Song v Commissioner of the Australian Federal Police
[2020] VSC 465
•31 July 2020
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
CONFISCATION AND PROCEEDS OF CRIME LIST
S ECI 2018 02123
| XUEYUE SONG & ORS (according to the attached schedule) | Applicants |
| v | |
| COMMISSIONER OF THE AUSTRALIAN FEDERAL POLICE | Respondents |
S ECI 2018 02124
| XUEYUE SONG | Applicants |
| v | |
| COMMISSIONER OF THE AUSTRALIAN FEDERAL POLICE | Respondents |
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JUDGE: | FORBES J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 13 March 2020 |
DATE OF JUDGMENT: | 31 July 2020 |
CASE MAY BE CITED AS: | Song & Ors v Commissioner of the Australian Federal Police |
MEDIUM NEUTRAL CITATION: | [2020] VSC 465 |
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PROCEEDS OF CRIME – Applications to revoke restraining order – Application for a declaration that restraining orders are beyond authority – Does the Proceeds of Crime Act 2002 (Cth) (‘the Act’) permit a court by a single order to restrain property under ss 18 and 19 of the Act – section 27 of the Act permits restraint on multiple bases - Applications dismissed - The Commissioner of the Australian Federal Police vThasthahir (2016) 313 FLR 358 - Lee v Director of Public Prosecutions (Cth) (2008) 217 FLR 200 – Mai v The Commissioner of the Australian Federal Police [2020] VSCA 38 - The Commissioner of the Australian Federal Police v Zhang & Anor (2016) 312 FLR 17 - Song v Commissioner of Australian Federal Police [2019] VSCA 206 – Proceeds of Crime Act 2002 (Cth), ss 18, 19, 22, 27, 31, 42, 45, 47, 49, 73 and 315A.
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APPEARANCES: | Counsel | Solicitors |
| For the Applicants | Mr M Hassall | H & H Lawyers |
| For the Respondents | Ms R Burton | Commissioner of the Australian Federal Police Criminal Assets Litigation |
HER HONOUR:
Xueyue Song and his wife are suspected of a large scale fraud in China. They are alleged to have collected deposits from people there in contravention of Chinese criminal law. In 2014 they arrived in Australia with their adult son, Jian Song. Some of the money collected (an amount of approximately AUD $24 million) was transferred to Australia in May and June 2015. Those funds were said to be used to acquire assets in Australia. Some of the assets are held in the name of Jian Song, or a company of which he is sole director and shareholder[1], or in the name of Hai Jiang. Xueyue Song and his wife left Australia in late 2015. An arrest warrant and Interpol Red Notice were issued by the Chinese authorities for them in 2015 and 2016 respectively.
[1]AMG Australia Investment Unit Pty Ltd.
Jian Song remains in Australia. Both Jian Song and Hai Jiang are suspected of certain offences under the Criminal Code Act1995 (Cth) including dealing with property reasonably suspected of being proceeds of crime.
As a result of these suspicions the Commissioner for the Australian Federal Police (‘AFP’) applied to restrain identified property pursuant to the Proceeds of Crime Act 2002 (Cth) (‘the Act’). On 9 November 2018, this Court made orders restraining property in relation to both Jian Song and Hai Jiang.[2] In each case the order restrained property pursuant to s 18 and s 19 of the Act.
[2]Proceeding S ECI 2018 02123 relates to Jian Song and Proceeding S ECI 02124 relates to Hai Jiang. Separate orders have been made in relation to each suspect as required by s 22 of the Act.
Xueyue Song claims an interest in property restrained in both proceedings and has filed applications to exclude his interest from restraint. On 24 May 2019 he also filed applications to revoke the restraining order in both proceedings. On 20 December 2019 he sought to amend the applications seeking in the alternative a declaration. The declaration sought in each proceeding was ‘that Part 2-1 of the POC Act does not confer power on a court to make a single restraining order pursuant to more than one provision of Division 1 of Part 2-1 of the POC the Act’. [3] He contends that there was no power to make a single order restraining property under both s 18 and s 19. The declaration and revocation applications are made in the alternative and rely on overlapping arguments.
[3]Applicant’s application for declaration pursuant to court order by Justice Forbes on 4 Dec 2019, 19 December 2019.
In Jian Song’s proceeding, applications for a declaration and revocation are also made by Jian Song himself and AMG Australia Investment Unit Pty Ltd (‘AMG’).
These applications were heard after an unsuccessful attempt to obtain an extension of time to appeal the restraining orders. Kaye JA refused an extension of time in September 2019.[4] The question that Xueyue Song and others sought to agitate in that proposed appeal was substantially the same question as raised by these applications; does the Act permit a court by a single order to restrain property under both s 18 and s 19 of the Act? Kaye JA made a number of observations on this question of statutory construction but, as no extension of time was granted, it was not necessary for him to reach a concluded view.
[4]Song v Commissioner of Australian Federal Police [2019] VSCA 206 (Kaye JA) (‘Song’).
The applications for a declaration that the orders are beyond authority or their revocation are refused. In summary, the legislation does contemplate that property may be restrained in more than one way, and s 27 of the Act specifically permits restraint on multiple bases. Further, the different pathways to exclusion from or cessation of restraining orders and the different tests for forfeiture do not require procedural ‘choices’ by a proceeds authority. Despite the different pathways the Act deals consistently with interests in the property of suspects and of third parties. My reasons for these conclusions follow.
The Legislative Scheme
Chapter 2 of the Act sets out ‘The confiscation scheme’. The applications for restraint of property were made by the AFP pursuant to s 25 of the Act. These applications are contained within Chapter 2 at Part 2-1 which deals with restraining orders. Division 1 of Part 2-1 sets out five circumstances when a court, upon being satisfied of required matters, must make a restraining order. Those five circumstances are headed:
(a)Where people are convicted or charged with indictable offences (s 17);
(b)Where people are suspected of committing serious offences (s 18);
(c)Where property is suspected of being proceeds of indictable offences etc (s 19);
(d)Where people are suspected of deriving literary proceeds from indictable offences etc. (s 20); and
(e)Where a person has unexplained wealth (s 20A).
In each circumstance subsection (2) of the relevant provision identifies various types of property that may be covered by an order. I will return to the significance of these subsections.
More broadly, Division 2 sets out how restraining orders are obtained. Applications under s 25 are subject to notice being given to the owner/s of the property in accordance with s 26 unless s 26(4) applies. If s 26(4) applies, as it did here, an application is made ex parte.
Section 27 then provides:
Proceeds of crime authority may choose under which section it applies for a restraining order
To avoid doubt, the fact that a proceeds of crime authority may apply for a restraining order under a section of Division 1 against property in relation to an offence does not prevent a proceeds of crime authority from applying for a restraining order under a different section of Division 1 against that property in relation to that offence.
Interpretation of this provision is central to the applicants’ argument as to the power of a court to order restraint.
Division 3 deals with excluding property from restraining orders. By s 29 it provides:
29 Excluding property from certain restraining orders
(1)The court to which an application for a restraining order under section 17, 18 or 19 was made, must, when the order is made or at a later time, exclude a specified interest in property from the order if:
(a) an application is made under section 30 or 31; and
(b)the court is satisfied that the relevant reason under subsection (2) or (3) for excluding the interest from the order exists.
….
Xueyue Song, Jian Song and AMG have made applications for exclusion in May 2019 relevantly under s 31. Those applications have not yet been determined and no substantive material has been filed in support of the applications.
Division 4 deals with giving effect to restraining orders. Division 5 deals with further orders that can be made either ancillary to restraint or permitting the Official Trustee to take custody and control of restrained property. Division 6 deals with the duration of restraining orders and circumstances of their revocation or cessation. Xueyue Song has made applications for revocation of the orders pursuant to s 42 within this Division. That section provides:
42 Application to revoke a restraining order
(1)A person who was not notified of the application for a restraining order may apply to the court to revoke the order.
(1A) The application must be made:
(a) within 28 days after the person is notified of the order; or
(b)if the person applies to the court, within that period of 28 days, for an extension of time for applying for revocation – within such longer period, not exceeding 3 months, as the court allows.
….
Types of Restraining order
The five types of restraining orders that can be made with respect to property fall into two categories. First there is ‘suspect based restraint’. This is property restrained where a person is suspected of, or a criminal process is on foot for offences (s17, 18) or a person is suspected of having wealth from particular sources (s 20 and 20A). Suspect based restraints are all addressed to circumstances of an identified person who is suspected of various matters or charged with or convicted of certain offences.
Second there is ‘property based restraint’. This is restraint where the property is suspected of being related to offences (s 19). Restraint of identified property need not be related to any particular suspect. It is addressed to circumstances of the property itself. If the property is reasonably suspected to be related to an offence either because it is proceeds or an instrument of that offence, that will be sufficient for restraint. Property that can be characterised this way may be restrained under s 19 even where there is no person identified as a suspect in relation to the offence or even when the owners of the property cannot be identified.
The distinction between suspect based restraint and property based restraint is maintained through the confiscation process. The grounds for exclusion from restraint set out at s 29(2) are different depending upon whether the order is made under ss 17[5], 18[6] or 19[7]. The cessation of restraint is determined differently where a suspect based restraint has been ordered[8] from where an order is for a property based restraint.[9]
[5]Where s 29(2)(a) or (b) apply.
[6]Where s 29(2) (c) applies.
[7]Where s 29(2)(d) applies.
[8]Where s 45(1) or (2) apply.
[9]Where s 45 (3) applies.
What must be proved for forfeiture of property to the Commonwealth is also different. Forfeiture where restraint was ordered under s 18 is determined by s 47. This section requires proof on a civil standard that the suspect engaged in conduct constituting the relevant offence. Restraint under s 19 is governed by s 49. Section 49 requires satisfaction that the property meets the definition of proceeds of or an instrument of various relevant offences and that steps have been taken to identify and notify persons with an interest in the property. It does not require any finding that a person committed the relevant offence.
In The Commissioner of the Australian Federal Police vThasthahir[10] (‘Thasthahir’) J Forrest J set out the distinction between suspect based orders and property based orders commenting on an evident parliamentary intent ‘to deal differently with confiscation cases where there is a known suspect and where there is not’.[11] In Thasthahir the restraint order was only made pursuant to s 19. The court was dealing with a preliminary point of whether the order was still in force. His Honour held that s 45(3) was the relevant cessation provision and, as none of the criteria for cessation of the order were met, the order remained in force. The reasoning of Hidden J in Lee[12] was adopted by his Honour.
[10]Commissioner of the Australian Federal Police v Thasthahir (2016) 313 FLR 358 (‘Thasthahir’).
[11]Ibid 367 [31] citing Lee v Director Of Public Prosecutions (Cth) (2008) 217 FLR 200 at 200 (‘Lee’).
[12]Ibid 368 [35], [36] citing Lee (n 11) [22].
Lee dealt with property belonging to Mr Lee also restrained only under s 19. Hidden J rejected an argument that the order lapsed after 28 days by operation of s 45(2) as Mr Lee had not been charged nor convicted within that time.[13] His Honour concluded that s 45(2) was not relevant because it only related to orders of suspect based restraint. Where property based restraint was ordered, then s 45(3) governed the cessation of restraint; the occurrence of certain events, namely the outcome of a forfeiture application, or an order excluding an interest.
[13]Mr Lee also unsuccessfully argued that the application for confiscation order was not validly made so that both s 45(2)(a) and(b) were satisfied and the restraining order had ceased to be validly in force.
Both Lee and Thasthahir involved restraint under a single provision. They were relied on by Xueyue Song as part of the submission that the different provisions and conditions for exclusion or cessation demonstrate a structure in the legislation when read as a whole indicating an intention that restraint is to be ordered under only one provision.
Overlap in grounds for restraint
The conditions required to make orders under the five provisions overlap. In particular the prospect of overlap between conditions necessary for one or other suspect based order and a property based order might be relatively frequent where there is an identified suspect. Orders on other occasions have been made under more than one provision of the Act.
Such was the situation in Mai v The Commissioner of the Australian Federal Police[14] when the Court of Appeal dealt with an appeal against an unsuccessful revocation application. The restraining order had been directed at a car owned by the applicant for revocation and real property owned by her brother who was suspected of various relevant offences. Both items of property were restrained under both s 18 and s 19.
[14][2020] VSCA 38 (‘Mai’).
The appeal concerned questions of statutory construction of s 42 for determining a revocation application. Although there was no challenge to the Court making a single order for restraint under both sections, the reasoning outlined by the court required it to consider closely a particular aspect of ss 18 and 19. It concerned the meaning of the requirement that the court be ‘satisfied that the authorised officer who made the affidavit holds the suspicion or suspicions stated in the affidavit on reasonable grounds’.[15] In discussing the nature of the test for reasonable grounds for suspicion, the Court said:
Applying this reasoning,[16] it is necessary under ss 18 and s 19 of the Act to consider whether the authorised officer had an actual apprehension that an offence had been committed, or that the property and the vehicle were proceeds or an instrument of a relevant offence, rather than a mere idle wondering as to that matter…[17]
[15]As found in s 18(1)(f) and s 19(1)(f) of the Act.
[16] Having quoted reasoning from Queensland Bacon Pty Ltd v Rees (1966) 115 CLR 266, 303.
[17]Mai (n 14) 25 [68].
The Court had regard to the different nature of the relevant suspicion necessary under s 18 from that under s 19. Under s 18 suspicion was as to the commission of an offence while under s 19 suspicion was about the nature of property.[18] The court went on to clearly set out the way in which the evidence supported a suspicion that the suspect brother had breached the Corporations Act2001 (Cth) in a manner that was a ‘serious offence’ and a suspicion that property in his name was proceeds of that offence so that the property must be restrained under both s 18 and s 19.[19] Then with the vehicle owned by the suspect’s sister, they concluded that the evidence met both s 18(3)(b) (iii) and s 19. There was no concern expressed at the overlap or that a single order restrained property under more than one section.
[18]‘Proceeds’ and ‘instrument’ both being defined by s 329 and s 330 of the Act.
[19]Mai (n 14) 28, [76].
The power to make a single order relying on more than one section has been made on a number of occasions without challenge. The question was canvassed before Kaye JA by the parties in their extension of time application to appeal these restraining orders. At that hearing it was relevant only as to the prospects of success of any appeal and no full argument was heard, nor concluded view expressed. However, the observations are relevant. His Honour observed that the construction of s 27 advanced by Xueyue Song:
33…would deprive it of any meaningful content. If, in a particular case, a proceeds of crime authority were in a position that it could seek a restraining order under more than one section of Division 1 – and, in particular, under more than one of s 17 to s 20A inclusive – it would not have been necessary for the legislature to have included a provision such as s 27, in order to validate a choice made by the authority as to one of those provisions, to the exclusion of the other possible provisions on which the authority might have relied, but did not rely. In other words, if, for example, the authority chose to proceed under s 18, when it might equally have been able to have proceeded under s 20, it would not be necessary to rely on a provision such as s 27 to validate its choice.
34Contrary to the submission advanced on behalf of the applicants, the plain, unambiguous, meaning of the text of s 27 is that a proceeds of crime authority may apply for a restraining order under more than one section of that Division. The heading to the section forms part of the provision pursuant to s 13(1) of the Acts Interpretation Act 1901 (Cth). However, that section does not mandate that the proceeds of crime authority must choose under which section it applies for a restraining order; rather, as pointed out by counsel for the respondent, s 27 is facilitative, and not restrictive.
…
37In my view, the fact that various provisions in the Act may require an applicant for an exclusion order to meet different tests, in respect of a restraining order granted under more than one section, does not necessarily militate in favour of the construction of s 27 contended for on behalf of the applicants.[20]
[20]Song (n 4).
Submissions of the parties
The Applicants’ submissions can be summarised as follows:
(a)When interpreting the legislation and the power conferred by it to make orders, it is necessary to read s 27 as a whole and in the context of the whole statutory framework.[21]
(b)The whole of the statutory framework references an order (singular) made under 17, 18, 19, 20 or 20A[22] and so indicates the legislature intended orders not being made under more than one provision. There is no express provision permitting an order under more than one section.
(c)Although there may be overlap between the prerequisites under the five provisions, s 27 should be interpreted as requiring the proceeds authority to choose under which singular section it relies. To read s 27 as permitting a choice of ‘sections’ is to distort the plain meaning of s 27.
(d)Because procedures for exclusion and forfeiture differ as between suspect based restraint and property based restraint, an order based upon more than one section will require applicants to meet differing eligibility criteria and require a court to resolve conflicting procedural approaches.
(e)Equally the application of differing provisions bring restraining orders to an end where an order is made under both s 18 and s 19 makes cessation unclear. It cannot be known when the restraint comes to an end when s 45(2) is met or whether s 45(3) applies. This issue is raised by the effect of decisions in Lee and Thasthahir.[23]
(f)Confiscation legislation interferes with fundamental rights and obligations and any ambiguity should be interpreted so as to respect property rights.[24] Making orders under more than one section results in uncertainty in multiple contexts and compounds that position of uncertainty for parties seeking to respond.
[21]Lordianto v Commissioner for the Australian Federal Police (2019) 374 ALR 58.
[22]Emphasis added as made in the Applicant’s submissions, ‘Written Submissions of Applicant in support of declaratory order and revocation applications’, Submissions in Song v Commissioner of the Australian Federal Police [2020] VSC 465, S ECI 2018 02123 & 02124, 19 December 2019, (‘Applicant’s submissions’) [6].
[23]Ibid [25] & [28].
[24]Relying on Markovski v Director of Public Prosecutions (2014) 41 VR 458.
The AFP’s submissions can be summarised as follows:
(a)The purpose and object of the Act permits a single order relying on more than one basis for restraint. A lack of power to do so is based on an incorrect interpretation of the legislation.
(b)A proper interpretation of s 27 is facilitative, permitting a proceeds authority to choose one or more sections as are relevant and, if the requirements of each section are met, a Court is required to order restraint under one or more sections.
(c)Either by way of comity or persuasion, my decision should accord with the reasoning of Kaye JA in Song.[25] Although the applicants had apprehended that the AFP would rely on an issue estoppel arising from his Honour’s decision and so addressed the matter, the AFP did not frame any submissions on the basis of an issue estoppel.
(d)Mr Xueyue Song himself has not demonstrated sufficient interest to bring a claim for declaratory relief having not yet identified grounds for exclusion and the application to amend to seek declaratory relief was opposed.
[25]Song (n 4).
Analysis
(i) Legislative interpretation
The Applicants seek a declaration of the power of a court with a proceeds jurisdiction to make restraining orders. They submit that the legislative scheme does not support a single order for restraint of property under more than one provision. Given that a court must make the order sought if satisfied of the necessary matters, then a proceeds authority must be compelled to choose between a particular suspect based order or a property based order at any given time.[26]
[26]Transcript of Proceedings, Song v Commissioner of the Australian Federal Police [2020] VSC 465 (Supreme Court, S ECI 2018 02123 & 02124, Justice Forbes, 19 December 2019) 23 [23] – [27].
In particular the applicants point to the use of the singular in many places throughout the Act – the definition of a ‘restraining order’ being an order under ‘ss 17, 18,19, 20 or 20A’[27] in s 338 and the use of ‘an order’ and ‘the order’ throughout ss 17-20A inclusive. In addition they point to the absence of an express power in the legislation to make orders under more than one section. All of these are said to demonstrate an intent that orders are made on only one basis.
[27]Emphasis added.
I do not accept the argument that a contrary intent is demonstrated here by the general language and structure of the Act. First, the Acts Interpretation Act1901 (Cth) provides words in the singular include the plural.[28] Second, the singular form and the use of ‘or’ to describe alternate sections does no more than indicate that any one section is capable of standing alone as the basis for an order.
[28]Acts Interpretation Act 1901 (Cth) s 23.
Third, the legislation specifically requires that an ‘order must only relate to one suspect’ and it said so immediately following the relevant restraining provisions by including s 22 of the Act in mandatory language. It might be thought that any restriction to a single ground being relied on for an order would also have been explicitly expressed if such a limitation on the power was intended.
Likewise s 315A provides that a court may hear and determine two or more applications under the Act at the same time. By s 315A(2), special rules govern the order for hearing a forfeiture application where an exclusion application is on foot so that any forfeiture application may only be heard after determination of the exclusion application. No restriction on applications for restraining orders was included as an exception to hearing and determination of two or more applications.
Where the five types of restraint have the potential for a degree of overlap one would expect a clear direction precluding reliance on more than one provision.
Fourth, if it is necessary to go further, the Explanatory Memorandum accompanying the introduction of the Proceeds of Crime Bill 2001[29] described Clause 27 of the Bill as ‘This clause confirms that in circumstances where the DPP is able to apply for more than one type of restraining order, the DPP may choose under which provisions it seeks the order.’[30]
[29]Explanatory Memoranda, Proceeds of Crime Bill 2001 (Cth).
[30]Emphasis added.
The interpretation of s 27 specifically lies at the heart of the applicants’ argument. It is said to be the critical provision in the legislation mandating the selection of one basis for restraint at any given point in time and precluding concurrent restraint. It submits that on a proper interpretation, s 27 clarifies that the proceeds authority must make a decision as to which individual provision it relies on to apply for a restraining order and this decision is not reviewable by a third party. This is said to be consistent with the interpretation of the broader structure and language of the legislation.[31]
[31]Applicant’s Submissions (n 22) [15].
I have not accepted the submission in relation to the broader statutory construction and do not accept the submission in relation to s 27. True it is that the section uses singular language directed at the ‘section’ that the proceeds authority may choose. However, there is nothing in the language of s 27 that would suggest it is directed at the availability or otherwise of review of a decision by a third party. Whether the authority chooses one, or more than one provision, s 27 is silent on any questions of the rights of those with an interest in property. In my view there is nothing ambiguous about s 27 that would make it necessary to imply such an interpretation.
Section 27 is prefaced by the phrase ‘To avoid doubt,…’. What then, is the doubt that the section seeks to avoid?
Section 27 is specifically directed at the question of whether or not the same property may be restrained on more than one basis. The interpretation of s 27 is informed by the legislative purpose of restraint: to prevent a particular property being disposed of or dealt with. The principal objects of the Act are to deprive persons of the proceeds and other benefits of criminal activity and to undermine the profitability of criminal enterprises as set out in s 5 of the Act. Restraint under any one provision is sufficient to preclude any dealings with or disposal of the property. Restraint under more than one provision imposes no greater prohibition on dealing with the property.
Section 27 addresses the circumstances in which a property restrained under one section can also to be restrained under a different section. It states that this may occur where the same relevant offence is relied on. In this way s 27 clarifies that a proceeds authority, having made an application relying on one section is not prevented from applying under a different section for an order against that property. In other words when dealing with a particular property the section specifically contemplates a wide net being cast, permitting a choice to seek an order under more than one section. This is subject only to the requirement that the same offence underlies each basis of restraint. An application under one section ‘does not prevent’ an application under a different section against ‘that property in relation to that offence.’
The use of the singular noun ‘section’ on this construction makes sense as a matter of both logic and grammar. A proceeds authority is not bound to rely on more than one section. If it does rely on one, it is not prevented from relying on another. Clearly where it relies on more than one section it must satisfy the court that each basis relates to the same offence and of the relevant criteria to obtain the restraint under each section.[32]
[32]Mai (n 14).
I am persuaded by the observations of Kaye JA set out above.[33] I agree that the section does not mandate a choice, let alone a choice requiring the selection of a single ground of application. The provision is not concerned to prescribe any choice that might be made by a proceeds authority. Rather it sets out circumstances under which a proceeds authority may choose to restrain property by more than one relevant provision. This might be thought otherwise to be in doubt given the different regimes for dealing with interests in the property, including exclusion and forfeiture, that will be applied to the property.
[33]See paragraph 25.
(ii) Different procedural approaches and tests to be applied
The applicants argue that, depending on whether suspect based or property based restraint is ordered, different tests apply for exclusion, forfeiture, revocation and cessation. This gives rise to procedural differences of major significance for those seeking to respond to the restraint. The different procedures for dealing with restrained property are said to be indicative of restraint intended only under one section. I will set out an outline of the different procedural paths that must be followed.
Exclusion
Suspects and third parties are both able to apply to have their interest in property excluded from restraint and/or forfeiture.[34] In both cases the reasons for exclusion are listed in the legislation. For exclusion from restraint they are:
[34]Under s 29 from restraint under s 17, 18, 19 and under s 73 from forfeiture.
29 Excluding property from certain restraining orders
(2)The reasons for excluding a specified interest in property from a restraining order are:
(a)for a restraining order under section 17 if the offence, or any of the offences, to which the order relates is a serious offence – the interest is neither proceeds nor an instrument of unlawful activity; or
(b)for a restraining order under section 17 if paragraph (a) does not apply – the interest is neither proceeds nor an instrument of the offence, or any offence, to which the order relates; or
(c) for a restraining order under section 18 – the interest is neither:
(i) in any case – proceeds of unlawful activity; nor
(ii)if an offence to which the order relates is a serious offence – an instrument of any serious offence; or
(d) for a restraining order under section 19 – the interest is neither:
(i)in any case – proceeds of an indictable offence, a foreign indictable offence or an indictable offence of Commonwealth concern; nor
(ii)if an offence to which the order relates is a serious offence – an instrument of any serious offence.
Section 73 sets out similar grounds for exclusion from forfeiture. An applicant for exclusion must show that their interest meets s 73(c) and where relevant (d):
73 Making exclusion orders
(1)A court that made a forfeiture order or that is hearing, or is to hear an application (a forfeiture application) for a forfeiture order, must make an order excluding a specified interest in property from forfeiture ( an exclusion order) if:
(a) a person applies for the exclusion order; and
(b)the forfeiture order, or the forfeiture application, specified property in which the applicant has an interest; and
(c)if the forfeiture order was (or the forfeiture order applied for would be) made under s 47 or s 49 – the court is satisfied that the applicant’s interest in the property is neither of the following:
(i) proceeds of unlawful activity;
(ii)if an offence on which the order was (or would be) based is a serious offence – an instrument of any serious offence; and
(d)if the forfeiture order was (or the forfeiture order applied for would be) made under s 48 – the court is satisfied that the applicant’s interest in the property is neither proceeds nor an instrument of any of the offences to which the forfeiture order or forfeiture application relates.
….
The criteria for exclusion do not differentiate between the interests of suspects and third parties.
Cessation
Absent a conviction, suspect based restraint comes to an end in one of the ways set out in s 45 of the Act. For present purposes there are four relevant circumstances:
(1)When charges against a suspect are withdrawn or an acquittal or appeal against conviction are obtained (s45(1)), unless there is a confiscation application on foot;
(2)After 28 days if no conviction or charge is laid and no confiscation application order is on foot (s45(2));
(3) On an order for exclusion from forfeiture or refusal of an order for forfeiture as set out in s 45(3);
(4)If the property is that of a person who is not a suspect and is property that is neither an instrument nor proceeds nor subject to effective control of a suspect, then a restraining order ceases to be in force if the suspect is not charged within 28 days (s 45(6));
The conclusion of any criminal procedure relating to a suspect does not always have the effect of ceasing restraint of property. Acquittal or withdrawal of charges does not end restraint if a confiscation application is on foot. Where there is a confiscation application on foot, it is the determination of the confiscation application that will cease restraint.
If a suspect is never charged then the restraint of their interest is not ceased until an exclusion or confiscation application is determined. Likewise, restraint of the property of third parties in ‘suspect based’ restraint is determined, like the suspect’s, by the outcome of any exclusion and forfeiture application. There may never be any criminal process commenced.[35]
Forfeiture
[35]Section 45(6) provides an exception for property of a third party that is not suspected of being proceeds or an instrument, in circumstances where a suspect is not charged
Each of ss 17, 18 and 19 are directed at different circumstances. Section 18 deals with suspicion of ‘serious offences’, as defined. The definition includes only particular indictable offences.[36] Both ss 17 and 19 apply more widely to all indictable offences. Section 19 is a hybrid dealing also with ‘serious offences’ where the property is suspected of being an instrument of a serious offence.[37]
[36]Section 338 of the Act as defined.
[37]Section 19(d)(ii) and (e)(ii) each deals with property suspected of being an instrument of a serious offence.
The forfeiture regime to be applied depends firstly on whether or not the offence relied on, either suspected or charged is a ‘serious offence’. Broadly speaking a ‘serious offence’ includes certain drug offences, money laundering offences, or unlawful conduct intended to cause loss to another person or the Commonwealth of at least $10,000.[38]
[38]Definition of ‘serious offence’ is set out in s 338.
For suspect based restraint, forfeiture on conviction of the suspect for a ‘serious offence’ is automatic and governed by s 92. Otherwise, upon conviction of an indicatable offence forfeiture is dealt with under s 48. Under this section forfeiture requires both proof of conviction and satisfaction by the Court that the property is either proceeds of, or where relevant an instrument of, one or more of the convicted offences.
Where no conviction is obtained, but where criminal charges are laid then a suspect based restraining order ceases on conclusion of the criminal process unless certain forfeiture applications are on foot.[39] Where no charges are ever commenced against a suspect, then again a restraining order ceases unless a forfeiture application is on foot.[40] Property otherwise covered by restraint under s 19 remains restrained until determination of a forfeiture application.[41] In all three scenarios, either s 47 or s 49 will apply to forfeiture. Again, the distinction is between those offences that are ‘serious offences’ where s 47 is applicable, and indictable offences where s 49 applies.
[39]See s 45(1)(d), (e) ,(f), (g) or (h).
[40]See s 45(2).
[41]See s 45(3).
Forfeiture under s 47 requires proof of one or more ‘serious offences’ by a suspect, but on a civil and not criminal standard. In this narrower class of offence, it is not necessary to show a connection between the property of a suspect and the serious offence.[42] If property of a third party is restrained under s 18(2)(d), then proof that the person whose conduct formed the basis of the restraining order (the suspect) engaged in conduct constituting a serious offence will be sufficient to forfeit the third party’s restrained property. To put it another way: the suspicion that the third party property interest is proceeds or an instrument of a serious offence sufficient to restrain the property, will without more, be sufficient to forfeit the property if the suspect’s conduct is established.
[42]Section 47(1). There is no equivalent to s 49(3).
By contrast, forfeiture under s 49 does not require proof of the offence. It requires satisfaction of a connection with the suspected offending: that the property is proceeds of, or an instrument of certain types of indicatable offences, including serious offences. In other words, property restrained on a suspicion that it is proceeds or an instrument of an indictable offence is forfeited if a court is satisfied that the property is proceeds or an instrument of a relevant indictable offence, proven on a civil standard. This applies whether the property is that of someone who is a suspect or a third party.
(iii) The effect of the different procedures
It can be seen from the outline above through the scheme of restraint, exclusion, cessation and confiscation, that a distinction is maintained between the procedures applicable to each basis for restraint. The differences are said to support an interpretation of the legislation that restraint is intended on the basis of only one section of the Act at a time.[43]
[43]Applicant’s submissions (n 22) [17] –[18].
There is no doubt that the Act intends suspect based restraint to be dealt with differently to property based restraint. The Act also treats property retained on suspicion of ‘serious offences’ differently from other indictable offences. It does not follow that property cannot be subject to restraint on more than one basis. Just as different matters of fact or suspicion are relevant to the making of an order under s 18 or s 19, so are different requirements necessary to bring an order to an end whether by cessation or forfeiture. These differences do not necessarily result in conflict or uncertainty. This is because the regime of confiscation consistently treats the property of suspects differently from that of third parties regardless of which section is used for restraint and forfeiture.
Whether suspect based or property based restraint has occurred, the restraint is continued, independent of any criminal process, where an application for a forfeiture or other confiscation order has been made.
Application for exclusion of any interests from restraint are to be dealt with prior to forfeiture applications. In The Commissioner of the Australian Federal Police v Zhang & Anor[44] (‘Zhang’) the Court of Appeal confirmed that on a proper construction of the Act it was envisaged that applications for exclusion under s 29 or 29A be determined prior to hearing an application for the forfeiture order. Section 315A(2) of the Act now specifies this although it was not operative in the applications in Zhang.
[44](2016) 312 FLR 17 (‘Zhang’).
The Court of Appeal said in Zhang:
Finally, on the question of sequence, it is necessary to consider the logic underlying the Act. As forfeiture orders are made under s 49 over restrained property,[45] the first step for the court must be to identify the scope of the restraining order. Where a s 31 exclusion application has been made this requires the court to identify what property remains within the scope of the restraining order after the s 31 exclusion application has been heard and determined. It is that remaining scope which identifies the property to be forfeited. It follows that an exclusion application must be determined before the court considers whether the property should be forfeited pursuant to s 49(1)(c).[46]
[45]Noting in Zhang property was only restrained under s 19 so s 47 had no relevance.
[46]Zhang (n 44) [84].
The determination of exclusion applications will identify what property remains liable to forfeiture. Any remaining property is only forfeited under s 47, if the suspect’s conduct amounting to the serious offence is proved. Under s 49 all property not excluded from restraint is forfeited.
Therefore the statutory regime intends identification of lawfully acquired property to be excluded where possible prior to ordering forfeiture. Even where exclusion from restraint is not sought at the time of forfeiture, s 73 requires any specified interest in property is to be excluded from forfeiture. There are only limited circumstances in which an application to exclude property from forfeiture can be made after forfeiture. It is not , as the applicants contend, s 49(3) that ‘forces’ bona fide exclusion applications to be made giving the proceeds authority ‘first run’ at the witnesses. The exclusion of lawful interests are where possible, are always identified and excluded prior to ordering forfeiture with the onus resting on the person seeking to prove that lawful interest. Only then is the proceeds authority required to prove any additional matters that might be required to obtain forfeiture of that which remains.
To understand further why the procedural differences do not demonstrate an intention to confine restraint to a single basis, it is necessary to examine subsection (2) of the provisions dealing with suspect based restraints. In each case subsection (2) identifies the types of property that can be restrained.
In all four cases of suspect based restraint, property can be restrained simply if it is the property of the suspect or that which is under the suspect’s effective control.[47] In those cases all property of the suspect is subject to forfeiture if the offence is proven. This is so regardless of whether or not there is a connection between the property and the offending. Property of the suspect, even if lawfully acquired, is subject to forfeiture unless an exclusion application demonstrates that lawful acquisition. Of course, if the court is not satisfied of the conduct of the suspect, then the restraining order comes to an end without forfeiture.[48]
[47]See ss 17 (2)(a)-(c), 18(2)(a)-(c), 20(2)(a)-(c) and 20(2)(a)-(e).
[48]See s 45(3).
Suspect based restraints also make limited provision for property of any other person to be restrained. This can occur only if the property itself is suspected of being proceeds of or an instrument of the relevant offence, and then only if s 17 or s 18 is relied on.[49] This requires identification of a suspect.
[49]See ss 17(2)(d) and 18(2)(d).
Section 19 similarly restrains the property of any person but again only if the property is suspected of being proceeds or an instrument of an offence. This section can be relied on whether or not any suspect is identified.
Finally, property interests where the owner cannot be identified similarly can only be restrained on the three bases: effective control of a suspect where one is identified, or proceeds or an instrument of an indicatable offence.
Once a property is restrained, the procedure for exclusion treats suspects and third parties alike. Both can apply for exclusion from restraint and forfeiture.[50] The tests for exclusion are identical whether applied to a suspect or third party. They require proving the nature of their interest in accordance with s 29(2) or s 73(1). The onus rests on the applicant for exclusion, be they a suspect or not.
[50]Section 29 sets out the grounds for exclusion from restraint and s 73 the grounds for exclusion from forfeiture.
Whether suspect or third party, an applicant for exclusion from a restraining order must show, if a serious offence is a basis for restraint, that their interest is neither proceeds nor an instrument of ‘unlawful activity’ as this is widely defined in s 338.[51] In the case of all other charged indictable offences or the suspicion of indicatable offences, the interest must be shown to be neither proceeds of an offence to which the order relates (if property is restrained under s 17) or proceeds of ‘unlawful activity’ if no charges are on foot.
[51]See section 29(2).
Suspects and third parties alike may apply for exclusion of their interest from forfeiture. Any person seeking exclusion must establish that their interest is neither proceeds of unlawful activity nor, where relevant, an instrument of a serious offence.[52]
[52]See s 73(1)(c) and (d).
To a suspect whose property may be restrained merely on the basis of ownership (ss 17 and 18) forfeiture requires only relevantly proof of the offence.[53] If the suspect’s property is restrained under s 19, forfeiture requires proof that the property is proceeds of a relevant offence[54]. If restrained under both s 18 and s 19, the different matters of proof must relate to the same offence by operation of s 27.
[53]By the suspect under s 47(1)(c).
[54]It is not necessary to establish that the offence generating the proceeds was committed by a particular person. See s 49(2)(a).
The property of any other person can only be restrained in the first place on suspicion of connection between the property and offence.
Under s 47, whether or not an exclusion application is on foot, proof of the conduct constituting the offence relied on for s 18 must be established for forfeiture. Property subject to s 47 forfeiture will either be that of a suspect[55] or property that is itself suspected of being proceeds or an instrument of the suspect’s offence. If the offence is proven then all of that property not excluded is forfeited. In relation to a suspect’s own property it will not be necessary to show in addition that the property is proceeds or an instrument of that offence. In respect of third party interests, no higher level of proof than the suspicion required to restrain the property is necessary for property that has not been excluded.
[55]Or under the suspect’s effective control.
Under s 49, whether a suspect or third party, a person must lodge an exclusion application to avoid the effect of s 49(3) on forfeiture. If s 49(3) applies, the proceeds authority is not required to prove as fact the reasonable grounds for suspicion that it relied on to obtain restraint. This is limited by the obligation on the proceeds authority to satisfy the court that it has taken reasonable steps to identify and notify persons with an interest in the property.[56] Relieving the proceeds authority of a need to satisfy the court that the restrained property is proceeds or an instrument of an offence applies only where there is no assertion of a lawful interest over the property before the court. Then, in respect of suspect and third party interests alike, no higher level of proof than the suspicion required to restrain the property is required.
[56]See s 49(1)(e).
Whether by s 47 or s 49, property subject to forfeiture will have been narrowed by exclusion orders under s 31 or exclusion applications under s 73, if any, before a forfeiture order is made.
In my view there is therefore no procedural conflict. If the identity of the person with the interest in property and the reason the property is restrained is borne in mind then the operation of s 47 and s 49 co-exist without conflict.
Whilst the property of suspects is treated differently to the property of other persons in the structure of the legislation, in all cases where the property is restrained as suspected proceeds or instrument of an offence, suspects and others are dealt with identically. Where a person does not file an exclusion application prior to forfeiture the proceeds authority is relieved from proving that the property is ‘proceeds’ under s 49(1)(c). There is no requirement to separately prove that property of a third party is ‘proceeds or an instrument’ of the offence for forfeiture under s 47.
Xueyue Song and AMG, as persons not a suspect for the purpose of restraining the property, must lodge an exclusion application and have it dealt with prior to forfeiture by demonstrating the lawfulness of their interest in accordance with s 29. They have made such an applications. Jian Song is a suspect and he too has lodged an application for exclusion from restraint. As the relevant suspected offences are ‘serious offences’ within the meaning of the legislation Xueyue Song and the other applicants for exclusion, whether suspect or third party, must also prove that their interest is not an instrument of any serious offence.
The fact that a proceeds authority might be put to different proof when it seeks forfeiture; proving an offence under s 47 or proving proceeds of the offence under s 49, does not change the nature of what a person resisting forfeiture has to establish. In all cases a person resisting the orders sought by a proceeds authority must demonstrate their lawful acquisition of their interest.
The Act intends to and does interfere explicitly with property rights. It provides mechanisms for those with lawfully acquired interests in property or wealth that is liable to confiscation to protect their interest. A lawfully acquired interest is one which can be demonstrated not to derive from unlawful origins as defined by s 336A. In this way property rights are respected save for those rights that are specifically curtailed by the legislation. Whether property is restrained by one or more sections, the right of persons to protect their lawfully acquired property remains the same. That is, any ambiguity or differences in construction of restraint and confiscation provisions does not differently affect lawfully acquired property interests. The same identification of those lawfully acquired interests is at the heart of the process no matter which of the five restraining provisions commence the process.
Relief - Declaration
Application was made in December 2019 to amend the revocation applications to include seeking a declaration. This was after the unsuccessful attempt to appeal the making of the restraining orders. A declaration is a discretionary remedy.[57] The subject upon which the court is requested to make a declaration must be a real question and not a hypothetical one.
[57]Ainsworth v Criminal Justice Commission (1992) 175 CLR 564.
Having decided to lodge exclusion applications, there is no doubt that s 315A(2) of the Act requires these to be determined before any forfeiture is sought, whether it be under s 47 or s 49. This means that the question of resolving any proper procedural approach if there is in fact any conflict between the two forfeiture provisions, is not a conflict that will be exposed by the facts of this case. There is no direct or significant effect on how the court will deal with the applicants’ interest in the restrained property.
Even if I am wrong in my analysis of the construction of s 27, there would be no practical effect in a declaration that restraint was permitted under one provision only. The property would still be restrained on one or other basis until the confiscation application falls to be determined. Whether one or both provisions are relied on ultimately for forfeiture, the exclusion of any lawful interests of the applicants will have already been determined.
Xueyue Song has not filed any material to outline the nature of the interest in property that he seeks to have excluded. The AFP take issue with whether he has standing to seek the declaration. Even if standing was established for the reasons outlined above I would decline to make a declaration as sought.
Revocation of the restraining orders
The applicants sought revocation of the restraining orders under s 42 as an alternative remedy to the declaration. The applications for revocation were filed in each proceeding on 28 May 2019. An affidavit of the solicitor acting for Jian Song, AMG and Xueyue Song was sworn on 24 May 2019. It is not clear whether the affidavit is in support of the exclusion application, or the revocation application or both. What is clear from the affidavit is that Jian Song provided instructions regarding the restraining order in his personal capacity on 26 November 2018 and as director of AMG on 25 February 2019. Xueyue Song provided instructions in ‘late’ March 2019.
The restraining orders had obviously come to the attention of each person, at the latest on the date on which the instructions were given. The applications are filed more than 28 days from the time when the instructions were given and no timely application for an extension was made. They are therefore not made in accordance with s 42 and should be dismissed on this basis.
Xueyue Song argues that he has never been ‘notified’ of the Orders within the meaning of s 42(1A) and therefore the 28 day limitation period has not elapsed. Notification of restraining orders once made are dealt with by s 33 which provides:
33 Notice of a restraining order
(1)If a court makes a restraining order covering property that a person owns, the responsible authority must give written notice of the order to the person.
Note: A person who was not notified of the application for a restraining order may apply to revoke the restraining order within 28 days of being notified of the order: see section 42.
The restrained property included a number of parcels of land and vehicles, none of which listed Xueyue Song as a registered owner, and a number of bank accounts and cash paid to and by Compass Global Asset Management. No accounts are held in the name of Xueyue Song. There are therefore no assets restrained that identify Xueyue Song as a person who owns the property. The applications for exclusion that he has filed have not yet been supported by any substantive affidavit material outlining the interest that is sought to be excluded. His solicitor’s affidavit refers generally only to ‘a beneficial interest’. Accordingly, there is no evidence that Xueyue Song is a person to whom notice in accordance with s 33 was required.
As a practical matter the restraining order came to his attention at the latest in March 2019 prompting him to give instructions to his legal representative. There is no merit to the submission that the orders have not yet been brought to the notice of Xueyue Song.
The issues upon which the revocation applications are based are broadly the same as the basis for declaratory relief.
The grounds upon which a court may revoke a restraining order are set out in s 42(5) of the Act. They are:
(a)there are no grounds on which to make the order at the time of considering the application to revoke the order; or
(b)it is otherwise in the interests of justice to do so.
The principal argument relied on for revocation was that if the orders were beyond power then it is in the interests of justice that the orders be set aside. As my conclusion is that the orders are not beyond power, this ground falls away. For the reasons set out above, even if made within time, the applications for revocation would fail.
A secondary ground for revocation was raised. This ground argued that the suspicion was inadequately articulated in the supporting affidavit. The suspicion was articulated to describe property of which Jian Song was the registered owner, or over which he had effective control as being proceeds and/or an instrument, of relevant serious offences under the Act and/or under the relevant article of the Criminal Law of the People’s Republic of China (‘PRC Criminal Law’). By use of ‘and/or’ to each of these references, it was said that the separate requirement for restraint under s 18 and s 19 have been merged. A combination of possibilities arise by reason of this terminology. One of the many possibilities suspected is that the restrained property might only be an instrument of a ‘foreign indictable offence’ and therefore not subject to restraint.
Clearly if the property is that of Jian Song, as a suspect it can be restrained under s 18 without any need for it to be suspected of being proceeds or an instrument of any offence. There was clearly a basis for restraint under s 18, and any inadequacy in the wording of the affidavit did not affect this. It was submitted that being merely an instrument of a foreign indictable offence was not a ground under s 19 and that, in any event, there was no evidence to satisfy the court that the relevant article of the PRC Criminal Law met the definition of a foreign indictable offence.
Even if these two matters were made out, there was no dispute that other possibilities raised by the manner in which the deposed suspicions are articulated do meet the requirements of s 19. If so it could not be said that there were no grounds to make the order at the time. The possibility articulated by the applicants does not give rise to a ground for revoking the restraining order.
Accordingly the application to amend the application to seek a declaration is refused and the applications for revocation are dismissed.
SCHEDULE OF PARTIES
S ECI 2018 02123
| XUEYUE SONG | Applicant |
| - and - | |
| JIAN SONG | Applicant |
| - and - | |
| AMG AUSTRALIA INVESTMENT UNIT PTY LIMITED (ACN 606 410 388) | Applicant |
| - and - | |
| THE COMMISSIONER FOR THE AUSTRALIAN FEDERAL POLICE | Respondent |
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