Xue v R

[2021] NSWCCA 270

Court of Criminal Appeal

Supreme Court

New South Wales

Medium Neutral Citation:

Xue v R [2021] NSWCCA 270

Hearing dates:

8 September 2021

Date of orders:

15 November 2021

Decision date:

15 November 2021

Before:

Beech-Jones CJ at CL at [1];
R A Hulme J at [2];
N Adams J at [3].

Decision:

(1) Leave to appeal against conviction is granted.

(2) The appeal is dismissed.

Catchwords:

CRIME — Appeals — Appeal against conviction — offences under s 193C, Crimes Act – dealing with property suspected of being proceeds of crime – whether necessary to particularise serious offence(s) from which funds derived – consideration of analogous provision in s 400.9, Criminal Code (Cth) – held, not necessary to particularise serious offence(s) – whether trial judge failed to provide adequate reasons – whether verdicts unreasonable – whether trial judge erred in finding that defence in s 193C(4) was not made out – appeal dismissed

Legislation Cited:

Confiscation of Proceeds of Crime Act 1989 (NSW)

Confiscation of Proceeds of Crime Amendment Act 2005 (NSW)

Crimes Act1900 (NSW) ss 193A, 193B, 193C, 193F

Criminal Appeal Act 1912 (NSW), ss 5, 6

Criminal Code (Cth) ss 400.1, 400.9, 400.13

Criminal Legislation Amendment (Organised Crime and Public Safety) Act2016 (NSW)

Criminal Procedure Act 1986 (NSW), ss 132, 133

Evidence Act1995 (NSW), ss 65, 128, 177, 191

Interpretation Act 1987 (NSW), s 12

Supreme Court (Criminal Appeal) Rules 2021 (NSW), r 4.15

Cases Cited:

Anderson v Judges of the District Court of New South Wales (1992) 27 NSWLR 701

Chen v Director of Public Prosecutions (Cth) (2011) 83 NSWLR 224; [2011] NSWCCA 205

Director of Public Prosecutions (Cth) v Ngo [2012] NSWSC 1521; (2012) 227 A Crim R 287

Douglass v The Queen [2012] HCA 34; (2012) 290 ALR 699

DRJ v Commissioner of Victims Rights (No 2) (2020) 103 NSWLR 692; [2020] NSWCA 242

Filippou v The Queen (2015) 256 CLR 47; [2015] HCA 29

Fleming v The Queen (1998) 197 CLR 250; [1998] HCA 68

Ford v R [2020] NSWCCA 99

George v Rockett (1990) 170 CLR 104; [1990] HCA 26

Lin v R [2015] NSWCCA 204; (2015) 253 A Crim R 1

Mahmood v State of Western Australia (2008) 232 CLR 397; [2008] HCA 1

Murray v The Queen (2002) 211 CLR 193; [2002] HCA 26

Obeid v R [2017] NSWCCA 221

R v Chan (1992) 28 NSWLR 421

R v McKellar (No 3) [2014] NSWSC 106

Yacoub v R [2021] NSWCCA 166

Texts Cited:

New South Wales Legislative Assembly, Parliamentary Debates (Hansard), 26 October 2005

New South Wales Legislative Assembly, Parliamentary Debates (Hansard), 22 March 2016

Category:

Principal judgment

Parties:

Juan Xue (Applicant)
Regina (Respondent)

Representation:

Counsel:
Mr D Campbell SC with Mr G Jones (Applicant)
Ms K Jeffreys (Respondent)

Solicitors:
M Sten (Applicant)
Solicitor for Public Prosecutions (NSW)

File Number(s):

2018/215130

Publication restriction:

Nil.

 Decision under appeal 

Court or tribunal:

District Court

Jurisdiction:

Criminal

Date of Decision:

17 June 2020

Before:

Noman SC DCJ

File Number(s):

2018/215130

Judgment

1. BEECH-JONES CJ at CL: I have reviewed the record of the trial. I agree with the reasons of N Adams J and the orders her Honour proposes.

2. R A HULME J: The comprehensive reasons provided by N Adams J accord with my own assessment of the evidence at trial and the disposition of each of the grounds of appeal. I agree with the orders her Honour proposes.

3. N ADAMS J: The applicant, Mr Juan Xue, appeals under s 5 of the Criminal Appeal Act 1912 (NSW) against his convictions on five counts of dealing with property in circumstances where there were reasonable grounds to suspect it was proceeds of crime contrary to s 193C(1) of the Crimes Act1900 (NSW). On 1 June 2020, he pleaded not guilty to the following six charges:

Count 1:   That between 1 March 2017 and 8 March 2017 at Sydney in the State of NSW South Wales, did deal with property, being approximately $100,000 in Australian currency, in circumstances where there are reasonable grounds to suspect that the approximately $100,000 in Australian currency are proceeds of crime.

Count 2:    That between 1 April 2017 and 20 April 2017 at Sydney in the State of NSW South Wales, did deal with property, being approximately $400,000 in Australian currency, in circumstances where there are reasonable grounds to suspect that the approximately $400,000 in Australian currency are proceeds of crime.

Count 3:   That on 26 April 2017 at Sydney in the State of NSW South Wales, did deal with property, being approximately $158,000 in Australian currency, in circumstances where there are reasonable grounds to suspect that the approximately $158,000 in Australian currency are proceeds of crime.

Count 4:   That between 20 April 2017 and 19 May 2017 at Sydney in the State of NSW South Wales, did deal with property, being approximately $489,850 in Australian currency, in circumstances where there are reasonable grounds to suspect that the approximately $489,850 in Australian currency are proceeds of crime.

Count 5:    That between 1 June 2017 and 15 July 2017 at Sydney in the State of NSW South Wales, did deal with property, being approximately $498,200 in Australian currency, in circumstances where there are reasonable grounds to suspect that the approximately $498,200 in Australian currency are proceeds of crime.

Count 6:    That between 1 June 2017 and 15 July 2017 at Sydney in the State of NSW South Wales, did deal with property, being approximately $700,000 in Australian currency, in circumstances where there are reasonable grounds to suspect that the approximately $700,000 in Australian currency are proceeds of crime.

4. Pursuant to s 132 of the Criminal Procedure Act1986 (NSW), the applicant elected to be tried by judge alone. The trial proceeded before Noman SC DCJ on 1-5, 9 and 10 June 2020. On 17 June 2020, her Honour found the applicant not guilty on count 1 and guilty on the remaining five counts.

5. The Crown case relied heavily upon the evidence of Zhou Bing Qian, who gave evidence with the protection of a certificate under s 128 of the Evidence Act1995 (NSW). Documents tendered in the course of his evidence included banking records pertaining to Mr Qian’s then exporting business Sino International Group Pty Ltd (“Sino”), WeChat transcripts and documents relating to foreign currency transfers. The Crown also relied upon, inter alia, police evidence and the expert evidence of a forensic accountant.

6. The nub of the Crown case was that on a number of occasions in 2017 the applicant, who was for the most part in the People’s Republic of China during that time, contacted Mr Qian in Sydney and arranged for him to collect large amounts of cash from people in Sydney, deposit that cash into the Sino bank account and then transfer it to the applicant’s bank account in China. The applicant requested that Mr Qian send him photographs of $5 notes as “receipts”. Mr Qian was to show that banknote to each person he collected the money from. Mr Qian had known the applicant in a business capacity from 2015. He described the applicant as a friend.

7. The maximum penalty for an offence under s 193C(1) of the Crimes Act is 5 years imprisonment. On 24 July 2020, the applicant was sentenced to an aggregate term of 3 years imprisonment, to be served by way of an intensive correction order. The applicant does not seek leave to appeal against his sentence.

8. The applicant relies upon four grounds of appeal. He contends that the trial judge misdirected herself with respect to the elements of the offence, failed to employ an appropriate process of reasoning in concluding it was reasonable to suspect the property was the proceeds of crime, and erred in determining that the statutory defence in s 193C(4) had not been made out. He further contends that the verdicts are unreasonable and cannot be supported having regard to the evidence.

9. Ground 1 asserts a misdirection as to the nature of the offence in question. This matter was not raised before the trial judge. Although r 4.15 of the Supreme Court (Criminal Appeal) Rules 2021 (NSW) potentially applied, as Bathurst CJ observed in Obeid v R [2017] NSWCCA 221 at [24], if established, this ground raises a matter which, if correct, would constitute a miscarriage of justice and thus r 4.15 would have no application. Ground 2 asserts an inadequacy of reasons which is also a question of law. Grounds 3 and 4 do not involve questions of law alone and thus leave is required to appeal on those grounds pursuant to s 5(1)(b) of the Criminal Appeal Act. The Crown did not oppose leave being granted on those grounds and in those circumstances, I would grant it.

The relevant legislation

10. Part 4AC of the Crimes Act is headed “Money Laundering”. Relevant definitions in Pt 4AC are set out in s 193A and include the following:

deal with includes—

(a)  receive, possess, conceal or dispose of, or

(b)  bring or cause to be brought into New South Wales, including transfer or cause to be transferred by electronic communication, or

(c)  engage directly or indirectly in a transaction, including receiving or making a gift.

instrument of crime means property that is used in the commission of, or to facilitate the commission of, a serious offence.

proceeds of crime means any property that is substantially derived or realised, directly or indirectly, by any person from the commission of a serious offence.

serious offence means—

(a)  an offence (including a common law offence) against the laws of New South Wales, being an offence that may be prosecuted on indictment, or

(a1)  an offence against a law of the Commonwealth that may be prosecuted on indictment, or

(b) the offence of supplying any restricted substance prescribed for the purposes of section 16 of the Poisons and Therapeutic Goods Act 1966 that arises under section 18A (1) of that Act, or

(c)  an offence committed outside New South Wales (including outside Australia) that would be an offence referred to in paragraph (a) or (b) if it had been committed in New South Wales.

11. Section 4 of the Crimes Act provides a definition for “property” as follows:

Property includes every description of real and personal property; money, valuable securities, debts, and legacies; and all deeds and instruments relating to, or evidencing the title or right to any property, or giving a right to recover or receive any money or goods; and includes not only property originally in the possession or under the control of any person, but also any property into or for which the same may have been converted or exchanged, and everything acquired by such conversion or exchange, whether immediately or otherwise.

12. A number of different offences of dealing with the proceeds of crime are set out in ss 193B and 193C of the Crimes Act with a descending degree of seriousness.

13. Section 193B(1) (which carries a maximum penalty of 20 years imprisonment) provides for the offence of money laundering if a person:

1. Deals with the proceeds of crime;

2. Knowing that it is proceeds of crime, and

3. Intending to conceal that it is proceeds of crime.

14. Section 193B(2) (which carries a maximum penalty of 15 years imprisonment) provides for the offence of money laundering if a person:

1. Deals with proceeds of crime;

2. Knowing that it is proceeds of crime.

15. Section 193B(3) (which carries a maximum penalty of 10 years imprisonment) provides for the offence of money laundering if a person:

1. Deals with proceeds of crime; and

2. Is reckless as to whether it is proceeds of crime.

16. The applicant was convicted of the less serious offence in s 193C(1) (which carries a maximum penalty of 5 years imprisonment) of dealing with property suspected of being proceeds of crime. Section 193C(1) provides for an offence if a person:

1. Deals with property, and

2. There are reasonable grounds to suspect that the property is proceeds of crime, and

3. At the time of the dealing, the value of the property is $100,000 or more.

17. A less serious offence is created by s 193C(2) (which carries a maximum penalty of 3 years imprisonment) where the elements are otherwise the same but the value of the property is less than $100,000.

18. Section 193C(3) of the Crimes Act contains a non-exhaustive list of factors which may amount to “reasonable grounds” for the purposes of both s 193C(1) and (2) and is in these terms:

(3)  Without limiting subsection (1) (b) or (2) (b), there are reasonable grounds to suspect that property is proceeds of crime in each of the following circumstances—

(a)  in the case of subsection (1) (a)—the dealing involves a number of transactions that are structured or arranged to avoid the reporting requirements of the Financial Transaction Reports Act 1988 of the Commonwealth that would otherwise apply to the transactions,

(b)  the dealing involves a number of transactions that are structured or arranged to avoid the reporting requirements of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 of the Commonwealth that would otherwise apply to the transactions,

(c)  the dealing involves using one or more accounts held with authorised deposit-taking institutions in false names,

(d) the dealing amounts to an offence against section 139, 140 or 141 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 of the Commonwealth,

(e)  the value of the property involved in the dealing is, in the opinion of the trier of fact, grossly out of proportion to the defendant’s income and expenditure over a reasonable period within which the dealing occurs,

(f)  the dealing involves a significant cash transaction (within the meaning of the Financial Transaction Reports Act 1988 of the Commonwealth) and the defendant—

(i)  has contravened the defendant’s obligations under that Act relating to reporting the transaction, or

(ii)  has given false or misleading information in purported compliance with those obligations,

(g)  the dealing involves a threshold transaction (within the meaning of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 of the Commonwealth) and the defendant—

(i)  has contravened the defendant’s obligations under that Act relating to reporting the transaction, or

(ii)  has given false or misleading information in purported compliance with those obligations,

(h)  the defendant—

(i)  has stated that the dealing was engaged in on behalf of or at the request of another person, and

(ii)  has not provided information enabling the other person to be identified and located. (emphasis added)

19. Section 193C(4) creates a defence to a charge under s 193C(1) or (2) as follows:

(4)  It is a defence to a prosecution for an offence under this section if the defendant satisfies the court that the defendant had no reasonable grounds for suspecting that the property was substantially derived or realised, directly or indirectly, from an act or omission constituting an offence against a law in force in the Commonwealth, a State or a Territory or another country.

20. Section 193D creates the offence of dealing with property that subsequently becomes an instrument of crime. Section 193E provides for alternative verdicts in specified circumstances and s 193F provides that proof is not required for certain matters. Section 193F is in these terms:

(1)  To avoid doubt, it is not necessary, in order to prove for the purposes of an offence under this Part that property is proceeds of crime, to establish that—

(a)  a particular offence was committed in relation to the property, or

(b)  a particular person committed an offence in relation to the property.

(2)  To avoid doubt, it is not necessary, in order to prove for the purposes of an offence under this Part that property will be an instrument of crime, to establish—

(a)  an intention or risk that a particular offence will be committed in relation to the property, or

(b)  an intention or risk that a particular person will commit an offence in relation to the property.

21. Finally, s 193FA provides that several contraventions may be included in a single charge.

The evidence

22. The Crown case relied upon:

1. The evidence of Zhou Bing Qian. His statement to police made on 23 March 2018 was tendered as exhibit A and he was cross-examined.

2. Agreed facts (exhibit B) were tendered pursuant to s 191 of the Evidence Act 1995 (NSW). The agreed facts related to police surveillance of Mr Eray Turkdogan and set out Mr Turkdogan’s activities around the time he gave Mr Qian three backpacks containing money (counts 5 and 6).

3. Exhibit C was a Crown tender bundle comprising the following:

1. The statement to police of Junjian “Jack” Wang made on 19 September 2019. Mr Wang was not required for cross-examination.

2. The statement to police of Linhao “Emily” Xie made on 24 July 2019. Ms Xie was cross-examined.

3. The statement to police of Nick Zhai, Supay Compliance Officer, dated 29 May 2020 (with Supay records annexed). He was not required for cross-examination.

4. The expert statement of Ezekiel Gadate, forensic accountant, dated 29 August 2019. Mr Gadate was not required for cross-examination.

5. The affidavit of Camelia Thompson (Compliance Officer at Commonwealth Bank), annexing records relating to the bank cheque subject of count 3. Ms Thompson was not cross-examined.

6. Documents produced by Louis Carr Real Estate in relation to the purchase of a property by the applicant using the bank cheque subject of count 3.

7. An expert certificate of Detective Senior Constable Bayliss dated 10 October 2019, tendered pursuant to s 177 of the Evidence Act. His evidence related to common structures and methods used by money laundering syndicates. He was not required for cross-examination.

8. The statement to police of Narelle McPhail, Border Force Officer, dated 1 August 2018. That statement annexed documents relating to the applicant’s trips to China during 2017. She was not required for cross-examination.

23. Counts 1-2 and 4-6 related to the use of “Supay”, a foreign currency company. Supay was used to transfer money from Australia to China because Chinese banks do not accept Australian currency. Supay converted Australian dollars (AUD) to Chinese Ren Min Bi (RMB) and charged a flat rate of $15 per transfer. There was also evidence that Supay provided a slightly more advantageous exchange rate than other foreign exchange companies. The maximum amount that could be transferred in one Supay transaction was $100,000.

24. There was also expert evidence from Senior Constable Bayliss about the use of “daigou” companies to facilitate money laundering. Daigou means “buying on behalf” and refers to a person who facilitates the buying and selling of international products on behalf of a customer in mainland China. It is a well-developed industry in Australia and products commonly bought include health products and baby formula. However, restrictions in China mean that Chinese citizens cannot transfer more than 50,000 CNY per year (about $10,000 AUD) out of China. As a result, money laundering syndicates use daigou companies to launder money. This involves money being provided to a daigou via a clandestine exchange; the diagou then purchases Australian products and ships them to China; the products are then sold at a profit and the profit is passed on to the branch of the money laundering syndicate in China.

25. A person identified in the evidence, but who was not called as a witness at the trial was variously described as “Li Da An”, “Da An”, “An”, “Li Daan” and “Da’an”. For the purpose of this judgment I will refer to him as Mr Daan. For reasons which I provide below, the various names by which this person was described may have led to some confusion as to Mr Qian’s knowledge of this person. The applicant’s case was that he was paying money to people in China, including Mr Daan, on behalf of Sino. In Mr Qian’s evidence at trial he initially said that he did not remember meeting a Mr Daan but when shown WeChat messages containing Mr Daan’s name in Mandarin he recalled meeting that person. He denied using Mr Daan to transfer money between Australia and China for Sino’s business (referred to as “factoring”). The applicant relied on Mr Qian’s initial denial of having met Mr Daan as support for the proposition that he was concealing the true nature of the dealings (as related to Sino’s expenses in China). I shall return to this issue in my consideration of ground 3.

23. Some aspects of the Crown case were not disputed. In particular, with the exception of count 1, the applicant did not dispute the transactions occurred. Rather, he provided an alternate exculpatory explanation for them. It was not disputed that Mr Qian took receipt of substantial quantities of cash, or that in relation to counts 2 and 4-6 the funds were deposited into the bank account of Mr Qian’s business (or given to a third party) and then transferred to the applicant’s bank account in China. For count 3, it was not disputed that Mr Qian handed the cash to the applicant, who purchased a bank cheque and used it towards the deposit of a purchase of property in his name.

24. The Crown case was that the applicant was involved in those cash transactions at least by requesting from Mr Qian a photograph of the serial number of a $5 note, which he then forwarded to others for use as a “token” in the exchange.

25. The principal issue on each count was whether the applicant had established on the balance of probabilities that he had no reasonable grounds to believe the property was proceeds of crime. The applicant contended that at the relevant times he was an employee of Mr Qian’s company (which Mr Qian denied), and that he believed the transactions involved the transfer of legitimate funds for business purposes.

Mr Qian’s evidence

The relationship between Mr Qian and the applicant

29. Mr Qian was 55 years old at the time of the trial. He moved to Sydney from China in 1989 to study English. He completed a Master of Business Administration. In 2009, he registered Sino, which sent Australian products to China. He was the sole proprietor of that business. The applicant lived in Melbourne and operated a similar company there. Mr Qian and the applicant met in about 2015.

Mr Qian’s business

30. Mr Qian’s evidence was that Sino did not sell goods; it simply sent goods from Australia to China. The majority of their customers were in Australia, with a negligible number in China. He said the freight forwarding industry involved high expenses and very low profits, and Sino incurred costs in both Australia and China. The expenses in China were for customs and postal services, which accounted for 50-55% of Sino’s takings. If business expenses in China were not paid, goods would not be delivered.

31. Mr Qian gave evidence that he had a bank account in China that he had used to make payments since 2011, and he had registered a local company in Shenzhen to conduct business in China. He said that Sino had never had a representative in China and did not need one in 2017. Mr Qian said that he had on occasion asked the applicant to help him facilitate payments in China for Sino, but not on a regular basis. Their companies had done some trial shipments together around September 2015, but that arrangement did not continue. He denied offering the applicant a job with Sino.

32. The applicant’s legal representatives issued subpoenas to Sino and its accountants and no documents were produced (exhibits 2, 3). Sino had not lodged tax returns after the financial year ending 30 June 2015. In that financial year, Sino had a gross income of approximately $3.4 million. Mr Qian gave evidence that every year was different. He had previously told the NSW Crime Commission that the daily takings were always over $10,000 and that he deposited over $10,000 cash almost every day. However, he clarified at the trial that this was not quite right, as it was not that much every day and it fluctuated. Mr Qian said the takings were just under $1 million in 2014, and he did not know what they were in 2016 or 2017. He confirmed that Sino received 90% of its money in cash. He said that after 30 June 2017 the business was not trading and had no income.

Count 1

33. Mr Qian’s evidence was that in February or March 2017 his friend “Evan” (the applicant) came to his house with about $100,000 in cash. Evan asked him to deposit the money into his account and transfer it to a Chinese bank account in the name of Qing Jun Tang. Mr Qian asked why he could not do it himself and the applicant told him he did not want anyone to know, including his wife. Mr Qian agreed.

34. On 7 March 2017, Mr Qian attended the Commonwealth Bank branch at Castle Towers and deposited $9,000 into Sino’s business account. He also attended the Commonwealth Bank branch at Carlingford and deposited $98,000 into the Sino account. He said that some of this money was his own and some was the applicant’s. On 8 March 2017, he transferred $99,627.82 into the Tan account via Supay.

35. The Sino bank records showed cash deposits on 7 March 2017 in the amount of $107,000 and the Supay records showed the transfer of $99,627.82 to the account of Qing Jun Tang.

36. The applicant was found not guilty of count 1.

Count 2

37. Mr Qian stated that in early April 2017 the applicant called him on WeChat and said he needed more money transferred to him. The applicant was in China at the time and requested it to be transferred to his personal bank account in China. The applicant asked Mr Qian to take a photo of a $5 note and send it to him. The applicant explained it was like a receipt and that Mr Qian had to keep the $5 note and give it to the person who would hand him the money.

38. Mr Qian sent a photo and then a second photo as the first did not contain the serial number. The applicant told Mr Qian he would receive a phone call from someone to make arrangements to collect the money. Mr Qian assumed the money was derived from the applicant’s business because the applicant was from Guangdong province in China. Mr Qian said it was well-known that people from that area operate in cash only and do not use banks.

39. On 9 April 2017, the applicant sent a WeChat message to Mr Qian asking, “Has anyone in Sydney contacted you?”. Mr Qian replied, “No”.

40. The next day, Mr Qian received a phone call from a man who said he had something to give Mr Qian and asked where to meet. Mr Qian replied with an address. That text message, sent on 10 April 2017 at 11:21am, was in evidence. Mr Qian met the man in Epping the next day and gave him the $5 note. The man looked at the note and gave Mr Qian a backpack containing money.

41. In WeChat messages sent on the afternoon of 10 April 2017 the applicant asked, “is the amount confirmed?” and Mr Qian replied, “40 bundles. I haven’t counted yet. I need to go out first and will count them when I come back.” Mr Qian confirmed that 40 bundles meant $400,000.

42. The applicant sent another WeChat message to Mr Qian on 10 April 2017 stating, “There is another amount of 25. Need your $5.” Mr Qian understood this to mean that he was to send another $5 note and receive another $250,000. The applicant then sent a voice message saying, “Boss, if there is a second amount, if you are contacted for the second amount, please notify me first. There is some problem with the person who collects money on DA AN’s end. She is too scared to receive.” Mr Qian replied with a photo of a $5 note and said, “These two are sorted. What are we going to do with it?...”. Mr Qian believed, based on that message and the amounts later transferred, that he must have collected $104,500 more in a second meeting on 10 April 2019 but he could not recall the details.

43. At 3:36pm on 10 April 2017, Mr Qian sent a text message to an unknown number with an address in Beverley Hills. He did not know why he sent that text message. He believed it must have related to the collection of an additional $104,500 in cash but he could not recall that meeting. Mr Qian said that the amount of $250,000 referred to above was a third drop that day which did not happen.

44. He then deposited $513,205 in six separate transactions into the Sino bank account between 11 April and 19 April 2017. He transferred $504,500 out of that account in the same period. Five Supay invoices showed that $499,425 was deposited into the applicant’s bank account in China.

Count 3

45. Mr Qian said that on two occasions he handed cash that he had received through the WeChat arrangements (using $5 note tokens) directly to the applicant. He could not recall when this occurred or the amounts involved but said that on one occasion the applicant said he was using the money to buy a house in the Pennant Hills area.

46. On 26 April 2017, the applicant purchased a bank cheque from Commonwealth Bank in the amount of $158,000. He paid for the cheque in cash. He used the bank cheque to pay the deposit for the purchase of a property in Cherrybrook.

47. The purchase was financed by a loan from Westpac. Mr Qian recalled that Sino transferred $3,600 to the applicant’s bank account on 17 April 2017 to assist the applicant to obtain a home loan. Exhibit 19 was the applicant’s home loan application including a letter signed by “Joe Qian” stating that the applicant had been employed by Sino since March 2017 as General Manager with an annual salary of $190,008. Mr Qian’s evidence was that he signed this letter, but it was false. In cross examination he was shown some payslips (exhibit 22) and stated that he had never seen them before, and they had not been produced by Sino.

Count 4

48. A few weeks after count 2 (10 April 2017) the applicant called Mr Qian on WeChat and asked him to collect more money. Mr Qian agreed and sent a photo of a $5 note.

49. The next day, Mr Qian received a call from a man who said he had something for Mr Qian and asked where to meet. Mr Qian texted the man an address in Epping.

50. They met the next day. The man checked the $5 note against something in his phone and then gave Mr Qian a backpack containing money. Mr Qian left and messaged the applicant that he had received the bag.

51. The applicant asked Mr Qian to wait a few days before sending the money because the exchange rate was poor. Mr Qian waited and then deposited $489,850 into Sino’s bank account on 18 May 2017. This was done in 22 separate transactions. He then transferred $489,785 to the applicant’s bank account in China via Supay.

Counts 5 and 6

52. The applicant returned to China on 1 June 2017. In June or July 2017, Mr Qian received a message from the applicant asking him to meet a man and collect money. The applicant asked for photographs of two $5 notes and Mr Qian sent those photos. He did not hear anything for a few days and then the applicant messaged him asking if he still had both notes. Mr Qian realised he had spent one of them so he sent the applicant a photo of another $5 note.

53. The next day, 3 July 2017, the applicant received a phone call from a man who needed to give him something. This man was Eray Turkdogan. He was under police surveillance at the time and the text messages and phone calls between Mr Qian and Mr Turkdogan were in evidence.

54. Mr Qian arranged to meet Mr Turkdogan in Beverley Hills on 3 July 2017. He gave Mr Turkdogan the two $5 notes he had photographed for the applicant and Mr Turkdogan appeared to check them on his phone and then returned one of the notes. Mr Turkdogan gave Mr Qian a food delivery bag containing cash. Mr Qian left and notified the applicant. The applicant said not to deposit the money yet and to wait for another call about another collection. The amount received was $498,200.

55. On 3 July 2017 at 3:51pm, Mr Qian sent a message to the applicant saying, “50 is the maximum amount”. This meant that Mr Qian had counted the money and that there was a maximum of $500,000 (50 bundles) but there were some $10 and $20 notes. Shortly after, the applicant messaged Mr Qian saying, “I honestly don’t have any money to pay on behalf. I haven’t had any income for ages”. Mr Qian said that this was in response to a conversation they had a few days earlier when Mr Qian was complaining that the money collection was taking up too much time and he wanted to stop. He believed the applicant sometimes sent money to the person he was paying in China before receiving the money from Australia. Mr Qian believed this person was called “An” and he had received messages forwarded from “An”.

56. The applicant then sent a message saying, “Where should the person meet you to pick up the 20 tomorrow? Need the address.” On the morning of 4 July 2017, Mr Qian messaged the applicant saying, “Are they going to give you the money first?”. The applicant replied saying, “I have requested payment first. I have requested they provide the $5 document. If the document number is not provided to you, it means that I haven’t received the money.” The applicant later said, “Don’t give them the 20 if they failed to send the $5 note.” He denied that he was telling Mr Qian what to do. Mr Qian said that this was in relation to a meeting he was supposed to have with a woman receiving $200,000 on behalf of “An” but that this meeting never eventuated.

57. On 4 July 2017 at 11:49am, Mr Qian sent a picture to the applicant on WeChat containing a note with a tally of one of the bundles which only contained $8,200 instead of the normal $10,000. He said he only counted this bundle because he was supposed to give $200,000 to the woman collecting on behalf of An. Mr Qian then sent a message saying, “If so, no need for me to count the 300,000. It will be counted by the bank later. I’ll only need to count the 200,000”. This was a reference to the instructions to give $200,000 to a woman in cash and transfer $300,000 via Supay. The applicant replied with a photo of a breakdown of $50, $20 and $10 notes amounting to $8,280.

58. The applicant then said, “confirm 20 not going ahead today” and “[g]o ahead with the deposit. Go ahead to deal with the first lot.”

59. On 4 July 2017, Mr Qian deposited $420,000 into the Sino bank account. He then transferred this amount to the applicant’s bank account in China via Supay. Later that day Mr Qian deposited $40,000 into his personal account and then transferred it to the Sino account. All of this money was received from Mr Turkdogan on 3 July 2017.

60. Mr Qian then sent a message to the applicant saying, “I’ll try my best to finalise another 50. Need two days. 52 deposited.” The applicant replied saying, “Is there any problem with the first 50? AN has to pay on behalf of Brother No.4 first.” Mr Qian said that Brother No.4 was the party “An” had to pay after receiving the money from the applicant and he did not know who Brother No.4 was.

61. On 4 July 2017, Mr Qian received another call from Mr Turkdogan, and they met in Carlingford at around 1:20pm. Mr Qian gave him the other $5 note and Mr Turkdogan checked it against something in his phone. Mr Turkdogan then handed Mr Qian two backpacks containing money. The backpacks contained $700,000.

62. The applicant messaged Mr Qian at 2:46pm asking, “Is the second lot received?”. Mr Qian replied, “It’s received.” Half an hour later the applicant said, “What are the two lots in total?” and “Did you receive 70 today?”. Mr Qian understood that the applicant was asking if he had received $700,000. The applicant said that he had only copied and forwarded this message from a broker.

63. Later, on 4 July 2017, the applicant sent a WeChat message saying, “AUD $498200.00 is received on 3 July 2017 and is to be distributed in accordance with 1.5% for Brother No.4 and 3.5% for us.” Mr Qian said that $498,200 was the amount he received on 3 July 2017 and the percentages were a cut that he, the applicant and Brother No.4 received for assisting with the transfer of money. Mr Qian believed that the applicant retained his “cut” from the money he owed the applicant from Sino’s business but said that he never checked if the applicant was actually doing this.

64. On 5 July 2017, Mr Qian deposited $59,900 into the Sino account and $20,000 into his personal account and then transferred $20,000 from his personal account to the Sino account. He then transferred $99,985 to the applicant’s bank account in China through Supay.

65. On 7 July 2017, the applicant sent messages to Mr Qian saying, “Any plan for the remaining amount?... Any progress for the remaining amount boss? You didn’t call me yesterday… Can you disclose the plan a little bit? AN has been chasing me”.

66. Around that time Mr Qian approached Junjian Wang, known as “Jack”, and asked if Jack could receive Australian money in cash and transfer money from his Chinese bank account to another account in China. Jack agreed to do this and said he could transfer 850,000 RMB. That equated to $164,518.25 AUD. Mr Qian met Jack in Carlingford and gave him the money in a plastic bag. The next day Jack transferred 850,000 RMB to the applicant’s bank account in China. Jack sent Mr Qian a receipt which Mr Qian forwarded to the applicant on WeChat.

67. On 11 July 2017, the applicant sent a receipt to Mr Qian which recorded that 1,033,320 RMB had been transferred to the account of Li DA AN.

68. In July 2017, the applicant contacted a friend, Xie Linghao (“Emily”) and asked if he could borrow RMB from her to pay for customs clearance in China. On 13 and 14 July 2017, Emily transferred 1,040,000 RMB in transactions under 50,000 RMB to the applicant’s bank account in China. The applicant told her “Old Qian” was driving to Brisbane to give her the money. Mr Qian was initially planning to transfer the money to Emily by bank transfer, but a cashier told him that would look very suspicious. Mr Qian passed this information on to the applicant and the applicant told Mr Qian to deliver the money personally.

69. On 13 July 2017, Mr Qian drove to Brisbane and met Emily near her warehouse in Cooper Plains. He gave her $270,000 in cash (money that he received from Mr Turkdogan). He then had dinner with Emily and then stayed the night at a hotel before driving back to Sydney the next day. The applicant sent a WeChat message saying “Boss, thank you for your effort”.

70. On 13 July, Mr Qian transferred $99,985 of the money received from Mr Turkdogan to the applicant’s bank account in China via Supay.

71. On 14 July 2017, while Mr Qian was driving back from Brisbane, he sent a message to the applicant saying, “Fuck, Brother No.4 was really upset…”. The applicant replied, “I’ll have a talk with DA AN after this one is settled this morning.”

72. Between 4 July and 14 July 2017, Mr Qian made a total of 20 separate deposits into the Sino account totalling $627,930 and transferred out $620,030. He transferred $619,985 to the applicant’s account in China via Supay. He also deposited $60,000 cash into his own account in two transactions.

73. On 18 July 2017, the applicant said, “Emily still has AUD $40,000 outstanding and you 82000 [sic]”. Mr Qian said, “Correct”. The applicant said, “See if it will arrive tomorrow. DA AN has almost gone mad.”

74. On 18 and 19 July, the applicant sent Mr Qian tables that Mr Qian said referred to the money he received from Mr Turkdogan and the exchange rates via Supay. The applicant said that these referred to the money he received from Sino not the amounts of cash received. The total of the amounts set out in the table was $1,198,200. The applicant described the amounts as “payable to DA AN”.

75. A message from the applicant on 19 July 2017 said:

“Distribution of profit: 3.5% of total cash amount out of which 1% is account fee for the company the remaining 2.5% will be distributed with 60% for DA AN and 40% for Australia party. The total RMB exchange amount – RMB amount payable to customer. It’s to be distributed in accordance with 43% for DA AN and 57% for Australia party.”

The affidavit evidence and agreed facts

Exhibit B: agreed facts

76. Exhibit B related to the physical surveillance of Mr Eray Turkdogan. The agreed facts stated that on 3 July 2017 Mr Turkdogan left his home and drove to a location in Beverley Hills. Mr Qian was seen walking towards that location and returning with a backpack. Later that day, Mr Turkdogan met another man in Pyrmont. That man entered the vehicle carrying a black bag and left without the bag.

77. On 4 July 2017, Mr Turkdogan was observed to drive to a location in Carlingford and park his vehicle. About 30 seconds later, Mr Qian was seen departing from that location.

76. Mr Turkdogan was arrested and charged with money laundering offences. he pleaded guilty to offences under s 193B of the Crimes Act and agreed facts were tendered which included the exchanges with Mr Qian on 3 and 4 July 2017. The amounts in those transactions were $498,200 and $700,000 respectively. There was no evidence that the applicant ever had direct contact with Mr Turkdogan.

Evidence of Junjian “Jack” Wang

79. Exhibit C1 was the affidavit of Junjian Wang. Mr Wang, whose English name was “Jack”, operated a “daigou” business in Australia (as explained above at [24]). In 2014, he commenced using Sino as a courier company to transport baby formula and vitamins to China. He knew a man called “Joe” or “GM Qian” (GM standing for General Manager) was the boss of Sino. Mr Wang said that he usually paid Joe in Australian dollars, but Joe sometimes requested payment in Chinese RMB. When Joe requested payment in RMB, Mr Wang would ask one of his customers in China to pay Joe from their Chinese bank account to a Chinese bank account nominated by Joe.

80. In July 2017, Joe called Mr Wang and said that he needed 850,000 RMB to pay his couriers in China. Joe said that he would give Mr Wang the equivalent amount in AUD at a slightly better exchange rate. Mr Wang said he agreed to this exchange because Chinese laws preventing movement of more than $50,000 USD in RMB made it difficult for him to purchase supplies in AUD. He said that Joe provided the details of a Chinese bank account via WeChat. Mr Wang sent those details to his agent in China who transferred the money to that account. That bank account was in the name of Juan Xue. Mr Wang did not know who Juan Xue was.

81. After the transfer, he met Joe in Carlingford Village near a medical centre and Joe gave him a bit over $160,000 in a plastic bag. He said that the money was in bundles of $10,000 and was mostly $50 notes with some $20 notes. This exchange was alleged to have been made with funds received from Mr Turkdogan, as set out above at [74].

Evidence of Linghao “Emily” Xie

82. Ms Xie’s statement was tendered and became exhibit C2. She was cross-examined. Ms Xie was the director of a company, Twinkle Grace Pty Ltd, which exported baby formula and health food from Australia to China. She had a warehouse at Coopers Plain in Brisbane. She met the applicant through a mutual friend in Shenzhen, China.

83. In July 2017, she received a phone call from the applicant, who said he was doing a customs clearance and needed Chinese RMB currency. This was for his business exporting small parcels to China. The applicant asked if he could borrow RMB and repay Emily in AUD or RMB. She agreed as a favour to the applicant because they had a mutual friend.

84. On 13 and 14 July 2017, Ms Xie transferred 1.04 million RMB from her personal account in China to the applicant’s bank account in China. She did this in a number of transactions under $50,000. On the evening of 13 or 14 July 2017, she received a call from the applicant who said that “Old Qian” was driving to Brisbane to deliver the money. She told the applicant that she did not want cash but could not remember what he said in reply. A few hours later, “Old Qian”, whom she had previously met in Shenzhen with the applicant, arrived at her warehouse in the middle of the night with a bag full of money. She let him into the warehouse for about 30 minutes and then booked a hotel room for him. She returned to the hotel at around 8:00am the next morning but he had already left.

85. When Ms Xie counted the money in the bag there was $270,000, which was about $70,000 more than the equivalent amount she had transferred to the applicant in RMB. She spoke to the applicant who asked her to transfer the additional amount in RMB. Between 15 and 20 July 2017, she transferred approximately 370,000 RMB into the applicant’s Chinese bank account.

86. In cross-examination Ms Xie said that she knew the applicant and Mr Qian “[did] things together” but she did not know if they worked together or if one of them was working for the other.

The forensic accountant’s evidence

87. Forensic accountant Ezekiel Gadate reported that from 8 March to 13 July 2017, Sino made 13 transfers to Supay totalling $1,713,252, less transfer fees, funded by cash deposits and some transfers from Mr Qian’s personal account. His examination of Supay records indicated that there were 10 international money transfers from Sino totalling $1,708,792.82. Nine of these transfers were made to the applicant’s bank account and one to an account in the name of Qing Jun Tang.

88. Bank statements showing transactions involving Sino’s account from 1 January to 15 July 2017 showed an opening balance of around $2,500. In the relevant period there were few other credits and none approaching the size of those outlined above. A total of $38,670 was transferred out of the Sino account under the description of “Wages/Salary” between 1 July 2016 and 15 July 2017.

89. After examining the applicant’s financial records, Mr Gadate was unable to correlate the applicant’s declared income with his bank accounts. The applicant did not declare any wages or salary in his tax returns for the financial years 2016-17 and 2017-18. In 2016-17, the applicant declared a “net non-primary production income” of $21,000 and in 2017-18 he declared a net investment loss of $25,598. He did not declare any income for his company Igneex and declared a net loss of $54,311 for his company AUD Express. His bank accounts received a total of $550,024.59 in deposits from 1 July 2016 to 15 July 2017. Of this amount $334,366 was identified as originating from “large unknown deposits” and a further $60,300 in cash deposits. A total of $350,462.56 was withdrawn or transferred to an unknown destination.

Police evidence

90. Detective Bayliss provided an expert statement outlining methods commonly used in money laundering, including large quantities of cash, clandestine exchanges, the use of $5 notes as identifying “tokens”, structuring transactions to avoid reporting thresholds, and the use of “Daigou” businesses to transmit funds to China (exhibit C).

The defence case

The applicant’s evidence

91. The applicant’s case was that he was an employee of Sino and was paying Sino’s business expenses in China including to Mr Li Daan.

92. The applicant gave evidence. He denied the acts subject of count 1. He said that he never took $100,000 in cash to Mr Qian’s house between 1 and 8 March 2017. In relation to counts 2-6, the applicant’s case was that he had no reasonable grounds to suspect that the money was proceeds of crime.

93. In 2015, the applicant came to Australia and commenced operating a daigou business called Igneex. It was difficult to enter the market, so he started looking for another company to cooperate with him. He came across Sino, under the business name Express One, and contacted that company. He met Mr Qian in August 2015 in a warehouse in Sydney. Exhibit 17 was an email chain between the applicant and a representative of Sino. The applicant relied on exhibit 5 as a contract between Igneex and Sino although it had only been signed by him and had no corresponding signature from anyone at Sino. He said that he worked with Sino under that agreement despite the fact it was never countersigned. The applicant said that the business relationship was suspended in September 2015, but he maintained contact with Mr Qian as he admired him. In April 2016, he re-branded his company as AUD Express because Igneex had bad branding due to lost goods.

94. The applicant’s business ceased trading in late 2016 and around that time he flew out to Sydney to visit Mr Qian. Mr Qian advised him to seek a financial planning diploma. Exhibit 8 was an email that the applicant sent to Mr Qian regarding his enquiries about this diploma. Mr Qian also asked if he could use an Igneex van in Melbourne as the company was not doing well and the applicant agreed.

95. The applicant said that in November 2016 Mr Qian offered him a job in the event that Igneex closed. The applicant also said that Mr Qian asked him to pay some postal costs in China and that he paid this out of his personal account and was not reimbursed until 2017. The applicant said that in December 2016 Mr Qian again offered him a job and this time the applicant decided to close Igneex and accept the job. As noted above, Mr Qian denied ever offering the applicant a job at Sino.

96. The applicant said he began working unpaid to familiarise himself with the business and that in January 2017 he introduced Mr Qian to Mr Li Daan and Mr Qian said he would be doing a “financial broker” business with Mr Daan.

97. The applicant began paid work in March 2017. He said that he received an annual salary of $190,000 paid weekly. The applicant said that his role was to deal directly with customers and postal/freight services in China. He would have to pay Sino’s costs so that the goods would be released to the customers. He said that this was why he had to travel between Australia and China.

98. In relation to count 3, the applicant said that he received money from Mr Qian because he and his wife had used their own money to pay Sino’s debts in China and to pay Mr Daan. He said that Mr Qian repaid him in Australian dollars, and he used this money to purchase a bank cheque which he used to pay the deposit on his home. He said he did not have any other income at the time, but his wife worked and there was family money.

99. Payslips purporting to be from Sino were tendered in the applicant’s case (exhibit 22). They described the applicant as a “General Manager” with a gross annual salary of $190,000. The payslips noted a gross weekly income of $3,653.85, a net weekly income of $2,451.39 and superannuation of $347.12. Only one bank transfer described as “Salary” was made from Sino to the applicant. That payment was for $3,600, paid on 17 April 2017.

100. The applicant said that the payslips accurately recorded his salary, including that he had earned over $18,000 as at 27 April 2017, even though he had only received $3,600. The applicant said Mr Qian “always [paid] late” and that his net pay of $2,451 on the payslip was less than the amount he actually received because Mr Qian paid the applicant to arrange his own superannuation. The applicant said that after he received the payment of $3,600 he was paid in cash.

101. In relation to count 4, his evidence was that he did not know these funds came from cash received by Mr Qian.

102. The applicant said that Sino used a “broker system” to obtain payment from its customers in China because of foreign currency controls in China. The applicant said that customers paid the broker in Chinese currency and the broker, who had a branch in Australia, would pay the freight service in Australian dollars. The applicant said the broker would contact him on behalf of the client in China who wanted to pay Sino. The broker would ask for a serial number to verify he was the right person and he would forward this message to Mr Qian requesting a photo of a $5 note. The applicant would then forward the photo from Mr Qian to the broker. This was the extent of his dealings.

103. In cross-examination the applicant clarified that the broker did not actually ask for a photo of a $5 note; the broker asked for identification and Mr Qian decided on the $5 note system. He said that when Mr Qian sent the photo without the serial number, he forwarded this to the broker who replied asking for a photo with the serial number. He forwarded this to Mr Qian. The applicant did not know who the broker was, whether there was more than one broker or what companies the broker(s) worked for. The broker(s) only messaged via WeChat asking for photos of $5 notes. He did not know how the broker’s Australian counterpart effected payment. His understanding was that the payment was for freight fees and the purchase of goods such as nutrition powders. He also said that Mr Daan would pay some of Sino’s business expenses in China and that Mr Qian would reimburse Mr Daan by transferring money to the applicant’s account in China.

104. The applicant produced some WeChat messages that had not been annexed to Mr Qian’s statement and were not tendered in the Crown case. Those messages became exhibit 20. The messages are summarised below at [121]-[125]. One message referred to the “Original AUD amount” of “14000+15500-3600”. He said that $14,000 was his wages for March and $15,500 his wages for April, minus the $3,600 Mr Qian had already paid him. The applicant said, “Boss, please confirm the above when you get up. I just finished reconciliation with Da’an. Good night.” Exhibit 20 also showed Mr Qian asking if the applicant could transfer 15,000 CNY to Sichuan on his behalf. The applicant agreed and Mr Qian sent bank account details. The payment was to a logistics and postal service in Sichuan.

105. The applicant said he continued to work for Sino until August 2017 and never received the balance of his wages. He said that at the time of trial he was still owed $30,000.

106. In cross-examination Mr Qian agreed that he did not have any other income in 2016-17 apart from the income he received from Sino. He said he did not know that “40 bundles” referred to $400,000 or “25 bundles” referred to $250,000. He said he did not know that Mr Qian was being paid in cash at all and denied knowing that the $5 note system meant that Mr Qian was being paid in cash rather than through a bank transfer.

107. The applicant said that Mr Daan did not contact Mr Qian directly because he spoke broken Mandarin as he was from Hong Kong. He said he was like a translator and disagreed that language had nothing to do with his role as a middleman.

108. In relation to the message sent on 4 July 2017 saying “Boss, have you given any consideration to the delivery of 20 tomorrow?” the applicant said that he understood that Mr Qian was giving someone else “20”, that being some amount of money. In relation to the message sent immediately afterwards in which he said, “What conditions are required for the other side to remit money to us?” the applicant was asked why, if Sino was paying a debt, money was being given to them. The applicant said that Mr Daan was asking for urgent payment so Mr Qian was giving cash to someone in Australia who would pay Mr Daan in China.

109. When asked why Mr Qian would not simply transfer money directly to Mr Daan’s account in China to pay Sino’s debts, the applicant said:

“I don't know. Let me tell you, the reason he doesn't want to directly transfer to Li Daan because yesterday I say Mr Qian when he doing the currency exchange they got extra to charge. They got extra benefit of the rate. If he directly transferred the $200,000 directly to Li Daan's bank account he cannot get a benefit. He uses my bank account, that's why we have money rest.”

110. The applicant said he did not think this system was suspicious. When asked what the difference was between Mr Qian transferring money to him rather than directly to Mr Daan, the applicant said:

“Mr Qian will set the rate with XE.com. This is the rate we follow with Mr Li Daan. XE.com, the rate is quite low. For example, let's say $100, if now Mr Qian send the money via SUPAY to Mr Li Daan, Mr Li Daan will receive $520. But the deal and the rate we set up with Mr Li Daan was 510. So Mr Qian absolutely need an account in the middle. So once receive 520 take off $10 for holding for the benefit and transfer another 510 to Mr Li Daan. Otherwise he's not able to take the extra benefit during the exchange.”

111. The applicant relied on the calculations in exhibit 20 as evidence of using Supay to take advantage of the better exchange rate.

112. The applicant was asked why Mr Qian did not deal with the broker directly and he said that Mr Qian was busy and that was why he messaged the applicant and the applicant forwarded his messages to the broker and the broker’s messages to Mr Qian.

Mr Mundt (forensic accountant)

113. The applicant’s forensic accountant Michael Mundt (exhibit 10) offered the opinion that Sino continued to trade in July 2017, and that it was possible those transactions represented trading activities of Sino, based on the volume of deposits through the account in that month.

114. Mr Mundt agreed with Mr Gadate’s opinion that he was unable to correlate the applicant’s declared income with his bank accounts.

Unavailable witnesses

115. Four affidavits were tendered on the basis that the makers were unavailable as they were in China (s 65, Evidence Act).

116. Mr Huang Tian stated that in 2016 he met Mr Qian, who asked him to receive packages on his behalf in China. Mr Tian’s role was to organise customs clearance. He participated in this arrangement until Mr Qian stopped paying him. He sent Mr Qian an invoice for the money owing, which was annexed to his affidavit. In July 2017, Mr Tian received a payment of 101,925.74 CNY from the applicant’s Chinese bank account. A receipt of this payment was also annexed to his affidavit. He took this to be the final payment from Mr Qian as it was the amount shown on the invoice.

117. Mr Shuguang Dai stated that he had known Mr Daan since 2015 and had business dealings with him. He said that he met the applicant in 2016 and Mr Qian in 2017. He said that he knew Mr Qian and Mr Daan had business dealings (he did not elaborate on the basis of this knowledge). Mr Dai stated that in April 2017 he received 1,000,000 CNY from the applicant’s Chinese bank account and understood these funds to be related to business dealings Mr Daan had with Mr Qian in Australia. He did not explain the basis of this understanding. He said that the money was payment for debts owed to him by Mr Daan. No annexures relating to that payment were provided.

118. Mr Jintian Yao said he had known the applicant since 2016. He was an employee of China Post Group. In May or June 2016, he met Mr Qian who commenced using the services of China Post Group in Guangzhou. On 20 July 2017, China Post Group received 48,338.74 RMB from the applicant’s bank account in China. He understood these funds to be related to outstanding payments accumulated by Mr Qian. No supporting evidence or annexures were provided.

119. Mr Jiongmin Chen said that he had known the applicant since 2013. He said that in April 2017 Mr Qian met with him and the applicant in China. Mr Qian enquired as to whether he could open a bank account in China to facilitate the payment of people he owed in China for his business. The applicant said that he had been doing this for Mr Qian as an employee for one month. He was unable to organise a bank account for Mr Qian due to government policy and the need for Mr Qian to be in China. The applicant told Mr Chen that he would continue to make payments on behalf of Mr Qian because the bank account could not be organised.

Exhibit 20

120. Exhibit 20 comprised screenshots of WeChat messages between the applicant and Mr Qian that were not on Mr Qian’s phone. Those messages had been translated into English and disclosed the following.

121. On 22 May 2017 at 2:21am, the applicant said to Mr Qian:

“For the $76500, it will be settled with Da’an at an exchange rate of 5.17 while Da’an will settle with Brother Four and 5.175.

[calculations about currency rates]

Hence, Da’an should additionally pay CNY 20,058.3 for the second transaction.

122. Seven minutes later, the applicant said:

“For the $500,000, it will be settled with Da’an at an exchange rate of 5.1206 while Da’an will settle with Brother Four at 5.1102.

[calculations about currency rates]

Total to be transferred to Da’an

13660.5 + 500000*5.1102*0.96 = CNY 2,466,556.5”

123. Five minutes later, the applicant said:

“$489800 - $15 (service charges)

at an exchange rate of 5.2454, is converted into CNY 2,569,118.24

2017/05/19-/2017/05/22

CNY 2,466,566.5 transferred to Da’an

Balance: CNY 102,551.74

At the exchange rate of 5.2454, equivalent to AUD 19,550 + 10,200

$29,750 in total, $14,875 per capita

Original AUD amount

14000 + 15500 – 3600 = $25,900

25900 - 14875 = $11,025.”

124. Two minutes later, the applicant said:

“Boss, please confirm the above when you get up. I just finished reconciliation with Da’an. Good night.”

125. Mr Qian did not reply to any of those messages. Twelve hours later, at 2pm that afternoon, Mr Qian sent the following message:

“Can you do me the favour of transferring CNY 15,000 to Sichuan on my behalf?

126. The applicant then requested an account number which Mr Qian provided. The applicant sent a screenshot of the transfer.

The primary judgment

127. The primary judge provided reasons for her verdicts on 17 June 2020. Ground 2 concerns the adequacy of these reasons. Given this criticism, I have summarised her Honour’s judgment in some detail. Apart from grounds 1 and 4, which contend that her Honour erred as to the relevant elements of the offence and defence, no ground of appeal contends for any misdirection by her Honour. Accordingly, I do not propose to set out the legal directions. Nor do I propose to summarise the findings on count 1, upon which the applicant was acquitted.

128. Her Honour identified the elements of the offence under s 193C(1) as I have set out above at [16], the relevant definitions in s 193A and the terms of the statutory defence in s 193C(4).

129. Her Honour noted the accused’s submission that for counts 2, 4, 5 and 6 he was not dealing in Australian currency as referred to in each count and responded by observing at [12] that this was “a particular” and no application for directed verdicts had been made at the close of the Crown case.

130. Her Honour then noted the accused’s submission that a bank account represents a chose in action and is “not by definition Australian currency” and went on to state “it could not be said that Xue did deal in Australian currency, he dealt in funds in his bank account as placed there by Qian”. Her Honour concluded at [11] that the evidence established that the accused, in his dealings with Mr Qian, indirectly dealt with Australian currency.

131. Her Honour next addressed a submission made by the accused that now forms part of ground 1, namely, whether the actual offence from which the funds were derived needed to be identified by the Crown. Her Honour noted the terms of s 193F(1) (extracted above at [20]) and then stated the following at [13]:

“However, it was submitted that what was required was for an offence to be identified in the evidence: AWS [91]. It is agreed that there is no evidence as to the source of the funds or of a particular crime. The accused relied upon Chen v DPP [2011] NSWCCA 205, a decision considering a different offence provision, to support this submission. This provision requires proof of not only a belief but that the property is the proceeds of crime. It is accepted that the offence provisions, and their Commonwealth counterparts, concern markedly different elements. There is unquestionably a hierarchy of offending included in Part 4AC of the Act. Fairly, reference was also made to the single judge decision in DPP v Ngo [2012] NSWSC 1521 wherein the aptness of the reasoning in Chen to an offence under an offence similar to the index offence provision was considered. I do not consider that Chen is binding authority in determining this offence provision. I am assisted by the consideration of Button J in Ngo. I determine that I am required to be satisfied that the property was derived from a non-specific serious offence.”

132. Her Honour then noted that the Crown relied upon the circumstance provided for in s 193C(3)(e) where the value of the property is “grossly out of proportion to the [accused’s] income and expenditure over a reasonable period within which the dealing occurs”. Her Honour then gave an overview of the evidence of Mr Qian at [15] and that of the accused at [16].

133. Her Honour gave herself a warning under s 165 concerning the evidence of Mr Qian and gave reasons for doing so (at [20]-[33]). She also gave herself a “Murray” direction (Murray v The Queen (2002) 211 CLR 193; [2002] HCA 26). She concluded of Mr Qian at [34]:

“I accept that he was imprecise on occasion such as when his company was registered and the facts surrounding its deregistration. However, he was consistent on its business structure and its financial position as confirmed by records. He had been friendly with the accused and engaged in business activity with him. The accused was residing at his home in March 2017. There was evidently a closeness between the two.”

134. Her Honour went on to summarise the evidence of Mr Qian and the accused at [35]-[54] setting out where the accused disputed the evidence of Mr Qian.

135. Her Honour gave herself a “Mahmood” direction (Mahmood v State of Western Australia (2008) 232 CLR 397; [2008] HCA 1) in relation to two witnesses: Tang Qing Jun and Li Daan and set out her reasons for doing so in circumstances where the Crown opposed such a direction for Mr Daan. As will be seen below, the applicant contends for error in the manner in which her Honour dealt with the evidence of Mr Daan. Her Honour concluded the following on this question at [61]-[62]:

“I propose to take into account the absence of Li Daan on the basis he was referred to in messages produced by Mr Qian to the police. I am unable to conclusively determine whether Mr Qian did volunteer more about Li Daan given the imprecise questioning of Det Hudson. I would favour Det Hudson’s evidence. The reference to ‘Daan’ in the WeChat conversations should have provoked some inquiry by police.

As a matter of prudence I direct myself that there could and should have been further inquiries to locate both witnesses. I will take into account the absence of this evidence in determining whether I should entertain a reasonable doubt about the accused’s guilt. Tang Qing Jun impacts directly on count 1. Li Daan impacts across the remaining counts.”

136. Her Honour then went on to direct herself on the question of assessing reliability at [64]-[71] including the evidence of the accused (at [72]-[76]). She also gave herself a character direction at [77]-[80].

137. Her Honour then went on to consider and direct herself in relation to the expert evidence at [81]-[104], including a warning concerning unavailable documents given that Sino did not produce any documents in response to a subpoena issued on behalf of the accused.

138. Her Honour noted that although both experts had access to the Supay currency exchange records and the Australian business and personal bank records and the available tax returns for both Mr Qian and the accused, neither had access to any accounts in China. Her Honour noted the following as to Sino’s wage outgoings at [89]:

“Sino’s wage outgoings varied over the financial years. Mr Gadate noted $38,670 recorded as wage withdrawal in bank details in the 2016-2017 financial year: at [46]. In the last available records for the year ending 2015 the total wages bill was under $180,000 [Ex 10 annexure L]. The accused tendered documents stating that the accused’s salary in 2017 was $190,000 per annum [Ex 8, part 19 and 22]. I note that the Sino bank records do reflect regular salary payments to either one or two persons weekly in the amount of $1108 each. There was no evidence about these payments but payments on occasion were transferred to Mr Qian and his wife’s personal account. I infer some payments were to Ms Xu and possibly Mr Qian. This quantum is well below that claimed by the accused to be his salary.”

139. Her Honour went on to note at [90]-[92]:

“In both the 2017 and 2018 financial years the accused declared no income from salary or wages. The tax records available for the accused’s companies declared either no income or a loss.

The accused paid the 20% deposit for his home purchase with the cheque relevant to count 3, and a further $160 000 from an unknown source. Both experts opine that the accused’s declared income did not correlate with his bank accounts.

In the period July 2016 through to July 2017 Sino deposited a total of $2,072,000.86 with $1,686,992.40 of this amount being deposited between 7 March and 10 July 2017. The deposits in April, May and July far exceed any other month and correlate with similar excessive withdrawals to Supay. During the 13 months only $38,670 is noted as ‘Wages / Salary’.”

140. Her Honour noted that Mr Mundt gave different evidence to Mr Gadate as to the cessation of trading by Sino in 2017. He offered the opinion that Sino continued to trade beyond the date it was deregistered (14 May 2017) noting that its ABN was not cancelled until 23 August 2017. Her Honour summarised Mr Mundt’s evidence at [94]-[96].

141. At [99] her Honour noted the Crown submission that Mr Gadate’s evidence supported Mr Qian’s evidence that he would receive sums of money, deposit that money into the Sino account and then transfer it to the accused’s Chinese bank account using Supay. In each instance, the final destination of the money received by Mr Qian (or a substantial portion of it) was the accused’s bank account, through a transaction in which the accused facilitated the exchange of a token. That is, Mr Gadate’s evidence was consistent with Mr Qian’s evidence that the money moved in a circuit from a person with whom the accused, either directly or indirectly, was in contact with (as demonstrated by the communication of the token), to Mr Qian, and then to the accused’s own bank account, such amounts being grossly out of proportion to the accused’s income and expenditure during the relevant period. Her Honour concluded as follows at [103]-[104]:

“I note the opinion evidence from Mr Mundt. After reviewing the source documents and the opinions offered I accept the evidence of Mr Gadate. On the available records the amount of money is disproportionate to the regular trading of Sino.

I am satisfied beyond reasonable doubt and determine that the money was not money related to the business operations of Sino.”

142. Her Honour then considered the evidence of the four unavailable witnesses relied upon by the accused whose affidavits were read but the Crown was not able to cross-examine. Her Honour summarised this evidence, and the submissions made in relation to them, at [105]-[124]. Her Honour noted that the accused relied upon this evidence to support the proposition that he was employed by Mr Qian and that he conducted acts in relation to Sino’s business. The evidence in the exhibits asserted payments from the accused’s bank account: exhibit 12 referred to a payment on 19 April 2017, exhibit 11 referred to a payment in July 2017 and exhibit 13 referred to a payment on 20 July 2017. Her Honour directed herself at [109] that:

“I determine that I should exercise caution in deciding whether to accept any of this evidence given the limitations arising from an absence of specificity about numerous aspects and that it has not been tested. The failure to specify the basis of knowledge renders some aspects of the evidence unsatisfactory.”

143. Her Honour then summarised the evidence of Huang Tian (exhibit 11), Dai Shuguang (exhibit 12), Yao Jintian (exhibit 13), Chen Jiongmin (exhibit 14) as well as the competing submissions about the weight to be given to their evidence from [110]-[121] before summarising the respective cases again as follows:

“Mr Qian accepted he provided the document confirming employment. He said this document was false and was provided to support the accused’s home loan application. He said the accused was not employed by Sino. Mr Qian provided this evidence under the protection of a s 128 certificate. Mr Qian said the pay slips he was shown were not from his company.

The home loan application, Ex 19, dated 2 May 2017, attaches the confirmation of employment and sole payslip documents. The accused paid the deposit of 20%, being $320 000. Half of this payment, being the $158,000 paid, is relevant to count 3.

In summary, the accused’s case is that he denied handling any money as suggested for count 1. He accepted his involvement with the transactions supporting the other counts but claimed he was not dealing with the proceeds of crime. A consideration under s.193[3] Crimes Act is where an accused nominates that any handling was at the request of another person. It is a relevant concern where the accused fails to nominate that person. The accused did not fail to provide information. He nominated Mr Qian as that person. He sought to rely upon the statutory defence that he had no reasonable grounds for suspecting the money was the proceeds of crime, as defined.”

144. Her Honour then noted at [125] that the Crown relied upon the circumstance provided for in s 193C(3), that the value of the property involved in the dealing was, in the opinion of the trier of fact, grossly out of proportion to the accused’s income and expenditure over a reasonable period within which the dealing occurred.

145. Her Honour then summarised the accused’s evidence in detail from [129]-[157]. I do not propose to repeat that summary here although it is to be noted that her Honour made a number of observations during that summary as follows:

1. At [131] her Honour noted the accused’s evidence about the significance of the $5 note at T 220-221 and described it as “unsatisfactory”.

2. At [133]-[134] her Honour referred to the accused’s evidence about the WeChat message on 10 April 2017 at T 232-233 and noted that it did not accord with the terms of the message.

3. At [138] her Honour referred to the accused’s evidence about the WeChat message on 15 May 2017 at T 241-244 and noted his evidence that he had “no idea” why Mr Qian told him to be careful.

4. At [139] her Honour referred to the accused’s evidence about the WeChat message on 3 and 4 July at T 247-249 and in particular that the transaction involved Mr Qian paying local members of the Daigou group in Australian dollars for those members to then arrange their Chinese contacts to pay Mr Daan: T 249. Her Honour said of this: “There was no explanation in the evidence as to why any money would be remitted to the accused or Sino as indicated in the message”.

5. At [140] her Honour referred to the accused’s evidence about the WeChat message on 4 July at T 250 in which Mr Qian mentioned a preference for an office as “people are willing to kill for $200,000”. Her Honour noted that the accused’s explanation required “consideration of the message flow” and that he did “not produce any messages to support his defence”.

6. At [141] her Honour referred to the message sent by the accused with a break-down of $10, $20 and $50 note denominations amounting to $8280 and noted that this “was not explained in evidence”.

7. At [142]-[143] her Honour summarised the accused’s evidence about Mr Qian giving $200,000 cash to be exchanged with Chinese Yuan to repay Mr Daan by depositing into the accused’s account and that Supay would be used: T 252. He said he had no reason to suspect anything suspicious: T 253. Her Honour observed the following at [144]:

“This explanation is difficult to follow. I understand that Supay may have offered a better rate than a mainstream bank. However, Supay could just as readily have been used to pay directly to Li Daan’s account in China rather than the accused’s account in China.”

8. At [147] her Honour referred to the evidence that the accused sent a message to Mr Qian saying, “thanks for your effort” and noted that “[t]his message does not readily reconcile with Mr Qian being the employer in the relationship”.

9. At [149] her Honour noted the message by the accused “more work, request to move 30” and his explanation that it was a message from the broker that he only forwarded without understanding the content: T 268. Her Honour noted the accused’s evidence that he was only an intermediary between the broker and Mr Qian and didn’t stop to think what it was about as it was none of his business: T 269. Her Honour observed that:

“The timing of the messages reflects they came in quick succession. On his evidence his role as merely forwarding messages presents [as] entirely surplus and pointless.”

10. At [151] her Honour stated “I do not accept the accused’s evidence that he was merely forwarding messages from the broker”.

11. At [153] her Honour noted the accused’s evidence that he did not understand from the messages with Mr Qian that Mr Qian was receiving cash in Australian dollars and observed that that evidence did not reconcile with the contents of the WeChat messages about counting money.

12. At [154] her Honour noted the accused’s evidence that the money going through his account was from Mr Qian to pay debts to Mr Daan and his belief that the money he paid for debts was about $20,000 to $30,000: T 271. He confirmed this was only in September 2016 to early 2017: T 275. In re-examination he was directed to his wife’s payment on 22 May 2017 at the request of Mr Qian of about $2,800 on behalf of Sino to China Post. Of this her Honour observed at [155] that:

“If this was the case then there would be no basis for repaying $158,000 in April 2017. The evidence from the witnesses in China does not account for this payment.”

146. Her Honour then addressed the evidence and submissions concerning the statement of DSC Bayliss, who was relied upon as an expert in money laundering (Ex C, Annexure 6). It was noted that the Crown submitted that many of the features of money laundering activities described by Detective Bayliss could be seen in the transactions described by Mr Qian.

147. At [160] her Honour noted that both parties relied upon the WeChat messages and at [162] her Honour noted:

“Within the messages the accused refers to Mr Qian as ‘boss’. Mr Qian explained this was culturally appropriate. The accused relied upon it as denoting their relationship as employer and employee.”

148. Her Honour then summarised the evidence in support of each of the six counts in the indictment from [163]-[226]. Count 1 was dealt with at [167]-[179]; count 2 at [180]-[192], count 3 at [193]-[200], count 4 at [201]-[208], count 5 at [209] and count 6 at [210]-[226]. I do not consider it necessary to summarise those passages.

149. From [229] her Honour set out her findings. At [229]-[230] she observed that:

“I have considered the accused’s account in evidence. I consider that the accused was unimpressive in responding to questions.

I take into account that he denied the allegations. Just because I do not consider his denials to be persuasive does not mean that I would necessarily find him guilty of one or more counts in the indictment. He does not assume any onus other than that contained in s 193C[4].”

150. As for Mr Qian her Honour observed the following at [232]-[233]:

“I have been cautious in my assessment of the reliability of the Mr Qian by carefully considering his evidence and how it sits with other evidence in the trial. He did not give his evidence in a manner suggestive of fabrication although he was on occasion imprecise or flippant. Much of his evidence, other than the role ascribed to the accused, is consistent with other available evidence.

On his own account he was prepared to sign a document knowing it to be false, and to deposit money into the accused’s account falsely purporting it to be salary, knowing this information would be used to support a home loan application. This is likely criminal conduct and well warranted Mr Qian’s concern about ensuring protection against self-incrimination. This was information he volunteered against interest.”

151. After referring to the respective submissions about Mr Qian, her Honour stated at [237]:

“I have considered his evidence against the submissions concerning issues impacting on reliability. The accused submitted that I should direct myself that he may be unreliable because he gave his evidence under the protection of a s 128 certificate. Unusually however there was no submission advanced by either party that I would determine that he was unreliable based on a finding that he was or may have been criminally involved in the subject offending. Similarly, the accused submitted that I would not accept the evidence wherein Mr Qian admitted, under protection of a s 128 certificate, that he was complicit in providing false material to support a home loan for the accused. That is, that acceptance of criminal conduct was submitted to be false and this false acknowledgment of possible fraud rendered his evidence unreliable.”

253. With these principles in mind, I turn to consider the complaints made on behalf of the applicant under this ground.

254. As the Crown identified, the applicant relied primarily on the lack of evidence proving that the money was derived from the commission of a serious offence, which I have already addressed under ground 1. The submissions under this ground otherwise focussed on the operation of the statutory defence in s 193C(4). I shall address the discrete arguments made in connection with this submission below.

Employment by Sino

255. Her Honour did not accept the applicant’s evidence that he was employed by Sino and was receiving the money as part of his employment for the purposes of paying Sino’s business expenses in China. I am satisfied that it was open to her Honour to arrive at this conclusion. Her Honour noted that the applicant did not declare a salary on his tax return. She assessed his claims about his salary in the context that he had no relevant qualifications, an absence of success in similar businesses and that the responsibilities and duties associated with his alleged role were low-level. It was open to her Honour to accept the evidence of Mr Qian who denied that the applicant was employed by Sino.

256. The applicant placed particular weight on the payslips (exhibit 22), but her Honour accepted the evidence of Mr Qian on this topic. It was open to her Honour to do so. His evidence was that they were forgeries. It is to be accepted that some of the payslips post-dated the applicant’s home loan application (including payslips dated 20 July 2017 and 3 August 2017). But given that Mr Qian denied that they were authentic and said that Sino’s payslips looked different to those produced by the applicant, that does not take the matter any further. Nor do I accept the argument that her Honour erred in rejecting these documents because they could not be “proven to be forgeries”, given Mr Qian’s evidence on this subject. In any event, her Honour was entitled to consider this aspect of the evidence in the context of the transactions overall.

257. The applicant’s explanation of the events seems to me to involve unnecessary double-handling of the funds. He explained that this process was necessary because he had a bank account in China and Mr Qian did not. But Mr Qian’s evidence was that he did have a bank account in China and had used this account since he started his business in 2011. He explained that he had registered a company in Shenzhen whose bank account he used to pay expenses in China.

258. The applicant also stated that it was necessary to transfer funds to his account, via Supay, to take advantage of the exchange rate offered by Supay. He said that this was better than transferring the money directly to Mr Daan through Supay because an exchange rate would be “set” with Mr Daan of, for example, 5.1 RMB per AUD but that Supay would offer 5.2 RMB per AUD. This allowed him to siphon off additional RMB before transferring the money to Mr Daan. The trial judge noted at [142]-[143] that this evidence was difficult to follow and did not explain why the money could not be transferred directly to Mr Daan. Moreover, the applicant’s explanation assumed that Mr Daan knew the amount of AUD being transferred to China and had fixed an exchange rate to determine the amount of RMB he expected to receive. This explanation by the applicant is more consistent with money laundering rather than the reimbursement of Sino’s business expenses in China. If Mr Daan was being reimbursed for Sino’s expenses in China, he would have no reason to know how many AUD were being transferred and would only be concerned with the re-payment of a fixed amount in RMB.

259. As for the submission that the descriptions given in the Supay invoices supported the defence case (the transactions were described as “business”, “purchasing stock”, “payment of goods” and “logistics”), her Honour dealt with this argument and was satisfied that there could well be business reasons why Mr Qian would have put these vague descriptions on those invoices.

260. As for the affidavit of Junjian Wang, I am satisfied that this evidence supports the Crown case. The evidence of Mr Wang was consistent with Mr Qian needing to transfer the cash he received which was subject of counts 5 and 6 through alternate means other than through Supay to the applicant. It does not establish that the applicant worked for Mr Qian or that the $160,000 in cash was pertinent to Sino’s business dealings.

261. As for the fact that in the WeChat messages the applicant calls Mr Qian “boss”, it was open to her Honour to accept Mr Qian’s evidence that this usage was a sign of respect as he was the older of the two and it was culturally appropriate for the applicant to refer to him in this way.

The funds belonged to Sino

262. I have considered the affidavit of Michael Mundt (exhibit 10). The high point of his evidence as it pertained to the applicant’s defence at trial was his opinion that Sino continued operating until the financial year ending 30 June 2018, and that the income of Sino in the 2016-17 financial year was approximately $3 million. I do not accept the submission made in this Court that this evidence was unchallenged. Mr Gadate arrived at a different conclusion and the Crown at trial submitted that his evidence should be preferred to that of Mr Mundt. Just because Mr Mundt was not cross-examined does not mean that his evidence must be accepted.

263. Mr Mundt’s opinion was that Sino continued to trade beyond July 2017. This was on the basis that although Sino was deregistered on 14 May 2017, its ABN was not cancelled until 23 August 2017. On this issue, her Honour noted at [96] that she did not accept that the evidence that Mr Qian was “in the process” of re-registering the company in December 2017 meant that the business continued operating throughout 2017.

264. Another basis upon which the Crown invited the trial judge to reject Mr Mundt’s opinion that Sino continued to trade in July 2017 was that his opinion was premised on transactions related to money received from Mr Turkdogan and there was no evidence to infer that the transactions were related to Sino’s business activities. The difficulty is that Mr Mundt’s opinion was in part dependent on his instructions and was inconsistent with Mr Qian’s evidence.

265. A number of submissions were made in this Court to the effect that certain evidence was “unchallenged”. Just because a witness is not cross-examined, does not mean that their evidence must be accepted. The trial judge was confronted by a similar approach. For example, at [86] of her Honour’s judgment she noted that the applicant had submitted that a “fact not in dispute” was that Sino had a potential gross income in the 2016-2017 year of $8 million. As her Honour noted, that was not an accepted fact, it was not comfortably supported by the evidence and it was ultimately conceded that it could not be satisfied on balance.

266. Her Honour accepted the evidence of Mr Gadate over that of Mr Mundt and was satisfied that the amount of money dealt with over the period of the indictment was disproportionate to the regular trading of Sino.

267. It is to be accepted that Mr Qian resiled from his initial evidence to the Crime Commission that Sino had cash income in the order of $10,000 per day. But I am not satisfied that exhibit 20 supports the applicant’s contention that he was settling business expenses for Sino through money transferred to the applicant’s account in China. On the contrary, it supports the contention that he was involved in money laundering.

The significance of the reference to Mr Daan in exhibit 20

268. The applicant’s case was that most of the money he received was paid to Mr Daan as reimbursement for Sino’s expenses. Mr Qian denied this. The applicant submitted that Mr Qian’s omission of reference to Mr Daan in his police statement (which was tendered at the trial) means that his denials ought not to be accepted. It seems to me that there may have been some confusion about this evidence at the trial.

269. Mr Qian’s evidence was that he knew Mr Daan but denied ever using Mr Daan to pay Sino’s business expenses in China. His evidence was that he had told the police about Mr Daan in his police interview statement. Detective Hudson denied this and said that all the information given by Mr Qian, other than general conversation, was put in his statement to police. But in Mr Qian’s statement to police he said that he believed the person the applicant was sending the money to in China was called “An” and that the applicant sometimes forwarded messages to him from “An”. He explained that a WeChat message from the applicant saying “AN has to pay on behalf of Brother No.4 first” meant that Brother No.4 was the person An had to pay after receiving money from the applicant.

270. In relation to the charts sent by the applicant via WeChat on 19 July 2017 (annexed to his statement), Mr Qian explained that he believed this represented the breakdown of how the applicant transferred the money to “An” once he received it. Those charts referred to the amount “payable to DA AN”.

271. The WeChat messages annexed to Mr Qian’s statement to police mentioned “AN”, “DA AN” and “Li Da An” several times. All of those messages appeared to refer to the same person, being the person whom the applicant was paying money to in China. All of the messages relating to Mr Daan were sent by the applicant. The messages referred to “settlement” amounts with “DA AN”, amounts payable to Da An, the applicant being “chased” by “AN”, talking to “DA AN”, or “DA AN” going “mad” due to delays in the money being transferred. The applicant also referred to a “problem” with the person who “collects money on DA AN’s end” in relation to a proposed collection of money by Mr Qian on 10 April 2017.

272. On 5 July 2017, the applicant said, “I have told AN that [we] would try to convince Brother No.4 to move it according to today’s XE. There is no other choice even if it’s at a loss…”. This conversation appeared to relate to a fall in the exchange rate.

273. Although the trial judge seemed to accept the defence submission that Mr Qian had not mentioned Mr Daan to police when making his statement, it seems to me that the fact “An” is the same person may not have been fully comprehended by her Honour. Mr Qian’s evidence was that the name would have been spelt differently in Mandarin and he said that he could not recognise the name when it was put to him in English. He denied using Mr Daan for “factoring”. When exhibit 20 was put to him in cross-examination (including a screenshot of WeChat messages using Mr Daan’s name in Mandarin) he agreed that he had met Mr Daan and said that he had told police about Mr Daan.

274. I have considered the series of WeChat messages sent by the applicant to Mr Qian on 22 May 2017. As set out above, it includes the applicant’s various calculations of amounts and exchange rates and repeatedly refers to the funds being “settled” with Da’an and “Brother Four” and funds being transferred to Da’an. After setting out three such calculations the applicant said, “Boss, please confirm the above when you get up. I just finished reconciliation with Da’an. Good night.” These messages were tendered by the applicant but were not on Mr Qian’s phone.

275. Contrary to the applicant’s evidence, it seems to me that the discussions about the percentage that the applicant, Mr Daan and Mr Qian might be paid is consistent with their involvement in money laundering. There would be no need for such discussions if, as the applicant contended, money was simply being sent from Mr Qian to the applicant to pay Sino’s expenses. I am supported in this conclusion by Senior Constable Bayliss’ evidence about the use of daigou businesses by money laundering syndicates. His evidence was that once the funds arrived in China, the daigou business would receive a percentage “cut” of the profit.

276. Another difficulty with the applicant’s reliance on exhibit 20 is that Mr Qian at no stage engaged in any of the conversations about Mr Daan. One interpretation of these messages is that Mr Qian was not particularly interested in what the applicant was doing with Mr Daan as it was the applicant who was the ringleader and Mr Qian was simply the courier. In other WeChat extracts tendered by the Crown it is clearly the applicant who is telling Mr Qian what to do.

277. When regard is had to other evidence at trial, it was open to her Honour to reject the applicant’s contention that exhibit 20 established that the applicant was employed by Sino, being paid wages by Sino and paying Sino’s business expenses in China with the funds provided by Mr Qian.

The applicant’s income

278. I have already considered under ground 1 the first aspect of the applicant’s submission that the Crown could not prove the circumstance in s 193C(3)(e), that being the contention that the subsection could not be assessed until the applicant had actual possession of the property. Counsel for the applicant also submitted that the tribunal of fact could not properly assess the question without evidence about the applicant’s income in China. The applicant’s evidence at trial in relation to his income was as follows:

“Q. Now putting aside any money that you say you were paid by Sino, were you receiving any other income during the 2016/2017 financial year?

A. WITNESS: No.”

279. The submission made by senior counsel at the hearing of this appeal was that, contrary to the terms of the question, the applicant was only talking about his income in Australia and he could have been receiving income in China. That submission must be rejected. There was no ambiguity in the terms of the question asked.

280. The applicant’s evidence was that he had savings in China and was being supported by his family and his wife’s family. The evidence of his age, lack of tertiary qualifications and lack of success in his previous enterprises is also relevant to the question of any supposed wealth in China, of which there was no evidence.

The four unavailable witnesses

281. As for the four unavailable witnesses, I have summarised their evidence above. Her Honour noted that the position of the Crown was that those affidavits contained hearsay representations, were vague and at times the facts asserted were unclear. Her Honour noted at [109] that the failure to specify the basis of the knowledge of each of these deponents rendered some aspects of their evidence unsatisfactory.

282. Her Honour noted in relation to Huang Tian’s evidence (at [110]-[111]) that he believed the money was paid on behalf of Mr Qian but he had no knowledge of that fact, and that the only basis for his belief was that he thought the applicant was working for Mr Qian.

283. Similarly, her Honour noted at [113] Dai Shuguang’s evidence that he “knew” that Mr Daan and Mr Qian had business dealings, but he did not say what those dealings were or how he knew this information. He “understood” the amount of $200,000 paid to him by the applicant related to business dealings between Mr Daan and Mr Qian but did not indicate how he knew this.

284. As for Yao Jintian’s evidence, he said he “understood” that the applicant used his account to make outstanding payments for postage owed by Mr Qian but, as her Honour pointed out at [116], there was no indication as to the basis for this understanding. This affidavit did no more than assert a belief without foundation.

285. Finally, Chen Jiongmin was informed by the applicant that he was used by Mr Qian to facilitate the payment of accounts. As her Honour noted at [119], there was no indication as to when the applicant told him this. Her Honour went on to note the Crown submission that this evidence was no more than a hearsay representation which merely relayed things said to him by the applicant.

286. In addition to noting the limitations of these affidavits her Honour returned to their evidence at [258] and noted that the evidence was that the witnesses were paid money by the applicant “purportedly” on behalf of Mr Qian but that this evidence had limitations which impacted on its probative value. Her Honour accepted that it provided “some” support for the applicant’s version but was not ultimately satisfied, having regard to all of the evidence, that the defence had been established. It was open to her Honour to approach that evidence in the manner she did.

Conclusion

287. Overall, I am satisfied that it was open to her Honour to be satisfied beyond reasonable doubt of the applicant’s guilt on counts 2 to 6.

288. The transactions included large sums of cash, a token system initiated by the applicant, clandestine money drops in public places, and an unnecessarily complex method of transferring funds out of the country. The evidence of Mr Gadate was that the funds were significantly out of proportion to Sino’s ordinary trading activities and both accountants agreed that the records they were provided with could not be reconciled with the applicant’s claims as to his employment and salary.

289. There were a number of aspects of the applicant’s evidence which her Honour found unsatisfactory. It was open to her Honour to reject the applicant’s evidence that the money was part of a broker system used by Sino. She described his evidence about the WeChat messages as “unimpressive and not credible”. It was open to her Honour to make that finding in light of the applicant’s evidence that he was a General Manager and was paid $190,000 per year yet most of the messages were of no interest to him and he “merely was a conduit” for forwarding messages. I have already summarised the other difficulties she had with his evidence above at [156]-[159].

290. Accordingly, I would dismiss this ground.

Ground 4

291. The applicant’s fourth ground of appeal was as follows:

“Ground 4: The primary judge erred when determining that the defence provided for by S.193C(4) had not been made out.”

Applicant’s submissions

292. Counsel for the applicant submitted that s 193C(4) must be read as stating that the applicant had no reasonable grounds for believing that the property was derived from a serious offence and that the offence in question had to be identified.

293. The applicant went on to submit that the primary judge erred in focussing on the state of mind or knowledge of the applicant when, in the applicant’s submission, the proper test involved an evaluation of a reasonable person in the position of the applicant. The applicant submitted that on this objective test her Honour would have concluded that the defence was made out and acquitted the applicant.

Crown submissions

294. The Crown relied on Yacoub v R [2021] NSWCCA 166 (considered below) and submitted that the trial judge applied the correct test and no error had been made out.

Consideration: Ground 4

295. This ground overlaps with ground 1 to some extent. Just as I was satisfied that the Crown is not required to identify any offence, let alone a “serious offence”, from which the funds were derived, it follows that the same finding applies under this ground.

296. In any event, this ground can be answered by the decision in Yacoub v R, which concerned an appeal against conviction in respect of an offence under s 193C(1), where Basten JA stated at [21] (Walton and Adamson JJ agreeing):

“The prosecution had to establish that, objectively, there were ‘reasonable grounds to suspect’ that the property was the proceeds of crime. That did not turn on the state of mind of the accused. The defence, on the other hand, was entirely concerned with the state of mind of the accused.”

297. The trial judge applied the correct test (at [251] and [267]). There was no requirement to read down the defence to refer to a “serious offence”, to identify the offence in question, or to consider the position of a reasonable man in the applicant’s position.

298. In the circumstances of this case, to make out the defence the applicant bore the onus of persuading the tribunal of fact on the balance of probabilities to accept his evidence as to the way the transactions took place. Her Honour gave appropriate consideration to the evidence adduced by the applicant and the arguments made on his behalf, at [251]-[267] and elsewhere in the reasons. As stated above, there were a number of unsatisfactory aspects to the applicant’s account, including the nature of his purported employment with Sino and his interpretation of the WeChat exchanges, as set out above under ground 3. It was well open to her Honour to reject the applicant’s evidence on this question.

297. No error has been demonstrated in her Honour’s approach to the statutory defence. Ground 4 should be dismissed.

ORDERS

300. I would propose the following orders:

1. Leave to appeal against conviction is granted.

2. The appeal is dismissed.

*****

Decision last updated: 15 November 2021