The Commissioner of the Australian Federal Police v Vo

[2016] NSWSC 711

Supreme Court

New South Wales

Medium Neutral Citation:	The Commissioner of the Australian Federal Police v Vo [2016] NSWSC 711
Hearing dates:	24 May 2016, 1 June 2016
Decision date:	03 June 2016
Jurisdiction:	Common Law
Before:	Adamson J
Decision:	(1) Dismiss the defendant’s notice of motion filed on 25 May 2015.  (2) Order the defendant to pay the plaintiff’s costs.
Catchwords:	CRIMINAL ASSETS – proceeds of crime – application for compensation order in respect of property forfeited to the Commonwealth – bank loan to purchase property obtained as a result of knowingly false representations by defendant – onus of proving interest in property was neither derived from offence nor instrument of offence within meaning of Proceeds of Crime Act not discharged – application dismissed
Legislation Cited:	Crimes Act 1958 (VIC), ss 81, 82 Criminal Code Act 1995 (Cth), Schedule 1, ss 400.1, 400.3, 400.9 National Consumer Credit Protection Act 2009 (NSW), s 29 Oaths Act 1900 (NSW), s 27A Proceeds of Crime Act 2002 (Cth), ss 19, 77, 78, 180 329, 330, 338
Cases Cited:	Commissioner of the Australian Federal Police v Courtenay Investments Ltd (No. 4) [2015] WASC 101 Milne v The Queen [2014] HCA 4; 252 CLR 149 Taylor v Attorney-General (SA) (1991) 55 SASR 462 White v Director of Public Prosecutions (WA) [2011] HCA 20; 243 CLR 478
Category:	Principal judgment
Parties:	The Commissioner of the Australian Federal Police (Plaintiff/Respondent) Thi Thuy Linh Vo (Defendant/Applicant)
Representation:	Counsel: G O’Mahoney (Plaintiff/Respondent) C Dobraszczyk (Defendant/Applicant)   Solicitors: Australian Federal Police (Plaintiff/Respondent) Greenfield Lawyers (Defendant/Applicant)
File Number(s):	2013/198069

Judgment

Introduction

1. The Commissioner of the Australian Federal Police (the plaintiff) commenced these proceedings by summons filed on 28 June 2013 under the Proceeds of Crime Act 2002 (Cth). Except where otherwise indicated, all references to legislative provisions in these reasons are to this Act.

2. On 5 August 2013 this Court made restraining orders over a sum of cash and a property at 11 Donovan Street, Lalor in the State of Victoria (the Property) pursuant to s 19. The orders made provision for the mortgagee, Bankwest (formerly Commonwealth Bank of Australia), to deal with the registered mortgage over the Property in accordance with its terms. The Court also ordered that Thi Thuy Linh Vo, the defendant, be examined pursuant to s 180.

3. By notice of motion filed on 25 May 2015, Ms Vo seeks the following orders:

1. Pursuant to sections 77 and 78 of the Proceeds of Crime Act 2002 (Cth) (“the Act”):

1.1   A declaration that a proportion of the value of the Defendant’s interest in item 2 in the Schedule to the Order of the Court made on 27 August 2013 (“the Donovan Street Property”) was not derived or realised, directly or indirectly, from the commission of any offence; and

1.2 An order directing the Commonwealth, once the Donovan Street Property has vested absolutely in the Commonwealth, to pay to the Defendant an amount to be calculated by the Court in accordance with section 77(2) of the Act.

4. Since these proceedings were commenced, Bankwest obtained default judgment for possession in respect of the Property on 18 September 2015. A writ of possession issued on 4 November 2015. The Property was sold at auction for $550,000. Settlement occurred on 20 May 2016. The surplus sale proceeds were $99,000.66 and were paid to the Official Trustee in Bankruptcy, in accordance with the Court’s orders. This is the sum in respect of which the compensation order is sought.

The facts

The purchase of the Property

5. On 29 April 2011 Ms Vo applied for a loan from Bankwest to purchase the Property. She made a written declaration in support of her loan application, in which she made the following three representations (each of which has been established to be false to her knowledge):

1. she worked full time as a “Supervisor Accounting Clerk” at Schembri Earthmoving Repairs for a salary of $74,989.20 and had been employed there for two years;

2. her assets included savings of $86,000 at “WBC” (Westpac Banking Corporation) and $52,000 (which was the deposit she had paid for the purchase of the Property);

3. she intended to rent out the Property for an expected rental income of $15,600.

6. In support of representation (1), Ms Vo provided two documents which appeared to be pay slips from Schembri Earthmoving Repairs. They were expressed to be for the respective periods: 28 March 2011 to 1 April 2011; and 4 April 2011 to 8 April 2011. The hourly rate was expressed to be $37.95/hour, for 38 hours a week. Figures for gross pay, PAYG withholding, net pay, superannuation and sick leave were expressed for “this pay” and “YTD” (year to date). On the second of the two payslips, which was endorsed with the company seal of Schembri Earthmoving Repairs Pty Ltd, the following calculation appeared in bold:

$1,442.10 x 52 = $74,989.20.

7. Of the “assets” referred to in (2), the sum of $132,000 represented a liability to Mrs Schembri who had advanced the money to Ms Vo.

8. As to the “rental income” in (3), Ms Vo admitted that she intended to live at the Property with her three children.

9. In reliance on these representations Bankwest advanced Ms Vo the sum of $495,930.17 so that she could purchase the Property from Oaklake Investments Pty Ltd for $520,000.

10. On 9 May 2011 Ms Vo became the sole registered proprietor of the Property. Bankwest was registered as mortgagee over the Property to secure the loan referred to above.

Ms Vo’s financial position

11. The records of the Australian Taxation Office (ATO) reveal the following with respect to Ms Vo’s financial affairs.

Financial year	Tax return lodged	Taxable income	Tax paid	Employer	Centrelink income (single parent)
2007	Yes	$0	$0	N/A	$13,323
2008	No	$13,959
2009	No	$2,508	$78	LPTP Clothing P/L	$14,564
2010	Yes	$28,883	$12,090
2011	Yes	$30,975	$3,952	TLC Contractors P/L	$1,336
2012	Yes	$33,639	$7,333	TLC Contractors P/L	$0

12. The records of the Australian Securities and Investment Commission (ASIC) show that TLC Contractors Pty Ltd was registered on 28 August 2009. Ms Vo was its sole director, secretary and shareholder.

13. On 1 July 2009 LPTP Clothing Pty Ltd opened an account in respect of Ms Vo and deposited $225.69 into an account in the MLCS Superannuation Trust.

Schembri Earthmoving Repairs

14. The plaintiff obtained documents from the ATO and ASIC which establish the following:

1. the business of Schembri Earthmoving Repairs Pty Ltd, which was established on 4 February 1999, is operated by the Schembri Family Trust;

2. Mrs Schembri and her husband Jason Schembri are beneficiaries of the Schembri Family Trust and receive distributions from the trust from time to time;

3. since the time of the registration of Schembri Earthmoving Repairs Pty Ltd on 4 February 1989, Mr Schembri has been its sole director, shareholder and secretary;

4. Mr and Mrs Schembri declared their income (which comprised distributions from the Schembri Family Trust) in their tax returns as follows:

Financial year	Mrs Schembri	Mr Schembri
2008	$42,043	$44,960
2009	$47,653	$49,282
2010	$44,750	$47,019
2011	$48,108	$48,851

5. Schembri Earthmoving Repairs Pty Ltd did not lodge any tax returns for the 2008-2011 financial years.

15. Ms Vo called Phillip Borg, the accountant for Mr and Mrs Schembri, to give evidence. He deposed in his affidavit that he prepared the tax returns for the Schembri Family Trust, which he identified as the relevant trading entity. He gave evidence that between 2008 and 2011 Schembri Earthmoving Repairs Pty Ltd did not file tax returns because it does not trade in its own right. He confirmed in cross-examination that Schembri Earthmoving Repairs Pty Ltd did not employ anyone and had neither financial outgoings nor income during the period 2008 to 2011.

Credit licence

16. The evidence reveals that neither Ms Vo nor Hui Schembri has ever held a credit licence. A credit licence is required before a person is entitled to lend money. Section 29(2) of the National Consumer Credit Protection Act 2009 (NSW) provides that it is an offence to lend money without a licence. The plaintiff relied on the circumstance that Mrs Schembri did not have a credit licence for the purposes of the question whether Ms Vo had discharged the onus of proving the matters in s 77(1)(c) and (d) of the Act.

Credibility of witnesses

Ms Vo’s evidence

17. Ms Vo’s evidence is not consistent. Because of the importance of her credibility in the present proceedings I propose to address the various statements she has made over time in the order in which she made them.

Ms Vo’s statement dated 19 February 2013

18. In her statement of 19 February 2013 Ms Vo said, relevantly:

3.   I worked in a number of factories for many years. In 2009 I started my own sewing business. I own my own house.

4.   I have been a gambler for many years now. I normally gamble at Crown Casino in Melbourne Treasury Casino in Brisbane, and Sky City Casino in Adelaide Casino.

5.   I am in the process of getting my Turnover documents from these Casinos. I have won more than $1million over the past 3 years.

6.   On 16 February 2013 I was flying from Melbourne to Sydney. I had intended to gamble at the Star City Casino. I normally take a large amount of cash money with me when I gamble. When I win, I take money in the form of cheques as well as cash. But I normally prefer to get cash as it’s quicker.

7.   When I take money in the form of cheques [sic]. I bank the cheque into my CBA account [number provided].

The examination of Ms Vo pursuant to s 180 of the Act

19. On 21 November 2013 and 12 December 2013 Ms Vo was examined (pursuant to the order referred to above which was made on 5 August 2013) (the 2013 Examination). She was asked about the payslips she submitted in support of her application to Bankwest. The transcript for 19 December 2013 records the following:

MR McCARTHY:   Now, you submitted this application to Bankwest to get a mortgage, didn’t you?

INTERPRETER:   Yes

MR McCARTHY:   You were never employed with Schembri Earthmoving Repairs, were you?

INTERPRETER:   No, I did not work there.

MR McCARTHY:   So how did you get payslips in your ---

INTERPRETER:   Yes. At that time I needed a loan to buy an accommodation. I use my business. I try two different banks but this was not – they all rejected that, so I needed somebody to help me with that so I used Schembri Earthmoving Repairs to do this paper for me so that I could get a loan with the bank.

MR McCARTHY:   So you asked Schembri Earthmoving Repairs to give you the payslip?

INTERPRETER:   Yes.

MR McCARTHY:   Even though you were not employed there and you never received any payments from that company?

INTERPRETER:   Yes, I just ask them to do a paper.

MR McCARTHY:   And your purpose in asking for this payslip was so that you could get a loan?

INTERPRETER:   Yes.

MR McCARTHY:   So you accept that it was false to say that you worked at Schembri Earthmoving Repairs?

INTERPRETER:   Yes. I did use my business to – across many banks but they all rejected that because my business was very young, so I needed to do this, ask Schembri to help me so that I could have a home loan.

MR McCARTHY:   Who did you ask in Schembri Earthmoving Repairs for this?

INTERPRETER:   Hu Schembri.

MR McCARTHY:   And was she the person who gave you these?

INTERPRETER:   Yes.

Mr McCARTHY:   And did you tell her why you wanted them?

INTERPRETER:   Yes, I did.

20. The transcript of the examination also records the following exchange about Ms Vo’s money-lending business:

Mr McCARTHY:   And is it part – have you been requested to give that money back to Ms Schembri?

INTERPRETER:   I did offer to pay back but she said, “No, keep the money there,” because she and I agree – took part into our business lending money to others to earn interest and we can share the interest with each other.

Mr McCARTHY:   So you were – if I understand, you were in business with Ms Schembri lending money?

INTERPRETER:   Normally everyone would know that I am a gambling person. I have money. So they just gave me the money, or if I can use the money to earn interest, I can share the interest with people who gave me money.

Ms Vo’s affidavits sworn 27 March 2014, 16 December 2015 and 2 May 2016

21. Ms Vo’s native language is Vietnamese. She speaks some English but, at times, requires the assistance of an interpreter, both with speaking and reading English. Her affidavit sworn 27 March 2014 bore an endorsement pursuant to s 27A of the Oaths Act 1900 (NSW) but it had not been completed. Section 27A provides:

Affidavits by persons unable to read written English

If it appears to the person before whom an affidavit is made (the authorised person) that the person making the affidavit (the deponent) is blind, illiterate or otherwise unable to read written English, the authorised person must certify, in or below the jurat:

(a) that the affidavit was read to the deponent in the presence of the authorised person, and

(b) that it appeared to the authorised person that the deponent understood the affidavit, and

(c) that the deponent subscribed the affidavit (by signature or mark) in the presence of the authorised person.

22. Ms Vo’s second and third affidavits, dated 16 December 2015 and 2 May 2016 respectively, did not bear the required endorsement.

23. Ms Vo gave oral evidence that before she swore the affidavits her solicitor, Tran Minh Phuoc, who is bilingual in English and Vietnamese, translated the affidavits into Vietnamese for her. She also gave evidence that, on the day of the hearing, 24 May 2016, this process of translation was repeated following which she confirmed that she adhered to what was written in English in her affidavits, with a minor correction to her second affidavit to change the word “week” in paragraph 9 to “month”.

24. In her first affidavit, Ms Vo relevantly deposed (as to her occupation and the loan):

“I have worked consistently in a number of factories for many years. I did process work mainly.

I also started and operated a number of businesses for many years. I owned and operated a beauty salon Ninh Kieu for some 3 years. I also owned and operated a sewing business called TLC Contractors Pty Ltd.

In May 2011, I used some of the money from my savings to buy my own home at 11 Donovan Street, LALOR, VICTORIA. The purchase price was $520,000. I borrowed $408,408 from BankWest Home Loans. I also borrowed $130,000 from my friend Hieu Thi SCHEMBRI to pay the deposit. Annexed and marked “A” is a copy of the “Letter of Confirmation” signed by myself and Hieu Thi SCHEMBRI.”

25. In her first affidavit Ms Vo also deposed to her money-lending business:

“I am in the business of loaning money to people and receiving a high interest in return. I would obtain money from my close friends and family and then loan this money to close friends. I trusted at the casinos who were in need of money to gamble. I would charge them a high interest rate and they would pay me back. I would then repay the principal and some of the interest to the original persons who gave me the money.”

26. In her second affidavit Ms Vo relevantly deposed:

“10.   Hieu [Schembri] told me that I was paying too much rent, and that she would lend me some money to buy a house.

11.   Hieu told me that she got the $130,000.00 to loan me by drawing down on the equity from her home loan account. As a result, Hieu had to pay interest plus the principal back to the bank.

12.   The $130,000.00 borrowed from Hieu was put into my Westpac bank account – Account No. XXXX.

…

14.   Hieu and I made an informal lending agreement that went like this:

a.   Hieu would lend me $130,000.00 for a deposit to buy the property;

b.   I would pay Hieu the interest on this loan, at about $200-$400.00 per time. This would be paid immediately and in cash; and

c.   If the house was ever sold, I would pay off the mortgage to the bank, pay Hieu back the $130,000.00 and then split the capital gain equally with Hieu.”

27. In her third affidavit Ms Vo deposed as to the break-up of the $130,000 which she had borrowed from Mrs Schembri to buy the Property and the dates on which each amount was paid.

Ms Vo’s oral evidence at the hearing on 24 May 2016

28. An issue as to the quality of the interpreter was raised in the course of Ms Vo’s cross-examination by Ms Dobraszczyk, who appeared on behalf of Ms Vo. Ms Dobraszczyk informed me that her instructing solicitor, who is bilingual in the English and Vietnamese languages, had raised the concern. Following the raising of the issue, Ms Vo was invited to answer the questions posed in English, if possible. However, it was made clear to her that she would have the assistance of the interpreter, if required. Following a short adjournment granted for that purpose, Ms Dobraszczyk confirmed her instructions to continue with the same interpreter. After the luncheon adjournment, another interpreter took over, about whom no complaint was made. I am satisfied, in these circumstances, that all reasonable steps have been taken to ensure that Ms Vo understood what was being put to her, and that any inconsistencies in her evidence were not the product of issues associated with the standard of interpreting.

29. In her evidence, Ms Vo described her occupation as a beautician. She admitted that she was not working as a beautician, although said that she had done so in the past. She said that she had done a beautician course for one year in about 1992 or 1993. She could not remember the name of the institution that had run the course; the names of any of the teachers; or the names of any of her fellow students. She agreed that she had not worked as a beautician for about 20 years.

30. Ms Vo confirmed the accuracy of the ATO’s records set out above as to her income and the names of her employers. She said that she had three children, who were born in 1994, 1996 and 2002 respectively, whom she supports financially.

31. Ms Vo confirmed that she had known Mrs Schembri for about ten years, in the course of which they developed a close friendship. She said that she speaks to Mrs Schembri every day and spoke to her most recently on the previous day (23 May 2016).

32. Ms Vo agreed that, in 2011, when she decided that she wanted to buy the Property, she had “next to nothing” by the way of assets or income. She realised that, in order to have her loan application with Bankwest approved, she would have to give false information about her financial position. Ms Vo did not, however, agree that the picture of her financial position which she painted for Bankwest was entirely false and maintained that she had in fact worked for Schembri Earthmoving Repairs Pty Ltd for “three months to get some income” in 2011. The evidence she had given in the 2013 Examination (that she had not worked for Schembri Earthmoving Repairs Pty Ltd) was put to her in cross-examination. She insisted that she had worked for Mrs Schembri for a few months in 2011.

33. The following exchange ensued in her cross-examination:

Q. It [the paperwork provided to Bankwest] was false because you never did any work in relation to those pay slips. Correct?

A. WITNESS: No, I did some ‑ I did come to work with her but ‑ but ‑ but not ‑ not payment. I just come every day. Sometimes I work myself and sometimes I have the time, I come to help her, just to help. Because she and me like sister. I come help to her but not payment. That's right. Just do the paper to borrow the bank.

34. Mr O’Mahoney, who appeared for the plaintiff, then put to Ms Vo the actual payslips submitted to Bankwest. Ms Vo agreed that they gave an entirely false impression and that she had never received any payments from Schembri Earthmoving Repairs. Ms Vo admitted that she had asked Mrs Schembri to prepare the payslips for her and that she had explained why she needed them. Ms Vo admitted that she had made false representations to Bankwest in order to obtain the loan. She explained why she had done so in the following answer:

A. WITNESS: I know it ‑ I know I done this wrong. I done this wrong because my low income, I can't borrow the bank. That's why I done this paper wrong to ‑ because I want to borrow the money. That's why I do this. Not true, yeah, I know it wrong, yeah.

35. Ms Vo admitted that she had made the following representations that were false to her knowledge in the loan application: that she was employed by Schembri Earthmoving Repairs; that her occupation was supervisor accounting clerk; that she had been employed there for two years; that her annual income was $74,989.20; that she intended to rent out the Property for $15,600 per annum (when the fact was that she intended to live there with her three children); that she had no dependants (when she actually had three dependent children); that she had assets which included savings of $86,000; and that she had paid the deposit of $52,000 from her own money.

36. Ms Vo explained the work she was to do for Mrs Schembri in the following terms:

A. WITNESS: Sometime I come in. I come to help her when she sick or something. I come to cook, clean and help everything. I can do everything and as only for work over there, just I didn't work much, only to ‑ after do the paper, just write "yes, I work for you, Schembri". I still have her come because she's very sick, to cook for her, to clean, to do everything, to help her just like sister, like my family.

Q. I understand?

A. WITNESS: And I'm not work in the business, just do the laundry and do the lawn.

37. Ms Vo admitted in cross-examination that Bankwest approved her loan only because of the false representations she had made about her income and savings. She admitted that what she had falsely represented in the loan application to be savings were in fact monies (totalling $130,000) which Mrs Schembri had transferred to her account for that purpose.

Findings regarding Ms Vo’s credibility

38. As is apparent from what is set out above, Ms Vo’s evidence was, at times, inconsistent. The inconsistency between her evidence in the 2013 Examination that she had not worked for Schembri Earthmoving Repairs and her evidence before me that she had performed some work in the business, albeit of a menial and occasional kind, was never resolved. She was particularly evasive about her occupation and did not explain why she had described herself as a beautician when she had worked in that area for a short period about twenty years ago. She provided no documentary support for any of her statements about her gambling winnings or the income she had earned from her work from time to time.

39. Notwithstanding the matters referred to above, Ms Vo was prepared to make substantial admissions, including that: she had intentionally misrepresented her income and savings to Bankwest for the purpose of obtaining a loan; that she had asked Mrs Schembri to prepare fake payslips for her to give the impression that she had a regular and substantial income in secure employment; and that she had asked Mrs Schembri to transfer funds to her bank account in order to give Bankwest the false impression that she had substantial savings.

40. As to the somewhat vexed question whether she ever actually worked for Schembri Earthmoving Repairs, I am not satisfied that Ms Vo actually received any payment for work in that business. Whatever she did for Mrs Schembri appears to have been no more than sisterly acts of assistance by way of household help. To the extent to which Mrs Schembri paid Ms Vo any money I am not persuaded that these sums were other than gifts to assist her with her maintenance and support and that of her children.

Mrs Schembri’s evidence

41. Mrs Schembri affirmed three affidavits, on 14 May 2015, 16 December 2015 and 2 May 2016 respectively. They suffered from the same defect as those of Ms Vo in that they did not bear an endorsement under s 27A of the Oaths Act. However, I was satisfied that Mrs Schembri understood the contents of her affidavits as they had been translated for her by Ms Vo’s bilingual solicitor, Ms Phuoc, before she affirmed them. Further, the court interpreter also translated them for her before she gave oral evidence in Court on 24 May 2015, following which she adhered to their contents, save for one matter. Mrs Schembri took issue with the description of her occupation as “retired” and said, in further evidence in chief, that she was helping her husband with his business.

42. Mrs Schembri deposed as follows in her affidavit of 14 May 2015:

1.   I have known the Defendant for approximately 15 years. I am her adopted sister. Her mother adopted me when I was 34 years old.

2   On 8 April 2011, I lent the Defendant $130,000.00 for the purpose of purchasing property at 11 Donovan Street, Lalor, Victoria 3075, pursuant to the Contract of Sale dated 22 March 2011 and settlement due on 4 May 2011 in the price of $520,000. Annexed and marked “A” is a copy of the “Letter of Confirmation” signed by myself and the Defendant.

3   On 23 March and 11 April 2011, I transferred the amount of $130,000 – in instalments of $45,000 and $85,000 – from the equity in my home mortgage account into the mortgage account of the above property that the Defendant was purchasing. Annexed and marked “B” is a copy of the relevant bank account statement.

4   The Defendant agreed to pay me back once she sold the above property for a profit in the future.

43. Mrs Schembri admitted that she knew that Ms Vo wanted to buy the Property and needed a bank loan to do so. She admitted that the payslips were “entirely fake” since Ms Vo did not earn those amounts. Mrs Schembri said that, in so far as Ms Vo did any work for Schembri Earthmoving Repairs, it was looking after the shop when Mrs Schembri was away or doing some cleaning on the premises. From time to time Mrs Schembri would give Ms Vo money to help her support the children.

44. Mrs Schembri’s evidence about the provenance of the $130,000 was relatively scant. She annexed the Westpac bank statement which recorded the withdrawals of the constituent sums but gave inconsistent evidence about her own income and occupation. In her affidavits, she stated that her occupation was “retired” but she said in evidence that she performed work for Schembri Earthmoving Repairs, which she implied was an entity engaging in profitable commercial enterprise. However, when she was challenged by reference to the evidence given by Mr Borg (referred to above, that Schembri Earthmoving Repairs had never traded), she said that there was actually another entity, “JMV”, which worked alongside Schembri Earthmoving Repairs and that JMV was the entity for which she performed work.

45. Mrs Schembri said that she last spoke to Ms Vo about two weeks ago (which was inconsistent with Ms Vo’s evidence that they had spoken on the previous day).

46. Mrs Schembri’s evidence was largely against interest and, to that extent, I accept it. She was evasive about whether Ms Vo worked for Schembri Earthmoving Repairs and contradictory in her evidence about whether she herself worked at all and for whom she worked. I have set out my findings above as to that matter.

Relevant legislative provisions

Proceeds of Crime Act 2000 (Cth)

47. The Act relevantly provides:

77 Making compensation orders

(1)   A court that made a *forfeiture order, or that is hearing, or is to hear, an application for a forfeiture order, must make an order under subsection (2) (a compensation order) if:

(a)   a person (the applicant) has applied for a compensation order; and

(b)   the court is satisfied that the applicant has an *interest in property specified in the forfeiture order or in the application for the forfeiture order; and

(c)   the court is satisfied that a proportion of the value of the applicant’s interest was not derived or realised, directly or indirectly, from the commission of any offence; and

(d)   the court is satisfied that the applicant’s interest is not an instrument of any offence; and

(e)   in the case of a court that is hearing or is to hear an application for a forfeiture order—the court makes the forfeiture order.

(2)   A *compensation order must:

(a)   specify the proportion found by the court under paragraph (1)(c); and

(b)   direct the Commonwealth, once the property has vested absolutely in it, to:

(i)   if the property has not been disposed of—dispose of the property; and

(ii)   pay the applicant an amount equal to that proportion of the difference between the amount received from disposing of the property and the sum of any payments of the kind referred to in paragraph 70(1)(b) in connection with the *forfeiture order.

78 Application for compensation orders

Before a forfeiture order has been made

(1)   A person may apply to a court for a *compensation order if an application for a *forfeiture order that could specify property in which the person claims an *interest has been made to the court, but the forfeiture order is yet to be made.

48. The asterisked terms are defined in the Act. The relevant definitions are as follows:

329 Meaning of proceeds and instrument

. . .

(2) Property is an instrument of an offence if:

(a) the property is used in, or in connection with, the commission of an offence; or

(b) the property is intended to be used in, or in connection with, the commission of an offence;

. . .

(3) Property can be . . . an instrument of an offence even if no person has been convicted of the offence.

(4) Proceeds or an instrument of an * unlawful activity means proceeds or an instrument of the offence constituted by the act or omission that constitutes the unlawful activity.

330 When property becomes, remains and ceases to be proceeds or an instrument

…

(2) Property becomes an * instrument of an offence if it is:

(a)  wholly or partly derived or realised from the disposal or other dealing with an instrument of the offence; or

(b)  wholly or partly acquired using an instrument of the offence;

including because of a previous application of this section.

338   Dictionary

"interest " , in relation to property or a thing, means:

(a) a legal or equitable estate or interest in the property or thing; or

(b) a right, power or privilege in connection with the property or thing;

whether present or future and whether vested or contingent.

Crimes Act 1958 (Vic)

49. The provisions relied on by the plaintiff are the following:

82   Obtaining financial advantage by deception

(1)   A person who by any deception dishonestly obtains for himself or another any financial advantage is guilty of an indictable offence and liable to level 5 imprisonment (10 years maximum).

(2) For purposes of this section deception has the same meaning as in section 81.

81   Obtaining property by deception

. . .

(4) For the purposes of this section, "deception"—

(a) means any deception (whether deliberate or reckless) by words or conduct as to fact or as to law, including a deception as to the present intentions of the person using the deception or any other person;

Criminal Code (Schedule 1 to the Criminal Code Act 1995 (Cth))

50. Section 400.9 of the Criminal Code relevantly provides:

400.9 Dealing with property reasonably suspected of being proceeds of crime etc.

(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.

Consideration

51. It is common ground that the requirements of s 77(1)(a) and (b) of the Act were met, since Ms Vo has made an application for a compensation order and she has an interest in the Property, as registered proprietor, and an interest in the surplus proceeds as a result of its sale. Section 77(1)(c) and (d) are in issue. In order to obtain a compensation order, Ms Vo must establish that the balance of the surplus proceeds of sale of the Property was not derived or realised, directly or indirectly, from the commission of any offence and that her interest is not the instrument of any offence. These matters will be considered in turn.

Section 77(1)(c): whether Ms Vo has established that any proportion of the value of her interest was not derived, or realised, directly or indirectly, from the commission of any offence

The parties’ submissions

Ms Vo’s submissions in chief

52. Ms Dobraszczyk submitted that the plaintiff was required to identify the offence or offences, the commission of which were said to have resulted in the proportion of the value of Ms Vo’s interest, in respect of which Ms Vo claimed a compensation order. She submitted that the plaintiff had failed to identify any such offence or offences.

53. Ms Dobraszczyk submitted that Ms Vo had discharged the onus imposed on her by s 77(1)(c) by showing that the monies advanced by Mrs Schembri had been advanced from a home loan account at Westpac in the names of Mrs Schembri and her husband.

The plaintiff’s submissions

54. Mr O’Mahoney submitted that to require the plaintiff to nominate the offence or offences from which Ms Vo’s interest in the Property was said to be derived would be to reverse the onus of proof and disregard the statutory wording.

55. The plaintiff submitted that, but for the commission of the offence of obtaining financial advantage by deception, Ms Vo would not have acquired the Property at all. In these circumstances, Mr O’Mahoney contended that Ms Vo could not discharge her onus of establishing that any proportion of the value of her interest was not derived, or realised, directly or indirectly, from the commission of any offence.

56. Mr O’Mahoney confirmed that the plaintiff relied on the admissions made by Ms Vo that she engaged in the business of money lending and the evidence that she was not licensed. He submitted that these admissions could be taken into account in deciding whether Ms Vo had discharged the onus under s 77(1)(c).

57. Mr O’Mahoney submitted further that there was no objective evidence as to how the monies which were advanced by Mrs Schembri came into Mrs Schembri’s possession. He pointed to the absence of any tax records, financial statements or other business records for the relevant time which indicated what Mrs Schembri did for a living, what she owned, what income she earned and what tax was paid on it. He submitted that the absence of such documents was telling in itself in light of the unreliability of her oral evidence. He referred to her inconsistent evidence about whether she was retired or not, employed or not, and by whom, if at all, she was employed.

58. Mr O’Mahoney also relied on the circumstance that Mrs Schembri was central to the fraud perpetrated by Ms Vo on Bankwest in that she falsified the payslips which gave unwarranted verisimilitude to Ms Vo’s false representations to Bankwest that she earned income from Schembri Earthmoving Repairs (at the level and for the period indicated in the payslips). She also advanced the monies which permitted Ms Vo to represent (falsely) the amount of the loan from Mrs Schembri as an asset (savings and the deposit) rather than as a liability (which was its true character). In these circumstances, Mrs Schembri was not an arm’s length-third party lender to Ms Vo but a substantial collaborator in the deception.

Ms Vo’s submissions in reply

59. To the extent to which the plaintiff relied on the circumstance that neither Ms Vo nor Mrs Schembri had a credit licence, Ms Dobraszczyk contended that the plaintiff ought not be permitted to make submissions, since neither Mrs Schembri nor Ms Vo had been cross-examined about their evidence of money-lending or any unauthorised lending in which they had engaged. She submitted that, in these circumstances, the plaintiff was not entitled to rely on Ms Vo’s admissions that they were involved in a money-lending business.

60. In response to Mr O’Mahoney’s submission that there were no business records to substantiate Mrs Schembri’s income, Ms Dobraszczyk asked rhetorically, “what is so magical about the documents he has submitted have to be there?”

Consideration

61. I do not understand it to be in issue that the loan was obtained from Bankwest as a result of representations made to the bank, which were false to Ms Vo’s knowledge at the time she made them. Indeed Ms Vo made specific admissions to that effect. In these circumstances, I cannot be satisfied that the Property was not purchased as the result of the commission of an offence contrary to s 400.9 of the Criminal Code, the offence being obtaining a financial advantage (a loan from Bankwest) by deception contrary to s 82 of the Crimes Act 1958 (Vic).

62. As Ms Vo bore the onus of proof, she would have had to exclude the possibility that the monies were obtained in connection with an illegal money-lending business. For present purposes, Ms Vo was a borrower, and not a lender. In these circumstances the legality or otherwise of her own money-lending business may not have been relevant. Nonetheless, Ms Vo’s admissions that Mrs Schembri was engaged in a money-lending business (or that they were together engaged in a money-lending business) were relevant to the question under s 77(1)(c). However, in light of the view to which I have come set out above, it is not necessary to determine the consequences (if any) of Mr O’Mahoney not cross-examining Ms Vo or Mrs Schembri about the money-lending business about which Ms Vo gave evidence and made admissions both in her examination and in her affidavit evidence.

63. For these reasons, Ms Vo has failed to discharge the onus she bears of proving that any portion of the value of the Property (represented presently by the surplus funds which are under the control of the Official Trustee in Bankruptcy) was not derived or realised whether directly or indirectly from the commission of any offence (s 77(1)(c) of the Act).

Section 77(1)(d): whether Ms Vo has established that her interest is not an instrument of the offence

The parties’ submissions

Ms Vo’s submissions

64. Ms Dobraszczyk argued that the $130,000 advanced to Ms Vo by Mrs Schembri was not an instrument of an offence since it was not used in connection with Ms Vo’s obtaining the Property by deception and is to be distinguished from the fraudulent representations made to Bankwest as to Ms Vo’s income (in which Ms Dobraszczyk accepted Mrs Schembri was incontrovertibly involved).

65. Ms Dobraszczyk relied on Milne v The Queen [2014] HCA 4; 252 CLR 149, where the meaning of the word “use” was considered in the context of s 400.3 of the Criminal Code which prohibits dealing with money or other property if the person intends that the money or property will become an instrument of crime. The term “instrument of crime” is defined by s 400.1, which relevantly provides that money is an instrument of crime if it is used in the commission of an offence. The High Court (French CJ, Hayne, Bell, Gageler and Keane JJ) said, of present relevance, at [33]:

“For property to become an instrument of crime within the meaning of s 400.3(1) it must be “used”. An ordinary meaning of the verb “use” is “[t]o make use of (some immaterial thing) as a means or instrument; to employ for a certain end or purpose”. That is the relevant ordinary meaning for the definition of “become an instrument of crime” which involves the “use” of property to serve a purpose, namely the “commission of an offence” . . .”

[Footnotes omitted.]

66. Ms Dobraszczyk submitted that it could not be said that the $130,000 was used to obtain a financial advantage by deception, as the word “used” was interpreted in Milne v The Queen.

The plaintiff’s submissions

67. Mr O’Mahoney submitted that what occurred, in substance, was that Ms Vo and Mrs Schembri devised a plan whereby Ms Vo could buy the Property, which would have been impossible without a loan from a bank. Ms Vo and Mrs Schembri knew that her income was insufficient to obtain bank approval and collaborated to prepare false invoices. Mrs Schembri also lent $130,000 to Ms Vo, which Ms Vo represented as an asset when it was actually a liability. But for the $130,000 and the false pay slips, the loan from Bankwest would never have been advanced and Ms Vo could not have purchased the Property. Accordingly, he contended that I could not be satisfied that the $130,000 was not an instrument of the offence since it was used in connection with the offence (of obtaining a financial advantage by deception).

67. Mr O’Mahoney relied on the extended definition of “instrument of an offence” in s 329(2) (set out above) which includes not only property which has been used in the commission of an offence, but also property which has been used “in connection with” the commission of an offence. These words have been found to be words of “wide import”: Taylor v Attorney-General (SA) (1991) 55 SASR 462 (Debelle J). Mr O’Mahoney also referred to White v Director of Public Prosecutions (WA) [2011] HCA 20; 243 CLR 478 at [21] where French CJ, Crennan and Bell JJ (Gummow J agreeing at [33]) considered a similar expression in the corresponding Western Australian legislation and found that the statutory wording went beyond the ordinary meaning of “use” because of the phrase “in connection with”. Justice Gummow agreed with this approach: [33]. Mr O’Mahoney also relied on the approach taken by Edelman J in Commissioner of the Australian Federal Police v Courtenay Investments Ltd (No. 4) [2015] WASC 101 at [474]-[518].

Consideration

69. Although the Property was subsequently sold, this does not affect the status of the surplus funds as an instrument of the offence: s 330(2).

70. The surplus funds have been realised as a result of the sale of the Property which was purchased, in part, with the loan funds from Mrs Schembri and, in part, with funds advanced by Bankwest as a result of Ms Vo using the false payslips created by Mrs Schembri to obtain a financial advantage by deception. The surplus funds are, therefore, proceeds of an unlawful activity. Bankwest was a victim of the criminal conduct that led to its lending on the basis of the false payslips and it has been paid out, as first registered mortgagee, following the sale. Accordingly, the only property in respect of which a compensation order could be made (if Ms Vo discharged her onus of proving the matters in s 77(1)(c) and (d)) is the surplus funds under the control of the Official Trustee in Bankruptcy (since Bankwest had priority over Ms Vo’s interest in any remaining equity in the Property, in any event).

71. The issue in dispute is whether the funds advanced by Mrs Schembri were “used in, or in connection with, the commission of an offence”. The onus lies on Ms Vo to satisfy me that they were not.

72. I have considered the authorities to which I have been referred and had regard to the particular statutory wording addressed in them. Milne v The Queen involved a different statutory wording in that the word “use” did not bear the extended meaning of “use in connection with”. This is a significant distinction since the words “in connection with” require no more than some relationship (which is neither tenuous nor remote) between the property and the offence, which is a lower threshold than is required when the test is “used in the commission of an offence” (as in Milne v The Queen).

73. As Edelman J observed in Commissioner of the Australian Federal Police v Courtenay Investments Ltd (No. 4) at [492], it is necessary to define the alleged facts in the commission of the offence. In the present case, the offence postulated is the offence of obtaining a financial advantage by deception.

74. I cannot be satisfied that the loan funds from Mrs Schembri were not an instrument of an offence since there was a substantial connection between the use of the $130,000 obtained from Mrs Schembri and the commission of the offence of obtaining a financial advantage by deception. Ms Vo requested that Mrs Schembri transfer funds from the Westpac account held jointly with her husband to Ms Vo’s bank account for the purpose of Ms Vo using them to obtain a financial advantage (a loan from Bankwest) by deception. The transfer enabled her to represent (falsely) to Bankwest that the funds deposited (from Mrs Schembri) were actually her own savings, rather than (as was the case) monies advanced by Mrs Schembri. Ms Vo admitted that Bankwest would not have lent her the money but for the misrepresentation as to her assets (which included the monies that comprised the loan from Mrs Schembri and which the Bank was led to believe constituted savings).

75. In these circumstances, Ms Vo has failed to discharge the onus she bears of proving that the funds advanced to her from Mrs Schembri (which led to the purchase of the Property) were not an instrument of an offence (s 77(1)(d) of the Act).

Orders

76. I make the following orders:

1. Dismiss the defendant’s notice of motion filed on 25 May 2015.

2. Order the defendant to pay the plaintiff’s costs.

**********

Decision last updated: 03 June 2016