Gwe v Commissioner of the Australian Federal Police

[2020] NSWCA 247

Court of Appeal

Supreme Court

New South Wales

• Summary available
• Amendment notes

Medium Neutral Citation:

Gwe v Commissioner of the Australian Federal Police [2020] NSWCA 247

Hearing dates:

25 August 2020

Date of orders:

2 October 2020

Decision date:

02 October 2020

Before:

Bathurst CJ at [1]; Bell P at [2]; Emmett AJA at [93]

Decision:

1.       Grant leave to appeal.

2.       Appeal allowed.

3.       Set aside the orders of the primary judge and, in lieu thereof, order that:

(a) Pursuant to s 29 of the Proceeds of Crime Act 2002 (Cth) all of the Appellants' interests in the property restrained by schedule 2 of the order made on 9 July 2015 be and are hereby excluded from restraint.

(b) Pursuant to s 39(1)(e)(i) of the Proceeds of Crime Act 2002 (Cth), the Official Trustee is directed forthwith to pay the funds held by him pursuant to the restraining order made on 9 July 2015 to the Appellants' solicitors, Lincolns Lawyers and Consultants, by electronic funds transfer to such account as may be specified in writing by that firm.

(c) Pursuant to s 323 of the Proceeds of Crime Act 2002 (Cth), the Respondent pay costs incurred by the Appellants in connection with the proceeding in the Common Law Division and this appeal.

(d)     The proceeding is remitted to the Common Law Division for directions on the Appellants' application for damages on the Respondent's undertaking as to damages.

4.       Direct that in the absence of agreement between the parties submissions as to costs not exceeding three pages to be filed by Friday 9 October 2020.

Catchwords:

PROCEEDS OF CRIME – Freezing orders – Proceeds of Crime Act 2002 (Cth) – application to exclude property from restraining order – whether frozen property was acquired in circumstances that would not arouse a reasonable suspicion that property was proceeds of an offence – whether exclusion order should have been made in relation to the property – where applicant had provided sufficient consideration and did not have actual knowledge that the property constituted proceeds of an offence – significance of failure to cross-examine – whether inferences sought to be drawn available in the absence of cross-examination.

Legislation Cited:

Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) s 142

Proceeds of Crime Act 2002 (Cth) ss 19, 29, 31, 39, 180, 317, 323, 330(4)(a), 338, Pt 2.1

Cases Cited:

Allied Pastoral Holdings Pty Ltd v Commissioner of Taxation [1983] 1 NSWLR 1; (1983) 70 FLR 447

Apollo Shower Screens Pty Ltd v Building and Construction Industry Long Service Payments Corporation [1985] 1 NSWLR 561; (1985) 10 IR 88

Browne v Dunn (1893) 6 R 67; [1893] 1 WLUK 44

Director of Public Prosecutions for the State of Victoria v Le (2007) 232 CLR 562; [2007] HCA 52

Director of Public Prosecutions v Le (2007) 17 VR 352; [2007] VSCA 18

Henderson v State of Queensland (2014) 255 CLR 1; [2014] HCA 52

Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361; [2011] HCA 11

Lordianto v Commissioner of the Australian Federal Police (2019) 266 CLR 273; [2019] HCA 39

Masterton Homes Pty Ltd v Palm Assets Pty Ltd (2009) 261 ALR 382; [2009] NSWCA 234

Precision Plastics Pty Limited v Demir (1975) 132 CLR 362; [1975] HCA 27

Purkess v Crittenden (1965) 114 CLR 164; [1965] HCA 34

Rockcote Enterprises Pty Ltd v FS Architects Pty Ltd; Carelli v FS Architects Pty Ltd [2008] NSWCA 39

Category:

Principal judgment

Parties:

Yoo Tak Gwe (First Applicant)
Tan Soi Hoang (Second Applicant)
Commissioner of the Australian Federal Police (Respondent)

Representation:

Counsel:

B W Walker SC with E W L Greaves and A L Oakes
A R Moses SC with L T Livingston and H C Cooper

Solicitors:

Lincolns Lawyers and Consultants (Applicants)
Commissioner of the Australian Federal Police, Criminal Assets Litigation (Respondent)

File Number(s):

2018/00214680

 Decision under appeal 

Court or tribunal:

Supreme Court of New South Wales

Jurisdiction:

Common Law

Citation:

[2018] NSWSC 992

Date of Decision:

29 June 2018

Before:

Rothman J

File Number(s):

2015/200790

HEADNOTE

[This headnote is not to be read as part of the judgment]

This case concerned an application for leave to appeal from the decision of Rothman J (the primary judge) who dismissed an application by Mr Yoo Tak Gwe and his wife Ms Tan Soi Hoang (Ms Hoang) (together, the Applicants) for orders pursuant to ss 29 and 31 of the Proceeds of Crime Act 2002 (Cth) (the Act) that certain property be excluded from freezing orders which had been made ex parte on 9 July 2015 following an application to the Supreme Court of New South Wales by the Commissioner of the Australian Federal Police (the Commissioner), pursuant to s 19 of the Act.

The relevant property was described in the freezing order as including five Westpac bank accounts and three parcels of real property located in Zetland, NSW, which were jointly purchased by the Applicants who were residents of Indonesia. The freezing orders included an order that the Applicants both be examined pursuant to s 180 of the Act, with those examinations taking place in July 2015.

The Applicants did not contest that there was a basis for the ex parte freezing orders because there had been deposits that disclosed “structured payments” contrary to s 142 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (the AML Act). As the primary judge found, deposits into the relevant Westpac accounts had been structured by two Indonesian money lenders in such a way as to avoid the $10,000 AUD limit on the deposit of cash before reporting requirements operated, and that the Zetland properties were purchased at least in part with money from those accounts. Those properties were thus purchased with money that was part of a scheme in which the Applicants received structured deposits.

However, the Applicants contended that the property the subject of the freezing orders should be excluded from the freezing orders as their interest in the property was neither “proceeds of an offence” nor an “instrument of an offence”, pursuant to s 29(2)(b) of the Act. This was because, they contended, they had provided sufficient consideration for the property, and that they neither knew nor had any reasonable suspicion that the property was “proceeds of an offence”, pursuant to s 330(4)(a) of the Act. Ms Hoang who could not read English gave evidence that she had sole responsibility over the Applicants’ financial affairs, and that she did not look at any individual transactions disclosed within her Westpac bank statements, but only the total balance on her bank statements or on the internet banking platform to which she had electronic access.

The primary judge dismissed the Applicants’ notice of motion with costs. Relevantly for present purposes, the primary judge held that the evidence was “uncontroverted and unchallenged’ that the Applicants did not know that the property had been transferred in a manner which resulted in the funds being the proceeds or an instrument of an offence. However, the primary judge held that the Applicants (on whom the onus lay under s 317 of the Act) had not established that they had acquired the relevant property “in circumstances that would not arouse a reasonable suspicion”, within the meaning of s 330(4)(a) of the Act.

The principal issue that arose on appeal was whether the primary judge erred in not holding that the frozen property was acquired by the Applicants in circumstances that would not arouse a reasonable suspicion that the property was proceeds of an offence.

The Court held (Bell P, Bathurst CJ and Emmett AJA agreeing), allowing the appeal:

1. The primary judge erred in holding that the Applicants had not acquired the relevant property in circumstances that would not arouse a reasonable suspicion within the meaning of s 330(4)(a) of the Act. It being accepted that Ms Hoang had no actual knowledge of the structured nature of payments made into the Westpac Choice account and, in the absence of cross-examination, there was no basis for the primary judge to reject the consistent evidence Ms Hoang had given that all she was ever aware of was the balance of the bank account, and not its underlying activity, or to find that she was aware of circumstances that would arouse a reasonable suspicion that the property was proceeds of an offence: [1] (Bathurst CJ); [76] (Bell P); [101] (Emmett AJA).

2. An assessment of whether or not, for the purposes of s 330(4)(a) of the Act, property is acquired by a third party in “circumstances that would not arouse a reasonable suspicion that the property was proceeds of an offence”, whilst to be made objectively, must nevertheless be undertaken in light of the actual knowledge of the party seeking the exclusion order: [1] (Bathurst CJ); [67] (Bell P); [101] (Emmett AJA).

Director of Public Prosecutions v Le (2007) 17 VR 352; [2007] VSCA 18; Lordianto v Commissioner of the Australian Federal Police (2019) 266 CLR 273; [2019] HCA 39, applied.

3. Inferences from the evidence for which the Commission contended were required to be put to Ms Hoang in cross-examination as a matter of fairness: [1] (Bathurst CJ); [83] (Bell P); [101] (Emmett AJA).

Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361; [2011] HCA 11; Browne v Dunn (1893) 6 R 67; [1893] 1 WLUK 44; Precision Plastics Pty Limited v Demir (1975) 132 CLR 362; [1975] HCA 27; Allied Pastoral Holdings Pty Ltd v Commissioner of Taxation [1983] 1 NSWLR 1; (1983) 70 FLR 447, applied.

4. The basis on which the primary judge found that the Applicants had not discharged their onus involved an exercise in speculation based upon an example that had no foundation in the facts: [1] (Bathurst CJ); [87] (Bell P); [101] (Emmett AJA).

5. As the Applicants did not have actual knowledge that the property the subject of the freezing orders constituted “proceeds of an offence”, and given that sufficient consideration had been provided in relation to the funds which were translated into the frozen property, an exclusion order should have been made in relation to the property: [1] (Bathurst CJ); [90]-[91] (Bell P); [101] (Emmett AJA).

Judgment

Introduction

1. BATHURST CJ: I have had the advantage of reading the judgment of the President in draft. I agree with the orders his Honour proposes and with his reasons.

2. BELL P: Before the Court is an application for leave to appeal from a decision of Rothman J (the primary judge) who dismissed an application by Mr Yoo Tak Gwe (Mr Gwe) and his wife Ms Tan Soi Hoang (Ms Hoang) (together, the Applicants) for orders pursuant to ss 29 and 31 of the Proceeds of Crime Act 2002 (Cth) (the Act) that certain property be excluded from freezing orders which had been made ex parte on 9 July 2015 following an application to the Supreme Court of New South Wales by the Commissioner of the Australian Federal Police (the Commissioner), pursuant to s 19 of the Act.

3. The relevant property was described in the freezing orders as:

1. two separate funds standing to the credit of Westpac Banking Corporation in the names of the Applicants, namely a “Westpac Choice” trading account and a Westpac eSaver account;

2. funds held in or available for withdrawal, including any redraw, from three Westpac Banking Corporation “Rocket Loan” (home loan) accounts held in the name of the Applicants (the Rocket Loan Accounts); and

3. three parcels of real property, being Lots 177, 139 and 125 in Strata Plan 90181 located in Zetland, NSW held in the name of the Applicants (the Zetland Properties).

   4. The three Rocket Loan Accounts were apparently opened in association with the acquisition of the three Zetland properties.

   5. The Applicants are residents of Indonesia where they own and work together in a wholesale packaging company which imports and resells packaging for cosmetic products such as lipstick and perfume. The Applicants, on the evidence before the Court, have visited Australia on three or four occasions, most recently for relevant purposes in July 2015 on the day following the making of the ex parte freezing orders. Those freezing orders included an order that the Applicants both be examined pursuant to s 180 of the Act. Those examinations relevantly took place on 23 and 24 July 2015 respectively, and were conducted by Mr O’Mahoney of counsel (the s 180 examination).

   6. On 22 January 2016, the Applicants filed a notice of motion seeking the relief which was the subject of the judgment currently under appeal. That application was supported by affidavits from both of the Applicants. In response, the Commissioner relied upon an affidavit of Mr Darren James Burtenshaw (Mr Burtenshaw) sworn 9 July 2015 which had been relied on to obtain the original ex parte freezing orders. The Commissioner also relied upon a second affidavit of Mr Burtenshaw sworn 15 July 2016 and tendered two exhibits to the respective Burtenshaw affidavits. The Commissioner also relied on an affidavit of Ms Marie Elizabeth Johnston (Ms Johnston), affirmed 4 July 2016, which principally exhibited banking records of Westpac Banking Corporation (Westpac) and the transcripts of the s 180 examinations of the Applicants.

   7. The basis for the application for the exclusion of the property was that the Applicants had an interest in the property within the meaning of the Act, and that that interest was neither “proceeds” of an offence nor an “instrument of an offence”: see s 29(2)(b) of the Act. By s 330(4)(a) of the Act, property only ceases to be “proceeds of an offence” or “an instrument of an offence”:

   “if it is acquired by a third party for *sufficient consideration without the third party knowing, and in circumstances that would not arouse a reasonable suspicion, that the property was proceeds of an offence or an instrument of an offence (as the case requires)…”

   8. “Sufficient consideration” is defined in s 338 of the Act as meaning:

   “an acquisition or disposal of property is for sufficient consideration if it is for a consideration that is sufficient and that reflects the value of the property, having regard solely to commercial considerations”.

   9. The Applicants’ case was that they had provided sufficient consideration for the property, and that they neither knew nor had any reasonable suspicion that the property was “proceeds of an offence.”

   10. The Applicants did not contest that there was a basis for the ex parte freezing orders, because there had been deposits that disclosed “structured payments” contrary to s 142 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (the AML Act). Indeed, the primary judge held at [17]-[18] that:

   “The records located by the AFP demonstrate transactions into the relevant Westpac accounts of Gwe and Hoang, which were structured deposits: AFP Submissions, [19] and [22], being structured in such a way as to avoid the $10,000 AUD limit on the deposit of cash, before reporting requirements operated.

   The real property, being the three units or apartments described in Schedule 2 to the Motion, were purchased, at least in part, with money from those accounts. Those properties were, therefore, purchased from money that was part of a scheme in which the defendants’ received structured deposits: AFP Submissions, at [23]-[24]; second Burtenshaw Affidavit, at [35]-[46].”

   11. Later, at [87]-[89], the primary judge said:

   “Further, there is no doubt, again on the material currently before the Court, that the amount held to the credit of each of the defendants/applicants was the result of deposits structured so as to avoid the reporting requirements imposed by law and breach of which is an offence, described above.

   Further again, the funds standing to the credit of the defendants/applicants in Westpac (each of the accounts) were the result of deposits by Messrs Linggo and Cheung in which Messrs Linggo and Cheung (or others) were dealing with property reasonably suspected of being the proceeds of crime in excess of $100,000.

   As the name of the statute implies, the Anti-money Laundering and Counter-terrorism Financing Act is intended to catch cash deposits of sizeable amounts in order that law enforcement agencies can stop or restrict the laundering of money from criminal activity and the funding of terrorism. Similarly, s 400.9(1) of the Criminal Code is intended to deter persons from dealing with large amounts of property that is reasonably suspected of being the proceeds of crime.”

   12. It was accepted both at first instance and in this Court that the Applicants did not know that the payments into their accounts were “structured payments” of a kind that breached the AML Act.

   13. The primary judge dismissed the Applicants’ notice of motion with costs. Relevantly for present purposes, the primary judge held at [136] that the property the subject of the freezing orders was not acquired for sufficient consideration within the meaning of s 330(4)(a) of the Act because the consideration was furnished “well before the commission of the offence and was not an acquisition at a time after the commission of the offence” (the consideration issue), and, at [163], that the Applicants (on whom the onus lay under s 317 of the Act) had not established that they had acquired the relevant property “in circumstances that would not arouse a reasonable suspicion” within the meaning of s 330(4)(a) of the Act (the reasonable suspicion issue).

   14. In relation to the consideration issue, the Applicants in this Court submitted, correctly, that the primary judge’s finding with respect to consideration was inconsistent with the High Court’s recent decision in Lordianto v Commissioner of the Australian Federal Police (2019) 266 CLR 273; [2019] HCA 39 (Lordianto) which was delivered after delivery of the judgment currently under appeal. The Commissioner accepted that, in light of what was said in Lordianto, this point, reflected in the Commissioner’s first ground of appeal, should succeed.

   15. Although the Commissioner originally resisted the grant of leave to appeal, he retreated from that stance in light of his concession in relation to the consideration issue. That concession did not resolve the appeal, however, as the Applicants recognised that they also needed to succeed in relation to the reasonable suspicion issue in order to overcome the primary judge’s decision.

   16. Before turning to consider how that was dealt with at first instance and the Applicants’ attack on the primary judgment in that regard, more needs to be said in relation to the Zetland Properties and the Westpac Accounts.

The Zetland Properties and the Westpac Accounts

17. According to their evidence, the Applicants became interested in investing in real property in NSW after attending a presentation in late 2012 in Jakarta by a company called Centurion which was promoting a residential development situated in or to be situated in Zetland, an inner city suburb of Sydney. The Applicants claimed that they proposed ultimately to retire to Australia where they had a nephew named David to whom they were evidently close.

18. Two of the Zetland Properties were purchased on 3 December 2012 for $690,000 and $700,000. The first page of the respective contracts records that there was a 10% deposit in respect of each acquisition.

19. The third of the Zetland Properties was purchased by contract dated 26 February 2013 for $705,000.

20. The Zetland Properties were jointly purchased by the Applicants.

21. According to Ms Hoang, the paperwork for these acquisitions was arranged by a representative of Centurion in Jakarta who, according to Ms Hoang, was also responsible for the opening of the five Westpac accounts. As indicated at [3] above, three of these accounts were home loan accounts, and the other two accounts were savings accounts.

22. Although she claimed not to speak English and gave her evidence in the course of the s 180 examination through an interpreter, Ms Hoang said that the representative of Centurion showed her how to transfer funds from the savings accounts to the home loan accounts using Westpac’s internet banking facility (which was in English).

17. Ms Hoang also accepted in the course of her s 180 examination that she would receive bank statements in relation to the Westpac accounts by post. She also indicated that she received such hard copy bank statements “[m]aybe once a month or more”. These were in evidence and, to the extent that they contained text, this was in English.

18. Although the contracts of sale in relation to the Zetland Properties were dated December 2012 and February 2013, it would appear that settlement in relation to those sales did not occur until sometime after mid 2014. This emerges from the affidavit of Ms Johnston which exhibited loan offer documents associated with the Rocket Loan Accounts. These documents are variously dated 14 May 2014, 15 May 2014 and 1 July 2014. In addition, the Applicants’ “Westpac Choice” trading account records three “withdrawals for settlement” of $135,151.15, $136,957.93 and $139,057.55 respectively on 8 October 2014.

19. The Applicants’ “Westpac Choice” account (account no. 62-1187) appears to have been opened in or about February 2013. A bank statement for the period from 28 February 2013 to 28 May 2013 disclosed an opening balance and a closing balance of $0.00 with no credit or debit activity in that period.

20. In relation to the period 28 May 2013 to 28 August 2013, a deposit of $100,000 was recorded on 9 July 2013, described in the statement as “Deposit Victoria Park East WA”. The same bank statement reveals that on 12 July 2013 that amount was withdrawn by reason of an internet online banking funds transfer.

21. The next Westpac Choice bank statement for the period 28 August 2013 to 28 November 2013 disclosed an opening balance and a closing balance of $0.00 with no credit or debit activity in that period.

22. The next Westpac Choice bank statement for the period 28 November 2013 to 28 February 2014 disclosed an opening balance of $0.00 and a closing balance of $10,005. It also disclosed total credits to the account of some $220,105 and total debits of $210,100 in this period.

23. The bank statement for this period discloses that seven deposits were made to this account by “internet online banking”. These are shown in the following table:

Date	Description of deposit	Amount
20 January 2014	Deposit – Internet Online Banking 2550789 Payment Dari Indo 18-Jan	20,000.00
30 January 2014	Deposit – Internet Online Banking 2761677 Fnds Tfr 30-Jan	100.00
3 February 2014	Deposit – Internet Online Banking 2687082 Payment Yanti 03-Feb	10,000.00
4 February 2014	Deposit – Internet Online Banking 2325558 Payment Dari Indo 04-Feb	11,700.00
4 February 2014	Deposit – Internet Online Banking 29111478 Payment Yanti 04-Feb	2,500.00
6 February 2014	Deposit – Internet Online Banking 2333504 Payment Yanti 06-Feb	10,000.00
7 February 2014	Deposit – Internet Online Banking 2159330 Payment Yanti 07-Feb	10,000.00

30. The bank statement for the same period also contains the following deposit entries:

Date	Description of transaction	Amount
3 February 2014	Deposit Haymarket NSW	5,000.00
3 February 2014	Deposit Campsie NSW	7,000.00
3 February 2014	Deposit Bankstown NSW	8,000.00
3 February 2014	Deposit Tatiek To Yoo Tak Gwe Tsh	10,000.00
3 February 2014	Deposit Yanti Yoo Tak Gwe Tan So	20,000.00
4 February 2014	Deposit Haymarket NSW	7,500.00
4 February 2014	Deposit Kanggaru Dari Indo	18,300.00
6 February 2014	Deposit Campsie NSW	6,000.00
6 February 2014	Deposit Strathfield NSW	6,500.00
6 February 2014	Deposit Burwood, 168 Burwood Rd NSW	7,500.00
6 February 2014	Deposit 591 George St NSW	9,000.00
6 February 2014	Deposit Haymarket NSW	9,500.00
7 February 2014	Deposit Haymarket NSW	4,000.00
7 February 2014	Deposit 242 Castlereagh Street NSW	8,000.00
7 February 2014	Deposit Market & Clarence Sts NSW	9,500.00
7 February 2014	Deposit Yanti Yoo Tak Gwe Tan So	20,000.00

31. Two internet transfers each in the sums of $100,000 were effected on 10 and 11 February 2014.

32. The Westpac Choice bank statement for the period 28 February 2014 to 28 May 2014 discloses an opening balance of $10,005 and a closing balance of $2,105. The statement also discloses total credits in that period of $184,100 and total debits of $192,000.

33. There were three internet online banking deposits in this period comprising deposits of $15,000 and $5,000 on 1 April 2014 and $40,000 on 3 April 2014.

34. The balance of the deposits for this period were made, according to the bank statement, at various Westpac branches on the dates and in the amounts shown in the following table:

Date	Description of transaction	Deposit Amount
12 March 2014	Deposit Hawthorn Vic	400.00
12 March 2014	Deposit Haymarket NSW	6,800.00
12 March 2014	Deposit Rockdale NSW	7,000.00
12 March 2014	Deposit Rockdale NSW	8,000.00
12 March 2014	Deposit Haymarket NSW	9,000.00
12 March 2014	Deposit 591 George St NSW	9,200.00
13 March 2014	Deposit Box Hill Vic	1,500.00
26 March 2014	Deposit Potts Point NSW	700.00
3 April 2014	Deposit 242 Castlereagh Street NSW	5,000.00
3 April 2014	Deposit Campsie NSW	7,000.00
3 April 2014	Deposit 591 George St NSW	7,000.00
3 April 2014	Deposit Haymarket NSW	8,000.00
4 April 2014	Deposit Hurstville NSW	4,000.00
4 April 2014	Deposit Burwood, 168 Burwood Rd NSW	5,500.00
4 April 2014	Deposit Rockdale NSW	6,000.00
4 April 2014	Deposit Blacktown Westpoint NSW	6,500.00
4 April 2014	Deposit Strathfield NSW	7,000.00
4 April 2014	Deposit 591 George St NSW	7,000.00
4 April 2014	Deposit Haymarket NSW	8,000.00
4 April 2014	Deposit Newtown NSW	9,000.00
8 April 2014	Deposit Wales Corner, Melbourne VIC	1,500.00

35. The Westpac Choice bank statement for the period 28 May 2014 to 28 August 2014 discloses an opening balance of $2,105 and a closing balance of $502,083. The statement also discloses total credits in that period of $499,978 and total debits of $0.

36. There were five internet online banking deposits in this period, as shown in the following table:

Date	Description of transaction	Deposit Amount
10 July 2014	Deposit Online 2238409 TFR Westpac eSa	100,000.00
11 July 2014	Deposit Online 2067122 TFR Westpac eSa	100,000.00
14 July 2014	Deposit Online 2341612 TFR Westpac eSa	100,000.00
24 July 2014	Deposit – Internet Online Banking 2974918 Payment Fr Soraya Ambadar 23-Jul	30,000.00
8 August 2014	Deposit Online 2208523 TFR Westpac eSa	100,000.00

37. One further deposit for this period was made on 22 August 2014, according to the bank statement, for the amount of $69,978.00 and with the transaction description, “RTGS High Value Payment Ref No 0385791 Henry Wijaya”.

38. The Westpac Choice bank statement for the period 28 August 2014 to 8 October 2014 discloses an opening balance of $502,083 and a closing balance of $241,916.37. The statement also discloses total credits in that period of $151,000 and total debits of $411,166.63.

39. The internet online banking deposits during this period are as shown in the following table:

Date	Description of transaction	Deposit Amount
10 September 2014	Deposit Online 2359099 Pymt Joni Joni 094	4,000.00
11 September 2014	Deposit Online 2559644 Pymt Joni Joni 111	5,000.00
12 September 2014	Deposit Online 2154762 Pymt Noviana No 111	4,000.00
12 September 2014	Deposit Online 2254078 Pymt Gustinia D Indokoala	3,000.00
29 September 2014	Deposit Online 2859453 Pymt Yuni Khari yanti	10,000.00

40. The balance of the deposits for this period were made, according to the bank statement, at various Westpac branches on the date and in the amounts shown in the following table:

Date	Description of transaction	Deposit Amount
10 September 2014	Deposit 094 094	2,000.00
10 September 2014	Deposit Ria Meryanti 094	14,000.00
11 September 2014	Deposit Blenda Beatrice Trf	6,000.00
12 September 2014	Transfer Deposit at South Melbourne VIC	20,000.00
12 September 2014	Deposit Tri Swarno 111	8,000.00
26 September 2014	Deposit 591 George St NSW	5,000.00
26 September 2014	Deposit yanti yanti	2,500.00
29 September 2014	Deposit 591 George St NSW	7,000.00
29 September 2014	Deposit 242 Castlereagh Street NSW	8,000.00
29 September 2014	Deposit indo oz mony	7,094.00
29 September 2014	Deposit Sukendro Darmant Kt	7,906.00
29 September 2014	Deposit Widiawaty 09622	10,000.00
29 September 2014	Deposit Sukendro Darmant Ky	10,000.00
30 September 2014	Deposit 591 George St NSW	8,500.00
30 September 2014	Deposit 591 George St NSW	9,000.00

The evidence of Ms Hoang in relation to the Westpac accounts

41. Ms Hoang made it clear in her evidence in the s 180 examination that she had complete responsibility for the Applicants’ financial affairs including the financial affairs of their company in Indonesia, and that her husband, Mr Gwe, did not take any interest in the financial aspects of the company, he being principally concerned with marketing.

42. In her affidavit, Ms Hoang said at paras 45-49 as follows:

“The Westpac Accounts

45.   Between my husband and I we have (5) accounts with Westpac (all in our joint names):

a.   (3) accounts are ‘home loan accounts’ which relate to each of the three properties which we have purchased in Zetland; and

b.   (2) savings accounts. One was the Choice account which was used for everyday banking when I needed to transfer money from Indonesia to Australia to pay down our home loans. The other was the eSaver who had the higher interest rate.

46.   The Westpac accounts were set up about the time that we purchased each of the properties. They were set up on our behalf by Ricky from Centurion. Centurion have offices in Australia and also in Jakarta. I recall that following each of the purchases, we visited Centurion's offices in Jakarta to sign some paperwork. Ricky also visited our home on a number of occasions to us to sign some paperwork, some related to the purchase and others to the finance with Westpac I cannot now recall which papers were signed at either our home or at Centurion's offices.

Internal Westpac Transfers

47.   Once the accounts were established, Ricky returned some time later and provided me with instructions on how to use the online banking at the Westpac online banking system on my iPad. I do not have online banking with any of my accounts in Indonesia as I do not trust the Indonesian banks nor did I know how to use the online banking system, however, I was assured by Ricky that the Australian banks were much more trustworthy. On that basis, I felt comfortable enough to use the online banking app with Westpac on my iPad. I personally do not know of any Westpac branches in Indonesia, so it also makes sense from that point of view.

48.   Ricky instructed me how to transfer money between my accounts. I am keen to pay off the properties in Australia as soon as possible so I learned how to transfer money from my Choice account into the ‘E Saver’ account (an account with a higher interest rate) and/or into the ‘Rocket Investment’ accounts (which are the home loan accounts in respect of each of the properties). Exhibited at pages 111 to 112 of TSH-1 is a copy of a number of screenshots that were taken by David which shows the (a) Westpac 'home screen'; and (b) the transfer screen.

The Westpac 'Home Screen'

49.   The ‘home screen’ is the screen which is accessed by a user once they have successfully logged-on to their account. It shows nothing more than the respective balances of a customer's account it does not show any detail in respect of transactions on the account. If a customer wishes to access the detail of their accounts (i.e. such as view each transactions on the account) they would need to click on the account name which would take them to that section of the account. I did not perform this function as I do not know how to do it in respect of these accounts, and have only ever been concerned with the balance to confirm that a transfer from our money changer had arrived. I knew that the funds had been transferred when there was a significant change to the balance of the account.” (emphasis added).

43. These paragraphs do not explain how money was transferred into or otherwise deposited in either the Westpac Choice account or the Westpac eSaver account. Earlier in her affidavit at para 34, however, Ms Hoang gave evidence as to how she used Indonesian money changers to “send funds to Australia to service our mortgages over a number of properties that we own in Sydney”.

44. In short, Ms Hoang said that the Applicants’ business used money changers to remit funds to their international suppliers, as well as to send funds to Australia in order to save foreign exchange charges that would be rendered if such transfers were effected by an Indonesian bank. This process evidently involved Ms Hoang using two money changers in Jakarta to whom she would transmit monies from her and her husband’s Indonesian bank accounts, or to whom she would provide cash. Those transmitted amounts would then be transferred by the money changers to the Applicants’ nominated Australian bank accounts. At paras 35(h) and (i) of her affidavit, Ms Hoang described the procedure she followed once funds had been transferred to the money changers:

“…

(h)   Step seven - Once the money had been transferred to the money changer, I would then fax a copy of the receipt (blue or red) that I received from the bank to the money changer as a way of confirmation of the deposit. On occasion, the fax machine was not working so I would call the money changer or visit their office or home to inform them that the transfer had been made.

(i)   Step eight - some time later, I would typically receive a telephone call from either Rosiyana or Ahong [the two money changers used by Ms Hoang] informing me of the time that they expected the funds would to be available. That time very much depended on the 'destination' country and might range from a day (in the case of transfers to China) to several days (for a transfer to Australia). In my experience, the transfers that I made to Australia generally took between 3 to 5 days, sometimes longer.”

45. Ms Hoang continued in para 36 of her affidavit to say that, whenever she asked the money changer, “Rosiyana”, to remit monies overseas, she would never receive a receipt and that “[n]ormally the rates are confirmed by telephone and I would transfer the money to the money exchanger” in the way described in the affidavit.

46. In her s 180 examination, Ms Hoang was asked questions in relation to her use and knowledge of the Westpac bank accounts. The relevant portion of the transcript is set out below:

“MR O'MAHONEY:   The bank statements- sorry- the bank accounts that you had in Australia, would you check to ensure that when you transferred money to your accounts in Australia, these large sums of money, that they arrived in those bank accounts?

INTERPRETER:      I would just check. If I had, for example, transferred 50,000, I would check whether I if, for example, had 150,000 in – sorry - 150,000 in the bank, then I would check. If there was 100,000 then I'd go, oh, it's been transferred.

MR O'MAHONEY:   You did that because you wanted to know that when you were transferring money from Indonesia to Australia that it was actually working, that it arrived?

INTERPRETER:      I was just checking the savings, the balance.

MR O'MAHONEY:   Yes, but you were doing that because you wanted to know that the money you transferred to Australia arrived. Correct?

INTERPRETER:      Yes. Yes, that's right.

MR O'MAHONEY:    The only way to do that was to look at the bank statements. Correct?

INTERPRETER:      Yes, just looking at the bank accounts.

MR O'MAHONEY:    Those bank accounts, those bank statements, were they sent to you electronically on email?

INTERPRETER:       No.

MR O'MAHONEY:    Are they accessible – were they accessed by you via the internet?

INTERPRETER:      Yes, I'd look at the internet and I'd have a look at the balance.

MR O’MAHONEY:   You would log into the Westpac website, would you?

INTERPRETER:      Yes.

MR O'MAHONEY:   Did you also receive-generally banks will send out statements either in hard copy via post or electronically via email. Did you receive bank statements in either of those forms?

INTERPRETER:      I never looked at them because I don't speak English.

MR O'MAHONEY:   Well, that wasn't an answer to my question. My question was, did you receive those statements via email or via post?

INTERPRETER:      I would receive them by post.

MR O'MAHONEY:   You don't need to speak English, do you, to see the numbers in bank accounts? Correct?

INTERPRETER:     Yes, I’d just have a look at the balance and see that it had arrived.

MR O'MAHONEY:   Madam, I'll ask you to focus your answers on my question. You don't need to speak English to see numbers in bank statements, do you?

INTERPRETER:      No.

MR O'MAHONEY:   You don't need to speak English to see whether there's been a lot or a little of activity in relation to a bank statement, do you? You have to answer yes or no.

INTERPRETER:      Yes.”

47. Later, the following exchange occurred:

“MR O'MAHONEY:   You said before you get bank statements in hard copies. Do you remember saying that?

INTERPRETER:       Yes.

MR O'MAHONEY:     Do you get them every month?

INTERPRETER:       Maybe once a month or more. I'm not sure.

MR O'MAHONEY:    Do you or your husband open those bank statements?

INTERPRETER:       I open them. He doesn't know about all that.

MR O'MAHONEY:    Does your husband ever look at the bank statements?

INTERPRETER:       No.

MR O'MAHONEY:    Why not?

INTERPRETER:      Because I organise all of that.”

48. Later still, when being asked about a Westpac Choice bank statement recording transactions in June 2015 (which it was not suggested she had received by mail in Indonesia prior to the examination), Ms Hoang reiterated her earlier evidence that she would only look at the total balance and “never paid any attention” to individual entries. The evidence continued:

“INTERPRETER:     I’ve never paid any attention to any of those things. I’ve only seen the total balance that’s given to me by the money changer.

MR O’MAHONEY:   This is your bank statement. Correct?

MR O'MAHONEY:   Are you not interested in a bank statement showing tens of entries, many tens of entries of cash deposits into your own bank account at locations all over New South Wales and Victoria?

INTERPRETER:      I've never paid any attention.

MR O'MAHONEY:   Well, Madam, you wouldn't have to pay much attention to know there's a lot of activity going on in relation to this bank account, would you?

INTERPRETER:      I haven't paid any attention. The important thing is just to know that the amount of money that I transferred - that I paid for, was transferred through the money changer.

MR O'MAHONEY:   You see, your transfers, your remittances to this bank account, only occur every now and then, don't they?

INTERPRETER:      Yes. When I have money then I give it to the money changer. I buy it from the money changer and the important thing to me is just that it goes through.

MR O'MAHONEY:   But you would only have to look at this bank statement for a second to appreciate that there's an awful lot of activity going on. Surely you wanted to know what that activity was.

INTERPRETER:      I don't really understand it.

MR O'MAHONEY:   Did you not want to understand it? It's your bank statement.

INTERPRETER:      I don't - but I don't understand it. All I care about is just buying it from the money changer and checking my balance.

MR O'MAHONEY:   But wouldn't you want to understand transactions occurring on your own bank account?

INTERPRETER:     I don't understand it.

MR O'MAHONEY:  I know. What I want to understand is why you are not interested in understanding it.

INTERPRETER:    The problem is I don't understand. I don't understand. The important thing is just that I get the money.”

49. The following exchange also took place:

“MR O’MAHONEY:  Why have you not asked David to read out to you all of this activity on your bank statement?

INTERPRETER:      I didn't think of that.

MR O'MAHONEY:   Is it because you always knew, madam, there was - is it because you always knew about this activity on your bank statement?

INTERPRETER:      No.

MR O'MAHONEY:   Is it because you always understood that there were going to be a lot of small individual transactions on your bank statement for the amounts you transferred from Indonesia?

INTERPRETER:      No”.

50. The thrust of Ms Hoang’s evidence, both in the s 180 examination and in her affidavit before the primary judge, was that she did not look at any individual transactions disclosed on her hard copy Westpac Choice bank statements or available on the Westpac internet banking platform to which she had electronic access.

The proceedings at first instance

51. It has already been noted that, at first instance, the Applicants did not contest that there was a basis for the ex parte freezing orders because there had been deposits that disclosed “structured payments”, contrary to s 142 of the AML Act.

52. It was accepted by the Commissioner that, at least for the purposes of the appeal, all of the moneys that found their way into the Westpac accounts and the Zetland Properties derived from payments made by the Applicants to the two Indonesian money lenders, to whom reference has already been made. This was said to be reflected in the unchallenged finding by the primary judge at [135] that:

“In the circumstances of this case, the defendants/applicants transferred money to money-changers. From that money was deducted a commission for the service of ‘transferring’ the money. The money was to have been transferred into the Westpac accounts and, ultimately, was.”

It was also clarified in the following portion of the transcript in the course of the hearing of the appeal:

“BATHURST CJ:   Why don’t we proceed then on the basis that the primary judge apparently found that there was consideration but, incorrectly, that it was temporally defective, if I can put it on that basis, and this case really turns and falls on reasonable suspicion and nothing else in the absence of a notice of contention?

MOSES:   Yours Honours would be surprised to hear that I absolutely agree with what your Honour has said. We say we win on that ground in any event, but your Honour is pushing on an open door with me on that.

BATHURST CJ:   I want to be precise about this. You don’t wish to contend that the moneys that went into the accounts were other than having a causal connection with the moneys paid by Mr Walker’s clients to the moneychangers in Indonesia?

MOSES:   Your Honours can proceed on that basis and Mr Walker is absolutely correct as to the battleground in respect of the way in which this appeal has been prepared by the parties and to be conducted by the parties.”

53. This concession might be thought to have been surprising given the apparent absence of detailed evidence from Ms Hoang at first instance setting out and documenting all of the amounts transmitted to the money lenders in Indonesia and detailing a broad equivalence, after allowing for fees and exchange rate erosion, with the amounts deposited into the Westpac accounts. It is not for this Court, however, to second-guess the making of concessions by Commonwealth entities represented by experienced counsel and to proceed, in the absence of a Notice of Contention and in light of the concession, other than on the basis that consideration had been furnished for all of the property that was the subject of the freezing orders.

54. This concession, together with the concession in relation to the consideration issue (see [14] above), meant that what had been the principal issue before the primary judge was the sole issue in this Court, namely, the question whether the frozen property was acquired by the Applicants in circumstances that would not arouse a reasonable suspicion that the property was proceeds of an offence.

55. Ms Hoang was not cross-examined in the proceedings at first instance for the purposes of challenging the evidence summarised at [50] above. Indeed, she was not cross-examined at all notwithstanding that, in submissions filed prior to the hearing before the primary judge, it had been put on behalf of the Commissioner that:

“Gwe and Hoang submit that at no stage were they aware that the funds they engaged the money changers to transfer were structured into their Westpac accounts. Their evidence is that in examining the relevant bank account statements, Gwe and Hoang never proceeded beyond the balance page to inspect the underlying transactions into the account. They submit that the failure to inspect the underlying transactions could not arouse a reasonable suspicion and the funds thereby ceased to be the proceeds of an offence once they were deposited into the Westpac accounts.

This submission should be rejected.”

It was also put that:

“Their responses to questions put to each of the Defendants in the course of the examinations conducted under s 180 of the Act, demonstrate evasiveness and lack of candour. Gwe also claimed a lack of recollection or knowledge on matters concerning the remitting of funds to Australia. It is submitted that it is inherently implausible that Gwe’s recollection could have been so lacking in so many respects. More will be said about the unreliability of the Defendants’ evidence following cross-examination.” (emphasis added).

56. Notwithstanding this signalling of an intention to cross-examine, senior counsel for the Commissioner did not cross-examine either Ms Hoang or Mr Gwe. It will be necessary to return to the significance of the failure to cross-examine later in these reasons.

57. The primary judge, having noted at [139] that “the evidence is uncontroverted and unchallenged that the defendants did not know that the property had been transferred in a manner which resulted in the funds being the proceeds or an instrument of an offence”, proceeded to the question of whether or not the property had been transferred in circumstances that would arouse a reasonable suspicion that the property was proceeds of an offence. The primary judge’s key findings in this regard are contained in [141]-[153] of his judgment as follows   :

“[141]   The defendants/applicants rely upon the evidence, also uncontroverted and unchallenged, that the relevant actor [Ms Hoang] looked only at the balance of the account and not at the transactions that occurred to cause that balance to be effected. There are a number of issues that need to be noted.

…

[144]   To meet the ‘objective test’, as I have described it, the defendants/applicants rely upon the affidavit of Ms Hoang of 15 April 2016. At [47]-[48] of that affidavit Ms Hoang refers to training she received on the use of online banking at the Westpac online banking system on her iPad and her use of online banking to transfer between her Australian accounts. Ms Hoang exhibits … screenshots showing the Westpac home screen and the transfer screen. It is not suggested that Ms Hoang exhibited all of the screenshots over a period of time, or any period of time, relating to the relevant transactions.

[145]   At [49] of the aforesaid affidavit, Ms Hoang attests to the following:

‘[49] The “home screen” is the screen which is accessed by a user once they have successfully logged-on to their account. It shows nothing more than the respective balances of a customer’s account it does not show any detail in respect of transactions on the account. If a customer wishes to access the detail of their accounts (i.e. such as view each transactions on the account) they would need to click on the account name which would take them to that section of the account. I did not perform this function as I do not know how to do it in respect of these accounts, and have only ever been concerned with the balance to confirm that a transfer from our money changer had arrived. I knew that the funds had been transferred when there was a significant change to the balance of the account.’

[146]   Ms Hoang attests that she did not look at the details of the transactions on the account, but only the home screen of the online banking application. That evidence is unchallenged and uncontroverted. However, a view of the home screen, with the balance displayed, does not necessarily result in Ms Hoang being unaware of the circumstances that the monies were transferred in amounts less than $10,000, which, thereby, constituted an offence. It is necessary to use an example.

[147]   Assume that an amount of $100,000 AUD was transferred to Australia and deposited in amounts of $9,000 on each of 11 days. If, as Ms Hoang was told, a transfer of funds to Australia would take 3 to 5 days and the balance was seen on days three, six and nine, the home screen would reflect a balance of approximately $27,000, $54,000 and $81,000 respectively.

[148]   In other words, an examination of the ‘home screen’ would, or may, disclose circumstances that showed the structuring of the transfer in amounts less than the funds that were required to be transferred and raise significant suspicion.

[149]   Significantly, Ms Hoang does not attest to the lack of knowledge of transfers of larger amounts in a manner that was structured so as to avoid the deposit of $10,000 or more. Even if, as is the evidence, only the balances were examined, as earlier explained, a person would be aware of the structuring of deposits by the depositing of a total amount in parts.

[150]   Unless knowledge of the offence of structuring deposits so as to avoid a $10,000 limit was itself required, then, even on the balance of probabilities, the circumstances have not been shown to be such as would not arouse a reasonable suspicion that the property was proceeds of an offence or an instrument of an offence.

[151]   In my view, the terms of s 330(4) of the Act do not require a person, who has acquired property or an interest in property, to know that it is an offence to structure transactions in a manner which avoids reportable transactions. The reference to ‘circumstances’ requires the third party to know the circumstances.

[152]   Once the circumstances are known, it is not the subjective view of the third party as to a reasonable suspicion that matters. The circumstances must ‘not arouse a reasonable suspicion’, bearing in mind the view already expressed that it must be assumed that a party knows the law and that ignorance of the law is not a basis upon which a reasonable suspicion would not be aroused.

…

[153] Given the onus of proof prescribed by s 317 of the Act, the defendants/applicants have not satisfied the Court that they were unaware of circumstances that would arouse a reasonable suspicion, namely, the structuring of amounts transferred into deposits that were significantly less than the amount transferred, accumulating, over a period, to a balance close to the amount transferred (or to the amount transferred less the commission for the transfer).” (emphasis added).

Grounds of appeal

58. The Applicants rely on two grounds of appeal and accept that they must succeed on both. The Commissioner’s concession in relation to the first ground of appeal relating to the consideration issue has already been noted, as has his acceptance, in light of the concession, that leave to appeal from the decision of the primary judge should be granted.

59. The second ground of appeal is as follows:

“In considering whether the appellants had discharged their onus of proving that they acquired the relevant property ‘in circumstances that would not arouse a reasonable suspicion ...’, the primary judge erred by drawing the wrong inference from the facts as he found them.

Particulars

a.   The primary judge accepted at [144] - [146] as unchallenged and uncontroverted the evidence of Ms Hoang that she only looked at the home screen of her online banking, and on that screen she only ever saw the then current balance for the account, not a transaction history.

b.   The primary judge proceeded to assume (and thereby infer) at [147] that:

i.   Ms Hoang did or might have looked at the home screen on set frequencies; and

ii.   The depositing of funds pursuant to a transfer arrangement might take 11 days, such that Ms Hoang would or might have seen a degree of structuring if she looked at the home screen on several days during that period.

c.   The unchallenged evidence established that on each occasion the depositing of funds was spread out over 2 to 3 consecutive business days: tabs 1 and 4 of exhibit MEJ-1.

d.   It was Ms Hoang's unchallenged evidence that she knew when to expect deposits to the relevant account: reasons at [8(ix)].

e.   The proper inferences on all the evidence were that Ms Hoang did not look at the home screen with sufficient frequency to be able to observe any structuring, and that therefore a reasonable person in her position had no basis to form a relevant suspicion.” (emphasis in original).

60. The reference to “tabs 1 and 4 of exhibit MEJ-1” in the particulars to the second ground of appeal is a reference to various Westpac bank statements evidencing the deposits into the Applicants’ bank accounts.

Relevant authority

61. Before turning to consider the second ground of appeal, it is desirable to note what the High Court has said in relation to s 330(4)(a) of the Act which was central to the present case.

62. Section 330(4)(a) of the Act was the subject of detailed consideration in Lordianto. At [68] of Lordianto, the plurality observed:

“Identifying the property sought to be excluded, and the property said to be acquired (as they may be different), is a critical initial step. It ensures that the property sought to be excluded is the subject of the restraining order and, where relevant, that it is proceeds, or an instrument, of an offence (not disputed in these appeals). Significantly, it also ensures that the balance of the question under s 330(4)(a) is the right question: namely, did the applicant for the exclusion order acquire the relevant property for sufficient consideration without that applicant knowing, and in circumstances that would not arouse a reasonable suspicion, that that property was proceeds, or an instrument, of an offence? If the property is misdescribed, what an applicant needs to prove necessarily proceeds from the wrong starting point.”

The plurality continued, at [69]-[71], in a passage upon which the Commissioner placed much emphasis, to say:

“Acquired for sufficient consideration

Having identified the property and determined that the property is proceeds, or an instrument, of an offence, the next step is to determine whether the applicant for the exclusion order acquired that property for sufficient consideration. That necessarily directs attention to the circumstances in which the property was acquired by the applicant as well as the balance of s 330(4)(a) – whether the applicant did not know, and in circumstances that would not have aroused a reasonable suspicion, that the property was proceeds, or an instrument, of an offence. In its terms, the test is objective.

As seen earlier, ‘an acquisition or disposal of property is for sufficient consideration if it is for a consideration that is sufficient and that reflects the value of the property, having regard solely to commercial considerations’. Aspects of that definition should be noted: the consideration must be sufficient and reflect the value of the property and, in assessing both of those matters, the court is to have regard solely to commercial considerations.

That inquiry, and analysis, are self-evidently not undertaken in some vacuum divorced from the circumstances in which the applicant acquired the property. As the text of s 330(4)(a) indicates, the focus must be upon what the applicant paid to acquire the property and in what circumstances. The objective inquiry is directed at identifying what the applicant acquired and how, what were the form and amount of the consideration the applicant provided, and when and how that consideration was provided. That list is not exhaustive. It cannot be exhaustive: the analysis of whether the acquisition by the applicant was for sufficient consideration forms part of an assessment of whether the circumstances of that acquisition (which must at least include the facts and matters just identified) would not have aroused a reasonable suspicion that the property was proceeds, or an instrument, of an offence.” (emphasis in original, footnote omitted).

63. Mr Walker SC, who appeared for the Applicants, did not gainsay this analysis, and rejected the submission that his submissions in some way ran contrary to it. They did not.

64. At [89] of Lordianto, the plurality said in relation to the reference to “reasonable suspicion” in s 330(4)(a) of the Act that:

“A reasonable suspicion must have a factual basis. As this Court has previously stated, the test is objective. The question is: would a reasonable person in the position of the acquirer of property have had a suspicion that the property was proceeds, or an instrument, of an offence? It is a positive feeling and more than a mere idle wondering. In the context of a similar provision in the Confiscation Act 1997 (Vic), the test has been described as ‘whether the circumstances in which the applicant acquired her interest in the property were such as to arouse in her a reasonable suspicion that the property had been used in connection with the [crime]’”. (emphasis added, footnotes omitted).

65. The last sentence of this paragraph adopted a proposition stated by Maxwell P and Chernov JA (with whom Neave JA relevantly agreed) in Director of Public Prosecutions v Le (2007) 17 VR 352; [2007] VSCA 18 at [24], as follows:

“In our view, the director's submission must be rejected. The ‘reasonable suspicion’ provision in s 52(1)(a)(iii) is concerned with whether the circumstances in which the applicant acquired her interest in the property were such as to arouse in her a reasonable suspicion that the property had been used in connection with the trafficking. Plainly, the word ‘reasonable’ imports an objective test. This means that it will not avail an applicant to say ‘I had no suspicion’ if a reasonable person in her circumstances, and knowing what she knew, would have formed a suspicion. But if, in those circumstances and knowing what she knew, a reasonable person would not have formed a suspicion, that is the end of the matter. There is no warrant in the statutory language, or in authority, to import into the analysis some fictitious ‘reasonable person’ to whom must be attributed some (arbitrary) state of knowledge of the relevant circumstances, on the basis of which it can be said that he/she would have formed a suspicion.” (emphasis added)

66. On appeal to the High Court, (see Director of Public Prosecutions for the State of Victoria v Le (2007) 232 CLR 562; [2007] HCA 52 (Le)), Kirby and Crennan JJ (with whom Gleeson CJ relevantly agreed) said at [127]-[128]:

“By reference to, and comparison with, verbal formulae considered in Queensland Bacon Pty Ltd v Rees and Australian Securities and Investments Commission v Edwards, the DPP contended that the Court of Appeal applied the requisite test subjectively by looking only to whether the wife had the requisite state of mind, rather than approaching the matter objectively. The DPP relied on various matters of fact said to support findings contrary to the Court of Appeal's finding, if the test were applied objectively. However, the wife had not been challenged in her evidence on her denial of knowledge of the relevant circumstances. In any event, the majority in the Court of Appeal (with whom Neave JA agreed on this point) stated:

‘Plainly, the word “reasonable” imports an objective test. This means that it will not avail an applicant to say “I had no suspicion” if a reasonable person in her circumstances, and knowing what she knew, would have formed a suspicion … In the present case, the question is: would a reasonable person in [the wife's] position have had a suspicion?’

There was no error in the Court of Appeal’s description of the test or its application.” (footnotes omitted).

This view represented the majority judgment of the Court of five. It is relevant, however, to note that Gummow and Hayne JJ (who dissented in the result) said at [50] on the question as to whether or not Mrs Le had satisfied the onus of demonstrating that her interest in property was acquired in circumstances that did not raise a reasonable suspicion:

“The remaining grounds of appeal that are pressed concern the correctness of the conclusion reached by the primary judge and the Court of Appeal that Mrs Le had satisfied the criterion in s 52(1)(a)(iii) of the Act that her interest was acquired ‘without knowing, and in circumstances such as not to arouse a reasonable suspicion, that the property was tainted property’. In light of the appellant's success on grounds 4 and 5, it is unnecessary to decide the point. However, given that Mrs Le's evidence was uncontradicted and was accepted by both the primary judge and the Court of Appeal, it would be difficult for the DPP now to persuade this Court to overturn the findings made below.” (emphasis added).

67. The significance of these citations for present purposes is that an assessment of whether or not, for the purposes of s 330(4)(a) of the Act, property is acquired by a third party in “circumstances that would not arouse a reasonable suspicion that the property was proceeds of an offence”, whilst to be made objectively, must nevertheless be undertaken in light of the actual knowledge of the party seeking the exclusion order. Thus, if a person with the applicant’s knowledge (“knowing what she knew” in the passage from Le at [24]) would not have had a reasonable suspicion, then this element of s 330(4)(a) will be satisfied.

Consideration

68. Against this background, what separated the parties in the present case may be concisely identified. Mr Walker submitted that, in the absence of challenge by cross-examination, the primary judge was bound to accept Ms Hoang’s evidence (both that given on affidavit and in the s 180 examination) that she had no awareness of the structured nature of the deposits into the Westpac Choice account because she only ever looked at and was concerned with the balance of that account, and not its underlying activity. As such, he submitted, without granular knowledge of multiple individual deposits into that account in sums of less than $10,000, there was nothing that Ms Hoang had actual knowledge of that would have aroused any suspicion in her mind (or that of a reasonable person with her knowledge) as to the use of the bank account in a way that contravened s 142 of the AML Act.

69. Mr Moses, on the other hand, submitted that Ms Hoang did not in terms say in her affidavit that she was not aware of the multiple deposits which, taken together, amounted to an offence. He said that it was in her power to have said this and that, as the Applicants bore the onus of establishing a lack of any factual basis for reasonable suspicion, it had not been incumbent on him to cross-examine Ms Hoang in the proceedings at first instance.

70. The submission, made on more than one occasion, that there was no evidence from Ms Hoang that she was unaware of the fact of the structured payments into the Westpac Choice savings account, should be rejected. Both in the course of her s 180 examination in the passages set out at [46] – [49] above and in her affidavit (see [44] above), Ms Hoang had made it clear that she did not look at and, by necessary implication, had no knowledge of the fact or detail of multiple individual deposits into the Westpac account. It was only through and with such knowledge that she could, objectively assessed, have had a reasonable ground for suspicion.

71. As the primary judge emphasised on more than one occasion, this evidence was unchallenged and uncontradicted. The evidence could have been challenged and Ms Hoang confronted in cross-examination. The Commissioner had signalled an intention to do so in preliminary submissions, see [55] above. But for whatever reason, Ms Hoang’s consistent evidence was not challenged.

72. A cross-examiner’s failure to challenge evidence is a calculated forensic step. Indeed, it has been described at the highest level as a “gamble” and one that can be lost: Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361; [2011] HCA 11 at [74] (Kuhl). At [74], Heydon, Crennan and Bell JJ said:

“The second condition was not satisfied. The plaintiff had no opportunity to deal with the criticism. Normally cross-examining counsel will prefigure and lay the ground work for any criticism a judge may feel minded to make of a witness's evidence in chief. But here there was no cross-examination on the plaintiff's evidence in chief about what happened in the moments before he sustained his injuries. This created a difficulty for the trial judge. The tactical decision of defence counsel not to cross-examine on that topic may well have been shrewd. When Wigmore enunciated his celebrated but controversial proposition to the effect that cross-examination was ‘beyond any doubt the greatest legal engine ever invented for the discovery of truth’, he immediately stated another much less controversial proposition by way of caveat: ‘A lawyer can do anything with a cross-examination – if he is skillful enough not to impale his own cause upon it.’ The truth of the second proposition lies in the fact that when a cross-examiner seeks to extract from a witness testimony which is more favourable to the cross-examiner's client than that which the witness gave in chief, the new testimony often turns out to be adverse to the client. If evidence in chief is thought to be too feeble to serve its purpose, cross-examiners often think it best to leave it alone, for to cross-examine will do no more than strengthen it: the repeated questions may cause the witness to think harder, may cause the witness to become more determined, may trigger better recollection and may result in the witness giving the more detailed evidence which was not given in chief. But decisions by cross-examiners of that kind are gambles, and the gambles can be lost. Whether the cross-examiner lost the gamble in this case is discussed below.” (footnotes omitted).

Earlier, their Honours had cited Lord Herschell LC’s famous speech in Browne v Dunn (1893) 6 R 67; [1893] 1 WLUK 44 at 70-71 (Browne v Dunn). It also merits full citation:

“it seems to me to be absolutely essential to the proper conduct of a cause, where it is intended to suggest that a witness is not speaking the truth on a particular point, to direct his attention to the fact by some questions put in cross-examination showing that that imputation is intended to be made, and not to take his evidence and pass it by as a matter altogether unchallenged, and then, when it is impossible for him to explain, as perhaps he might have been able to do if such questions had been put to him, the circumstances which it is suggested indicate that the story he tells ought not to be believed, to argue that he is a witness unworthy of credit. My Lords, I have always understood that if you intend to impeach a witness you are bound, whilst he is in the box, to give him an opportunity of making any explanation which is open to him; and, as it seems to me, that is not only a rule of professional practice in the conduct of a case, but is essential to fair play and fair dealing with witnesses.” (emphasis added).

73. In a separate speech in Browne v Dunn at 76-77, Lord Halsbury had said:

“To my mind nothing would be more absolutely unjust than not to cross-examine witnesses upon evidence which they have given, so as to give them notice, and to give them an opportunity of explanation, and an opportunity very often to defend their own character, and, not having given them such an opportunity, to ask the jury afterwards to disbelieve what they have said, although not one question has been directed either to their credit or to the accuracy of the facts they have deposed to.”

74. In Precision Plastics Pty Limited v Demir (1975) 132 CLR 362 at 370-371; [1975] HCA 27 (Precision Plastics), Gibbs J (with whom Stephen and Murphy JJ agreed) said:

“The respondent was asked in her examination-in-chief: ‘How long did you intend to continue working?’ and replied: ‘I like to work very much. Until the age of fifty-five years old. Of course, until the last day until I died I like to work as far as work is concerned.’ If it had been intended to suggest that she was not speaking the truth she should have been cross-examined on this matter so that she might have had an opportunity of explanation (cf. Browne v. Dunn), but she was not in fact cross-examined on her answer. The respondent's evidence that she intended to work until she reached the age of fifty-five was not inherently incredible. She had in fact been engaged in employment for most of the time during which she had been in Australia before the accident, and had only given up employment when it was necessary to care for her child. In these circumstances, in my opinion, the jury, acting reasonably, were bound to accept her evidence, uncontradicted and unchallenged in cross-examination, that she had the present intention of working until she reached the age of fifty-five.”

75. Whilst it may not be usual or a particularly prudent practice, It was not “inherently incredible” that Ms Hoang only consulted the balance of her accounts as disclosed on her hard copy and electronic bank statements. Ms Hoang did not speak English and, on her evidence, her interest was solely in knowing that the total amounts she had provided to the money changers had been transmitted. No other evidence was led to contradict her evidence given in the s 180 examination and her affidavit that she did not know of the individual deposits, cf. Masterton Homes Pty Ltd v Palm Assets Pty Ltd (2009) 261 ALR 382; [2009] NSWCA 234 at [105].

76. The consequence of the failure to cross-examine Ms Hoang in the present case was, consistently with Precision Plastics (see also Allied Pastoral Holdings Pty Ltd v Commissioner of Taxation [1983] 1 NSWLR 1; (1983) 70 FLR 447 (Allied Pastoral)), that it could not be submitted that Ms Hoang had actual knowledge of the structured nature of payments made into the Westpac Choice account. There was no basis for the primary judge to reject (and the primary judge quite correctly did not reject) the consistent evidence Ms Hoang had given in her affidavit and in the course of the s 180 examination, namely that all she was ever aware of was the balance of the bank account, and that she did not know that there were or would be a number of small individual transactions deposited into that account in Australia which together represented the flow of her funds.

77. Further, the fact that Lordianto and Le focus on actual rather than constructive knowledge meant that it was not to the point that Ms Hoang had documents in her possession or access to information electronically that, had she consulted them or interrogated the internet platform, she would have learnt of the structured deposits being made into the bank accounts. As Mr Walker put the matter in his reply:

“…the law is not constructive knowledge. To put it another way, one can't approach the notion of ‘knowing what she knew’, to adapt a quotation from the Victorian Court of Appeal [in Le] approved by the High Court, one can't treat that as meaning or incorporating or including knowing what she didn't know but could know had she done something she didn't do.”

78. Ms Hoang’s lack of actual knowledge of the structured payments which, in light of the absence of cross-examination, the primary judge was bound in the circumstances to accept was no doubt what led the primary judge to resort in [146]-[148] of his judgment to the example of structured deposits being made into the bank account over 11 days, coupled with Ms Hoang’s evidence that she was told by the money changers that moneys transferred to them would then take 3-5 days to be received into the Westpac accounts: see [44] above.

79. The difficulty with the example constructed by the primary judge is that it simply could not be related to the evidence which disclosed the vast majority of the structured deposits being made periodically within 3-4 days of each other. There were no strings of deposits of amounts under $10,000 over 11 days, as contemplated in the primary judge’s example, and, as was pointed out in argument, in any event, even where there were multiple deposits over the course of a smaller number of days, some of these exceeded the $10,000 threshold, a fact that might well be thought, even if Ms Hoang had been aware of it, to be inconsistent with a money laundering exercise.

80. In short, Ms Hoang did not have knowledge of the scenario envisaged by the primary judge from which a reasonable suspicion “would or may” have arisen (see [147]), namely of account balances of $27,000, $54,000 and $81,000 respectively on days 3, 6 and 9 following a transfer to the money lender in Indonesia of $100,000 on “day 0”, because his Honour’s example was entirely theoretical and bore no relationship to the transactional history on the accounts. (Even if it did, it is not apparent why the fact that the bank account was increasing by increments of $27,000 would put its holder on notice of a series of individual payments of $9,000 each.)

81. The example given by the primary judge, with respect, involved an attribution to the “reasonable person” contemplated by the objective nature of the inquiry under s 330(4)(a) of the Act of “some (arbitrary) state of knowledge of the relevant circumstances, on the basis of which it can be said that he/she would have formed a suspicion”, to borrow the language of the Victorian Court of Appeal in Le: see [65] above. As Mr Walker submitted, the example given by the primary judge was “entirely hypothetical”, involved an “assumption which is counterfactual” and “is utterly bereft of any anchoring in any facts”. He described it as “an artificial construct” that was “neither never put to our client, nor much more to the point has any factual anchorage at all”.

82. In written submissions, the Commissioner countered that the primary judge’s example was merely “a hypothetical illustration”. A “hypothetical illustration” is not a sound basis, however, upon which to rest a central conclusion, still less when that conclusion relies upon inferences as to what may be deduced from the checking of a balance once every three days, and those inferences were never put to the relevant witness.

83. The Commissioner also advanced the submission that the “apparent delays and irregular patterns” in the receipt of payments into the bank accounts “support an inference that Ms Hoang had reason to, and did, check the account balance on a daily basis across periods which spread over more than 2 or 3 days”. This may have been a fruitful line of cross-examination, but it was not pursued or even attempted in the proceedings before the primary judge, and the basal considerations of fairness upon which Browne v Dunn rests dictate that it cannot be embraced or advanced in the way the Commissioner sought to do in his written submissions. As Hunt J said in his well-known decision in Allied Pastoral at 16:

“It has in my experience always been a rule of professional practice that, unless notice has already clearly been given of the cross-examiner’s intention to rely upon such matters, it is necessary to put to an opponent’s witness in cross-examination the nature of the case upon which it is proposed to rely in contradiction of his evidence, particularly where that case relies upon inferences to be drawn from other evidence in the proceedings. Such a rule of practice is necessary both to give the witness the opportunity to deal with that other evidence, or the inferences to be drawn from it, and to allow the other party the opportunity to call evidence either to corroborate that explanation or to contradict the inference sought to be drawn. That rule of practice follows from what I have always believed to be rules of conduct which are essential to fair play at the trial and which are generally regarded as being established by the decision of the House of Lords in Browne v Dunn (1894) 6 R 67.” (emphasis added)

84. The Commissioner also submitted that “nowhere in her evidence did Ms Hoang say that she had no reason to be inspecting the ‘home-screen’ every second or third day or that she had no reason to do so for the purpose of seeing if the money had arrived. Again, Ms Hoang’s evidence was silent on these matters.” This submission is based upon the same inference referred to in the previous paragraph.

85. Fully accepting that Ms Hoang and her husband bore the onus under s 317 of the Act, there was no need for Ms Hoang to give such evidence in chief given her other evidence (including that given on her s 180 examination) that she was not aware of the structured nature of the payments and only ever looked at the balance of the accounts: see [46]-[49] above. There is only so far that one can go in proving a negative: Apollo Shower Screens Pty Ltd v Building and Construction Industry Long Service Payments Corporation [1985] 1 NSWLR 561 at 564-565; (1985) 10 IR 88. Ms Hoang cannot be criticised for not anticipating a submission based upon a hypothetical example advanced by the primary judge in his judgment, and one which was never put to her by the Commissioner in circumstances where it was plain that her position and evidence was that she had no actual knowledge of the structured payments.

86. This was sufficient evidence, in my opinion, from which the negative proposition that the Applicants were required by s 330(4)(a) to establish, could be inferred, and it was for the Commissioner to “deal with that evidence either by submission or argument” (Rockcote Enterprises Pty Ltd v FS Architects Pty Ltd; Carelli v FS Architects Pty Ltd [2008] NSWCA 39 at [78]) or, as Windeyer J put it in Purkess v Crittenden (1965) 114 CLR 164 at 171; [1965] HCA 34, “throwing the matter into doubt”; see also Henderson v State of Queensland (2014) 255 CLR 1; [2014] HCA 52 at [90]. The way that needed to be done in the present case was by pressing the inference for which the Commissioner contended on Ms Hoang by way of cross-examination.

87. It follows that the critical aspect of the primary judge’s reasoning on the s 330(4)(a) question was, with respect, flawed. Evidence was adduced of Ms Hoang’s actual knowledge, namely of the balance only of the accounts, which, as the primary judge rightly emphasised, was neither challenged nor controverted. The primary judge’s conclusion at [146] that that fact “does not necessarily result in Ms Hoang being unaware of the circumstances that the monies were transferred in amounts less than $10,000, which, thereby, constituted an offence” led his Honour to an exercise in speculation based upon an example that obtained no foundation in the facts of the case. The speculative nature of his Honour’s reasoning was manifested in his statement at [148], based upon his hypothetical example that “an examination of the ‘home screen’ would, or may, disclose circumstances that showed the structuring of the transfer in amounts less than the funds that were required to be transferred and raise significant suspicion” (emphasis added).

88. For these reasons, the Applicants’ attack on the primary judge’s reasoning on this issue must succeed and the second ground of appeal is made out.

89. That conclusion still leaves the question as to whether an exclusion order should have been made in relation to the seized property.

Should an exclusion order have been made in relation to the seized property?

90. In light of the Commissioner’s acceptance that the Applicants did not have actual knowledge that the property the subject of the freezing orders constituted “proceeds of an offence”, and that sufficient consideration had been provided (to the money lenders) in relation to the funds which were translated into the frozen property, the only issue needing to be established by the Applicants was the negative proposition contained in s 330(4)(a) of the Act.

91. For the reasons given above, that proposition was established, and the appeal should be allowed.

Conclusion

92. For all of the above reasons, the following orders should be made:

1. Grant leave to appeal.

2. Appeal allowed.

3. Set aside the orders of the primary judge and, in lieu thereof, order that:

1. Pursuant to s 29 of the Proceeds of Crime Act 2002 (Cth), all of the Appellants' interests in the property restrained by schedule 2 of the order made on 9 July 2015 be and are hereby excluded from restraint.

2. Pursuant to s 39(1)(e)(i) of the Proceeds of Crime Act 2002 (Cth), the Official Trustee is directed forthwith to pay the funds held by him pursuant to the restraining order made on 9 July 2015 to the Appellants' solicitors, Lincolns Lawyers and Consultants, by electronic funds transfer to such account as may be specified in writing by that firm.

3. Pursuant to s 323 of the Proceeds of Crime Act 2002 (Cth), the Respondent pay costs incurred by the Appellants in connection with the proceeding in the Common Law Division and this appeal.

4. The proceeding is remitted to the Common Law Division for directions on the Appellants' application for damages on the Respondent's undertaking as to damages.

4. Direct that in the absence of agreement between the parties submissions as to costs not exceeding three pages to be filed by Friday 9 October 2020.

93. EMMETT AJA: These proceedings are concerned with the Proceeds of Crime Act 2002 (Cth) (the Proceeds Act), which provides a mechanism for the confiscation of the proceeds of crime. Under Pt 2.1 of the Proceeds Act, restraining orders can be made against property on grounds that relate to possible forfeiture or confiscation orders.

94. Thus, under s 19, if, relevantly, the Commissioner of the Australian Federal Police (the Commissioner) applies for a restraining order in respect of property and there are reasonable grounds to suspect that the property is the proceeds of an indictable offence or an instrument of a serious offence, and certain other prerequisites are satisfied, the Supreme Court is required to order that the property must not be disposed of or otherwise dealt with by any person. Under s 29, the Court must exclude a specified interest in property from such an order if an application is made, relevantly, under s 31, and the Court is satisfied that the relevant reason exists for excluding the interest. Under s 31, a person may apply for an order under s 29 if a restraining order has been made that covers property in which the person claims an interest.

95. Under s 330(4)(a), property ceases to be the proceeds of an offence or an instrument of an offence, relevantly, if each of the following prerequisites is satisfied:

• the property was acquired by a third party for a consideration that is sufficient and that reflects the value of the property, having regard solely to commercial considerations, and

• the property was acquired by the third party without the third party knowing that the property was proceeds of an offence or an instrument of an offence (as the case requires), and

• the property was acquired by the third party in circumstances that would not arouse a reasonable suspicion that the property was proceeds of an offence or an instrument of an offence (as the case requires).

96. Mr Yoo Tak Gwe and Ms Tan Soi Hoang (together the Property Owners) arranged for payments in Indonesian currency to be made over a period of time to money changers in Indonesia on the basis that the equivalent in Australian dollars would be credited to accounts of the Property Owners with Westpac Banking Corporation (Westpac) in Australia. Funds were subsequently so credited to the accounts with Westpac. Part of the funds so credited was applied by the Property Owners in part payment of the purchase prices for three properties situated in Zetland, New South Wales (the Zetland Properties). The balance of the purchase prices for the Zetland Properties was borrowed from Westpac on the security of mortgages of the Zetland Properties. Further parts of the funds so credited to accounts with Westpac were applied in repayment of the moneys borrowed by the Property Owners from Westpac.

97. On 9 July 2015, a judge of the Common Law Division made restraining orders under the Proceeds Act, relevantly, in respect of the Zetland Properties and five accounts of the Property Owners with Westpac (the Restrained Accounts). By notice of motion filed on 22 January 2016, the Property Owners applied, relevantly, for orders under ss 29 and 31 of the Proceeds Act in relation to the Zetland Properties and the Restrained Accounts. The Property Owners contended that they had a property interest in the Zetland Properties and the Restrained Accounts and that, by the operation of s 330, neither was proceeds of an offence or an instrument of an offence. On 29 June 2018, for reasons published on that day, another judge of the Common Law Division (the primary judge) ordered that the application be dismissed with costs. By summons filed on 27 September 2018, the Property Owners seek leave to appeal from the orders made by the primary judge.

98. The evidence discloses that large numbers of deposits were made to the Restrained Accounts in sums under the amount of $10,000. That mechanism was clearly designed to avoid the operation of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth). However, the unchallenged and uncontroverted evidence on behalf of the Property Owners was that they were unaware of those facts and were unaware of the arrangements whereby funds more or less equivalent to the funds provided to the money changers in Indonesia were credited to the Restrained Accounts.

99. It is accepted by the Commissioner that the second prerequisite for the operation of s 330(4)(a) does not entail constructive or imputed knowledge. It must follow that the circumstances referred to in the third prerequisite must be limited to facts that are actually known to a person applying for an order pursuant to ss 29 and 31.

100. The question raised in the proceedings is whether the third prerequisite for the operation of s 330(4)(a) described above has been satisfied. That is to say, the question is whether the Zetland Properties and the Restrained Accounts were acquired by the Property Owners in circumstances that would not arouse a reasonable suspicion that they were proceeds of an offence or an instrument of an offence.

101. I have had the advantage of reading in draft form the proposed reasons of the President. I agree with his Honour that the negative proposition contained in s 330(4)(a) was established. Accordingly, in light of the Commissioner’s acceptance that the Property Owners did not have actual knowledge that the Zetland Properties and the Restrained Accounts constituted proceeds of an offence and that sufficient consideration had been provided to the money changers in relation to the funds that were translated into the Zetland Properties and the Restrained Accounts, the appeal should be allowed. I agree with the orders proposed by the President.

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Amendments

06 October 2020 - Amended Judgment Summary attached

24 December 2020 - Revision to headnote at (1), first sentence, "... that the Applicants had acquired the relevant property ..." changed to "... that the Applicants had not acquired the relevant property ..."

Revision to [36], first sentence, "... give internet online banking deposits ..." changed to "... five internet online banking deposits ..."

Decision last updated: 24 December 2020