Director of Public Prosecutions (Cth) v Wei-Liang Tu

[2005] NSWSC 772

CITATION:	DPP (Cth) v Wei-Liang Tu [2005] NSWSC 772
HEARING DATE(S):	19/07/05
JUDGMENT DATE :	19 July 2005
JURISDICTION:	Common Law Division
JUDGMENT OF:	Kirby J
DECISION:	(1) The application is dismissed; (2) The applicant to pay the Director's costs.

CATCHWORDS:	Criminal Practice & Procedure - application to exempt gambling winnings at Casino from forfeiture order.
LEGISLATION CITED:	Proceeds of Crime Act 2002 (Cth) Customs Act 1901 Financial Transaction Reports Act 1988
CASES CITED:	New South Wales Crime Commission v OB & Anor [2002] NSWSC 633
PARTIES:	Director of Public Prosecutions (Cth) Wei-Liang Tu
FILE NUMBER(S):	SC 011184/2003
COUNSEL:	G J Bellew - DPP (Pl/Resp) J Watts (Def/Appl)
SOLICITORS:	DPP (Cth) (Pl/Resp) Back Schwartz Vaughan (Def/Appl)

LOWER COURT JURISDICTION:	District Court
LOWER COURT JUDICIAL OFFICER :	Finnane DCJ

Ex tempore - Revised
IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

JUSTICE DAVID KIRBY

Tuesday 19 July 2005

011184/03 DIRECTOR OF PUBLIC PROSECUTIONS v WEI-LIANG TU

JUDGMENT

1 KIRBY J: Application is made by Wei-Liang Tu (the applicant) against the Director of Public Prosecutions in respect of certain funds which, at the time of his arrest on 14 May 2003, were standing to his credit in an account at the Star City Casino. The funds were subject to a restraining order made under the Commonwealth Proceeds of Crime Act 2002. The application by Mr Tu is made under s94(1) of that Act.

2 Mr Wei-Liang Tu and a Mrs Zhang were charged with the importation and possession of drugs. They separately stood trial before Finnane DCJ and a jury in the District Court. Each was convicted of two offences. In the case of Mr Tu, the first charge was that on 14 May 2003 the defendant did, without reasonable excuse, attempt to obtain possession of prohibited imports to which s233B of the Customs Act 1901 applied, to wit a quantity of methylamphetamine, namely 212 kilograms.

3 The second charge was that on 14 May 2003 he did, without reasonable excuse, have in his possession prohibited imports to which s233B of the Customs Act 1901 applied, to wit a quantity of methylamphetamine, namely 107 kilograms.

The importation charge.

4 The circumstances in which the offences were committed were described by the sentencing Judge. Arrangements were made for the importation into this country of a container of food stuffs from China. Within the container there were 401 boxes. Upon arrival in Australia, the container was x-rayed. The Customs Officers became suspicious about its contents. Once the container was opened, the officers found concealed within 20 of the boxes, methylamphetamine crystals, commonly referred to as Ice. The trial judge referred to the importation as "huge", and it was. It involved some 212,352 grams of the drug which, in terms of purity, amounted to 163,749 grams. The street value was given as $106 million, with a wholesale value of between $25 and $40 million.

5 Each of the 401 boxes had a number on the side. Some numbers had been written with a particular pen. The numbers were ultimately important in connecting the shipment to Mr Tu. Permission was sought and given for a controlled delivery, that is, the release of the container with a substance substituted for all but a very small quantity of the drugs. The container was then the subject of surveillance. It was taken to a warehouse at Ultimo. Mrs Zhang and Mr Tu were observed entering the warehouse. They isolated 15 of the 20 boxes which had the drugs. After they completed their work, Mr Tu drove from the warehouse with Mrs Zhang. She got out of the vehicle and soon after was arrested. She had in her possession some of the drugs, and scales. Later, the applicant was also arrested. He had in his possession a sheet of paper with a list of numbers. Certain numbers were circled. The numbers circled corresponded with the 20 boxes containing the drugs. Mr Tu also had a key and swipe card. The key and card opened the warehouse.

The possession charge.

6 The second charge, that of possession, also involved a very significant quantity of drugs, namely 107,534 grams. In terms of pure methylamphetamine, it amounted to 81,689 grams. It was said that, if sold on the street, it would be worth $53 million dollars or thereabouts. If sold wholesale, it would be worth between $12 and $20 million dollars. The drugs were found in cartons in a flat at Pyrmont occupied by Mr Tu. The cartons were in a cupboard. The drugs were described as being like brown sugar. They were therefore different in appearance from the drugs in the container, the subject of the first count, which were white. Their source, as a matter of inference, was a previous importation.

7 Mr Tu is a Canadian citizen. He came to Australia from China on 16 March 2003. Within a short time, he began living at the Star City Casino on a package which provided him with free accommodation and services because he was regarded as a serious gambler. He remained at the Star City Casino until 24 March 2003 and for a short period thereafter, when accommodation was again provided by the Casino. In his evidence today, he has said that at other times he occupied a rented apartment near the Casino, being the apartment at Pyrmont where the drugs, the subject of the second count, were later found.

8 Finnane DCJ, in his sentencing remarks, made the following comment relevant to the source of the drugs recovered from Mr Tu's Pyrmont apartment: (p7)

"... Five hundred cartons of brown sugar in pieces was brought in in that shipment; only 474 cartons were delivered to Mr Yee and the other 26 obviously went to Mrs Zhang. Roughly half that number of cartons, about thirteen, cannot be accounted for.
It seems clear to me, beyond any doubt at all, that the drugs in those cartons were distributed into the market in Australia. I cannot say who was the distributor, and the sentences which I am imposing on both of these people do not have in them any element of punishment for any involvement by them in the distribution because I know nothing of such involvement. All that can be said is that Mrs Zhang brought those goods in and clearly they were in her possession at some point."

9 I should add that Mr Yee was a Customs Agent, assisting Mrs Zhang, and was entirely blameless. Once Mrs Zhang got hold of the 26 cartons containing the drugs, a number of them were obviously transferred to the Pyrmont apartment of the applicant, where they were later found by the police. It is significant, in the context of this application, that some of the cartons were never recovered.

The source of gambling funds.

10 Mr Tu has been in custody since his arrest on 14 May 2003, having stood trial and been convicted on both counts. On 3 December 2004, he was sentenced by Finnane DCJ to concurrent sentences of 25 years imprisonment with 16 years and 7-1/2 months non parole period.

11 On 16 May 2003, the Commonwealth sought an order from this Court restraining property identified in a schedule to an affidavit which was filed at the time of that application. The property was the sum of $101,500 which was in Mr Tu’s account at Star City Casino. On 19 August 2004 a notice of motion was filed on behalf of Mr Tu to exclude that property on the basis of an affidavit which was provided to the Commonwealth in draft form. The draft affidavit, as I understand it, was not then sworn. However, when the matter began today, an affidavit of Mr Tu was read which annexed the previous affidavit, explaining some matters which were not correct in respect of paras 7 and 12 of the earlier affidavit.

12 Mr Tu gave evidence that when he came to Australia he had with him $30,000. He did not declare it. He did not understand the need to do so and it travelled with him as cash. Having arrived in Australia on 16 March he deposited the sum of $9000 with Star City on 18 March 2003 in an account. He thereafter gambled. From time to time he replenished his account when it was reduced to zero, as set out on p13 of exhibit A, being a record from the Star City Casino.

13 Counsel for Mr Tu drew attention to an entry on the Casino records for 10 May 2003, that is some four days before Mr Tu’s arrest. On that day, his account having been reduced to zero, it was again replenished by $30,000. Thereafter, the account went up and down in the next several days before reaching $101,500 at the time of his arrest on 14 May 2003. Apart from that record, there is a document, exhibit 1, which recorded transactions on what is termed his Gold Visa account and various Canadian accounts. Mr Tu operated an account known as the TD Canada Trust Visa Gold Select Account. The records of that account show various amounts drawn out by Mr Tu using a credit card facility. The account was replenished from time to time by funds which either came from an account referred to as the TD account, operated by Mr Tu in Canada, or from his wife’s account in Canada, or a third account which has been referred to as the Toronto account. It is apparent from this exhibit that, in the course of his stay in Australia, considerable sums were deposited in his Visa account from overseas sources.

14 Mr Tu in his original affidavit (which, as mentioned, is an annexure to the affidavit of 19 July 2005), gave a history of his business life in Canada and said this in relation to the money which was used for his gambling in Australia: (para 10)

"10. My initial deposit into the Star City Account on 18 March 2003 was $9000. This money was taken from my Gold Select Visa Account number ... on 18 March 2003.”

15 The affidavit then stated that deposits made in the Star City account between 18 March 2003 and 15 May 2003 were derived from cash advances from his Gold Select Visa Account and his winnings at the Casino. Withdrawals on the other hand were made during the same period and used for further gambling. His case is that the funds used for his gambling can ultimately be traced to either funds from Canada, which were transferred from time to time to Australia, or from his gambling winnings. It was submitted that, ultimately, I would be satisfied that they were not the proceeds of any unlawful activity. In other words, he seeks to isolate, or insulate, his gambling in Australia, and the ultimate credit balance of $101,500, from the unlawful drug activities which were taking place at the same time.

16 Mr Tu was cross-examined at some length by counsel for the Director of Public Prosecutions. His attention was drawn first to statements made to his solicitor concerning the source of the $30,000 which was deposited on 10 May 2003. He acknowledged that he said to his solicitor that the source of that money was Ms Yee. He explained that Ms Yee was a person he met at the Casino, who sat next to him at the table and gambled. At some point they made an arrangement whereby they would share proceeds. The suggestion was, on the account he first gave his solicitor, that Ms Yee had given him $30,000 which he then used to replenish his Casino account on 10 May 2003. He altered that version this morning, when he again saw his solicitor. On this occasion had the benefit of a Cantonese interpreter. The draft affidavit which had been prepared for him was amended to delete any reference to Ms Yee and that version. He said the $30,000 came from cash he had available which he had won gambling.

17 When asked by counsel for the Director of Public Prosecutions what was it that had prompted the recollection that the $30,000 was the product of gambling rather than from some other source, including Ms Yee, he said that he did not know.

18 His counsel, Mr Watts, acknowledged with frankness that his response was unsatisfactory. Nonetheless, he suggested that his account should be accepted for a number of reasons. First, it is hardly surprising that he should have difficulty in explaining his dealings in the course of the two months that he was in Australia since they had occurred some time ago and, in the nature of things, his net gambling position in terms of wins and losses, was changing daily and was complex. Secondly, he plainly has some language difficulties. Once he had the benefit of a Cantonese interpreter, he deleted any suggestion that the money came from Ms Yee, stating that it came from gambling.

19 Mr Tu described his habits as a gambler. He said that he would, from time to time, draw money out of his Visa account. He kept some money, cash, in a deposit box at the Casino when he was at the Casino. He also kept money in cash in his pocket, or his wallet. Once he moved to the apartment, he was in the habit of keeping money in his apartment, sometimes very large sums of money, up to $30,000 and $40,000 in cash. In other words, it cannot be suggested, according to his counsel, that a close examination of the Star City records, p13, exhibit A, is necessarily an indication that he was consistently losing money, though it is true to say that his account was zero periodically and thereafter replenished. He did have other sources of funds, as he described.

The statutory framework.

20 The issue arises, as I said, under the Proceeds of Crime Act 2002, s94, which deals with excluding property from forfeiture under Pt 2.3 of the Act. Section 94 is in these terms:

"s94(1) The court that made the restraining order referred to in paragraph 92(1)(b) may make an order excluding particular property from forfeiture under this Part if:
(a) the person referred to in paragraph 92(1)(a) applies for an order under this section; and
(b) the property is covered by the restraining order; and
(c) the person owns the property; and
(d) the person has been convicted of a serious offence to which the restraining order relates; and
(e) the court is satisfied that the property is neither proceeds of unlawful activity nor an instrument of unlawful activity; and
(f) the court is satisfied that the defendant's interest in the property was lawfully acquired.
(2) To avoid doubt, an order under this section cannot be made in relation to property if the property has already been forfeited under this Part.
(3) The person must give written notice to the DPP of both the application and the grounds on which the order is sought.
(4) The DPP may appear and adduce evidence at the hearing of the application.
(5) The DPP must give the applicant notice of any grounds on which it proposes to contest the application."

21 A definition is provided of the term "proceeds of crime" in s329(1) and (2) which is in these terms:

"s329(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.
s329(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."

Submissions by the parties.

22 Counsel for the Director of Public Prosecutions acknowledged that in respect of the matters which the applicant, Mr Tu, must prove under s94 the Court would be satisfied, on the balance of probabilities (that being the test), as to paras (a), (b), (c) and (d). However, it was suggested, the Court would not be satisfied in respect of paras (e) and (f), the onus being on the applicant. As I understand the submissions by the Commonwealth Director of Public Prosecutions, the Court would not be satisfied on two broad bases. The first related to Mr Tu as a witness. It was suggested that there were many certain unsatisfactory aspects of his evidence. The second related to what is suggested as unlawful activity, which arises from his evidence, or at least in respect of which I would not be satisfied that the proceeds, the subject of this application, were not proceeds of an unlawful activity.

23 Dealing first with the suggested unsatisfactory aspects of Mr Tu’s evidence, it was said that he repeatedly contradicted the account he gave as to the original source of the money which was used to fund his account at the Star City Casino. Further, counsel for the Director submitted that one cannot isolate the replenishment on 10 May 2003 of $30,000 from other transactions. One must look at the course of dealings over the entire period. If any part of the fund, the ultimate fund which is now held by the Star City Casino, was not demonstrated as a matter of probability by the applicant to have not been the proceeds of unlawful activity, then the whole fund is tainted (New South Wales Crime Commission v OB and Anor [2002] NSWSC 633 at para 6).

24 The first account given by Mr Tu, according to counsel for the Director, was that the funds used to open his account at Star City derived from the $30,000 he brought to this country in cash a few days earlier. Mr Tu later said that the funds derived from that source in part and his visa account in part. I do not have the benefit of a transcript at the time of giving this judgment, but the short point of the Crown was, and I accept, that there was an absence of consistency on the part of Mr Tu as to the source of the funds he began with at the Casino, whether it be the money he brought to this country or the visa account, or some other source, or even gambling. Without being precise as to the contradiction, there were differing versions as to the initial payment. Mr Bellew of counsel, on behalf of the Director, reminded the Court that Mr Tu later said in cross-examination that the source of funds, the entire source, was the visa account. Indeed he repeated that answer a number of times.

25 When Mr Tu came to deal with the $30,000 deposited on 10 May, he again, according to counsel for the Director, gave different accounts. One version was that the money was a mixed fund, partly the proceeds of gambling and partly money he kept in a safe deposit box at the Casino. The problem with that evidence, it was suggested, was that Mr Tu had moved out of the Casino by that stage, so that he no longer had a safe deposit box. That, according to the Director, was an indication of his unreliability. Moreover, he provided another version as to the source of this money. He acknowledged that he told his solicitor that the source was Ms Yee. He was unable to say why he had now abandoned that account in favour of the account put forward in his affidavit, which was that the funds came from the visa account and were the product of that account and gambling.

26 It has to be said that Mr Tu was not a satisfactory witness. In part his difficulty may derive from language difficulties, but that cannot be the whole explanation. Even with charity, making allowance for language, there were differences in the evidence he gave on a number of issues, but most especially in respect of the source of the funds used on 10 May, the $30,000.

27 When he was asked what it was that provoked his recollection, as he now gives it, and the recent change of recollection concerning Ms Yee, he simply appeared stumped. He could not give an explanation. He was asked the question several times. Each time he simply said, after a long pause, "I do not know". That evidence does not fill me with confidence as to the explanation which he now advances.

Possible unlawful activity.

28 Beyond that, it is suggested by the Crown, there are other matters which suggest unlawful activity, which the applicant has not dealt with in any satisfactory way so as to satisfy the Court that the proceeds were not derived from unlawful activity.

29 The Director pointed to a series of transactions, as set out in exhibit 1, where on at least three occasions, Mr Tu sought credit using his visa card, gold card, for $9900, that being $100 short of the $10,000 amount which would require the bank to report the transaction. Two were on the same day.

30 It may be inferred from the convictions of Mr Tu that his presence in Australia was associated with arrangements he and Mrs Zhang were making for the importation of massive quantities of drugs. As explained, one of the offences involved access to a warehouse with an immensely valuable quantity of a prohibited drug. In the context of such drug related activities, reporting to the authorities the continuous arrival in this country of funds may, one would infer, be something which he would wish to avoid, even if some part of those funds was being used, or even substantially used, for the purposes of gambling.

31 The submission is made by counsel for the Director that the applicant would not have satisfied the Court that the pattern of withdrawals was the consequence of any suggestion by the Bank. Rather, it was associated with what is termed structuring, that is seeking to avoid the Financial Transaction Reports Act 1988. Section 31 makes it an offence to structure financial transactions so as to avoid reporting. I accept that as the more likely explanation than the explanation given by Mr Tu.

32 But, quite apart from structuring, it appears that, whilst Mr Tu was engaged in gambling, he was also engaged in arranging and warehousing the very large quantity of drugs which were ultimately the subject of one of the charges against him. Money was, no doubt, required for those activities.

33 More than that, Mr Tu was ultimately found to have a very substantial quantity of drugs in his apartment, the result of a previous importation. His companion in this crime, Mrs Zhang, likewise had in her possession a significant quantity of drugs from the same shipment. Yet, as mentioned by Finnane DCJ, of the 26 cartons delivered to the customs agent, Mr Yee, being the cartons with the drugs, only half were recovered (13 cartons) as a result of the police search of Mrs Zhang, her flat and the flat of the applicant. It is likely that part of that shipment, the missing 13 cartons, had been sold. I think, as a matter of inference, that it is certainly possible, and indeed probable, that the applicant derived income from that source during his time in Australia, and that some of the proceeds were used in gambling at the Casino. However, I need not go that far. The applicant has not satisfied me, as a matter of probability, that the money used to gamble, including the $30,000 on 10 May 2003, was not derived, or partly derived, from unlawful activity.

The $30,000 deposit on 10 May 2003.

34 The applicant, in submissions, as I have said, concentrated on the $30,000 which was deposited on 10 May and suggested I would be satisfied that, as a matter of probability, he had demonstrated that that sum was not the proceeds of unlawful activity, but rather derived from the more or less continuous and substantial payments which are set out in exhibit 1.

35 It may be accepted that there is no taint, or no obvious taint, on money sent to the applicant from Canada. It may also be accepted that it was a significant sum. However, there is no obvious relationship between the amounts used for gambling and the payments made from overseas. The payments from overseas were not transferred the day they were received into the gambling account, so that each amount corresponded. Ultimately, one is dependant upon inference and the word of the applicant, that the money used to replenish his gambling account (including the $30,000) was itself the proceeds of gambling and not of unlawful activity. I do not, however, accept Mr Tu's account.

36 The pattern of Mr Tu’s account at the Star City Casino (exhibit A, p13) demonstrates significant amounts being deposited at various points and then used to the point where they diminished to zero. That repeatedly occurred in the period after his arrival and before 10 May. He does, on 10 April, deposit $95,000 in his account, which he said were winnings from gambling, where he cashed in chips. One does not have transaction by transaction evidence as to the credit and debit balance each day of his winnings and losses. Nonetheless, the pattern which emerges in the period before 10 May suggests significant losses.

37 Whilst I accept that Mr Tu may have had some cash, I am not persuaded as a probability, that the $30,000 can be sourced from his gambling or his gambling in combination with the money he received from overseas. In some respects it seems odd that he should receive $7,977 on 7 May 2003, a matter of three days before 10 May, if he had cash at his disposal which would make replenishment from overseas unnecessary. However, it is unnecessary for me to resolve how that came about. The payment of $30,000 used on 10 May 2003 to replenish his account was made only four days before his arrest, and made at a time proximate to the date when it can be demonstrated he had possession of a massive quantity of drugs. That fact, in combination with the unsatisfactory aspects of Mr Tu as a witness, leave me in a position that I am not satisfied, as a matter of probability, that the proceeds of the Casino account were not the proceeds of unlawful activity. I therefore dismiss the application.

BELLEW: Would your Honour make an order reserving the question of costs at this stage?

HIS HONOUR: Yes I’m happy to deal with costs now if you wish.

WATSON: We make an application.

HIS HONOUR: I think costs inevitably follow the event don’t they?

WATSON: I think that is the normal course.

38 HIS HONOUR: The orders I make are:

(1) that the application is dismissed; and

(2) that the applicant should pay the Director’s costs.

I return the Act.

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