Commissioner of the Australian Federal Police v Fu - [2019] WASC 204

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION:   COMMISSIONER OF THE AUSTRALIAN FEDERAL POLICE -v- FU [2019] WASC 204
CORAM:   SMITH J
HEARD:   11 JUNE 2019
DELIVERED          :   14 JUNE 2019
FILE NO/S:   CIV 3038 of 2016
MATTER: IN THE MATTER of an Application pursuant to s 18 and s 19 of the Proceeds of Crime Act 2002 (Cth) and IN THE MATTER of real property located at 207 Riseley Street, Booragoon in the State of Western Australia
BETWEEN:   COMMISSIONER OF THE AUSTRALIAN FEDERAL POLICE
Applicant
AND
ZHENGSHAN FU
Respondent

Catchwords:

Proceeds of crime - Forfeiture order - Restraining order - Proceeds of indictable and serious offence - Application for real property to be forfeited - Mandatory conditions for making the order sought

Legislation:

Anti-Money Laundering and Counter Terrorism Financing Act 2006 (Cth), s 43, s 142(1)
Criminal Code Act 1995 (Cth), s 135.1(3), s 400.9(1)
Proceeds of Crime Act 2002 (Cth), s 18, s 19, s 47, s 49, s 52, s 119, s 314, s 317, s 335(2), s 338

Representation:

Counsel:

Applicant	:	Ms S Fishbourne
Respondent	:	No appearance

Solicitors:

Applicant	:	Criminal Assets Litigation: Australian Federal Police
Respondent	:	VL Legal

Case(s) referred to in decision(s):

Nil

SMITH J:

Application for forfeiture order

This is an application by the Commissioner of the Australian Federal Police pursuant to s 49 of the Proceeds of Crime Act 2002 (Cth) (the Act) for the court to make a forfeiture order to forfeit real property restrained by a restraining order made by McGrath J on 9 December 2016.
The Commissioner applies as a 'responsible authority' within the meaning of that term in s 338 of the Act as a 'proceeds of crime authority' within the meaning of that term in s 338.
Section 317 of the Act provides that the applicant in any proceedings under the Act bears the onus of proving the matters necessary to establish the grounds for making the order applied for, and that (subject to s 52 and s 119 not being relevant to this matter) any question of fact to be decided by the court on an application is to be decided on the balance of probabilities.

Procedural history

On 25 November 2016, the Commissioner filed a notice of originating motion seeking various orders, including:
(a)restraining orders pursuant to s 18 and s 19 of the Act; and
(b)forfeiture orders pursuant to s 47 and s 49 of the Act, in relation to specified real property.
On 9 December 2016, following an ex parte hearing, McGrath J made the following restraining orders and a custody and control order:
1.Pursuant to section 18 of the Proceeds of Crime Act 2002 (Cth), the property specified in Schedule A must not be disposed of or otherwise dealt with by any other person except in the manner and circumstances specified in the order, or with the written consent of the Applicant.
2.Pursuant to section 19 of the Proceeds of Crime Act 2002 (Cth), the property specified in Schedule A must not be disposed of or otherwise dealt with by any other person except in the manner and circumstances specified in the order, or with the written consent of the Applicant.
3.Notwithstanding paragraphs 1 and 2, the Westpac Banking Corporation as registered mortgagee of the property detailed in Schedule A (pursuant to registered mortgage number M232913) may deal with the property in accordance with the terms of the registered mortgage, including continuing to levy interest in accordance with the loan agreement and adjusting the balance of the loan account accordingly.
4.Pursuant to section 38 of the Proceeds of Crime Act 2002 (Cth), the Official Trustee in Bankruptcy shall take custody and control of the property referred to in Schedule A.
5.The applicant to notify in writing any person he believes may have an interest in the property described in Schedule A of the orders made herein as soon as practicable.
The property specified in Schedule A of the order is located at 207 Riseley Street, Booragoon in the State of Western Australia, also known as Lot 226 on Plan 11632 Certificate of Title Volume 1446 Folio 190 (the restrained property).
At the time the order was made, his Honour had before him an affidavit by Federal Agent James Harrison sworn on 25 November 2016. Federal Agent Harrison deposed as an authorised officer (within the meaning of s 338 of the Act) that he held a reasonable suspicion that the respondent had committed one or more of the following criminal offences:[1]
(a)dealing with money that is reasonably suspected of being proceeds of crime and at the time of dealing the value of the money was AUD 100,000 or more, contrary to s 400.9(1) of the Schedule to the Criminal Code Act 1995 (Cth) (Criminal Code);
(b)being a party, or causing another person to become a party to two or more non‑reportable transactions for the sole or dominant purpose of ensuring, or attempting to ensure, that the transaction was conducted in a manner and form that would not give rise to a threshold transaction that would have been required to have been reported under s 43 of the Anti‑Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (AML Act), contrary to s 142(1) of the AML Act; and/or
(c)doing anything with the intention of dishonestly causing a loss to another person, and the other person is a Commonwealth entity, namely the Australian Taxation Office, contrary to s 135.1(3) of the Criminal Code;
(d)the restrained property, is wholly or partly the proceeds and/or instrument of an indictable and serious offence within the meaning of s 19(1)(d)(i) and s 19(1)(d)(ii) of the Act being dealing with money that is reasonably suspected of being proceedings of crime at the time of dealing the value of the money is AUD 100,000 or more, contrary to s 400.9(1) of the Criminal Code.
[1] Affidavit James Harrison, sworn 25 November 2016 [7] ‑ [8], [31] ‑ [36], [47].
Section 400.9(1) of the Criminal Code is both an indictable offence and a serious offence for the purpose of the Act. A penalty for an offence under s 400.9(1) of the Criminal Code is imprisonment for 3 years or 180 penalty units, or both.
Section 135.1(3) of the Criminal Code is both an indictable offence and a serious offence for the purpose of the Act. The penalty for an offence under s 135.1(3) of the Criminal Code is imprisonment for 10 years.
Section 142(1) of the AML Act is both an indictable offence and a serious offence for the purposes of the Act. The penalty for an offence under s 142(1) of the AML Act is imprisonment for 5 years, or 300 penalty units, or both.

Forfeiture pursuant to s 49 of the Act

Pursuant to s 314 and s 335(2) of the Act, the court has jurisdiction to hear and determine the application by virtue of the fact that it has jurisdiction to deal with criminal matters on indictment in the State of Western Australia.
Section 49 of the Act provides as follows:
(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.
Section 49(1) imposes an obligation on the court to make a forfeiture order in the event that the four conditions in s 49(1) are satisfied. The court is only released from that obligation if the court is satisfied of the matters specified in s 49(4). If the pre‑conditions specified in s 49(4) are met, the discretion conferred by s 49(4) is only enlivened if the court is satisfied that it is not in the public interest to make a forfeiture order.
It is clear that the condition in s 49(1)(a) has been satisfied in that the Commissioner applies as a proceeds of crime authority who is the relevant responsible authority for the restraining order made by McGrath J that covers the restrained property.
The condition in s 49(1)(b) has been satisfied. The restraining orders were made on 9 December 2016 and has continued in force since that date.
I am also satisfied that the condition in s 49(1)(e) has been satisfied in that I am satisfied that the authority has taken reasonable steps to identify and notify the persons with an interest in the property. An 'interest' in relation to property or thing is defined in s 338 of the Act to mean a legal or equitable estate or interest in the property or thing or a right, power or privilege in connection with the property or thing, whether present or future and whether vested or contingent.
There are three identified persons who have an interest in the restrained property. These are the Westpac Banking Corporation, who hold a registered mortgage over the restrained property, the tenants of the property and the respondent who is the registered proprietor of the restrained property.
The Commissioner served notice of the restraining order on:
(a)9 December 2016 by serving notice of and a copy of the restraining order on the Westpac Banking Corporation;[2]
(b)9 December 2016, by Federal Agent Harrison personally serving the tenants of the restrained property a number of documents which included:[3]
(i)the chamber summons filed 25 November 2016;
(ii)the affidavit of Federal Agent Harrison sworn 25 November 2016;
(iii)written submissions in support of the application filed 25 November 2016;
(iv)the restraining order made on 9 December 2016; and
(v)the undertaking as to damages filed by the Commissioner on 25 November 2016.
[2] Affidavit of Michelle Linehan, affirmed 28 February 2019 [10].
[3] Affidavit of James Harrison, sworn 13 June 2017 [9] ‑ [10].
I am satisfied that respondent has notice of the restraining order and these proceedings. On 2 May 2017, Mr Victor Lo of Forbes Kirby Lawyers entered a memorandum of appearance for the respondent. On 17 May 2018, Mr Victor Lo of VL Legal filed a notice of change of representation for the respondent.
The court is released from a requirement that the condition in s 49(1)(c) need not be satisfied if the court is satisfied that no application has been made under div 3 of pt -2 of the Act for the (restrained) property to be excluded from the 'restraining order' or that any such application has been withdrawn.
No application to exclude the restrained property from restraining orders has been made.
On 5 June 2018, delegates of the Commissioner inquired of Mr Lo by email whether the respondent would bring an application to exclude property from the restraining orders under the Act. No response was received from Mr Lo.[4]
[4] Affidavit of Michelle Linehan, affirmed 28 February 2019, annexure ML-4, page 14.
On 18 January 2019, a second email was sent to Mr Lo on behalf of the Commissioner to again inquire whether the respondent intended to bring an application to exclude property from the restraining orders. No response was received from the respondent's solicitors.[5]
[5] Affidavit of Michelle Linehan, affirmed 28 February 2019, annexure ML-5, page 15.
On Friday, 3 May 2019, VL Legal were served with the following documents:[6]
(a)the affidavit of Michelle Linehan in support of a forfeiture order, affirmed 28 February 2019;
(b)a minute of proposed orders eFiled 30 April 2019;
(c)the Commissioner's submissions (in support of the application for forfeiture) eFiled 30 April 2019; and
(d)orders made by the court, on 1 May 2019, listing the matter for hearing on Tuesday, 11 June 2019 at 11.00 am.
[6] Affidavit of Caitlin Anne Telfer, sworn 30 May 2019 [3] ‑ [8].
On the facts before the court s 49(4) is not engaged.
For these reasons, I am satisfied that each of the relevant conditions specified in s 49(1) of the Act have been made out and there is no basis for the court to refuse the order sought and, specifically, no basis on which the court could consider whether the public interest warrants such an order not being made, pursuant to s 49(4) of the Act.
Accordingly, I will make an order in the form of the proposed minute of orders filed on behalf of the Commissioner on 30 April 2019.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
EH
Research Associate/Orderly to the Honourable Justice Smith
14 JUNE 2019