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[2025] NSWSC 1049
General information, not legal advice.
Supreme Court of NSW
2025-09-15
Rothman J
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Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Commissioner of the Australian Federal Police v Sun (No 2) [2025] NSWSC 1049
Hearing dates: On the papers
Date of orders: 15 September 2025
Decision date: 15 September 2025
Jurisdiction: Common Law
Before: Rothman J
Decision: (1) Pursuant to the provisions of s 98 of the Civil Procedure Act 2005 (NSW), the plaintiff Commissioner of the Australian Federal Police shall pay the defendant’s costs of and incidental to the proceedings on the ordinary basis, other than costs already the subject of an order of the Court.
(2) Otherwise, the proceedings are dismissed.
Catchwords: COSTS — party/party — Proceeds of Crime Act 2002 (Cth) s 323 — indemnity costs — where the Court refused orders for forfeiture of property suspected of being proceeds of indictable offence — commencement and conduct of proceedings by the Commissioner was not unwarranted or unreasonable — costs awarded on ordinary basis
Legislation Cited: Australian Federal Police Act 1979 (Cth), s 17
Civil Procedure Act 2005 (NSW), s 98
Proceeds of Crime Act 2002 (Cth), ss 45(3), 49, 73, 323, 338
Uniform Civil Procedure Rules 2005 (NSW), r 42.1
Cases Cited: Application by the Commissioner of the Australian Federal Police v Sun [2024] NSWSC 890
Bale v Kimberley Developments Pty Ltd (No 2) [2022] NSWSC 1009
Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd (No 2) [2009] NSWCA 12
Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 257; [1993] FCA 801
Diez v Director of Public Prosecutions (2004) 62 NSWLR 1; [2004] NSWCA 452
Gwe v Commissioner of the Australian Federal Police (No 2) (2020) 103 NSWLR 535; [2020] NSWCA 350
Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344
Ohn v Walton (1995) 36 NSWLR 77
Category: Costs
Parties: Commissioner of the Australian Federal Police (Plaintiff)
Jieying Sun (Defendant)
Representation: Counsel:
G O’Mahoney / D Tang (Plaintiff)
G A Sirtes SC / P Reynolds (Defendant)
Solicitors:
Criminal Assets Litigation, Australian Federal Police (Plaintiff)
MLH Lawyers (Defendant)
File Number(s): 2015/308779
Publication restriction: N/A
HIS HONOUR: The plaintiff (hereinafter “the Commissioner”) commenced these proceedings by summons in which the plaintiff contended that the defendant was engaged in a money laundering operation. As is common in these applications, the summons sought ex parte orders freezing the funds and assets of the defendant. The summons and application for freezing orders were dealt with urgently and, on 21 October 2015, Button J granted the interim orders in the summons filed in Court on that day.
On 19 November 2015, the defendant sought an exclusion of certain property from the restraining orders issued under the P**roceeds of Crime Act 2002 (Cth), which exclusion application was brought on for hearing on 30 and 31 August 2017.
On 30 October 2017, Wilson J dismissed the application for exclusion of certain property and ordered the defendant to pay the Commissioner’s costs.
The Commissioner sought forfeiture orders pursuant to s 49 of the Proceeds of Crime Act and this application was heard by the Court for over a week ending 9 February 2023.
Following written submissions, the Court issued a judgment, the effect of which was to refuse the application by the Commissioner for the forfeiture order (“the Forfeiture Judgment”). [1] The facts can be briefly summarised but are set out in full in the Forfeiture Judgment. The defendant is a citizen of the People’s Republic of China (“PRC” or “China”), who has lived and lived in Australia, at the time of the Forfeiture Judgment, on a student visa. Her father is a well-resourced businessperson with significant business interests operating in the PRC and was, at the time of the Forfeiture Judgment, an extremely successful businessperson.
The defendant was employed by the father in the PRC but was on extended leave when in Australia for the purpose of learning and becoming fluent in English. During the defendant’s time in Australia, the defendant’s father transferred funds to her for the purpose of purchasing a residential unit.
The father utilised a money exchange agent to whom the father transferred money, the ultimate result of which was that the money was deposited, albeit in instalments, in the defendant’s accounts.
The scheme under which this occurred is a scheme which has the effect of laundering, or seeking to launder, monies obtained either by criminal activity of third persons or in a manner that avoids the payment of appropriate taxation by a third person. The monies received by the money exchange agent are deposited in the accounts of such third persons, who are otherwise in possession of illicit funds (usually if not always cash), thereby providing a provenance for the money and allowing it to be claimed to be legally obtained.
The exchange agent, in such a scenario, obtains a commission from the person who possessed the previously illicit funds. Because monies are earnt on commission from criminal elements, the exchange agent is in a position to offer significantly better exchange rates for persons who otherwise may innocently seek to transfer money internationally.
In the Forfeiture Judgment, the Court determined that the defendant was not a person who held property that was the proceeds of an indictable offence, the proceeds of a foreign indictable offence, or the instrument of a serious offence. Consequently, the Court refused the orders under s 49 of the Proceeds of Crime Act, the effect of which was that the restraining order, initially issued by Button J in 2015, ceased to have force in respect of the property in question. [2]
The orders made in the Forfeiture Judgment allow the parties to seek costs under s 323 of the Proceeds of Crime Act. The defendant has sought those costs.
The defendant has sought indemnity costs in relation to the proceedings and has also sought that the Court vacate the costs order issued by Wilson J on 30 October 2017. The provisions of s 323 of the Proceeds of Crime Act are in the following terms:
Costs
(1) If:
(a) a person brings, or appears at, proceedings under this Act before a court in order:
(i) to prevent a *forfeiture order or *restraining order from being made against property of the person; or
(ii) to have property of the person excluded from a forfeiture order or restraining order; and
(b) the person is successful in those proceedings; and
(c) the court is satisfied that the person was not involved in any way in the commission of the offence in respect of which the forfeiture order or restraining order was sought or made;
the court may order the Commonwealth to pay all costs incurred by the person in connection with the proceedings or such part of those costs as is determined by the court.
(2) The costs referred to in subsection (1) are not limited to costs of a kind that are normally recoverable by the successful party to civil proceedings.
There are aspects to this claim which require further elucidation. The Commissioner does not oppose a costs order in relation to the proceedings generally but opposes the ordering of indemnity costs and opposes the vacation of the order for the defendant to pay the Commissioner’s costs of the application for the exclusion order under s 73 of the Proceeds of Crime Act, issued on 30 October 2017.
The Court, being a superior court of record with general jurisdiction, including jurisdiction as to equity, has an inherent power to order costs. Over and above the inherent power, s 98 of the Civil Procedure Act 2005 (NSW) authorises any court governed by the terms of the C**ivil P**rocedure Act to award costs. The Commonwealth provision, extracted above, is an additional jurisdiction and/or power.
There are two aspects of the provision of s 323 that require comment. First, s 323(1) is facultative or permissive. It allows the Court to order costs; it does not require the Court to order costs. Secondly, that which may be ordered by the Court is “all costs incurred by the [defendant] in connection with the proceedings or such part of those costs as is determined by the court”.
Thirdly, the provisions of s 323(2) are unusual. They extend the costs that may be awarded to a class of costs that may not be “normally recoverable by the successful party to civil proceedings”.
The prima facie position in ordinary civil litigation is that costs will follow the event. [3] The awarding of “costs” is an order that is intended to compensate the successful party for bringing or defending the proceedings. Costs are compensatory, not punitive. [4]
In Bale v Kimberley Developments Pty Ltd (No 2), [5] Ward P said:
“In that context, ‘relevant delinquency’ does not mean moral delinquency or some ethical shortcoming but delinquency bearing a relevant relation to the conduct of the case (see, for example, White Constructions ACT Pty Ltd (in liq) v White [2004] NSWSC 303 at [11] per McDougall J). Circumstances in which indemnity costs may be awarded include: where a party has made allegations that ought never to have been made; where an action has been commenced or continued where the plaintiff, properly advised, should have known the applicant had no chance of success; and where proceedings have been commenced in wilful disregard of known facts or clearly established law. An award of indemnity costs serves the purpose of compensating a party fully for costs incurred when the Court takes the view that it was unreasonable for the party against whom the order was made to have subjected the innocent party to the expenditure of the case.” [6]
There are other circumstances in which the Court may order indemnity costs. As the UCPR make clear, where there is an offer of compromise, including a Calderbank offer, the terms of which would have been more favourable to the offeree than the ultimate outcome of the proceedings, the Court may ordinarily order indemnity costs. There is no presumption that an order for indemnity costs will be made in favour of the offeror, but it is a highly relevant consideration in the exercise of the costs discretion. [7]
In circumstances where the Court is dealing with an offer, the Court takes a relatively commercial attitude and often does not deal with the merits or otherwise of the litigation itself. In other circumstances, particularly where a party commences or maintains proceedings which are manifestly groundless or destined to fail, the Court is endeavouring to discourage litigation where there are no reasonable prospects of success. [8]
The Court’s power to order indemnity costs is enlivened when there is a sufficient or unusual feature which warrants the making of such an order. [9]
However, notwithstanding all of the foregoing, it is essential to understand that an order for indemnity costs is an order that the appropriate measure of compensation of a particular party is that they have their full costs paid and is not a means of punishment of the unsuccessful party. At least arguably, the ordinary rules associated with the order for costs in civil proceedings do not apply strictly to proceedings under the P**roceeds of Crime Act. Subsection 323(2) makes that clear.
It seems that the terms of s 323(2) of the Proceeds of Crime Act reflect the punitive nature of the orders that are made against a defendant, who, ultimately, is found innocent of the circumstances that gave rise to the restraining or freezing orders.
Thus, one can well imagine that, if there were economic losses associated with the circumstance that the property may not have been able to be dealt with, such economic losses may be a factor considered in the awarding of costs or the amount of the costs, pursuant to the provisions of subs 323(2) of the Proceeds of Crime Act. Nevertheless, the provision is a provision for costs, not damages.
The reference to “all costs” ordinarily equates with indemnity costs, being those costs that have been expended other than costs that were unreasonably incurred. [10]
The expression “all costs” was recently discussed by the Court of Appeal in Gwe v Commissioner of the Australian Federal Police (No 2). [11] The Court, after referring to the comments of Santow JA, with whom Beazley and Tobias JJA agreed, [12] in Diez, said:
“The use of the expression ‘all costs’ does not mean that that will or must be the basis upon which an order for costs is awarded when the conditions set out in s 323(1) of the Act are satisfied. As Santow JA also indicated (at [34]), s 101 (and s 323) confers a discretion. Nothing in the text of s 323 creates a presumption or encourages a predisposition towards the grant of indemnity costs as opposed to costs awarded on any other basis.” [13]
With great respect to the Court of Appeal, I agree that the terms of s 323 of the Proceeds of Crime Act do not create a presumption that indemnity costs will be awarded or even a preference for the ordering of indemnity costs. It provides a power or jurisdiction, and the awarding of costs is still a discretion to be exercised in accordance with proper principle.
As pointed out by the Commissioner, the terms of s 323 apply to orders made against the Commonwealth. The Commissioner is a person appointed for seven years pursuant to s 17 of the Australian Federal Police Act 1979 (Cth). The Commissioner is not, for all purposes, the Commonwealth. At the same time, the Australian Federal Police and the Commissioner are not established as separate legal entities.
As Dhanji J stated, there is an administrative arrangement between the Commonwealth and the Australian Federal Police as to the source in budgetary terms of the monies that would be payable under a costs order. An initiating application for orders under the statute is made by an authorised officer, as defined by s 338 of the Proceeds of Crime Act, which relevantly, includes an officer of the Australian Federal Police authorised by the Commissioner. [14]
An application for orders under the Proceeds of Crime Act is not made by the “Commonwealth”. Nevertheless, the Commissioner and the Australian Federal Police, to the extent that they are operating under the authority granted by the statute, are arms of the Commonwealth. In my view, no distinction ought to be made in the exercise of discretion to award costs between the principles applicable to an order against the Commonwealth, and the principles applicable to an order against the Commissioner.
The Court is required in exercising any discretion under the Civil Procedure Act, including s 98 costs orders, to take into account the overriding purpose and object of the statute: the facilitation of the just, quick and cheap resolution of the real issues between the parties. [15]
The Court, by order of Button J, granted interim relief to the Commissioner on the basis of the usual undertaking as to damages. Nevertheless, the Court, at that time, took the view that the application of the Commissioner was arguable and otherwise sufficient for the grant of such freezing orders under the statute. Wilson J refused an order for exclusion of the property from the freezing orders.
In those circumstances, it cannot be said that the commencement of the proceedings by the Commissioner was unwarranted or unreasonable. The evidence in the proceedings for the making of the forfeiture orders, which gave rise to the Forfeiture Judgment, also established that there was a reasonable basis for the Commissioner to commence proceedings against the defendant. The evidence is summarised fully in the Forfeiture Judgment.
As earlier stated, the ordinary rule is that costs follow the event. The ordinary rule is also that costs are awarded on an ordinary basis, and not an indemnity basis. The defendant commenced the proceedings for the exclusion of the property from the restraint orders, prior to a final hearing. Those proceedings were unsuccessful.
In my view, there is no good reason, as a matter of that which is just, to vacate the orders of Wilson J to the effect that the defendant should pay the Commissioner’s costs of and incidental to the application for the exclusion of the property. Those costs should, as is the ordinary case, follow the event and I see no good reason to countermand or vary those orders.
As a matter of practicality, those costs will be deducted from the costs that are otherwise calculated and payable to the defendant by the Commissioner. The aspect of whether the Court should order that costs be assessed on an indemnity basis is more difficult.
Ultimately, the only basis for an allegation that the defendant was involved in any criminal activity was the allegation that the defendant committed fraud by misleading the bank in obtaining a loan for the purchase of real estate. There is no suggestion that the defendant defaulted on that loan and no suggestion that the defendant, through her father, did not have the wherewithal to service the loan in accordance with its terms.
The concern of the Commissioner, understandably, was excited by the money-laundering aspect of the arrangement with the money-exchanger. The process by which the money was transferred from China to Australia is, unfortunately, a not uncommon feature for the laundering of monies.
The process, as described above, provides the transferor with a better exchange rate than might have been the case were the monies transferred through a legitimate financial institution. Further, the monies are deposited into the account of the defendant in instalments, so that the money-exchanger can, on her or his perception, avoid the mandatory reporting requirements for international money transfers.
The Commissioner is performing a public duty and should not be the subject of “punishment” or more severe orders, if the applications made by the Commissioner are taken reasonably. The Commissioner has done nothing, other than the proper running of a case, that would warrant admonishment, or which would excite the need for greater compensation payable to the defendant.
I accept that, even though the defendant (and her father) has acted wholly innocently, they have expended significant amounts on senior and junior counsel and solicitors in order for their case to be presented appropriately. The engagement of senior and junior counsel was an appropriate and wholly reasonable course.
I return to the principle that costs are compensatory and not punitive. On one view, no successful party ought to be denied full compensation for the costs reasonably incurred in enforcing or defending their position. Nevertheless, ordinarily those costs are assessed on the ordinary basis and parties are usually out of pocket.
Even though this is a situation in which there is good reason to provide full compensation for the costs incurred, given the innocence of the defendant, I do not consider that there is good reason to depart from the ordinary rule. I determine that the costs of the proceedings should be assessed on the ordinary basis.
The Court makes the following orders:
Pursuant to the provisions of s 98 of the Civil Procedure Act 2005 (NSW), the plaintiff Commissioner of the Australian Federal Police shall pay the defendant’s costs of and incidental to the proceedings on the ordinary basis, other than costs already the subject of an order of the Court.
Otherwise, the proceedings are dismissed.
**********
Application by the Commissioner of the Australian Federal Police v Sun [2024] NSWSC 890 (“the Forfeiture Judgment”).
Proceeds of Crime Act 2002 (Cth), s 45(3).
Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”), r 42.1.
Ohn v Walton (1995) 36 NSWLR 77 at 79.
Bale v Kimberley Developments Pty Ltd (No 2) [2022] NSWSC 1009.
Ibid, at [45] (Ward P).
Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 at [8].
Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 257; [1993] FCA 801.
Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd (No 2) [2009] NSWCA 12 at [4].
Diez v Director of Public Prosecutions (2004) 62 NSWLR 1; [2004] NSWCA 452.
Gwe v Commissioner of the Australian Federal Police (No 2) (2020) 103 NSWLR 535; [2020] NSWCA 350.
Diez, supra.
Gwe, supra, at [12] (Bathurst CJ, Bell P, Emmett AJA).
Proceeds of Crime Act 2002 (Cth), s 338, definition of “authorised officer”.
Civil Procedure Act 2005 (NSW), s 56.
Commissioner of the Australian Federal Police
Sun
(1993) 46 FCR 225
(2004) 62 NSWLR 1
(2020) 103 NSWLR 535
(1995) 36 NSWLR 77