Re Application Pursuant to Section 19 of the Proceeds of Crime Act 2002 (Cth);

[2016] WASC 105

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION: RE APPLICATION PURSUANT TO SECTION 19 OF THE PROCEEDS OF CRIME ACT 2002 (CTH); EX PARTE COMMISSIONER OF THE AUSTRALIAN FEDERAL POLICE [2016] WASC 105

CORAM:   ALLANSON J

HEARD:   22 MARCH 2016

DELIVERED          :   22 MARCH 2016

FILE NO/S:   CIV 1432 of 2016

MATTER                :An Application pursuant to Section 19 of the Proceeds of Crime Act 2002 (Cth)

Real property located at 2A Crana Place, Karawara, Western Australia, and Funds standing to the credit of Bank Accounts listed in Schedule 'A'

EX PARTE

COMMISSIONER OF THE AUSTRALIAN FEDERAL POLICE
Applicant

AND

DMM
First Respondent

WSL
Second Respondent

Catchwords:

Proceeds of Crime Act 2002 (Cth) s 18 - Restraining order - Commission of a serious offence - Ex parte application - Turns on own facts

Proceeds of Crime Act 2002 (Cth) s 19 - Restraining order - Proceeds or instrument of a serious offence - Ex parte application - Turns on own facts

Legislation:

Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth), s 5, s 43, s 142
Criminal Code (Cth), s 400.2, s 400.9
Proceeds of Crime Act 2002 (Cth), s 18, s 19, s 26, s 39, s 42, s 180, s 182, s 215, s 329, s 330, s 335, s 338

Result:

Restraining order made
Application for ancillary orders adjourned

Category:    B

Representation:

Counsel:

Applicant:     Mr M Seaman

First Respondent           :     No appearance

Second Respondent      :     No appearance

Solicitors:

Applicant:     Australian Federal Police - Proceeds of Crime Litigation

First Respondent           :     No appearance

Second Respondent      :     No appearance

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

Commissioner of the Australian Federal Police v Kalimuthu [No 2] [2015] WASC 376

Director of Public Prosecutions (SA) v Tregenza [2002] SASC 414; (2002) 84 SASR 346

Walsh v Loughnan [1991] 2 VR 351

ALLANSON J: 

(This judgment was delivered orally on 22 March 2016 and has been edited for publication.  Because of the subject matter of these reasons the names of the parties have been anonymised.)

1. The Commissioner of the Australian Federal Police applies for restraining orders under s 18 and s 19 of the Proceeds of Crime Act 2002 (Cth) against two individuals. The orders relate to seven bank accounts in the name of DMM, two bank accounts in the name of WSL, two other joint accounts, and a house and land in Karawara.

2. Federal Agent Gareth Alexander Reilly states, in his affidavit made 14 March 2016, that he suspects that the funds standing to the credit of the account holders in the specified accounts are the proceeds of indictable offences, and an instrument of a serious offence.  He states his reasons for that suspicion.  He further states that he suspects the Karawara property was financed with the proceeds of an indictable offence or offences.  In an updated affidavit dated 22 March 2016 some further information is given regarding the current account details of the specified bank accounts, one of them having been closed and one of them now containing a more substantial balance than was disclosed in the earlier affidavit.

3. Federal Agent Reilly also states that he reasonably suspects that each of DMM and WSL have committed indictable offences, which are serious offences, contrary to s 400.9(1) of the Criminal Code (Cth) and s 142 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth). Each of those offences, in the circumstances alleged, is an indictable offence and a serious offence as defined in s 338 of the Act.

4. The primary question in this application is whether he holds those suspicions on reasonable grounds.

5. The effect of the order, whether under s 18 or s 19, is that the property to which it relates must not be disposed of or otherwise dealt with by any person, except in the manner and circumstances specified in the order.

6. The applicant applies for ancillary orders and examination orders.  I deal with those separately below.

7. In these reasons, unless I state otherwise, all references to legislation are to the Proceeds of Crime Act 2002.

The alternative bases for the order

1. Under s 18 the court must make a restraining order if a proceeds of crime authority applies for the order, there are reasonable grounds to suspect that a person has committed a serious offence, the affidavit requirements in s 18(3) for the application have been met, and the court is satisfied that the authorised officer who made the affidavit holds the suspicion or suspicions stated in the affidavit on reasonable grounds.

2. By s 18(3), in this case, the authorised officer must suspect that DMM and WSL committed the offence or offences to which the application relates; and to the extent that the application seeks to restrain the property of any other person, that he suspects the property is subject to the effective control of DMM or WSL, or is the proceeds of an offence or the instrument of a serious offence. The affidavit must include the grounds on which he holds those suspicions.

3. Under s 19, the court must make a restraining order if a proceeds of crime authority applies for the order, there are reasonable grounds to suspect that the property is the proceeds of specified offences or an instrument of a serious offence, the application is supported by an affidavit that complies with s 19(1)(e), and the court is satisfied that the authorised officer who made the affidavit hold the suspicion or suspicions stated in the affidavit on reasonable grounds.

4. The meaning of the terms proceeds and instrument is found in s 329 and s 330. Relevantly, property is proceeds of an offence if it is wholly or partly derived or realised, whether directly or indirectly, from the commission of the offence: s 329(1). Property is an instrument of an offence if it is used or intended to be used, in or in connection with the commission of an offence: s 329(2). Property remains proceeds of an offence or an instrument of an offence even if it is credited to an account with a financial institution, or it is disposed of or otherwise dealt with: s 330(3).

5. Property can be the proceeds of an offence or an instrument of an offence even if no person has been convicted of the offence: s 329(3).

6. Under both s 18 and s 19, the reasonable grounds need not be based on a finding as to the commission of a particular offence. The court must make an order even if there is no risk of the property being disposed of or otherwise dealt with (although whether there is such a risk may be relevant to whether the matter is urgent, and the discretion to determine the matter ex parte).

Jurisdiction

1. Jurisdiction under the Act is vested in the court of the States:  s 314. 

2. By s 335, whether a court has proceeds jurisdiction for an order depends on the circumstances of the offence or offences to which the order would relate. There are alternative bases on which this court might have jurisdiction. If all or part of the conduct constituting an offence to which the order would relate occurred, or is reasonably suspected to have occurred in a Western Australia, the Supreme Court, as a court with jurisdiction to deal with criminal matters on indictment in Western Australia, has proceeds jurisdiction: s 335(2).

3. At least part of the conduct constituting the relevant offences on which the applicant relies occurred, or is reasonably suspected to have occurred in Western Australia.  In particular, the conduct relied upon against each respondent includes dealing with the proceeds of offences, that conduct occurring in Western Australia. 

4. I am satisfied this court has proceeds jurisdiction.

Proceeding without notice

1. The Commissioner asks the court to consider the application without notice to DMM or WSL, or to any other person. Under s 26(4), the court is required to consider the application without notice having been given if requested by the responsible authority to do so, but is not required to determine the application ex parte.

2. The court may, at any time before finally determining the application, direct the responsible authority to give notice to a specified person or class of persons: s 26(5).

3. The consequences of an order made without notice will produce some prejudice to the respondents, particularly with regard to the procedural consequences that flow from a restraining order being in place:  see Commissioner of the Australian Federal Police v Kalimuthu [No 2] [2015] WASC 376 [42]. Despite those consequences, the applicant has shown good reason to proceed without notice and I will determine the application for restraining orders.

4. In my opinion, the interests of justice required the court to consider the application and make the order restraining the property.  I hold that opinion because the case for an immediate restraint is very strong.  The nature of the property restrained includes funds in bank accounts.  Large withdrawals have been made in the past.  The account holders would be able to move funds quickly and dissipate them if they were given notice of the application.  It is appropriate to ensure that the objects of the Act are not defeated by any withdrawal of the funds.

5. Further, s 42 allows the court to revoke a restraining order on the application of a person who was not notified of this application, on grounds including where 'it is otherwise in the interests of justice to do so'. The rights under s 42 sufficiently alleviate the prejudice the respondents might suffer, so that the balance of justice favours proceeding to determine the application without notice.

Formal matters

1. The application has been made by the Commissioner of the Australian Federal Police, who is a proceeds of crime authority: s 338.

2. The Commonwealth has given an undertaking under s 21 with respect to the payment of damages or costs, or both, for the making and operation of the order.

3. The application is supported by the affidavit of Federal Agent Reilly.  I am satisfied that Federal Agent Reilly, as a member of the Australian Federal Police, is an authorised officer.

The offences

1. The first of the relevant offences is s 400.9 of the Criminal Code.  Relevantly:

   (1)A person commits an offence if:

   (a)the person deals with money or other property; and

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

   (c)at the time of the dealing, the value of the money and other property is $100,000 or more.

   …

   (4)Absolute liability applies to paragraphs (1)(b) and (c) and (1A)(b) and (c).

   (5)This section does not apply if the defendant proves that he or she had no reasonable grounds for suspecting that the money or property was derived or realised, directly or indirectly, from some form of unlawful activity.

2. The element in subsection (1)(b) that the money is proceeds of a crime is taken to be satisfied if 'the conduct involves a number of transactions that are structured or arranged to avoid the reporting requirements of the Anti-Money Laundering and Counter‑Terrorism Financing Act that would otherwise apply to the transactions':  Criminal Code s 400.9(2)(aa). The Anti-Money Laundering and Counter-Terrorism Financing Act imposes reporting requirements for transactions involving the transfer of physical currency, where the total amount of physical currency transferred is not less than $10,000:  see Anti-Money Laundering and Counter-Terrorism Financing Act s 5, s 43.

3. By Criminal Code s 400.2:

   A person deals with money or other property if the person does any of the following:

   (a)receives, possesses, conceals or disposes of money or other property;

   (b)imports money or other property into Australia;

   (c)exports money or other property from Australia;

   (d)engages in a banking transaction relating to money or other property.

4. The second relevant offence is under s 142 of the Anti-Money Laundering and Counter-Terrorism Financing Act:

   (1)A person (the first person) commits an offence if:

   (a)the first person is, or causes another person to become, a party to 2 or more non reportable transactions; and

   (b)having regard to:

   (i)the manner and form in which the transactions were conducted, including the matters to which subsection (3) applies; and

   (ii)any explanation made by the first person as to the manner or form in which the transactions were conducted;

   it would be reasonable to conclude that the first person conducted, or caused the transactions to be conducted, in that manner or form for the sole or dominant purpose of ensuring, or attempting to ensure, that the money or property involved in the transactions was transferred in a manner and form that would not give rise to a threshold transaction that would have been required to have been reported under section 43.

   (2)Subsection (1) does not apply if the defendant proves that the first person did not conduct the transactions, or cause the transactions to be conducted, as the case may be, for the sole or dominant purpose of ensuring, or attempting to ensure, that the money or property involved in the transactions was transferred in a manner and form that would not give rise to a threshold transaction that would have been required to have been reported under section 43.

Facts

1. DMM and WSL are residents of Indonesia.  Between February 2013 and December 2015, DMM was frequently in Australia, often for periods of three months or more.  WSL was in Australia on seven occasions, although generally for much shorter visits.  Her longest stay was only about four weeks, and five of her visits were for a week or less.

2. During her time in Australia, DMM opened 13 bank accounts with the Commonwealth Bank of Australia at branches in Western Australia.  I will identify accounts by the last four numbers in the account number. 

3. On 19 February 2013 she opened account number 7244.  Currently the account balance is insignificant ‑ just over $3,000, but the transactions on this account over the period from April 2013 to November 2014 are far from insignificant.  Those transactions found the application relating to DMM.  No order is sought for account number 7244, it being accepted that it is currently being used by DMM for her living expenses.

4. WSL also opened two accounts at a Perth branch of the Commonwealth Bank, on 11 April 2014:  account numbers 7076 and 7084.  She gave DMM authority to operate the accounts.  On 13 October 2015, DMM and another person opened a joint account at another branch of the Commonwealth Bank in Western Australia.  On the same day, DMM and WSL opened a joint account at the same bank (account number 7560).

Transactions on account number 7244

1. The account was opened with a cash deposit of $2,000, half of which was withdrawn after about two weeks.  At the beginning of April 2013, the balance was about $9,000.  The account was regularly used - apparently as a general account, with payments out for living expenses such as food and clothes.  Occasional deposits were made by transfer of funds.

2. On 2 April 2013, two cash amounts were deposited into the account:  $9,000 and $1,000.  On 18 April, two cash deposits totalling $10,000 were again made (this time $6,000 and $4,000).  Similar cash deposits were made again on 2 May (two deposits with a total of $10,000), 27 and 28 June (five deposits for a total of $20,000), and 22 July (two deposits for a total of $10,000).

3. Beginning in February 2014, there were many such cash deposits - none of the individual deposits was more than $9,500, but multiple deposits on the same day frequently resulted in cash into the account of amounts greater than $10,000.  For example, on 25 February 2014, 12 deposits were made, nine of them were for $9,500.  The sum of $100,000 was deposited on that day.  Between 6 and 17 March 2014, $200,000 was deposited in 24 transactions, none of which exceeded $9,400.  On 24 and 25 March 2014, $60,000 was deposited in nine separate transactions. 

4. The pattern of large sums going into the account by cash deposits, none greater than $9,500 and many on the same day, continued until October 2014.  The deposits were made in New South Wales and Victoria.  During the period of approximately 20 months between February 2013 to October 2014, 175 non‑reportable transactions were made.

5. During that period, money was also transferred out of the account, often to three other accounts in the name of DMM:  account number 4827, account number 4835, and account number 6789.  Of these, only account number 6789 has a significant current balance.  

6. There were other transfers and withdrawals from account number 7244 which link it to seven other accounts in DMM's name, which have more substantial current balances, and a property purchased by DMM and WSL at 2A Crana Place in Karawara.

7. Agent Reilly suspects that a series of transfers from the account tie account number 7244 to the purchase and construction of a home on 2A Crana Place, Karawara:

   1.on 15 April 2014, a transfer of $527,994.32 from the account matches the total purchase costs, stamp duty and rates for the property; and

   2.six transfers from the account have the reference Collier Homes P/L or '2A Crana Place'.

Transactions on WSL's accounts

1. A similar pattern is demonstrated on analysis of the transactions on WSL's accounts.  Account number 7076 was opened with a $500 deposit on 11 April 2014.  Money was deposited into the account in 58 cash deposits between 7 February and 30 March 2015.  Starting in February 2015, multiple cash deposits were made, all below $10,000 but with the total frequently exceeding that amount on one day, and far exceeding it over a very short period.  For example, $40,000 was deposited in five amounts on 18 and 19 February 2015; $120,000 in 22 separate amounts between 6 and 13 March 2015. 

2. Analysis of transactions out of the accounts shows:

   1.on 13 October 2015, $200,000 was transferred to account number 7560;

   2.on 13 October 2015, $300,000 was transferred to account number 7552; and

   3.on 14 October 2015, $200,000 was transferred to account number 7084.

Suspicion held on reasonable grounds

1. The question is whether the facts outlined above give rise to a suspicion on reasonable grounds.  Whether a person has reasonable grounds to suspect something is to be judged on the facts known to that person at the time.  The concept of reasonable suspicion is well known in the law.

2. For there to be reasonable grounds to suspect there must be material which is sufficient to induce the state of suspicion in a reasonable person.  It is not, however, necessary that the material which establishes the reasonable grounds for suspicion be limited to admissible evidence:  Walsh v Loughnan [1991] 2 VR 351, 357 (Vincent J); Director of Public Prosecutions (SA) v Tregenza [2002] SASC 414; (2002) 84 SASR 346.

3. On the facts outlined above, I am satisfied there are reasonable grounds for the suspicions deposed to by Federal Agent Reilly. Physical currency has been transferred by many transactions, none of which is reportable, but which together would reasonably lead one to suspect, in the absence of explanation, that the transactions were conducted for the sole or dominant purpose of ensuring that the transfers would not give rise to a reportable transaction, contrary to s 142 of the Anti-Money Laundering and Counter-Terrorism Financing Act. 

4. It is also reasonable to suspect that the property has been dealt with by DMM and WSL and, at the time they dealt with it, the value of the money and other property was $100,000 or more.  There are several transfers and withdrawals from the accounts in amounts greater than $100,000. 

5. There are reasonable grounds to suspect that the funds standing to the credit of the specified bank accounts in DMM's name, and those in the name of WSL, are subject to the effective control of DMM.  There are reasonable grounds to suspect that the two joint accounts are subject to the effective control of either DMM or WSL. 

1. The Karawara property is registered in both their names.

2. Those matters are sufficient basis to make the restraining orders sought. 

Other orders requested

1. Under s 39(1), the court may make any ancillary orders that the court considers appropriate. Section 39 also provides:

   (3A)Despite subsection (3), the court must consider an application for an ancillary order without notice having been given under [subsection (3)] if:

   (a)the responsible authority requests the court to do so; and

   (b)the restraining order to which the application relates was considered, in accordance with subsection 26(4), without notice having been given.

2. The first ancillary order sought is to require any Authorised Deposit Taking Institution, on request by a member of the Australian Federal Police, within two days of receiving the request, to provide information 'as may be requested from time to time'.

3. Part 3-3 of the Act provides in some detail for notices to financial institutions requiring them to provide information. The provisions of the Act include that the notice be in writing, and the period within which the recipient must respond: s 213(1), s 214. Importantly, it provides legal protection for an institution which responds to a notice: s 215. The specific power under pt 3‑3 may not exclude the power to make an order of the kind sought as an ancillary order. It is unnecessary to decide that question. But the applicant has not satisfied me that I should exercise the court's power in his favour, where that would limit the procedural and other protections which the Act affords to the recipient of a request for information.

4. The applicant also applies for orders under s 39(1)(ca) against each respondent by an amendment to the notice of motion. Those orders would require the respondents each to provide sworn statements within 14 days 'to set out all of her interests in property and her liabilities'.

5. The applicant applies also for orders pursuant to s 180 that DMM and WSL be examined about their affairs. By s 182:

   (1)An examination order can only be made on application by the responsible authority for the principal order, or the application for a principal order, in relation to which the examination order is sought.

   (2)The court must consider an application for an examination order without notice having been given to any person if the responsible authority requests the court to do so.

6. In my opinion, the factors which favour determining the restraining order application without notice to the respondents do not require that the whole of the application be determined without notice.  The applicant did not press for these ancillary applications to be determined ex parte.  They will be adjourned to a date to be fixed and determined following notice of the application being given to the respondents.

Orders

1. On this application, where an order is sought under s 18 in relation to each of DMM and WSL, there should be separate orders. A restraining order must only relate to one suspect: s 22. It was proposed that is be done by separate orders within the one 'set' of orders, but even that resulted in a degree of overlap because of the property jointly owned by both respondents. It would be preferable for there to be a separate order extracted for each of the first and second respondent, relating solely to that respondent.

2. The orders will provide for the Official Trustee to take custody and control of the property listed in Schedule B (the funds standing to the credit of the several accounts).  I will make orders for giving notice of the restraining orders and supporting affidavit in the terms requested.  There will be liberty to apply.