Director of Public Prosecutions v Zhang

[2021] VCC 416

All

IN THE COUNTY COURT OF VICTORIA

AT MELBOURNE

CRIMINAL DIVISION

Revised
Not Restricted
Suitable for Publication

Case No. CR-19-00751

THE COMMONWEALTH DIRECTOR OF PUBLIC PROSECUTIONS	Prosecution
v
ZHENGWEI ZHANG	Defence

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JUDGE:	HIS HONOUR JUDGE CAHILL
WHERE HELD:	Melbourne
DATE OF HEARING:	30 November 2021
DATE OF RULING:	1 December 2021
CASE MAY BE CITED AS:	DPP v Zhang
MEDIUM NEUTRAL CITATION:	[2021] VCC 416

RULING
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Subject:Admissibility of evidence – expert evidence – admissions made with authority – uncharged acts

Catchwords:              Dealing with property reasonably suspected of being proceeds of crime; Admissibility of evidence; uncharged acts.

Legislation Cited:      Criminal Code Act 1995 (Cth); Crimes Act 1900 (NSW); Evidence Act 1995 (Cth)

Cases Cited:Lindini v NSW [2006] NSWSC 259; Singh v The Queen [2016] VSCA 163; Shi v The Queen [2014] NSWCCA 276; Papakosmos v The Queen (1999) 196 CLR 297; Kamleh v The Queen (2005) 79 ALJR 541; Haddara v R (2014) 43 VR 53

Ruling:  Evidence of uncharged acts excluded – Disputed expert witness testimony admissible - Evidence of representations of co-accused excluded

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APPEARANCES:	Counsel	Solicitors
For the Prosecution	Mr R. Barry	Office of Commonwealth  Public Prosecutions
For the Defence	Mr C. Terry	Galbally Parker

HIS HONOUR:

1Zhengwei Zhang (‘Zhang’) is to stand trial on five charges of dealing with money, more than $100,000, reasonably suspected of being proceeds of crime, contrary to section 400.9 (1) of the Criminal Code Act 1995 (Cth) (‘the Code’).

2Linchong Pan (‘Pan’) is his co-accused.

Alleged Circumstances

3The Crown case is the accused man was involved in, receiving, possessing and disposing of large sums of cash:

(a)   on 10 June 2017, when he travelled to Sydney, collected $500,000 in cash and returned with it to Melbourne (Charge 4 – Pan’s proxy);

(b)   on 19 June 2017, when he collected $1,214,300 in cash at Eltham and disposed of it in Melbourne (Charge 6 – Pan’s proxy);

(c)   on 23 June 2017, when he collected $220,000 in cash at Templestowe and disposed of it in Melbourne (Charge 8 – Pan’s proxy);

(d)   on 29 June 2017, when he travelled to Sydney with Pan, collected $900,000 in cash and they returned with it to Melbourne (Charge 9 – joint commission with Pan); and

(e)   on 5 July 2017, when he travelled to Sydney with Pan, collected $700,000 in cash and they returned with it to Melbourne (Charge 10 – joint commission with Pan).

4It is alleged that Pan operated a financial advisory and loan brokerage business in Melbourne and the accused was his employee.

Counts 4, 6 and 8

5It is alleged Pan procured the accused to:

(a)   collect the cash at Sydney on 10 June 2017 (Charge 4 - Pan’s proxy);

(b)   collect cash at Eltham on 19 June 2017 (Charge 6 – Pan’s proxy); and

(c)   collect cash at Templestowe on 23 June 2017 (Charge 8 – Pan’s proxy).

6Relying on the proxy provision,[1] the prosecution has charged Pan with offences under section 400.9, in relation to each of the 10 June 2017 (Charge 3), 19 June 2017 (Charge 5) and 23 June 2017 (Charge 7) cash dealings charges, on the basis that he procured the accused to commit the offences.

[1]Criminal Code Act 1995 (Cth), s 11.3.

Counts 9 and 10

7It is alleged that Pan and Zhang travelled together to Sydney, where they collected cash:

(a)   on 29 June 2019 (Charge 9 – Joint commission); and

(b)   on 5 July 2019 (Charge 10 – Joint commission).

8Both Pan and the accused are charged with section 400.9 offences for these two transactions.

9Relying on the joint commission provision,[2] the prosecution alleges that Pan and the accused entered into an agreement to commit the two offences.

[2]Criminal Code Act 1995 (Cth), s 11.2A.

Counts 1, 2, 11 and 12

10The prosecution also allege that:

(a)   on 23 May 2017, Pan travelled to Sydney and brought $640,000 in cash, which he withdrew from a Star Casino betting account, to Melbourne (Pan -Charge 1);

(b)   on 31 May 2017, Pan travelled to Sydney brought $250,000 in cash, which he withdrew from a Star Casino Sydney betting account, to Melbourne (Pan - Charge 2);

(c)   on 17 July 2017, Pan travelled to Sydney where he collected $340,000 and returned to Melbourne with it (Pan - Charge 11);

(d)   on 20 July 2017, Pan travelled together with Zhang to Sydney where they collected $500,000 in cash. Pan returned to Melbourne with part of the cash collected. Police arrested Zhang at Sydney airport, as he was attempting to leave New South Wales with the remainder (Pan - Charge 12).

11It is alleged the sums of money they collected and disbursed far exceeded their business and personal income and expenditure at the time.

12It is also alleged that they chose not to use the banking system to obtain and dispose of the money.

13The prosecution case is that Pan and the accused were money remitters, in Australia, for an international money laundering syndicate which used the Hawala method to secretly move substantial sums of money internationally, using currency in different countries, without moving currency between countries or making an electronic bank transfer.

14It has been described as a money transfer without money movement.

15It is alleged their money dealings were part of a money laundering scheme that enabled the overseas transfer of large sums of money to be carried out anonymously and without detection by law enforcement agencies.

Elements of an offence under s 400.9

16There are three physical elements of the offence under section 400.9, namely:

(a)   the accused dealt with money;

(b)   it is reasonable to suspect that the money is proceeds of crime; and

(c)   at the time of the dealing, the money was valued at $100,000 or more.

17The prosecution is not required to prove that the money is proceeds of a crime which has been committed.

18Intention is the fault element which attaches to the first physical element.[3] The prosecution must prove the accused meant to deal with money. A person deals with money if he receives, possesses or disposes of it.

[3] Criminal Code Act 1995 (Cth), s 5.6(1).

19Absolute liability attaches to the second and third physical elements.[4]

[4] Criminal Code Act 1995 (Cth), s 400.9(4).

20The issue in the trial is whether it is reasonable to suspect that the money is proceeds of crime.

21The second element is “an objective or impersonal physical element”.[5] It is not concerned with an accused’s knowledge or belief.[6] It is for the jury to determine, on the basis of all the evidence at trial, whether it is reasonable to suspect that the money is proceeds of crime.[7]

[5] Singh v The Queen [2016] VSCA 163, at [52].

[6] Shi v The Queen [2014] NSWCCA 276, [42].

[7] Singh v The Queen [2016] VSCA 163, at [52].

22The prosecution rely on the accused man’s receipt of considerable sums of cash, which were disproportionate to his income, and his involvement in the Hawala method of money transfer, which avoided the reporting obligations of the banking system, to prove it is reasonable to suspect that the money he dealt with was the proceeds of crime.

Application

23Mr Terry, who appears for the accused, makes an application to exclude evidence of:

(a)   the four money dealings charged against Pan but not the accused (Charges 1, 2, 11 and 12);

(b)   certain opinions of Detective Sgt Warren Lysaght; and

(c)   representations Pan allegedly made to clients on 20 June 2017 and 25 July 2017.[8]

[8] Summary of Prosecution Opening dated 9 June 2020, at [33].

Evidence of money dealings charged against Pan but not the accused

Defence Submissions

24Mr Terry submitted the evidence is not probative of the issue in dispute and, accordingly, is irrelevant and inadmissible.

25He contrasted the evidence here with the evidence of a money dealing, not involving the accused, which was admitted to prove the money the accused dealt with was reasonably suspected to be proceeds of crime.[9]

[9]Singh v The Queen [2016] VSCA 163.

26Singh was convicted, after trial, of one charge under section 400.9. The Court of Appeal ruled evidence that eight days’ after Singh’s dealing, the person who delivered the money to him in a backpack also delivered a similar amount of money to another person, again in a backpack, was relevant to prove the offence against Singh because it could rationally affect the assessment of the probability that it is reasonable to suspect that the money with which Singh had dealt with, was proceeds of crime.

27The Court held the similarities between the two transactions rendered it very likely that they both involved money that was proceeds of crime.[10]

[10] Singh v The Queen [2016] VSCA 163, at [65].

28Mr Terry submitted the evidence of the transactions charged against Pan, but not the accused, lacked similarities with the transactions charged against the accused necessary to give the evidence probative value.

29He submitted the transactions, the subject of Charges 1 and 2, which allegedly involved Pan operating and drawing on a betting account at Star Casino in Sydney to collect cash, were markedly dissimilar to the transactions charged against the accused who is alleged to have collected cash from third parties.

30He submitted, the transactions which are the subject of Charges 11 and 12, were similar, to the extent they involved both Pan and the accused travelling to Sydney where they collected cash, but lacked the similarities needed for the evidence to have probative value. In particular, he pointed to the fact that the transactions charged against the accused man, in counts 6 and 8, did not involve travel to Sydney.

Prosecution submissions

31Mr Barry, who appeared for the Crown, submitted evidence of the transactions, the subjects of Charges 11 and 12 are circumstances relevant to proof of the second element.

32In relation to Charge 11, it is alleged when Pan returned to Melbourne after collecting $340,000 in cash, he met the accused and gave him $90,000 to deliver to a client.[11]

[11] Summary of Prosecution Opening dated 9 June 2020, at [121].

33Mr Barry submitted the accused’s alleged receipt of the cash from Pan constitutes an uncharged act of dealing with property reasonably suspected of being proceeds of crime and, accordingly, is admissible in the trial of the accused.

34In relation to charge 12, it is alleged the accused travelled with Pan to Sydney where they collected $500,000 in cash, which Pan divided into a duffel bag and a suitcase. At the airport, when Pan and the accused were attempting to return to Melbourne, Pan cleared security with the duffel bag but the accused was stopped and with the suitcase which contained $579,150 in cash.

35New South Wales Police subsequently charged the accused with the offence of dealing with property suspected of being proceeds of crime contrary to section 193C of the Crimes Act 1900 (NSW).

36Mr Barry submitted that the accused’s possession of the cash in the suitcase constitutes another uncharged act of dealing with property suspected of being proceeds of crime and, accordingly is admissible in proof of the charges against him.

Consideration

37In relation to the transactions which are the subject of Charges 1 and 2, it is alleged, on 24 May 2017 and 31 May 2017, Pan flew from Melbourne to Sydney, where at Star Casino, he operated a betting account to obtain cash withdrawals of $640,000 (Charge 1) and $250,000 (Charge 2).[12]

[12] Summary of Prosecution Opening dated 9 June 2020, at [36] – [41], [42] – [47].

38It is also alleged that on the morning of 1 June 2017, whilst he was on a flight to Shanghai, Pan exchanged WeChat messages with the accused where they discussed Pan profiting from fluctuating exchange rates between Chinese Renminbi and the Australian dollar.[13]

[13] Summary of Prosecution Opening dated 9 June 2020, at [51].

39In my view Pan’s sharing of information with the accused is capable of showing they shared a common purpose to undertake future cash transactions.

40In combination, evidence that;

(a)   Pan was operating a remittance business;

(b)   the accused was his employee;

(c)   Pan shared information with the accused about currency;

(d)   between them, Pan and the accused collected substantial sums of cash in Sydney and Melbourne and disposed of it in Melbourne;

(e)   the substantial sums dealt with were disproportionate to their respective incomes; and

(f)    they avoided the banking system to effect the transactions,

is capable of proving all nine transactions, including those which did not involve the accused, involve dealing with money reasonably suspected of being proceeds of crime.

41Accordingly, I am satisfied that the evidence of the four transactions not charged against the accused, could rationally affect the assessment of the probability of it being reasonable to suspect that the money, the subject of the transactions charged against the accused, was proceeds of crime.

42Because of the accused’s shared understanding of money movement (Charges 1 and 2) and his direct involvement in the cash dealings (Charges 11 and 12), I am satisfied the risk of impermissible coincidence reasoning, identified in Singh as a possible unfair prejudice,[14] does not arise.

[14] Singh v The Queen [2016] VSCA 163, at [64].

Admissibility of the aspects of Mr Lysaght’s expert evidence

Defence Submissions

43The Crown proposes to call Detective Lysaght to give expert evidence of the operation of the Hawala method of money movement, money laundering syndicates’ use of it to move money, and the similarities between Hawala and the money dealings of Pan and the accused.

44Detective Lysaght gave evidence on a preliminary examination. His expertise in relation to money laundering, gained from his knowledge and experience in the New South Wales police force was not challenged.

45He produced his statement which contains opinions based on his expertise.

46Mr Terry challenged the opinions he expressed at paragraphs [94], [100], [111], [131] and [138] on the grounds that they are not opinions based on expertise, but conclusions which the jury could reach by inferential reasoning. He submitted, in the circumstances, Detective Lysaght’s opinion is irrelevant.

47Under cross-examination, Mr Lysaght agreed his opinions, expressed at [111], [131] and [138] are not based on any special knowledge or expertise. Accordingly, those opinions are inadmissible. However, it is open to a jury a jury, using inferential reasoning, to reach the same conclusions he has expressed in his opinions.

48He testified his opinions, expressed at [94] and [100], are based on his knowledge and expertise. I accept that they are and accordingly, those opinions are admissible under section 79 of the Evidence Act as an exception to the opinion rule.

Admissibility of Pan’s representations made on 20 June 2017 and 25 July 2017

Defence submissions

49Mr Terry objected to the admissibility of conversations Pan allegedly had with clients on 20 June 2017 and 25 July 2017.

50It is alleged:

(a)   on 20 June 2017, Pan told the client that his cash came from cigarettes, whereas cash supplied from another syndicate came from drugs and was not “safe”;[15] and

(b)   on 25 July 2017, Pan used the word “launder” when he offered to supply cash to another client.[16]

[15] Summary of Prosecution Opening dated 9 June 2020, at [33].

[16] Summary of Prosecution Opening dated 9 June 2020, at [33].

51Mr Terry submitted the representations are inadmissible hearsay.

52He also submitted that if the prosecution relies on the representations as admissions by Pan, they do not to fall within the admissions made with authority exception.[17]

[17] Evidence Act 1995 (Cth), s 87.

Prosecution Submissions

53Mr Barry submitted the representations do not constitute an admission.

54Mr Barry submitted the origin of the monies dealt with was kept secret from Pan and he did not know where the money came from. Accordingly, in his submission, Pan’s representations could not constitute an admission.

55He submitted the evidence is admissible for a non-hearsay purpose, that is, as evidence of Pan’s state of mind.

56He submitted evidence of Mr Pan’s belief that he was laundering money is one circumstance which the jury can consider in determining whether it is reasonable to suspect that the money is proceeds of crime.

Consideration

57Evidence of the state of mind may be admissible for a non-hearsay purpose in some cases[18].

[18] Papakosmos v The Queen (1999) 196 CLR 297, at [48]; Kamleh v The Queen (2005) 79 ALJR 541.

58Because, on the prosecution case, Pan did not know the source of the monies dealt with, evidence of his belief of the nature of the monies he dealt with, if admissible, is of limited probative value.

59I am mindful that the prosecution is not required to prove the money the accused dealt with is proceeds of crime.

60I am also mindful the disputed element, that it, is reasonable to suspect that the money is proceeds of crime, is not concerned with an accused’s knowledge or belief.[19] It is an objective or impersonal element.[20]

[19] Shi v The Queen [2014] NSWCCA 276 at [42].

[20] Singh v The Queen [2016] VSCA 163 at [52].

61I am satisfied there is an unfairness to the accused to admit evidence of Pan’s belief in proof of the second element when evidence of his own belief is inadmissible for that purpose.

62I exclude the evidence in the exercise of my discretion under section 135 of the Evidence Act 1995 (Cth) or, alternatively, in exercise of the general common law discretion to exclude evidence, the admission of which would be unfair to the accused.[21]

[21] Haddara v R (2014) 43 VR 53, per Redlich and Weinberg JJA at [12]

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