Commissioner of the Australian Federal Police v HWCJ GLB Pty Ltd

JUDGMENT

1. On 30 April 2024, I gave judgment in Commissioner of the Australian Federal Police v HWCJ GLB Pty Ltd (No 2) [2024] NSWSC 482. These reasons are to be read together with that decision.
2. In Commissioner of the Australian Federal Police v HWCJ GLB Pty Ltd [2022] NSWSC 1574, Campbell J made orders pursuant to the Proceeds of Crime Act 2002 (Cth) ("POCA" or "the Act") restraining funds held to the credit of the five corporate defendants in various accounts with a number of Australian banks. My judgment in Commissioner of the Australian Federal Police v HWCJ GLB Pty Ltd (No 2) concerned the distribution of funds held in various of those accounts pursuant to applications made under the POCA. The background to the applications is set out in that judgment.
3. In short, proceedings were brought by the Commissioner against the corporate defendants for the restraint, and ultimately forfeiture, of funds held by those entities. Those funds were obtained as a result of frauds committed against a large number of persons. The applicants that participated in the proceedings leading to my judgment in Commissioner of the Australian Federal Police v HWCJ GLB Pty Ltd (No 2) (the original applicants) were victims of that fraud. Each sought orders that would have the effect of distributing to them their interest in the restrained funds. There was no issue that each was entitled to a share of the funds. The hearing conducted over three days from 26 to 28 February 2024 was primarily concerned with the method by which the interests of the various applicants should be calculated.
4. Subsequent to the hearing of the applications in February 2024 but prior to the delivery of my judgment, a further seven applicants (the new applicants) came forward, claiming an interest in the restrained funds.
5. The various accounts with respect to which this litigation is concerned are set out in Commissioner of the Australian Federal Police v HWCJ GLB Pty Ltd (No 2) at [10]. The orders of 30 April 2024 provide for payment to the original applicants of funds in those accounts. With respect to the majority of the accounts, the making of the orders would extinguish the funds in the particular account, leaving nothing for the new applicants. Given this, the orders made by me on 30 April 2024 were immediately stayed, pending resolution of the claims of the new applicants. That stay was subsequently extended on 17 May 2024 and remains in place.
6. Various of the orders sought by the new applicants will, if made, affect (at least some of) the orders made by me on 30 April 2024. The impact of the new applications varies across the different accounts. As a result, different positions were (at least initially) taken by various of the original applicants with respect to the claims of the new applicants. These reasons concern interests in funds in the following accounts ("the relevant accounts"): a. National Australia Bank (NAB) Account HWCJGUSD01 held in the name of HWCJ GLB Pty Ltd (HWCJGUSD01 Account); b. NAB Account HWCJGCAD01 held in the name of HWCJ GLB Pty Ltd; c. NAB Account JCJHEUSD01 held in the name of JCJ Health Pty Ltd (JCJHEUSD01 Account); d. NAB Account LJYINUSD01 held in the name of LJ Yin Pty Ltd (LJYINUSD01 Account); and e. NAB Account WHGLBUSD01 held in the name of Wenhao Globle Pty Ltd.
7. That is, these reasons concern each of the accounts dealt with in Commissioner of the Australian Federal Police v HWCJ GLB Pty Ltd (No 2) with the exception of the GSL Bud accounts.
8. With respect to the relevant accounts, it was agreed that the new applications could be determined on the papers, without the need for a further hearing. The need for a hearing with respect to the GSL Bud accounts has not yet been finally resolved. It is, however, undesirable to further delay the making of orders with respect to the relevant accounts while the position with respect to the GSL Bud accounts is determined.
9. At a directions hearing on 19 June 2024 concerned with how to deal with the new applications, no opposition was indicated to orders being made in favour of new applicants, distributing to them their interest in the relevant accounts, that interest being determined by application of the same method of distribution determined to be appropriate for the particular account in my judgment of 30 April 2024. As a result, proposed consent orders were drafted by the Commissioner and circulated to the applicants. In the event, each of the applicants agreed with the consent orders with the exception of one, who, for reasons that are unclear, indicated they neither consented to, nor opposed, the making of the orders.
10. In the circumstances referred to above, any further hearing was dispensed with by agreement of the parties, with the matter to be determined on the papers. In determining the applications I have had regard to the affidavits of the applicants filed in support of the motions, the Commissioner's proposed Agreed Facts filed 1 July 2024 (which had obtained the agreement of relevant applicants) and the affidavit of Charlie Nasr, forensic accountant, filed 24 June 2024. That material sets out the contributions made by the new applicants to the relevant accounts. The evidence satisfies me that funds contributed to the relevant accounts by each of the new applicants were obtained from a source such that the applicant is not, under the Act, disentitled to relief with respect to that interest.
11. Various of the applicants have provided reasons as to why they did not participate in the hearing of the matter in February. Those reasons attest to the various ways in which the assumption that all relevant persons were appropriately notified was misplaced. While some applicants have not provided a clear explanation, I am satisfied that the failure of the new applicants to come forward at an earlier time and participate in the February hearing should not disentitle them to relief.
12. The affidavit of Mr Nasr sets out the entitlement of all applicants in the relevant accounts based on their interest calculated by either the pari passu methodology or by engaging the hybrid methodology, as those terms were used in Commissioner of the Australian Federal Police v HWCJ GLB Pty Ltd (No 2). There is, in my view, with respect to each of the relevant accounts, no reason to apply a different method of distribution to that adopted with respect to that account in Commissioner of the Australian Federal Police v HWCJ GLB Pty Ltd (No 2), for the reasons given in that judgment.
13. The stay of the orders insofar as it applies to the relevant accounts should be discharged. Orders should be made in favour of new applicants Xiao Ni Xu (039), Tom Fuh Shiong Fan (040), Laurence Jou (041), Malik Greene (042) and Ven Tow Lee (043), each of whom contributed funds to at least one of the relevant accounts. It will be necessary to vary the orders made on 30 April with respect to the accounts LJYINUSD01 and JCJHEUSD01 to adjust the interests of the original applicants in accordance with Mr Nasr's revised calculations taking into account the new applicants.

Orders

1. In order to give effect to the above, I make the orders set out below: Partial discharge of stay previously ordered 1 The stay of the orders made on 30 April 2024, as granted by order 4 made on 30 April 2024 and order 3 made on 17 May 2024, is discharged, with immediate effect, insofar as it applies to or affects any of the following accounts: a. National Australia Bank (NAB) Account HWCJGUSD01 held in the name of HWCJ GLB Pty Ltd (HWCJGUSD01 Account); b. NAB Account HWCJGCAD01 held in the name of HWCJ GLB Pty Ltd; c. NAB Account JCJHEUSD01 held in the name of JCJ Health Pty Ltd (JCJHEUSD01 Account); d. NAB Account LJYINUSD01 held in the name of LJ Yin Pty Ltd (LJYINUSD01 Account); or e. NAB Account WHGLBUSD01 held in the name of Wenhao Globle Pty Ltd. 2 The Court notes that the stay of the orders made on 30 April 2024, as granted by order 4 made on 30 April 2024 and order 3 made on 17 May 2024, continues to operate only in respect of the Commonwealth Bank of Australia Accounts 062319 10881183 and 062759 10597291 held in the name of GSL Bud Pty Ltd (collectively the GSL Bud 183 and 291 Accounts). Xiao Ni Xu (Applicant 039) exclusion orders - HWCJGUSD01 Account and LJYINUSD01 Account 3 Pursuant to s 29 of the Proceeds of Crime Act 2002 (Cth) ("POCA"), the interest of Xiao Ni Xu in the property restrained by the orders made on 3 November 2022, together with any interest earned on that applicant's interest in the property while under restraint, is hereby excluded from restraint. The interest of Xiao Ni Xu in the restrained property is: a. USD 249,995 in respect of the HWCJGUSD01 Account; and b. USD 15,108.58 in respect of the LJYINUSD01 Account. 4 Leave is granted to Xiao Ni Xu to apply for an order pursuant to s 39(2)(d) of the POCA. 5 Pursuant to s 39(1)(e)(i) of the POCA, the Official Trustee is directed to pay to Xiao Ni Xu the sum of USD265,103.58, together with any interest earned on that amount while under restraint. Payment is to be made by electronic funds transfer to such account as may be specified in writing by Xiao Ni Xu or their legal representative. Tom Fuh Shiong Fan (Applicant 040) exclusion order - HWCJGUSD01 Account 6 Pursuant to s 29 of the POCA, the interest of Tom Fuh Shiong Fan in the property restrained by the orders made on 3 November 2022, together with any interest earned on that applicant's interest in the property while under restraint, is hereby excluded from restraint. The interest of Tom Fuh Shiong Fan in the restrained property is USD 49,993 in respect of the HWCJGUSD01 Account. 7 Leave is granted to Tom Fuh Shiong Fan to apply for an order pursuant to s 39(2)(d) of the POCA. 8. Pursuant to s 39(1)(e)(i) of the POCA, the Official Trustee is directed to pay to Tom Fuh Shiong Fan the sum of USD 49,993, together with any interest earned on that amount while under restraint. Payment is to be made by electronic funds transfer to such account as may be specified in writing by Tom Fuh Shiong Fan or their legal representative. Lawrence Jou (Applicant 041) exclusion orders - LJYINUSD01 Account 9 Pursuant to s 29 of the POCA, the interest of Lawrence Jou in the property restrained by the orders made on 3 November 2022, together with any interest earned on that applicant's interest in the property while under restraint, is hereby excluded from restraint. The interest of Lawrence Jou in the restrained property is USD 788.95 in respect of the LJYINUSD01 Account. 10 Leave is granted to Lawrence Jou to apply for an order pursuant to s 39(2)(d) of the POCA. 11 Pursuant to s 39(1)(e)(i) of the POCA, the Official Trustee is directed to pay to Lawrence Jou the sum of USD 788.95, together with any interest earned on that amount while under restraint. Payment is to be made by electronic funds transfer to such account as may be specified in writing by Lawrence Jou or their legal representative. Mallik Greene (Applicant 042) exclusion order - HWCJGUSD01 Account 12 Pursuant to s 29 of the POCA, the interest of Mallik Greene in the property restrained by the orders made on 3 November 2022, together with any interest earned on that applicant's interest in the property while under restraint, is hereby excluded from restraint. The interest of Mallik Greene in the restrained property is USD 85,000 in respect of the HWCJGUSD01 Account. 13 Leave is granted to Mallik Greene to apply for an order pursuant to s 39(2)(d) of the POCA. 14 Pursuant to s 39(1)(e)(i) of the POCA, the Official Trustee is directed to pay to Mallik Greene the sum of USD 85,000, together with any interest earned on that amount while under restraint. Payment is to be made by electronic funds transfer to such account as may be specified in writing by Mallik Greene or their legal representative. Ven Tow Lee (Applicant 043) exclusion order - HWCJGUSD01 Account, LJYINUSD01 Account and JCJHEUSD01 Account 15 Pursuant to s 29 of the POCA, the interest of Ven Tow Lee in the property restrained by the orders made on 3 November 2022, together with any interest earned on that applicant's interest in the property while under restraint, is hereby excluded from restraint. The interest of Ven Tow Lee in the restrained property is: a. USD 399,995 in respect of the HWCJGUSD01 Account; b. USD 15,778.83 in respect of the LJYINUSD01 Account; and c. USD 5,466.34 in respect of the JCJHEUSD01 Account. 16 Leave is granted to Ven Tow Lee to apply for an order pursuant to s 39(2)(d) of the POCA. 17 Pursuant to s 39(1)(e)(i) of the POCA, the Official Trustee is directed to pay to Ven Tow Lee the sum of USD 421,240.17, together with any interest earned on that amount while under restraint. Payment is to be made by electronic funds transfer to such account as may be specified in writing by Ven Tow Lee or their legal representative. Variation to orders in respect of LJYINUSD01 Account 18 Pursuant to rule 36.16(3A) of the Uniform Civil Procedure Rules 2005 (NSW), orders 1 to 3 made on 30 April 2024 are varied insofar as they relate to the LJYINUSD01 Account so that those orders read as follows: 1. Pursuant to s 29 of the POCA, the interest of each applicant in the property restrained by the orders made on 3 November 2022, being the LJYINUSD01 Account, together with any interest earned on that applicant's interest in that property while under restraint, is hereby excluded from restraint. The interest of each applicant in that restrained property is the amount or amounts, if any, set out against the name of that applicant in the Schedule A attached to these orders. 2. Leave is granted to each applicant to apply for an order pursuant to s 39(2)(d) of the POCA. 3. Pursuant to s 39(1)(e)(i) of the POCA, the Official Trustee is directed to pay to each applicant the amount or amounts set out next to the name of that applicant in the attached Schedule A, together with any interest earned on that amount or those amounts while under restraint. Payment is to be made by electronic funds transfer to such account as may be specified in writing by each applicant or their legal representative. Variation to orders in respect of JCJHEUSD01 Account 19 Pursuant to rule 36.16(3A) of the Uniform Civil Procedure Rules 2005 (NSW), orders 1 to 3 made on 30 April 2024 are varied insofar as they relate to the JCJHEUSD01 Account so that those orders read as follows: 1. Pursuant to s 29 of the POCA, the interest of each applicant in the property restrained by the orders made on 3 November 2022, being the JCJHEUSD01 Account, together with any interest earned on that applicant's interest in that property while under restraint, is hereby excluded from restraint. The interest of each applicant in that restrained property is the amount or amounts, if any, set out against the name of that applicant in the Schedule B attached to these orders. 2. Leave is granted to each applicant to apply for an order pursuant to s 39(2)(d) of the POCA. 3. Pursuant to s 39(1)(e)(i) of the POCA, the Official Trustee is directed to pay to each applicant the amount or amounts set out next to the name of that applicant in the attached Schedule B, together with any interest earned on that amount or those amounts while under restraint. Payment is to be made by electronic funds transfer to such account as may be specified in writing by each applicant or their legal representative. Transfer of funds in currency in which restrained funds are held 20 Pursuant to section 39(1)(e) of the POCA, the Official Trustee is directed to pay each of the successful applicants for exclusion orders the relevant funds in the currency (foreign or Australian) in which those funds are presently held (without conversion or exchange into a different currency). SCHEDULE A NAB Account LJYINUSD01 in the name of LJ YIN Pty Ltd Proceedings no. Applicant name Applicant's interest in United States of America Dollars (USD) 037 Ronald Myers USD 16,744.72 017 Gang Wu / ValueTek Inc USD 12,370.08 018 James McBrayer USD 4,482.63 035 Jie Bai USD 1,862.66 025 John Amodeo USD 17,955.96 007 John Poelman USD 22,845.79 041 Lawrence Jou USD 788.95 020 Neil Richardson USD 19,815.59 024 Rajeev Sharma USD 3,702.43 038 Ravinder Sagoo USD 111.62 023 Steven Rubinstein USD 32,929.09 027 Ching-Liu Wu USD 1,859.35 043 Ven Tow Lee USD 15,778.83 028 Xiang Yun Luo USD 16,050.63 039 Xiao Ni Xu USD 15,108.58 022 Yong-Xiao Wang USD 10,415.02 Total USD 192,821.93

SCHEDULE B NAB Account JCJHEUSD01 in the name of JCJ Health Pty Ltd Proceedings no. Applicant name Applicant's interest in United States of America Dollars (USD) 037 Ronald Myers USD 24,401.38 012 Isen Chen USD 11,781.21 036 Jeffrey Edel USD 577.64 007 John Poelman USD 4,377.33 003 Robert Brooks USD 9.566.18 024 Rajeev Sharma USD 1,865.56 023 Steven Rubinstein USD 51,034.38 027 Ching-Liu Wu USD 10,341.26 029 Tony Chen USD 415.20 043 Ven Tow Lee USD 5,466.34 033 Xiang Liao USD 4,134.60 031 Yu Geng USD 3,305.42 Total USD 127,266.51

Amendments 25 July 2024 - Firm name corrected on coversheet for applicant 37 31 July 2024 - typographical error amended in Order 15 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 31 July 2024