HIS HONOUR: By summons filed on 27 February 2017, the Commissioner of the Australian Federal Police sought a series of orders pursuant to the Proceeds of Crime Act 2002 (Cth). On that day, N Adams J made a number of orders, including restraining orders, under s 19 of that Act, in respect of various pieces of property, including a property in Gordon Street, Campsie. On 1 September 2017, Campbell J made forfeiture orders in respect of the restrained property other than the Campsie property: see In the matter of an application by the Commissioner of the Australian Federal Police [2017] NSWSC 1206.
Ms Xiaoting He is the registered proprietor of the Campsie property. Mr Wen Lin is her spouse. They live there with their three children. There is a registered mortgage over the property in favour of Westpac Banking Corporation.
On 13 September 2017, Ms He and Mr Lin filed a notice of motion seeking a declaration pursuant to s 49(4) of the Act that it is not in the public interest to forfeit the Campsie property. On 9 November 2018, Ms He and Mr Lin filed an amended notice of motion which included an additional prayer seeking the making of a hardship order pursuant to s 72 of the Act. For abundant clarity, the precise terms of all of the orders relevantly sought in that amended notice of motion are set out as follows:
TOTAL RELIEF IN RESPECT TO FORFEITURE OF xx GORDON ST, CAMPSIE
3. A declaration pursuant to section 49(4) of the Proceeds of Crime Act 2002, that it is not in the public interest to order forfeiture of the real property located at xx Gordon St, Campsie, New South Wales, being Lot xx in Deposited Plan 6591;
ALTERNATIVELY IF FOFEITED
DECLARATION OF INTEREST - LIN
4. Pursuant to the Proceeds of Crime Act 2002 a declaration that the applicant LIN holds an interest in the Campsie property on such proportion, terms and basis as the Court determines.
PARTIAL RELIEF IN RESPECT TO xx GORDON STREET CAMPSIE - HARDSHIP ORDER AND/OR ORDER FOR BUY BACK OF PROPORTIONAL INTEREST ALTERNATIVELY PAYMENT OF COMPENSATION FOR INNOCENT INTEREST:
RELIEF FROM HARDSHIP
4A Pursuant to r.18 of the Uniform Civil Procedure Rules 2005, Mr Wen Lin (born xx November 1980) be appointed as tutor in the proceedings for:
(a) Zixuan Lin (born xx December 2009);
(b) Xiaoia Lin (born xx May 2011); and
(c) Zicheng Lin (born xx June 2012) ("the Children")
4B Pursuant to section 72 of the Proceeds of Crime Act 2002 (Cth), upon forfeiture to the Commonwealth of the property identified in Schedule Two to the Order of the Court made on 27 February 2017 ("Campsie Residential Property"), being property of Xiaoting He, the Commonwealth is to pay to the Children such sum as the Court deems appropriate to relieve the hardship caused to the Children by the forfeiture of the Campsie Residential Property.
BUY BACK ORDER - DECLARATION
5. An order declaring pursuant to sections 57 and 58 of the Proceeds of Crime Act 2002 stating the nature, extent and value of the Applicant/s interest that is excluded from forfeiture;
BUY BACK ORDER
6. An order pursuant to section 89 of the Proceeds of Crime Act 2002, permitting the Applicant/s to buy back their forfeited interest in the Campsie property;
ALTERNATIVELY COMPENSATION DECLARATION
7. A declaration pursuant to section 77(1)(c) of the Proceeds of Crime Act 2002, that a proportion, as stated by the Court, of the value of the Applicant/s interest in xx Gordon St, Campsie was not derived or realised from a crime; and
COMPENSATION ORDER
8. An order pursuant to section 77 of the Proceeds of Crime Act 2002 that the Applicant/s be paid compensation in such proportion, as declared, from the sale of the Campsie property.
RELIEF IN RESPECT TO WESTPAC BANK ACCOUNT 732062 796044
9. Pursuant to the Proceeds of Crime Act 2002 a declaration that the Applicant LIN holds an interest in the Westpac Bank Account 732062 796044 on such proportion, terms and basis as the Court determines.
10. Pursuant to section 78(2) of the Proceeds of Crime Act 2002, leave to Applicant/s to apply for a compensation order in respect of the funds standing to the credit of Westpac Banking Corporation Choice account number 732062 796044 held in the name of Xiaoting He; and
11. Pursuant to section 77 of the Proceeds of Crime Act 2002, a compensation order in favour of the Applicant/s in a sum stated by this Court in respect of the funds standing to the credit of Westpac Banking Corporation Choice account number 732062 796044 held in the name of Xiaoting He.
COSTS
12. Costs.
OTHER ORDERS
13. Pursuant to the provisions of the Proceeds of Crime Act 2002 such other orders and declaration as the Court considers appropriate to give effect to the Proceeds of Crime Act 2002.
Registrar Bradford made orders by consent on 29 May 2019 dismissing prayers 3 to 13 of this amended notice of motion and reserving costs.
On 18 September 2019, Registrar Bradford made further orders in relation to the filing of evidence in support of the Commissioner's application for forfeiture of the Campsie property as well as any applications that Ms He and Mr Lin proposed to make. On 6 December 2019, Registrar Jones made an order listing the matter for hearing and directing Ms He and Mr Lin to file any evidence or further applications by 31 January 2020.
The proceedings came before me on 4 March 2020 on the Commissioner's application for the forfeiture order pursuant to s 49 of the Act. That section provides as follows:
49 Forfeiture orders--property suspected of being proceeds of indictable offences etc.
(1) A court with * proceeds jurisdiction must make an order that property specified in the order is forfeited to the Commonwealth if:
(a) the * responsible authority for a * restraining order under section 19 that covers the property applies for an order under this subsection;
(b) the restraining order has been in force for at least 6 months;
(c) the court is satisfied that one or more of the following applies:
(i) the property is * proceeds of one or more * indictable offences;
(ii) the property is proceeds of one or more * foreign indictable offences;
(iii) the property is proceeds of one or more * indictable offences of Commonwealth concern;
(iv) the property is an instrument of one or more * serious offences; and
(e) the court is satisfied that the authority has taken reasonable steps to identify and notify persons with an * interest in the property.
(2) A finding of the court for the purposes of paragraph (1)(c):
(a) need not be based on a finding that a particular person committed any offence; and
(b) need not be based on a finding as to the commission of a particular offence, and can be based on a finding that some offence or other of a kind referred to in paragraph (1)(c) was committed.
(3) Paragraph (1)(c) does not apply if the court is satisfied that:
(a) no application has been made under Division 3 of Part 2-1 for the property to be excluded from the * restraining order; or
(b) any such application that has been made has been withdrawn.
Refusal to make a forfeiture order
(4) Despite subsection (1), the court may refuse to make an order under that subsection relating to property that the court is satisfied:
(a) is an * instrument of a * serious offence other than a * terrorism offence; and
(b) is not * proceeds of an offence;
if the court is satisfied that it is not in the public interest to make the order.
Ms He appeared at the hearing of the application on 4 March 2020 assisted by an interpreter but without legal representation.
It emerged during the course of the proceedings at that time that Ms He opposed the forfeiture order sought by the Commissioner. She did not in terms articulate her position clearly but it soon became apparent, and I concluded at least, that she wished to contend that the Campsie property was neither an instrument of a serious offence nor the proceeds of an offence or, even if it were, that the Court should be satisfied that it is not in the public interest to make an order pursuant to s 49(1) of the Act. Moreover, having regard to two affidavits that Ms He sought to read, and to the terms of an unfiled notice of motion dated 8 October 2019 provided to me on 4 March 2020, it appears that she wished alternatively to persist with an application for relief of hardship pursuant to s 72 of the Act.
I declined to make any substantive orders at that time but instead made orders referring Ms He to the Registrar of the Court for referral to a barrister or solicitor on the pro bono panel for legal assistance: see In the matter of an application by the Commissioner of the Australian Federal Police [2020] NSWSC 179. When the matter returned to me on 29 May 2020, I was advised by Mr Jones of counsel that he had originally accepted a brief on terms to assist Ms He but that he was unable to continue to do so as the result of what I was informed was "a conflict". Ms He therefore became once again an unrepresented litigant. She remains so.
The Commissioner now asks that I proceed to make an order pursuant to s 49(1) of the Act that the property at Gordon Avenue, Campsie be forfeited to the Commonwealth.
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Commissioner's submissions
The Commissioner submitted that s 49(1)(c) of the Act does not apply in the present case as no application has been made under Division 3 of Part 2-1 for exclusion from restraint. It is not in issue that this Court has proceeds jurisdiction under the Act. The Commissioner is the responsible authority and a restraining order in respect of the Campsie property has been in force for at least 6 months. Accordingly, s 49(1)(a) and (b) are satisfied. So far as concerns s 49(1)(e), the only persons with a potential interest in the Campsie property are Ms He, Mr Lin and Westpac Banking Corporation as a registered mortgagee. Ms He and Mr Lin filed a notice of appearance on 19 April 2017. Westpac was notified of the Commissioner's application on 11 June 2019 and indicated that it had no objection to a forfeiture order being made provided its interest as a mortgagee was protected.
In these circumstances, the Commissioner seeks orders in the following terms:
1. Pursuant to s 49 of the Proceeds of Crime Act 2002 (Cth), the property listed in the Schedule of these orders be forfeited to the Commonwealth, subject to the interest of Westpac Banking Corporation as mortgagee pursuant to registered mortgage number AJ977986.
2. Pursuant to s 69(2) of the Act, leave is granted to the Official Trustee in Bankruptcy on behalf of the Commonwealth to deal with the forfeited property in the Schedule immediately.
3. Xiaoting He and Wen Lin pay the Commissioner's costs, as agreed or assessed, in respect of prayers 3 to 13 of the Amended Notice of Motion filed 9 November 2018, save that there be no order as to costs for that part of the Commissioner's costs incurred in respect of prayers 4A and 4B of the Amended Notice of Motion.
4. Xiaoting He and Wen Lin pay the Commissioner's costs, as agreed or assessed, in respect of prayer 24 of the Amended Summons filed 10 May 2017.
5. The proceedings be otherwise dismissed.
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Consideration
The crime of which the Commissioner contends the Campsie property is the proceeds is an alleged breach of s 192G of the Crimes Act 1900. That section is in the following terms:
192G Intention to defraud by false or misleading statement
A person who dishonestly makes or publishes, or concurs in making or publishing, any statement (whether or not in writing) that is false or misleading in a material particular with the intention of--
(a) obtaining property belonging to another, or
(b) obtaining a financial advantage or causing a financial disadvantage,
is guilty of an offence.
The evidence upon which the Commissioner relies uncontroversially establishes that Ms He obtained an advance of funds from Westpac Banking Corporation to assist her with the purchase of the Campsie property, secured by a registered mortgage. Ms He purchased the Campsie property pursuant to a contract for the sale of land dated 26 September 2015. The purchase price was $1,745,000. Westpac provided $1,280,000 to assist with the purchase. It would seem on one view that the balance of the purchase price came from funds lent to Ms He by her family. However, the Commissioner contends that, in securing the mortgage advance from Westpac, Ms He provided information to the bank when completing its loan application documents which were misleading in a material particular. For example, Ms He disclosed that her annual gross income before tax was $406,470. That was incorrect. The Commissioner asserts that there were other examples of this as well.
In the events that have occurred, neither Ms He nor Mr Lin has been charged with an offence under this provision, nor have they been charged with any other offence. It would seem that they came to the attention of the Australian Federal Police in the course of an extensive investigation into the suspected criminal conduct, including drug importation and money laundering, of other individuals. The evidence originally provided in support of the Commissioner's application for orders restraining property, including the Campsie property, suggested that large amounts of money that were disproportionate to any income declared by Ms He for taxation purposes had passed through bank accounts in her name.
Westpac makes no complaint that it was misled by Ms He or that it has suffered loss or detriment as the result of any false or misleading information provided by her in the loan application documents. It would seem that the loan account with Westpac for the Campsie property was serviced regularly for a considerable period although it has in more recent times fallen into arrears. Westpac has so far taken no action to recover possession of the Campsie property although it seems apparent that it has become entitled to do so.
During the course of the hearing before me, Ms He indicated that the loan application, although signed by her, was prepared by someone else. That arose during the following exchange:
"HIS HONOUR: The commissioner says that you told Westpac that you had an income of $400,000 when you applied for the loan and the commissioner says that was untrue, what do you say about that?
INTERPRETER: Actually, your Honour, my broker told me at that time, as long as you can pay 20 per cent deposit and you don't have to worry about the rest of the things, I can prepare and I can make all the rest of the materials or documents for you, just let me know how much you could pay and after that he just, he or she just provided me the last page of the sales of the contract and asked me to sign the signature and for this thing I'm really sorry for that because I didn't view that very carefully and I didn't go through the contract or the document with a solicitor, so I admit that I made a mistake and I'm very sorry for this."
It is an element of the s 192G offence that the person alleged to have contravened its terms did so dishonestly. Without expressing, or indeed being able to express, any view about that in the present circumstances, there is a potential issue concerning whether Ms He has committed the nominated offence or whether the money advanced by Westpac, or the Campsie property purchased with the borrowed funds, can properly be characterised as the proceeds of a crime.
Division 5 Subdivision B of the Act deals with excluding property from a forfeiture order. Sections 73 and 74 are in the following terms:
73 Making exclusion orders
(1) A court that made a * forfeiture order, or that is hearing, or is to hear, an application (a forfeiture application) for a forfeiture order, must make an order excluding a specified * interest in property from forfeiture (an exclusion order) if:
(a) a person applies for the exclusion order; and
(b) the forfeiture order, or the forfeiture application, specifies property in which the applicant has an interest; and
(c) if the forfeiture order was (or the forfeiture order applied for would be) made under section 47 or 49--the court is satisfied that the applicant's interest in the property is neither of the following:
(i) * proceeds of * unlawful activity;
(ii) if an offence on which the order was (or would be) based is a * serious offence--an instrument of any serious offence; and
(d) if the forfeiture order was (or the forfeiture order applied for would be) made under section 48--the court is satisfied that the applicant's interest in the property is neither proceeds nor an instrument of any of the offences to which the forfeiture order or forfeiture application relates.
(2) An * exclusion order must:
(a) specify the nature, extent and value (at the time of making the order) of the * interest concerned; and
(b) direct that the interest be excluded from the operation of the relevant * forfeiture order; and
(c) if the interest has vested (in law or equity) in the Commonwealth under this Part and is yet to be disposed of--direct the Commonwealth to transfer the interest to the applicant; and
(d) if the interest has vested (in law or equity) in the Commonwealth under this Part and has been disposed of--direct the Commonwealth to pay the applicant an amount equal to the value specified under paragraph (a).
74 Applying for exclusion orders
Before a forfeiture order has been made
(1) A person may apply for an * exclusion order if a * forfeiture order that could specify property in which the person claims an * interest has been applied for, but is yet to be made.
After a forfeiture order has been made
(2) A person who claims an * interest in property specified in a * forfeiture order may, at any time after the forfeiture order is made, apply to the court that made the forfeiture order for an * exclusion order.
(3) However, unless the court gives leave, the person cannot apply for an * exclusion order if he or she:
(a) was notified of the application for the * forfeiture order, but did not appear at the hearing of that application; or
(b) appeared at the hearing of that application.
(4) The court may give the person leave to apply if the court is satisfied that:
(a) if paragraph (3)(a) applies--the person had a good reason for not appearing; or
(b) if paragraph (3)(b) applies--the person now has evidence relevant to the person's application that was not available to the person at the time of the hearing; or
(c) in either case--there are other special grounds for granting the leave.
Ms He has never made an application for exclusion of the Campsie property.
My original concern was that Ms He faces the forfeiture of her property in circumstances where the offence upon which the Commissioner relies would in the ordinary course of events probably have passed unnoticed. It is rare in my experience that the accuracy or otherwise of loan application documents ever becomes an issue outside of attempts by a borrower to avoid the obligation to repay the loan. That has not arisen here.
Ms He clearly speaks very little English. She has always required the assistance of an interpreter. I have no way of knowing whether her understanding of English is better now than it was in 2015. I anticipate that Ms He's ability to navigate the intricacies of the Westpac loan application documents without assistance would have been almost non-existent. I also expect that she would have placed significant, if not complete, reliance upon anyone assisting her in that task. There seems to me to be a very real issue about her precise level of understanding of the loan application documents and whether her contribution to the answers they contain were given by her or manufactured by someone else without her input. Those concerns appear to be particularly pertinent to the question of whether or not Ms He has offended s 192G.
It is clear that Ms He is not precluded by the Proceeds of Crime Act from making an exclusion application, even at this late stage. I accept that in order to succeed, she would bear the onus of demonstrating at least that she had not committed the s 192G offence upon which the Commissioner relies. I also anticipate that the Commissioner would be likely vigorously to oppose both Ms He's entitlement to make such an application at this late stage of the proceedings in the first place as well as the substance of any such application as she may succeed in bringing in the second place.
I note that Ms He is presently unrepresented. Although a prior referral to the pro bono legal assistance scheme was successful in that a barrister was appointed to meet and take instructions from her, it did not lead, through nobody's fault, to the barrister appearing for her in these proceedings: see In the matter of an application by the Commissioner of the Australian Federal Police [2020] NSWSC 179. It is also obvious that Ms He would not be able without legal assistance to navigate the intricacies of an exclusion application, so that the practical reality is that such an application would not be made at all without the assistance of a lawyer acting on her behalf.
UCPR 7.36(2A) provides as follows:
(2A) The court may not refer a litigant for assistance under this rule if the litigant has obtained assistance under a previous referral at any time during the immediately preceding period of 3 years unless the court is satisfied that there are special reasons that justify a further referral.
It seems to me that there are special reasons in the present case that justify a further referral. If it is not otherwise already apparent, I consider that Ms He should be given an opportunity to test the underlying basis for the Commissioner's claims. I understand that Ms He was previously represented and claimed relief in the terms already described. I am unaware why no attempt was made on her behalf to contest her alleged liability for the s 192G offence or to attempt to have the Campsie property excluded from forfeiture. There is in these circumstances in my opinion a significant possibility that without legal assistance, a miscarriage of justice could occur. In making that assessment, I hasten to note that Mr Prince of counsel, who appears for the Commissioner, has been both extremely helpful to me during the hearing of the Commissioner's claim and has conducted himself entirely in accordance with the highest professional standards. The same comments apply to those who have instructed Mr Prince.
However, without a competent contradictor, the Commissioner cannot be expected to mount some kind of faux exclusion application on Ms He's behalf to which he might then be expected to respond. This is adversary litigation of considerable importance. It is only fair to the Commissioner that Ms He should be properly represented.
Subject to any application which may in due course be made by Ms He, I consider that the Commissioner is entitled to the relief that he claims. I propose to make those orders when the matter next returns to me if Ms He has not by then taken any step to have the Campsie property excluded from forfeiture by application for an exclusion order or for such other relief as she may be advised. I should also note that Ms He has on previous occasions been represented by lawyers for whose professional fees she has presumably been personally responsible. Ms He should not take my orders to mean, if she is unable to obtain pro bono legal assistance, that she should not otherwise proceed to instruct lawyers to assist her or that I will continue indefinitely to adjourn the Commissioner's application if there is no reasonable basis for me to expect that she will do so.
Having regard to these matters I consider that the following orders should be made:
1. Refer Xiaoting He to the Registrar of the Court for referral to a barrister or solicitor on the Pro Bono Panel for legal assistance with respect to:
1. Advice generally in relation to the Commissioner's application for forfeiture of the Campsie property and any rights that she may have to make an exclusion application pursuant to ss 73 and 74 of the Proceeds of Crime Act 2002;
2. Representation generally in the conduct of the remaining issues in the proceedings, in particular the Commissioner's current forfeiture application, including at directions, interlocutory or final hearings;
3. Drafting or settling documents to be filed or used in the proceedings.
1. Adjourn the proceedings for directions before me at 9.30am on 28 August 2020.
2. Reserve the costs of and incidental to the hearing of the Commissioner's motion for a forfeiture order with respect to the Campsie property.
3. Grant liberty to the parties to apply on 48 hours' notice to the Court by arrangement with my Associate.
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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: 13 July 2020