Ex Parte - [2010] WASC 277

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: EX PARTE COMMONWEALTH DIRECTOR OF PUBLIC PROSECUTIONS [2010] WASC 277

CORAM: ALLANSON J

HEARD: 7 OCTOBER 2010

DELIVERED : 7 OCTOBER 2010

FILE NO/S: CIV 2545 of 2010

MATTER :An application pursuant to s 19 of the Proceeds of Crime Act 2002 (Cth)

EX PARTE
COMMONWEALTH DIRECTOR OF PUBLIC PROSECUTIONS
Applicant

Catchwords:

Ex parte application for restraining order in relation to an account in Western Australia - Foreign indictable offence

Legislation:

Proceeds of Crime Act 2002 (Cth), s 19

Result:

Application granted

Category: B

Representation:

Counsel:

Applicant: Mr E W L Greaves

Solicitors:

Applicant: Director of Public Prosecutions (Cth)

Case(s) referred to in judgment(s):

Director of Public Prosecution (SA) v Tregenza [2002] SASC 414; (2002) 84 SASR 346
George v Rockett [1990] HCA 26; (1990) 170 CLR 104
Hussien v Chong Fook Kam [1970] AC 942
Queensland Bacon Pty Ltd v Rees [1966] HCA 21; (1966) 115 CLR 266
Walsh v Loughnan [1991] 2 VR 351

ALLANSON J: By an originating summons dated 29 September 2010, the applicant, the Commonwealth Director of Public Prosecutions (DPP), seeks orders pursuant to s 19 (restraining order) and s 49 (forfeiture order) of the Proceeds of Crime Act 2002 (Cth). The present application is for the restraining order only.
The court has been requested to consider the application ex parte. Under s 26(4) the court must consider the application without notice having been given if the DPP requests that it do so. Under s 26(5), before finally determining the application, the court may direct the DPP to give or publish notice of the application to a specified person or class of persons.
Further, s 42 of the Act provides for any person who was not notified of the application to apply to revoke the order. The court may revoke the order if satisfied that there are no grounds on which to make the order at the time of considering the application to revoke the order; or if it is otherwise in the interests of justice to do so: s 42(5). The restraining order remains in force until the court revokes it: s 42(3).
In the circumstances, including the nature of the application, I am satisfied that it is appropriate to proceed without notice to any other party and to both consider and determine the application ex parte.

The evidence

On the application, the DPP bears the onus of proof on the balance of probabilities on any question of fact: s 317.
In support of the application, the applicant filed two affidavits of Shaun Robert Milligan, a member of the Australian Federal Police (AFP). The first was sworn on 29 September 2010, and the second on 7 October 2010.
The first affidavit annexes a statement sworn in the United States of America by a special agent of the United States Federal Bureau of Investigation (FBI).

Jurisdiction

Jurisdiction under the Proceeds of Crime Act is vested in the courts of this State: s 314. Under s 335(3), if all of the conduct constituting an offence to which the order sought in the proceedings would relate occurred outside Australia, or is reasonably suspected of having occurred outside Australia, the courts of any State or Territory with jurisdiction to deal with criminal matters on indictment have jurisdiction. In the present matter, the conduct said to constitute an offence occurred outside Australia. The Supreme Court, as a court with jurisdiction to deal with criminal matters on indictment, has 'proceeds jurisdiction' within the meaning of the Act.

The requirements for the order

By s 19, 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 the requirements set out in that section are met.
The first requirement is that the DPP applies for the order, and that has happened.
The second requirement is that there are reasonable grounds to suspect that the property is, relevantly in the present matter, the proceeds of a foreign indictable offence.
A foreign indictable offence is defined in s 337A. In effect, conduct is treated as having constituted a foreign indictable offence at all relevant times if an application is made for a restraining order in relation to conduct that constituted an offence against the law of a foreign country; and, if the conduct had occurred in Australia, at the time of the application for the restraining order the conduct would have constituted an offence against the law of the Commonwealth, a State or a Territory punishable by at least 12 months imprisonment.
The property the subject of the application is described in the summons in this way:
The quantity of gold and silver bullion and the sum of money (collectively 'the property') standing to the credit of an account with the Gold Corporation (trading as the Perth Mint) styled Goldfinger Bullion Reserve Corporation Account SEC579 ('account').
The first question, accordingly, is whether there are reasonable grounds to suspect that the property is the proceeds of a foreign indictable offence. The test of 'reasonable grounds to suspect' (or tests similarly worded) is well known in the law. In George v Rockett [1990] HCA 26; (1990) 170 CLR 104, 115, the High Court approved the definition of 'suspicion' given by Lord Devlin in Hussien v Chong Fook Kam [1970] AC 942, 948:
In its ordinary meaning [suspicion] is a state of conjecture or surmise where proof is lacking: 'I suspect but I cannot prove'.
The court referred also to the comments of Kitto J in Queensland Bacon Pty Ltd v Rees [1966] HCA 21; (1966) 115 CLR 266, 303.
For there to be reasonable grounds to suspect there must be material which is sufficient to induce the state of suspicion in a reasonable person. It is not, however, necessary that the material which establishes the reasonable grounds for suspicion be limited to admissible evidence: Walsh v Loughnan [1991] 2 VR 351, 357 (Vincent J); Director of Public Prosecution (SA) v Tregenza [2002] SASC 414; (2002) 84 SASR 346.
AFP agent Milligan states that he is an authorised officer for the purposes of the Proceeds of Crime Act. He attaches to his affidavit a print‑out from an AFP electronic gazette dated 16 January 2003 to the effect that the Commissioner of the AFP authorises all AFP members and special members as authorised officers pursuant to s 338 of the Proceeds of Crime Act. I am satisfied that he is an authorised officer.
AFP agent Milligan has information, including a sworn statement, provided to him by the United States FBI agent who has been the case agent for relevant investigations in the United States. He has also obtained further information from the Perth Mint in relation to the account in the name of Goldfinger Bullion Reserve Corporation (GBRC) held there.
The statement from the FBI agent contains a sufficiently detailed summary of the investigations carried out by that agent and her colleagues in the United States for the court to make an assessment of whether the requirements of s 19 have been met. In summary, that material sets out the following.
GBRC managed bullion reserve services for e‑Bullion, a company affiliated with Goldfinger Coin and Bullion Inc (GCB) in the United States. Both GBRC and GCB were incorporated in late 2000. Mr James Fayed is director of both.
In 2008, Mr Fayed, doing business as GCB, was indicted in California in the United States for operating an unlicensed money transmitting business in violation of United States' law. Those charges were later discontinued, for reasons which are not presently relevant. GCB operated during the period up to Mr Fayed's arrest in 2008.
GCB's activities in the United States included accepting funds in accounts on behalf of various parties, and transferring those funds to the accounts of other parties. Some of the accounts through which funds flowed were operated by persons conducting fraudulent schemes commonly known as Ponzi schemes and high yield investment schemes. There is material showing that Mr Fayed and GCB were aware that the accounts were being conducted for those purposes and facilitated the activities of those conducting the schemes.
Funds deposited with GCB were swept daily into another account of the Bank of America. Funds from the Bank of America account were transferred to the account at the Gold Corporation, Australia. In particular, there were substantial transfers of funds to Goldcorp between December 2005 and June 2007 - which includes the period when two Ponzi schemes investigated by the FBI were operating through GCB.
On that material, essentially information received from United States investigative authorities, I find that there are reasonable grounds to suspect:
(1)that Mr Fayed, through GCB, committed one or more offences against United States statutes in relation to the operation of an unlicensed money transmitting business, wire fraud, and money laundering, or concealing or disguising the nature, location, source, ownership, or control of the proceeds of specified unlawful activity;
(2)the offences were committed in the United States of America;
(3)that conduct would, if carried out in Australia have constituted offences that are punishable by imprisonment of more than 12 months under the Anti‑money Laundering and Counter Terrorism Financing Act 2006 (Cth), s 74(2) and s 400.3, s 400.9 and s 474.14 of the Criminal Code (Cth); and
(4)the property sought to be restrained is the proceeds of those offences within the meaning of s 329(1) and s 330 of the Act.
The requirement that there are reasonable grounds to suspect that the property is the proceeds of a foreign indictable offence is made out.
The next requirement is that the application is supported by an affidavit of an authorised officer stating that the authorised officer suspects the property is proceeds of the offence and including the grounds on which the authorised officer holds the suspicion. FPA agent Milligan states in his affidavit that he has that suspicion, and sets out the material and information provided to him in his enquiries and which are the grounds for that suspicion.
I am satisfied that agent Milligan holds the suspicion he stated on reasonable grounds.
In making these finding, I recognise that the application was made ex parte.
The Commonwealth has given an undertaking as to damages: see s 21.
Finally, the applicant does not seek an absolute order that the property must not be dealt with by any person, but qualifies that order by recognising the entitlement of the Gold Corporation to sell property as is necessary to meet the costs of storing the property. And further, the order provides for the holder of the account, subject to the contractual terms attaching to the account, to sell any or all of the bullion and convert the same to cash, with the cash then to be restrained. Those qualifications are, in my opinion, appropriate.
The GBRC account at the Gold Corporation is authorised to be operated by Mr Scott Layton and Mr Michael Singleton. On the material put before me in the supplementary affidavit of agent Milligan, the name Michael Singleton is an alias for Mr Fayed.
Notice of the application, and the material in support of it, is to be given to Mr Fayed, GBRC, GCB, the counsel in the United States for Mr Fayed and those companies, Mr Layton, and the Gold Corporation.
For these reasons I make the orders asked.