Application by the Commissioner of the Australian Federal Police v Sun

[2024] NSWSC 890

Supreme Court

New South Wales

Medium Neutral Citation:

Application by the Commissioner of the Australian Federal Police v Sun [2024] NSWSC 890

Hearing dates:

14-18 November 2022, 9 February 2023

Date of orders:

24 July 2024

Decision date:

24 July 2024

Jurisdiction:

Common Law

Before:

Rothman J

Decision:

(1) The Court refuses the application by the Commissioner of the Australian Federal Police for a forfeiture order pursuant to s 49 of the Proceeds of Crime Act 2002 (Cth).

(2) Any parties seeking costs under s 323 of the Proceeds of Crime Act 2002 (Cth) shall, within 14 days of the date of the delivery of this judgment, file submissions of no more than five pages, together with any documents upon which reliance is placed for that purpose and any party opposing such order shall, within a further 14 days, file submissions of no more than five pages together with any documents upon which the opponent relies. The matter will be listed for short argument before the Court at a convenient time to the parties.

Catchwords:

CRIME – proceeds of crime – Proceeds of Crime Act 2002 (Cth) – application for a forfeiture order – whether real property and monies in bank accounts is proceeds of crime – chose in action – whether chose in action is proceeds of crime or instrument of serious offence

Legislation Cited:

Commonwealth Constitution, s 51(xxxi)

Crimes Act 1900 (NSW), ss 4B, 192E, 192G

Proceeds of Crime Act 2002 (Cth), ss 17, 18, 49, Pt 2-2 Div 5 Subdivs B-C, 73, 77, 78, 180, 318A, 318B, 329, 330, 338,

Criminal Code 1995 (Cth), ss 135.2, 400.9(1)

Cases Cited:

Anning v Anning (1907) 4 CLR 1049; [1907] HCA 13

Blackadder v Ramsey Butchering (2005) 221 CLR 539; [2005] HCA 22

Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34

Collier v Sunday Referee Publishing Co Ltd [1940] 2 KB 647; [1940] 4 All ER 234

Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd (2022) 275 CLR 165; [2022] HCA 1

Herald and Weekly Times Ltd v Commonwealth (1966) 115 CLR 418; [1966] HCA 78

Lordianto v Commissioner of the Australian Federal Police (2019) 266 CLR 273; [2019] HCA 39

Paull v Munday (1975) 11 SASR 346

R v Neil; Ex parte Cinema International Corporation Pty Ltd (1976) 134 CLR 2; [1976] HCA 11

R v Watson; Ex parte Australian Workers’ Union (1972) 128 CLR 77; [1972] HCA 72

Re Queensland Electricity Commission; Ex parte Electrical Trades Union of Australia (1987) 61 ALJR 393; [1987] HCA 27

State Government Insurance Office (Qld)v Crittenden (1966) 117 CLR 412; [1966] HCA 56

Ta Lee Investment Pty Ltd v Antonios [2019] NSWCA 24

Technical Products Pty Ltd v State Government Insurance Office (Qld) (1989) 167 CLR 45; [1989] HCA 24

Category:

Principal judgment

Parties:

Commissioner of the Australian Federal Police (Plaintiff)
Jieying Sun (Defendant)

Representation:

Counsel:
G O’Mahoney / D Tang (Plaintiff)
G A Sirtes SC / P Reynolds (Defendant)
Solicitors:
Criminal Assets Litigation, Australian Federal Police (Plaintiff)
MLH Lawyers (Defendant)

File Number(s):

2015/308779

JUDGMENT

1. The Commissioner of the Australian Federal Police (hereinafter “the Commissioner”) seeks a forfeiture order under s 49 of the Proceeds of Crime Act 2002 (Cth) (hereinafter “the Act”) in relation to property of which the defendant, Ms Jieying Sun, is the registered proprietor or in whose name funds are deposited.

2. The property in question is real property at 304/118 Joynton Avenue, Zetland NSW 2017 of which, as earlier stated, the defendant, Jieying Sun is the registered proprietor, and funds standing to the credit of the defendant in ANZ being account ending in numbers #592, which account is also in the name of the defendant. The account will hereafter be referred to as the “ANZ Account” and the property as the “Zetland Property”.

3. The order is opposed by the defendant.

4. Further, if the Court were minded to issue forfeiture orders then the defendant seeks compensation orders under s 78(1) of the Act in respect of all or any of the property to be forfeited.

Background

5. The defendant is a citizen of the People’s Republic of China (hereinafter “PRC” or “China”) who has lived and lives in Australia on a student visa. Her father, Mr Liwu Sun, resides in China and is a well-resourced businessperson with significant business interests operating in the PRC and who, on the evidence before the Court, has been extremely successful.

6. On or about 11 or 12 August 2014, an amount of $517,241 was transferred to the defendant’s account with the Commonwealth Bank (hereinafter the “CBA Account”). The funds deposited originated from either the father’s accounts or from one of his companies. The method of transfer is a matter which has occasioned the restraining orders sought and obtained by the Commissioner.

7. In or around December 2014 (according to the defendant on 28 November 2014), the defendant entered into a contract for the purchase of the Zetland Property. The financing of the property involved the defendant obtaining a bank cheque from one or two of her CBA Accounts for a deposit of $95,500; and, obtaining a loan from ANZ Bank for the purchase of the property (in the amount of $640,000). The ANZ account was opened as an offset account on that loan.

8. In January 2015, $430,000 was transferred from the CBA Account to the ANZ account.

9. Settlement of the Zetland Property occurred on 20 January 2015. The purchase price, seemingly over and above the deposit already mentioned, was $857,055.71. Further, the defendant was required to pay $38,485 in stamp duty and $2,146.11 in legal fees.

10. It is necessary to briefly describe the process by which the moneys were transferred from the PRC to Australia. In or about 2014, the Australian Federal Police (hereinafter “AFP”) commenced an investigation into suspected money laundering syndicates and one, in particular, comprised some Chinese students who had been observed depositing large sums of cash into various Australian financial institutions and then transferring the funds overseas.

11. As part of the investigation in November 2014, the AFP commenced an investigation into Mr Yei Feng. In 2015, Mr Feng was charged with an offence being one contrary to s 400.9(1) of the Criminal Code Act 1995 (Cth) (hereinafter the “Criminal Code”). The charge was that between 23 July 2014 and 8 December 2014, in Sydney and elsewhere, Mr Feng dealt with money, reasonably suspected to be the proceeds of crime, and, at the time of dealing with the money, its value was $100,000 or more.

12. Mr Feng pleaded guilty. The conviction was recorded on 9 December 2016 at which time Mr Feng was sentenced to 8 months imprisonment.

13. It is appropriate to describe the criminal enterprise that occurred. The process is not uncommon and is one to which the authorities are now alert.

14. Money that is sought to be transferred internationally is, from time to time, transferred through unscrupulous money exchange agents who, on account of profits being earned elsewhere, offer a slightly better exchange rate and lower service fees to effect the exchange. The money is then transferred to the exchange agent who deposits it in an account of a person unknown to the transferor of the money.

15. The account to which it is transferred usually belongs to, or is associated with, a person engaged in criminal activity, who then pays others to deposit cash in amounts less than the reportable amount, which total the amount to be transferred, into the account of the transferee. In that way, the criminal enterprise “launders” cash obtained from criminal activity; the exchange agent obtains a commission on the laundered money greater than a market transfer commission; and the transferor transfers the money at a lower cost than otherwise would be required. Other than as a result of noticing multiple deposits, compared to one deposit, the transferee may be wholly unaware of the process that has been undertaken.

16. The foregoing process is illegal; launders money from criminal activities; and renders the money and anything purchased with the money an instrument of criminal activity. The process described may involve no knowledge of the process or of any illegality or criminal activity on the part of the original transferor or the ultimate transferee. In these proceedings, there is no suggestion that the defendant or her father (or his companies) were aware of the process being undertaken or the illegality of the process.

17. Relevant to the current proceedings, on 11 and 12 August 2014, three persons, including Mr Feng, deposited cash in Ms Sun’s CBA account totalling $437,291. This was deposited in seven different deposits of which Mr Feng made five deposits totalling $357,241. The other two deposits were by Lin Su and Lin Shau, each of whom was a student, and each deposited on 12 August 2014 amounts of $30,000 and $50,050 respectively. Ms Sun also deposited, in her own account, an amount of $70,000 on 20 August 2014.

18. On 17 December 2014, Ms Sun obtained a bank cheque for $95,500 from the Bank utilising the moneys deposited in the account in the aforesaid manner. This bank cheque was used for the exchange of the contracts for the purchase of the Zetland Property, which occurred on 19 December 2014. The contract price was $955,000.

19. In December 2014, Ms Sun applied for a loan with the ANZ Bank. While the authorship of all of the information contained in each of the documents is a matter of some contention, it is sufficient for the present purposes to note that the document was based upon a completed home loan application form; an employment certificate dated 27 November 2014 issued by Ms Sun’s father’s company (or one of them), Beijing Xingpeng Construction Engineering Co Ltd, certifying that Ms Sun was employed with the company since November 2011 as a full-time office manager; three payslips from the company for September, October and November 2014; a bank statement showing salary credit; and statements of Financial Position dated 11 December 2014, 29 December 2014 and 30 December 2014, each purportedly signed by Ms Sun.

20. Leaving aside the circumstances pertaining to the obtaining of the loan by the defendant, Ms Sun, the factual matrix upon which the Commissioner relies in relation to the money transfer is not unusual. The issue in the proceedings is that the Commissioner asserts that the ANZ loan was obtained by Ms Sun by misrepresenting her circumstances in that, at the time of the loan application, Ms Sun was neither employed by her father or his companies nor receiving income as alleged.

21. There is no allegation that ANZ has suffered damage as a consequence of the alleged fraud, but the circumstance that ANZ has suffered no damage does not, in and of itself, overcome the reasonable suspicion that, by the misrepresentation, Ms Sun dishonestly obtained a benefit by deception. A person who, by deception, dishonestly obtains a financial advantage is guilty of the offence of fraud, pursuant to the terms of s 192E of the Crimes Act 1900 (NSW).

22. If the person from whom the financial advantage is obtained is the Commonwealth then there is an equivalent Commonwealth offence under s 135.2 of the Criminal Code. The latter offence is irrelevant to the current proceedings and conduct because ANZ is not the Commonwealth, nor a Commonwealth entity.

23. Further, the provisions of s 192G of the Crimes Act render it an offence for a person, acting dishonestly, to make or to publish or to concur in making or publishing, any statement (written or oral) that is false or misleading with the intention of, relevantly, obtaining a financial advantage. The term “dishonest” or “dishonestly”, where used in the Crimes Act, signifies “dishonest according to the standards of ordinary people and known by the defendant to be dishonest according to the standards of ordinary people”. ^[1]

    1. Crimes Act 1900 (NSW), s 4B.

24. The Commissioner alleges that Ms Sun obtained the advantage, being the loan funds from the ANZ, by making statements to the Bank contained within:

1. the ANZ home loan application form;

2. the employment certificate provided to ANZ;

3. the payslips, to which earlier reference has been made;

4. the bank statements from SPD Bank showing salary credits; and

5. the three Statements of Financial Position, to which earlier reference has been made, being those dated 11 December 2014, 29 December 2014 and 30 December 2014.

25. The Commissioner alleges that each of the documents were false or misleading in a material particular, contrary to s 192G of the Crimes Act.

26. Whether the Commissioner has satisfied the Court that the ANZ loan funds were proceeds of crime is a matter of fundamental controversy in the proceedings before the Court. On the other hand, the deposit, being moneys in the account derived from the transfer arrangements orchestrated by Mr Feng and for which he has been convicted, is relatively uncontroversial.

27. Mr Feng was convicted of an offence, being dealing with money suspected of being proceeds of crime contrary to s 400.9(1) of the Criminal Code. The moneys were transferred by Mr Feng and others into the defendant’s CBA account and, pursuant to the terms of s 329(2) of the Act, the moneys in that account became an instrument of a serious offence.

28. It is appropriate to recite s ss 329 and 330 of the Act:

“329.   Meaning of proceeds and instrument

(1)   Property is proceeds of an offence if:

(a)   it is wholly derived or realised, whether directly or indirectly, from the commission of the offence; or

(b)   it is partly derived or realised, whether directly or indirectly, from the commission of the offence;

whether the property is situated within or outside Australia.

(2)   Property is an instrument of an offence if:

(a)   the property is used in, or in connection with, the commission of an offence; or

(b)   the property is intended to be used in, or in connection with, the commission of an offence;

whether the property is situated within or outside Australia.

(3)   Property can be proceeds of an offence or an instrument of an offence even if no person has been convicted of the offence.

(4)   Proceeds or an instrument of an unlawful activity means proceeds or an instrument of the offence constituted by the act or omission that constitutes the unlawful activity.

330.   When property becomes, remains and ceases to be proceeds or an instrument

(1)   Property becomes proceeds of an offence if:

(a)   the property is wholly or partly derived or realised from a disposal or other dealing with proceeds of the offence; or

(b)   the property is wholly or partly acquired using proceeds of the offence; or

(c)   an encumbrance or a security on, or a liability incurred to acquire, retain, maintain or make improvements to, the property is wholly or partly discharged using proceeds of the offence; or

(d)   the costs of retaining, maintaining or making improvements to the property are wholly or partly met using proceeds of the offence; or

(e)   the property is improved using proceeds of the offence;

including because of one or more previous applications of this section.

(2)   Property becomes an instrument of an offence if:

(a)   the property is wholly or partly derived or realised from the disposal or other dealing with an instrument of the offence; or

(b)   the property is wholly or partly acquired using an instrument of the offence; or

(c)   an encumbrance or a security on, or a liability incurred to acquire, retain, maintain or make improvements to, the property is wholly or partly discharged using an instrument of the offence; or

(d)   the costs of retaining, maintaining or making improvements to the property are wholly or partly met using an instrument of the offence; or

(e)   the property is improved using an instrument of the offence;

including because of one or more previous applications of this section.

(3)   Property remains proceeds of an offence or an instrument of an offence even if:

(a)   it is credited to an account; or

(b)   it is disposed of or otherwise dealt with.

(4)   Property only ceases to be proceeds of an offence or an instrument of an offence:

(a)   if it is acquired by a third party for sufficient consideration without the third party knowing, and in circumstances that would not arouse a reasonable suspicion, that the property was proceeds of an offence or an instrument of an offence (as the case requires); or

(b)   if the property vests in a person from the distribution of the estate of a deceased person, having been previously vested in a person from the distribution of the estate of another deceased person while the property was still proceeds of an offence or an instrument of an offence (as the case requires); or

(ba)   if the property has been distributed in accordance with:

(i) an order in proceedings under the Family Law Act 1975 with respect to the property of the parties to a marriage or either of them; or

(ia) an order in proceedings under the Family Law Act 1975 with respect to the property of the parties to a de facto relationship (within the meaning of that Act) or either of them; or

(ii)   a financial agreement, or Part VIIIAB financial agreement, within the meaning of that Act or a superannuation agreement within the meaning of Part VIIIC of that Act;

and 6 years have elapsed since that distribution; or

(c)   if the property is acquired by a person as payment for reasonable legal expenses incurred in connection with an application under this Act or defending a criminal charge; or

(d)   if a forfeiture order in respect of the property is satisfied; or

(e)   if the property is forfeited, confiscated or otherwise disposed of under a corresponding law (whether or not because of an order made under that law); or

(f)   if the property is otherwise sold or disposed of under this Act; or

(g)   in any other circumstances specified in the regulations.

(5)   However, if:

(a)   a person once owned property that was proceeds of an offence or an instrument of an offence; and

(b)   the person ceased to be the owner of the property and (at that time or a later time) the property stopped being proceeds of an offence or an instrument of the offence under subsection (4) (other than under paragraph (4)(d)); and

(c)   the person acquires the property again;

then the property becomes proceeds of an offence or an instrument of the offence again (as the case requires).

(5A)   Paragraph (4)(ba) does not apply if, despite the distribution referred to in that paragraph, the property is still subject to the effective control of a person who:

(a)   has been convicted of; or

(b)   has been charged with, or who is proposed to be charged with; or

(c)   has committed, or is suspected of having committed;

the offence in question.

(6)   Property becomes, remains or ceases to be proceeds of an unlawful activity, or an instrument of an unlawful activity, if the property becomes, remains or ceases to be proceeds of the offence, or an instrument of the offence, constituted by the act or omission that constitutes the unlawful activity.

(7)   Paragraphs (1)(a) to (e) and (2)(a) to (e) do not limit each other.

(8) This section does not limit section 329.”

29. Once, in accordance with the foregoing, it is clear that the money given by the defendant’s father to the money exchanger to transfer to his daughter was diverted and utilised to launder money, the money (being the cash deposited by Mr Feng and others into the account of the defendant) becomes, pursuant to the terms of ss 329 and 330 of the Act, either the proceeds of crime or an instrument of crime (possibly both).

30. As earlier stated, the Commissioner applies for forfeiture orders under s 49 of the Act. It is necessary to recite the provisions of s 49:

“49.   Forfeiture orders - property suspected of being proceeds of indictable offences etc.

(1)   A court with proceeds jurisdiction must make an order that property specified in the order is forfeited to the Commonwealth if:

(a)   the responsible authority for a restraining order under section 19 that covers the property applies for an order under this subsection; and

(b)   the restraining order has been in force for at least 6 months; and

(c)   the court is satisfied that one or more of the following applies:

(i)   the property is proceeds of one or more indictable offences;

(ii)   the property is proceeds of one or more foreign indictable offences;

(iii)   the property is proceeds of one or more indictable offences of Commonwealth concern;

(iv)   the property is an instrument of one or more serious offences; and

(e)   the court is satisfied that the authority has taken reasonable steps to identify and notify persons with an interest in the property.

(2)   A finding of the court for the purposes of paragraph (1)(c):

(a)   need not be based on a finding that a particular person committed any offence; and

(b)   need not be based on a finding as to the commission of a particular offence, and can be based on a finding that some offence or other of a kind referred to in paragraph (1)(c) was committed.

(3)   Paragraph (1)(c) does not apply if the court is satisfied that:

(a)   no application has been made under Division 3 of Part 2 - 1 for the property to be excluded from the restraining order; or

(b)   any such application that has been made has been withdrawn.

Refusal to make a forfeiture order

(4)   Despite subsection (1), the court may refuse to make an order under that subsection relating to property that the court is satisfied:

(a)   is an instrument of a serious offence other than a terrorism offence; and

(b)   is not proceeds of an offence;

if the court is satisfied that it is not in the public interest to make the order.

31. There are a few aspects of the foregoing provision which require expansion. First, the provisions of s 49(1) of the Act, by using the word “must”, requires a court to make an order if the conditions in the subsection have been satisfied.

32. In regard to the provisions of s 49(1) of the Act, it should be noted that the Court is a court with proceeds jurisdiction; the Commissioner is a relevant responsible authority described in s 49(1)(a) and has applied for an order under s 49(1) of the Act; a restraining order was issued by the Court on 21 October 2015, which, to state the obvious, is more than six months before today and before the motion for the forfeiture order was agitated, and, therefore, satisfies s 49(1)(b); and, the Commissioner has taken reasonable steps to identify and notify persons with an interest in the property. The foregoing is uncontentious.

33. By virtue of the proceeds of crime, the cash deposited in the account of the defendant was realised from the commission of an offence, being the offence with which Mr Feng was charged and which was committed by him and others. Further, the chose in action, or moneys contained in the account, was probably used in connection with the commission of an offence and, perhaps more importantly, the money provided to the exchange agent was money used in connection with the commission of an offence and was, as a consequence, an instrument of an offence pursuant to the terms of s 329(2) of the Act.

34. Further again, by operation of s 330(1) of the Act, the moneys contained in the bank account or the chose in action of the defendant is property wholly or partly derived or realised from the disposal or other dealing with proceeds of the offence, being the money laundered as a result of the offending of Mr Feng and others. It is also property wholly or partly acquired using proceeds of the laundering offence.

35. Over and above the foregoing, pursuant to the terms of s 330(2) of the Act, the property is an instrument because it is property wholly or partly derived or realised from the disposal or other dealing with an instrument of the offence, being the laundered moneys and/or is property wholly or partly acquired using an instrument of the offence. Similarly, if the deposit moneys are an instrument of the offence and or proceeds of an offence, then the Zetland Property is, by virtue of s 330(2)(b) property wholly or partly acquired using an instrument of the offences committed by Mr Feng and his cohorts.

36. Thirdly, the property only ceases to be proceeds of an offence or an instrument of an offence pursuant to the terms of s 330(4) of the Act. For that purpose, we can, without more, simply disregard the provisions of pars (b), (ba), (c), (d), (e), (f) and (g) of subsection 330(4) of the Act. In other words, the only possible relevant provision that would have the effect of the property ceasing to be proceeds of an offence or an instrument of an offence is the circumstance described in subsection 330(4)(a) of the Act. The paragraph is extracted above.

37. The dictionary to the Act, s 338, defines “sufficient consideration” as “consideration that is sufficient and that reflects the value of the property, having regard solely to commercial considerations”. Thus, considerations that are not commercial in nature, as may sometimes represent consideration for some contracts, are not to be factored into the determination of whether sufficient consideration has been provided.

38. The construction of the foregoing provisions and the term “sufficient consideration” was the subject of extensive discussion by the High Court in Lordianto. ^[2]

    2. Lordianto v Commissioner of the Australian Federal Police (2019) 266 CLR 273; [2019] HCA 39.

39. In Lordianto, the High Court clarified that, essentially, for property to cease to be proceeds, pursuant to the terms of s 330(4) of the Act, there needs to be the equivalent of a bona fide purchaser for value without notice. The High Court provided the example of a drug dealer gifting cash to a relative who then purchases a motor vehicle. ^[3] The motor vehicle would still be the proceeds of crime and it is only when a subsequent purchaser buys the motor vehicle for value without knowledge of the criminally tainted antecedents that the property ceases to be the proceeds of crime.

    3. Lordianto, supra, at [86], [103] (Kiefel CJ, Bell, Keane and Gordon JJ).

40. Further, the High Court rejected the proposition that the third party referred to in s 330(4)(a) of the Act needs to be a third party to the transaction by which the property first became the proceeds of crime. ^[4]

    4. Lordianto, supra, at [99] (Kiefel CJ, Bell, Keane and Gordon JJ).

41. Further again, and most relevantly for the current discussion, the High Court made clear that reliance on a “temporal” connection is a mistake. Such a temporal approach does not take account of the operation of s 330(1) and (2) of the Act. The High Court said at [100]:

“[100] Third, the reliance in some judgments below on a “temporal” issue – property “becoming” proceeds or an instrument of an offence under s 330(1) or (2) at the same time as it “ceased” to be proceeds or an instrument under s 330(4)(a) – is inconsistent with the POCA. It does not take account of the operation of s 330(1) and (2), to which reference has just been made. Further, it does not take account of the fact that the inquiry under s 330(4)(a) is objective. Necessarily, there can be no detailed exposition in the abstract.” ^[5]

5. Lordianto, supra, at [100] (Kiefel CJ, Bell, Keane and Gordon JJ) (footnotes omitted).

42. The reference to the operation of s 330(1) and s 330(2) is a reference to the explanation given by the High Court at [96] that it may not be possible to identify the transaction by which the property first became proceeds of an offence or an instrument of an offence and it is not consistent with the text of the Act to limit the “third party” to which s 330(4) refers to a person with no involvement in the transaction by which property first became proceeds of an offence or an instrument of an offence. Rather, the High Court took the view that the term “third party” is no more than a descriptor of a person who satisfies s 330(4)(a) of the Act.

43. The Court, as presently constituted, is bound by the determination of the High Court and by its considered obiter. Yet, the reference to the absence of a temporal connection does create some tension.

44. The terms of s 330(4) deal with the “cessation” of property as proceeds of an offence or an instrument of an offence. Without more, this would suggest that s 330(4) of the Act operates only after property has become the proceeds or instrument of an offence.

45. The High Court was not dealing with that situation. Yet one can readily foresee the circumstances where the consideration is provided prior to the property becoming the proceeds or instrument of an offence. An example will suffice.

46. Let us assume, perhaps in a manner not totally foreign to the arrangements in this case, that an employee works for an employer whose head office is overseas. Leaving aside for present purposes whether the employee may be compensated at a rate that is above market rates, let us further assume that the employment contract is terminated and the employee, in calculating her or his entitlements, realises that there has been an underpayment of salary of, say, $100,000.

47. The underpayment is raised with the employer in Australia who immediately accepts the correctness of the claim and refers it to the head office overseas. The head office transfers the $100,000 to the employee’s bank account and Mr Feng (or persons operating in the same manner) undertakes the same money laundering process as occurred in these proceedings.

48. The employee receives the $100,000 in a bank account but the consideration, being the services provided under the contract of employment, was provided before the offence took place and before the chose in action (being the bank account of the employee) was debited with the amount that is, in accordance with the analysis in these proceedings, the proceeds or instrument of an offence.

49. When the consideration was provided, assuming for present purposes it is “sufficient consideration” and assuming the provision of services under a contract of employment is a “commercial consideration”, it was well before the money became the proceeds or instrument of an offence and at a time when there were no proceeds or instrument of an offence in any relevant sense. Does the High Court comment that there need be no “temporal connection” mean that consideration for the amount that was provided well before it became the proceeds or instrument of an offence may be sufficient consideration and, notwithstanding the inelegance of the phrase, consideration that allows the proceeds or instrument to cease to be such?

50. The foregoing difficulty is one that is, or may be, relevant to the current circumstances with which the Court must deal. It is further complicated by the terms of Subdivisions B and C of Division 5 of Part 2-2 of the Act, which dealt with exclusion orders and compensation orders. Exclusion orders depend upon property not being the proceeds of unlawful activity or the proceeds or instrument of an offence and merely reiterate the difficulty.

51. A court that has issued or is to issue a forfeiture order may make a compensation order under s 77 of the Act. There are some obvious technical requirements. An applicant must make the application for the compensation orders; the Court must be satisfied that the applicant has an interest in the specified property described in the forfeiture order or in the application for the forfeiture order; and the Court has issued, or is to make, the forfeiture order.

52. The non-technical requirements for a compensation order to be made require the Court to be satisfied that a proportion of the value of the applicant’s interest in the property was not derived or realised, directly or indirectly, from the commission of any offence and that the applicant’s interest is not an instrument of any offence.

53. Given the conclusions already reached, it could never be said that, in the foregoing hypothetical, an employee’s chose in action (or so much of it as was transferred from overseas) was not the instrument of an offence.

54. It cannot have been the intention of the legislature to confiscate property of persons who are innocently exposed to their property being the instruments or proceeds of crime. The clear purpose of the provisions of s 330(4) and the capacity to issue exclusion and compensation orders is to ensure that persons, who have an interest in property, which, for reasons that do not involve their knowledge or criminality, can be classified as the instrument or proceeds of crime, should not be prejudiced.

55. While the federal government plainly has the power to confiscate property derived from criminal activity, if the property confiscated were property of an innocent third party, there may be interesting issues associated with the provisions of s 51(xxxi) of the Constitution.

56. While it is important not to read comments in any judgment beyond that with which the judgment is dealing, the High Court was expressly dealing with a submission that considered and sought to rely upon the use of the word “ceased” or “ceases” in the Act. As a consequence, the Court is not inclined to depart from the generality of the comments of the plurality and “sufficient consideration”, even when provided before the property becomes the instrument or proceeds of crime, may be taken into account in determining whether the provisions of s 330(4) of the Act have been satisfied.

57. The High Court dealt expressly with international transfers of the kind here impugned because that was an issue in the Lordianto appeal. The High Court said at [75]-[81]:

“[75] The essential initiating event is an instruction by a payer (or the originator of a payment) to their bank to reduce the value of their bank balance in an account and to increase, correspondingly, the bank balance of an account held by a named recipient (also known as the beneficiary). The form of the instruction is not fixed. The originator’s title to “money” is not transferred. The transfer operates by adjusting the total amount of the debts owed by the participants, the banks, to each other by a process which the banks commercially describe as “netting”. It is a process whereby a series of obligations between two participants is replaced with a single obligation which is calculated by adding all of the obligations owed by each participant to the other and deducting the smaller from the larger. On any one day, the netting involves multiple participants in the industry, often using clearing houses, which operate as multilateral contracts. The process of netting determines the net sum which each bank owes to each other in the clearing system, which is then settled.

[76] There are a number of consequences. First, when an originator instructs a bank to make a transfer from their account, the chose in action representing that credit balance is extinguished or reduced by the amount of the transfer. Second, a fresh chose in action is created, or the value of an existing chose in action is increased, for the beneficiary which entitles them to withdraw an equivalent amount from their bank, subject always to the terms of their contract with their bank. Third, the property the beneficiary acquires is wholly distinct from the property which the originator had before the transfer. Indeed, the POCA recognises the change in the nature of property held by a bank by providing that “property” remains proceeds, or an instrument, of an offence even if credited to an account.

[77] These processes raise significant commercial considerations and, thus, consequences for the proper construction of s 330(4)(a). As stated earlier, different forms of property will necessarily raise different questions about the form, amount, nature and source of the consideration.

[78] Once the property in a bank account is properly identified and it is recognised that the value credited to another account is not the property that was deposited, many of the submissions about what was necessary in order for an applicant for an exclusion order to demonstrate that they have provided “sufficient consideration” for the acquisition of an interest in connection with their chose in action in a bank account must be rejected.

[79] First, contrary to the AFP’s submissions, it was unnecessary for the appellants to establish, and contrary to established banking practice to require proof, that the “funds” deposited into the appellants’ respective Australian bank accounts, which they sought to exclude from the restraining order, were “their own funds”. As just seen, the funds deposited with the banks were not the property the appellants held and sought to exclude.

[80] Second, contrary to the approach adopted by some of the courts below, it was unnecessary for the appellants to establish, and contrary to established banking practice to require proof, that the appellants had a direct connection, contractual or otherwise, with the persons who “made the deposits” into their Australian bank accounts or that there was any contractual relationship, whether as agents or otherwise, between the remitters in the foreign country and the depositors in Australia.

[81] Third, a construction that focuses attention away from whether consideration has been paid and instead towards whether the relevant relationships are direct or indirect diverts attention from the fact that a purpose of the provision is to exclude those who have not paid sufficient consideration, including volunteers, from being able to keep proceeds, or an instrument, of an offence.” ^[6]

6. Lordianto, supra, at [75]-[81] (Kiefel CJ, Bell, Keane and Gordon JJ) (footnotes omitted).

58. The foregoing analysis must be applied in dealing with the applications that are now before the Court. It is necessary to bear in mind that, as earlier stated, the jurisdiction relies on the initial formation of a reasonable suspicion and depends upon the criminal conduct of the person whose conduct forms the basis of the original restraining order, not the person whose property is being forfeited. In this case, there can be no doubt that Mr Feng whose conduct (and the conduct of his co-offenders) formed the basis of the restraining order engaged in the conduct that constituted one or more serious offences and is the basis upon which the property in issue in these proceedings is the proceeds or instrument of an offence. However, the Court is entitled not to make a forfeiture order if the Court is satisfied that property is an instrument of a serious offence other than a terrorism offence, but is not the proceeds of an offence, and should not be forfeited “in the public interest”. ^[7]

    7. Proceeds of Crime Act 2002 (Cth), s 49(4).

The evidence

59. As is obvious from the foregoing, a significant proportion of the primary facts are uncontentious. These reasons have already recounted that the defendant, Jieying Sun, is a citizen of the PRC, who has been employed by her father, Mr Liwu Sun, in one of his companies. Her residence in Australia, since 2008, has been pursuant to a study visa during which time she has undertaken a number of tertiary courses.

60. The father, Liwu Sun, resides in China. Further, the reasons have also already recounted the transfer of moneys from one of the father’s companies to the defendant, through an exchange agent and the transfer was the process by which serious criminal offending occurred, because the amount transferred was used to launder money. The persons involved, or some of them, have been the subject of criminal proceedings and conviction.

61. Also uncontentious is the fact that the moneys standing to the credit of the defendant were used as part of the deposit for the purchase of the property in Zetland and that the defendant obtained a loan from ANZ for the difference between the deposit and the purchase price of the property in Zetland (less certain other cash deposits).

62. As earlier stated, none of the foregoing is contentious.

63. Notwithstanding the short compass of the factual dispute between the parties, significant evidence was adduced and there was lengthy cross-examination on affidavits. The Commissioner relied upon the affidavits of Glyn Evan Roberts sworn 20 October 2015 and the exhibit thereto (Exhibit GER-1); the affidavit of Scott Michael Mathews, affirmed 1 November 2016 and the exhibit thereto (Exhibit SM-1) (the “First Mathews Affidavit”); an affidavit of John Vuceric affirmed 7 May 2020 and the exhibit thereto; a second affidavit of Scott Michael Mathews sworn 2 July 2020 (the “Second Mathews Affidavit”); an affidavit of Craig Jerkavits, affirmed 14 July 2020; an affidavit of Scott Michael Mathews, affirmed 23 November 2021 (the “Third Mathews Affidavit”) and the exhibit thereto; an affidavit of Jacqueline Mary Smythe sworn 3 December 2021 and the exhibit thereto; and the affidavit of Leanne Eileen Jackson sworn 9 December 2021 and the exhibit thereto.

59. Two further affidavits of Scott Michael Mathews affirmed 10 November 2022 and 14 November 2022 respectively are relied upon together with the entire transcript of the examination of Mr Yi Feng on 18 March 2016 and Mr Sean Huang of 18 August 2016 and Mr Guanyu Lai of 21 September 2021. Notice was given pursuant to the provisions of s 318B(1) of the Act. The transcript of Mr Huang and Mr Lai were admitted into evidence and the application for leave to admit the evidence of Mr Yi Feng was the subject of an application for leave under the relevant section.

60. Leaving aside the affidavits of interpreters, which were sworn in relation to translations of Chinese language exhibits and which translation was uncontentious, the defendant relied upon the affidavits of the defendant herself, Ms Jieying Sun, of 4 April 2017, two affidavits of the father, Liwu Sun of 20 January 2016 and 21 April 2016 and an affidavit of David Leamy of 13 March 2016. There are a large number of exhibits to the affidavits.

61. The defendant sought leave to rely upon additional evidence being the affidavit of Mr Shing Lam of 11 November 2021 which was sought to be relied upon in response to the Commissioner’s further affidavits.

62. The affidavits of Scott Michael Mathews related essentially to procedural matters, mostly being attempts to contact witnesses, including Tom Jin and Mr Yi Feng and otherwise were formal in that they exhibited a raft of documents. A further affidavit of Jayne Alice Qorraj also related to attempts to contact Mr Yi Feng. Similarly, the affidavit of David Leamy concerned essentially the provenance of documents. It is unnecessary to summarise the formal affidavits.

Leanne Jackson

68. As already stated, Ms Jackson swore an affidavit on 9 December 2021 and gave evidence on 14 November 2022. At the time of swearing the affidavit, Ms Jackson was a Commercial Home and Investment Lending Manager at ANZ; a position she had held since February 2009.

69. Her main role was assessing home loan applications. If the application were to involve foreign income, then the application would be submitted by her to the ANZ Credit Assessment Team.

70. Her usual practice, in assessing a loan, was to conduct an interview with the applicant and, in that interview, confirm the details of the application; provide the applicant with details of the financial products that may meet the applicant’s needs; compile the documents needed to progress the application; and request source documents from the applicant.

71. The source documents needed were payslips and bank records evidencing income over the last three months. If there were foreign income, an employment letter or contract would also be required. It was her ordinary practice to provide applicants with a blank home loan document for them to complete. If she were ever to help an applicant complete the form, it would only be on the basis of the information provided by the applicant. Further, she would always confirm the contents of the application with the applicant.

72. It was also her practice to obtain source documents directly from the applicant, rather than from the employer, for example. Ms Jackson is unaware of any situation where a person fulfilling her role at the branch level would contact an employer directly to receive from that employer the financial document or documents. If a third party, such as an accountant, were to provide a source document, then Ms Jackson would show it to the applicant for verification.

73. Part of the application is an authority for ANZ to obtain documents from accountants, financial advisers or employers. Despite this, Ms Jackson confirmed it was not the usual practice to obtain the documents in that manner. As part of the application process, Ms Jackson would obtain a Statement of Financial Position from the applicant, usually directly, which she would then cross-reference to source documents otherwise provided.

74. Ms Jackson would then submit the application with a recommendation as to whether it should be approved. There existed “Mortgage Credit Requirements”, which were exhibited to the affidavit, and which governed the process internally.

75. In the role described, Ms Jackson did not deal with mortgage brokers. Mortgage brokers had a separate section established by ANZ for them to submit loans for assessment. If a broker were involved, the assessment would not be dealt with at the branch level.

76. Apart from brokers, in the relevant period of the application for loan that was subject to these proceedings, ANZ had a programme that paid third parties 0.5% for referring a customer for home loan services. The system, in the understanding of Ms Jackson, was that third parties were not to complete application forms for customers and did not usually provide source documents to the Bank. If an introducer, whose function was merely to introduce applicants to the Bank were to provide a source document, it had to be shown to the applicant for verification. That was the system operated by Ms Jackson. Her usual practice was not to accept source documents from introducers, but only from the applicant.

77. Ms Jackson had no connection with the application by the defendant, Ms Sun. Nevertheless, Ms Jackson reviewed the documents relevant to the loan in question in these proceedings and made comments on them. Her view was that the documents would only have been used for an application with the knowledge and consent of the applicant. She also expressed the view that, in her experience, ANZ would not have approved a loan for 100% of the purchase price without the presence of collateral security.

78. In cross-examination, Ms Jackson clarified and/or confirmed that the Mortgage Credit Requirements policy relates to:

• the assessment of application of people approaching the Bank for a secured loan;

• the “non-permanent resident credit policy” is for assessing applicants who are not permanent Australian residents;

• she was not aware of a category under the policy for applicants who live in Australia but work overseas;

• an assessor, at a level outside the branch level, will always assess foreign applications;

• the person in the branch who dealt with the application of Ms Sun was Mr Jin;

• Ms Jackson’s role was the same as that filled by Mr Jin, but in a different branch;

• the role does not have the same level of discretion as the foreign income assessor role;

• the “Mortgage Credit Requirements” policy is applied assiduously by people in that role;

• applicants were able to verify foreign income in three ways, a letter from an employer, an employment contract, or the last three months of payslips;

• any one of the three available means of verifying foreign income could be provided but the credit assessor may want more on a full assessment and may gather as much information as possible;

• if foreign income were involved, when preparing the Statement of Financial Position, ANZ would deduct 20% to allow for the exchange rate risk;

• Ms Jackson had never encountered an applicant who was living in Australia and being paid in foreign currency;

• while it was not common for Ms Jackson to undertake contact with employers, accountants or the like, such a process could be undertaken but was not common when the documents provided seemed acceptable; and

• if a credit assessor needed to review an application, for when foreign income was involved, Ms Jackson’s expectation would be that it would taken between 2 and 10 days.

79. Ms Jackson was examined about the documents in the defendant’s loan application and confirmed the following issues:

• there was an agent authority on the file for Alwyn Maher as agent for the defendant, which means he had access to her accounts;

• the fact that the PAYG box was ticked on the Mortgagor’s Application Guide by Tom Jin does not mean that foreign income was not considered or the subject of reference, even though PAYG was an Australian system. It could, on Ms Jackson’s view, be a reference to the circumstance that payslips were used;

• the Mortgagor’s Application Guide had no indication that foreign income was in play;

• Ms Jackson could not work out from the Mortgagor’s Application Guide why the file had been flagged for review by a credit assessor;

• Ms Jackson did not consider it unusual for Ms Sun to have an Australian address as a number of expats were in that position;

• no documents were found that were created by the credit assessor; and

• a commission was paid to Ling Lin as an introducer on the loan, which meant that Ling Lin introduced the defendant to ANZ.

80. Ms Jackson confirmed, in re-examination, that introducers did not provide documents to the Bank and that their role was limited to introducing the customer who then signed a form to say they were willing to be linked to the introducer.

Jacqueline Mary Smythe

81. As already stated, Ms Smythe swore an affidavit on 3 December 2021. Ms Smythe was employed as a Senior Assessor in the Foreign Income Assessments Team at ANZ as at the date of her affidavit. She had worked at ANZ since 2006 and been in the current role since October 2017. Ms Smythe gave evidence about the loan assessment process.

82. For new applications that were made at a branch, Ms Smythe testified that the lending officer in the branch would make an initial assessment of the serviceability of the loan, before sending it to an assessor. It was sent to an assessor only if it did not meet the criteria for automatic approval. Those criteria included a situation where the serviceability of the loan depended upon foreign income stream.

83. If there were a foreign income stream, the application was referred to the Foreign Income Assessments Team. Ms Smythe would review the loan documents as well as the source documents to assess the serviceability of the loan. If the declared income did not match the source documents, the loan would not be approved.

84. Ms Smythe assessed the defendant’s loan application in 2014. By reference to the loan documents, Ms Smythe testified that the loan had been referred to her on 12 December 2014 by Tom Jin.

85. Ms Smythe conditionally approved the loan on the basis that certain documents and information were provided. Those documents included a property valuation, approval from the Foreign Investment Review Board, a non-resident acknowledgment form, and the date of the contract of sale. She understood that the requirements for those matters were conveyed to the branch by email.

86. On 31 December 2014, Mr Jin resubmitted the loan application with the requested documents as well as a transfer for the land subject of the loan. Ms Smythe then unconditionally approved the loan. She deposed that she approved the loan on the basis that the information provided was a correct representation of the defendant’s assets and liabilities as well as income.

87. Ms Smythe advised that the loan would not have been approved if the defendant were to have resided in Australia for residency purposes; did not reside with her parents; intended to purchase the property for residential purposes; was not employed in any capacity or receiving salary or income in any capacity, or any other income. Those circumstances would still apply as at the time that the evidence was adduced and, at that time, Ms Smythe was still employed at ANZ.

88. If the loan application had been submitted by someone who was residing in Australia, but a foreign applicant, it would not have been assessed by Ms Smythe.

89. In the course of cross-examination, Ms Smythe accepted that she had assumed that the applicant was a foreign resident because of the way in which the documents were presented to her and by the circumstance that it was sent through to the department that dealt with the assessment of foreign income. Notwithstanding her comment that she had stated that she would have communicated the conditional approval of the loan to Mr Jin, ANZ could not find the email granting conditional approval. Ms Smythe was unaware of commissions, if any, based on the amount of loans written. Ms Smythe was not paid a commission based upon the number or amount of loans approved.

90. Ms Smythe, and the department, would only receive the documents required for the manual assessment from the lending officer and would confer with the lending officers by email. While Ms Smythe had no separate recollection of the dates referred to in her affidavit, she had reviewed the ANZ systems to check the dates to which she had referred.

91. Further, Ms Smythe did not have a direct recollection of imposing the conditions on the conditional approval of the defendant’s loan and attested to that conditional approval after reviewing her notes. Ms Smythe is wholly unaware of the communications between Mr Jin and the defendant, which would be and is completely outside her knowledge. Ms Smythe did not contact employers or make any enquiries when assessing income.

Glyn Evan Roberts

92. Mr Roberts swore an affidavit on 20 October 2015 and was employed as a federal agent. It is generally unnecessary to summarise the evidence of Mr Roberts which generally went to the offending by Mr Feng. That offending is not in issue in the proceedings before the Court now. Nevertheless, Mr Roberts detailed the investigations which caused him to form the belief that Mr Feng had deposited money into accounts and it is clear that the belief was reasonable and based upon facts which were either proved or reasonably based.

93. During the course of cross-examination, Mr Roberts was asked about a person called Shaun Huang of Auschain Investment Group, but did not, initially, recall the person. He did recollect the person when shown orders issued by the Court in 2016 and, while not able to recollect the issues, did accept that there were a number of matters involving Mr Feng and he most likely deposited funds into the account of Auschain Investment Group.

Guanyu Lai

94. On 21 September 2021, Guanyu Lai attended a compulsory examination conducted under the Act. He confirmed, in examination-in-chief, that he had told the truth during that examination.

95. During his cross-examination, he was asked questions relating to his role in the defendant’s loan application. He did not have a good recollection because of the passage of time but accepted that he may have met the defendant and that they communicated via WeChat in 2014.

96. Mr Lai was also operating a company called Well Finance Pty Ltd and confirmed that he had a business card (Exhibit 1 in the proceedings) that had the word “broker” written on it in handwriting, but the word was not part of the card and was not his handwriting, as best he could tell.

97. The business card described Mr Lai as a “lending manager” and he understood that term to mean that he was a person in a company providing financial services as a mortgage broker. Mr Lai did not recall receiving an email dated 24 December from Apex Lawyers but accepted that he was the addressee (or that was his email address).

98. As best he could say at this time, the email may have related to the preliminary part of the transaction for the loan, but he did not believe that he was the defendant’s broker as he could not find any file on her. In response to a subpoena for documents relating to the defendant, he could not find any material.

99. Mr Lai also checked his settlement record, which is a document that records every customer for whom he settled, but he did not check his other communications. If a customer did not settle a loan, it would be treated as an enquiry, and he would not record it.

100. When shown Exhibit 3 (a further email from Chris Sun of 30 September 2014), he could not recall receiving it and when shown a significant number of messages on WeChat (Exhibit 4), the witness was unwilling to commit to whether it was his WeChat account and whether he received them or recorded them.

101. Mr Lai accepted the content of messages which related to him telling the defendant that her loan had not been approved but did not agree that the message meant he was involved in the transaction. In his system, if that be an appropriate description, if a loan were not approved by the lender, then the applicant would not become Mr Lai’s customer.

102. He was asked questions about Multicredit Mortgage in 2014 and testified that he did not work for that company but had worked for them a long time ago, from approximately 2005 to 2011. He did not recall meeting the defendant or the defendant’s father in 2014.

103. In 2014, he was in a relationship with Ling Lin, who acted as an introducer to ANZ. He thought he was familiar with Mr Jin of ANZ Burwood, but, when shown transcripts of his examination in which there was a reference to the fact that he knew Mr Jin and dealt with him, Mr Lai maintained he could not recall referring loans to Mr Jin.

104. Notwithstanding his evidence in examination, he had no independent recollection of searching WeChat records for Ms Sun and, more generally, had no recollection of Ms Sun at all or the events that were said to have taken place in 2014.

105. During re-examination, Mr Lai clarified that the front page of a contract for sale was a document he would usually obtain at the beginning of the process in seeking to act as a mortgage broker. His role as a broker involved him providing documents to the Bank as an intermediary and collecting information and documents. When shown Exhibit 3 again, which was, as earlier described, a communication from a solicitor, Chris Sun, referring to FRIB approval, he stated that his understanding was that the customer required FRIB approval because she was not a permanent resident and did not have citizenship.

Scott Michael Mathews

106. Mr Mathews is also an AFP agent who gave evidence via affidavit, being affidavits of 1 November 2016, 2 July 2020, 23 November 2021, 10 November 2022 (relating to procedural matters relating to the contact of witnesses, Tom Jin and Yi Feng) and 14 November 2022. Apart from the search for witnesses, and annexing the certificate of conviction for Mr Feng to the affidavit of 2 July 2020, the affidavit annexed examinations that had been conducted of the defendant, of Li Feng and of Guanyu Lai. Not all of the questions and answers were relied upon in the course of these proceedings.

107. Insofar as it related to the testimony at the examination of the defendant, Ms Jieying Sun, this evidence was given on 27 March 2016 and is to the following effect. Ms Sun was expecting to receive money in her bank account from her father for the purchase of a property. On the morning of 11 August 2014, she had a discussion with Shaun Huang on WeChat to the effect that someone would transfer the money into her account for the purchase of the property.

108. Mr Huang did not tell her who would be transferring the money to her, nor how much would be transferred. Further, she was not informed that the amount would be deposited into her account in cash. When she enquired why money had been deposited into her account from many different branches, Mr Huang told her it was “good for her” because she would not need to lodge or report some matter, the details of which Ms Sun did not recall.

109. Further, again, when reviewing the record of a $70,000 transfer, made on 11 August 2014, Ms Sun confirmed that she did not make that deposit. She does not know why she was listed as an agent for that transaction.

110. On the question of the home loan, Ms Sun testified that she needed an ANZ home loan to purchase the Zetland Property and the loan was obtained in or about December 2014, prior to the settlement in January 2015. Ms Sun was vague about the details of her assets and income which were provided with the loan application. Ms Sun could not identify whether she had bonds or shares in her father’s company and could not separate the two or did not understand the difference.

111. On the issue of her income received from her father and whether that was salary or a gift or a payment for studying, Ms Sun did not accept that it could not be income but accepted that she was not working.

106. Ms Sun asserted that the broker had verified the loan application and obtained the records directly from the company in China, including payslips. Ms Sun agreed that the three payslips annexed to the loan were the only three payslips that existed and that these had been created for the purpose of the loan application to show that she had a full-time job, despite the fact that she was not working.

107. Questions were asked and answers given relating to the existence of money “held for her” in China by her father. Ms Sun testified that it was her income but it was held for her in China and that her father did not have access to it and, for that reason, had not disclosed it on her application for reasonable living expenses from the restrained property.

108. Ms Sun agreed that in 2014, she had travelled on holiday to Korea and in 2014 she did not do any work for her father’s company in China. She testified that her study in Australia was work, which provided her a salary of $120,000 per annum which was disclosed to ANZ that year. Ms Sun also testified that there were restrictions on the transfer of money in China and that Mr Huang had informed her that more than $50,000 per year per person could not be transferred to Australia. Ms Sun said that Mr Huang told her to get her father to transfer money into a Chinese account, which would then be transferred through to her in Australia and would avoid that restriction.

Other evidence

115. Li Feng was the subject of examination on 18 March 2016. Mr Feng said that he did not know the defendant. He testified that when making the various cash deposits, including those into the account of Ms Sun, he was instructed by a man called Shiyu Cong who drove him around and gave him cash to deposit and gave him instructions on how to deposit it.

116. Mr Huang was also the subject of examination by the AFP on 18 August 2016. Mr Huang confirmed that Chinese banks have restrictions on overseas transfers and clients use currency transfer companies to effect large payments of money overseas. Such companies, on Mr Huang’s knowledge, transfer the money to an account in Australia and then use that to transfer it to the nominated account.

117. Mr Huang said that Ms Sun, the defendant, came to see him to discuss how to transfer money for the purchase of an apartment and said that he could either transfer it to many different recipients in tranches of $50,000 or use a transfer company. This was to be done, on his understanding, by electronic funds transfer.

118. Mr Huang noticed that the amounts were put into the defendant’s account in cash and considered that it was just a different way of this particular company operating. Mr Huang and the defendant exchanged messages on 11 August 2014. Apparently, Mr Huang asked a person by the name of Wang or Wong about the cash transactions and was informed that the cash deposit was normal and not to worry about it.

119. In the affidavit of 2 July 2020, Mr Mathews referred to the examinations on oath of Guanyu Lai and exhibited a copy of the transcript. A summary of the evidence obtained from that part of the transcript that was read into evidence in the proceeding follows.

120. Mr Lai was a mortgage broker and worked for a company called Multicredit Mortgage until early 2011 following which he worked at World Finance. His general practice was to collect information from clients so that he could assist them with a loan. He invariably had the client fill out the application form which he would then verify and check.

121. The client would provide him documents in support of the application and it was not his practice to obtain those documents directly from third parties, including employers. Before signing the application and sending it to the Bank, Mr Lai would go through the application with the customer. He would keep a file for each client and, if the client were to proceed with the application, the file would be kept for seven years. If, on the other hand, no application was made within three months, he would discard it.

122. He would not inform a client to deal directly with the Bank as that would exclude him from the transaction and jeopardise his commission.

123. He did not know the defendant or her father. He did not recall meeting them, nor did he have any files or records relating to either of them. He did recall being contacted by a solicitor with some questions that related to them.

124. Apart from the procedural matters to which he testified in the 14 November 2022 affidavit, Mr Mathews annexed a valuation report from Core Logic RP Data, dated 13 November 2022, for the Zetland Property, which valued the property at $920,000.

125. Mr Mathews became the case officer, which is the lead investigating officer, in relation to these matters in around 2016. The cross-examination concerned Mr Mathews’ attempt to contact Tom Jin.

John Vuceric

126. John Vuceric swore an affidavit on 7 May 2020. He is an Information Disclosure Officer at the Australian Taxation Office (hereinafter the “ATO”). He received a request for information relating to the defendant. The request came from the AFP and sought documents from 1 July 2008 to 30 June 2014, which documents were provided. Further documents were provided after a request from the ATO on 27 March 2020. The documents provided are exhibited to his affidavit.

127. Other formal evidence was given by Craig Jerkavits who is an Australian Border Force (hereinafter the “ABF”) supervisor. After receiving a request by email from Mr Mathews of the AFP, he provided records relating to the overseas movements of the defendant which were attached.

Liwu Sun

128. The defendant’s father provided affidavits of 20 December 2015 and 17 March 2016.

129. The affidavit of 17 March 2016 corrects some minor aspects of the earlier affidavit, the only aspect of which that is relevant to note, being an addendum to par [81] of the first affidavit. Including the addendum, which is in italics below, par [81] of the affidavit would now testify to the following effect:

“My daughter was employed and still is by Construction Co while she was on study leave in Australia. Her payrate was averaged out to be AUD$10,880 per month gross for the purposes of the ANZ loan. She accrued salary and bonuses and the restriction of remitting no more than RMB 1,000,000 per person per annum. She has funds still owing to her despite the large amount already paid to her. It would be fair to consider most of my daughter’s payments she received from Building Co to be a gift from me via Building Co. When she was an Office Manager I agreed for her to Study in Sydney and for Building Co to pay her an education allowance for that purpose.”

130. Otherwise, much of the evidence given by Mr Sun was uncontroversial. For reasons already explained that which was controversial was the issue of the employment of his daughter. Mr Sun gave evidence of his relationship with his daughter as her father and of his ownership of companies and, in particular, the Beijing Xingpeng Construction Engineering Company Limited, variously, in these proceedings, called the Building Company or the Construction Company and Beijing Cai Yu Water Supply Company Limited (hereinafter “the Water Company”). He owns substantial stakes in each company.

131. The Building Company constructed single houses, villas, offices, factories and other building compounds. The Water Company was involved in extracting water, treating it and selling it.

132. Mr Sun testified, which fact is uncontroversial in these proceedings, to owning assets well in excess of $50 million Australian dollars. His evidence was given by audio visual link and through an interpreter.

133. In late July/early August 2014, Mr Sun was in Sydney with his second wife. While in Sydney, Mr Sun saw his daughter and spoke to her about purchasing a property.

134. Initially, a property in Kent Road, Mascot was sought to be purchased. On or about 7 August 2014, Mr Sun met with the agent and discussed purchasing the Mascot Property off the plan. His daughter was in attendance.

135. The agent who is referred to as Sean Huang (and I take this to be a reference to Shaun Huang) informed them that he could get a good exchange rate on the money transfer and provided details of a transfer company to Jieying (the defendant). The account details were in the name of Teng Jingsheng.

136. On 11 August 2014, by this time having returned to China, Mr Sun transferred the funds in the manner suggested by Mr Shaun Huang. Mr Sun exhibited receipts for those transfers.

137. The money was transferred, first, by way of a 3.5 million RMB transfer from the Water Company to the Building Company. Then, 15 lots of 200,000 RMB (equivalent to about 3 million RMB) were transferred from the Building Company to Teng Jingsheng. Mr Sun understood that this would then be remitted immediately to his daughter. Mr Sun testified that the purchase of the Mascot property did not take place due to the price being increased.

138. In November 2014, Mr Sun returned to Australia with his wife and found another property being the Zetland Property. He testified that the Zetland Property was purchased in January 2015 using a loan from ANZ and other moneys provided by him.

139. Mr Sun testified that, since 2007, when his daughter graduated from college, she had been working for the Building Company. He said that the Building Company agreed to send her to Australia to study and improve her English.

140. He said that his intention is for his daughter to succeed him in the business with her two step-brothers and he would rely on her English skills as he did not speak English. On this basis, he said he agreed to pay her $10,880 per month while she was on “study leave” in Australia. He said that she had further amounts owing to her due to the restriction on paying more than 1 million RMB to any one person overseas in any one year. All of the foregoing was contained in the affidavit.

141. In cross-examination, Mr Sun confirmed that he had wanted his daughter to study overseas and that the defendant had come here on a student visa to pursue different educational qualifications between 2009 and 2017. He wanted to support her and pay for her tuition fees and living expenses.

142. When his daughter needed money for living expenses, he would give her that, but he also said that she had a salary source of income. He did not expect that the money he sent her would be paid back. He said that it was support and not an investment.

143. Mr Sun accepted that the money he sent for the benefit of his daughter was in the nature of a gift and agreed that par [81], extracted above and as amended, testified to the average pay of his daughter. He did not recall correcting the paragraph in his later affidavit to describe the funds as a gift from him through the Building Company.

144. He said that the majority of the payments received by the defendant were given as a gift, but maintained there was a salary income as well. He made such payments to his daughter through the finance department of his company or his assistant. His daughter would contact him to request it. When taken to the Chinese banking records attached to his affidavit, Mr Sun confirmed that the reason recorded for the transfer to his daughter on the banking records was “self-funded study abroad”. ^[8] The same reason was given in other statements.

     8. See PCB, p. 1083.

145. When questioned as to whether these payments had nothing to do with income and were in fact a loving father supporting his daughter, Mr Sun said that some of it was like that, but part of it was the salary. He thought there was unpaid salary so part of that was for that purpose.

146. Mr Sun agreed that the documents did not mention income but stated that his understanding at the time was that part of the funds were salary and the rest was a gift as the payments were out of his own pocket. Mr Sun testified that the unpaid salary was salary owed to his daughter to work, which was work she did before she came to Australia.

147. Mr Sun gave evidence that he is the chair of the Construction Company and now owns over 98% of the shares of that company. The company had no offices in Australia. He also agreed that there was an office manager role based in China which oversees administrative matters. When his daughter came to Australia, she was not discharged from her duty or role as office manager. He found a temporary replacement.

148. The temporary person needed help from his daughter and he did not agree that such assistance could not be performed from Australia or in Australia. Mr Sun was taken to a transcript of evidence he gave in August 2017 where he had agreed that it was impossible for his daughter to perform her role as office manager from Sydney. Mr Sun denied that such was the case. While he was correct in providing the answer at the time that he did, his daughter, the defendant, in the relevant period, was acting as a tutor to the temporary replacement.

149. Mr Sun denied the suggestion put to him that he was giving answers to assist his daughter or that she was not actually working for his company during the period leading up to 2014. He did not agree that during that time she was studying in Australia while being supported by a loving father. He did accept that he was a successful businessman with decades of experience and that he had purchased a large parcel of land in China with no mortgage.

150. When taken to par [25] of his earlier affidavit, which stated there was a mortgage over the office building, he explained that this was a result of needing to transfer assets from a previous company to the current company. He agreed that in late 2014, he was aware that his daughter was in discussions with a Bank about a loan application and that she needed documents to evidence her income. He was cross-examined on text message exchanges with his daughter in which he suggested that the defendant find out whether the Bank would accept evidence of backpay. ^[9]

     9. PCB, p.1718.

151. However, Mr Sun disagreed that this enquiry was as a result of the fact that the defendant was not receiving a regular salary. Mr Sun elaborated and explained that her payments had been informal, given that it was his company and his child, but because the Bank needed documents, he had realised there were no payslips and asked whether he could generate the payslips retrospectively. He did not accept that he was being dishonest about that to assist his daughter. He also denied that he was keen to provide backpay to his daughter to support her loan application, notwithstanding messages relating to the Bank accepting retroactive payments in particular months.

152. When pressed, Mr Sun reiterated that these discussions were not about back payments but about generating payslips retroactively for payments that had already been made or credited to the accounts of the defendant.

153. Mr Sun was then questioned about records of SPD Bank. Those records were in the name of the defendant.

154. Mr Sun denied that documents were given to his daughter to support her loan application and that he made the payments to his daughter in September, October and November 2014 in order to support her loan application. He did agree that, directly or indirectly, he took steps to provide the SPD document to her to assist her with the application. He initially denied receiving messages from his daughter about obtaining payslips but, when taken to the messages, indicated that he did not recall them.

155. Mr Sun agreed that he provided his daughter with a certificate of employment which was provided to ANZ. It was put to Mr Sun that it was “nonsense” for the defendant to have commenced a full-time role as office manager in Beijing while studying full-time in Australia in 2011, which Mr Sun refuted.

156. Further, Mr Sun denied that the payments made were a gift or a study allowance or that at no time between late 2011 and late 2014 was the defendant ever working as a full-time office manager for the company. He confirmed that his daughter was working full-time for his company from November 2011 until the present time and he knew that his daughter had declared a monthly gross income of $10,880 to the ANZ in relation to her loan application.

157. As to the reason that there were no documents evidencing employment prior to September 2014, Mr Sun explained that corporate procedures and paperwork were not as strict in China as they were in the West. He denied that he provided the payslips to help his daughter obtain a loan.

158. When examined on a list of transfers he made to his daughter over the last five years and the changing amounts and irregular periods during which payments were made, Mr Sun accepted that there might be times when his daughter’s salary was not paid on time, but that did not mean she would not get it in the fullness of time. While he agreed that, in 2013, the payments added up to $40,500 and that, as a matter of arithmetic, this was a lot less than $10,880 per month, he explained that the examiner did not know enough about how private businesses operated in China. The sums, he said, did not include all due payments and reserved payments.

159. When examined about the differential between $51,000 and $10,000 per month, Mr Sun continued to refer to “overdue payments” which he said accounted for the shortfall between the money received by Ms Sun and her stated income to ANZ. He denied that the amount of $10,880 per month was fabricated to help his daughter obtain a loan.

160. He was aware that his daughter used an ANZ loan of $640,000 to purchase the Zetland Property and that the balance of the stamp duty and purchase price were paid by him. He explained that one could say that he provided those funds to help her purchase the property but he did not agree that they were a gift and maintained that some of it was her salary.

161. He did not agree that his daughter had not worked for the money provided to her and accepted that he provided her financial assistance after the purchase of the Zetland Property. Because she was his daughter, he never calculated in detail the money he had given the defendant.

The defendant, Jieying Sun

162. As earlier indicated, the defendant, Jieying Sun, relied on three of her own affidavits, being affidavits of 29 November 2015, 14 March 2016 and 4 April 2017. The first affidavit was sworn in support of an application for reasonable living expenses to be excluded from the restraining orders initially made by the Court in relation to her assets.

163. In this affidavit, the defendant deposed that she did not know Li Feng and that she purchased the Zetland Property using funds provided by her father which were sent from his Chinese company through a third party, who had arranged a good exchange rate. The remainder of the funds, after the purchase of the property, were for her living expenses and, at least in part, to service the loan from ANZ.

164. Her plan was to remain in Australia after completing her studies and to open a small business. The funds remaining were to help her open the small business and they were a gift from her father.

165. Her only income otherwise was $350 per week from renting out the spare room in the Zetland Property. She requested, in the affidavit, reasonable living expenses from the restrained assets as she suggested that she could not ask her father for more money. She set out, in her affidavit, the expenses at that time.

166. The next affidavit of 14 March 2016 was only read in relation to pars [32]-[34]. Those three paragraphs annexed:

1. The employment certificate dated 27 November 2014 showing a net income of CNY624,660 (roughly AUD$131,399);

2. Three payslips (together with a comment that the defendant had never received any other payslips); and

3. Documents showing her employment contract with the Building Company.

167. The third affidavit, of 4 April 2017, was said to have been sworn in substitution for earlier affidavits so that, as a matter of convenience, all her evidence was in one document for the purposes of a motion to exclude her property from the orders made on 21 October 2015.

305. Often where a circularity in definition exists by the repetition of a particular word, one of the occasions where the term is used is given its ordinary or undefined meaning. Here there seems to be a clear alteration in focus by which the legislature has moved from a focus on the general to the particular role of the applicant for an exclusion.

306. Where, in dealing with forfeiture orders (and restraining orders), the Act requires the Court to examine the source and use of the “property”, in s 73 of the Act, when dealing with compensation orders, the legislature directs attention to the interests of the defendant. The interests of the defendant are the interests in the Zetland Property and the chose in action (the bank account).

307. The amount, transferred into the defendant’s bank account indirectly from her father, no longer remains as part of the amount available for withdrawal – it has been utilised for the deposit on the Zetland Property. Consequently, the defendant’s current interest, in the least complex sense being the sum available to be withdrawn from the account after the payment of the deposit on the Zetland Property, in the current chose in action is neither the instrument nor the product of a criminal offence. This comment relates to the general overview,; there are sums in the offset account that may fall within the term.

308. If one were to take a strict view of the “interest”, being the chose in action, which, in banking terms, is the right to withdraw or deal with money held and which, technically, may be the subject of a suit for recovery, if necessary, the defendant’s chose in action existed before the money-laundering offence occurred and continued to exist during and after the offending. The “only” difference that occurred was that the right to recovery applied to a greater (and subsequently lesser) amount.

309. On the immediately preceding view, an innocent defendant’s interest, being a bank account, if it were to have existed before the relevant offence, could never be the proceeds of the offence, but could be an instrument of an offence. Little turns on such a circumstance, because the definition of property is sufficiently broad to encompass choses in action, regardless of the identity of the “owner of the account” or its existence before, during or after the relevant offence (or the existence of the reasonable suspicion thereof).

310. Thus, if the assets represented by the bank account were the property of the Bank, it could still be the instrument or proceeds of the money-laundering and subject to applications for restraining orders made, for example, with Mr Feng and the other persons who deposited cash as the defendants. ^[28]

     28. Ibid, ss 17(2)(d), 18(2)(d).

311. The definitions in the Act of “interest” and “property” do not easily provide for the increasing or decreasing amount in a defendant’s bank account. The bank account is a chose in action which is within the definition of property under the Act because it is an interest in intangible personal property,^[29] being a “right, power or privilege in connection with”^[30] the amount held in the bank account. But the chose of action does not alter depending on the amount in the account.

     29. Ibid, s 338 definition of “property”.

     30. Ibid, s 338 definition of “interest”.

312. It is only if one reads the definitions in a way that elides the definitions or ignores the technicalities associated with “ownership” of a bank account that one can treat the balance in the account as “property”. In other words, if one treated the balance in an account as the account-holder’s money (thereby ignoring the circumstance that the accountholder only has a chose in action) then the “amounts” in the account represent property.

313. The alternative is to construe “property” to include the chose in action (which it does) and then to construe “interest” to mean the “interest in the chose in action” in a manner that, in the last-mentioned phrase, gives interest a meaning that includes the amount of entitlement to recovery under the chose in action.

314. Either of the foregoing constructions gives, in my view, effect to the obvious purpose of the Act and avoids any disharmony in its operations. Such a construction would allow for forfeiture orders relating to so much of the balance in the bank account as is the proceeds of crime and leave any remaining amount untouched.

315. Applying such a construction, the amount transferred by Mr Sun to the defendant, which was the subject of the money laundering process, is available for a forfeiture order, but any other amounts in the account would not be available. In the current proceedings, it is accepted that Mr Sun sought to transfer AUD$517,241 (originally not in Australian dollars) and this amount was deposited in the defendant’s CBA account. No forfeiture orders are sought in relation to amounts, if any, in any of the defendant’s CBA accounts.

316. The defendant then transferred this amount to another CBA account. In October 2014, the defendant obtained a bank cheque of $95,500 from the CBA, which was then used as the deposit on the Zetland Property, which was purchased for $955,000. The contract for sale was executed on 24 December 2014.

317. On 7 January 2015, Ms Sun transferred $430,000 from her CBA account to her ANZ account, of which $258,020.22 was used by ANZ as the balance owing on the purchase of the Zetland Property, after the loan from ANZ of $640,000. The circumstance that the CBA accounts were interposed between the transfer and the payment of the deposit and/or the payment of the balance owing on the purchase after the loan amount was credited, makes no difference to the status of the property either as an instrument of the offence or as proceeds of the offence. ^[31]

     31. Ibid, s 330(3).

318. Before dealing with the effect of the foregoing, it is necessary to summarise, as briefly as possible, the submissions of the parties.

Submissions of the Commissioner

324. The Commissioner seeks forfeiture of the Zetland Property and the balance in the ANZ account. It does so because the deposit was the proceeds of crime. As earlier stated, the deposit was the proceeds of crime because of the money laundering offence which resulted in the deposit in the CBA account, which, in turn, was utilised for the deposit. Secondly, the Commissioner seeks the Zetland Property because it was the product of the use of the deposit and the defendant obtained the loan from the ANZ in circumstances where it is reasonable to suspect that the quantum of the loan funds advanced, is the proceeds of crime as a consequence of the suspected breach of s 400.9(1) of the Criminal Code.

325. Further, the Commissioner submits that it is reasonable to suspect that the ANZ loan funds were “proceeds of crime” as they were wholly derived, directly or indirectly, from the commission of an offence against NSW law, being s 192G of the Crimes Act.

326. The Commissioner relies upon the terms of the loan application form to which reference has already been made; the employment certificate of 27 November 2014 to which reference has also been made; the three payslips for September, October and November 2014; the bank statement from SPD Bank showing salary credits; and three statements of Financial Position dated 11 December 2014, 29 December 2014 and 30 December 2014, each signed by the defendant.

327. The Commissioner submits that the documents were “false or misleading in a material particular”. The Commissioner submits that as at December 2014, the defendant was not employed by the Building Company, which was represented in the loan application; her salary from the Building Company was not as stated in the application form; and, her average gross monthly income was not, as represented, $7,641.00. The Commissioner also relies upon the representation that the defendant received payslips from the Building Company in September, October and November. While it was suggested to the defendant (and Mr Sun) that the payslips were concocted for the purpose of supporting the loan application, I do not understand that there was any suggestion that the defendant did not receive the payslips (except to the extent they may have been sent to an agent or broker).

328. As earlier indicated, the Commissioner submits that Ms Sun was not employed by her father’s company in 2014, she did not receive a salary or income from the Building Company and the payslips provided were created solely for the purpose of securing the loan.

329. In support of the proposition that the defendant was not an employee of the Building Company in 2014, the Commissioner submits that the defendant was studying in Australia and was not “working for” the Company. Between 2008 and at least 2015, the defendant was for most of the time in Australia on a student visa. The Commissioner relies upon the defendant’s own evidence that she came to Australia to study.

330. In support of the visit to Australia being to study, the Commissioner relies upon the incoming passenger cards provided to the ABF which identified the defendant’s occupation as “Student”. The Commissioner also relies upon the fact that the defendant agreed, during the examination under the Act, that during the whole time she had been in Australia, the defendant had been there as a student.

331. In support of the submission that the defendant did not receive income or salary from the Building Company in 2014, the Commissioner relies upon the proposition that the payments were not “dependant” upon her doing work for the Company. The submission was that they were a “gift from her father to support her study”. They rely on the statement in evidence of the defendant’s father who, albeit without context, gave evidence that “it would be fair to consider most of my daughter’s payments received from the Building Company to be a gift from me via Building Company” and the defendant’s comment that the Building Company has “since at least 2008 transferred money to me. I have not had to differentiate which payments are for salary, study allowance or gift”.

332. The Commissioner also relies upon the statement by the defendant that the money she received from China was more like a gift than a salary and that she, the defendant, did not “need to work for the money because of my father’s support”.

333. The Commissioner submits that the defendant did not receive any income for work done for the Building Company and such a circumstance is consistent with the tax records. Without being overly critical, it is not absolutely clear whether this differentiates between the receipt of income and the receipt of income for work done. It seems that the Commissioner does not differentiate between the two circumstances, which is consistent with the analysis earlier in these reasons, as to the aligning by the Commissioner of the term “employment” and “working”. The Commissioner submits that the non-filing of income tax returns for the financial year 2014 is consistent with her not being employed. It is certainly consistent with her not receiving income in Australia.

334. Next, the Commissioner relies upon the payslips being concocted and relies in particular on a question and answer as to the receipt of only three payslips. The defendant testified, in the examination under the Act, that she only needed three in order for the broker to get the home loan.

335. The extract of the transcript from the s 180 examination confirms the elision and confusion between the notion of working full-time and the status of employment.

336. The Commissioner submits that the false or misleading statements were made with the intention of obtaining a financial advantage. If the statements were false or misleading, then they would have been made with the intention of obtaining the loan, which is a financial advantage. It is unnecessary to rehearse that submission.

337. Next, the Commissioner attacks the credit of the defendant. These reasons have already summarised the evidence of the ANZ witnesses and the evidence of Mr Lai. I have, earlier in these reasons, dealt with the reliability of Mr Lai’s evidence. Nothing in the submission has caused me to alter that assessment.

Submissions of the Defendant

338. The defendant spent some significant time on the admissibility of the examination under s 180 of the Act of Yi Feng’s evidence. I have already dealt with the admissibility of that evidence. I take the view that reasonable steps have been taken to procure Mr Feng. He is overseas and while I do not condone some of the last-minute steps taken by the Commissioner, it does not impact upon the view I take that the material is admissible under s 318A of the Act. The witness is absent outside of the State and, on the evidence before the Court, I have formed the view that it is not reasonably practicable to secure the witness’s attendance. Further, as earlier indicated, the witness is unavailable and the document, being the transcript of the questions and answers under s 180 of the Act, contains the representation. Notice had been given of the reliance by the Commissioner on the evidence.

339. Further again, the Court draws no inference that the evidence of Yi Feng would not otherwise assist the Commissioner.

340. As to the loan amount, the Court has already made clear that the obtaining of a loan is the obtaining of a financial advantage, even though the Commissioner has shown no likelihood or probability that the loan would be the subject of default and accepting that ANZ, in all likelihood, would profit from the transaction.

341. The defendant submits that the Commissioner has failed to prove that the defendant made or published the document. It is fair to say that the evidence as to who published the document or completed it, is unclear.

342. The Court has already dealt with whether the statement is false or misleading in a material particular. Further, those comments relate to whether, in the ordinary use of the term, the statements were made “dishonestly”, which is a further factor relied upon by the defendant.

343. The defendant relies upon the imprecision in the Commissioner’s allegations. Notwithstanding that submission, it seems to the Court that there is sufficient particularity to allow the defendant to understand the allegation made against her. The defendant, however, relies upon the proposition that the Commissioner alleges only that there is “a statement in a signed loan application” which is inaccurate and fails to prove that it is “false”, ie. not believed to be true by the person who completed it and/or the defendant.

344. Further, the defendant relies upon the proposition that the loan application that is in evidence does not bear any signature. Since the Commissioner relies upon a statement in a “signed loan application”, it should not be permitted, on the submission of the defendant, to depart from the allegation upon which the parties are on notice.

345. Next, the defendant relies upon the lack of clarity as to the receipt of supporting documents by the defendant and the provision by the defendant of the documents to the ANZ. The Court has drawn the inference that, whoever received the supporting documents, did so because the supporting documents were requested by the defendant. Ultimately, because of the findings the Court has made, nothing turns on that inference.

346. However, the evidence is vague. There were significant other factors, as submitted by the defendant, in the process. The defendant’s father met with Mr Lai in October and received a “shopping list” of documents that Mr Lai required. The defendant’s stepmother was also involved in the process and was identified in the ANZ documents as the defendant’s agent.

347. Next, Mr Tom Jin was the subject of significant evidence; was a branch lending officer of ANZ who dealt with the defendant; and was not called by the Commissioner. Over and above the foregoing, Ms Lin, who was paid a commission for the loan and was described as a “third party introducer” for ANZ, was Mr Lai’s partner.

348. The defendant submits that she, on the evidence, played a peripheral role in the application itself. Any one of the other parties could have supplied the documents upon which the Commissioner relies to show that the defendant has committed an offence. The defendant denied providing the documents to the ANZ and there is no evidence to suggest otherwise.

349. The defendant submits, as a consequence, the Commissioner cannot establish, at any level, that the defendant actually or even circumstantially provided the documents to ANZ. There is much force in this submission.

350. The defendant also relies upon the relationship between Mr Lai and Ling Lin. That relationship includes the fact that the evidence of Mr Lai was that he was, at the relevant time, running a company known as “Ling Financial”. A company search, in evidence, shows that the shareholder and director of that company was Mr Lai’s partner, Ling Lin and that Mr Lai later became a director in 2017.

351. If, as was conceded by Mr Lai, he was running the business of Ling Financial, in circumstances where Ling Lin received the commission for the loan referral, then Mr Lai was involved in the loan transaction. The relationship between Ling Lin and Mr Lai included that the two of them were co-habiting.

352. The defendant also relies upon the WeChat messages between the defendant and Mr Lai in which the defendant seeks updates on her loan application, all of which, according to the submissions of the defendant, are consistent with Mr Lai being involved in the application and most probably in a position to provide the documents to the Bank. Mr Lai accepted that, from time to time, he contacted a customer’s employer to obtain information for loan applications.

353. Overall, there is no evidence in the Bank files as to how the Bank came into possession of the documents upon which the Commissioner relies.

354. Assuming for present purposes that the statements given to the Bank were for the benefit of the defendant, in order for the defendant to be held liable, on the submission of the defendant, for the false or misleading statements in them (without, on the submission, accepting that the statements were either false or misleading) the Commissioner was required to prove that the defendant was aware of the contents of the document. The Commissioner has failed to prove that fact and the Commissioner has failed to prove that the defendant concurred in the publication of the false documents and, otherwise, failed to prove that the defendant provided the documents. Such lack of proof does not take into account the seriousness of the allegation, albeit in the context of the civil onus.

355. I accept that the Commissioner has not proved, on the balance of probability, and taking into account the seriousness of the allegation, that the defendant provided the documents or was aware of the contents of the documents when they were provided. I also take the view that the failure of the Commissioner to provide a signed copy of the loan application, allows the Court to infer that no such signed application exists. The circumstance that the system utilised by the ANZ requires the application to be signed, and it is not, confirms that approach.

356. While it is not, directly, submitted by the defendant, the Court, as may be clear from the earlier comments on the evidence itself, considers that it is far more likely that the relationship between Mr Lai and Ms Ling allowed for the cutting of corners and that the material was just as probable to have been produced to ANZ by any one of Mr Jin, Mr Lai, or Ms Ling.

357. The defendant also relies upon a submission that the Commissioner has not satisfactorily identified, or proved, the nature of the falsity in a material particular. In that submission, the defendant relies upon the existence of the employment agreement; the employment certificate; the payslips; and the uncontentious nature of the circumstance that the defendant received the money from the Building Company. The defendant relies upon the proposition that, even if the defendant were in breach of her employment contract, or if the company were acting irregularly by continuing the defendant on their books, it does not go to whether the defendant was entitled to the income.

338. This argument has been dealt with already in the foregoing reasons and relates, although in this sense it was not put by the defendant, to the different nature of the existence of an employment relationship, a contract of employment and “working for” the company or employer.

339. The defendant submits that the bank statements are neither false nor misleading. They are bank statements and accurate. Similarly, the Statements of Financial Position, which comprise figures that could only have been calculated and inserted by someone at ANZ or with knowledge of their processes, are neither misleading nor deceptive.

340. The defendant submits that the Court would not find and ought be slow to find, and should reject any finding that the defendant has acted dishonestly, within the meaning of that term.

341. Moreover, the defendant submits that the ANZ must have known that the defendant was not working full-time for the Beijing Building Company. Her address was given as a Sydney address; her New South Wales driver’s licence was provided as documentation and identification; she attended on the Bank to sign documentation on 6 January 2015; and the Bank addressed correspondence to her in Sydney. In those circumstances, it cannot be suggested that the defendant was representing that she was a full-time office worker in Beijing. The most likely explanation, on the submission of the defendant, is that ANZ asked for documentation in relation to her employment with her father’s company and her father facilitated that information being received by the Bank.

342. The Court accepts the submissions made by the defendant in relation to the failure of the Commissioner to approve an offence under s 192G of the Crimes Act, in addition to the analysis already outlined in these reasons for judgment. The Court does not accept the submission of the defendant that the Commissioner if there were a breach of s 192G of the Crimes Act, has failed to satisfy the provisions of s 400.9(1) of the Criminal Code.

343. The defendant’s submissions in this latter regard depend upon the subjective knowledge of the defendant as to that which is illegal and s 400.9(1) of the Criminal Code does not depend upon the subjective knowledge of the person, there described, of the law. Rather, it depends upon a knowledge of the facts giving rise to a reasonable suspicion.

344. The defendant also submits that the Court should draw an adverse inference based upon the failure of the Commissioner to call Mr Jin. ^[32]

     32. Ta Lee Investment Pty Ltd v Antonios [2019] NSWCA 24 at [136]-[137] (Bathurst CJ, Beazley P and Macfarlan JA).

345. There is no suggestion that Mr Jin was unavailable. Mr Jin was the employee at ANZ who handled the loan application for the defendant.

346. Given that the Commissioner bore the onus of proof on the commission of the offence by the defendant in applying for the loan and in that regard, the onus of proof that it was the defendant who submitted the documents and/or completed them; had knowledge of their contents; and the other matters to which reference has already been made, an inference is available that the evidence of Mr Jin does not assist the Commissioner and, more readily, allows the Court to draw the affirmative inference arising from the evidence of the defendant that she did not submit the document and/or was unaware of their contents.

347. The affidavit of Mr Matthews testifies that the AFP could not locate Mr Jin. However, the affidavit does not testify as to what, if any, steps were taken and the affidavit of Shing Hei Lam testifies as to where, after 2021 when Mr Jin left ANZ, he worked. This was obtained in a Google search.

348. Lastly, the defendant relies upon the provisions of s 330(4)(a) of the Act and the comments of the High Court in Lordianto, supra, to submit that the defendant is a third party for which sufficient consideration has been paid.

Conclusion

369. Many of the factual determinations have already been outlined. As has been expressed earlier, I do not find that the Commissioner has proved, even on the balance of probabilities, that the defendant has breached s 192G of the Crimes Act. In those circumstances, the Commissioner has failed to prove that the defendant has contravened s 400.9 of the Criminal Code.

370. The Commissioner has failed the burden placed upon him to establish that the loan was the proceeds of crime or an instrument of crime and the Commissioner is not entitled to a forfeiture order in relation to the property, at least over and above the deposit, with which the Court will now deal.

371. The evidence before the Court does not establish that either Mr Sun or the defendant had any knowledge of the criminal activity of the money changers and/or Yei Feng. The evidence does establish that each of them is wholly innocent and caught up in a money-laundering operation conducted for the benefit of others.

372. The money-laundering operation utilised the transfer by Mr Sun or his company to the defendant to “launder” money, which the Court assumes was otherwise tainted. There is no suggestion that the money held by the Building Company or Mr Sun was, at that time, tainted.

373. As discussed earlier, in terms of the analysis of the High Court in Lordianto, supra, each of Mr Sun and the defendant are “third parties” to the transaction by which the property first became the proceeds of crime. In that sense, the defendant is “a bona fide receiver of property without notice”.

374. Yet, the issue is not quite as the defendant puts it. The Court is still required to determine whether the property has been “acquired” “for sufficient consideration”.

375. As can be seen from the earlier comments, I accept that the defendant would not, even at the point in time when the defendant received the transferred monies into her account, have aroused a reasonable suspicion that the property was proceeds of an offence or an instrument of an offence. Thus, the Court is required to determine whether the property has ceased to be the proceeds of an offence or an instrument of the offence committed by the money exchanger, Yei Feng, and the others associated with the offence.

376. The term “acquired” is not a narrow term and not confined to a purchase. In the context of s 330(4)(a) of the Act, it means to obtain. If it were confined to a purchase, the need for “consideration” and its use in the provision would be otiose. There would still need to be an issue relating to sufficiency but that would be achieved by utilising the well-known term “for value”. There is no reason, in the context of the Act and this provision, to read down the term “acquired” to mean anything other than “obtained”.

377. The next issue is whether the property was acquired “for sufficient consideration”. There is no suggestion or contest that suggests that the salary paid for the full-time position was exorbitant. There was a degree of leniency and generosity associated with the capacity of the defendant to take study leave and enjoy it, no doubt, as a result of the fact that there is a relationship between the defendant and the principal of the company which is employing her. But if the consideration were wages or salary, there is no suggestion that it is other than a salary that “reflects the value of the services to be provided under the contract having regard solely to commercial considerations”. ^[33]

     33. Proceeds of Crime Act, s 338 definition of “sufficient consideration”.

378. In a contract of employment, the consideration is, on the one hand, the remuneration, being the amount paid or to be paid (and other benefits) and, on the other hand, the requirement to be ready, willing and able to work in accordance with the contract. The contract of employment, even in the current circumstances, would have required, if the employer so directed, the defendant to return to China and fulfil duties, whether, in an emergency situation, for a short time or indefinitely. The only recourse the defendant would have to such a direction would be to terminate the contract, in accordance with the contract. It is unnecessary to discuss how that could occur.

379. At the time of the transfer of money, if it were salary or back pay, the employee was obliged to be ready, willing and able to perform work as directed. If the money transferred were salary, payable under the contract of employment, then the defendant “acquired” it “for sufficient consideration”.

380. If, as is one of the possibilities, the transfer were a “gift”, then no consideration was given for the transfer. Whether the transfer was a gift or salary, the question arises as to when the transfer was effective.

381. Leaving aside for present purposes the complication associated with the property being a chose in action, for personal property to be transferred and the gift effective, there must be a transfer of the property. In particular, a gift is complete when it is delivered to the donee. This is not the first time the courts have been required to deal with property that may not be “delivered” in the physical sense. Going to first principles, the High Court has said:

“The whole law on the subject is contained in the judgment of Turner LJ in Milroy v Lord: ‘I take the view of this Court to be well settled that, in order to render a voluntary settlement valid and effectual, the settlor must have done everything which, according to the nature of the property comprised in the settlement, was necessary to be done in order to transfer the property and render the settlement binding upon him. He may of course do this by actually transferring the property to the persons for whom he intends to provide, and the provision will then be effectual, and it will be equally effectual if he transfers the property to a trustee for the purpose of the settlement, or declares that he himself holds it in trust for those purposes; and if the property be personal, the trust may, as I apprehend, be declared either in writing or by parol; but, in order to render the settlement binding, one or either of these modes must, as I understand the law of this Court, be resorted to, for there is no equity in this Court to perfect an imperfect gift. The cases I think go further to this extent, that if the settlement is intended to be effectuated by one of the modes to which I have referred, the Court will not give effect to it by applying another of those modes. If it is intended to take effect by transfer, the Court will not hold the intended transfer to operate as a declaration of trust, for then every imperfect instrument would be effectual by being converted into a perfect trust.’

… I think that the words ‘necessary to be done’ … mean necessary to be done by the donor. Thus, in the case of shares in a company which are only transferable by an instrument of transfer lodged with a company, I think that the donor has done all that is necessary on his part as soon as he has executed the transfer. So, in the case of a gift of land held under the Acts regulating the transfer of land, I think that a gift would be complete on execution of the instrument of transfer and delivery of it to the donee. If, however, anything remains to be done by the donor, in the absence of which the donee cannot establish his title to the property as against a third person, the gift is imperfect, and in the absence of consideration the Court will not aid the donor as against the donor. But, if all that remains to be done can be done by the donee himself, so that he does not need the assistance of the Court, the gift is, I think, complete.”^[34]

34. Anning v Anning (1907) 4 CLR 1049 at 1056-1057 (Griffith CJ); [1907] HCA 13 (footnotes omitted).

382. If the transfer by the Building Company were a gift, then the donor, the Building Company, has done all within its power to effect that gift at the time that the transfer is lodged with the money exchanger. No further act of the Building Company is required or possible.

383. In those circumstances, the defendant is the “owner” of the gifted sum at the point that the Building Company completes and lodges the transfer request. It is, in my view, no different if the amount provided is salary. Whether the amount transferred, and ultimately received by the defendant and utilised for the deposit or credited in the offset account, was salary or a gift, it was the property of the defendant when the Building Company executed and lodged the transfer request.

384. In those circumstances, the property received by the money exchanger was the property of the defendant and the defendant has provided “sufficient consideration” for the property received in her accounts in Sydney. The amounts standing to the credit of the defendant in Sydney (being the amount recoverable under the chose in action) has been acquired by the provision by the defendant of the equivalent amount to the money exchanger. Or provided by the money exchanger fraudulently and illegally dealing with the property of the defendant by transferring it to an account other than an account of the defendant. In either case, “sufficient consideration” has been provided by the defendant.

385. The amounts standing to the credit of the defendant in each of the offset accounts and which was paid by way of deposit for the Zetland Property, ceased to be the proceeds or instrument of crime pursuant to the terms of s 330(4)(a) of the Act.

386. To the extent that it is necessary for the Court to determine whether the monies transferred were a gift or salary, I determine that the monies were, more probably than not, salary payable in part and from time to time in accordance with the needs of the defendant and otherwise accruing in the accounts of the employer and payable on application by the defendant. But, in my view, whether it is salary or a gift does not alter the conclusion that the monies in the accounts (and the money used for the deposit for the Zetland Property) ceased to be the proceeds of or an instrument of crime or an offence.

387. As already indicated for the reasons outlined by the Court, the Commissioner has not proved that the obtaining of the loan from ANZ was an offence under s 192G of the Crimes Act and the loan was not the proceeds or an instrument of crime. The reasons already given, include the additional reasons provided by the defendant and summarised above.

388. The Court is not required in relation either to the accounts or the Zetland Property to make a forfeiture order under s 49 of the Act because the Court is not satisfied that in any of the cases the property is either the proceeds of or an instrument of a serious indictable or foreign indictable offence. Pursuant to the terms of s 45(3), the effect of the refusal of the Commissioner’s application for a forfeiture order is that the restraining order initially issued by the Court ceases to be in force after the time for an appeal has expired or, if there were an appeal, it has lapsed or been dismissed and finalised.

389. For the foregoing reasons, the Court makes the following Orders:

1. The Court refuses the application by the Commissioner of the Australian Federal Police for a forfeiture order pursuant to s 49 of the Proceeds of Crime Act 2002 (Cth);

2. Any parties seeking costs under s 323 of the Proceeds of Crime Act 2002 (Cth) shall, within 14 days of the date of the delivery of this judgment, file submissions of no more than five pages, together with any documents upon which reliance is placed for that purpose and any party opposing such order shall, within a further 14 days, file submissions of no more than five pages together with any documents upon which the opponent relies. The matter will be listed for short argument before the Court at a convenient time to the parties.

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Endnotes

Decision last updated: 25 July 2024