In the matter of Xin & Ors

[2023] NSWSC 46

Supreme Court

New South Wales

Medium Neutral Citation:

Application by the Commissioner of the Australian Federal Police; In the matter of Xin & Ors [2023] NSWSC 46

Hearing dates:

31 January 2023

Date of orders:

31 January 2023

Decision date:

31 January 2023

Jurisdiction:

Common Law

Before:

Hamill J

Decision:

(1) Restraining orders and ancillary orders made pursuant to the Proceeds of Crime Act 2002 (Cth)

(2) Access to the court file is restricted to Justice Hamill, his staff and the staff of the Supreme Court registry until 10am, 2 February 2023

Catchwords:

CIVIL LAW – proceeds of crime – huge money laundering scheme – execution of search warrants imminent – need to deal with the matter urgently and in camera – where some involved already convicted – multiple orders sought for restraint of property – ancillary orders – no question of principle

Legislation Cited:

Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth), s 74

Crimes Act 1900 (NSW), ss 192E, 192G

Criminal Code Act 1995 (Cth), ss 11.2, 11.5, 400.3, 400.5, 400.9

Proceeds of Crime Act 2002 (Cth), ss 18, 19, 26(4), 38, 39, 39A, 39B, 329, 330

Category:

Principal judgment

Parties:

Commissioner of the Australian Federal Police (Plaintiff)
Steven Hoitou Xin (First defendant)
Yi Ming Wang (Second defendant)
MX Investments Pty Ltd (Third defendant)
MX Seven Investments Pty Ltd (Fourth defendant)
Tara Global Pty Ltd (Fifth defendant)
Wisdom AWCS International Pty Ltd (Sixth defendant)
XT International Trading Pty Ltd (Seventh defendant)
XTAW Investments Pty Ltd (Eighth defendant)
Jin Yang (Ninth defendant)
Ruizhen Wang (Tenth defendant)
Liangfang Shen (Eleventh defendant)
Xiaoli Chen (Twelfth defendant)
Ai Yang (Thirteenth defendant)
Zhaohua Ma (Fourteenth defendant)
Yanhua Jiang (Fifteenth defendant)
Golden Capital Commercial Logistics Pty Ltd (Sixteenth defendant)
Gub Sugar Pty Ltd (Seventeenth defendant)
Harris & Macarthur Pty Ltd (Eighteenth defendant)
Harris & Mary Ann Pty Ltd (Nineteenth defendant)
MJSD Investments Pty Ltd (Twentieth defendant)

Representation:

Counsel:
A Moses SC (Plaintiff)

Solicitors:
Australian Federal Police (Plaintiff)

File Number(s):

2023/32255

EX TEMPORE JUDGMENT (REVISED)

1. In circumstances of some urgency and secrecy, the plaintiff (the Commissioner of the Australian Federal Police, or “the Commissioner”), seeks a raft of orders pursuant to the provisions of the Proceeds of Crime Act 2002 (Cth) (“the Act”).

2. A summons dated 30 January 2023 was filed in court with leave, having been received informally in my chambers yesterday. The summons, on its face, seeks some 248 orders although today’s application is restricted to the first 158 orders and adds a further order which is protective of the interests of the defendants.

3. Substantively (and ultimately) the application is for restraining orders pursuant to ss 18 and 19 of the Act, a number of ancillary orders allowing the Official Trustee to deal with the property subject to the restraining orders and for the defendants, who are actual people, to provide sworn statements.

4. At the outset, and in advance of the hearing, the plaintiff, represented by Senior Counsel, asked that the present application be heard in closed court and, implicitly, that there be no publication of the proceedings and orders prior to the various defendants named in the summons being served with any orders that are made. Having read the material filed in support of the application, which again was provided in advance and subject to helpful summaries and written submissions prepared by the lawyers for the plaintiff and Senior Counsel and counsel who appear on behalf of the plaintiff, I indicated as soon as I came onto the bench that I was prepared to make such orders and close the Court.

5. Some of those orders are, in effect, mandatory: see, for example, the provision in s 26(4) of the Act, and noting that the plaintiff is a responsible authority under the Act. In any event, the need for the matter to be dealt with both expeditiously and in camera is obvious when one considers the nature of the proceedings and taking into account the content of the evidence and the nature of the orders sought.

6. The plaintiff is responsible for, and engaged in, an ongoing and complex investigation in what is suspected to be, and in some instances has been established by the convictions of certain people of relevant offences, to be a large-scale and international money laundering scheme. The plaintiff intends to execute 13 search warrants and make associated arrests tomorrow. It expects to seize or gain access to evidence and property relevant, or subject, to the money-laundering scheme (or perhaps series of schemes). The amount of assets in question is referred to in various ways throughout the evidence and is estimated to amount to about $240 million, but certainly is suspected to be in the order of hundreds of millions of dollars. The details are set out in the evidence and helpfully summarised in the written submissions.

7. The imminence of the execution of the search warrants gives rise to the urgency. The possibility that assets subject to the expected seizure might be dissipated, and the effect of any restraining orders made would thus be nullified or rendered nugatory, gives rise to the need for the matter to be dealt with secretly today. It is for those reasons that I deal with the matter on an urgent basis and in closed court and will make appropriate orders in due course restricting access to the court file.

8. A large amount of evidence was relied upon and, if I can say this respectfully, a small mountain of additional evidence was available. That evidence was tendered in the interests, I think, of transparency and to allow those subject to the orders and their legal representatives, ultimately, to be aware of the evidence upon which the Commissioner’s applications are based, however only one page of it was specifically drawn to my attention. In the circumstances, it is not necessary to go into very much detail to explain the orders I propose to make.

9. A lengthy affidavit of Australian Federal Police Officer Scott Mathews was read and I have had the opportunity in advance of the hearing to peruse it. I will not pretend to be seized of all of the detail or comprehend the precise details of the scheme set out, but the affidavit sets out with tolerable clarity the background to the investigation, the ongoing nature of the investigation, the property involved in the scheme (or at least that which is currently known about) and the fact of the conviction of three relevant offenders being Messrs XXX XXXX, W Wang and Z Cai. In July 2022, all of those people received custodial sentences. It also sets out the other people suspected to be involved and their complex connections with one another, the corporate structure of the operation and the involvement of various companies, the convoluted scheme by which money and assets said to be the proceeds of crime are, to use the vernacular, said to be “washed clean”, the substantial amount of information provided by Mr XX XXXX and the suspicion that some people, or at least one person, within prominent banks have some involvement.

10. To clarify, there are relevant people in addition to, if I can call them this (as everyone has in the material), the “suspects”, such as an accountant and the spouse of one of the named defendants or suspects. Both of those categories of persons are dealt with specifically in s 39 of the Act as being people who can be subject to sworn statement orders. I will return to that issue.

11. Turning then to the substance of the matter: At its heart the scheme involves very large sums of money, that is cash, being provided to one of the targets of the investigation, which is transferred and exchanged into foreign currency, transferred (at least notionally) to foreign banks, moved around through various overseas bank accounts (largely it seems in Hong Kong) and then ultimately electronically transferred back to Australia via international funds transfer.

12. Pursuant to s 18 of the Act and based on the material provided, I am satisfied that the plaintiff is a “proceeds of crime authority” under the Act and has applied for the orders sought in the summons: s 18(1)(c). There are reasonable grounds to suspect that a number of persons named in the summons and in the affidavit of Officer Mathews have committed “serious offences” as that expression is defined in the Act: s 18(1)(d). Without being exhaustive, those offences include:

• offences under ss 400.3, 400.5 and 400.9 of the Criminal Code Act 1995 (Cth);

• conspiracies to commit such offences and offences that I might describe generally as “accessorial offences” under ss 11.2 and 11.5 of the Criminal Code;

• offences under s 74 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth); and

• offences under ss 192E and 192G of the Crimes Act 1900 (NSW).

There is more particularity in the descriptions of the offences as to which Mr Mathews holds suspicions in his affidavit particularly, but not exclusively, in paragraph 33.

13. I am satisfied further that Mr Mathews is an “authorised officer” under the Act and that he holds the suspicion to which he deposes on reasonable grounds: s 18(1)(f).

14. I am satisfied that the affidavit requirements in s 18(1)(e) are met. That is, the application is supported by an affidavit of an authorised officer (being Mr Matthews), the affidavit sets out and states the relevant suspicions held by him, and the affidavit includes the grounds upon which the suspicions are held by reference to the lengthy history of the investigation, the identification of the relevant accounts and business records, the transfer of funds in and out of Australia and, not least, the induced statement of Mr XXX XXXX. I had my attention drawn to a particular paragraph of Mr XXX XXXX's induced statement, being paragraph 213, which sets out in a graphic and diagrammatical way the movement of funds as is, or will ultimately be, alleged.

15. Those matters having been established, there is no discretion in the Court to refuse to make the orders insofar as they relate to individuals and accordingly I propose to make those orders.

16. Other orders are not directed to individuals per se, but to property. Those orders are covered by s 19 of the Act and call into aid the definitions in ss 329 and 330. I do not propose to go through some sort of checklist because, in essence, the matters and evidence relied upon in respect of s 18 apply equally to s 19. But, again, I am satisfied of the statutory prerequisites and propose also to make the orders directed to property (rather than individuals).

17. I think that is sufficient to explain why it is I propose to make the restraining orders sought by the plaintiff.

18. I then turn to orders which do have, at least an element of, discretion involved. That discretion arises by use of the word “may” in the relevant sections, s 38 in particular as well as s 39, which allow the Official Trustee to take custody and control of the subject property. There is no reason, on the information before me, not to make such an order. As I have said in passing, there is also a discretion to make the ancillary orders under s 39 and again I see no valid reason not to make the orders. It would seem to defeat the whole purpose of the exercise to fail to do so.

19. On the other hand, I gave some consideration to declining to make the orders for sworn statements, which are sought in prayers 152-158, against the first, second, ninth, tenth and fourteenth defendants and, as I said in passing, against an accountant and the spouse of one of the defendants. It is no small thing for a court to compel a person to provide information that might potentially be used against them. That is particularly so when a person has not been afforded a right to be heard against the court making such an order.

20. However, s 39A of the Act deals with that issue directly by providing that, in sub-s (1), privilege against self-incrimination does not apply to such an order and, in sub-s (2), by restricting the use and admissibility of any information provided as a result of such an order.

21. Further, s 39B provides a person affected by such an order with a right to seek to have the order revoked. Such an application must be made within 14 days of a person being notified of the order. The orders sought today in the short minutes of orders bring that clearly to the attention of any person in receipt of the orders. I am comfortably satisfied that the plaintiff will make both the existence of that right, and the 14-day time limit in which to exercise it, clear at the time of the service of the orders, execution of the warrants or arrests.

22. I also note that the short minutes of order includes proposed order 159, prohibiting disclosure of any information gathered by means of sworn statements to investigating and prosecuting authorities in Australia, a State or territory of Australia or a foreign authority. Again, that provides me with some comfort that the concerns that I always have when invited to make such orders ex parte are mitigated by the protections both within the Act and by that additional order. I am grateful to the plaintiff for, if I can say it this way, gratuitously offering that order up.

23. I finally note two things. First, the foregoing is an extremely scanty appraisal and summary of the information with which I have been provided and the submissions that I have had the benefit of reading in advance of the hearing this morning, however I think it suffices to explain why I will make the orders sought.

24. Second, the plaintiff has given, what is described as, the usual undertaking as to damages, which again means that whilst there is potentially enormous interference with people’s property rights, those will be addressed by undertakings should this application somehow prove to be misconceived.

25. Accordingly, I make orders in accordance with the short minutes of order. Those orders are to be taken out forthwith. [1]

**********

1. At the conclusion of the proceedings, Senior Counsel for the plaintiff indicated that the plaintiff would provide further short minutes of order for consideration in chambers, seeking restriction of access to the court file. In chambers, an order was made to that effect, as well as a further order preventing the disclosure of an additional sworn statement (made by someone who is not a defendant in these proceedings) to investigating and prosecuting authorities.

Endnote

Decision last updated: 20 February 2023