R v Zhang

[2020] NSWSC 478

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:	R v Zhang [2020] NSWSC 478
Hearing dates:	23 April 2020
Date of orders:	01 May 2020
Decision date:	01 May 2020
Jurisdiction:	Common Law
Before:	N Adams J
Decision:	The release application is refused.
Catchwords:	BAIL — serious tax offences — fraud — flight risk — applicant extradited from New Zealand — risk factors — self-represented applicant — need for liberty in order to read Crown brief — Crown brief 220 volumes — access to laptops in custody — committal hearing
Legislation Cited:	Bail Act 2013 (NSW), s 16A, s 16B, 17, 18(1), s 19, s 49, s 74(3)(a) Criminal Code Act 1995 (Cth), Sch, s 135.4(3) Criminal Procedure Act 1986 (NSW), s 55(a), s 55(c), s 91
Category:	Principal judgment
Parties:	Li Zhang (Applicant) Crown (Respondent)
Representation:	Counsel: Li Zhang (Self represented) K Ginges (Crown)   Solicitors: Solicitor for the Commonwealth Director of Public Prosecutions (Crown)
File Number(s):	2020/84322

Judgment

1. Li Zhang makes a release application under s 49 of the Bail Act 2013 (NSW). He is charged with two offences contrary to section 135.4(3) of the Schedule to the Criminal Code Act 1995 (Cth). It is alleged that he conspired with other persons with the intention of dishonestly causing a loss to the Australian Taxation Office (“ATO”) between about 1 June 2004 and about 30 April 2008 and again between about 1 January 2004 and about 30 June 2006.

2. Mr Zhang is an Australian citizen. As at 2008, he was a successful property developer. He had been married twice. In 2008, he had a 21 year old daughter from his first marriage and a 12 year old son and a 10 year old daughter from his second marriage. In November 2008, he became aware that he was being investigated by the ATO for tax fraud involving around $19 million. Search warrants were executed on his properties on 15 April 2009.

3. On 24 April 2009, Mr Zhang flew to China. On his immigration form when he departed Australia, he described the reason for his visit to be a two week holiday. He did not return to Australia. He was eventually extradited from New Zealand over ten years later on 12 September 2019. He has remained in custody, bail refused, since that time.

4. Upon his extradition to Australia, Mr Zhang briefly engaged a private solicitor but declined to engage his legal services for his trial. He was also granted legal aid and provided with a solicitor and a barrister but declined to accept their assistance as well. Mr Zhang has chosen to represent himself on the basis, as he told the court, that he knows all the facts, that the lawyers do not know the facts and it would take them too long to understand them so only he can appear in this matter.

The Bail Act 2013

5. Mr Zhang is not charged with a “show cause” offence under ss 16A/16B of the Bail Act 2013 (NSW). The determination of his release application turns on an assessment of “unacceptable risk” should he be released. Section 17(1) of the Bail Act provides that a bail authority must assess any “bail concerns” before making a bail decision. Section 17(2) provides that a bail concern is a concern that an accused person, if released from custody, will:

(a)  Fail to appear at any proceedings for the offence, or

(b)  Commit a serious offence, or

(c)  Endanger the safety of victims, individuals or the community, or

(d)  Interfere with witnesses or evidence.

6. Section 18(1) of the Bail Act provides a number of mandatory factors to consider in an assessment of bail concerns. I will refer to these factors in more detail in my consideration below. Section 19 of the Bail Act provides that bail must be refused if the Bail Authority is satisfied, on the basis of an assessment of bail concerns (as set out in s 17), that there is an unacceptable risk that the applicant would do one or more of the four factors listed in s 19(2):

(a)  Fail to appear at any proceedings for the offence, or

(b)  Commit a serious offence, or

(c)  Endanger the safety of victims, individuals or the community, or

(d)  Interfere with witnesses or evidence.

7. The bail concern raised by the Commonwealth Director of Public Prosecutions (“CDPP”) which was said to amount to an unacceptable risk in this matter was that Mr Zhang would fail to appear to answer the charges upon which he was extradited.

Background

8. A significant amount of material was tendered on this application and it was listed as a special fixture. The hearing took almost a full day.

9. In opposing the release application, the Crown relied on documents contained in the 309 page Crown bundle as well as the affidavits of Alan Crowe dated 26 September 2019 and 17 April 2020 and the affidavit of Andris Gauja dated 22 April 2020.

10. Mr Zhang relied upon a 645 page bundle comprising, inter alia, affidavits and statements from a number of persons who either were willing to provide surety for him or vouched for his good character. The Crown required seven of these witnesses for cross-examination being: Chuanhua Yu, Lanhua Zhang, Tienan Zhang, Yan Lan, Susan Parrack, Qixin Wu and David Zhao. I will refer to their evidence below.

Facts

11. The Crown case is that Mr Zhang was involved in a conspiracy with a Mr Song (Peter) Chang and Mr Simon Chee-To Chan to defraud the ATO. This was achieved by creating false Business Activity Statements, claiming inflated input tax credits and GST refunds. During the relevant period Mr Zhang was the effective controller of a group of companies known as the Hightrade group. Mr Chang was an employee of this group at an executive level whereas Mr Chan was the internal accountant.

12. The first charge relates to a residential and retail development in Chippendale, developed by JKC Developments Pty Ltd. JKC Developments was a wholly-owned subsidiary of the Hightrade group. The second charge relates to a development in the Hunter Valley by Resort Hunter Valley Pty Ltd (“RHV”), which was also a wholly owned subsidiary of Hightrade.

13. In short, the prosecution alleges that JKC and RHV retained building companies and these companies invoiced in bulk amounts for significantly more money than was actually spent during construction. These companies were all related to the Hightrade group. They also received invoices from “supplier” companies, many of which were also related to the Hightrade group. Many of these invoices were significantly inflated or included non-existent items. Relying on these invoices, JKC lodged GST claims which caused the ATO to pay $3,151,800 in GST returns and input tax credits. At the same time, RHV caused the ATO to pay $15, 952,104 in GST returns and input tax credits.

14. On 15-16 April 2009, the ATO and Australian Federal Police (“AFP”) executed search warrants on a number of premises including Mr Zhang’s residence and business. As stated above, on 24 April 2009, Mr Zhang departed Australia for Hong Kong, never to (willingly) return. On 1 March 2014, one day after the AFP arrested Mr Chang, Mr Zhang left Hong Kong for China. Australia does not have an extradition relationship with China. Mr Chang stood trial, was convicted and imprisoned. Mr Chan departed Australia on 5 March 2010 and has never returned to Australia.

15. An unserved Court Attendance Notice (“CAN”) was filed on 29 March 2014 at Newcastle Local Court and Registrar Damian Bultitude issued an arrest warrant for Mr Zhang. This was in relation to the first count on the indictment. On 6 May 2015, another unserved CAN was filed in relation to the second count and on 3 September 2015, another arrest warrant for Mr Zhang was issued by Mr Bultitude. The CDPP had provided consent for the commencement of the prosecution against Mr Zhang.

16. In April 2019, Mr Zhang was arrested in New Zealand on the basis of the Australian arrest warrants. On 11 April 2019, he was refused bail by the New Zealand District Court. Mr Zhang initially contested the extradition proceedings but on 30 August 2019 he consented to being returned to Australia. He was returned to Australia on 12 September 2019.

17. On 13 September 2019, Mr Zhang was refused bail at Central Local Court. On 24 October Mr Zhang was served with 6.75 GB of Crown material on a USB stick. On 27 November 2019, Mr Zhang appeared unrepresented before the Court and was refused bail. By 30 January 2020, Mr Zhang had retained counsel and made another application (in accordance with s 74(3)(a) of the Bail Act) which was refused.

18. From 12 February 2020 Mr Zhang has been self-represented. For more abundant caution, when the Magistrate realised this, she provided him with some documents as to his legal rights. This has led to considerable correspondence between Mr Zhang and the CDPP. Mr Zhang has indicated that he wishes to make applications under the (then applicable) provision, s 91 of the Criminal Procedure Act 1986 (NSW). Mr Zhang seeks to have 200 witnesses called and cross-examined at the committal proceedings.

19. The committal proceedings were initially listed on 30 March 2020 but that date was vacated due to COVID-19 court arrangements. Those proceedings are currently unlisted. Mr Zhang is in breach of a court timetable regarding his s 91 submissions.

Mr Zhang’s whereabouts between 2009 and 2019

20. Immigration records show that Mr Zhang resided in Hong Kong and China from 2009 to 2015. As stated above, on 1 March 2014, one day after at the AFP arrested Mr Chang, Mr Zhang left Hong Kong for China.

21. The CDPP alleges that on 9 November 2015, Mr Zhang departed Hong Kong, bound for Australia. However, no inbound passenger card was found, nor is there any record in the Department of Home Affairs of Mr Zhang arriving in Australia on or after 9 November with this Australian passport. He was known to only have one passport at the time.

22. On 10 November 2015, Mr Zhang arrived in New Zealand. In May 2018, he obtained a variation of travel conditions in relation to his resident visa. This type of visa allows Australian citizens to re-enter New Zealand without being subject to character requirements.

23. On 18 January 2019, the CDPP was advised of Mr Zhang's whereabouts in New Zealand and he was arrested on 4 April 2019. Thereafter there were a number of court appearances in New Zealand. Mr Zhang filed and served a Notice of Opposition to surrender in May and it was not until 30 August 2019 that he consented to the surrender.

Mr Zhang’s written submissions

24. In his written submissions, Mr Zhang submitted that he has been an Australian citizen since 1994, that he is a father of four children, that the arrest warrants for his extradition from New Zealand were obtained unlawfully and that his incarceration since his return to Australia on 12 September 2019 is unlawful. He asserts that the case against him is a malicious prosecution.

25. Mr Zhang submitted that he has achieved great success in the property market as an investor and property developer. He named, as one of his successes, the development of the Crown Plaza Golf Resort in the Hunter Valley.

26. Mr Zhang submitted that he has no criminal record and that his community ties are strong as he has 10 family members, including his partner, former wives, children, sister, nephew and nieces, as well as thousands of ex-employees and contractors in Australia. He submitted that he poses no flight risk given that he only has Australian citizenship.

27. With respect to the nature of the charges and the strength of the prosecution case Mr Zhang submitted that the alleged offences were “12 to 18 years old business matters,” that there were no offences and that he is subject to an “ATO attack”.

28. With respect to the length of time he is likely to spend in custody if bail is refused, Mr Zhang submitted that no one knows how long it would take him to read the brief of evidence that has been served on him on a USB stick containing approximately 6.7 gigabytes of electronic material. He submitted that it consists of 80,000 pages that, if printed, would comprise approximately 220 lever arch folders. He further submitted that due to his limited access to the computer at the correctional centre and the fact that he often requires translation (his native language is Mandarin), it would take him eight years to read the brief.

29. With respect to the likelihood of a custodial sentence being imposed if convicted, Mr Zhang submitted that the case against him has no foundation and that he is innocent. He submitted that the committal proceedings against him have not commenced in accordance with the law because the CANs have been issued but not filed by the prosecution contrary to s 55(a) of the Criminal Procedure Act 1986 (NSW). He submitted that a charge certificate has not been filed and served in accordance with s 55(c). Mr Zhang further submits that if he were to be convicted and sentenced to terms to be served concurrently, the likely custodial sentence would be less than 3 years based on 60% non-parole period.

30. Mr Zhang further submitted that he needs to be free to consult with experts and professionals in over 20 fields in order to prepare his defence. Those areas of expertise are as follows:

1. Forensic accountant;

2. Accountant familiar with MYOB and its function;

3. Accountant familiar with CHEOP construction software;

4. Administrator;

5. Liquidator;

6. Valuer, Property;

7. Quantity Surveyor, Construction;

8. Golf Course design and construction expert;

9. Building and Construction manager;

10. Builder;

11. Hotel expert both management and construction;

12. Insurance expert both management and construction;

13. Insurance expert, construction;

14. Banking lending expert in construction;

15. Bank Desk banking facility expert;

16. Solicitor, Conveyance;

17. Instruction solicitor, crime;

18. Counsel, crime;

19. Immigration license agent;

20. Import and export expert, international trading;

21. Computer expert, such a server data base, “Lan” internet network;

22. International currency exchange expert, RMB currency exchange.

Mr Zhang’s witnesses

31. The CDPP required seven of Mr Zhang’s witnesses for cross examination.

32. Mr Chuanhua Yu has known Mr Zhang for about 30 years. He offered to lodge security in the amount of $1 million in support of Mr Zhang’s release application by way of a mortgage of his company, Yu & Sons. In his affidavit he stated that he had a 50% interest in property that could be mortgaged. In cross examination, he agreed that his company only has a minority 49% interest in a Shanghai based company, Everblaze Pty Ltd, which owns the property to be mortgaged. He conceded that he had not had any discussions with anyone at Everblaze about putting up the property for mortgage or as to whether he was authorised by them to do so. He stated that his intention was to obtain a mortgage over the value of his share only but agreed that he did not know how that could be effectuated.

33. Ms Lanhua Zhang, who is Mr Zhang’s sister, provided two letters in support of the release application and offered to deposit $100,000 in cash. She also offered to provide equity in two properties in the amount of $300,000. In cross-examination, Ms Zhang stated that the $100,000 came from selling a property in China which provided $98,000 with the rest coming from friends. She confirmed that she has two mortgages; one of $440,000 over a property worth about $580,000 and the other of $520,000 over her home, valued at about $680,000. She stated that she has not spoken to the banks whether her equity in properties could be used as a security.

34. Ms Zhang was cross-examined about her involvement in Mr Zhang’s business dealings. She denied ever hearing about a company called Green Joy Pty Ltd, she was not sure if she ever was a director of it, she agreed that her brother used her name for his companies but forgot which ones, and she remembered signing mortgage documents in relation to the Crown Plaza development. She initially could not recall what documents she had signed in relation to the Hunter Valley development and whether any of the companies related to her had any financial interest in the development of that resort. She then recalled arranging for Green Joy to obtain a mortgage over a company called Resort Hunter Valley and agreed that she signed a document that her brother told her to sign.

35. Ms Zhang stated that when her brother left Australia on 24 April 2009, he was definitely going to come back because he had business here. She could not answer why he did not return and denied that it was because of troubles with the ATO. She did not agree that it was strange that he did not return to see his children, stating that she could not “nose into it” and that they went over to China to visit him. She was aware that, prior to 2009, he would travel frequently to China and Hong Kong for business and would always come back. She stated that when she enquired with him why he did not come back, he told her that his business in China was not going well.

36. Mr Tienan Zhang is Mr Zhang’s nephew. He lived with Mr Zhang when he came to Australia in 2001. Mr Zhang trained him to become a manager. In cross-examination, he was shown ASIC documents recording him as a director of a number of companies between 2005-2008. He could not recall being a director of any of them. He could not recall whether he was a director of a company called initially Newcastle Esplanade Pty Ltd (later changed to Newstle Esplanade Pty Ltd) in May 2004 or of a company called Auschintle Pty Ltd on 1 July 2004. When shown documents recording that this company, of which he was a director, invoiced $90 million to Mr Zhang’s RHV company between 2005 and 2008, he could not recall anything about this. Nor could he recall being director of a company called Safety Monitor Pty Ltd in 2005, which was also involved in the Hunter Valley development.

37. Ms Yan Lan is Mr Zhang’s first ex-wife and mother of one of his daughters. They divorced in 1994 but remained in contact because of their daughter. She stated that her bookkeeping company, Y & L, used to provide bookkeeping services to companies associated with Mr Zhang until the year 2000 but that after that time her involvement with Mr Zhang related only to their daughter, who Mr Zhang supported. When shown ASIC documents, Ms Lan denied being a director of a company called Lanford Group Pty Ltd between 31 March and 3 April 2006 or doing accounting activities for companies called Lily Supp Pty Ltd and Auschintle or any of the companies involved in Hightrade projects. She could not explain why her company would claim $259,000 from one of the Hightrade companies in 2006 stating that it was Mr Zhang who “knows everything”. She agreed that she was surprised when Mr Zhang left in April 2009, for what she understood to be a business trip, and never returned.

38. Ms Susan Parrack, who has known Mr Zhang for 28 years, worked in the Hightrade Group and was his personal assistant when he left Australia in April 2009. She assumed that he would return and it was a few weeks before she became aware that he would not be returning. She has kept in touch with Mr Zhang by email a couple of times a year and stated that she was not surprised that he never came back to clear his name, as he mentioned he would, if he thought he was going to be put in gaol straight away.

39. Ms Qixin Wu worked as a site engineer for Hightrade Construction from November 1999 to December 2000. She provided a character reference for Mr Zhang. She agreed that she had had no contact with him while he was overseas nor did she know where he was during that time. Ms Wu stated that she provided a reference for Mr Zhang following her and her husband’s visit to Mr Zhang in gaol that occurred when she read the news about Mr Zhang in the Chinese newspaper.

40. Mr David Zhao stated that he has known Mr Zhang for about 21 years and that he also worked for Hightrade Constructions Pty Ltd between 1998 and 2003. He met Mr Zhang socially only once after he left his company and had no contact with him after Mr Zhang left Australia. He provided a reference after he was contacted by Ms Lynn Meng, Mr Zhang’s current partner.

Evidence concerning Mr Zhang’s access to computers in custody

41. There was conflicting evidence about Mr Zhang’s ability to access a computer in custody.

42. The CDPP estimated that the size of the prosecution brief, if printed, was approximately 210-220 volumes of material. A large portion of those volumes of material was hard copies of invoices and documents relating to the premises, business activities statements, communications with accountants and other persons involved.

43. The size of the brief is caused by the fact that the two developments were completed developments, so there is a significant documentation associated with both of them. Furthermore, all of Mr Zhang’s emails during this time were seized. The CDPP indicated that 750,000 emails are relevant to the case. They are contained on a 4TB hard-drive which has been given to Mr Zhang. The difficulty is that the prison computers do not have proprietary software such as Lotus Notes, which is required for examining the emails. To accommodate Mr Zhang, the CDPP has converted all of the emails into PDF form to make it easier for him to access in custody. This has led to allegations by Mr Zhang that the emails have been “faked”.

44. The CDPP submitted that it would be open to Mr Zhang to arrange for his own forensic analyst to assist him in examining these emails. Mr Zhang’s response was that there was no point anybody else looking at them as they did not know the facts.

45. Mr Zhang informed the Local Court that it would take him around 100 years to read this material.

46. Ms Meng and Mr Zhang had requested a personal laptop to be provided to Mr Zheng in his cell, rather than one belonging to Corrective Services. This was refused. At the time of the hearing before me on 23 April, the CDPP re-agitated the request for a Corrective Services laptop to be provided to Mr Zhang in his cell.

47. Andris Gauja is a solicitor at the CDPP. In his affidavit of 22 April 2020 he provided information in relation to Mr Zhang’s access to computers at the John Morroney Correctional Centre (“JMCC”) library.  Based on the information obtained from Lauren Fisher, acting education services co-ordinator at the centre, Mr Zhang has had access to “Blue” and “Green” computers at the JMCC library. They are situated in different rooms at the library with three “Blue” computers in one room and six “Green” computers in a separate room with an additional one in a separate classroom. “Blue” computers allow access to material on USB and “Green” ones allow for document typing only. In the week of 13 April 2020 Mr Zhang had access to the computers on three occasions and used the “Blue” computer on the morning of 22 April 2020 for 1 hour and 45 minutes. He was informed that he could use the computers again in the afternoon.

48. Based on the information obtained from Paul Rzepecki, Principal Correctional Officer at JMCC on 22 April 2020, Mr Gauja deposed that in the last five months Mr Zhang has had more access to computers than other inmates. He deposed that the only restrictions to access are related to COVID-19, in that inmates from one housing location do not associate or mix with inmates from another housing unit and that that access to the rooms with “Blue” and “Green” computers are limited to persons from one housing unit at a time. However, there are no more than three or four individuals in computer rooms at any one time.  

49. Mr Alan Crowe is a Senior Investigator attached to the Integrated Compliance, Investigations Team in the Australian Tax Office in its Newcastle office. In his affidavit of 29 November 2019, Mr Crowe detailed some of the correspondence between the ATO, the CDPP and Corrective Services. He also outlined his understanding that Mr Zhang could request a laptop which he could access in his cell overnight. This was in addition to “Red” and “Blue” computers which could be accessed for up to 6 hours a day. However, if Mr Zhang was to obtain a laptop, then he may have his access to these computers reduced in order to provide for inmates that did not have laptops. [I note whereas the other evidence describes computers as “Blue” and “Green” Mr Crowe describes them as “Blue” and “Red”. I am satisfied that nothing turns on this for the purpose of my determination of this release application].

50. According to the CDPP’s enquiries, it seems there is a capacity for a laptop to be made available but Mr Zhang has not requested it. Application needs to be made to JUSTConnect within Corrective Services of NSW.

Oral submissions

51. In oral submissions, Mr Zhang indicated that he needed to read the brief carefully “word by word”. He did not retain Legal Aid because they “come for the money, they not come for my interest” and he believed that a Legal Aid solicitor would not read his whole file. In relation to engaging a private lawyer, Mr Zhang submitted that his lawyers told him that he had to give them a $3 million deposit before they would read the brief. He stated that he is the only one who knows the facts.

52. Mr Zhang claimed that many of the CDPP documents were “fake”, including the affidavits of Alan Crowe. He stated that lawyers would not be able to identify that the emails and documentation from Mr Crowe were faked. As an example of this, he drew the Court’s attention to Mr Crowe’s affidavit dated 17 April 2020, attached to which was an email between Damian Bultitude and Alan Crowe dated 3 September. He asserted that the dates of the email had been changed. He also stated that the email was suspicious, because Mr Bultitude and Mr Crowe could simply have met face-to-face; this was the date that the warrant was issued against him, so there was no need for documentation. He also stated that the identification of the recipient was incorrect, because the surname should have appeared first in the relevant part of the email. He submitted that Alan Crowe, the ATO and the police had fabricated much of the evidence.

53. As for the issue of a computer, he had applied in 2019 for a laptop in his cell but this has been rejected. Mr Zhang then submitted that the 4TB hard drive with all the emails, contained original emails and the smaller tranche provided to him by police had been faked. This meant that preparing for the case was going to take extra time because he needed to compare the different version of the emails. However, there was an additional problem because he was not able to read the 4TB material in custody.

54. Mr Zhang responded to the issue of his flight risk by stating that he had met with the Chief Commissioner of the ATO on 23 April 2009. That time, he stated, it was unclear whether he was going to be charged, as the CANs had not been filed at this time. (The CDPP denies any such meeting took place}

Crown submissions

55. The CDPP submitted that Mr Zhang was a flight risk and therefore was a bail concern under s 17(2)(a) of the Bail Act. The CDPP presented an extended chronology detailing the various events in the prosecution of Mr Zhang that demonstrated this. Many of these are summarised above at [14]-[24]. In particular, the CDPP submitted that, but for the extradition proceedings, which were contested by Zhang until 30 August 2019, Mr Zhang would have remained in New Zealand or another foreign jurisdiction undetected.

56. In relation to each of the matters to be considered under the Bail Act, the CDPP submitted that Mr Zhang’s background was relevant under s 18(1)(a). The CDPP noted that Mr Zhang’s wife and two children reside in Sydney, as does his current partner. However, he has no known business ties with Australia. He has business interests in New Zealand, including as a co-director of Lee Property Group trading as Lee Tours. The registered office for this company is in China. He was living in a flat at the time of his arrest in Zealand that was valued at $3 million. He also has business interests in China and Fiji.

57. The CDPP submitted that Mr Zhang was the “mastermind” of very serious offences. This was said to be relevant under s 18(1)(b) of the Bail Act. He was, at different times, a director, secretary and shareholder of the Hightrade group and frequently communicated in relation to the Business Activity Statements and invoices that were to be lodged with the ATO.

58. The CDPP submitted that the case against Mr Zhang was strong, based on Mr Zhang’s directorship of the Hightrade group companies, his communications with his co-conspirators (especially in relation to figures to be placed into the Statements) and his signing of loan documents and witness statements from directors of companies indicating their lack of knowledge of the directorship of the various companies. The CDPP noted that his co-offender, Mr Chang, was convicted on largely the same evidence. It was submitted that this was relevant to the strength of the prosecution case. On the risk of flight it was noted that Mr Chang received a sentence of 5 years and 6 months with a non-parole period of 4 years and 6 months and it was submitted that Mr Zhang was also likely to receive a custodial sentence. This is relevant under s 18(1)(i) of the Bail Act.

59. The CDPP acknowledged that there is voluminous material involved in the prosecution, comprising the 4TB hard-drive mentioned above as well as a 6.75GB brief. However, the CDPP submitted that, pursuant to s 18(1)(l), there is no need for Mr Zhang to be at liberty to prepare for his trial as there are computer facilities in custody. The fact that Mr Zhang had prepared a 645 page submissions for his bail application, the CDPP submitted, was evidence of his ability to prepare in such an environment.

60. It was submitted that there were no bail conditions which could ameliorate Mr Zhang's flight risk. He is well connected in China and has shown previously that he is prepared to leave Australia for extended periods of time. In response to some of the material that was raised by Mr Zhang in his submissions, the CDPP submitted that the CANs issued by Mr Bultitude for Mr Zhang's arrest in 2014 and 2015 were valid. This was because they were filed and Mr Bultitude was an "authorised officer" as required by the relevant legislation.

61. Further, in response to Mr Zhang's contention that he requires over 20 specialists to assist his to prepare his case, the CDPP pointed out that being in custody did not prevent Mr Zhang from engaging specialists or a lawyer. Indeed, he had previously refused the assistance of Legal Aid and a forensic analyst for the email material. In response to Mr Zhang's submissions that the JKC Developments company simply "collapsed", the CDPP pointed to documents extracted from the Hightrade IT system which provided instructions that they were to be wound up when developments were completed. Furthermore, these documents showed that each company was designated as having a GST refund target.

62. In reply to the submissions that Mr Zhang was a "fighter" who wanted to clear his name and only departed for Hong Kong in 2009 on a holiday, the CDPP submitted that this "defies credibility and should be rejected". The CDPP also expressed concerns about Mr Zhang's proposed sureties. This was because of the source of their proposed means and their involvement with the conspiracy which is the subject of the charges against Mr Zhang. These concerns were developed in some detail in the CDPP's written submissions. By way of example, Ms Lanhua Zhang is Mr Zhang's sister. She was the director of Green Joy, which was a puppet company under Mr Zhang's control, according to the Crown case. Mr Zhang's submissions also indicated that Green Joy was used for the purposes of protecting his family and friend's investments in the RHV entities.

63. Furthermore, Mr Ginges noted that Mr Zhang had asserted that he had had significant engagement with Mr Chang’s trial in 2016 and 2017. Mr Zhang stated that he was involved in helping Mr Chang with his trial for a year. This trial had the same factual scenario as Mr Zhang’s pending trial and concerned the same documents. He therefore invited the court to infer Mr Zhang had already become very well conversant with many of the documents contained in the CDPP brief.

64. In relation to Mr Yu’s offer to provide a surety of $1 million, Mr Ginges submitted that this was unlikely to happen because Mr Yu needed permission from the majority shareholder of the company which controlled this money. Finally, Mr Ginges made clear that it was Crown's position that, despite the difficulties that Mr Zhang is having and may have in reading through the material, that this did not “elevate” him beyond the factors contained in s 18 (1) of the Bail Act and did not overcome his flight risk."

Consideration

65. I am satisfied that there is a significant bail concern that Mr Zhang would flee the jurisdiction if released on bail. Although overseas travel is currently severely restricted, that fact does not reduce this concern given Mr Zhang’s travel history. At a time when he knew that he was being investigated for tax fraud, Mr Zhang left the country leaving behind his three children, two of which were 8 and 11 years old. After his departure he spent significant periods of time in China, a country that has no extradition policy with Australia. He fought his extradition from New Zealand until the last minute (the day of the hearing).

66. Mr Zhang denied that there was anything suspicious about his departure to China in 2009. He explained that he was conducting business overseas which was not doing well. He explained that he wrote “holiday” on his outgoing passenger card when departing Australia for Hong Kong because there was no box which stated “holiday and business”. He submitted that in the 74 trips that he took in an 88 month period, there was a 50/50 split between holiday and business purposes. The difficulty with this assertion is that on the chronology prepared by Mr Zhang no trips were identified as “holiday” trips whereas 63 flights were taken for “business purposes”.

67. I found Mr Zhang’s statements to the effect that he was not fleeing possible charges when he left Australia difficult to accept. Similarly, the evidence of his witnesses during cross-examination that they did not think it unusual that he did not return to Australia was surprising to say the least.

68. Turning to the s 18(1) factors in (a), (b), (c), I have referred to the supporting material relevant to them above. It is to be accepted that Mr Zhang was a well-respected and successful businessman before he left Australia. He has some community ties in Australia but also appears to have close connection to China. The offences are serious. They involve a fraud in an amount of over $19 million. On the limited material available for me for the purposes of this release application the Crown case appears to be strong. If Mr Zhang was convicted he would receive a significant period of imprisonment.

69. Mr Zhang claims that the case is not strong because most of the documents are “faked”. In his written submissions he asserted:

“It was not an offence. It is more like a story to tell in the business world about how an innocent taxpayer was attacked by Australia (sic) Taxation Office (ATO). It is one of the biggest, if not the biggest financial disaster in Australia (sic) history. Mr Zhang is a victim among others in this event caused by the ATO’s attack.”

70. I have had particular regard to the following three factors in s18(1) :

(h)  the length of time the accused person is likely to spend in custody if bail is refused,

(l)  the need for the accused person to be free to prepare for his or her appearance in court or to obtain legal advice,

(p)  the bail conditions that could reasonably be imposed to address any bail concerns in accordance with section 20A.

71. Given the approach that Mr Zhang is taking to his committal proceedings (making application that all 200 witnesses be cross examined) and to his trial preparation in general (seeking to prove that all Crown documents are “fake”), it is clear that his matter will not be ready for trial any time soon. The committal proceedings were listed for hearing on 30 March 2020 (without the need for any witnesses) but they were vacated due to COVID-19 related listing changes. It is currently not known when his committal and trial would be listed for hearing. The trial of Mr Chang before Judge Lakatos SC took 10 weeks. Mr Zhang has estimated that his trial would take 6 months.

72. Although it seems likely that Mr Zhang will spend considerable time in custody awaiting trial, on the material currently before me it is not apparent that he would spend more time than the period of any custodial sentence imposed in the event he was to be convicted, given the sentence imposed on his co-accused. On the Crown case it was Mr Zhang who was the “mastermind” of the alleged fraud.

73. I have paid close regard to Mr Zhang’s claim that he needs to be free to prepare for trial. This was a particularly relevant s 18(1) factor in this matter. There is no doubt that it would be much easier for Mr Zhang to access the electronic brief if he was not in custody. The CDPP conceded that the brief is large and much of the seized material has been served electronically. One of the difficulties is that the Crown does not propose to rely on all of that material; much of it is supplied by way of disclosure. A significant amount of the material was seized under search warrants executed on Mr Zhang’s property.

74. A significant factor is Mr Zhang’s access to a computer whilst in custody. The material before me on this application is that although Mr Zhang applied to have access to an external personal computer (which was understandably declined), he has ever applied to be provided with a laptop from JUSTConnect. It is not clear to me why he has not done so.

75. I have had regard to the CDPP submission that an inference could be drawn that Mr Zhang has declined to engage legal representation and/or apply to have his own Corrective Services laptop so as to present a stronger release application. Although it is to be accepted that the nub of Mr Zhang’s application turned on the difficulties caused by being unrepresented without his own computer in custody, I do not consider it necessary to make a finding either way on this issue. Mr Zhang is entitled to decline to have legal representation and has the option of applying for a laptop from Corrective Services.

76. Despite the need for Mr Zhang to be free to prepare for his court matter, all of the factors in s 18(1) must be considered. Although I am satisfied that, given the size of the CDPP brief, it will be more time consuming for Mr Zhang to prepare his case in custody than if he was at large, that one factor cannot outweigh other factors relevant to the unacceptable risk of flight if he was to be released. One of the other matters is s 18(1)(p); the bail conditions advanced to ameliorate any risk should Mr Zhang be released.

77. Mr Zhang’s primary submission was that given his family ties, previous achievements and name recognition in a broader community, there could be no bail concerns and he deserves to be released unconditionally. Despite this, he indicated that he would be willing to voluntarily make a number of “undertakings”. I propose to address the difficulties with each of his proposed bail conditions in turn.

78. The first condition was that he forfeit his passport. This is a standard condition. As I understand it, his passport has already been forfeited. Given the gaps in his immigration history and the fact that the CDPP has been unable to account for how Mr Zhang came to travel from China to New Zealand I do not consider this condition to be of particular comfort.

79. The second condition was that Chuanhua Yu agree to forfeit, $1 million with security as bail surety. I have summarised Mr Yu’s evidence above. His affidavit was misleading. As was revealed in cross examination he does not own 50% of the relevant property: he owns 49% of a company which owns the property with the majority owner being a company in China.

71. The third condition was that Mr Zhang’s sister, Lanhua Zhang, agree to lodge the amount of $100,000 from her savings as bail surety. The evidence as to the source of those funds came solely from Ms Zhang. Ms Zhang owns two properties in Sydney with substantial mortgages. She initially offered security over those properties but it became clear that she had insufficient equity in those properties to lead the mortgagors to permit further security be given over them. This proposed condition was changed shortly before the hearing to one which required her to deposit $100,000 instead. Ms Zhang stated that these funds came from the sale of another property overseas and from friends.

72. A further difficulty with Ms Zhang’s evidence is that ASIC documents before the court upon which she was cross-examined show that she was involved in some of her brother’s business dealings at the time of these alleged offences. At one stage in cross-examination she agreed that Mr Zhang would give her documents to sign and she would just sign them. Moreover, her evidence about not thinking it strange that he brother left for China in 2009 and never came back was difficult to accept.

73. The fourth condition was that Mr Zhang would report weekly. This is clearly insufficient but even daily reporting would be insufficient in the absence of stronger surety conditions.

74. The fifth condition was that Mr Zhang would reside with his sister Lanhua Zhang. I repeat the statements I have made above regarding her close involvement with her brother and her willingness in the past to do things he asked her to do.

75. The final conditions were character acknowledgements from Lanhua Zhang and Chuanhua Yu and others. I repeat the observations I have made already about these witnesses.

76. Having examined the material before me and had regard to the factors in s 18(1) of the Bail Act I am satisfied that there is an unacceptable risk that Mr Zhang would fail to appear to answer his charges if released from custody.

77. Although the Court cannot order Corrective Services to provide Mr Zhang with his own laptop in custody, it is crucial that he have extensive access to one. He will require significant time on a computer to read the brief. Hopefully if and when Mr Zhang makes an application to get one it will be dealt with expeditiously.

78. The release application is refused.

Amendments

27 November 2023 - Publication restriction removed - judgment published

Decision last updated: 27 November 2023