Chen v Director of Public Prosecutions
[2019] VCC 1545
•25 September 2019 (revised)
2013
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMON LAW DIVISION | Revised Not Restricted Suitable for Publication |
| CONFISCATION LIST |
Case No. CI-18-00392
IN THE MATTER of the Confiscation Act 1997 (Vic)
-and-
IN THE MATTER of an application for an exclusion order under s40R of the Confiscation Act 1997 (Vic)
| BETWEEN: | |
| YUE CHEN | Applicant |
| and | |
| THE DIRECTOR OF PUBLIC PROSECUTIONS | Respondent |
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JUDGE: | HER HONOUR JUDGE QUIN | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 1 and 17 May 2019 | |
DATE OF RULING: | 25 September 2019 (revised) | |
CASE MAY BE CITED AS: | Chen v Director of Public Prosecutions | |
MEDIUM NEUTRAL CITATION: | [2019] VCC 1545 | |
REASONS FOR JUDGMENT
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Subject: CONFISCATION
Catchwords: Restrained property – application for exclusion order excluding property from an Unexplained Wealth Restraining Order
Legislation Cited: Confiscation Act 1997 (Vic), Part 4A, s 40G, s40R, s40S, s40T
Judgement : Application refused.
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APPEARANCES: | Counsel | Solicitors |
| For the Applicant | The applicant appeared in person | - |
| For the Respondent | Ms A Singh | John Cain Solicitor for Public Prosecutions |
HER HONOUR:
1 This is an application made by Yue Chen (“Ms Chen”) under the provisions of Part 4A of the Confiscation Act 1997 (“the Act”). The application is made under s40R of the Act, for a s40S exclusion order. The respondent to this application is the Director of Public Prosecutions (“the respondent”). In order to understand the genesis of this application, it is necessary to set out the background and the relevant orders that have been previously made by this Court.
Background
2 During 2013, Victoria Police conducted an investigation into the activities of Ms Chen, codenamed “Operation Chattering”. Ms Chen was charged with a number of offences, including extortion and blackmail (“the charges”) relating to her conduct towards Mr Jia Cheng Zhou (“Jackson”). When the charges were laid in December 2013, his Honour Judge Lacava made a Restraining Order over funds in Ms Chen’s bank accounts (currently valued at $579,116.07),[1] cash and jewellery, collectively the “property”, under the Act.
[1]Approximate as at December 2018
3 The details of the property are as follows:
(a) Westpac Banking Corporation (“Westpac”) bank account ending in 6391 in the name of Yue Chen – balance of $154,224.99;
(b) Commonwealth Bank of Australia (“CBA”) bank account ending in 4548 in the name of Yue Chen – balance of $99,577.78;
(c) CBA bank account ending in 4065 in the name of Yue Chen – balance of $100,351.32;
(d) CBA bank account ending in 1916 in the name of Yue Chen – balance of $11,816.00;
(e) CBA bank account ending in 1630 in the name of Yue Chen – balance of $213,145.98;
TOTAL amount in the bank accounts of $579,116.07;
(f) $10,650 AUD cash;
(g) Cartier ‘LOVE’ ring – value unknown.
4 For various reasons, the charges were not determined until 31 January 2018, and at that time they were withdrawn. The respondent made application to this Court on 2 February 2018 for an Unexplained Wealth Restraining Order (“UWRO”) in respect of the property under the Act. The application was made on the basis that a police officer suspected, on reasonable grounds, that the property was not lawfully acquired. (See s40G). That Order was made by her Honour Judge Cohen on 10 April 2018.
5 As a consequence of the provisions of the Act, the property is forfeited to the State, unless otherwise excluded, six months after the making of an UWRO. Ms Chen seeks an order excluding the property from the UWRO.
6 The scheme of the Act is clear – I have to determine the matter on the balance of probabilities, and to succeed, Ms Chen carries the onus of satisfying me that the property was lawfully acquired.
7 Unless Ms Chen proves otherwise, the property is presumed to have not been lawfully acquired. Evidentiary requirements for an UWRO are set out in the Act. In particular, documentary evidence must be provided,[2] although other evidence may be accepted in certain circumstances.[3] It should be said that a good deal of latitude was given to Ms Chen in terms of the evidence received due to her being unrepresented.
[2]Section 40T(1) of the Act
[3]Section 40T(2) of the Act
Legal representation and other developments in the course of the hearing
8 A number of documents were filed on behalf of Ms Chen by solicitors in respect of this application. During the course of proceedings, Ms Chen indicated that she had received legal advice from two different solicitors[4] who had also assisted her in preparing documents. At the commencement of proceedings, I ascertained that all the material relied upon by the respondent had been provided to Ms Chen.
[4]Transcript (“T”) 97
9 Towards the end of the second day of the proceedings, despite numerous attempts by me to explain to Ms Chen what was required in her application, I enquired if she would be assisted by a barrister from the Victorian Bar pro-bono scheme, who could assist in explaining to her the onus that she bore in terms of the exclusion relief that she sought.[5] It was apparent, in the course of proceedings, that she was having difficulty understanding that she was required to prove the property was lawfully obtained by her, rather than the respondent proving the property was unlawfully obtained by her.
[5]T98-114
10 Counsel appeared, and ultimately at the end of the day, Ms Chen indicated that she wanted to apply for Legal Aid. This application was then adjourned to allow for Ms Chen to make further application to Legal Aid, until 1 May, 2019.[6]
[6]T114-118
11 When the matter returned, after some discussion, Ms Chen indicated that she did not want me to consider an application to order Legal Aid for her, and that she wanted the matter to proceed, with her representing herself.[7]
[7]T122-130
12 The matter proceeded on 1 May 2019 and was then adjourned until Friday, 17 May 2019. I was informed that during this adjournment period, Ms Chen had been placed in Immigration Detention as an unlawful citizen – arrangements were made for her to attend Court on 17 May 2019. At the completion of proceedings, I requested that counsel for the respondent provide written submissions with relevant transcript pages and court book references by 30 May 2019. I then anticipated that Ms Chen would provide a response or make any submissions to me on 5 June 2019.
13 Sometime after 17 May 2019, my associate was informed that Ms Chen had been deported. By email to the Court, Ms Chen requested time to prepare her written response to the respondent’s closing submissions. The Court was sent Ms Chen’s closing submissions on 16 June 2019.
Legal framework
14 It is not necessary for present purposes to go through the machinery of the Act in any great detail, though such is fully set out in written closing submissions filed on behalf of the respondent, dated 17 May 2019.[8] I will, however, outline the relevant provisions.
[8]Respondent’s written closing submissions at paragraphs [2]-[8]
15 The combined effect of s40S(1) and s40S(2) is that the applicant bears the burden of satisfying the Court, on the balance of probabilities, that the property was lawfully acquired, and the Court is to presume that the property is not lawfully acquired unless the applicant discharges this burden.
16 The Act makes clear that the applicant must provide documentary evidence in support of any application for exclusion. Section 40T of the Act provides:
“(1)At a hearing of an application for a section 40S exclusion order, the applicant for the order must provide documentary evidence of any transactions alleged by the applicant to have occurred that would support the claim that the property that is the subject of the application was lawfully acquired by the applicant.
(2)The court hearing the application may accept evidence other than documentary evidence if—
(a)that other evidence is provided in addition to documentary evidence of the transaction; or
(b)the court is satisfied that it is not reasonable to expect documentary evidence to exist because of the nature of the transfer of property, the effluxion of time or any other reason.”
17 Given the time that has passed since the property was restrained in December 2013 and/or acquired by Ms Chen, I indicated that I would consider and accept evidence other than documentary evidence regarding Ms Chen’s application. Ms Chen relied on some documentary evidence, affidavit material and vive voce evidence from witnesses. She also gave evidence and was cross-examined.
18 The concept of “lawfully acquired” is discussed (but not limited) in s40G of the Act. Of relevance to this application are the following sections:
“(1) For the purposes of this Part—
(a) …
(b) property acquired by a person other than for sufficient consideration … is taken to have been lawfully acquired only if the person from whom it was acquired … lawfully acquired the property;
(c) property acquired by a person as a prize or as the proceeds of any form of gambling is taken to have been lawfully acquired only if any money or other item of value used by the person for the purposes of entering the prize draw or for the purposes of the gambling (as the case may be) was lawfully acquired;
(d)…
(e) property derived by a person from salary or wages or from payment under a contract for services is taken to have been lawfully acquired only if the salary or wages or the payment for the services (as the case may be)—
(i)did not exceed the reasonable market rate applying at the time for the labour or services provided; or
(ii)were lawfully acquired by the person from whom they were received;
…
(2) Subsection (1) does not limit the criteria for determining for the purposes of this Part whether or not property has been lawfully acquired.
… .”
19 As those provisions apply in this application:
(a) if the property is a gift, it is necessary for Ms Chen to prove that the person who gave the gift to her themselves lawfully acquired that property; or
(b) if the property is won or is the proceeds of gambling, it is necessary for Ms Chen to prove that the person who entered the draw or spent money gambling, and then gave some of those proceeds to Ms Chen, had lawfully acquired the funds used to make the bet or gamble; or
(c) any property or funds derived by Ms Chen as a result of the provision of her services or wages in the sex industry, it is necessary for Ms Chen to prove that the property or funds:
(i) did not exceed the market rate, or
(ii) were lawfully acquired by the person who utilised her services and provided the funds to her.
20 Thus, the effect of the provisions is that Ms Chen must satisfy the Court of the provenance or legitimacy of funds that had been provided to her via gifts, as winnings by either herself or someone else in wagering/betting, or in exchange for services that she provided.
21 The Act requires more than proof of, in this instance, evidence of accumulation of the property or funds by Ms Chen. That is, the Act requires more than evidence that Ms Chen has assets in the form of money in her bank accounts. She must prove that those funds were “lawfully acquired”, as that term is defined, by her or the person who gave them to her.
22 Ms Chen provided the Court with four affidavits, dated 28 June 2018,[9] 31 August 2018,[10] 7 March 2019[11] and 7 April 2019,[12] and a letter to the Court regarding her relationship with Junhong Bao, the living arrangements with Michael Chazan, and errors that she alleged had been made in calculations of the respondent.[13] Paul Byrden, forensic accountant, provided a report on which the respondent relied, that analysed the bank statements that had been provided by Ms Chen and other financial material.
[9]First affidavit RCB 69-72
[10]Second affidavit RCB 156-176
[11]Third affidavit RCB 177-186
[12]Fourth affidavit dated 30 April 2019 (see T184)
[13]See T184
23 In the course of her evidence, Ms Chen adopted the contents of her documents as true and correct. She explained in her evidence the reason for her denial of being involved in the sex industry in her earlier affidavits. Ms Chen also relied on affidavit material from other individuals referred to in these reasons.[14] She provided further material in the course of the hearing, particularly relating to cash gifts which she maintained had been transferred to her by her mother. Ms Chen relied on her oral evidence in adopting the contents of her affidavits/letter and her account regarding how the property was lawfully obtained.
[14]See paragraphs [24], [33] and [37] Judgment
24 Ms Chen called two witnesses:
(i) Kevin Wu, who swore an affidavit on 27 August 2017; and
(ii) Keith Nanayakkara, who swore an affidavit on 29 April 2019.
25 Ms Chen also cross-examined Scott Gray, Kathy Gale and Paul Byrden, who had sworn affidavit material, relied on by the respondent.
26 I note that counsel for the respondent required all the deponents of any affidavit material on which Ms Chen relied to be available for cross-examination.
Evidence – Ms Chen
Deposits in bank account
27 Deposits in Ms Chen’s bank account amounted to $1.68m from 1 July 2011 to 18 December 2013, with outgoings of approximately $1.1m. Part of these outgoings included funds sent overseas in the sum of $248,213.00.[15]
[15]Mr Byrden’s analysis RCB 647
28 In summary, Ms Chen claimed that this property was lawfully obtained by virtue of:
(i) money provided to her as gifts from her mother and other family members;
(ii) the receipt of various gifts and cash from older men or “sugardaddies”;
(iii) payment for her services as an escort or working in the sex industry;
(iv) the receipt of gifts from boyfriends.
(i) Money from Ms Chen’s mother and other family members
29 In support of her account regarding funds in the bank being lawfully obtained as gifts from family members, Ms Chen swore in her first affidavit, dated 28 June 2018, that:
· She received funds from her mother in November 2007 and April 2011 – her mother provided her $9,000 AUD when she visited her in Australia.[16] Further, her mother transferred to her $98,600[17] for tuition and living expenses between 2007 and 2010.
[16]First affidavit at paragraph [9] RCB 71
[17]First affidavit at paragraph [10] RCB 71 and T36
30 In her second affidavit dated 31 August 2018, Ms Chen swore:
· In November 2007, her mother, aunt and three family friends visited her – they each gave her $9,000 – she received a total of approximately $45,000 and deposited those funds in her bank accounts.[18]
· Her mother gave her $9,000 for graduating in 2011, which she deposited in her accounts.[19]
[18]Second affidavit at paragraph [6] RCB 157
[19]Second affidavit at paragraph [11] RCB 157
31 In the course of the hearing, Ms Chen provided documents which she maintained showed that her mother had transferred to her $20,000 on 10 July 2007, $25,000 on 20 November 2008 and $35,000 on 1 February 2009. The documents were titled “Application for Funds Transfer”, and the contents of them were in Chinese. Ms Chen maintained these were written proof the funds had been transferred to her by her mother.[20] Further, she maintained that her mother also provided her approximately $49,300 in early November 2009[21] – a total amount of approximately $130,000 between 2007 and 2010.[22]
[20]Email provided to the Court dated 17 May 2019 attachments
[21]RCB 618-620; RCB 5A
[22]T197
32 Additionally, Ms Chen provided a copy of an “income certificate” relating to her mother dated 22 January 2007, certifying that her mother had worked as acting “Head of the Finance Department” of a Chinese company, and the amount of money (in Chinese currency) that she earned in that role.[23] Ms Chen gave evidence that her mother provided the funds to her from her mother’s life savings, funds she had legitimately earned.[24]
[23]Email provided to the Court dated 17 May 2019 attachments
[24]T95-97;
33 In addition to her own evidence, Ms Chen also relied on the following affidavits/statutory declaration:
· Wang Wei (her mother), dated 13 May 2013 –She sent her daughter $98,600 to her Australian bank account before 30 June 2010 – the money was paid for her tuition house rental fee and daily expenses. It is not her income in Australia. It does not belong to those that need to tax.[25]
[25]RCB 91
· A second affidavit from her mother dated 27 August 2017 – In November 2007 and April 2011, she came to Australia and gave her daughter $9,000 for her living expenses – it was money from her life savings. Further, between 2007 and 2010, she transferred $98,600 from her bank account to Ms Chen.[26] Documentation was also provided indicating that Ms Wei had been in Australia on 18 April 2011.[27]
· Yan Feng Wang (her aunt), dated 27 August 2018 – In around November 2007, she came to Australia with Ms Chen’s mother and three other family friends and they gave Ms Chen about $9,000 each.[28]
[26]RCB 187-188
[27]Exhibit WW1 – affidavit of Weng Wei
[28]RCB 192-193
34 In respect of these amounts, Ms Chen was cross-examined about:
· Payments made to an overseas account by her to an account in her mother’s name totaling $184,013.[29]
[29]T39-41
· The circumstances of finding the documentation that was provided late in the proceedings on 17 May 2019.[30]
[30]T197-198
· The source of $248,213 funds that were transferred to accounts in China, particularly relating to AUSTRAC records showing $44,800 came from Ms Chen’s bank account ending 1916, and $203,413 were cash payments.[31]
[31]T40-41
· Ms Chen’s explanation for payment of $39,200 to her aunt, Wang Yan Feng, and no indication in Ms Feng’s affidavit of receipt of those monies.[32]
(ii)Money and gifts from “sugardaddies”; and
(iii) Money and gifts from services provided in the sex industry
[32]T39; T197-198
35 Ms Chen, in her first affidavit, swore:
· That she used websites such as suggardaddy.com and seeking arrangement.com to meet men and go on dates – with such an arrangement there was an implicit understanding that the men would give her gifts. [33]
[33]First affidavit at paragraph [6] RCB 70
· That she usually attended karaoke bars and casinos with men – some of these men would spend thousands of dollars at the Casino and she would often receive casino chips in large remunerations when they had a big win.[34]
· She retained cash gifts and kept them where she lived and when she had saved a substantial amount, she would deposit the cash into various accounts.[35]
[34]First affidavit at paragraph [7] RCB 70
[35]First affidavit at paragraph [8] RCB 70
36 In her third affidavit sworn on 7 March 2019, Ms Chen swore:
· In addition to the monies revealed in her first and second affidavits, she had earnings as a sex worker. She was paid in cash, and would keep the cash at home in a safety-deposit box until she had a considerable sum, and then the money would be banked.[36] She explained that in her first affidavit, she had not revealed that she had been a sex worker, because she did not want her family to know. [37]
[36]Third affidavit at paragraphs [6] and [7] RCB 178
[37]T25
· The details of some of the karaoke bars and brothels she attended or worked at were included, as were her working names and the names of other individuals in the industry that she could recall, associated with those businesses.[38] She maintained that the brothels would pay her in cash and she could earn a few thousand dollars a week.[39]
[38]Third affidavit at paragraphs [9] and [14] RCB 178;180
[39]Third affidavit at paragraphs [14] and [15] RCB 180-181
· During this time in Sydney, she continued to receive gifts from her “sugardaddies”, and also money when they won at the casino.[40]
[40]Third affidavit at paragraphs [19] and [21] RCB 182
· She also provided details of the brothels where she worked in Melbourne[41] and in Brisbane – again, maintaining she was paid in cash and that the amount earned would depend on the level of business.
· Jackson was one of her clients and he paid her monies for her services, BDSM and fetishes – he also wanted her to help in his business in Queensland – he did not want his wife to know that he was paying her any money.[42] There was further reference to Jackson in Ms Chen’s fourth affidavit dated 30 April 2019.[43]
[41]Third affidavit at paragraph [31] RCB 183-184
[42]Third affidavit at paragraphs [36]-[39] RCB 185-186
[43]Paragraphs [6]-[13]
37 Ms Chen relied on affidavit material from the following:
· Tim Zhu, dated 28 August 2018 – he swore that he met Ms Chen in Melbourne through WeChat – that he gave her about half of his winnings from Crown ($20,000), because he liked her at the time and wanted to have a relationship with her.[44]
[44]RCB 197
· Kevin Wu, dated 27 August 2018 – he swore that he met Ms Chen at the casino in Brisbane – that she helped him win some money – he could not remember details, such as how much money he gave her – it was on one occasion and he probably gave her close to $1,000 – that at this time, he was unemployed and the money to gamble came from his parents.[45]
[45] T131-138; RCB 198
· Leon Gruizinga, dated 28 August 2018 – he swore that some time in 2013, he went with Ms Chen to Crown Casino – she helped him win some money gambling so he shared some of the winnings with her – he gave her approximately $3,500 in chips, though he was not sure of the exact amount or the exact day that he went there.[46]
[46]RCB 199
· Xiao Yan Xu (Susan), dated 18 April 2019 – she swore that Ms Chen received cash payments for work in a brothel in Hotham Parade, Artarmon, New South Wales. [47]
[47]T147
· Lui Li (Linda), dated 17 April 2019 – she swore that Ms Chen used to work in her brothel, but she was unable to say how much money she earned working about two days a week.[48]
· Keith Nanayakkara, dated 29 April 2019 – he swore that he had seen Ms Chen many times in Melbourne CBD hotels and he would provide $200 for her companionship. He gave evidence that he met Ms Chen in 2017.[49]
[48]T148
[49]This evidence did not relate to the period before Ms Chen’s bank accounts were frozen
38 In addition to her affidavit material, Ms Chen relied on entries in her bank statements that revealed that she had incurred expenses, such as paying for hotels, as part of her work in the sex industry.[50]
[50] T143-144; RCB 130; RCB 124 and RCB 120
39 Further, Ms Chen gave evidence of payments for her services by both “sugardaddies” and her working as an escort – she reiterated on a number of occasions in the course of her evidence that payments were made to her for her companionship,[51] that payments from “sugardaddies” were not included in her income[52] and payments were on a cash basis.[53]
[51]T45
[52]T31
[53]See T98-103
40 Ms Chen was cross-examined about:
· The reasons for failing to indicate in her first and second affidavits that she had provided services in the sex industry.
· The lack of any documentation or any other evidence independent of her account regarding her employment at brothels or as an escort, despite being able to provide details of those brothels and some of the people who she worked with in her affidavit material.
· The lack of detail in the affidavit material from those that were involved in the industry with her, including “Susan” and “Linda”, and including no indication or approximate amount of how much was earned with “Susan”.
· The source of funds from “sugardaddies” or funds used for gambling by them, ultimately gifted to Ms Chen, and the lack of any information regarding their identity.
· Identification of payments made by Jackson in the sum of $111,111 to Ms Chen, and the reason for those payments.
· The reasons for Ms Chen’s failure to call most of the deponents of this material.
(iv) Gifts from boyfriends
41 In her second affidavit dated 31 August 2018, Ms Chen swore:
· Her boyfriend, Yu Rong Fan, came to Sydney to visit and gave her $9,800 in 2007.[54]
[54]Second affidavit paragraph [7] RCB 157
· Her ex-boyfriend, “Jimmy”, used to buy her expensive bags and jewelry – they would win money together at the casino and she was able to keep most of the winnings – this was often sums of $4,000 and $5,000. Jimmy’s parents gave her $8,800 for Chinese New Year. After they split up, she sold some of the things he had purchased for her and put that money in the bank.[55]
[55]Second affidavit paragraphs [8]-[10] RCB 157
· In April 2007, December 2012 and February 2013, she returned to Australia after visiting China and bought with her cash sums of $9,500 and $9,800.[56]
[56]Second affidavit paragraph [12] RCB 157
· Another boyfriend, “Johnnie”, would give her $9,500 each time he came back to see her from China. He would also buy her expensive jewellery and gifts – they would go to the casino together and she was able to keep some of the funds that she won.[57]
· She had tried to contact a number of the people mentioned who had provided her gifts, but she was unable to.[58]
[57]Second affidavit at paragraph [13]-[14] RCB 157
[58]Second affidavit at paragraph [15]-[17] RCB 158
42 In addition, Ms Chen provided copies of receipts for some luxury goods said to have been purchased for her by “Jimmy”[59] and “Johnnie”.[60]
[59]Exhibit YC2-3; RCB 165-167
[60]Exhibit YC2-5; RCB 171-176
43 Ms Chen was cross-examined about:
· The source of funds that were “gifts” from boyfriends.
· The lack of details regarding these men’s names and lack of affidavit material from any of them.[61]
· The nature of her relationship with each of these men.[62]
[61]T45
[62]T44
44 In respect of all the funds in the bank accounts, more generally, Ms Chen was cross-examined about her inability to quantify or calculate the amounts that she received from any of these sources, including through her involvement in the sex industry, and her failure to show the source of significant cash amounts, which she maintained had been gifts provided to her.
Casino winnings – cash located in her apartment
45 In her first affidavit dated 28 June 2018, Ms Chen swore:
· The cash amount located at her apartment had been won by her at the casino and she changed the chips to cash[63] – she maintained that the money used to gamble was lawfully acquired by her from payments for her sexual services.[64]
[63]First affidavit paragraph [11] RCB 71; T42
[64]Ms Chen’s closing submissions at page 18
46 Ms Chen was cross-examined about the lack of existence of any documents or AUSTRAC records for exchanging $10,630 of chips at the casino to cash,[65] and also the identity of those who had provided her funds for wagering.[66]
[65]T43
[66]T71
Gift from her ex-partner, Bao – Cartier ring
47 In her first affidavit dated 28 June 2018, Ms Chen swore:
· The Cartier ring was a gift from her ex-partner, Bao – she has been unable to contact him – it was paid for with a joint credit card.[67]
· Ms Chen provided documents, including a receipt from Cartier and copy of her joint bank account statement, showing the purchase on 8 October 2013.[68]
[67]First affidavit paragraph [13] RCB 71
[68]RCB 92-101
48 Ms Chen was cross-examined about the lack of any material from Mr Bao.
Analysis
49 As indicated above, given the time that had elapsed since the property had been acquired by Ms Chen or restrained, I indicated that I would, pursuant to s40T(2) of the Act, accept evidence other than documentary evidence to prove that the property was lawfully obtained. Further, given that the effect of Ms Chen’s evidence was that the majority of the property had been given to her as a gifts, as part of casino winnings, or as a consequence of services she had provided, the relevant provisions required her to prove that the source of those funds/gifts had been lawfully obtained by them. Similarly, Ms Chen was able to rely on evidence other than documentary evidence in proof of this aspect of her application.
50 I have outlined the evidence in respect of the property that was provided by Ms Chen and other material that she relied upon. It is clear from that summary, that the credibility of Ms Chen, and her account of her own or her donors’/clients’ lawful acquisition of the property, is a critical issue in this case.
51 The importance of this assessment was heightened by Ms Chen’s failure to have available all the deponents of affidavit material on which she relied for cross-examination. In the course of the proceedings, I indicated to her that she could be assisted in preparing relevant subpoenas to compel witnesses to attend, but ultimately she indicated that she did not want to adopt that course, consistently maintaining that she had provided enough evidence.[69]
[69]T73-75;T91-93; T150-151
52 Counsel for the respondent had indicated that she required all of the deponents to be cross-examined; however, only two of them were called. The evidence given by Mr Nanayakkara was not relevant, given the time at which he had engaged Ms Chen’s services was in 2017, well after the property had been restrained. In respect of her other witness, Mr Wu, he was unable to be certain how much money he had provided to Ms Chen, but thought it was about $1,000. He thought the money came from his parents, as he was unemployed at the time.[70] Thus, the only other witness called by the applicant was herself (Ms Chen), though she also relied on the affidavit material from deponents who were not available for cross-examination.
[70]T137
53 There were examples where Ms Chen’s evidence, both in affidavit and in oral form, was inconsistent and fanciful, to such an extent that I found her credit very seriously impugned. It is always an advantage to be able to see a witness giving evidence and to observe them as a witness or, in this instance, to observe her demeanour throughout the proceedings. Even taking into account any possible language difficulties, which I am not convinced existed given the manner in which Ms Chen utilised a professional interpreter, it was apparent that Ms Chen was a witness prone to inconsistent, evasive and, what could be described as “ranting and rambling” answers or questions to the respondent’s witnesses.
54 Many times during the course of the proceedings, both whilst she was giving evidence or when at the Bar table, she presented as aggressive and rude, alleging any number of conspiracies regarding the government, police and tax office in restraining her funds.[71] She was difficult to control and appeared to become more frustrated with the process, or angry, agitated and abusive when questioned regarding her activities in relation to Jackson and payments by him to her.[72] Similar responses were provided by Ms Chen when specific details or particulars were sought regarding large sums deposited in her bank accounts, or details were sought regarding the source of those funds.[73]
[71]T98-103
[72]T50-66
[73]T43-47; fourth affidavit
55 It is fair to say that Ms Chen maintained the majority of the property was obtained as a result of her work, whether that was in a brothel, as a private escort, or “companion”. The remainder of the funds were said to have been provided by family members and/or boyfriends. Although Ms Chen accepted that some of the funds were from Jackson, she gave various reasons as to why they had been lawfully obtained by her.
Income/funds from services provided
56 Ms Chen admitted that she did not accurately record the funds that she had earned in the sex industry to the ATO.[74] The ATO records revealed significantly less income or inflow as reflected in Mr Byrden’s report.[75] Approximately $1.6m was deposited between July 2011 and December 2013, a period of two-and-a-half years. Ms Chen’s tax records did not assist her in proof of her lawful acquisition of funds.
[74]The respondent withdrew the submission made during proceedings that the failure to report her income accurately to the ATO was contrary to s40G(1)(f) of the Act (see also T106)
[75]RCB 642, paragraph [23]
57 Ms Chen gave inconsistent answers regarding her income and this is relevant to my assessment of her credit. She gave evidence that:[76]
·If her income was under $19,000, she did not have to report it.[77]
·That it was her own privacy how much she earned and that “sugardaddies” would support her monthly – that it was stupid to report how much she earned to the tax office.[78]
·That she was “paid in cash and would keep the cash at home in a safety box until she had a considerable sum and deposited into a bank account”.[79]
·That her accountant had been responsible for preparation of the documents declaring her income to the ATO.[80]
[76]See also fourth affidavit, paragraph [29]
[77]T34
[78]T31
[79]Third affidavit paragraph [7], RCB 178
[80]T33
58 Ms Chen also maintained that Mr Byrden had engaged in doubling up of some of the figures in his accounting, and that, as a consequence, the amount of $1.6m inflow was incorrect or exaggerated. However, the evidence of Mr Byrden revealed that in relation to the transfer of funds, particularly in respect of some of the term deposits, because of the lack of information available, he was unsure whether transactions were related to each other. They were identified as an inflow and an outflow, the effect of which was to balance the other out.[81]
[81]T165 -170
59 The only evidence independent of Ms Chen regarding her work in the industry came from “Susan” and “Linda”; however, neither of them provided any detail as to how much Ms Chen earned, the frequency with which she worked, an estimate of the time that she worked at the brothel, or other details. Further, a number of different brothels[82] were identified by Ms Chen, but none of these businesses or people provided material in any form to the Court that could assist Ms Chen in her proving the funds were lawfully obtained.
[82]Third affidavit paragraphs [14] and [31], RCB 180; 183-184
60 Additionally, a portion of these funds were said to have come from “sugardaddies” – however, there was no material, even from Ms Chen, as to the details of these payments being made to her, such as when, who, by or how frequently, or where that person got the money for cash gifts that he gave Ms Chen. Additionally, if, as claimed by Ms Chen, some funds were from winnings at the casino by the “sugardaddy”, there was no evidence as to the source of funds used to gamble.
61 Even accepting the affidavit material from Tim Zhu, (who gave Ms Chen about half of his winnings from Crown ($20,000)),[83] or Leon Gruizinga (he gave her approximately $3,500 in chips, though he was not sure of the exact amount or the exact day that he went there),[84] there is no evidence as to where either men obtained those funds to lay the bets for the winnings. Similarly, in relation Kevin Wu, who gave evidence, he said he gave her funds on one occasion and he probably gave her close to $1,000, and that the money to gamble came from his parents. Again, there was no evidence of the legitimacy of the funds provided by his parents. [85]
[83]RCB 197
[84]RCB 199
[85] T131-138; RCB 198
62 In any event, the total of these amounts were very small compared to the $1.6m plus in Ms Chen’s bank accounts.
63 There is also evidence that part of the funds or property in Ms Chen’s Westpac bank account ($111,111) were derived from the unlawful activity of blackmail and extortion of Jackson.[86] Police alleged that from around September 2013 to December 2013, Ms Chen made demands of Jackson, her former client, in relation to the provision of sexual services.[87] In her record of interview, Ms Chen made some admissions regarding her connection to an incriminating phone number and that Jackson had given her money for various reasons.
[86]Affidavit of Detective Senior Constable Scott Gray sworn 12 December 2018 (Gray Affidavit) and the criminal brief “SG-7”, the Gale Affidavit and Financial Report. Ruling 17 May 2019, this evidence was ruled to be admissible as hearsay evidence pursuant to s 63 of the Evidence Act 2008 (Vic).
[87]Statements of Jackson RCB 842 and RCB 852; statements of Xiang Ding dated 21 November 2013 and 28 November 2013 RCB 837 and RCB 862; statement of Fei Song (aka Jerry) dated 13 December 2013 at RCB 867. Ruling 17 May 2019 – this evidence was ruled to be admissible as hearsay evidence pursuant to s63 of the Evidence Act 2008 (Vic).
64 When questioned about these admissions by me in her evidence, Ms Chen maintained that the police had misled her and that her English was poor at the time. She maintained that she could not remember an interpreter being present whilst she was being interviewed.[88]
[88]T27
65 Further, Ms Chen relied on rental documents and her own evidence that others were residing in the apartment when she was arrested at the same time as her. She maintained that the phone with incriminating material could have belonged to one of the other residents.[89]
[89]T59-61; T66; T185-T188
66 Police officer Scott Gray gave evidence that when he arrested Ms Chen, there was nothing to suggest that other residents lived in the apartment. That when she was arrested, Ms Chen had a small suitcase, and a handbag which had three mobile phones (including the one with the relevant phone number), a plane ticket and the cash part of the property.[90]
[90]T181 (see also T182-184)
67 In relation to the receipt of monies from Jackson, Ms Chen has provided inconsistent responses:[91]
·In cross-examination, she gave evidence that the total amount she received from Jackson was $99,000.[92]
·On day four of the proceedings, she maintained that of the $50,000 in her Westpac account, deposited in 2013 in Queensland, only $3,000 was from Jackson, in payment for her services, and the rest was her own money.[93]
·Later in her evidence, she said that the money is “not all from him. Some from other clients.”[94]
·Ms Chen then went on to say that every month Jackson gave her just a few thousand, but he did not give her large amounts at the same time and some was from other clients.[95]
[91]RCB 644
[92]T59
[93]Fourth Affidavit at paragraph [11]
[94]T191
[95]T191
68 There were unsatisfactory aspects of this evidence:
· Ms Chen was inconsistent in her account of the amount of funds provided to her by Jackson in her record of interview, her affidavit material and her oral evidence. I note that an interpreter was present throughout her interview with police and her rights were clearly explained to her.
· Ms Chen has provided various reasons why Jackson gave her funds, including that he liked her, that he wanted to compensate her and that he had supported her financially.[96]
· The payments by Jackson into Ms Chen’s Westpac account, the amount of those payments, the circumstances of her arrest, including the state of her apartment and her admissions as to the phone with incriminatory material, arguably implicate her in criminal activity related to Jackson. In any event, it is not necessary for the respondent to prove that the funds were unlawfully obtained.
[96]Fourth affidavit at paragraph [7]
69 That these funds were lawfully obtained depends on an acceptance by me of the evidence of Ms Chen – given the unsatisfactory aspects of this evidence, I am not satisfied that Ms Chen lawfully obtained this part of the property.
70 Additionally, I am not satisfied, in respect of any of the funds in the bank accounts said to have been acquired through Ms Chen’s work or as gifts, was lawfully obtained as that term is defined under the Act.
Gifts from family/boyfriends
71 Ms Chen initially maintained her mother gave her $98,600, relying on her mother’s affidavit dated 13 May 2013. On the last day of the hearing, she relied on documents that Ms Chen said her mother had just discovered, maintaining she was given $129,300.[97] Ms Chen gave evidence that her mother had only just found the documents in circumstances that appeared fanciful and inconsistent[98] with the previous material provided by her mother;
[97]T197
[98]T198-199
72 Ms Chen was inconsistent in her responses regarding her mother’s availability to give evidence, indicating she was in ill health,[99] but then maintaining her mother was well now and living with her aunty.[100]
[99]T72
[100]T197-198
73 Paul Byrden gave evidence that an “IFT” is an international funds transfer instruction which is an automatic system through AUSTRAC where all international funds, if transferred through a financial institution, are recorded.[101] When questioned regarding the documentation that Ms Chen provided during the hearing on 17 May 2019, she could not provide a plausible explanation as to why her Chinese documentation was not reflected in the AUSTRAC documents. She reiterated that her mother transferred funds to her four times, in total $130,000.[102]
[101]T173
[102]T197
Funds transfer to China – family members
74 When questioned regarding funds that she had transferred to her mother’s account, as part of the $248,000 she transferred overseas, Ms Chen revealed that she had opened an account using her mother’s ID and that she transferred money into that account, that is, she had transferred $184,000.[103] Ms Chen maintained that these funds were not received by her mother and that she had created that account in her mother’s name, but her mother was not aware of its existence.
[103]T39
75 Ms Chen had not, in her first, second or third affidavit, made any reference to setting up this account in the manner in which she alleged. Additionally, Ms Chen gave evidence on the last day of the hearing, that this was at a time when she was in Korea and then in Hong Kong, and that she needed the money so she could transfer it to her credit card.[104]
[104]T199
76 When questioned about the transfer of $39,200 to her aunt, Ms Chen maintained that this was repayment of:
(i) funds gifted to her by her aunt, when Ms Chen first moved to Australia;
(ii)repayment of money that her aunt had given her mother to forward to Ms Chen.[105]
[105]T40
77 There was no mention of repayment of any money to family members in any of Ms Chen’s affidavit material, including in the affidavit provided by her aunt.
78 Finally, in respect of gifts or payments from her previous partners or boyfriends, there was no evidence or affidavit material from any of those identified as to the source of funds to buy her gifts.
79 There were, therefore, a number of unsatisfactory aspects of this evidence relating to payments to and gifts from family members/boyfriends, including that:
(i) AUSTRAC’s IFTI records do not correspond with the transactions purportedly recorded in the “application for transfer” documents that had been provided by Ms Chen to the Court on 17 May 2019;
(ii) Ms Chen gave different accounts as to the total quantum of monies she had received from family members. She was unable to explain the inconsistencies in her affidavit material as to the amounts provided to her by this means, nor provide any plausible explanation for the discovery of documents late in the hearing regarding the total amount from her mother;
(iii)Ms Chen indicated that she paid back her aunt for monies received from her,[106] though there is no reference in her aunt’s affidavit to the funds being paid back. If I was minded to accept Ms Chen’s account in respect of these funds, which I am not, the funds would not be part of the property as she has repaid them to her aunt;
(iv) Ms Chen provided inconsistent accounts of the use of funds that were transferred by her, approximately $250,000, including the creation of a false account in her mother’s name and her indication, late in the proceedings, that she required this money when living overseas for her credit card;
(v)the amounts said to be provided by family members are only a small proportion of the total amounts in the bank accounts – some of which, according to Ms Chen, were repaid, and thus not part of the property;
(vi)neither Ms Chen’s mother or aunt were available for cross-examination;
(vii) there was no evidence from any of Ms Chen’s boyfriends, in affidavit or any other form, to support her account of receipt of gifts from them or their families.
[106]T40
80 In any event, this part of the property was said to have been gifted to Ms Chen by relevant family members/boyfriends. The only evidence of the legitimacy of those funds came from the untested affidavits of Ms Chen’s mother and aunt, and the oral evidence of Ms Chen. The documentation on which Ms Chen relied did not, as submitted by her, provide evidence that the funds from her mother had been lawfully acquired by her.
81 Accordingly, Ms Chen has failed to prove that this part of the property (gifts from her family or boyfriends) was lawfully acquired.
Cartier ‘LOVE’ ring
82 The ring was seized by police at Ms Chen’s premises upon her initial arrest on 3 December 2013. Ms Chen maintained that she received the ring as a gift from her partner, Junhong Bao, and that it was purchased on their joint credit card.[107] Ms Chen produced bank statements in relation to this joint credit card and a tax invoice from Cartier dated 6 October 2013 for a “ring, pink gold, white gold diamond” in the amount of $7,450 sold to Miss Yue Chen.
[107]Fourth affidavit at paragraph [13]
83 No evidence in any form has been provided by Ms Chen’s ex-husband.
84 Given that the ring was a “gift”, Ms Chen must satisfy the Court that the person whom she acquired it from, Junhong Bao, lawfully acquired the property.
85 Further, a review of the joint bank statement provided[108] indicates significant “cash” deposits leading up to the date of the purported acquisition of the ring.
[108]RCB 98
86 Ms Chen’s former husband, Junhong Bao, has not filed any affidavit in support of Ms Chen’s application and no evidence has been given by Mr Bao, or anyone else in relation to Mr Bao’s income or ability to finance the purchase of this ring.
87 Accordingly, Ms Chen has failed to prove that the ring is lawfully acquired.
$10,650AUD currency seized
88 This currency was also seized at Ms Chen’s residence upon her arrest on 3 December 2013. Ms Chen maintains that she won the money at the Casino.[109]
[109]First affidavit at paragraph [11], RCB 71
89 No documentary material of a cheque or of a similar nature has been filed by Ms Chen and enquiries with Crown reveal that Ms Chen is not a member of Crown, where documentation may have been available.
90 In cross-examination, when challenged that Ms Chen could not receive over $10,650 from a casino in exchange for chips, Ms Chen said that the monies she had received represented multiple gambling winnings. She could not provide an explanation as to the provenance of the funds used to place those bets.
91 Accordingly, Ms Chen has failed to prove that the cash amount of the property was lawfully acquired.
92 For the reasons set out above the exclusion application in respect of the property is refused.
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