Lordianto v Commissioner of the Australian Federal Police - [2018] NSWCA 199 - NSWCA 2018 case summary — Zoe

NSWNSWCA

Lordianto v Commissioner of the Australian Federal Police

[2018] NSWCA 199

Court of Appeal (NSW)|2018-03-23|Before: Beazley P, Payne JA, McColl JA

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At a glance

Source facts

Court

Court of Appeal (NSW)

Decision date

2018-03-23

Before

Beazley P, Payne JA, McColl JA

Catchwords

[2009] HCA 41 Allianz Australia Insurance Ltd v GSF Australia Pty Ltd (2005) 221 CLR 568
[2012] HCA 56 CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384
[1997] HCA 2 Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389
[1996] HCA 36 Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280

Source

Original judgment source is linked above.

Catchwords

[2009] HCA 41 Allianz Australia Insurance Ltd v GSF Australia Pty Ltd (2005) 221 CLR 568[2012] HCA 56 CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384[1997] HCA 2 Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389[1996] HCA 36 Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280[1993] FCA 456 Commissioner for Railways (NSW) v Agalianos (1955) 92 CLR 390[2015] WASC 320 Commissioner of the Australian Federal Police v Hart (2018) 351 ALR 1[2018] NSWSC 48 Croton v The Queen (1967) 117 CLR 326[1967] HCA 48 Davies v Collins [1945] 1 All ER 247 Director of Public Prosecutions (Vic) v Le (2007) 15 VR 352[2007] VSCA 18 Director of Public Prosecutions (Vic) v Le (2007) 232 CLR 562[2007] HCA 52 Esso Australia Pty Ltd v Australian Workers' Union [2017] HCA 54(2017) 92 ALJR 106 Farkas v R [2014] NSWCCA 141(2014) 243 A Crim R 388 Gibb v The Commissioner of Taxation of the Commonwealth of Australia (1966) 118 CLR 628[1966] HCA 74 Grygiel v Baine (No 2) [2005] NSWCA 434 He Kaw Teh v The Queen (1985) 157 CLR 523[1985] HCA 43 N Joachimson v Swiss Bank Corporation [1921] 3 KB 110 Kelly v R (2004) 218 CLR 216

Judgment (32 paragraphs)

[1]

Background facts

The appellants, who are husband and wife, are Indonesian citizens. They have both been granted permanent residency in Australia and spend time in Australia. Mr Lordianto comes from a wealthy Indonesian family who has business and investment interests in Indonesia. From time to time, the appellants transferred large sums of money to accounts held in their names by the Commonwealth Bank. As between the appellants, Ms Koernia had the responsibility of transferring money from Indonesia to Australia and managing their investments in Australia. Ms Koernia gave evidence that she arranged the transfer of money through money changers, who also provided remittance services, in Indonesia.
Ms Koernia gave evidence that she does not know how to use internet banking. She said that quarterly statements for the accounts the subject of the restraining order were posted by the Commonwealth Bank to the appellants' address in Singapore. Ms Koernia also said that if she needed to check the balance of the accounts at any time, she would go into a Commonwealth Bank branch in Australia or telephone the Commonwealth Bank representatives with whom she dealt for information as to the account balance.
Between 22 October 2013 and 5 August 2015, Ms Koernia arranged for money to be transferred into the First and Second Cash Investment Accounts in a total amount of $4,500,000. In most cases, the deposits were made in amounts under $10,000. The method whereby this was done, known as "cuckoo smurfing", is described more fully below.
Ms Koernia described the process by which she transferred money from Indonesia to Australia as follows. Before deciding which money changer to use, Ms Koernia would check the foreign currency exchange rate being offered by different banks and money changers in Indonesia so as to obtain the most competitive rate. Ms Koernia identified two money changers that she used, each of which, she said, represented themselves to be authorised money changers.
Ms Koernia said that: "When I have asked money remitters to transfer funds into Australian accounts, they have asked me to deposit the specified sum into a nominated account or accounts. After the money remitters have confirmed that the funds are in their nominated accounts, the remitter arranged for the funds to be transferred to the Australian account belonging to my husband and I."
A couple of days after depositing money into the nominated Indonesian account, Ms Koernia would contact the Commonwealth Bank in Australia to check that money had been received into the appellants' Commonwealth Bank accounts. She said that on each occasion, the Commonwealth Bank representative would tell her the current balance and list any recent deposits, so that she could tally them up. She said that on occasions, if there were too many transactions to add up easily, she would ask the bank to fax to her an account transaction listing. She said that she was always satisfied that the correct amount had been deposited into the nominated Commonwealth Bank account.
Ms Koernia said that she had never given any thought to the methods by which the money changers transferred the money and that it had never occurred to her that it might involve illegal activity. She said that at no stage did the Commonwealth Bank representatives tell her that there was anything wrong with money being paid into the appellants' accounts by way of multiple deposits mostly under $10,000, even after reading out the list of deposits to her. The only occasion on which a remark had been made to her was when one bank representative said that her bank statement was "very crowded", but the representative did not say that there was anything wrong with it.
From both the information given to her by bank representatives and from the bank statements, Ms Koernia was aware that numerous cash deposits in small amounts were being paid into the appellants' Commonwealth Bank accounts. She said, however, that she did not know that the deposits were being made at a number of different branches across Australia. She also said that she did not make any enquiry of the money changers in Indonesia or of the Commonwealth Bank in Australia as to why deposits were being made in that way.
Ms Koernia said that she did not know the identity of the people who deposited money into the Commonwealth Bank accounts. She said she "had no contact with or knowledge of any transaction" interposed between her deposits into the nominated bank account in Indonesia, and the receipt of money into the Commonwealth Bank accounts in Australia.
In cross-examination, Ms Koernia denied that she suspected, from the fact that many small deposits were being made, that one possibility was that there was some form of unlawful activity involved. She also denied that she suspected that the making of a large number of deposits under $10,000 on a single day was unusual. She further denied that she suspected that one of the reasons for the deposits being made in that way was to avoid mandatory reporting requirements imposed on Australian banks. She also denied that she recognised that one possibility for the numerous low dollar amounts being deposited was to avoid Australian anti-money laundering laws. She disagreed that she had refrained from making any enquiries about the manner in which the deposits were being made so as not to confirm her suspicions of wrongdoing.

[2]

Details of the transactions

Of the $4,500,000 that was deposited into the appellants' Commonwealth Bank accounts, a total of $2,786,062 was deposited by way of 390 cash deposits in sums of less than $10,000 over the period from 22 October 2013 to 5 August 2015. Multiple transactions were often made on the one day or over a short period of time. For example, between 23 and 31 October 2013, there were 77 cash deposits made into the appellants' First Cash Investment Account in amounts under $10,000 from branches as widely located as Chinatown, Marrickville, Lakemba and Parramatta, to name a few of the branches in New South Wales. Deposits were also made at branches in Queensland, Victoria, South Australia and Western Australia. A similar pattern is reflected in the way in which the balance of the $2,786,062 was deposited.
The remainder of the money Ms Koernia deposited with the Indonesian money changers was deposited into the appellants' Commonwealth Bank accounts in various amounts of over $10,000 at different branches across Australia. For example, on 24 October 2013, a cash deposit of $80,000 was made at the St James branch in New South Wales, on 29 November 2013, two cash cheques in the sum of $100,000 and $300,000 respectively were deposited at the Broadbeach branch in Queensland, and on 2 June 2015, $104,800 was deposited at the Innaloo branch in Western Australia.

[3]

Cuckoo smurfing

It is convenient at this point to describe the process or system known as "cuckoo smurfing". Evidence of this process was given by a former officer of the Australian Federal Police, whose report, after redaction, was admitted into evidence without objection and treated by the primary judge, at [53]-[54], as factual evidence. The process involves the following steps: "a. An international 'Controller' meets with an Australian crime syndicate head and agrees to launder a specific sum that is the proceeds of crime. The Controller receives a percentage of the criminal funds and is responsible for paying other money laundering syndicate members. b. The Controller instructs a complicit 'Coordinator', who is the proprietor of a money remittance business usually located in Singapore, Malaysia or Indonesia, to withhold customer remittances to Australia in an amount equalling the sum that the Controller has agreed to launder. c. The Coordinator instructs his employees, known as 'Collectors' in Australia to collect the criminal cash from the Australian syndicate. The Coordinator asks for the serial number of an Australian $5 note held by the Collector, and passes the number to the Controller. d. The Controller supplies the criminal syndicate head with the telephone number of the Collector and the serial number of the bank note held by him. The criminal syndicate head calls the Collector and arranges to meet to hand over the criminal cash. e. The meeting is conducted, the Collector provides the $5 note as identification and the criminal cash is handed to the Collector. f. The Collector confirms receipt of the criminal cash. The Coordinator provides the Collector with a list of bank account details and cash amounts originally obtained when customers requested the transfer of funds to Australia. g. The Collector attends a series of banks, making deposits of the criminal cash under the AUSTRAC reporting threshold (although this is not always the case) until all of the requested remittances have been satisfied. Once the Coordinator has been informed that all of his customers' remittances have been satisfied he can release the money originally supplied to him by the remitting customers to the criminal syndicate."
The report concluded: "The feature of this typology is that neither the criminal cash nor the innocent remittances are physically moved. As long as cash deposits in Australia are kept below the reporting threshold, there is no record, either electronic or physical, that could lead regulatory and enforcement agencies to intervene."

[4]

Issues on the appeal

The overarching issue on the appeal was whether, pursuant to the Proceeds of Crime Act, s 330(4)(a), the appellants acquired an interest in property by reason of the money being deposited into their existing bank accounts, in contravention of the Anti-Money Laundering and Counter-Terrorism Finance Act, s 142, that simultaneously ceased to be proceeds of an offence as the interest was: "… acquired by a third party for sufficient consideration … and in circumstances that would not arouse a reasonable suspicion, that the property was proceeds of an offence ..."
The particular issues raised by the notice of appeal were as follows: 1. Whether each deposit into the appellants' bank accounts constituted an acquisition of an "interest" in "property" by them within the meaning of the Proceeds of Crime Act: appeal grounds 1 and 2. 2. Whether the appellants were a "third party" under the Proceeds of Crime Act, s 330(4)(a): appeal grounds 3, 4 and 5. 3. Whether the appellants' interests in their bank accounts were acquired for sufficient consideration for the purposes of s 330(4)(a): appeal ground 6. 4. Whether the circumstances would have raised a reasonable suspicion on the part of the appellants that the property was proceeds of an offence or an instrument of an offence for the purposes of s 330(4)(a): appeal grounds 7 and 8. 5. Whether the primary judge denied the appellants procedural fairness by ordering costs against them without inviting submissions as to costs: appeal ground 9.

[5]

Relevant legislation

The Proceeds of Crime Act provides a comprehensive scheme for the restraint and forfeiture of proceeds of an offence or an instrument of an offence. It includes provisions whereby a person whose property is restrained may apply to have the property excluded from restraint and, in certain circumstances, for the payment of compensation. We have already referred to the operation of s 19 at [3] above. So far as is relevant to these proceedings, the Proceeds of Crime Act provides as follows: "29 Excluding property from certain restraining orders (1) The court to which an application for a restraining order under section … 19 was made must, when the order is made or at a later time, exclude a specified interest in property from the order if: (a) an application is made under section … 31; and (b) the court is satisfied that the relevant reason under subsection (2) or (3) for excluding the interest from the order exists. … (2) The reasons for excluding a specified interest in property from a restraining order are: … (d) for a restraining order under section 19 - the interest is neither: (i) in any case - proceeds of an indictable offence …; nor (ii) if an offence to which the order relates is a serious offence - an instrument of any serious offence. Note: One of the circumstances in which property ceases to be proceeds of an offence or unlawful activity involves acquisition of the property by an innocent third party for sufficient consideration: see paragraph 330(4)(a). … 31 Application to exclude property from a restraining order after restraining order has been made (1) A person may apply for an order under section 29 … if a restraining order that covers property in which the person claims an interest has been made. … 329 Meaning of proceeds and instrument (1) Property is proceeds of an offence if: (a) it is wholly derived or realised, whether directly or indirectly, from the commission of the offence; or (b) it is partly derived or realised, whether directly or indirectly, from the commission of the offence; whether the property is situated within or outside Australia. (2) Property is an instrument of an offence if: (a) the property is used in, or in connection with, the commission of an offence; or (b) the property is intended to be used in, or in connection with, the commission of an offence; whether the property is situated within or outside Australia. (3) Property can be proceeds of an offence or an instrument of an offence even if no person has been convicted of the offence. (4) Proceeds or an instrument of an unlawful activity means proceeds or an instrument of the offence constituted by the act or omission that constitutes the unlawful activity. 330 When property becomes, remains and ceases to be proceeds or an instrument (1) Property becomes proceeds of an offence if it is: (a) wholly or partly derived or realised from a disposal or other dealing with proceeds of the offence; or (b) wholly or partly acquired using proceeds of the offence; including because of a previous application of this section. (2) Property becomes an instrument of an offence if it is: (a) wholly or partly derived or realised from the disposal or other dealing with an instrument of the offence; or (b) wholly or partly acquired using an instrument of the offence; including because of a previous application of this section. (3) Property remains proceeds of an offence or an instrument of an offence even if: (a) it is credited to an account; or (b) it is disposed of or otherwise dealt with. (4) Property only ceases to be proceeds of an offence or an instrument of an offence: (a) if it is acquired by a third party for sufficient consideration without the third party knowing, and in circumstances that would not arouse a reasonable suspicion, that the property was proceeds of an offence or an instrument of an offence (as the case requires) … … 336 Meaning of derived A reference to a person having derived proceeds ... or wealth includes a reference to: (a) the person; or (b) another person at the request or direction of the first person; having derived the proceeds ... or wealth directly or indirectly. … 338 Dictionary In this Act, unless the contrary intention appears: … account means any facility or arrangement through which a financial institution accepts deposits or allows withdrawals and includes: (a) a facility or arrangement for: (i) a fixed term deposit; or (ii) a safety deposit box; and (b) a credit card account; and (c) a loan account (other than a credit card account); and (d) an account held in the form of units in: (i) a cash management trust; or (ii) a trust of a kind prescribed by the regulations; and (e) a closed account. To avoid doubt, it is immaterial whether: (f) an account has a nil balance; or (g) any transactions have been allowed in relation to an account. … sufficient consideration: an acquisition or disposal of property is for sufficient consideration if it is for a consideration that is sufficient and that reflects the value of the property, having regard solely to commercial considerations."

[6]

Principles of statutory construction

The Court is concerned in this case with the construction of specific provisions of the Proceeds of Crime Act, in particular, s 330(4)(a).
The relevant principles of statutory construction were not in contest. In Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28, the plurality stated, at [69], that the: "… primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute."
Their Honours referred to Commissioner for Railways (NSW) v Agalianos (1955) 92 CLR 390; [1955] HCA 27, in which Dixon CJ stated that: "… the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed."
In Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory) (2009) 239 CLR 27; [2009] HCA 41, the plurality explained, at [47], that: "This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the text itself. Historical considerations and extrinsic materials cannot be relied on to displace the clear meaning of the text. The language which has actually been employed in the text of legislation is the surest guide to legislative intention. The meaning of the text may require consideration of the context, which includes the general purpose and policy of a provision, in particular the mischief it is seeking to remedy." (citations omitted) See also Certain Lloyd's Underwriters v Cross (2012) 248 CLR 378; [2012] HCA 56.
In assessing the "purpose" of a statute, the Court must look to its text and structure. As the plurality emphasised in Lacey v Attorney-General for the State of Queensland (2011) 242 CLR 573; [2011] HCA 10: "The purpose of a statute is not something which exists outside the statute. It resides in its text and structure, albeit it may be identified by reference to common law and statutory rules of construction."
Most recently, in SZTAL v Minister for Immigration and Border Protection (2017) 347 ALR 405; [2017] HCA 34, the plurality stated, at [14], that: "The starting point for the ascertainment of the meaning of a statutory provision is the text of the statute whilst, at the same time, regard is had to its context and purpose. Context should be regarded at this first stage and not at some later stage and it should be regarded in its widest sense. This is not to deny the importance of the natural and ordinary meaning of a word, namely how it is ordinarily understood in discourse, to the process of construction. Considerations of context and purpose simply recognise that, understood in its statutory, historical or other context, some other meaning of a word may be suggested, and so too, if its ordinary meaning is not consistent with the statutory purpose, that meaning must be rejected." See also the observations of Gageler J at [35]-[39].

[7]

Basis of application for exclusion order

The appellants, in their exclusion application, stated that they were the beneficial owners of the money in the accounts and that their "interest" in the "property" was neither the proceeds of an offence, nor an instrument of an offence. They provided the following particulars of their interest as follows: "(i) [The appellants] held funds in Indonesia and Singapore which were all lawfully derived from [the appellants'] income and investments. (ii) [Ms Koenia] entered into agreements with [money changers] in Jakarta, Indonesia … to pay amounts in Indonesian rupiah in order to purchase at agreed exchange rates, amounts in Australian dollars to be deposited by the [money changers] into Australian bank accounts at the Commonwealth Bank of Australia operated by one or both of [the appellants]. (iii) The agreed exchange rates were rates that reflected the value of the amounts paid, having regard solely to commercial considerations. (iv) In respect of each relevant transaction, upon the payment by [the appellants] of the Indonesian rupiah as directed by the [money changer], the [money changer] became indebted to [the appellants] in the amount that was agreed to be deposited into [the appellants' accounts]. (v) In respect of each relevant transaction, pursuant to the contract between it and [Ms Koernia] (on behalf of herself and [Mr Lordianto]), the relevant [money changer] caused the Australian dollars purchased by [the appellants] to be deposited into [the appellants' accounts]. (vi) By depositing each sum in Australian dollars purchased by [the appellants] on the terms set out in sub-paragraph (ii) into [the appellants' accounts], the relevant Remitter discharged the debt arising from each relevant transaction. (vii) By reason that the total amount of the deposits for each transaction: (A) equalled the amount of each debt; and (B) reflected the value of the Indonesian rupiah paid by [the appellants], [the appellants'] interest in the [monies] was acquired for sufficient consideration by [the appellants]. (viii) The circumstances in which [the appellants] acquired their interest in the [monies] would not arouse a reasonable suspicion, and [the appellants] did not know, that the property was proceeds of an offence [or] an instrument of an offence (which is not admitted). (ix) In acquiring their interest in the [monies], [the appellants] were not party to any unlawful conduct, and are therefore 'third parties'."

[8]

Whether each deposit into the appellants' bank accounts constituted an acquisition of an "interest" in "property" by them within the meaning of the Proceeds of Crime Act: appeal grounds 1 and 2

[9]

Primary judge's reasons

The primary judge set out, at [68], the five elements that must be proved under s 330(4)(a) in order for property to cease to be the proceeds of an offence or an instrument of an offence. The first element was that there must have been an acquisition of property after the 'activity' that caused the property to become tainted had occurred. In this case, the relevant 'activity' was the making of the structured deposits.
Her Honour concluded, at [72], that the "interest" in "property" said to have been acquired was not 'money'. Rather, the correct characterisation of the appellants' interests in the Commonwealth Bank accounts was that of a chose in action, which gave the appellants an entitlement to require the bank to pay to them, on demand, all or part of the amount credited to their accounts.
Her Honour held that the choses in action were acquired when the appellants opened their bank accounts and that that interest did not vary. At all times, it remained the same contractual right to require the Commonwealth Bank to repay to them the balance in their accounts. Thus, whilst the value of the choses in action fluctuated, depending on the balance in their bank accounts from time to time, their interest in the property remained the same as when the bank accounts were opened. On this view, at the time that the appellants acquired their choses in action in opening the accounts, the structuring offence upon which the restraining order was based had not been committed.
As her Honour stated, at [83], "[t]he property of [the appellants] remained what it had always been - a chose in action; a contractual right", the value of which rose and fell with deposits and withdrawals. In other words: "The deposits represented an increment in the value of the property, but did not change its nature, and did not constitute an acquisition of property. There was no fresh or additional loan constituted by the deposits. [The appellants] had no property in the money deposited. The money was the property of the CBA."
Her Honour considered, at [89], that her view gained some support from the Proceeds of Crime Act, s 77(1)(c), which provides that a court must make a compensation order if, inter alia, the court is satisfied that a proportion of the value of the interest of an applicant was not derived or realised, directly or indirectly, from the commission of any offence. In her Honour's view, this appeared to be a recognition that "an applicant might have an interest, less than the whole, in the value of indivisible property" (emphasis in original).

[10]

Submissions

The appellants submitted that the primary judge erred in determining that they did not acquire property within the meaning of s 330(4)(a). They contended that a new or substituted chose in action arose on each occasion that a deposit was made. The Commissioner conceded that the primary judge had erred, although the argument advanced by the appellants was different in its legal analysis.
The appellants further submitted that their right to withdraw or deal with the funds standing to the credit of their bank accounts was an "interest" in or in connection with the property, constituted by the chose in action, whenever created, and was thus "property" as defined in the Proceeds of Crime Act.
The Commissioner did not cavil with her Honour's characterisation of the appellants' interests in the bank accounts as constituting choses in action which came into existence at the time the accounts were opened. Further, as noted earlier, the Commissioner agreed with the appellants' submission that their interest in the credit balance in their bank accounts was "property" within the terms of the definition in s 338, which was acquired from time to time as and when deposits were made. The Commissioner submitted that her Honour should have accepted the reasoning in the first instance decisions of Pham, Fitzroy All Pty Ltd and Kalimuthu [No 3]. The Commissioner also submitted that her Honour had erroneously distinguished this case from Studman.

[11]

Consideration

It is important at the outset to identify the "property" that is contended to have been acquired by the appellants. The terms of the contract between the Commonwealth Bank and the appellants were not in evidence. Her Honour, and the parties, each approached the bank accounts on the basis that they operated as current accounts in credit. We will adopt that same assumption, although it should be observed that the rights of parties in a modern banker-customer relationship may well be very different depending on the precise contractual terms between them, as modified by relevant statutes.
The law is settled that the contract between a customer and a bank is established at the time that a bank account is opened, and does not comprise a series of loans from the customer to the bank each time a deposit is made: see N Joachimson v Swiss Bank Corporation [1921] 3 KB 110 at 127; Croton v The Queen (1967) 117 CLR 326; [1967] HCA 48 at 330; Re Sutherland; French Caledonia Travel Service Pty Ltd (in liq) (2003) 59 NSWLR 361; [2003] NSWSC 1008 at [31]-[32].
Atkin LJ's conclusion in N Joachimson v Swiss Bank Corporation that there is only one contract made between the bank and its customer has prevailed in Australia.
As Dixon and Evatt JJ said in Russell v Scott (1936) 55 CLR 440; [1936] HCA 34 at 450-451, a "bank account" is nothing more or less than a chose in action, consisting "in the contractual right against the bank, i.e., in a debt, but a debt fluctuating in amount as moneys might be deposited and withdrawn".
In Croton, Barwick CJ said, uncontroversially and, in any event, in a passage approved in Parsons v The Queen (1999) 195 CLR 619; [1999] HCA 1 at [17]: "But, though in a popular sense it may be said that a depositor with a bank has 'money in the bank', in law he has but a chose in action, a right to recover from the bank the balance standing to his credit in account with the bank at the date of his demand, or the commencement of action."
The ratio of N Joachimson v Swiss Bank Corporation was described in Mark Hapgood QC (ed), Paget's Law of Banking (13th ed, 2007, LexisNexis) at 148, as being that: "… it is an implied term of the contract that the banker is not liable to repay the customer until demand is made. Until then, there is no presently due debt owed by the banker to his customer."

[12]

Whether the appellants were a "third party" under the Proceeds of Crime Act, s 330(4)(a): appeal grounds 3, 4 and 5

[13]

Primary judge's reasons

The primary judge rejected the appellants' argument that they were a "third party" within the meaning of s 330(4)(a). After careful consideration of the terms of s 330(4)(a) in their context, her Honour concluded: "[101] The use of the term 'third party' is infelicitous. Light is cast upon its proper construction when regard is had to the purpose for which s 330(4)(a) was enacted … It may, on its face, be seen to have been intended to protect a person who innocently acquires property (for sufficient consideration) unaware of the circumstances in which it became tainted. It is the statutory enactment of the equitable notion of a purchaser for value without notice. A third party is a person to whom property passes - a third party to the ownership of the property. It is the party by whom the property is acquired. The paragraph is concerned with the transfer of property. A person is not a third party only because he or she had no connection with the offence that causes the property to be tainted. … [104] The ordinary meaning of the words 'third party' and the ascertainable legislative intention of the provision, dictate that a 'third party' within s 330(4)(a) is a party who is, at the time of the criminal conduct, wholly removed from the property constituting the proceeds or instrument; it is not an owner of property who is wholly removed from the criminality that causes the property to be tainted."

[14]

Submissions

The appellants argued before the primary judge that a "third party" within the meaning of s 330(4)(a) was a person other than a party to the criminal conduct which caused the property to become tainted. It followed on this argument that because the structuring offences were transactions between the depositor and the bank, the appellants were a "third party". They reiterated that argument on the appeal. The appellants also submitted that the primary judge's construction of "third party" produced the "absurd" result that no acquirer of the proceeds of an offence could ever avail themselves of s 330(4)(a). Rather, s 330(4)(a) would only ever apply to an instrument of an offence, contrary to the express words of the provision. The appellants submitted that s 330(4)(a) should be construed as a statutory manifestation of the equitable concept of a bona fide purchaser for value without notice.
The appellants also submitted that, by virtue of the operation of s 330(4)(a), the deposits into their bank accounts ceased to become proceeds of crime at the same time as they would ordinarily have become such proceeds. It was integral to this argument that s 330(4)(a) did not require a temporal disjunction between the two events and that the transaction by which the property became proceeds of an offence or an instrument of an offence and its ceasing to be so could occur simultaneously. The import of their submission was that property that would otherwise become proceeds of crime does not become proceeds in circumstances where a person acquires property in accordance with s 330(4)(a). They contended that were it otherwise, an innocent acquirer of property would be bound to have the property forfeited if application is made for that purpose.
The Commissioner's position before the primary judge was that a "third party" does not simply refer to someone not a party to the offence. On the appeal, the Commissioner submitted that the primary judge's conclusion at [101] was correct. The Commissioner submitted that to adopt the construction for which the appellants contended would fail to give any substantive content to the term "third party" beyond the other, separately expressed, requirements of s 330(4)(a).
The Commissioner submitted that as account holders, the appellants "possessed, controlled and exercised the right to operate" the bank accounts into which the structured deposits were made, thereby causing the accounts to become instruments of offences. The appellants did not, on the Commissioner's submission, thereby become third parties in relation to their accounts.

[15]

Consideration

The meaning of "third party" in s 330(4)(a) is not without difficulty, as our reasons below and our respectful disagreement with the separate reasons of McColl JA make apparent. The appellants accepted that these deposits immediately gave rise to an interest in property, held by the appellants, which interest became proceeds of an offence within the meaning of the Proceeds of Crime Act, s 330(1). The issue under s 29 of the Proceeds of Crime Act was thus whether the appellants had proven that their interest in the property ceased to be the proceeds of crime, within the meaning of the Proceeds of Crime Act, s 330(4). The Note to the Proceeds of Crime Act, s 29(2) says: "Note: One of the circumstances in which property ceases to be proceeds of an offence or unlawful activity involves acquisition of the property by an innocent third party for sufficient consideration: see s300(4)(a)."
The concept of a "third party" is not defined in the Proceeds of Crime Act. The terms "third party" (used in s 330(4)(a)) and "innocent third party" (used in the extrinsic materials and the note to s 29) appear to have originated in a report by the Australian Law Reform Commission entitled Confiscation That Counts - A Review of the Proceeds of Crime Act 1987, Report No 87, (1999). Relevantly, chapter 12 provides as follows: "[12.3] It is clear from the various provisions dealing with the rights of third parties in both the POC Act and the Customs Act, Part XIII, Division 3 that it was not the intention of the legislature that there be any adverse impact on truly innocent third parties with bona fide interests in property. That said, the provisions providing relief for innocent third parties are extremely complex, although no more so than the confiscatory provisions from which they are intended to offer such relief. … [12.80] In his submission, the DPP states that, in the experience of his office, the rights of innocent third parties are adequately protected under the current provisions … the submission says that … the DPP would have no difficulty with additional provisions being enacted if that was considered necessary. However, any additional provisions will need to be carefully worded to ensure that they do not simply give defendants, and their associates, additional opportunities to delay the operation of the Act. … [12.82] These submissions, as reinforced in face to face discussions, add significant weight to the Commission's own analysis and concerns that, whether in respect of third party interests at large, or in relation to interests of creditor encumbrancees, it is imperative that the legislation be framed in such a way as to eliminate, or reduce to the extent practicable, the scope for third parties to obtain relief from restraining and forfeiture orders, and from the charging of property to satisfy pecuniary penalty orders, where the third party interest is acquired otherwise than from a bona fide and at arms length transaction. … Recommendation 53 • The POC Act should prescribe a uniform set of matters in respect of which a third party must satisfy the court when seeking exclusion of the third party's interest other than an encumbrance … - from a restraining order or forfeiture under the new non-conviction based regime • The matters on which the third party should be required to satisfy the court are that - the third party was not involved in the conduct to which the restraining or forfeiture order applies - that the third party's interest is not subject to the effective control of the defendant and - where the interest was acquired directly or indirectly from the defendant, the third party acquired the interest bona fide and for valuable consideration." (citations omitted)

[16]

Whether the appellants' interests in their bank accounts were acquired for sufficient consideration for the purposes of s 330(4)(a): appeal ground 6

Appeal ground 6 raises the issue of whether the appellants' interests in their bank accounts were acquired for sufficient consideration for the purposes of s 330(4)(a). Even if we are wrong as to whether the appellants were each a "third party" within the meaning of s 330(4)(a), we would nonetheless reject this ground of appeal for the reasons we give below.

[17]

Primary judge's reasons

The primary judge noted, at [55], that it was the appellants' case that they were the innocent victims of cuckoo smurfing and that their legitimate transactions in Indonesia had been subverted in such a way that the deposits in their Commonwealth Bank accounts were sourced, not from their own funds, but from proceeds in Australia of criminal activity. At [106]-[110], her Honour rejected the appellants' submission that their interests in the accounts were acquired for sufficient consideration, even if the property was taken to be "funds in the accounts" and not "an entitlement to receive the equivalent of the funds standing to their credit in the accounts".
In reaching this conclusion, her Honour observed that the appellants' submission contained an internal conflict. On the one hand, the appellants relied on the practice of cuckoo smurfing as the source of the funds deposited into their accounts, which necessarily meant that those funds were not the funds they had arranged with the Indonesian money changers to be deposited into their Australian accounts, there being no connection between the payments they made in Indonesia and the deposits made in Australia, other than the equivalence of amount. This meant that these were "gratuitous deposits", being monies that were deposited without consideration passing from the appellants to the depositors. The appellants retained whatever rights they had against the Indonesian money changers. Her Honour observed, at [107], that the payments made to the money changers were made in consideration of their transfer to the Commonwealth Bank accounts, and that that was a transfer that did not eventuate.
On the other hand, as her Honour noted, the appellants contended, as they had particularised in their exclusion application (set out above at [36]), that the funds that had been deposited in their Commonwealth Bank accounts had been acquired by them for sufficient consideration, the consideration being the funds they had paid into the various Indonesian accounts in accordance with the instructions of the money changers.
Her Honour observed, at [58], that the appellants' particularisation of their grounds for exclusion was inconsistent with their reliance on cuckoo smurfing as an explanation for the manner by which the monies were deposited into their accounts. Her Honour considered that the appellants' reliance upon cuckoo smurfing as the explanation for the many cash deposits into their accounts contradicted their contention that they gave sufficient consideration for their interests in the property. Her Honour observed, at [109]: "Moreover, if the applicants' payments in Indonesia were the consideration for the deposits, there is no apparent reason for the structuring of the transactions in such a way as to avoid reporting. Indeed, there is no apparent reason for the deposits to have been made in cash. Yet, over a two year period, that is what happened repeatedly, and Ms Koernia was kept informed by telephone, and given bank statements, that disclosed the manner and nature of the deposits. The applicants' reliance on cuckoo-smurfing cannot sit with their contention that they gave sufficient consideration for their interests in the property."

[18]

Submissions

The appellants contended that notwithstanding that sufficiency of consideration was not in issue before the primary judge, in circumstances where they had not been challenged on the commerciality of the rates at which Indonesian rupiah was exchanged for Australian dollars, the primary judge erroneously accepted the Commissioner's argument that insufficient consideration was given as the money paid by the appellants in Indonesia was not the same money that was deposited in Australia, and that the Australian depositors received no consideration from the appellants, such that those deposits were gratuitous.
The appellants submitted that her Honour's conclusion paid insufficient regard to the fungibility of money and to the substance of the obligation undertaken by the Indonesian money changers. The appellants explained that the transactions into which they had entered in Indonesia involved a contract between them and the money changers whereby a given amount in Indonesian rupiah, paid to nominated accounts in Indonesia, resulted in a given amount in Australian dollars being deposited in Australia. They contended that a currency exchange thereby took place. They also contended that there was "a transfer of funds as between the two countries in question".
The appellants submitted that in fulfilling their obligations under the contract, they gave "sufficient consideration", in that they deposited money into nominated Indonesian accounts as directed by the money changers in return for the obligation on the money changers to cause deposits to be made in Australian dollars. As the appellants sought to explain, when Ms Koernia deposited money into the nominated Indonesian accounts, there was no obligation on the money changers to deposit those same funds into the appellants' Commonwealth Bank accounts. Indeed, that was not only contrary to the appellants' arrangement with the money changers, but was inconsistent with usual banking practice. The obligation of the money changers was to ensure that an equivalent amount was deposited into the appellants' Commonwealth Bank accounts.
The appellants contended that the performance of the money changers' obligation through intermediaries did not affect the content of the obligation they had undertaken or the consequences of their performance: see Australis Media Holdings Pty Ltd v Telstra Corporation Ltd (1998) 43 NSWLR 104 at 118-119. The appellants submitted that it was irrelevant how the obligation was fulfilled and who performed it.

[19]

Consideration

In our opinion, the primary judge's analysis of, and conclusion as to whether, the appellants acquired property "for sufficient consideration" was correct.
In order to prove that they had acquired property for "sufficient consideration", the appellants needed to prove that the money they paid in Indonesia to the money changers somehow represented, through a series of intermediaries or transactions, funds being deposited into their Commonwealth Bank accounts.
The appellants' argument was that they gave sufficient consideration for the various transactions into which they entered with the Indonesian money changers. However, even if they had entered into a contract or contracts in Indonesia for which they gave sufficient consideration, they did not contend that they acquired property in Indonesia. Rather, they contended that they acquired an interest in property when deposits were made into their Commonwealth Bank accounts. In terms, their argument was that: "… property flowed from [the appellants] in Indonesia when [they] deposited required sums of money in rupiah into bank accounts nominated by the people with whom [they] were dealing. That gave rise to a matching obligation on them to cause a given sum to be deposited in Australian bank accounts. So the consideration for the deposits that were made in Australia was the money that flowed from [the appellants] in Indonesia."
The difficulty with the appellants' argument is that s 330(4)(a) requires that there be an acquisition of property "by a third party for sufficient consideration". Assuming for the purpose of this issue, contrary to our earlier finding that the appellants were not third parties, that they acquired property as third parties, it is necessary to identify the transaction by which the property was acquired and the party from whom the property was acquired. The starting point for that consideration is the "interest" in "property" which was acquired.
As identified earlier, the "property" acquired was a "right" or "power" in respect of the chose in action constituted by the appellants' bank accounts. The language of s 330(4)(a) does not specify to whom the consideration must be provided. Its concern is with the acquisition of property by a third party "for sufficient consideration". As a matter of construction, there can be no "sufficient consideration" unless it is provided for the acquisition of the property. As we have explained, an interest in property was acquired by the appellants each time a cash deposit was made into their accounts by unnamed persons in Australia from funds from an unknown source or sources that, at all times, were located in Australia. The property was thus acquired from the unnamed persons who made the deposits.

[20]

Whether the circumstances would have raised a reasonable suspicion on the part of the appellants that the property was proceeds of an offence or an instrument of an offence for the purposes of s 330(4)(a): appeal grounds 7 and 8

[21]

Primary judge's reasons

The primary judge dealt, at [111]-[123], with the question whether the appellants knew the property was tainted. The absence of knowledge that the property was proceeds of an offence or an instrument of an offence is one of the elements under s 330(4)(a) whereby property ceases to be proceeds or an instrument. Her Honour concluded, in circumstances where the onus rested on the appellants, that they had not established that the property was acquired without their knowledge that it was either proceeds of an offence or an instrument of an offence.
In coming to this conclusion, her Honour relied upon two matters.
First, her Honour considered that Ms Koernia's evidence as to why, on some occasions, she deposited very large sums of money to the nominated Indonesian accounts but, in other cases, deposited amounts of less than 500 million Indonesian rupiah, was "wholly unconvincing". This was so notwithstanding that her Honour was not prepared to act upon the basis that Indonesian law required deposits of over 500 million Indonesian rupiah to be reported to the Indonesian authorities. In this regard, her Honour observed that whilst there was some indirect evidence to that effect, it was not clear whether that only related to cash transactions or extended to other forms of payment or transfer.
Secondly, her Honour considered that in circumstances where the appellants knew, over a period of years, of the unorthodox manner by which deposits were made into their accounts, they had not discharged the onus on them to prove that they did not have knowledge that the property was the proceeds of crime. In this regard, her Honour considered, at [120], that Mr Lordianto's evidence "that his wife kept him informed of the manner in which the deposits were made fixe[d] him with sufficient knowledge".
In reaching her conclusion, her Honour rejected a submission that the concept of "wilful blindness" provided assistance on the facts of this case. Her Honour also rejected a submission that any assistance could be gained from the fact that the appellants, as frequent entrants to Australia, were aware that a declaration was required if a sum of more than $10,000 was being imported or exported.
For the same reasons that her Honour was not satisfied that the appellants had proved that they did not know that the property was tainted, she was not satisfied that the property was acquired in such a way as not to arouse a reasonable suspicion that it was proceeds of an offence or an instrument of an offence: see at [125]. Her Honour noted that the transactions had taken place over a period beginning in October 2013 and ending in October 2015.

[22]

Submissions

The appellants challenged the primary judge's determination on a number of bases, including that Ms Koernia's evidence that she did not know or have a reasonable suspicion that avoiding mandatory reporting requirements was an offence had not been challenged in cross-examination, and that the primary judge erred in her application of the statutory test under s 330(4)(a). They also submitted that the means by which the money was deposited into their Commonwealth Bank accounts was immaterial to them.
The appellants submitted that in order to be "disqualified" under s 330(4)(a), they had to have had certain factual knowledge, namely, that numerous small amounts had been paid into their Commonwealth Bank accounts. They accepted that they had this knowledge. However, they submitted that it was also necessary that they knew that a possible or suspected offence was involved. They submitted that there was no evidence that they had such knowledge, or room for suspicion that an offence had been committed.
The appellants further submitted that the test for the purposes of s 330(4)(a) was that the person must have had a suspicion that a crime had actually been or might have been committed. On their argument, it was not sufficient that a person knew of matters which, of themselves, would amount to a crime. Senior Counsel for the appellants modified this submission, stating that: "… it may suffice that there is knowledge of circumstances which may constitute an offence but at least there has to be knowledge of an offence by dint of which property may become proceeds."
The appellants submitted that the test for which they contended was based upon a textual analysis of the relevant provisions of the Proceeds of Crime Act. In brief, that was that property became proceeds of crime by virtue of an offence being committed. They contended that knowledge that the property was the proceeds of crime must, therefore, be based upon knowledge of a possible offence. Noting that the offences upon which the Commissioner relied were structuring or money laundering offences, the appellants submitted that there was no evidence that they had any knowledge of such offences.
The appellants contended that the primary judge had lowered the required level of knowledge in finding that Ms Koernia must have had "a reasonable suspicion that something untoward had occurred". They contended that that was not the statutory test and that it was insufficient to satisfy the statutory test. They submitted that it was an error to conflate the statutory test with one of suspicion that untoward events had occurred. The appellants further submitted that her Honour fell into error in her reasoning process in that her Honour did not identify any offence of which a reasonable suspicion was or could have been aroused.

[23]

Consideration

The test under s 330(4)(a) is, as the terms of the section require, an objective one. In Le, Kirby and Crennan JJ endorsed, at [127], the following statement in respect of a similar question posed by Victorian confiscation legislation, as articulated by the Victorian Court of Appeal in that case: "Plainly, the word 'reasonable' imports an objective test. This means that it will not avail an applicant to say 'I had no suspicion' if a reasonable person in her circumstances, and knowing what she knew, would have formed a suspicion ... In the present case, the question is: would a reasonable person in [the wife's] position have had a suspicion?" (emphasis added) See Director of Public Prosecutions (Vic) v Le (2007) 15 VR 352; [2007] VSCA 18 at [24]-[27].
The emphasised words in the passage from Le reflect, in the context of s 330(4)(a), the basal concept of the criminal law that a person does not need to know that the conscious act constituting an offence with which the person is charged is forbidden by law. This is so notwithstanding the common law presumption that mens rea, or "a knowledge of the wrongfulness of the act", is an essential ingredient in every offence: Sherras v De Rutzen [1895] 1 QB 918. In He Kaw Teh v The Queen (1985) 157 CLR 523; [1985] HCA 43, Brennan J considered, at 582, the concept of mens rea in the following terms: "It is implied as an element of the offence that, at the time when the person who commits the actus reus does the physical act involved, he either - (a) knows the circumstances which make the doing of that act an offence; or (b) does not believe honestly and on reasonable grounds that the circumstances which are attendant on the doing of that act are such as to make the doing of that act innocent." (emphasis added)
However, a person need not know that the elements of the offence constituted an offence. Brennan J referred to the observations of Jordan CJ in R v Turnbull (1943) 44 SR (NSW) 108, in which his Honour stated, at 109, as follows: "... assuming his mind to be sufficiently normal for him to be capable of criminal responsibility, it is also necessary at common law for the prosecution to prove that he knew that he was doing the criminal act which is charged against him, that is, that he knew that all the facts constituting the ingredients necessary to make the act criminal were involved in what he was doing. If this be established, it is no defence that he did not know that the act which he was consciously doing was forbidden by law. Ignorance of the law is no excuse." (emphasis added)

[24]

Whether the primary judge denied the appellants procedural fairness by ordering costs against them without inviting submissions as to costs: appeal ground 9

So far as the question of costs is concerned, the usual practice of the Court is to make an order for costs at the time judgment is delivered: see Civil Procedure Act 2005 (NSW), s 98. It was open for the appellants to ask the primary judge for an opportunity to make submissions as to costs. As Basten JA (Mason P and Bryson JA agreeing) noted in Grygiel v Baine (No 2) [2005] NSWCA 434, "[f]ailure to address on costs is commonplace and … may properly be taken by the Court as an indication that no special or unusual orders are required." His Honour identified two qualifications, neither of which arises in the present case. Accordingly, this ground of appeal must be dismissed.

[25]

Conclusion

It follows that the appeal must be dismissed with costs.
McCOLL JA: Subject to the following reasons, I agree with Beazley P's and Payne JA's reasons (joint judgment).
These reasons address the meaning of "third party" in s 330(4)(a) of the Proceeds of Crime Act 2002 (Cth) (POCA) [1] . They assume familiarity with the underlying facts and the parties' submissions as outlined in the joint judgment. Such matters will only be repeated to the extent necessary to afford context. As will become apparent, I disagree, with respect, with their Honours conclusion that the appellants were not third parties within meaning of that term in s 330(4)(a). Nevertheless because I agree with their Honours' conclusions otherwise I agree with the orders their Honours propose.
The appellants sought an order pursuant to s 29 of the POCA to exclude certain specified interests in property (Restrained Property) from a restraining order made by the Supreme Court of New South Wales on 28 June 2016 pursuant to the POCA, s 19. The Restrained Property consisted of funds of just under $6 million standing to the credit of the appellants in five Commonwealth Bank of Australia bank accounts, three in Ms Koernia's name, and two in their joint names.
The appellants claimed the Restrained Property was beneficially owned by them and was not proceeds of an indictable offence, nor an instrument of any serious offence. [2] As the primary judge, Simpson J, said, although the appellant's primary reasons for seeking the exclusion order were framed by reference to an application under s 29, the application was particularised in a manner referable to s 330(4)(a). In short, the appellants conceded before her Honour "that it would be difficult to maintain" that the Restrained Property had not been used in structured transactions, and that it was not tainted, but contended it had ceased to be the proceeds of an offence or an instrument of an offence because the appellants had acquired the Restrained Property in such circumstances as attracted the operation of s 330(4)(a) of the POCA. [3]
In short, the appellants submitted before the primary judge, and in this Court, that "third party" in s 330(4)(a) referred to a person other than a party to the criminal conduct which caused the property to become tainted. They argued that because the structuring offences were transactions between the depositor(s) of the funds and the CBA, they were, relevantly, third parties. [4]

[26]

Legislative framework

Bearing in mind that the primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute, determination of the meaning of s 330(4)(a) turns on consideration of its text and its context in the POCA, including the general purpose and policy of s 330, and the mischief it is seeking to remedy. [8] Such matters are important as "the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed". [9]
Thus it is important in order to construe s 330(4), to understand the framework of the POCA. [10]
The long title to the POCA is "An Act to provide for confiscation of the proceeds of crime, and for other purposes". The principal objects of the Act include "depriv[ing] persons of the proceeds of offences, the instruments of offences, and benefits derived from offences, against the laws of the Commonwealth or the non-governing Territories" (s 5(a)) and "punish[ing] and deter[ing] persons from breaching laws of the Commonwealth or the non-governing Territories" (s 5(c)).
Consistently with the long title, and as explained in Ch 1 (Introduction), Pt 1-3 (Outline of this Act), s 6 (General), the POCA establishes a scheme to confiscate the proceeds of crime by setting out in Ch 2 processes by which confiscation can occur, in Ch 3 ways in which Commonwealth law enforcement agencies can obtain information relevant to those processes, in Ch 4 related administrative matters, concluding with "miscellaneous provisions and with definitions and other interpretative material". The miscellaneous provisions appear in Ch 5 (Miscellaneous), while the definitions and other interpretative material appear in Ch 6 (Interpreting this Act).
Chapter 2 consists of "a [confiscation] scheme comprising interlocking parts". [11] freezing orders, restraining orders, forfeiture orders under which property is forfeited to the Commonwealth, forfeiture of property to the Commonwealth on conviction of a serious offence, pecuniary penalty orders requiring payments of amounts based on benefits derived from committing offences, literary proceeds orders requiring payments of amounts based on literary proceeds relating to offences and unexplained wealth orders requiring payment of unexplained wealth amounts: s 7, POCA.

[27]

Interrelationship of s 29 and s 330

As the primary judge said, the appellants particularised their exclusion application in a manner referable to s 330(4)(a) which "states the circumstances - the only circumstances - in which property ceases to be proceeds or an instrument of an offence." [22]
The appellants conceded before the primary judge that the Restrained Property had been proceeds or an instrument of a relevant offence, albeit without their complicity. [23] Accordingly, the critical question became whether, assuming contrary to her Honour's earlier ruling on the acquisition issue, the appellants had "acquired" an "interest" as defined in the Restrained Property, that property had ceased to be tainted in the s 330(4)(a) sense.
Both the parties' submissions, and the primary judge's reasons, focused on s 330(4) as answering that question. While s 330(4) was undoubtedly a relevant consideration, it is necessary to understand its place in the statutory matrix.
The s 19 restraining order turned, in part, on the applicants for that order establishing that an "authorised officer suspects" that the property the subject of the application "is proceeds of" (emphasis added) an offence referred to in s 19(1)(d) or, pursuant to s 19(1)(e), if the offence to which the order relates is a serious offence, the property "is an instrument of the offence" (emphasis added). Section 329 prima facie answers the question embedded in s 19(1)(d) and (e) by providing when property "is" proceeds or an instrument of an offence.
Section 29 requires the applicants for an exclusion order to prove that the applicants' interest in the Restrained Property "is neither" proceeds or an instrument of an offence.
While s 329 does not directly answer the question s 29 poses, it establishes the base point: whether the property in question "is" such proceeds or "instrument" in the first place. Only when that question has been resolved can the s 29 question, whether the applicants' "interest" in that property "is" or "is neither" one or the other, be determined. In this case the "is" question was treated as sufficiently answered by the appellants' concession as to the characterisation to which I have referred.
Section 330 is critical to the operation of s 329. Section 330(1) and (2) explain how property first "becomes", that is to say can be so characterised that an authorised officer can "suspect" it "is", proceeds or an instrument of an offence in the s 19 sense, and a court can be satisfied for the purposes of s 19(1)(f) that the authorised officer holds that suspicion on reasonable grounds and thus be subject to a restraining order. Section 330(3) explains that when there is a transaction referred to in that provision in relation to proceeds or an instrument of an offence (s 330(3) transaction), it "remains" so characterised. Section 330(4) explains when property which "is" either proceeds or an instrument of an offence "ceases" being so characterised.

[28]

Section 330(4)(a): third party

The primary judge held "third party" in s 330(4)(a) was "the statutory enactment of the equitable notion of a purchaser for value without notice." [30] In Tjongosutiono, [31] N Adams J observed that "[t]he concept of a third party is usually someone at arm's length".
While analogies may provide useful points of reference, the meaning of "third party" in s 330(4)(a) must be determined by the principles of statutory interpretation to which I have referred. As I have said, the fact that s 330(4)(a) is an aid to the construction of the substantive provisions of the POCA rather than a substantive enactment, does not mean that it should be construed divorced from its Pt 6-1 context. Any construction of s 330(4)(a) must be consistent with the language and purpose of all the provisions of the POCA, and reflect the "hierarchy of the provisions … to give each provision the meaning which best gives effect to its purpose and language while maintaining the unity of the statutory scheme." [32] In my view, with respect, decisions which have hitherto considered the meaning of "third party" have failed to have regard to, or accord sufficient weight to, the context in which s 330(4) appears and the hierarchy within s 330.
The concept of whether property "is neither proceeds nor an instrument [of a specified activity or offence]" is relevant to applications for exclusion orders made in relation to restraining orders made under each of s 17, (s 29(2)(a) and (b)), s 18, (s 29(2)(c)) and s 19 (s 29(2)(d)). In the latter case, reasons for excluding a specified interest in property from the s 19 restraining order turn on whether the interest "is neither" proceeds of an indictable offence, a foreign indictable offence or an indictable offence of the Commonwealth nor an instrument of any serious offence (s 29(2)(d)). Pursuant to s 29(3), a further reason for excluding a specified interest in property from any restraining order is, in part, whether "there are no reasonable grounds to suspect that the interest is *proceeds of the offence, or any of the offences" specified in the chapeau to s 29(3)(a).
Notably, s 29 does not expressly use the language of s 330(4) that property which is proceeds or an instrument of an offence has "cease[d]" to be such so as to warrant the grant of an exclusion order. Rather, it must be inferred that the concept of property not having that characteristic flows from the term "is neither". That expression is apt to describe property which never became "proceeds or an instrument of an offence" within s 330(1) - (2), [33] or ceased to be such as explained in s 330(4). It is conceivable that there may be cases in which a s 29 applicant could persuade a court of the former proposition.

[29]

Tjongosutiono

The joint judgment has approved the primary judge's reasons on the "third party" issue. N Adams J also substantially applied the primary judge's conclusion as to the meaning of "third party" in Tjongosutiono. It is appropriate that I make clear, to the extent not already apparent, my reasons for disagreeing with that approach. It is convenient to do so by analysing Tjongosutiono.
In Tjongosutiono, [36] N Adams J held that in order to be a s 330(4)(a) "third party", the "property must be acquired after the funds become either the proceeds or an instrument of an offence". Her Honour's conclusion in this respect appears to have turned on two matters. First, her earlier observation that sub-ss 330(4)(b) - (g) shared "the common characteristic that there is some effluxion of time between the property becoming the proceeds of crime and then ceasing to have that character as a result of an intervening act". [37] Second, her Honour's conclusion that, absent definition, the word "acquired" in s 330(4)(a) should be given its everyday meaning of "to come into possession of". [38]
In Tjongosutiono, the applicant for the s 42 revocation order had to establish that there were "no grounds" on which to make the restraining order at the time of the revocation application: s 42(5)(a), POCA. Although it is difficult to draw direct factual comparisons, the facts in that case bore some similarities to the present case. Both involved "cuckoo smurfing". The applicant had used moneychangers in Indonesia to seek to transfer money to bank accounts he held with Westpac in Australia for apparently legitimate use here. N Adams J found "the applicant's Westpac eSaver Account was used by unknown persons to launder cash which was presumably the proceeds of criminal activity in Australia." [39]
N Adams J held the applicant could not be a "third party" because, as the Commissioner submitted, he had been "involved in the first step of the process in Jakarta and was also involved in the final step in Australia when the deposits were made". The Commissioner in that case did not submit that the applicant was complicit in a criminal sense in the "cuckoo smurfing". As much is evident from her Honour's conclusion that "[j]ust because the applicant was not directly involved in the criminal activity of money laundering, it does not follow that he was a 'third party' for the purposes of s 330(4)(a) of the Act." [40]

[30]

Conclusion

Being a s 330(4)(a) third party is not sufficient to attract a finding that property "ceases" to be proceeds or an instrument of an offence. That depends on the applicant also satisfying the other requirements of s 330(4)(a). The appellants failed in that respect as the joint judgment has explained.

[31]

Endnotes

All references to the POCA are, for convenience, expressed in the present tense, however are taken from the POCA as in force on 1 December 2016 which, the Court was informed was the applicable legislation. There have been amendments to the POCA since 1 December 2016 including as recently as May 2018.
Commissioner of the Australian Federal Police v Lordianto [2017] NSWSC 1196; (2017) 324 FLR 237 at [24] (Lordianto) per Simpson J.
Ibid at [24], [30].
Ibid at [98].
[2017] NSWSC 1197 at [59] (Fernandez).
Ibid.
Section 400.9 of the Criminal Code (Cth) makes it an offence to deal with money or other property in circumstances where it is reasonable to suspect that the money or property is proceeds of crime and, at the time of the dealing, the value of the money and other property was $100,000 or more. It was not apparent that the Commissioner contended the appellants had committed any offence pursuant to s 400.9 - rather, I infer, it was the depositors of the funds to the credit of their accounts who were so implicated. The Commissioner's case, rather, was that by reason of the definition of property in s 329 of the POCA, the funds standing to the credit of an account holder such as the appellants in a bank account as a consequence of structured deposits made contrary to s 142(1) of the AML Act were either wholly or partly realised or derived, whether directly or indirectly, from the commission of that offence: see Commissioner of the Australian Federal Police v Minh Duc Pham [2015] NSWSC 1383 at [37] - [38] per Beech-Jones J; The Commissioner of the Australian Federal Police v Tjongosutiono (2018) 329 FLR 103; [2018] NSWSC 48 (Tjongosutiono) at [147] - [148] per N Adams J.
Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory) (2009) 239 CLR 27; [2009] HCA 41 at [47] per Hayne, Heydon, Crennan and Kiefel JJ; Military Rehabilitation and Compensation Commission v May [2016] HCA 19; (2016) 90 ALJR 626 at [10] per French CJ, Kiefel, Nettle and Gordon JJ; SZTAL v Minister for Immigration and Border Protection [2017] HCA 34; 91 ALJR 936 at [14] per Kiefel CJ, Nettle and Gordon JJ; see also [35] - [39] per Gageler J.
Commissioner for Railways (NSW) v Agalianos (1955) 92 CLR 390 at 397; [1955] HCA 27 per Dixon CJ; referred to with approval in Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28 (Project Blue Sky) at [69] per McHugh, Gummow, Kirby and Hayne JJ; see also Esso Australia Pty Ltd v Australian Workers' Union [2017] HCA 54; (2017) 92 ALJR 106 at [71] per Gageler J.

[32]

Amendments 27 April 2020 - Typographical errors corrected at [26], [30], [31], [42], [89], [106], [123], [159]. Errors in case citation corrected at [129], and in references to N Joachimson and Kalimuthu throughout. 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: 27 April 2020

Parties

Applicant/Plaintiff:

Lordianto

Respondent/Defendant:

Commissioner of the Australian Federal Police

Legislation Cited (11)

Crimes Legislation Amendment (Serious and Organised Crime) Act 2010(Cth)

Retail Shop Leases Act 1994(Qld)

Trade Practices Act 1974(Cth)

Proceeds of Crime Act 2002(Cth)

Acts Interpretation Act 1901(Cth)s 13(1).

Anti-Money Laundering and Counter-Terrorism Financing Act 2006(Cth)

Criminal Law (Detention and Interrogation) Act 1995(Tas)

Corporations Act 2001(Cth)

Criminal Assets Recovery Act 1990(NSW)

Family Law Act 1975(Cth)

Civil Procedure Act 2005(NSW)

Cases Cited (79)

R 388 Gibb v The Commissioner of Taxation of the Commonwealth of Australia (1966) 118 CLR 628; [1966] HCA 74 Grygiel v Baine (No 2) [2005] NSWCA 434 He Kaw Teh v The Queen (1985) 157 CLR 523; [1985] HCA 43 N Joachimson v Swiss Bank Corporation [1921] 3 KB 110 Kelly v R (2004) 218 CLR 216; [2004] HCA 12 Lacey v Attorney-General for the State of Queensland (2011) 242 CLR 573; [2011] HCA 10 Lee v Director of Public Prosecutions (Cth) (2009) 75 NSWLR 581; [2009] NSWCA 347 Mekpine Pty Ltd v Moreton Bay Regional Council [2016] 1 Qd R 148; (2014) 206 LGERA 120; [2014] QCA 317 Military Rehabilitation and Compensation Commission v May [2016] HCA 19; (2016) 90 ALJR 626 Moreton Bay Regional Council v Mekpine Pty Ltd (2016) 256 CLR 437; [2016] HCA 7 National Australia Bank Ltd v Norman (2009) 180 FCR 243; [2009] FCAFC 152 Ostrowski v Palmer (2004) 218 CLR 493; [2004] HCA 30 Parsons v The Queen (1999) 195 CLR 619; [1999] HCA 1 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28 R v Independent Broad-Based Anti-Corruption Commissioner (2016) 256 CLR 459; [2016] HCA 8 R v Turnbull (1943) 44 SR (NSW) 108 Re Sutherland; French Caledonia Travel Service Pty Ltd (in liq) (2003) 59 NSWLR 361; [2003] NSWSC 1008 Russell v Scott (1936) 55 CLR 440; [1936] HCA 34 Saba v Plumb [2018] NSWCA 60 Sherras v De Rutzen [1895] 1 QB 918 Shields v New South Wales Crime Commission (2007) 177 A Crim R 130; [2007] NSWCA 309 Studman v Commonwealth Director of Public Prosecutions (2007) 177 A Crim R 34; [2007] NSWCA 285 SZTAL v Minister for Immigration and Border Protection (2017) 347 ALR 405; [2017] HCA 34 Taylor v The Owners - Strata Plan No 11564 (2014) 253 CLR 531; [2014] HCA 9 Tolhurst v Associated Portland Cement Manufacturers [1903] AC 414 Yanner v Eaton (1999) 201 CLR 351; [1999] HCA 53 Texts Cited: Australian Law Reform Commission, Confiscation That Counts - A Review of the Proceeds of Crime Act 1987, Report No 87, (1999) House of Representatives, Revised Explanatory Memorandum to the Proceeds of Crime Bill 2002 (Cth) Macquarie Dictionary (6th ed, 2013) Mark Hapgood QC (ed), Paget's Law of Banking (13th ed, 2007, LexisNexis) Pearce and Geddes, Statutory Interpretation in Australia (8th edition, 2014, LexisNexis) Category: Principal judgment Parties: Sanko Lordianto (First Appellant) Indriana Koernia (Second Appellant) Commissioner of the Australian Federal Police (Respondent) Representation: Counsel: I D Temby QC; T P Mitchell (Appellants) A R Moses SC; L T Livingston; D Tang (Respondent)

Cited By (5)

Commissioner of the Australian Federal Police v Fernandez

Commissioner of the Australian Federal Police v Huang

Commissioner of the Australian Federal Police v HWCJ GLB Pty Ltd

Commissioner of the Australian Federal Police v Mazzco Investments Pty Ltd & Ors.

The Commissioner of the Australian Federal Police v Pharmacy Depot Hurstville Pty Ltd

Some limited support for that construction is provided by Campbell J in Re Sutherland; French Caledonia Travel Service Pty Ltd (in liq). The context of his Honour's remarks was the rules of tracing and the operation of Clayton's Case (Devaynes v Noble (1816) 1 Mer 572) in the case of proposed distributions by a liquidator appointed under the Corporations Act 2001 (Cth). His Honour determined that Clayton's Case was not applicable in the distribution of trust monies held by the liquidator. In the particular circumstances of that case, the liquidator was justified in making a pari passu distribution amongst claimants on the trust fund. His Honour said, at [61]: "At one level of legal analysis, there is a vast difference between a credit in a bank account, and money in a bag. The first is an inchoate chose in action (inchoate because of the need to make demand before there is a cause of action that can be sued on), while the second is a chose in possession. Coins in a bag are each separate and individually identifiable things, even though coins of the one denomination are for most practical purposes interchangeable, and adding more coins to a bag is simply adding an additional number of things of that type to the bag. In contrast, a debt owed by a banker to a customer is a single thing - an obligation to pay X dollars - and the client's paying more money into a bank account results in the creation of a different thing - an obligation to pay some larger number than X dollars. However the purpose of the activity that the Court of Appeal was engaged in was working out whether the defaulting solicitor could, conscientiously, deny that some of the money which remained in the bank account - the inchoate chose in action to pay the balance to the customer - was money of a particular client. For that purpose, there was no difference between a bank account, and coins from various sources placed in a bag. Functionally, the bank account and coins in the bag operated identically …" (emphasis added)

The Revised Explanatory Memorandum to the Proceeds of Crime Bill 2002 (Cth) stated the following in relation to cl 330: "This clause establishes that money or other property which is 'proceeds of an offence' or an 'instrument of an offence' does not lose its nature as such merely because it is exchanged for another item or is otherwise dealt with (for example by the sale of property which is proceeds or an instrument, or by placing cash which is proceeds into a bank account, or using cash which is proceeds to purchase property). This prevents a person from transforming property which is proceeds or an instrument into 'clean' property just by changing its nature. Subclause 330(1) deals with proceeds by providing that property becomes the proceeds of an offence if it is wholly or partly derived or realised from, or acquired with, proceeds of the offence. For example, if a house is acquired for $300,000, and $100,000 of the money used is proceeds of an offence, the entire property becomes the proceeds of the offence and is liable to forfeiture. Subclause 330(2) deals with instruments in a similar manner. Subclause 330(3) establishes that when the proceeds or an instrument of an offence is used to acquire other property not only does the original property retain its nature as proceeds or an instrument, the property acquired with the proceeds takes on that nature, and itself becomes the proceeds or an instrument of an offence. Subclause 330(4) protects the rights of innocent third parties who acquire the proceeds or instrument of an offence in certain circumstances. An example of how subclauses 330(1)-(4) would work is set out below: • If A defrauds the Commonwealth of $200,000, that money is the proceeds of an offence. • If A then purchases a house entirely with those proceeds, the house becomes the proceeds of an offence, and the money continues to be the proceeds of an offence. • However, if the seller of the house has acquired the money for sufficient consideration (that is, the house was sold for its value), and the seller does not know, and there is nothing that would cause him or her to suspect that, at the time of sale, that the money was the proceeds of an offence, that money then ceases to be the proceeds of an offence ..."

Sections 329 and 330 of the POCA which appear in Ch 6 (Interpreting this Act), Pt 6-1 (Meaning of some important concepts), Div 1 (Proceeds and instrument of an offence) provide: [21] 329 Meaning of proceeds and instrument (1) Property is proceeds of an offence if: (a) it is wholly derived or realised, whether directly or indirectly, from the commission of the offence; or (b) it is partly derived or realised, whether directly or indirectly, from the commission of the offence; whether the property is situated within or outside *Australia. (2) Property is an instrument of an offence if: (a) the property is used in, or in connection with, the commission of an offence; or (b) the property is intended to be used in, or in connection with, the commission of an offence; whether the property is situated within or outside *Australia. (3) Property can be proceeds of an offence or an instrument of an offence even if no person has been convicted of the offence. (4) Proceeds or an instrument of an *unlawful activity means proceeds or an instrument of the offence constituted by the act or omission that constitutes the unlawful activity. 330 When property becomes, remains and ceases to be proceeds or an instrument (1) Property becomes *proceeds of an offence if it is: (a) wholly or partly derived or realised from a disposal or other dealing with proceeds of the offence; or (b) wholly or partly acquired using proceeds of the offence; including because of a previous application of this section. (2) Property becomes an *instrument of an offence if it is: (a) wholly or partly derived or realised from the disposal or other dealing with an instrument of the offence; or (b) wholly or partly acquired using an instrument of the offence; including because of a previous application of this section. (3) Property remains *proceeds of an offence or an *instrument of an offence even if: (a) it is credited to an *account; or (b) it is disposed of or otherwise dealt with. (4) Property only ceases to be *proceeds of an offence or an *instrument of an offence: (a) if it is acquired by a third party for *sufficient consideration without the third party knowing, and in circumstances that would not arouse a reasonable suspicion, that the property was proceeds of an offence or an instrument of an offence (as the case requires); or (b) if the property vests in a person from the distribution of the estate of a deceased person, having been previously vested in a person from the distribution of the estate of another deceased person while the property was still proceeds of an offence or an instrument of an offence (as the case requires); or (ba) if the property has been distributed in accordance with: (i) an order in proceedings under the Family Law Act 1975 with respect to the property of the parties to a marriage or either of them; or (ia) an order in proceedings under the Family Law Act 1975 with respect to the property of the parties to a de facto relationship (within the meaning of that Act) or either of them; or (ii) a financial agreement, or Part VIIIAB financial agreement, within the meaning of that Act; and 6 years have elapsed since that distribution; or (c) if the property is acquired by a person as payment for reasonable legal expenses incurred in connection with an application under this Act or defending a criminal *charge; or (d) if a *forfeiture order in respect of the property is satisfied; or (e) if the property is forfeited, confiscated or otherwise disposed of under a *corresponding law (whether or not because of an order made under that law); or (f) if the property is otherwise sold or disposed of under this Act; or (g) in any other circumstances specified in the regulations. (5) However, if: (a) a person once owned property that was *proceeds of an offence or an *instrument of an offence; and (b) the person ceased to be the owner of the property and (at that time or a later time) the property stopped being proceeds of an offence or an instrument of the offence under subsection (4) (other than under paragraph (4)(d)); and (c) the person acquires the property again; then the property becomes proceeds of an offence or an instrument of the offence again (as the case requires). (5A) Paragraph (4)(ba) does not apply if, despite the distribution referred to in that paragraph, the property is still subject to the *effective control of a person who: (a) has been convicted of; or (b) has been charged with, or who is proposed to be charged with; or (c) has committed, or is suspected of having committed; the offence in question. (6) Property becomes, remains or ceases to be *proceeds of an *unlawful activity, or an *instrument of an unlawful activity, if the property becomes, remains or ceases to be proceeds of the offence, or an instrument of the offence, constituted by the act or omission that constitutes the unlawful activity. Part 6-2 (s 338) contains an extensive Dictionary defining terms which appear in the POCA.

Section 330(4) is in substantially, and relevantly, the same terms as when the POCA was enacted. The House of Representatives' Revised Explanatory Memorandum to the Proceeds of Crime Bill 2002 (which became the POCA), circulated by authority of the Minister for Justice and Customs, Senator the Honourable Chris Ellison, relevantly said of s 330: "General Outline … The Bill replicates the safeguards for innocent third parties, dependents and people with an interest in property which exist in the current legislation. It also provides ample opportunity for suspects to demonstrate the lawful derivation of their property both at the freezing and confiscation stages. It represents a balanced and fair approach to ensuring that crime particularly financing terrorist activity does not pay. … Clause 330 When property becomes, remains and ceases to be proceeds or an instrument This clause establishes that money or other property which is 'proceeds of an offence' or an 'instrument of an offence' does not lose its nature as such merely because it is exchanged for another item or is otherwise dealt with (for example by the sale of property which is proceeds or an instrument, or by placing cash which is proceeds into a bank account, or using cash which is proceeds to purchase property). This prevents a person from transforming property which is proceeds or an instrument into 'clean' property just by changing its nature. … Subclause 330(3) establishes that when the proceeds or an instrument of an offence is used to acquire other property not only does the original property retain its nature as proceeds or an instrument, the property acquired with the proceeds takes on that nature, and itself becomes the proceeds or an instrument of an offence. Subclause 330(4) protects the rights of innocent third parties who acquire the proceeds or instrument of an offence in certain circumstances. An example of how subclauses 330(1) - (4) would work is set out below: • If A defrauds the Commonwealth of $200,000, that money is the proceeds of an offence. • If A then purchases a house entirely with those proceeds, the house becomes the proceeds of an offence, and the money continues to be the proceeds of an offence. • However, if the seller of the house has acquired the money for sufficient consideration (that is, the house was sold for its value), and the seller does not know, and there is nothing that would cause him or her to suspect that, at the time of sale, that the money was the proceeds of an offence, that money then ceases to be the proceeds of an offence. • A person who receives the proceeds of an offence as a gift (and therefore does not supply any consideration for the property) will be liable to forfeit that property, whether or not they are aware of the property's origin." [Emphasis added.]

There appears to be a curious disconnect between s 19, s 49 and s 29. As I understand the POCA, at the time a s 29 exclusion application is made, no court has held that the property the subject of the restraining order "is" the proceeds or instrument of an offence, as opposed to being suspected "on reasonable grounds" to be such. Rather the Commissioner has satisfied the "low" s 19 threshold: Tjongosutiono at [107] per N Adams J. Nevertheless the exclusion application proceeds on the premise that the applicant has to establish that the interest in the property the subject of the application "is" in neither category. A finding that property the subject of the restraining order "is" the proceeds or instrument of an offence is only required when a court comes to making a s 49 forfeiture order, but then only if there has been an exclusion application, presumably unsuccessful. This curiosity was not explored in the present case, apparently both because the applicants conceded the credits to their accounts "had been proceeds or an instrument of a relevant offence" (primary judgment at [28]) and because her Honour concluded that the appellants' reliance on s 330(4)(a) assumed that the funds were either the proceeds or an instrument of an offence: Ibid at [46]. In Tjongosutiono, an application was brought pursuant to s 42(5) of the POCA for an order revoking s 19 restraining orders in which the applicant invoked s 330(4)(a). N Adams J observed at [113] that it went "without saying that in order for property to cease being the proceeds of crime, it must first be found to be the proceeds of an offence (or the instrument of a serious offence) in the first place", a proposition her Honour concluded was consistent with the Explanatory Memorandum in relation to cl 330. As in this case, quite when that step must be taken did not appear to be in issue, and her Honour did not consider it further. In Commissioner of the Australian Federal Police v Jieying Sun [2017] NSWSC 1476 which concerned an application for an exclusion order pursuant to s 29 brought ancillary to an application by the Commissioner for a s 19 restraining order, Wilson J proceeded at [79] on the premise that the s 29 applicant had to prove on balance that the property and money in respect of which the exclusion order was sought was neither the proceeds nor an instrument of any serious offence. Her Honour did not consider whether any burden lay on the Commissioner to establish at least a prima facie case that the relevant property was, as a matter of fact, not merely as matter of suspicion, such proceeds or instrument.

[This headnote is not to be read as part of the judgment] The appellants are Indonesian citizens and permanent residents of Australia. From time to time, they transferred large sums of money from Indonesia to Australia using "money changers" in Indonesia. The money changers directed the appellants to pay the money to be transferred into nominated Indonesian accounts. Between October 2013 and August 2015, a large number of cash deposits under $10,000 were made into the appellants' Commonwealth Bank accounts amounting in total to the sum paid into the Indonesian accounts. This mode of deposits was part of a process of money laundering known as "cuckoo smurfing". It was not suggested that the appellants were complicit in this activity. On 28 June 2016, a restraining order was made pursuant to the Proceeds of Crime Act 2002 (Cth), s 19, in respect of the funds standing to the credit of five of the appellants' Commonwealth Bank accounts, on the basis that there were reasonable grounds to suspect that the funds were either the proceeds or an instrument of money laundering and structuring offences. The appellants accepted that the funds were proceeds of an offence. However, they sought an order excluding their interests in the bank accounts from the restraining order, on the basis that, pursuant to the Proceeds of Crime Act, s 330(4)(a), their interests had ceased to be proceeds of an offence because they were acquired by the appellants as third parties for sufficient consideration without the appellants knowing, and in circumstances that would not arouse a reasonable suspicion, that their interests were proceeds of an offence. The primary judge dismissed the appellant's application, finding that s 330(4)(a) was not satisfied. On appeal, the principal issues were as follows:

Whether the appellants acquired an "interest" in "property" each time a deposit was made into their bank accounts within the meaning of the Proceeds of Crime Act (Ground 1);
Whether the appellants were a "third party" under the Proceeds of Crime Act, s 330(4)(a) (Ground 2);
Whether the appellants acquired their interests in the bank accounts for sufficient consideration (Ground 3); and
Whether the circumstances would have aroused a reasonable suspicion on the part of the appellants that their interests were proceeds of an offence (Ground 4). The Court held, dismissing the appeal: In relation to Ground 1 Per Beazley P and Payne JA (McColl JA agreeing) (i) The appellants possessed "property" within the meaning of the Proceeds of Crime Act, namely a chose in action in respect of each of their bank accounts enforceable against the Commonwealth Bank constituted by the right to compel the bank upon demand to pay an amount equivalent to the amount standing to the credit of each of their accounts. The appellants' right to demand payment was an "interest" in relation to the property. Accordingly, the appellants acquired an "interest" in "property" each time a deposit was made into their bank accounts: [47]-[82]. N Joachimson v Swiss Bank Corporation [1921] 3 KB 110; Russell v Scott (1936) 55 CLR 440; [1936] HCA 34; Croton v The Queen (1967) 117 CLR 326; [1967] HCA 48; CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384; [1997] HCA 2; Yanner v Eaton (1999) 201 CLR 351; [1999] HCA 53; Re Sutherland; French Caledonia Travel Service Pty Ltd (in liq) (2003) 59 NSWLR 361; [2003] NSWSC 1008; Director of Public Prosecutions (Vic) v Le (2007) 232 CLR 562; [2007] HCA 52; Shields v New South Wales Crime Commission (2007) 177 A Crim R 130; [2007] NSWCA 309; Studman v Commonwealth Director of Public Prosecutions (2007) 177 A Crim R 34; [2007] NSWCA 285; National Australia Bank Ltd v Norman (2009) 180 FCR 243; [2009] FCAFC 152; Taylor v The Owners - Strata Plan No 11564 (2014) 253 CLR 531; [2014] HCA 9; Commissioner of the Australian Federal Police v Fitzroy All Pty Ltd (2015) 299 FLR 439; [2015] WASC 320; Commissioner of the Australian Federal Police v Pham [2015] NSWSC 1383; Commissioner of the Australian Federal Police v Tjongosutiono (2018) 329 FLR 103; [2018] NSWSC 48 considered. Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280; [1993] FCA 456; Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389; [1996] HCA 36; R v Brown [1996] AC 543; Parsons v The Queen (1999) 195 CLR 619; [1999] HCA 1; Commissioner of the Australian Federal Police v Kalimuthu [No 3] [2017] WASC 108 referred to. In relation to Ground 2 Per Beazley P and Payne JA (ii) A "third party" is a person who, at the time of the criminal conduct, is wholly removed from the property constituting the proceeds of an offence. The person must acquire the property after it becomes proceeds of an offence. Accordingly, the appellants were not a "third party": [89]-[117]. Commissioner of the Australian Federal Police v Kalimuthu [No 3] [2017] WASC 108; Commissioner of the Australian Federal Police v Hart (2018) 351 ALR 1; [2018] HCA 1; Commissioner of the Australian Federal Police v Tjongosutiono (2018) 329 FLR 103; [2018] NSWSC 48 considered. Per McColl JA (dissenting) (iii) Any construction of s 330(4)(a) of the Proceeds of Crime Act 2002 (Cth) (POCA) must be consistent with the language and purpose of all the provisions of the POCA, and reflect the hierarchy of the provisions to give each provision the meaning which best gives effect to its purpose and language while maintaining the unity of the statutory scheme: [210]. Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28 applied. (iv) The clear intent of s 330(3) of the POCA is that property remains characterised as the proceeds or an instrument of an offence, notwithstanding that it has been dealt with in a manner contemplated by s 330 whether once, or on repeated occasions. There is never a temporal disjunction which can disassociate a subsequent purchaser or acquirer from a transaction which constitutes an element of an offence: [217], [220]. (v) Subsection 330(4) has the effect that the characterisation as the proceeds or an instrument of an offence (s 330(3)) ensures property the subject of a s 330(3) transaction retains, "ceases" if any sub-paragraph of s 330(4) applies: [222]. (vi) When the holder of a bank account into which funds which are the proceeds of an offence are credited cannot be said to be a "party" to the s 330(3) transaction in the sense of being intentionally complicit in the laundering activity, or stands at arms' length to the transaction, that person is a "third party" for the purposes of s 330(4): [227]. In relation to Ground 3 Per Beazley P and Payne JA (McColl JA agreeing) (vii) The appellants did not acquire their interests in the bank accounts for sufficient consideration, as they did not provide consideration to the persons who made the deposits into their Commonwealth Bank accounts, who the appellants did not know and had no connection with, contractual or otherwise: [133]-[140]. In relation to Ground 4 Per Beazley P and Payne JA (McColl JA agreeing) (viii) The conduct identified by the known circumstances would have aroused a reasonable suspicion on the part of the appellants, who were financially sophisticated international investors, that their interests in the bank accounts were proceeds of an offence. The appellants need not have known that the conduct constituted an offence: [154]-[163]. Sherras v De Rutzen [1895] 1 QB 918; R v Turnbull (1943) 44 SR (NSW) 108; He Kaw Teh v The Queen (1985) 157 CLR 523; [1985] HCA 43; Ostrowski v Palmer (2004) 218 CLR 493; [2004] HCA 30; Director of Public Prosecutions (Vic) v Le (2007) 232 CLR 562; [2007] HCA 52 considered. Director of Public Prosecutions (Vic) v Le (2007) 15 VR 352; [2007] VSCA 18; Saba v Plumb [2018] NSWCA 60 referred to.