Compass Global Holdings Pty Ltd v Commissioner of the Australian Federal Police
[2021] VSC 611
•23 September 2021
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
CONFISCATION AND PROCEEDS OF CRIME LIST
S ECI 2018 02124
IN THE MATTER of the Proceeds of Crime Act 2002 of the Commonwealth
-and-
IN THE MATTER of the suspect, Hai Jiang
BETWEEN:
| COMPASS GLOBAL HOLDINGS PTY LTD (ACN 159 256 014) | Applicant |
| v | |
| THE COMMISSIONER OF THE AUSTRALIAN FEDERAL POLICE | Respondent |
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JUDGE: | FORBES J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 4 August 2021 and supplementary written submissions dated 11 August 2021 and dated 23 August 2021 |
DATE OF RULING: | 23 September 2021 |
CASE MAY BE CITED AS: | Compass Global Holdings Pty Ltd v Commissioner of the Australian Federal Police |
MEDIUM NEUTRAL CITATION: | [2021] VSC 611 |
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PRACTICE AND PROCEDURE – Proceeds of Crime – Restraining order – Applications for forfeiture and exclusion from forfeiture – Particulars and pleadings – Request for particulars – Proceeds of Crime Act 2002 (Cth).
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HER HONOUR:
These reasons deal with an application by Compass Global Holdings Pty Ltd (CGH) for the Commissioner for the Australian Federal Police (the Commissioner) to provide ‘particulars’ of forfeiture applications. For context, it is necessary to set out the orders restraining relevant funds in respect of which those forfeiture applications have been filed and the exclusion applications made by CGH in respect of its claimed interest in those funds.
The suspicion underpinning the orders restraining the property is that funds have been obtained illegally in China, unlawfully moved to Australia and then used to acquire property. AMG Investment Unit Pty Ltd (AMG) is a company related to the suspect (Hai Jiang). The transfer of funds is alleged to have occurred using or involving money remitter companies. There are four relevant entities, CGH, Compass Global Asset Management Pty Ltd (CGAM), Compass Global Markets Pty Ltd (CGM) and Goldmate.
In February 2019, the Commissioner made an application to restrain property under the Proceeds of Crime Act 2002 (Cth) (POCA). It sought and obtained orders restraining:
(a) $1,000,000 paid to CGAM, by AMG (the AMG funds);
(b) the sum of $1,000,000 paid by CGAM to Goldmate Pty Ltd (Goldmate) (the CGAM funds);
(c) the sum of $284,090.90 paid by CGH to Goldmate; (the transferred sum); and
(d) the sum of $129,987.77 held by CGH as residue funds connected to the transfer of funds from China to Australia conducted on behalf of Hai Jiang, who is the suspect for the purpose of the restraining order.
An earlier ex parte application had restrained a range of other property. The applications overlapped on one respect: the original restraining order had identified a sum of $414,078.67 held in a nominated account of CGH. It was subsequently learnt that an amount of $284,090.90 had been transferred by CGH to Goldmate and that the nominated back account in the original restraining order had in fact been closed. The Commissioner sought to vary the initial restraining order by removing reference to the sum of $414,978.67 and the nominated account and to capture the differentiation between that which had been transferred to Goldmate by CGH and the residue funds that had been subject to the original order. There was no dispute that the residue funds had at some earlier point in time been held in the nominated bank account (residue funds).
At the time the original restraining orders were made, orders were also made taking property (including the $414,978.67 the Initial Amount) into the custody and control of the Official Trustee under s 38 of POCA. The Initial Amount was not paid to the Official Trustee.
CGH made applications to revoke the original order and opposed the variation. The restraint and revocation applications were heard by Moore J on 6 March 2019. On that day, as between the Commissioner and Goldmate, consent minutes were provided which stipulated that Goldmate would make twelve monthly payments to the Official Trustee of restrained funds totalling $1,284,090.90 that had been paid to it by CGAM and CGH. CGAM did not appear. There remained a dispute regarding the description of the residue funds between CGH and the Commissioner that was resolved by Moore J.[1] As a result, the orders restraining four items as identified above were made, and CGH ‘under protest’ transferred the sum of $129,987.77 to the Official Trustee.
[1]Commissioner of the Australian Federal Police v Hai Jiang [2019] VSC 334.
In March 2019 and December 2019, the Commissioner filed two applications for forfeiture of property. The application in March 2019 relates to the AMG funds, the CGAM funds and the transferred funds. The later application relates to the residue funds. Forfeiture applications cannot be determined until all exclusion applications have been heard and determined.[2]
[2]Proceeds of Crime Act 2002 (Cth) s 315A(2) (‘POCA’); see also Commissioner of the Australian Federal Police v Heng Jie Zhang and Ying Shen [2016] VSCA 171.
CGH has filed two applications (on 5 September 2019 and on 13 January 2020) for orders excluding from restraint and forfeiture its specified interest in property pursuant to sections 31 and 74 of the POCA (the exclusion applications). The first seeks exclusion of its interest in the AMG funds, the CGAM funds and the transferred funds. The second seeks exclusion of its interest in the residue funds. To obtain exclusion, CGH needs to establish on the balance of probabilities that its specified interest in the property is not proceeds of unlawful activity nor an instrument of an offence in accordance with section 29(2) of the POCA. The precise nature of what must be established varies depending on which provision of the POCA has restrained the property. Broadly speaking the effect of section 29(2) is that an applicant for exclusion will demonstrate a lawfully acquired interest.
Applications for exclusion must give notice of the grounds on which exclusion is sought. The grounds in the applications filed by CGH simply identify the relevant parts of s 29 relied on and say nothing as to the basis for, or nature of, the interest to be excluded. The Commissioner submits that the grounds are not proper grounds because they do not on their face identify the nature of the interest sought to be excluded.[3] No affidavits in support of the exclusion applications have yet been filed.
[3]Respondent, ‘Outline of Submissions’, Submissions in Compass Global Holdings Pty Ltd v the Commissioner of the Australian Federal Police, S ECI 2018 02124, 23 August 2021, [33]; and as identified in Commissioner for the Australian Federal Police v Nguyen [2016] NSWSC 883 (‘Nguyen’).
On 4 August 2021, in a directions hearing before me, CGH sought an order for better particularisation of the Commissioner’s March 2019 forfeiture application. CGH rely on an affidavit of Mr Simon Tsapepas affirmed 3 August 2021. The applicant submitted that such particularisation is necessary before it can proceed with its exclusion applications. The parties addressed argument to the issue of whether the Commissioner’s forfeiture applications were adequately defined and whether ‘particulars’ could be sought and ordered. I granted the parties leave to supplement their oral arguments with written submissions. I received submissions from CGH dated 11 August 2021 and from the Commissioner dated 23 August 2021.
The Commission raised a preliminary point. The applicants have not complied with various orders that they file their affidavit material in support of the exclusion applications. Those timetabling orders required compliance by 2 November 2020, extended to 19 February 2021, further extended to 5 May 2021 and then 14 May 2021. From 7 April 2021, any further extensions were to be supported by affidavit material.
Since 17 May 2021, rather than seeking an extension and filing a supporting affidavit, CGH by its solicitors has engaged in an exchange of correspondence seeking the Commissioner’s agreement to defer CGH filing its affidavit material until the Commissioner provides certain details of its forfeiture applications. Those details are now sought as an order for ‘particulars’. The Commissioner objects to CGH making the application in circumstances where it is in breach of orders that it provide affidavits in support of the exclusion applications, or affidavit support for any request for further time to do so.
CGH does not seek particulars relating to the residue funds[4] which are held by the Official Trustee. CGH should therefore have complied with the orders in relation to that aspect of its exclusion application already. No explanation for its failure to do so has been provided.
[4]Which are the subject of the forfeiture application dated 4 December 2019.
In respect of the other three sums,[5] they seek orders that, by a certain date the Commissioner file and serve ‘Particulars of the Forfeiture application’ specifying:
[5]The subject of the forfeiture application dated 21 March 2019.
(a) the entity from which forfeiture is sought with respect to the AMG funds, the CGAM funds and the transferred sum;
(b) whether the AMG funds, the CGAM funds and the transferred sum are held by the Official Trustee; and if so,
(c) whether any forfeiture order, if made, would be satisfied by funds presently held by the Official Trustee.
Can a request for Particulars be made?
A proceeding for restraining orders under the POCA is a civil proceeding not criminal.[6] However, it is governed by the Supreme Court (Criminal Procedure) Rules 2017 (Vic) (Criminal Procedure Rules).[7] Further, the Civil Procedure Act 2010 (Vic) does not apply.[8] Supreme Court civil proceedings are commenced by Originating Motion or Writ except where otherwise provided by or under any Act.[9] POCA provides that a proceeds of crime authority may apply for a restraining order and that such an application is supported by an affidavit and subject to various notice requirements to others.[10] The Criminal Procedure Rules provide for the form of application and supporting affidavit material. The nature of an application and the basis upon which the issues are identified is analogous to the process followed in a proceeding commenced by Originating Motion. There is no provision in the Criminal Procedure Rules for pleadings as contemplated by Order 13 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) as are applicable to proceedings commenced by Writ.
[6]POCA (n 2) s 312.
[7]Supreme Court (Criminal Procedure) Rules 2017 (Vic) o 6 pt 3, which deals with Applications made under the Commonwealth Act.
[8][8] Civil Procedure Act 2010 (Vic) s 4(2)(d).
[9]Supreme Court (Criminal Procedure) Rules 2017 (Vic) r 4.01.
[10]POCA (n 2) s 25(1).
CGH nevertheless contends that a request for ’particulars‘ may be made and that it is appropriate in this case to do so. It relies on the NSW Supreme Court case of AFP v Nguyen.[11] Nguyen was an applicant seeking to revoke a restraining order. As such, there was a statutory obligation upon her to provide grounds of her application which, as Fagan J said, required the applicant ’to particularise his or her attack upon an existing restraining order, not merely to recite the statutory formulation of the test for overturning it’. Ms Nguyen was criticised for her continued refusal to set out any such ‘particularised‘ grounds prior to the hearing. It was the failure to foreshadow the case that was criticised and led to the possibility of an unnecessary and protracted hearing. CGH relies on this aspect of Nguyen to contend that without the requested details from the Commissioner there is potential for an unnecessary and protracted proceeding.
[11]Nguyen (n 3).
Further, CGH points to two occasions where the County Court of Victoria accepted that an application could be made for particulars. In the first of the two cases, Judge Misso observed that ’particulars are necessary where they will permit the parties to understand the grounds upon which an application may be made or opposed ‘[12] In that case, the Judge was referred to Nguyen, as well as Commissioner of the AFP v Courtenay Investments Pty Ltd[13] and Commissioner of the AFP v Hart.[14] The Judge observed that both counsel before him acknowledged that an application and its grounds do not carry a requirement to plead in a way expected with a statement of claim and defence. Within that context the Judge accepted that it is necessary for the parties to understand the battleground as it is set out by an application and its opposition as disclosed by grounds, evidence in affidavits and if necessary, by judicial pronouncement. The Judge did not accept that the applicants were kept in the dark as to the battleground.
[12]Sadafi & Anor v Commissioner of the Australian Federal Police [2018] VCC 1145.
[13](No 4) [2015] WASC 101.
[14][2018] 262 CLR 76.
In the second of the two cases, Judge Dyer was required to rule on the adequacy of the grounds of opposition filed by the Commissioner.[15] His Honour ’did not accept that it [was] appropriate that orders mandating pleadings play any role in litigation under the POCA’.[16] CGH submits nevertheless that it is entitled to the particulars as part of its entitlement to a fair hearing. CGH describes the position as analogous to requiring a party to file a defence before advising against whom ultimate relief is sought.
[15]Qian & Ors v Commissioner of the Australian Federal Police(Ruling No 2) [2021] VCC 846.
[16]Ibid [23].
The Commissioner opposes the request submitting that particulars are something recognised in proceedings between parties and serve to define the facts and legal issues that each wishes to assert. The function of pleadings, and particulars, is to control the evidence and to allow the parties to know the case each is to meet. By contrast, each application under the POCA requires the applicant to satisfy the Court of the relevant matters prescribed therein. In this case, the procedure is more aligned with administrative law proceedings than that of inter-partes civil proceedings. Were it appropriate to approach the request on the principles applicable to pleadings, the Commissioner submits that what is sought is not facts or matters necessary to understand the case CGH is to meet but are in the nature of interrogatories.
I accept the Commissioner’s submissions. The analogy to filing a defence is misconceived. CGH is not defending a forfeiture application. Its interest is identified by the exclusion applications that it has filed. An order for particulars, in a fashion associated with matters contested by exchange of pleadings, has no place in an application contested by exchange of grounds and accompanying evidence as to those grounds. That is not to say that ‘grounds’ if unintelligible or uninformative to a respondent cannot be sought to be clarified if it is appropriate in the circumstances. Further, a Court may intervene to compel a party to do so. Nguyen goes no further than that. Neither County Court case is of assistance to CGH to demonstrate that some availability of particulars generally exists separate to the orderly exchange of grounds and affidavits in support of those grounds. If anything, Qian supports the opposite view.
It is important to bear in mind that in Hart the POCA application under consideration (under the relevant Queensland procedural rules) had been one conducted with pleadings. In Courtney Investments the trial proceeded on a statement of agreed facts that Edelman J said were treated as a pleading. Nothing in either case lends support to a general right to ‘particulars’ of an application as that procedure is governed in Victoria.
A request to clarify grounds may, in appropriate circumstances, be sought. But in my opinion there is no basis for a person to seek particulars of an application as that term is understood in civil procedure. In this case, some of the ‘particulars’ might be more accurately described as interrogatories directed at the Commissioner’s intentions.
In circumstances where the CGH applications for exclusion suffer from the same deficiency as that of the applicant in Nguyen, there is force in the submission of the Commissioner that a belated request to defer provision of grounds and affidavits in support of them by CGH should not be countenanced.
Is there a need for CGH to know information about possible enforcement?
In short, CGH wants to know whether it might be at risk of having funds that it holds forfeited beyond those it has lodged with the Official Trustee. It seems to anticipate this risk if CGAM or Goldmate have not complied with the orders to place funds in the custody and control of the Official Trustee. Underlying the request is an argument of CGH that what is restrained is a transaction or transfer rather than something that is held by an entity. This is why particulars are sought, so that CGH can know whether any forfeiture order might be enforced against it. The issue of whether it amounts to property as defined by the POCA is not only raised to explain and justify the request for information, but is also said to remain an issue for ventilation at some later stage in the proceeding. It is an issue that has already received some oxygen.
Before Moore J, in its application to revoke the original restraining order, CGH argued that the proposed orders did not sufficiently nominate the property to be restrained. His Honour held that the residue funds and the transferred sum were sufficiently identified (or particularised, as was the descriptor in issue) as property. The ‘particulars’ sought now are distinguished because they relate to transfers to which CGH is not a party: from AMG to CGAM, CGAM to Goldmate, and Goldmate to the Official Trustee.
CGH submits that the nature of its interest can only be proved when the property is properly identified. Leaving to one side for the present whether funds, identified by way of an amount transferred from A to B, is indeed property as defined, it seems tolerably clear that what is restrained are funds associated with four identified transfers. To the extent that CGH asserts a specified interest under section 29 in any of the funds, it is for CGH to demonstrate the nature of that interest. However, CGH submits that some further identification is required in the forfeiture application and that it is entitled to that information, not to understand the forfeiture application but in order to decide whether to pursue exclusion.
Forfeiture orders are sought by the Commissioner under section 49 – Forfeiture of property suspected of being proceeds of indictable offences etc. Section 73 is found in Division 5 which is concerned with Reducing the effect of forfeiture orders. One method of reduction is by making exclusion orders.[17] Section 73 provides for making exclusion orders:
[17]See the POCA, s 74 for different processes.
73 Making Exclusion orders
(1)A court that makes a *forfeiture order, or that is hearing, or is to hear, an application (a forfeiture application) for a forfeiture order must make an order excluding a specified *interest in property from forfeiture (an exclusion order) if:
(a) a person applies for the exclusion order; and
(b)the forfeiture order or the forfeiture application, specifies the property in which the applicant has an interest;[18] and
[18](Underlining added).
(c)if the forfeiture order was (or the forfeiture order applied for would be) made under section 47 or 49 – the court is satisfied that the applicant’s interest in the property is neither of the following:
(i) *proceeds of *unlawful activity;
(ii)if an offence on which the order was (or would be) based in a serious offence – and instrument of any serious offence: and
…
(2) An exclusion order must:
(a)specify the nature extent and value (at the time of making the order) of the interest concerned; and
(b)direct that the interest be excluded from the operation of the relevant forfeiture order; and
…
CGH submit that one condition of making an exclusion order is that:
the forfeiture order or forfeiture application specifies the property that the applicant has an interest. If the property subject of the forfeiture application is held by the Official Trustee, transferred by Goldmate pursuant to the orders dated 6 March 2019 then CGH would have no interest in the property. Further if the property is held by CGAM and not by CGH then CGH would have no interest in the property.[19]
[19]Applicant, ‘Outline of Submissions’, Submissions in Compass Global Holdings Pty Ltd v the Commissioner of the Australian Federal Police, S ECI 2018 02124, 11 August 2021, [56].
This submission focuses on section 73(1)(b) of the POCA and relies on it to argue that identification of whether or not funds are held by the Official Trustee is part of the identification of property to which the forfeiture application relates. In my view, the submission is based upon a misreading of section 73. That provision is directed to identifying the interest to be excluded. It ensures that it is an interest in that property which is otherwise to be forfeited. The provision says nothing about what information is required by a forfeiture application which will no doubt reference back to the property restrained.
An exclusion application is one of a number of ‘interlocutory stages’ before forfeiture,[20] which commence with restraint. The obligation on CGH by filing the exclusion applications is to demonstrate the interest it has in the restrained property and that the interest is not proceeds of unlawful activity or an instrument of an offence. Once established, that interest will be identified and excluded from property to be forfeited. Where the funds are held is a different question to the interest that a party might have in those funds. Beyond establishing its specified interest, CGH has no other interest in funds that might otherwise be forfeited.
[20]As described by Adams J in Commissioner of the Australian Federal Police v Tjongosutiono [2018] NSWSC 48 and approved in Mai v Commissioner of the Australian Federal Police (2020) 62 VR 118.
CGH’s submission that if the ‘property’ is held by the Official Trustee then CGH has no interest in it does not explain why, if it is not held by the Official Trustee, but is located somewhere else, that it does or might have an interest.
I do not accept the submission that CGH would be required to advise if they hold or have ever held funds said to be paid by AMG to CGAM, or by CGAM to Goldmate in circumstances where they were not a party to the transaction that identifies the funds restrained. They are not required to do so. They may choose to do so for the purpose of establishing their own specified interest if it is relevant.
The Commissioner submits that the proposed order requiring identification of the entity against which forfeiture is sought is not meaningful. Forfeiture orders under sections 47 and 49 are not sought from any particular entity, but the order relevant to each section compels that ‘property specified in the order is forfeited to the Commonwealth’; thereby, in effect, an order in rem.
The concern with ‘enforcement’ of any forfeiture order is misconceived. Once an order for forfeiture is made, it is enforceable against the person holding that property. It is not necessary to identify where the property is presently located. This highlights the importance of identifying and excluding all other interests prior to forfeiture. The Commissioner is not required by the POCA to particularise against which entity forfeiture is sought as CGH contend. To seek information about how the Commissioner might seek to enforce forfeiture, or more accurately against whom if funds are not held by the Official Trustee, is patently not for the process of identifying whether CGH’s own interest should be excluded.
CGH also infers that the Commissioner is requiring CGH to file material in support of its exclusion application to enable the Commission to substantiate its forfeiture application. This is because reference was made to a forensic accountant’s report, not yet completed, which the Commissioner intends to rely in opposition to exclusion applications and in support of forfeiture applications. That report is addressing the question of tracing the CGAM funds and it is clear from the correspondence that those funds have not been transferred to the Official Trustee. Whether or not exclusion applications are filed, the Commissioner is obliged to provide evidence in support of the forfeiture applications. It is clear that any exclusion application that is made must be determined before forfeiture. I do not draw any inference that the Commissioner is seeking to improperly require CGH to file affidavit material. That requirement has been imposed by court orders.
There is another exclusion application on foot in relation to the transfers of funds even though Goldmate and CGAM have not filed exclusion applications. In particular, Xueyue Song has also filed an exclusion application in relation to the AMG funds, the CGAM funds and the transferred sum, which will also fall to be determined before any forfeiture application. The issues in dispute will be narrowed by CGH filing grounds for its exclusion applications and such material as it seeks to rely on in support of those applications.
For the reasons outlined above, I will not make the orders sought by the Applicant under paragraph [65] of their submissions dated 11 August 2021.
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