Commissioner of Australian Federal Police v Zhang (Ruling No 3)

[2015] VSC 438

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

S CI 2013 02407

AUSTRALIAN FEDERAL POLICE	Applicant
v
HENG JIE ZHANG	First respondent
and
YING SHEN	Second respondent

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JUDGE:	T FORREST J
WHERE HELD:	Melbourne
DATES OF HEARING:	3, 4, 5, 6, 7 August 2015
DATE OF RULING:	7 August 2015
CASE MAY BE CITED AS:	Commissioner of Australian Federal Police v Zhang & Anor (Ruling No 3)
MEDIUM NEUTRAL CITATION:	[2015] VSC 438

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PROCEEDS OF CRIME – Application for forfeiture of property – No case submission – Proceeds of Crime Act 2002 (Cth).

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APPEARANCES:	Counsel	Solicitors
For the Applicant	Ms R Burton	Australian Federal Police
For the Respondents	Mr N J Clelland QC Mr C G Juebner	Tony Hargreaves & Partners

HIS HONOUR:

1. I ruled some days ago that a forfeiture application brought under s 59(1) of the Proceeds of Crime Act2002 should be heard and determined before related applications for exclusion (from restraining orders and forfeiture orders) were heard (Ruling No 1).  I then commenced to hear forfeiture applications relating to two residential properties and a motor vehicle.

1. The Commissioner for the Australian Federal Police (the applicant) tendered evidence in three redacted affidavits, together with attached exhibits.  There was no cross-examination of any deponent.  At the conclusion of the Commissioner's case, Mr Clelland QC for the respondents made a no case submission.  I shall now provide my reasons for acceding to that submission.

1. A no case submission in a civil trial before a judge alone can be subtly different to its counterpart in a criminal trial.  It may, on occasions, take account not just of the sufficiency of evidence, but also the quality of that evidence.  It is unnecessary to say more because the submission made by Mr Clelland relates only to the sufficiency of the evidence in this matter.  The test is simple.  On the evidence, could the applicant prove his case?  Could the inference essential to that proof be drawn be drawn?  A helpful (and more expansive) analysis of the relevant principles can be found in Australian Securities and Investments Commission v Healey.[1]

   [1][2011] 278 ALR 618 at 743.

1. Before turning briefly to the evidence, I wish to make a couple of further observations.  The applicant contended that the standard of proof that applied to him on the forfeiture application was the bare civil standard.  The respondents contended that the applicant must prove his case to the civil standard, but with a Briginshaw gloss.  For the purposes of this exercise and without determining the issue at all, I shall proceed on the basis that the bare civil standard applies.

1. Next, in this case, the applicant was confronted by s 49(1)(c) of the Act.  In my Ruling No.1 in this matter, I set out an analysis of the Act’s structure and scheme.

1. Section 49(1)(c) provides that:

Where property is restrained under s 19(1), it will be forfeited to the Commonwealth if the court is satisfied of one or more of the following:

(a)       The property is proceeds of one or more indictable offences;

(b)The property is proceeds of one or more foreign indictable offences;

(c)The property is the proceeds of one or more indictable offences of a Commonwealth concern; and

(d)      The property is an instrument of one more serious offences.

1. In this case, neither respondent to the forfeiture application has been the subject of any relevant criminal charge or conviction.

1. Where forfeiture orders are sought upon a relevant conviction, an applicant will not be confronted by s 49(1)(c) as the criminal conviction is considered sufficient to prove the that the property is tainted.  In the current circumstances however, the applicant must prove that the property is tainted in one or more of the ways countenanced by s 49(1)(c).

1. In my view, the applicant has failed to adduce evidence capable of proving either that the property was the proceeds of some type of specified crime under that sub-section, or that it was an instrument of crime of the specified type.  The evidence tendered by the applicant consisted three fairly heavily redacted affidavits, two from Detective Senior Constable Glover, one from Ms Rix, together with attached exhibits.

1. In my view, taken at its highest for the applicant, the sum total of the evidence discloses the following: 

·    Heng Jie Zhang bought two properties and a motor vehicle in the period 2009 to 2012;

·    The Ashwood property was purchased for $600,000 in 2012;

·    The Canterbury property was purchased for $5m in 2012; and

·    The Mercedes Benz motor vehicle was purchased for $110,000 in 2009. 

1. All this property, including the car, is unencumbered.  Insofar as the Canterbury property is concerned, the funds for purchase were provided by a ‘Heng Jie Investments’ account held with the Commonwealth Bank of Australia.  Funds had been deposited into that account in 2012 from a variety of sources including $2,081,325 by international funds transfer, the requesting party being Ying Sheng, the second respondent, and $2 million deposited by Zhimin Guo.  Other smaller deposits came from persons who, on the face of the documentation, were named Phoi Hang Tat, Lu Feng and Changrong Zhu, and by depositor named XINYING Pty Ltd. Mr Zhang did not file tax returns in Australia between 1997 and 2013.  It was agreed between the parties that Mr Zhang has resided in China since 2005. 

1. These factual conclusions are fortified by the sensible concessions made on behalf of the Commissioner.  It was accepted that the evidence before the court does not prove more than that funds were deposited into the Heng Jie Investments account from diverse persons and in a convoluted fashion.  The applicant frankly conceded that he was unable to point to specific underlying criminal conduct.

1. In my view, whilst that evidence may well be sufficient to justify a suspicion under s 19, it is quite insufficient to justify a finding under s 49(1)(c) that the property is tainted in one or more of the identified manners.  There is no evidence of the initial source of the monies deposited into the Heng Jie Investments CBA account.  I know nothing of the circumstances of any of the depositors, or whether the monies deposited were before tax or after tax dollars.  In short, it is my view that the totality of the evidence on this application is incapable of satisfying s 49(1)(c) of the Act.  Put another way, the Commissioner has failed to prove even to a prima facie level that the property is the proceeds of crime or an instrument thereof.

1. Accordingly, the applications for forfeiture are refused.  Section 45(3) will operate, and the restraining orders on that property will cease to be enforced.