Commissioner of the Australian Federal Police v Jiang
[2019] VSC 334
•22 May 2019
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
CONFISCATION AND PROCEEDS OF CRIME
S ECI 2018 02124
| COMISSIONER OF THE AUSTRALIAN FEDERAL POLICE | Applicant |
| v | |
| HAI JIANG | Respondent |
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JUDGE: | Moore J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 6 March 2019 |
DATE OF JUDGMENT: | 22 May 2019 |
CASE MAY BE CITED AS: | Commissioner of the Australian Federal Police v Jiang |
MEDIUM NEUTRAL CITATION: | [2019] VSC 334 |
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PROCEEDS OF CRIME — Application for restraining order — Application for variation of a restraining order — Whether property proposed to be restrained sufficiently particularised — Proceeds of Crime Act 2002 (Cth), ss 18, 19, 25, 38, 39, 42 and 338.
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APPEARANCES: | Counsel | Solicitors |
| For the Commissioner of the Australian Federal Police | R Burton | Australian Federal Police |
| For Compass Global Holdings Pty Ltd | M W L Symons | Madison Branson Lawyers |
HIS HONOUR:
Background
On 9 November 2018, on the application of the Commissioner of the Australian Federal Police (the Commissioner), the Court made an order under ss 18 and 19 of the Proceeds of Crime Act 2002 (Cth) (the Act) prohibiting certain specified property from being disposed of or dealt with, without the consent of the Commissioner or until further order. The property the subject of the restraining order included that described as follows:
The sum of $414,078.67 in the account of Compass Global Holdings Pty Ltd, held with Bank of Queensland in account number 122796 22305669, in connection with Hai Jiang.
The Court also ordered pursuant to s 38 of the Act that the above property be taken into custody and placed under the control of the Official Trustee.[1]
[1]The order was expressed to apply in slightly different terms in respect of ‘The sum of $414,078.67 in the account of Compass Global Holdings Pty Ltd, in the Bank of Queensland account number 122796 22305669, being the residual funds held by Compass Global Holdings Pty Ltd in relation to Hai Jiang.’
In an affidavit relied upon by the Commissioner in support of the making of these orders, Federal Agent Graham White of the Australian Federal Police (the AFP) deposed as to his suspicion that the person referred to in the orders, Hai Jiang, had committed the following serious offences within the meaning of the Act:
(a)Dealing with property worth $1,000,000 or more that is reasonably suspected of being the proceeds of crime, contrary to section 400.3 of the Criminal Code Act 1995;
(b)Dishonestly causing a loss to the Commonwealth, contrary to section 135.1(3) of the Criminal Code Act 1995;
(c)Obtaining a financial advantage by deception contrary to section 134.2 of the Criminal Code Act 1995.
The present applications
On 22 February 2019, the Commissioner filed an application under s 25 of the Act for a restraining order under ss 18 and 19 of the Act. The application was brought in relation to Hai Jiang. The Commissioner sought orders pursuant to ss 18 and 19 of the Act prohibiting certain sums of money from being disposed of or otherwise dealt with by any person without the consent of the Commissioner, or until further order, and requiring those funds to be transferred to and held by the Official Trustee until the determination of this proceeding or further order.
On 28 February 2019, Compass Global Holdings Pty Ltd (CGH) filed an application under s 42 of the Act for an order revoking the restraining order made on 9 November 2018 referred to in paragraph [1] above.
On 1 March 2019, the Commissioner filed an amended application under ss 25 and 39 of the Act for a restraining order under ss 18 and 19 of the Act and a variation to the restraining order made on 9 November 2018. The orders sought in the amended application were in the same terms as in the Commissioner’s application dated 22 February 2019, save that the Commissioner sought a variation to the restraining order made on 9 November 2018 by removing the references to the property set out in paragraph [1] above, being the sum of $414,078.67 in CGH’s account with the Bank of Queensland in connection with Hai Jiang.
At the hearing of the above applications, counsel for CGH acknowledged that the relief sought by his client in its application had been subsumed by the relief sought by the Commissioner in the Commissioner’s amended application filed on 1 March 2019.
On 6 March 2019, the Court made orders which, save in one respect, accorded with the relief sought by the Commissioner in the Commissioner’s amended application filed on 1 March 2019. This included an order varying the restraining order made on 9 November 2018 by removing the references therein to the sum of $414,078.67.
The remaining controversy between CGH and the Commissioner concerns that part of the Commissioner’s amended application in which a restraining order and an order pursuant to s 38 of the Act is sought in respect of property described as follows (the proposed orders):
The sum of $129,987.77 held by Compass Global Holdings Pty Ltd (ACN 159 256 014) as the residue funds connected to the transfer of funds from China to Australia conducted on behalf of Hai Jiang.
Factual background
In support of the making of the proposed orders, the Commissioner relied upon an affidavit affirmed by Federal Agent White on 22 February 2019. In that affidavit, Federal Agent White also refers to and relies upon the contents of the affidavit affirmed by him on 8 November 2018 filed in support of the restraining order made by the Court on 9 November 2018.
Federal Agent White deposes that this proceeding was commenced after an investigation into persons and entities associated with the alleged unlawful movement of funds within China and the transfer of AUD$24,010,675.13 (which I will refer to as ‘the suspect funds’) from China to Australia. The suspect funds were then allegedly used to acquire a number of properties and other assets in Australia. Federal Agent White details his suspicion that, in acquiring Australian property, various suspects, including Hai Jiang, committed offences under Australian law.
The suspect funds comprise some of the funds allegedly obtained illegally in China by certain named persons who are alleged to have been involved in an enterprise involving the unlawful collection of deposits from members of the public. It is alleged that those persons transferred the suspect funds to Australia using an Australian-based money remitter, Compass Global Markets Pty Ltd (CGM), which in turn utilised the services of another money remitter, Goldmate Pty Ltd (Goldmate). The details relating to the transfer of funds are complex and of limited present relevance, but may be summarised as follows:
(a) The suspect funds, which amounted to Yuan 119.156 million, were transferred to various Chinese bank accounts through seven main transactions in May-June 2015.
(b) The recipients of these transactions were customers of CGM who indirectly transferred those moneys to Australia using a ‘contra trade’ method, pursuant to which, after the receipt of the Yuan into the Chinese accounts, Goldmate would transfer those funds to CGM in Australia which in turn would transfer the corresponding amount in AUD to the customer’s designated foreign account.
(c) In a statutory declaration which was in evidence, Andrew Su, the Chief Executive Officer of CGM and Compass Global Asset Management Pty Ltd, states that, between 25 May 2015 and 17 June 2015, Hai Jiang instructed CGM to sell a total of Yuan 117,813,400 in exchange for AUD 24,010,675.13, being the suspect funds referred to above.
The funds from the seven main transactions referred to above were settled and paid to various beneficiaries, except for a residual amount of $414,078.67 (the residual amount). The evidence before the Court is that Hai Jiang instructed CGM to transfer the residual amount back to his own account in China. A foreign exchange deal to this effect was entered into and recorded by CGM. However, after Goldmate advised CGM that there may be issues with Hai Jiang’s transactions, the deal was not settled after CGM put an immediate hold on the transaction.
In light of this evidence, in his affidavit of 8 November 2018, Federal Agent White deposed that the residual amount remained with CGM. It is in this context that the Court made the orders referred to in paragraph [1] above.
Since the making of the restraining orders on 9 November 2018, the Commissioner has become aware of two important matters in relation to the residual amount. First, the bank account referred to in the restraining orders dated 9 November 2018 in which the residual amount was understood to be held is in fact closed. It is not in dispute, however, that the residual amount was, at some point in time, held in that account. Secondly, on 23 September 2015, $284,090.90 of the residual amount was transferred by CGH to Goldmate.
It is in the context of these developments that on 6 March 2019 the Court made orders which included:
(a) orders removing the reference to the residual amount in the restraining orders made on 9 November 2018 (being the property set out in paragraph [1] above); and
(b) a restraining order and order pursuant to s 38 of the Act in relation to the sum of $284,090.90 paid by CGH to Goldmate.
As I have explained, the remaining controversy is whether the Court should make the proposed orders. Those orders are in respect of $129,987.77, being the remainder of the residual amount after deducting the amount of $284,090.90 paid by CGH to Goldmate.
Submissions of Compass Global Holdings Pty Ltd
In opposition to the making of the proposed orders in relation to the sum of $129,987.77 (see paragraph [8] above), CGH submits that, unlike the orders made on 9 November 2018 which nominated a particular bank account in which the residual amount was said to be held, the description of the sum of $129,987.77 does not sufficiently nominate what property is to be restrained.
CGH submits that the evidence only establishes that the residual amount was held by it at an earlier date and that part of that amount was paid to Goldmate. The evidence, it submits, does not establish that it still holds the sum of $129,987.77 in any form. Accordingly, it is contended that the proposed orders seek to restrain something which in the past was property held by CGH, but which may not be property now held by it.
CGH submits that the property which it once had in the sum of $129,987.77, when held in an identified bank account, was a chose in action. However, because the bank account in which that amount was once held has been closed, when the restraining orders were made on 9 November 2018, the identified property the subject of those orders did not exist. There was no property the subject of actual restraint.
In this context, CGH submitted that the property which the Commissioner now seeks to restrain in his amended application is not ‘sufficiently particularised.’ With the closure of the bank account referred to in the orders made on 9 November 2018, the sum of $129,987.77 has taken a different form; it is not apparent on the evidence before the Court that the sum is still held by CGH.
CGH also points to difficulties which it is submitted flow from the Commissioner’s failure to show what, if any, property remains in CGH’s hands and what is described as the ‘inadequacy in the particularisation of the property’ the subject of the proposed order:
(a)In relation to the proposed orders sought that CGH pay to the Official Trustee the sum of $129,987.77, this raises the question of ‘which particular sum of $129,987.77’ is to be transferred. If a ‘different sum of $129,987.77’ be transferred, a question arises as to whether the sum of $129,987.77 will remain subject to restraint and possibly forfeiture in due course. CGH would be unable to know whether it is complying with the order in the event that it was made.
(b)Without adequate particularisation of the property to be restrained, the effect of the order is said to garnish the property of CGH while denying to it, or some other party with an interest in the property, the opportunity to show that it has an interest in the restrained sum which might be subject to an exclusion or compensation order pursuant to the Act. There is therefore said to be an ‘inescapable presumption’ that $129,987.77 will be forfeited by CGH and that it will be denied the opportunity to assert any rights granted by the Act, even if it no longer holds any sum by way of residue amount.
Consideration
In oral submissions, counsel for CGH acknowledged that the gravamen of his client’s opposition to the making of the proposed orders was that the property the subject of the proposed restraint was inadequately particularised or specified.
This submission, and the other submissions advanced by CGH, are rejected for the reasons which follow.
The proposed order is not cast generally as applying to the sum of $129,987.77. It is that sum held by CGH ‘as the residue funds connected to the transfer of funds from China to Australia conducted on behalf of Hai Jiang.’ It is agreed that the residual amount, of which the $129,987.77 is part, was, at some point in time, held in CGH’s Bank of Queensland account referred to in the orders made on 9 November 2018. There is therefore sufficient clarity as to the particular property the subject of the proposed restraint.
The proposed orders are not, however, directed to a unique item of property. They are expressed to apply to certain ‘residue funds.’ This highlights the essential fungible character of the property the subject of the proposed restraint. As such, contrary to CGH’s submissions, no issues arise as to ‘which particular sum of $129,987.77’ is to be transferred to the Official Trustee pursuant to the proposed order sought under s 38 of the Act.
My conclusion that the proposed orders sufficiently identify the property the subject of restraint addresses the foundation of CGH’s complaint that the effect of the orders would be to garnish CGH’s property while denying to it, or some other party, the opportunity to show that it has an interest in the restrained sum so as to support an exclusion or compensation order. CGH must have knowledge of what has occurred in relation to the $129,987.77 as those funds form part of the residual funds which it previously held. It is therefore well placed to provide evidence in support of any exclusion application which it might seek to bring under the Act. Such evidence would presumably reveal whether or not that amount has been disbursed and, if so, to whom.
Neither is there any substance to CGH’s complaint that the word ‘funds’ is inadequate because a chose in action is not funds but a right to enforce against a bank. Unlike the restraining order made on 9 November 2018, the proposed orders are not cast by reference to a particular bank account. Given the breadth of the definition of ‘property’ in s 338 of the Act,[2] there is no difficulty in a restraining order being expressed by reference to a sum of money forming part of an identified class of funds.
[2]‘Property means real or personal property of every description, whether situated in Australia or elsewhere and whether tangible or intangible, and includes an interest in any such real or personal property.’
Central to CGH’s opposition to the making of the proposed orders is the proposition that the evidence does not establish that it still holds the sum of $129,987.77, in any form. This submission does not pay due regard to the evidence which is before the Court. In his statutory declaration made on 5 June 2017, Mr Su, the Chief Executive Officer of CGM and Compass Global Asset Management Pty Ltd, stated (emphasis added):
The bottom line is that the funds from the transactions were settled and paid to the various beneficiaries. There was a residual amount of $414,078.67 that Daniel instructed us to transfer back to China to his own account. A foreign exchange deal was entered into and is recorded in our systems but was not settled. Once Goldmate advised Compass that there may be issues with Daniel’s transaction, our back office put an immediate hold on the transaction and there is currently a balance of that amount still recorded in our systems.
As I have noted, it is now known that the bank account in which the residual amount had been held has been closed and that $284,090.90 of that amount has been transferred to Goldmate. Significantly, however, neither Mr Su nor anyone from CGH has given evidence to explain what has occurred in relation to the remaining $129,987.77 which formed part of the residual amount. The Court is therefore left in a position where the evidence establishes that a portion of the residual amount remains ‘recorded in [Compass’] systems.’
In any event, I also accept the Commissioner’s submissions that it is not incumbent on the Commissioner to establish the whereabouts of property the subject of a proposed restraint. The legislative criteria for the making of a restraining order are set out in s 18(1) of the Act. To paraphrase, the Court must make a restraining order in respect of ‘property’ if: (a) the Commissioner applies for the order; (b) there are reasonable grounds to suspect that a person has committed a serious offence as defined in the Act; (c) certain prescribed affidavit requirements are met;[3] and (d) the Court is satisfied that the authorised officer who made the affidavit holds the suspicion or suspicions on reasonable grounds.
[3]As set out in s 18(3) of the Act.
It follows from the reference to ‘property’ in s 18(1) that it is necessary for a restraining order to be expressed to apply to particular ‘property’ within the meaning of that word in s 338 of the Act. I have already concluded that the proposed orders sufficiently ‘particularise’ the property that is proposed to be the subject of the restraint. CGH did not contend that the proposed orders were deficient because they were not expressed to apply to ‘property’ as that word is defined in the Act. The effect, however, of CGH’s submission is that the Commissioner bears the onus of proving that CGH continues to hold the sum of $129,987.77. That contention finds no support in the detailed statutory criteria referred to above which form part of an Act which regulates in very detailed and prescriptive terms the jurisdiction of courts in respect of proceeds of crime proceedings.
In making the restraining order on 9 November 2018, each of the criteria prescribed by s 18 of the Act were met in respect of identified property which included the residual funds, including the Court being satisfied that Federal Agent White held on reasonable grounds the suspicions to which he deposed in his affidavit. That conclusion and satisfaction is unaffected by the fact that it is now known that the bank account referred to in the 9 November 2018 order has been closed. On the evidence now before the Court, each of the criteria prescribed by s 18 of the Act continue to be met in respect of that part of the residual funds comprising the $129,987.77 referred to in the proposed orders. The Court is satisfied that Federal Agent White holds on reasonable grounds the suspicions to which he deposed in his affidavit dated 8 November 2018 and upon which he continues to rely in the Commissioner’s amended Application.
Given that the property the subject of the proposed orders is a sum of money connected to the transfer of funds from China to Australia on behalf of the suspect Hai Jiang, I am also satisfied that an order under s 38 of the Act transferring $129,987.77 to the Official Trustee is required.
Upon the Commissioner providing to the Court the usual undertaking as to damages, the Court will accordingly order as follows:
1. Pursuant to sections 18 and 19 of the Act, the property specified in Schedule A of this Order not be disposed of or dealt with by any person, without the prior written consent of the Applicant or until further order.
2. Pursuant to section 38 of the Act, the restrained funds identified in Schedule A be transferred to and held by the Official Trustee until the determination of this proceeding or until further order.
SCHEDULE A
The sum of $129,987.77 held by Compass Global Holdings Pty Ltd (ACN 159 256 014) as the residue funds connected to the transfer of funds from China to Australia conducted on behalf of Hai Jiang.
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