Director of Public Prosecutions (Cth) v Chia
[2004] VSC 184
•26 May 2004
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
PRACTICE COURT
No. 1496 of 2003
| THE DIRECTOR OF PUBLIC PROSECUTIONS (COMMONWEALTH) | Plaintiff |
| v | |
| TENK LENG CHIA | Defendant |
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JUDGE: | CHIEF JUSTICE WARREN | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 7 and 25 May 2004 | |
DATE OF JUDGMENT: | 26 May 2004 | |
CASE MAY BE CITED AS: | DPP (Cth) v Chia | |
MEDIUM NEUTRAL CITATION: | [2004] VSC 184 | Revised 2 June 2004 |
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BANKER AND CUSTOMER - Ownership of proceeds of account.
PROPERTY - Proceeds of bank account - Forfeiture.
PROCEEDS OF CRIME ACT (Cth) 2002, ss.5, 19, 38, 39, 49, 58, 276, 329, 330 and 338 - Restraining order - Custody order – Official Trustee – Application to vary restraining order made ex parte.
CHEQUES ACT 1986 (Cth) – Section 67.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Ms M.M. Gordon S.C. with Mr D.W. Bennett | Office of Public Prosecutions |
| For the Defendant | No appearance | |
| For the Applicant | Mr Judd Q.C. with Mr P. Dowdy | Henry Davis York Solicitors |
| For Bayerische Hypo und Vereinsbank AG (HVB) For Aspinalls For the Official Trustee | Mr R. Peters Mr R. Macaw Q.C. with Mr S. Linden | Arnold Bloch Leibler Coudert Bros Australian Government Solicitor |
HER HONOUR:
The applicant, Westpac Banking Corporation (“Westpac”) seeks by interlocutory application the vacation of part of an order made by a judge of this Court pursuant to s.38 of the Proceeds of Crime Act 2002 (Cth) (“the Act”). The plaintiff, the Commonwealth Director of Public Prosecutions, commenced the proceeding by originating motion on 17 October 2003. The plaintiff in the proceeding seeks orders:
1.Pursuant to s.49(1) of the Proceeds of Crime Act 2002 (Cth) the forfeiture to the Commonwealth of certain funds defined in the schedule to the originating motion.
2.Pursuant to s.58(2) of the Act direct the Official Trustee to execute any deed or instrument in the name of any person who owns or has an estate interest or right in the said property and to do any act or thing necessary to give validity and operation to any such deed or instrument, as may be necessary or convenient for giving effect to the preceding paragraph.
Section 49(1) of the Act provides:
“49 Forfeiture orders - conduct constituting indictable offences etc.
(1)A court with proceeds jurisdiction must make an order that property specified in the order is forfeited to the Commonwealth if:
(a)the DPP applies for the order; and
(b)the property to be specified in the order is covered by a restraining order under section 19 that 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 terrorism offences; and
(d)the court is satisfied that each such offence that is not a terrorism offence was committed within the 6 years preceding the application for the restraining order, or since that application was made; and
(e)the court is satisfied that the DPP has taken reasonable steps to identify and notify persons with an interest in the property.”
Section 58(2) of the Proceeds of Crime Act provides:
“58 The court may also make supporting directions
(1)If a court makes a forfeiture order, the court has power to give all directions that are necessary or convenient for giving effect to the order.
(2)This includes, for a forfeiture order specifying registrable property, a direction to an officer of the court to do anything necessary and reasonable to obtain possession of any document necessary for the transfer of the property.”
Background to the Proceeding
Prior to the filing of the originating motion, upon an application made by the Director ex parte on affidavit, on 24 September 2003, Dodds-Streeton J made a restraining order pursuant to s.19 of the Proceeds of Crime Act in relation to funds standing to the credit of Westpac in account No. 032 024 307 855 (“the account”) held in the name of Teck Leng Chia. Section 19 of the Act provides:
“19 Restraining orders - people suspected of committing indictable offences etc.
When a restraining order must be made
(1)A court with proceeds jurisdiction must order that:
(a)property must not be disposed of or otherwise dealt with by any person; or
(b)property must not be disposed of or otherwise dealt with by any person except in the manner and circumstances specified in the order;
if:
(c)the DPP applies for the order; and
(d)there are reasonable grounds to suspect that the property is:
(i)the proceeds of a terrorism offence or any other indictable offence, a foreign indictable offence or an indictable offence of Commonwealth concern (whether or not the identity of the person who committed the offence is known); or
(ii)an instrument of a terrorism offence;
and, if the offence is not a terrorism offence, that the offence was committed within the 6 years preceding the application, or since the application was made; and
(e)the application for the order is supported by an affidavit of an authorised officer stating that the authorised officer suspects that:
(i)in any case - the property is proceeds of the offence; or
(ii)if the offence to which the order relates is a terrorism offence - the property is an instrument of the offence;
and including the grounds on which the authorised officer holds the suspicion; and
(f)the court is satisfied that the authorised officer who made the affidavit holds the suspicion stated in the affidavit on reasonable grounds.
Property that a restraining order may cover
(2)The order must specify, as property that must not be disposed of or otherwise dealt with, the property specified in the application for the order, to the extent that the court is satisfied that there are reasonable grounds to suspect that that property is:
(a)in any case - proceeds of the offence; or
(b)if the offence to which the order relates is a terrorism offence - an instrument of the offence.”
Orders were also made on 24 September 2003 pursuant to s.38 of the Act that the Official Trustee take custody and control of that property, being the account, until further order. Section 38 provides:
“38 The court may order the Official Trustee to take custody and control of property, or specify property, covered by a restraining order if the court is satisfied that this is required.”
Thus, the first orders made were in the nature of a restraining order and the second orders made were in the nature of a custody order.
In the schedule to the originating motion the property that is the subject of the proceeding is described:
“The funds under the custody and control of the Official Trustee pursuant to the restraining order made by the Supreme Court of Victoria in proceeding number 1496 of 2003 on 24 September 2003, being funds that were previously held in Westpac Banking Corporation account number 032 024 307 855, together with any interest that has accrued thereon since the making of the restraining order.”
The Background Facts to the Application
Chia together with one Fun opened the account with Westpac in December 2000. It appears that the funds were used primarily for the gambling purposes of Chia. Apparently, those moneys, together with other moneys, were stolen by Chia. On 18 August 2003 Chia drew a cheque for the sum of £1,640,000 and on 20 August 2003 drew a further cheque for £990,000. The cheques were made payable to Aspinalls On‑Line Inc (“Aspinalls”). The cheques are now held, apparently, by another party, NatWest. It is to be observed that there was a delay by Westpac in responding to the presentation of the two cheques. However, I was informed that it was not a matter with which the Court need be concerned at this time.
On 2 September 2003 Chia was arrested. Subsequently, on 5 September 2003, the payee on each of the cheques wrote to Westpac demanding payment on the cheques. On 19 September 2003 Westpac asserted its right to honour the first cheque and to remit the balance of the funds in the subject account to Singapore. On the same day, Westpac wrote to Chia confirming that the sum of $22,314,384.15 would be transferred on 22 September 2003 and that a further sum of $7,000,000 would be held by Westpac which was seeking clarification as to its position. On 22 September Westpac transferred the sum of $22,314,384.15 to an account controlled by the Singaporean police. On 23 September 2003 Westpac transferred the balance of the funds in the account, being the sum of $7,000,000 together with accumulated interest, from the account to a Westpac suspense account.
These events, broadly described, led to the commencement of proceedings in the Supreme Court of Victoria.
On 24 September 2003 an application was made ex parte by the Director of Public Prosecutions in this Court for the orders already referred to and as made by Dodds‑Streeton J on that day.
Other proceedings
On 7 January 2004 Aspinalls commenced proceedings in the Supreme Court of New South Wales against Westpac pursuant to s.67 of the Cheques Act 1986 (Cth)[1] and against Chia. It transpired on 9 January 2004 that Westpac transferred the funds it was holding in the suspense account back into the subject account. On 12 March 2004 Aspinalls applied for summary judgment against Chia and the application was adjourned to 16 April 2004. On 2 April 2004 Chia pleaded guilty to various criminal charges and was convicted. On 16 April 2004 summary judgment was entered against Chia in favour of Aspinalls in the sum of £1,640,000 together with interest and costs. Other aspects of the application were adjourned to 30 April 2004.
[1]67 Drawee institution to pay or dishonour promptly
(1)Where a cheque is duly presented for payment, the drawee institution shall either pay or dishonour the cheque as soon as is reasonably practicable and, if the drawee institution fails to do so, then, unless it has become aware of a defect in the holder’s title or that the holder has no title to the cheque, the drawee institution:
(a)the fact that the instrument is a cheque and that it is reasonable to expect a cheque that has been duly presented for payment to be either paid or dishonoured promptly;
(b)the means by which, and the place at which, the cheque was presented;
(c)the means that were available to it for paying or dishonouring the cheque;
(d)the relative speed, reliability and cost of those means;
(e)the usage of financial institutions in relation to the payment and dishonour of cheques;
(f)in a case where a request under subsection 62(5) or 62A(2) was made by it in relation to the cheque - the following matters, namely:
(i)the making of the request;
(ii)the nature of the request;
(iii)the time within which the request was made;
(iv)the means by which the request was made;
(v)the means that were available to it for making the request;
(vi)the relative speed, reliability and cost of those means;
(vii)whether or not the request was complied with;
(viii)if the request was complied with - the time within which the request was complied with;
(ix)if the request was a request to furnish further particulars and the request was complied with - the nature of the particulars furnished to it;
(x)the usage of financial institutions in relation to the making of requests under subsection 62(5) or 62A(2); and
(g)any other facts of the particular case, including:
(i)the nature of the cheque; and
(ii)whether any delay in paying or dishonouring the cheque was:
(A)caused by circumstances beyond the control of the drawee institution; and
(B)not imputable to default, misconduct or negligence on the part of the drawee institution.
3.Subsection (1) does not prejudice any rights that the drawee institution may have to debit the drawer’s account with the amount of the cheque.
Meanwhile, Westpac filed the present application in the Supreme Court of Victoria seeking that the second part of the order made by Dodds‑Streeton J on 24 September, the custody order, be vacated. Westpac proffered an undertaking that it would not make any payment or disposition of any kind whatsoever so as to reduce or diminish the credit balance standing to the account if the orders sought were made.
On 23 April 2004 Aspinalls issued an application in the Supreme Court of New South Wales seeking a garnishment notice against Westpac in relation to the funds in the account.
The present application was heard on 7 May 2004 and judgment was reserved. Subsequently, on 10 May 2004 Westpac filed an application ex parte in the Supreme Court of New South Wales seeking an order to stay the garnishment proceedings, later amended to an application to set aside those proceedings. On 10 May 2004 the application for leave to file and serve a garnishment notice was adjourned until 21 May 2004 by order of the Supreme Court of New South Wales. The Director of Public Prosecutions became aware of the application in the New South Wales Supreme Court and was represented on the return of the application to set aside before Bergin J on 20 May 2004. On the first return of the application, her Honour extended the stay (ordered on 10 May 2004) to 28 May 2004. As a consequence of these developments, the Director requested the listing for mention of the present application, which occurred on 25 May 2004. I was informed that in the New South Wales Supreme Court proceedings Bergin J had required Aspinalls to provide the Court with a written undertaking that it would not serve its garnishment notice on Westpac until the proceedings instituted by the Director of Public Prosecutions in the Supreme Court of Victoria had been finalised. Further, whilst judgment was reserved on the present application the substantive proceeding in this Court, that is the originating motion, was referred to the Listing Master to be fixed for hearing.
The Application
The Bank’s application is that paragraph 2 of the Orders made by the Court on 24 September 2003 be vacated upon the following undertakings given on behalf of the Bank:
(a)that as at the date of the Order of the Court (24 September 2003) the amount standing to the credit of the said account (disregarding the unpaid cheques presented on behalf of Aspinalls) was $7,084,40.92 and that from that date interest will accrue on the account balance at a fluctuating rate which is currently 4.65% per annum;
(b)as at 7 May 2004 the amount standing to the credit of the said account is $7,262,974.76;
(c)that pending the hearing and determination of the motion dated 13 October 2003 it will not debit the account with any amount and that it will credit the account with the said interest;
(d)that upon the determination of the Motion dated 13 October 2003 it will pay the amount standing to the credit of Teck Leng Chia, account no. 032 024 307 885 as directed by the Court.
Further, the application is made pursuant to the liberty granted in paragraph 5 of the Orders of the Court made on 24 September 2003. The interest of Westpac is in the manner in which the balance standing to the credit of Chia in account no. 032 024 307 855 is to be dealt with, having regard to the direction of the Official Trustee to Westpac to, in effect, transfer “all funds standing to the credit of the account” to the Official Trustee unless the Court varies the Order made on 24 September 2004. Such a transfer may not relieve Westpac of its obligations to its customer (Chia) or NatWest, the holder of cheques payable to Aspinalls. Furthermore, it was submitted, such a payment may be in contempt of an order made by the High Court of the Republic of Singapore.
The Director of Public Prosecutions opposed the application by Westpac on three grounds: first, it was submitted that Westpac requires leave of the Court to bring the application and that no basis has been demonstrated such as to justify the granting of leave; secondly, even so, the Director submitted that the order sought to be varied, namely the custody order, was a necessary order and should not be varied. It was submitted that the circumstances did not support the vacation of the order as sought by Westpac. Thirdly, it was submitted that the application for variation misconceived the purpose of the legislation.
Mr Judd QC who appeared with Mr Dowdy for Westpac submitted that the order made by Dodds‑Streeton J on 24 September 2003 related to “all funds standing to the credit … “ and that the extent of the expression “the credit” is uncertain. It was submitted that the extent of the credit standing to the account of Chia is only capable of identification after the obligation of Westpac to pay cheques held by NatWest has been determined. It was submitted that if Westpac is obliged to pay those cheques the credit balance in the subject account will be minimal. It was submitted that if Westpac, pursuant to the orders of Dodds‑Streeton J, is required to release the moneys to the extent of the present credit balance of the account without resolution of the claim for payment by NatWest, difficulties would arise. It was submitted that the transfer of the credit balance in moneys worth, that is approximately $7,000,000, would discharge the obligations of Westpac to Chia, reduce his credit balance to nil and render the Aspinalls cheques later presented for payment by NatWest worthless. Alternatively, the transfer of moneys worth by Westpac to the Official Trustee would be tantamount to a transfer by Westpac of its own funds to which no order could properly attach, thereby leaving intact the credit balance in favour of Chia. Thus, it was argued, (in that circumstance) that the claimants under or through Chia would be entitled to be paid under the banker-customer relationship or by reason of the operation of s.67 of the Cheques Act. In summary, therefore, it was submitted by Westpac that if the first approach was taken the risk lay with Aspinalls but if (alternatively), the latter approach was taken then the risk lay with Westpac. It is appropriate at this juncture to observe that when the orders were made ex parte on 24 September 2003 the usual undertaking as to damages was proffered by the Director on behalf of the Commonwealth. It was submitted for Westpac that it should not be expected to rely upon the undertaking in order to protect its position. Further, it was submitted that in light of the undertakings proffered by Westpac with respect to the present application there was no risk to, or disregard of, the operation of the Proceeds of Crimes Act in this instance and the respective positions of Westpac, NatWest and Aspinalls would be protected until determined by the Court whereupon the amount standing to the credit of the account of Chia would be ascertained.
Mr Judd urged that the credit balance with respect to the Chia account is significant in this instance because the present credit balance may exceed the ultimate entitlement of the customer depending upon whether or not Westpac is obliged to pay the cheques held by NatWest. It was submitted that when the deposits were made by Chia they became, as a matter of law, the property of Westpac and were exchanged for an obligation to re‑pay on demand: see Foley v Hill[2]; Base Investments Limited v Canadian Imperial Bank of Commerce[3]; Re Metway Bank Limited[4]; also, National Australia Bank Limited v KDS Construction Services Pty Ltd[5]. Thus, Mr Judd submitted that there is no fund as such to satisfy the concept or description “funds standing to the credit” as recited in the order of Dodds‑Streeton J made on 24 September 2003. Mr Judd submitted that the entitlement to the cheques could only be determined after the fate of the cheques was decided. In other words, the real issue is whether or not the cheques are good and must be paid. It was submitted for Westpac that the question must be determined before Westpac should be obliged to hand over the amount in the account said to be the present credit balance of that account. It is the fear of Westpac that if a premature transfer of custody takes place of the subject $7,000,000 there will be two consequences. Either the transfer of funds to that amount to the Official Trustee will have the effect of depleting the account of Chia. If that occurs, it has the effect that Aspinalls may have nothing to resort to or recover from the cheques or, alternatively, the bank may have to pay Aspinalls without the ability to recover in the ordinary course from the account. On the other hand, so it was put, the transfer of the money or the transfer of an amount of $7,000,000 does not have the effect of interfering with or reducing the entitlement of Chia, rather, what is being transferred is the bank’s money to which the order does not attach and was never intended to attach. Hence, it was submitted that what will occur is either a significant risk of loss to Aspinalls or a significant risk of loss to Westpac.
[2](1848) 2 HLC 28, 36-37.
[3][1986] 1 WLR 1072, 1073.
[4](1991) 1 Qd R 120, 123.
[5](1987) 163 CLR 668, 676.
The Submissions of the Director of Public Prosecutions
It was submitted by Ms Gordon SC who appeared with Mr Bennett for the Director that Westpac required leave of the Court to apply for an ancillary order and reliance was placed on s.39 of the Act. Section 39 of the 2002 Act provides for the making of orders ancillary to a restraining order. It provides, so far as is relevant, as follows:
(1)The court that made a restraining order, or any other court that could have made the restraining order, may make any ancillary orders that the court considers appropriate and, without limiting the generality of this ,the court may make any one or more of the following orders:
…
(2)The court can only make an ancillary order on the application of:
(a)the DPP; or
(b)the owner of the property covered by the order; or
(c)if the Official Trustee was ordered to take custody and control of the property - the Official Trustee; or
(d)any other person who has the leave of the court.
(3)A person who applies for an ancillary order must give written notice of the application to all other persons entitled to make such an application.
(4)An ancillary order may be made:
(a)if it is made by the court that made the restraining order - when making the restraining order; or
(b)if any case - at any time after the restraining order is made.”
Section 39(2) provides that an ancillary order is made only on the application of the DPP, the owner of the property, the Official Trustee or any other person who has the leave of the Court. Section 38 of the Act provides that the Court “may order the Official Trustee to take custody and control of property, or specify property, covered by a restraining order if the Court is satisfied that this is required”. It was submitted by Ms Gordon for the Director that s.38 provided the criterion that governed the determination of an application under s.39. Thus, it was submitted, that when the orders were made on 24 September 2003, Dodds‑Streeton J was satisfied that the making of the subject custody order was required within the meaning of and for the purposes of s.38 of the Act.
It was not suggested on behalf of Westpac that circumstances had changed in any relevant sense since the orders were made on 24 September 2003 such that the custody order was no longer required. On that basis, therefore, it was argued for the Director that leave to apply for the ancillary order should be refused against Westpac. It was submitted on behalf of Westpac that no leave was required for the purposes of s.39 because the bank applied pursuant to liberty to apply ordered by Dodds‑Streeton J on 24 September 2003. Furthermore, it was submitted that Westpac was a party affected by the order made, indeed, there could not be a party more affected by the order than the bank. In addition, it was argued that if resort is had to s.39(2) of the Act then Westpac is the owner of the property because until there is a determination of the moneys to which Chia is entitled then the money is owned by the bank. Thus, Westpac put in issue ownership of the property that is the subject of the orders made by Dodds‑Streeton J. Mr Judd submitted that the orders were made ex parte and in the absence of Westpac. Indeed, it was not a party to the original proceeding.
The issue has been considered in part by the Federal Court in Vickers v Minister for Business and Consumer Affairs and ors[6].
[6](1982) 43 ALR 389.
In that case the applicant was arrested and charged with illegally importing drugs. At the time of the arrest money was received from the applicant and suspected of being the proceeds of sale of narcotics. The applicant was subsequently acquitted of the importation charge and sought the return of moneys seized. Although the case was one concerned with the provisions of the Customs Act 1901 (Cth) Morling J held that moneys standing to the credit of a savings bank account belonged to the bank, not the customer and that the owner of the account had no more than a right to call for payment. The Court cited Foley v Hill[7].
[7]Ibid.
I consider that, in the circumstances, it is reasonable and appropriate for Westpac to rely upon the order of liberty to apply made by Dodds‑Streeton J. The orders were made ex parte and it would be harsh and unreasonable if Westpac could not seek to ventilate the matter before the Court: see National Australia Bank Limited v Bond Brewings Holdings Ltd[8]. I am satisfied, therefore, that so far as leave is necessary leave should be granted. It is unnecessary at this point to consider the issue of ownership, a subject I will return to shortly with respect to the merits of the present application.
[8][1991] 1 VR 386.
I turn then to the submissions of the Director as to whether the custody order should be vacated. It was submitted that the funds in the account are “proceeds” of an offence for the purposes of the Act. Further, it was submitted that it is appropriate to take into account the objects and scheme of the Act and, also, the role of the Official Trustee as provided for in the Act. Section 5 of the Act[9] defines the principal objects as being, among other matters, to deprive persons of the proceeds of offences. Section 276 provides that the Official Trustee may do anything that is reasonably necessary for the purpose of preserving the subject property. In this respect, it was submitted, the Official Trustee takes control and custody of property for the purpose of securing it for subsequent confiscation and for the purpose of carrying out the directions of the Court. So much was established in Deputy Commissioner of Taxation v Kunz[10]. In that respect, the Official Trustee operates as a representative of the Court and is the mechanism by which the Court takes the property under its own control[11]. Of course, the Act provides a procedure, upon the hearing of an application for forfeiture, by which a party that alleges an interest in the property can assert its interest and the Court can thereby determine that interest.
[9]5 Principal objects
The principal objects of this Act are:
(a) to deprive persons of the proceeds of offences, the instruments of offences, and benefits derived from offences, against the laws of the Commonwealth or the non‑governing Territories; and
(b) to deprive persons of literary proceeds derived from the commercial exploitation of their notoriety from having committed offences; and
(c) to punish and deter persons from breaching laws of the Commonwealth or the non‑governing Territories; and
(d) to prevent the reinvestment of proceeds, instruments, benefits and literary proceeds in further criminal activities; and
(e) to enable law enforcement authorities effectively to trace proceeds, instruments, benefits and literary proceeds; and
(f) to give effect to Australia’s obligations under the Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime, and other international agreements relating to proceeds of crime; and
(g) to provide for confiscation orders and restraining orders made in respect of offences against the laws of the States or the self-governing Territories to be enforced in the other Territories.
[10](1992) ATC 4,521, 4,528 (per Beach J with whom Fullagar and Brooking JJ agreed).
[11]Deputy Commissioner of Taxation v Kunz (1990) ATC 4,977, 4982, 4984; (1992) ATC 4,521, 4,527-4,528.
It was emphasised by Ms Gordon in the course of her submissions that the confiscation provisions of the Act constitute craconian provisions. That is certainly the case and, indeed, they are driven by a particular purpose, deprivation of the proceeds of offences. This matter was never properly addressed on behalf of Westpac. The situation from the perspective of the bank is rendered more difficult by the proffering of the undertaking as to damages before Dodds‑Streeton J and upon which basis, in the usual way[12], the order, in particular, the custody order, was made. There is no suggestion that there is any difficulty, reservation or inhibition attaching to the proffering of the undertaking as to damages by the Commonwealth. Indeed, it would be difficult to see how that could be so. It was also argued on behalf of the Director that there has been no change in circumstances such as to justify the variation of the order made by Dodds‑Streeton J. Of course, the order made on 24 September 2003 was made ex parte. It was not an interlocutory order made inter partes. That said, it is pertinent to observe that, so far as change has occurred, it has shifted more in favour of the Director. This is for a number of reasons: first, Westpac is not a disinterested third party, rather, it has a real interest in the outcome of the proceedings; secondly, the Director asserts that Westpac has not provided the Official Trustee with an appropriate degree of co‑operation in relation to the funds since the making of the order on 24 September 2003. In the latter respect, the Director complained that Westpac held the relevant funds in a non‑interest bearing suspense account from 23 September 2003 to 9 January 2004 notwithstanding that the Official Trustee requested the transfer of the funds to an interest bearing account. There were other historical facts that need not be recited at present that the Director relied upon to support the assertion of lack of appropriate co‑operation by Westpac. These circumstances included failure to provide a bank statement to the Official Trustee despite requests to do so.
[12]See National Australia Limited v Bond Brewing Holdings Ltd.
The third matter relied upon in this regard by the Director was a risk that the funds may be dealt with by Westpac inadvertently in contravention of the restraining order. Reference was made in the affidavits before the Court to circumstances where that occurred. However, there is a general prevailing presumption that an order will be complied with. Lastly, in this regard it was submitted that in light of the number of parties involved in legal proceedings with respect to the funds (including Aspinalls, Westpac, Chia, the Commonwealth Director of Public Prosecutions and Bayansche Hypo und Veveinsbank AG) the matter of entitlement to the moneys is one that should be determined by the Court, and that the moneys are safer and better located in the control of the Official Trustee.
I do not accept that Westpac is a disinterested third party. It is, quite obviously, a keenly interested party and seeks to protect asserted rights. So far as lack of co‑operation between Westpac and the Official Trustee arises, it seems to me that they are matters that are more appropriately the subject of application, if necessary, by the Official Trustee. It is not a matter in which I need intervene at this point.
Ultimately, I am satisfied that the orders made by Dodds‑Streeton J on 24 September 2003 should not be disturbed. I base my view on three reasons. First, the fact of the proffering of the undertaking by the Commonwealth of Australia; secondly, my view that the proffering of the undertaking by Westpac, although properly and reasonably made, fails to take account of and pay due regard to the purpose of the Act and, in particular, the role of the Official Trustee; thirdly, so far as there is litigation on foot involving a number of parties, they are matters that can be determined by the Court and ultimately traced (it seems to me) through the undertaking as to damages proffered by the Commonwealth of Australia.
So far as the point made by Mr Judd is concerned, namely, that the proceeds of the account for the moment belong to the bank, that is a different issue.
Notwithstanding the submissions by Westpac as to whom the proceeds of the account belonged, that is, that it was the bank’s money, the scheme of the Act is important. The orders made by Dodds‑Streeton J on 24 September 2003 were concerned with “the amount of funds standing to the credit of the account”. Under s.338 of the Proceeds of Crime Act “property” is defined to mean “real or personal property of every description[13], whether situated in Australia or elsewhere and whether tangible or intangible”. It includes “an interest in any such real or personal property”. Section 338 defines the expression “interest” to mean:
“(a)A legal or equitable estate or interest in the property or thing; or
(b)a right, power or privilege in connection with the property or thing; whether present or future and whether vested or contingent.”
[13]My emphasis.
The expression “of every description” is very broad and includes any interest in any such real or personal property. Money standing to the credit of a bank account is personal property; see Vickers v Minister for Business and Consumer Affairs[14]. Furthermore, s.329 of the Act defines “proceeds” of an offence as consisting of or being constituted where it is wholly or partly derived or realised, whether directly or indirectly, from the commission of a relevant offence.[15] Reliance was placed by the Director on the fact that Chia pleaded guilty to crimes which are “foreign indictable offences”.[16] Consequently, Chia, as a result of his crimes, derived funds advanced to him by banks, obtained those funds for the purpose of gambling and deposited the funds. There was unchallenged evidence that Chia opened the account with Westpac for the purposes of depositing his winnings and paying off his losses. Thus, the orders made by Dodds‑Streeton J appear on their face to be orders made with respect to property that was identified as being proceeds of an offence, namely, property identified that was standing to the credit of a bank account in Westpac. Furthermore, s.330(2) of the Act provides that “property becomes proceeds of an offence if it is wholly or partly derived”. Furthermore, s.330(3) provides that property remains proceeds of an offence even if it is credited to an account. The word “account” is defined in s.338 as “any facility or arrangement through which a financial institution accepts deposits or allows withdrawals”. Section 338, in turn, defines “financial institution” as including, among other entities, Australian or foreign financial corporations. The treatment or definition of “property” under the Act is tantamount to a statutory fiction that extends that which constitutes property for the purposes of the statutory regime to include an amount standing to the credit of a bank account in order to overcome the ownership position relied upon by Westpac.
[14]Ibid at 403.
[15]329 Meaning of proceeds and instrument
(1) Property is proceeds of an offence if:
(a) it is wholly derived or realised, whether directly or indirectly, from the commission of the offence; or
(b) it is partly derived or realised, whether directly or indirectly, from the commission of the offence;
whether the property is situated within or outside Australia.
(2) Property is an instrument of an offence if:
(a) the property is used in, or in connection with, the commission of an offence; or
(b) the property is intended to be used in, or in connection with, the commission of an offence;
whether the property is situated within or outside Australia.
(3) Property can be proceeds of an offence or an instrument of an offence even if no person has been convicted of the offence.
(4) Proceeds or an instrument of an unlawful activity means proceeds or an instrument of the offence constituted by the act or omission that constitutes the unlawful activity.
[16]See s.338.
There is an additional aspect of importance and that is the role of the Official Trustee. The Court may order the Official Trustee to take custody and control if it is required. The order made by Dodds‑Streeton J on 24 September 2003 pursuant to s.38 of the Act had such effect.
Essentially, the purpose underlying the scheme of the Act is to provide a regime whereby funds that are the proceeds of crime are restrained and in effect quarantined so that they are able to be dealt with and disposed of in the absence of competing interests until those interests are determined at law. In the present instance there appears to be no issue that the amount standing to the credit of the account of Chia can be determined. Thus, in my view, there is no issue for present purposes as to whether the proceeds of the account constitute the property of Chia or not. The issue is in my view determined by the construction contained in ss.329, 330 and 338 of the Act. On that basis, the present position is determined and the application disposed of.
There were additional arguments put concerning Westpac and Aspinalls and their competing rights and interests. They are matters that in my view I need not determine for present purposes. It seems to me that the only obligation with which I need be concerned is the obligation owed by Westpac pursuant to s.67 of the Cheques Act, that is, to deal with the cheques. It is not until the cheques are drawn, presented and honoured that an amount is paid or credited to the bank account. That does not seem to have occurred in this instance. The order made by Dodds‑Streeton J requires that the funds standing to the credit of the account be restrained and delivered up. I see no basis to vary those orders.
For these reasons I consider that the application by Westpac, supported by Aspinalls, fails and should be dismissed.
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