Commonwealth Director of Public Prosecutions v Alex Chan AKA Ngoo Chan

THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

12088/98 - COMMONWEALTH DIRECTOR OF PUBLIC PROSECUTIONS v ALEX CHAN AKA NGOO CHAN JUDGMENT

1 HIS HONOUR: Mr Alex Chan (Mr Chan) was arrested and charged with knowingly being associated with the importation of a prohibited drug, namely heroin. As a consequence of his being so charged a restraining order was made under the Proceeds of Crime Act 1987 (the Act) in respect of property of a kind referred to in s 43(1)(c), (d) and (e), all of which property is property of the person described in the section as the defendant, in this case Mr Chan. 2 The property the subject of the restraining order made under s 43 of the Act included real estate at Langford in Western Australia described in the restraining order as the Western Australian property. In addition, an amount of $50,000 which was paid into the Supreme Court Registry as surety for bail was the subject of such order. 3 On 11 August 2000 Mr Chan was convicted of the offence with which he was charged and as a consequence the time limited by the Act for the forfeiture of the property the subject of the restraining order began to run. 4 There has been dispute between the Director of Public Prosecutions and Mr Chan as to whether or not such restraining order has been effectively extended by an order of Greg James J made on 13 March 2001 and such order is presently the subject of a proposed appeal by the Director of Public Prosecutions. No notice of appeal has yet been filed. 5 The application which is presently before the Court is one pursuant to which Mr Chan seeks a declaration that the Western Australian property and the amount of $50,000 should be disregarded for the purposes of s 30 of the Act. 6 Section 48(4) of the Act provides, that where a person has been convicted of or has been charged with a serious offence and a Court in reliance on that conviction or charging has made a restraining order against property in which the defendant has an interest, such person may apply to the Court for a declaration in relation to his or her interest and provided two conditions are fulfilled the Court may declare that the restraining order is to be disregarded for the purposes of s 30 of the Act. 7 Those conditions are that the Court must be satisfied that:

(1) the property was not used in or in connection with any unlawful activity and was not derived directly or indirectly by any person from any unlawful activity, and

(2) the defendant's interest in the property was lawfully acquired. 8 There is no issue in this regard between the DPP and Mr Chan in relation to the Western Australian property. There is clear and cogent evidence that such property was purchased for an amount of some $41,000 in 1983 with moneys which were in part provided by Mr Chan from his savings, in part by an amount of $17,000 given to him by his mother in 1983 and in part with $13,000 given to him by his father-in-law in Perth in the same year. 9 In the light of that evidence the Director of Public Prosecutions has not challenged the fulfilment of either of the pre-conditions set out in s 48(4)(e) of the Act, and without conceding that Mr Chan is entitled to a declaration in respect of that property pursuant to that section, has advanced no submissions to the contrary. I think it appropriate that a declaration under the section should be made in respect of that property. 10 The situation in relation to the amount of $50,000 is different. In the affidavit evidence filed in Court Mr Chan said that the amount was lent to him by his "good friend Anthony Wong" and an affidavit by Mr Wong deposes to the fact that he agreed to lend Mr Chan an amount of $56,000 "to pay for his bail". This is because (it was said) Mr Chan was a good friend of Mr Wong. 11 An affidavit was filed by Mr William Chan, who is unrelated to the defendant, and is a solicitor of the Supreme Court. His affidavit deposes to receipt of the $50,000 by him and then gives details as to the circumstances in which that money came into his possession. Clearly part of his evidence in that regard is incorrect. He is, in my opinion, mistaken in relation to some of the events on a day in late January 1998 when the money came to him. 12 However, the essence of his evidence, namely that the $50,000 that he caused to be paid into the office of the Supreme Court as bail surety for his client Mr Chan, is borne out by a series of documents which belatedly and somewhat painfully were ultimately drawn out of Mr Chan's file or obtained at the eleventh hour from other sources. 13 Those documents show that Mr Wong did indeed withdraw $56,000 from the account of his company on 28 January 1998. It is also clear from the records that a bank cheque was obtained by Mr Wong with the proceeds of that $56,000. 14 Mr William Chan gave evidence, and I accept it, that the $6,000 parcel of the $56,000 was paid in cash to counsel who had appeared and was appearing on behalf of Mr William Chan's client, namely the defendant. There was then some difficulty experienced about the mode of payment into Court and in the up-shot Mr William Chan said that his client paid the $50,000 parcel of the $56,000, to which I have previously referred, into a joint account held by Mr Chan and his wife. 15 That an amount of $50,000 was paid into such account is clear from the bank records. It was paid in on 2 February 1998. Furthermore, it is clear from the documents that have now come to light that on 9 February 1998 an amount of $50,000 was sent by telegraphic transfer from Western Australia, where Mrs Alex Chan was residing, to a bank account with the State Bank of China. The account number of the account to which it was sent coincides with Mr William Chan's office bank account number. 16 The records of Mr William Chan that are extant are less than full. However, they show that on 9 February 1998 an amount of $50,000 was received into the office account of Mr William Chan's practice on account of Mr Chan and that on 11 February that $50,000 was disbursed on behalf of Mr Chan. That was the date on which the moneys were paid into the Supreme Court on account of bail and the paper trail, together with the essential evidence of Mr Wong and Mr William Chan, satisfies me that the money which was lodged with the Supreme Court was money that had been lent by Mr Wong to Mr Chan and had been deposited with the Supreme Court via the joint account which Mr Chan held with his wife and the office account of Mr William Chan. 17 Mr Chan, therefore, has the requisite interest in the property. It was his. In return for that money he remains indebted, or on the evidence remains, indebted to Mr Wong. 18 There is no evidence or any suggestion that the property, namely the $50,000, was used in or in connection with any unlawful activity or was derived directly or indirectly by Mr Wong or any other person from any unlawful activity. Furthermore, the evidence satisfies me that the defendant's interest in the property was lawfully acquired. 19 For those reasons I am satisfied that the provisions of s 48(4)(e) of the Act are satisfied in respect of that amount of $50,000 and that it would be appropriate to make a declaration pursuant to that sub-section in respect of that amount of money. 20 The orders of the Court will be:

Declare that the restraining order made on 25 August 1998 and varied on 3 September 1998 and 4 February 1999 to the extent that it relates to the Western Australian property and the amount of $50,000 lodged with the Supreme Court as bail surety, shall be disregarded for the purpose of s 30 of the Proceeds of Crime Act 1987. 21 Following the making of the declaration in relation to the two items of property, namely the Western Australian real estate and the amount of $50,000 that is favourable to Mr Chan, counsel addressed on the question of costs. 22 There is an onus cast upon a defendant who makes an application under s 48(4) of the Act to establish the matters (positive and negative) required by the section. In so far as s 48(4)(e) is concerned it includes both categories. Whilst there is authority that forfeiture provisions are to be construed in the same way as legislation that effects a penalty and that when proving a negative there may be cases in which the evidentiary burden is readily satisfied, the fact remains that at the end of the proceedings unless the Court is satisfied of the matters set out in s 48(4)(e) the party making the application fails. 23 As was said in Brauer ((1989) 45 A Crim R 109) the applicant: "bears the legal and ultimately persuasive onus of satisfying the Court in relation to the negative state of affairs"

set out in s 48(4)(e)(i). He also bears the onus of establishing the matters in s 48(4)(e)(ii), although that is in positive form. 24 The object of this case changed during the course of its conduct. When the matter opened there was an adjournment application on behalf of the Director of Public Prosecutions. For reasons set out in the judgment which I gave yesterday that application failed. That took the whole of the morning yesterday and the Director of Public Prosecutions will have to pay those costs. 25 Thereafter the matter proceeded on the basis that there was no dispute as to the matters in s 48(4)(e) in so far as they related to the Western Australian property. There was no formal consent on the part of the Director of Public Prosecutions. This was in order to preserve what it viewed as a position that might arise consequent upon an appeal from Greg James J's decision of 13 March 2001 being successful. However, it was not a matter in contest. 26 The matter in contest was the amount of $50,000 but that was only in contest until such time as it emerged, as it did, that the application that was made yesterday in respect of that amount of money was not an application under s 48(4) but an application under s 43(3). 27 Upon analysis of that approach it emerged late yesterday afternoon that if the defendant, as applicant, succeeded in respect of the Western Australian property, then s 43(4) would deprive him of success in relation to the $50,000, unless it were established that the value of the Western Australian property was not sufficient to meet the expense of defending Mr Chan's criminal appeal proceedings. There was no evidence as to the value of the property other than the fact it had been purchased for some $41,000 in 1983. 28 When faced with that situation senior counsel for the applicant took his courage in his hands and boldly changed the basis of the claim, I think rightly so. If he failed because of the provisions of s 43(4) in relation to a claim for legal expenses under s 43(3) then by the time the matter came back for hearing, if it ever did, he faced the prospect that Greg James J's decision may be over-ruled and since the money was required for legal expenses, better to have it now or know it was not available, than to wait until a date undetermined. So the fact is that when the case commenced this morning senior counsel advised the Court that he proposed to expand his application in respect of the $50,000 so as to seek a declaration under s 48(4). That necessitated further cross-examination of Mr William Chan and the tender of some additional documents. There the evidence rested. 29 However, after senior counsel for the DPP had addressed, senior counsel for the applicant sought to re-open in order to tender some further documents and further evidence from Mr Chan. Those documents and that further evidence led to a situation in which there was, without doubt, a clear paper trail which demonstrated that in high probability the $50,000 had come from Mr Wong, that it had been part of the $56,000 that had been withdrawn by Mr Wong from his company's bank account, that it had gone into a joint account of Mr Chan and his wife and in due course by telegraphic transfer into Mr William Chan's office account. That made clear what had, up to that time, been equivocal and inconclusive. The documents made it unnecessary to examine the inconsistency between the affidavit of Mr Anthony Wong of 22 November 2000 where (in para 4) he said he gave the cheque, being "a bank cheque" for $56,000 to the defendant's solicitors, Messrs W Chan & Co and the situation as deposed to by Mr William Chan in para 3 of his affidavit of 26 March 2001, namely that: "Mr Anthony Wong brought into my firm the sum of $56,000. This was initially in the form of cash. Counsel at the time, Mr Costello, took $6,000 as payment for his legal fees."

and there was then evidence about dealings to get a $50,000 bank cheque. 30 On that state of the evidence, that is before the tender of the additional documents, there was not only a justification in the Director of Public Prosecutions resisting the claim under s 48(4) in respect of the sum of $50,000, but also a real concern as to the true source of the money which went into Mr Chan's office account and ultimately to the Supreme Court. 31 None of that would have been necessary had the evidence which was ultimately put before the Court been put before it at the appropriate time. In those circumstances I do not think it would be appropriate to require the Director of Public Prosecutions to pay the whole of the costs. 32 Once the situation arises that there is to be a split in the burden of costs and they should not follow the ordinary rule of the whole of them following the event, the discretion is one which is not easy to exercise. It is a matter on which minds might differ, but in my opinion, having regard to the course of the proceedings, the need for the applicant to come before the Court to get a declaration, the application for adjournment and the fact that the case, had it been evidenced at the beginning in the way in which it was evidenced at the end, would have been shorter, I am of opinion the appropriate order is for the Director of Public Prosecutions to pay the costs of the proceedings as on a one day hearing basis, in addition to costs previously reserved. 33 Application has been made on behalf of the Crown for a stay of the orders which I have made in this matter. There is no doubt, as the findings that I have made indicate, that the property in Western Australia and the $50,000 to which I have referred, are the property of the applicant and were not derived in any manner that would cause them to be tainted or otherwise forfeited. 34 They are property in respect of which in one sense an order should never have been made in the first place against them. However, the position of the Crown is that because the Notice of Motion of 15 September 2000 which sought an extension of the period for forfeiture (the waiting period) before forfeiture occurred, did not have the relevant part of it heard and determined until 13 March 2001, that is after the expiry of the unextended waiting period of six months from the date of conviction on 11 August 2000, the undoubted property of Mr Chan is forfeited and irrecoverable. That is an argument that I think needs to be determined by the Court of Appeal. 35 On the face of it, it is unjust as an outcome and in the interests of justice I do not think it appropriate to grant a stay in respect of the orders that I have made.

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