The Commissioner of The Australian Federal Police v Vo

Supreme Court of NSW|2015-09-21|Before: Schmidt J, Adams J, Rothman J

Thi Thuy Linh Vo (Defendant) Representation: Counsel: Mr G J O'Mahoney (Plaintiff) Ms C Dobraszczyk (Defendant)

Solicitors: Australian Federal Police Proceeds of Crime Litigation Unit (Plaintiff) Greenfield Lawyers (Defendant) File Number(s): 2013/198069 Publication restriction: Nil

Issues

The parties identified the issues lying between them in relation to the cash to be: 1. Whether the notice of motion filed 29 April 2015 had been withdrawn for the purposes of s 49 of the Act. 2. If so, whether certain cash of about $449,000, which the defendant was found in possession of, was the proceeds of any particular offence or was an instrument of any particular offence.
In order to understand what came to lie in issue between the parties, it is necessary to understand the unusual procedural history of the matter.
Orders initially given by the Registrar were not complied with by Ms Vo. In February 2014, Ms Vo filed a motion seeking orders under s 73 and s 74 of the Act, excluding the property from forfeiture. Registrar Bradford gave directions as to that application on 25 February. They were also not complied with.
In April 2015, Ms Vo filed another motion seeking orders joining her as a defendant; giving her leave under s 31(3) to bring an application, as well as orders under s 29, excluding from restraint her interest in the money and the Lalor property.
On 7 May 2015, Harrison J made orders to which the Commissioner consented, joining Ms Vo and permitting her to bring her s 31 application. Later in May 2015, Ms Vo filed another motion under s 77 and s 78 in relation to a proportion of the value of her interest in the property. That has not yet been pressed. The other motions were listed for hearing on 17 and 18 June 2015.
On 16 June, Ms Vo sought to file another motion in which she sought orders that her February and April motions be dismissed and the hearing vacated, with costs to be reserved. On 17 June, Fagan J refused leave to file that motion, taking the view that it was superfluous, but permitted an affidavit sworn by Ms Tran, Ms Vo's solicitor, to be filed in court and read. There Ms Tran deposed, amongst other things, that: "… (f) I have advised the defendant, and the defendant accepts, that her applications for exclusion orders under sections 73 and 29 of the POCA are very unlikely to succeed, and that it is not in her interests to proceed to a defended hearing on those applications. (g) I have also advised the defendant, however, that, because of the statutory scheme of the POCA, and in particular the wording of section 49(3)(b) of the Act, if she "withdraws" her application for an exclusion order under section 29 of the POCA (as opposed to that application being dismissed), the plaintiff will be entitled to summary forfeiture of the restrained property without having to prove the matters set out in section 49(1)(c) of the Act. (h) In the circumstances, the defendant has instructed me to indicate to the Court that: i. The defendant accepts that her applications for exclusion orders under section 29 and 73 of the POCA will be unsuccessful, and accordingly does not wish to proceed to a defended hearing on those applications; ii. If the exclusion applications proceed to hearing on 17-18 June 2015, the defendant will not seek to adduce any evidence in support of those applications; and iii. The defendant consents to the applications being dismissed, but will not "withdraw" the application for an order under section 29 of the POCA. (i) The above matters were conveyed to the plaintiff by email dated 2 June 2015, and the plaintiff's legal representatives advised by letter dated 10 June 2015 that the plaintiff neither consents to nor opposes the hearing dates for the exclusion applications being vacated, but does object to the applications being "dismissed" rather than "withdrawn"."
It emerged before Fagan J that there was an issue between the parties as to the meaning of s 49(3) of the Act and whether the course which Ms Vo wished to take, by having her motions dismissed, would amount to a withdrawal of her April motion, in which she sought orders under s 29. It was explained for Ms Vo that if the Commissioner sought a forfeiture order, she wished to advance a legal argument that an onus fell on the Commissioner to establish under s 49(1)(c), that the seized cash was either proceeds or an instrument of the nominated offence under s 400.9 of the Criminal Code (Cth) of possessing property reasonably suspected of being proceeds of crime.
Ms Vo thus moved on her February and April motions. It was submitted for Ms Vo that: "HASSALL: For the record, can I preface what I'm going to do by saying that I've given anxious consideration to the issue that my friend flagged about the propriety of formally moving on a motion where it is conceded that it will be unsuccessful. I agree it is artificial. I have considered that carefully and come to the conclusion that the artifice is created by the legislation. In reaching that conclusion, just for the record, I have had regard to page 24 of the explanatory memorandum to the Proceeds of Crime Bill as it relates to clause 49."
In support of those motions, Ms Vo read not only Ms Tran's affidavit, but also the affidavits filed by the Commissioner in the proceedings. The February 2014 motion was then formally withdrawn, but it was submitted that Ms Vo was content for that motion to be dismissed. As to the April 2015 motion, after formally reading Federal Agent Roberts' two affidavits and two other affidavits sworn by two translators in October 2014, orders dismissing that motion were also sought.
Ms Vo's application was not opposed by the Commissioner, whose position was that even if the motions were dismissed by order of the Court as she sought, in the circumstances, s 49(3) would apply, with the result that the matters specified in s 49(1)(c) would not have to be proven, if a forfeiture order was sought.
Fagan J noted that Ms Tran's affidavit and those of Federal Agent Roberts did not support her applications. His Honour also observed that whoever heard the Commissioner's forfeiture application: "... will have to determine whether in those circumstances what has occurred this should be described as the withdrawing. The court that hears your forfeiture application under 49 will have to decide whether that is a term of art and whether there is procedurally any such thing as withdrawing and, if there is, whether it is any different from it being dismissed in circumstances where it was not being urged. "
The orders Fagan J made were: "1. I order that the balance of the notice of motion of 29 April 2015 which remains to be dealt with following the making of orders 1 and 2 in that notice of motion on 7 May 2015 be dismissed. 2. I order the defendant to pay the plaintiff's costs of and incidental to the notice of motion filed 29 April 2015. 3. I order that the notice of motion filed on behalf of the defendant on 25 February 2014 be dismissed. 4. I order that the defendant pay the plaintiff's costs of and incidental to that motion filed 25 February 2014. 5. I further order by consent pursuant to s 180 of the Proceeds of Crime Act 2002 (Cth) the following persons are to be examined concerning the affairs of Thi Thuy Linh Vo: (a) Hieu Thi Schembri. 6. I stand the summons over for further directions before the Common Law Registrar at 9am on 11 August 2015. 7. Liberty to restore on two day's written notice."

Proper approach to construction

The statutory construction question lying between the parties must be approached in the way the Chief Justice discussed in SAS Trustee Corporation v Woollard [2014] NSWCA 75; (2004) 86 NSWLR 367 at [58]: "... As was said by the plurality in Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory) [2009] HCA 41; (2009) 239 CLR 27 at [47], the task of statutory construction must begin with the words of the statute itself considered in context, which includes the general purposes and policy of the provisions. Ascertainment of the statutory purpose may be based on an express statement of purpose in the statute, inference from the text and, where appropriate, reference to extrinsic material: Certain Lloyd's Underwriters v Cross [2012] HCA 56; (2012) 248 CLR 378 at [23]-[25], [68] and [88]. As was pointed out by Kiefel J in that case, the starting point is the words in question, read in the context of the statute."
Legislation such as the Proceeds of Crime Act, providing as it does for forfeiture of property, is penal in nature, with the result that ambiguities ought to be construed in favour of the owner of the property (see Forbes v Traders' Finance Corporation Ltd [1971] HCA 60; (1972) 126 CLR 429 at 447 per Gibbs J). Clear words are required before an intention to take the draconian step of imposing automatic forfeiture is attributed to the Parliament (see Murphy v Farmer [1988] HCA 31; (1988) 165 CLR 19 at 28. Nevertheless, ordinary rules of construction must still be applied when the proper construction of such a statute arises for consideration (see Beckwith v The Queen [1976] HCA 55; (1976) 135 CLR 569 at 576).
The duty of the Court is thus to ascertain and give effect to the purpose of the legislature, as expressed in the language enacted by the Parliament. The principle suggesting a stricter approach to the interpretation of penal legislation remains useful, when ambiguity seems intractable (see R v Lavender [2005] HCA 37; (2005) 222 CLR 67 at [94]). But the practical consequences of the competing interpretations must also be taken into account (see Public Transport Commission of New South Wales v J Murray-More (NSW) Pty Ltd [1975] HCA 28; (1975) 132 CLR 336). An interpretation of an act which allows a person to take advantage of his or her own wrongdoing must also be resisted (see the discussion in D C Pearce and R S Geddes, Statutory Interpretation in Australia (7th ed 2011, LexisNexis) at [2.41])
In this case, I consider that there is no intractable ambiguity in s 49 and that the application of ordinary rules to its construction, does not permit the construction for which Ms Vo contended.

The statutory provision

Section 49 provides: "49 Forfeiture orders - property suspected of being proceeds of indictable offences etc. (1) A court with *proceeds jurisdiction must make an order that property specified in the order is forfeited to the Commonwealth if: (a) the *responsible authority for a *restraining order under section 19 that covers the property applies for an order under this subsection; and (b) the restraining order has been in force for at least 6 months; and (c) the court is satisfied that one or more of the following applies: (i) the property is *proceeds of one or more *indictable offences; (ii) the property is proceeds of one or more *foreign indictable offences; (iii) the property is proceeds of one or more *indictable offences of Commonwealth concern; (iv) the property is an instrument of one or more *serious offences; and (e) the court is satisfied that the authority has taken reasonable steps to identify and notify persons with an *interest in the property. (2) A finding of the court for the purposes of paragraph (1)(c): (a) need not be based on a finding that a particular person committed any offence; and (b) need not be based on a finding as to the commission of a particular offence, and can be based on a finding that some offence or other of a kind referred to in paragraph (1)(c) was committed. (3) Paragraph (1)(c) does not apply if the court is satisfied that: (a) no application has been made under Division 3 of Part 2‑1 for the property to be excluded from the *restraining order; or (b) any such application that has been made has been withdrawn. Refusal to make a forfeiture order (4) Despite subsection (1), the court may refuse to make an order under that subsection relating to property that the court is satisfied: (a) is an *instrument of a *serious offence other than a *terrorism offence; and (b) is not *proceeds of an offence; if the court is satisfied that it is not in the public interest to make the order.
The statutory purpose against which the proper construction of s 49 must be considered is specified in s 5, which provides: "5 Principal objects The principal objects of this Act are: (a) to deprive 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; and (b) to deprive persons of *literary proceeds derived from the commercial exploitation of their notoriety from having committed offences; and (ba) to deprive persons of *unexplained wealth amounts that the person cannot satisfy a court were not derived from certain offences; and (c) to punish and deter persons from breaching laws of the Commonwealth or the non‑governing Territories; and (d) to prevent the reinvestment of proceeds, instruments, benefits, literary proceeds and unexplained wealth amounts in further criminal activities; and (da) to undermine the profitability of criminal enterprises; and (e) to enable law enforcement authorities effectively to trace proceeds, instruments, benefits, literary proceeds and unexplained wealth amounts; and (f) to give effect to Australia's obligations under the Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime, and other international agreements relating to proceeds of crime; and (g) to provide for confiscation orders and restraining orders made in respect of offences against the laws of the States or the *self‑governing Territories to be enforced in the other Territories."
The forfeiture orders sought follow restraining orders made under s 19, which appears in "Chapter 2 - The confiscation scheme". That chapter includes "Part 2.1 -Restraining orders", which includes s 29, "Excluding property from certain restraining orders"; s 30, "Application to exclude property from a restraining order before restraining order has been made"; s 31, "Application to exclude property from a restraining order after restraining order has been made"; and s 42, "Application to revoke a restraining order".
Restraining orders are made under s 19, on proof by affidavit sworn by an authorised officer, that there are reasonable grounds to suspect that property is either the proceeds of or instrument of a specified offence, including relevantly in this case, an indictable offence under s 400.9 of the Criminal Code. In such a case identity of the person who committed the offence need not be known (s 19(1)(d)) and proof of other offences is not required (s 400.13 of the Criminal Code). Such an affidavit must reveal the grounds on which the authorised officer suspects that the property is proceeds of the offence or an instrument of the offence.
The affidavit on which the Commissioner's s 19 application was advanced, was one of those on which Ms Vo relied, when she sought orders dismissing her motions.

The restraining order and later application under s 31

The parties are bound by the conclusions reached by the Court, when a s 19 order is made. In a case where an interested person has not been given notice of a s 19 application, an application for revocation of the order, may be made within 28 days under s 42.
In this case, the hearing before Adams J in August 2013 proceeded ex parte, but Ms Vo was on notice of the application. An email from her solicitor was tendered and his Honour was informed of discussions in which it had been indicated by Ms Vo's solicitor, that it was considered that there was no point in her contesting that application.
Federal Agent Roberts' affidavit of 26 June was then relied on. He there deposed to having a suspicion that the cash seized from Ms Vo was the proceeds of and/or instrument of an offence against s 400.9(1) of the Criminal Code, which is both an indictable and a serious offence for the purposes of the Act.
Federal Agent Roberts deposed to the circumstances in which the cash seized at Sydney airport on 16 February 2013 came to be suspected to be the proceeds of crime. They included that the cash was found in a suitcase which contained no clothing; that Ms Vo then said that she had won the cash over the last year, at casinos in Sydney, Melbourne and Adelaide; and that she was staying at The Star casino, but that she had no reservation there. On arrest Ms Vo was also found to have a Louis Vuitton handbag containing, amongst other things, three boarding passes for flights from Melbourne to Sydney, Sydney to Melbourne and Melbourne to Sydney in her name for 16 February, as well as four mobile phones, including a locked Blackberry phone and five unused mobile prepaid sim cards. When the Blackberry was accessed, a pre-set command erased the information stored on the phone, using a technique known to be used by organised crime groups, to protect their data.
On 19 February 2013, Ms Vo made a statement, in which she claimed to have won more than $1 million over the past 3 years; that she had intended to use the seized cash to gamble at the casino; and that she preferred to receive cash, when she won. Casino records obtained pursuant to search warrants did not, however, support her claimed winnings and so could not account for the cash.
Ms Vo's disclosed income also showed limited income in amounts specified in the years 2006 to 2012. The company of which she was sole director, secretary and shareholder showed minimal income in 2010 - 2012. This income was also incapable of accounting for the cash.
Ms Vo's bank records had also been examined. They revealed significant deposits into a Westpac account not identified as being payments from an employer, some of which was used to purchase the Lalor property. There were other substantial deposits into a CBA account. Funds passing through that account were also suspected to be the proceeds of crime, given that they were not supported by Ms Vo's known declared income, or casino winnings.
Federal Agent Roberts also deposed that investigation of the purchase of the Lalor property suggested that false information had been provided to Bankwest, which provided a loan for the property purchased in 2011 for $417,347. In the result it was suspected that the monies used for that purchase were also the proceeds of crime, contrary to s 400.9 of the Criminal Code, the offence being obtaining financial advantage by deception contrary to s 82 of the Crimes Act 1958 (Vic).
Ms Vo made her application under s 31 to exclude the property from the restraining order in April 2015. Leave was then required, because she had been notified of the s 19 application, but did not appear at the hearing. Section 317 provides that the applicant in any proceedings under the Act bears the onus of proving the matters necessary to establish the grounds for making the order applied for and that what is in issue must be decided on the balance of probabilities. An exclusion order could thus be made under s 29 in Ms Vo's favour on satisfaction, in this case, that the cash was neither proceeds of an indictable offence, nor an instrument of any serious offence.
As I have explained, by the course which Ms Vo took at the June 2015 hearing, relying on the affidavit evidence on which the Commissioner's case rested at the hearing of the s 19 application, as well as other affidavits later served on her by the Commissioner, she admitted that she could not meet the onus imposed upon her by either s 29 or s 73 and accordingly, asked for both her motions to be dismissed.
As discussed in The Nominal Defendant v Gabriel [2007] NSWCA 52; (2007) 71 NSWLR 150 at [103] - [111], a party can make admissions in court proceedings, either as to matters of fact or law, in various ways. Once an admission has been made during the course of the proceedings, not in consequence of any agreement between the parties, the matter proceeds on that basis, unless the Court grants leave for the admission to be withdrawn. Here Ms Vo did not seek leave to withdraw her admissions and had she done so, could not have been granted such leave, given the deliberate course which she had pursued and its purpose.
It is in that context pertinent to observe that there are obligations imposed on the parties by s 56(2) of the Civil Procedure Act 2005 (NSW). Thereby the parties have a duty to assist the Court to further the overriding purpose specified in s 56(1), namely the just, quick and cheap resolution of the real issues in the proceedings.
Given Ms Vo's admissions, it is difficult to see that the course she pursued in resisting the Commissioner's application for forfeiture orders in relation to the seized cash, accorded with that obligation.

The parties' cases on the construction of s 49

Despite the course she had earlier taken, Ms Vo maintained that the Commissioner could not proceed as s 49(3) provided, because she had not, she claimed, "withdrawn" her s 31 application. That was in dispute.
The Commissioner's case was that Ms Vo's April 2015 motion, by which she sought orders under s 29, was not, in truth, pressed at the June hearing, given the acknowledgment then made, both by the submissions and the evidence advanced, that she had no basis on which she could press such an application. Accordingly, the orders sought, dismissing both of her motions, were not opposed.
It was submitted that those steps were incapable of amounting to an application under Division 3 of Part 2.1, for the cash to be excluded from the Court's restraining order, as required by s 49(3)(a). Further, even if such an application had been made by the mere filing of the April motion, the course Ms Vo had pursued amounted, in reality, to a withdrawal of that application, as provided in s 49(3)(b). In those circumstances, a forfeiture order would be made, without the Commissioner being obliged to prove the matters specified in s 49(1)(c).
This approach to the construction of s 49(3) was resisted by Ms Vo on the basis that under this statutory scheme, she was entitled to take the steps she had deliberately pursued, in order to put the Commissioner to proof of the matters specified in s 49(1)(c). That is, despite her admissions that she could not meet the onus imposed on her, either under s 29 or s 73, she was entitled to put the Commissioner to proof of the matters specified in s 49(1)(c), given that she had made an application under s 31, which she had not withdrawn, but which she had sought to have dismissed.

The extrinsic material

Support for Ms Vo's case was said to be found in the revised explanatory memorandum to the Proceeds of Crime Bill 2002, where it was said as to s 49: "Clause 49 provides for civil forfeiture orders for circumstances where conduct involves indictable offences. The court must make such an order, on the application of the DPP, in relation to property which has been restrained for six months under clause 19 and no application for exclusion from restraint has been made or is on foot. If an application for exclusion from restraint has been made, the court is also required to find (on the civil standard) that the property is the proceeds of an indictable offence, a foreign indictable offence or an indictable offence of Commonwealth concern (each of those terms is defined in Part 6-2), or that the property is the instrument of one or more terrorism offences. If the property is the proceeds of an offence which is not a terrorism offence, the court must be satisfied that the offence was committed within the 6 years preceding the application for the restraining order. If the offence in question is a terrorism offence, however, no time period applies in relation to its commission."
Recourse to extrinsic material such as this, is provided for in s 15AB of the Acts Interpretation Act 1901 (Cth). It must be approached, however, in the way discussed in Re Australian Federation of Construction Contractors; Ex parte Billing [1986] HCA 74; (1986) 61 ALJR 37 at 39. Section 15AB thus does not permit recourse to the revised explanatory memorandum for the purpose of departing from the ordinary meaning of the text of s 49(3), unless either its meaning is ambiguous or obscure, or its ordinary meaning leads to a result that is manifestly absurd, or is unreasonable.

Ms Vo's construction must be rejected

The difficulty with the construction for which Ms Vo contended was that it does not pay proper regard, either to the ordinary meaning of the word used in s 49(3)(b) "withdrawn", which is not defined in the Act, or to the statutory scheme itself.
The nature of that scheme was explained in the revised explanatory memorandum on which Ms Vo relied, consistently with the objects of the Act specified in s 5: "The procedures for civil forfeiture will enable confiscation by a simpler civil process, where a court decides whether it is more probable than not that a person committed a serious offence and that property has been derived from that conduct, without first needing a criminal prosecution leading to a conviction before that property can be confiscated. A person will have the opportunity to prove to the court that his or her assets were lawfully derived; if such proof can be provided, those assets will not be forfeited. The civil forfeiture regime will operate in parallel with the existing conviction-based regime."
Section 49 must be construed in its statutory context. As discussed in Lee v Director of Public Prosecutions (Cth) [2009] NSWCA 347; (2009) 75 NSWLR 581 at [21], under this legislative scheme: "The interests of a person in property the subject of a valid restraining order are deliberately and expressly at risk of confiscation, absent affirmative steps to exclude property on the application of the interested person."
What tells against the construction for which Ms Vo contended is that the statutory scheme provides an interested person with numerous opportunities to establish such an interest and that it contemplates that if they are not pursued, an applicant like the Commissioner will not be required to prove the matters specified in s 49(1)(c) when a forfeiture application is pursued. Section 317 imposes the onus on the interested person who pursues such an application, with questions of fact to be decided on the balance of probabilities.
Firstly, even before a restraining order is made, a person who claims an interest in the seized property may make an application under s 30, in which case an onus falls on the interested person to establish the matters specified in s 29(2)(d) in the case of an order sought under s 19, namely, the interest is neither: "(i) in any case -- proceeds of an *indictable offence, a *foreign indictable offence or an *indictable offence of Commonwealth concern; nor (ii) if an offence to which the order relates is a serious offence -- an *instrument of any serious offence."
An interested person may also appear to resist an application for a restraining order under s 19. In that event, the onus falls on the applicant for the order to prove the matters specified in s 19(1), including that: "(d) there are reasonable grounds to suspect that the property is: (i) the * proceeds of a * terrorism offence or any other * indictable offence, a * foreign indictable offence or an * indictable offence of Commonwealth concern (whether or not the identity of the person who committed the offence is known); or (ii) an * instrument of a * serious offence …"
If a restraining order is made without prior notice of the application being given, an interested person may apply for a revocation order under s 42 within 28 days of receiving notice of the restraining order. The applicant must then establish under s 42(5) that: "(a) there are no grounds on which to make the order at the time of considering the application to revoke the order; or (b) it is otherwise in the interests of justice to do so."
After a s 19 order is made, an interested person also has the opportunity to seek to have the property excluded from that order, by pursuing an application under s 31. Again, the onus then falls on the interested person to establish the matters specified in s 29.
If such an application is not made, an interested person also has the right, under s 73, to make an application for exclusion from a forfeiture order, before such an order is sought. Again, the onus then falls on the interested person to establish the matters specified.
An applicant may also appear to resist an application for a forfeiture order under s 49. Even after a forfeiture order is made, an interested person may still make a s 73 application, where, again the onus falls on the interested person.
It is in that context that the proper construction s 49(3) arises to be considered. It envisages that in the event that a forfeiture order is sought, in circumstances where no application under s 30 or s 31 has been made, or if made, has been withdrawn, the applicant for the forfeiture order is not to be put to proof of the matters specified in s 49(1)(c). If such an application has been made and is not withdrawn, the onus to establish the matters specified in s 49(1)(c) falls on the applicant for the forfeiture order.
It follows that when a forfeiture order is pressed, if no s 30 or s 31 application has been made, an interested person may still pursue a s 73 order. Whether or not a s 73 application is then pursued, however, the effect of s 49(3) is that the matters specified in s 49(1)(c) do not have to be established by the applicant for the forfeiture order. It follows from the onus provisions of s 317, that, in that event, the onus then falls on the applicant for the s 73 order, to establish the matters there specified.
In arriving at this conclusion it is relevant to consider that what is imposed by s 49(1)(c) does not mirror that which is imposed by either s 29, or by s 73. To have property excluded from a restraining order, once made under s 19, an applicant under s 31 must prove, in accordance with s 29, that the interest claimed is neither: "(i) in any case - proceeds of an *indictable offence, a *foreign indictable offence or an *indictable offence of Commonwealth concern; nor (ii) if an offence to which the order relates is a serious offence -an *instrument of any serious offence."
What s 49(1)(c) requires be established by an applicant for a forfeiture order is different. Under that section only one or more of the following must be established: "(i) the property is *proceeds of one or more *indictable offences; (ii) the property is proceeds of one or more *foreign indictable offences; (iii) the property is proceeds of one or more *indictable offences of Commonwealth concern; (iv) the property is an instrument of one or more *serious offences; …"
That is a less onerous obligation than that imposed by s 29, understandably, given that an applicant under s 49 must have already satisfied the Court of the matters specified in s 19, that is, that there are reasonable grounds to suspect that the property is either: "(i) the *proceeds of a *terrorism offence or any other *indictable offence, a *foreign indictable offence or an *indictable offence of Commonwealth concern (whether or not the identity of the person who committed the offence is known); or (ii) an *instrument of a *serious offence; …"
By way of contrast, when it is an application brought under s 73 which is pressed by an interested person, the onus imposed on an applicant is significantly more onerous than that imposed by s 19, s 29 or s 49(1)(c). Under s 73(1)(c) what must then be established is that the applicant's interest in the property is neither: "(i) *proceeds of *unlawful activity; (ii) if an offence on which the order was (or would be) based is a *serious offence - an instrument of any serious offence; …"
"Unlawful activity" is widely defined in the Dictionary to the Act in s 338 to mean: "an act or omission that constitutes: (a) an offence against a law of the Commonwealth; or (b) an offence against a law of a State or Territory; or (c) an offence against a law of a foreign country."
It is in that context that s 49(3) must be construed, providing, it must be remembered: "Paragraph (1)(c) does not apply if the court is satisfied that: (a) no application has been made under Division 3 of Part 2‑1 for the property to be excluded from the *restraining order; or (b) any such application that has been made has been withdrawn."
As the Commissioner submitted, to construe the word "withdrawn" used as it is in s 49(3)(b), as not encompassing an application brought under s 31 to exclude property from a restraining order made under s 19, which is not pressed, because it is admitted that it has no prospects of success, would be to permit the opportunity to make an application under s 31 to be used as an entirely artificial device, designed to circumvent the onus imposed on a person who claims an interest in restrained property under s 29, to establish that it was lawfully derived.
Such an approach to the construction of s 49(3) would not only fail to give the word "withdrawn" its ordinary meaning, but would also fail to pay necessary attention to other relevant aspects of the statutory scheme and its purpose. The word "withdraw" is relevantly defined in the Macquarie Dictionary to mean: "1. to draw back or away; take back; remove. 2. to retract or recall: to withdraw a charge."
In the face of that definition, it is apparent that an application brought under s 31 to have a motion in which orders under s 29 are sought dismissed, because it is admitted that there is no basis on which they could be made, given evidence which is led, is in reality a withdrawal of the application for the orders sought in the motion.
To accept the construction for which Ms Vo contended would result in a construction that on its face is manifestly absurd and unreasonable, undermining as it would the clear purpose of this legislative scheme. It would not only mean that applicants could thereby avoid the onus the legislature intends that they must bear when pursuing the interest they claim to have in the restrained property. It would also disrupt what was intended to be a simple process, by which forfeiture of property the subject of a restraining order under s 19 results, without proof of the matters specified in s 49(1)(c), in cases where persons who claim to have an interest in the property, have no basis on which to establish that they acquired the property in question by lawful means.
It follows that the construction for which Ms Vo contends may not be accepted.

Ms Vo's motions did not fall within s 49(3)

Ms Vo's motions sought orders under s 31 and s 73. In the circumstances in which Ms Vo sought orders dismissing her motions, it is apparent that neither fell within s 49(3). Ms Vo led a positive case seeking orders dismissing both motions, because she could not, on the evidence which she read, establish that she had acquired the restrained cash by lawful means, as s 29 and s 73 both required. That course of conduct reveals that the motions which she filed were not, in truth, pressed as applications for relief under either s 31 or s 73, but finally mere devices designed to avoid the onus the Act intended she would have to meet, if she sought to recover the restrained property.
Even if Ms Vo's s 31 motion did amount to an application within the meaning of s 49(3)(a), by the steps which she pursued and the admissions which she made when asking the Court to dismiss the motion, it is apparent that application was in fact withdrawn, notwithstanding the course she pursued by moving on the motions and reading the affidavits served upon her by the Commissioner, as well as those sworn by her solicitor.
That the course Ms Vo took was intended to avoid adverse costs consequences, as she submitted at the hearing of the forfeiture application, is belied by the cost order in fact made by Fagan J, when dismissing her motions. If her opposition to the forfeiture order fails, she is, in any event, at risk of another adverse costs order.
The reality is that the course pursued by Ms Vo had nothing to do with costs. It was rather intended to create circumstances in which the Commissioner was put to the time, trouble and expense of meeting the onus imposed by s 49(1)(c) and s 317, in circumstances where the legislature did not intend that such an onus be so imposed.
The course pursued before Fagan J was entirely artificial, inconsistent with the obligations imposed on Ms Vo by s 56 of the Civil Procedure Act 2005 (NSW), designed, as it was, to avoid the requirements of this statutory regime. That explains the concern expressed by counsel appearing for Ms Vo earlier referred to, as to the course being pursued.
This is truly a situation where it is essential to look to the substance of the course Ms Vo pursued, rather than to its form. Properly understood, that course is not available to a person who claims an interest in restrained property, under this legislative scheme. It was not capable of imposing on the Commissioner the obligation to meet a procedural step under s 49 which the legislature did not consider necessary for such applicants to meet, when pursuing forfeiture orders in relation to restrained property, nor the trouble and expense involved in its pursuit.
In the result the Commissioner had no obligation to establish the matters specified in s 49(1)(c) and the forfeiture order sought in relation to the cash must be made.

Is the cash the proceeds or instrument of the s 400.9(1) offence?

The parties addressed the requirements of s 49(1)(c) in the event that the construction case Ms Vo advanced was accepted and accordingly, the issues lying between them as to those matters should also be dealt with.
It was not in issue that an offence under s 400.9(1) is both an indictable offence and a serious offence, as defined in the Act. It is relevant to bear in mind that s 400.1 and s 400.9(5) of the Criminal Code respectively provide: "400.1 Definitions (1) In this Division: … "instrument of crime" : money or other property is an instrument of crime if it is used in the commission of, or used to facilitate the commission of, an offence against a law of the Commonwealth, a State, a Territory or a foreign country that may be dealt with as an indictable offence (even if it may, in some circumstances, be dealt with as a summary offence). … "proceeds of crime" means any money or other property that is wholly or partly derived or realised, directly or indirectly, by any person from the commission of an offence against a law of the Commonwealth, a State, a Territory or a foreign country that may be dealt with as an indictable offence (even if it may, in some circumstances, be dealt with as a summary offence). … 400.9 Dealing with property reasonably suspected of being proceeds of crime etc. (5) This section does not apply if the defendant proves that he or she had no reasonable grounds for suspecting that the money or property was derived or realised, directly or indirectly, from some form of unlawful activity. Note: A defendant bears a legal burden in relation to the matter in subsection (5) (see section 13.4)."
Ms Vo is bound by her admissions at the June hearing, that she cannot establish that the cash is not the proceeds of an indictable offence, an instrument of a serious offence, or proceeds of an unlawful activity. Her case, however, was that the same evidence, supported by the further evidence led by the Commissioner at the hearing was not capable of meeting the lesser onus imposed on the Commissioner under s 49(1)(c), on the balance of probabilities, that it was the proceeds of an indictable offence or the instrument of a serious offence.
Section 400.9(1) of the Criminal Code provides: "400.9 Dealing with property reasonably suspected of being proceeds of crime etc. (1) A person commits an offence if: (a) the person deals with money or other property; and (b) it is reasonable to suspect that the money or property is proceeds of crime; and (c) at the time of the dealing, the value of the money and other property is $100,000 or more."
To understand this offence it is also necessary to pay attention to s 400.9(2)(c) which provides that paragraph (1)(b) is taken to be satisfied if "the value of the money and property involved in the conduct is, in the opinion of the trier of fact, grossly out of proportion to the defendant's income and expenditure over a reasonable period within which the conduct occurs". Further, s 400.2 must also be borne in mind. It provides: "400.2 Definition of deals with money or other property A person deals with money or other property if the person does any of the following: (a) receives, possesses, conceals or disposes of money or other property; (b) imports money or other property into Australia; (c) exports money or other property from Australia; (d) engages in a banking transaction relating to money or other property."
It is also necessary to pay regard to s 400.13, which provides: "400.13 Proof of other offences is not required (1) To avoid doubt, it is not necessary, in order to prove for the purposes of this Division that money or property is proceeds of crime, to establish: (a) a particular offence was committed in relation to the money or property; or (b) a particular person committed an offence in relation to the money or property. (2) To avoid doubt, it is not necessary, in order to prove for the purposes of this Division an intention or risk that money or property will be an instrument of crime, to establish that: (a) an intention or risk that a particular offence will be committed in relation to the money or property; or (b) an intention or risk that a particular person will commit an offence in relation to the money or property."
The evidence the Commissioner relied on established that the seized cash was not the proceeds of lawful means given the circumstances in which it was seized; Ms Vo's explanation as to how she came to be in possession of the cash; the circumstances of Ms Vo's employment; her operation of the company of which she was director, secretary and shareholder; her casino winnings; and her borrowings. It is not open to doubt that it was reasonable to suspect that the cash was the proceeds of some unidentified crime, particularly given the provision made in s 400.13 which makes it unnecessary to prove either the particular offence or offences from which the cash was earlier derived, or who committed them. The Commissioner was also entitled to rely on Ms Vo's admissions, the proper inference from which was that she had not acquired the cash by lawful means.
Ms Vo contended that still, the evidence did not establish that the cash was either "proceeds" of an indictable offence or an "instrument" of a serious offence. Those terms are defined in s 329: 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.

The cash was an instrument of the s 400.9 offence

In Director of Public Prosecutions (Cth) v Mylecharane [2007] NSWSC 1174, Mr Mylecharane had been convicted by a jury of an offence under s 400.9, after police seized cash of some $286,900 from a storage unit which he was using. While he did not oppose the forfeiture order sought, the trustee in bankruptcy of a Mr Moussa, who claimed he had loaned the money to Mr Mylecharane, did. James J was not satisfied that the cash belonged to Mr Moussa (at [22]). His Honour also concluded that it did not appear that the cash which Mr Mylecharane had in his possession, had been derived or realised from the commission of that offence and hence, could not be proceeds of the offence (at [48]).
James J also concluded, however, that possession of the cash was sufficient to amount to a use of the cash and thereby, concluded that it had been used in or in connection with the commission of the s 400.9 offence. Accordingly, his Honour concluded, the cash was an instrument of that offence (at [52]).
Ms Vo accepted the correctness of James J's conclusion that the cash could not be "proceeds" of the s 400.9 offence, submitting that in Ms Vo's case, that the cash in the suitcase seized at the airport had not been wholly or partly derived or realised from the commission of that offence. Further, it was submitted, s 400.9 being an offence an element of which was that it was reasonable to suspect that the cash was the proceeds of crime, it was difficult to see how it could ever be established that what had been derived from the s 400.9 offence, could be anything more than reasonably suspected of being proceeds of some other crime.
Ms Vo also contended that James J was wrong in concluding that the cash at the storage unit was the instrument of the s 400.9 offence, relying on the views of Mitchell J in Commissioner of the Australian Federal Police v Fitzroy AII Pty Ltd [2015] WASC 320 and Milne v The Queen [2014] HCA 4; (2014) 252 CLR 149.
In Fitzroy, Mitchell J was dealing with an application under s 19 of the Proceeds of Crime Act, which was resolved by an order that the proceedings be transferred to the Supreme Court of Victoria. His Honour found that he did not have power to make the order under s 19 to which he considered the Commissioner was entitled, but that the Victorian Supreme Court did.
What was there at issue was $599,500 held in a bank account as the result of 72 deposits of less than $10,000, suspected to involve offences under s 142(1) of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) and s 400.9(1) of the Criminal Code. Mitchell J considered that there were reasonable grounds to suspect that a s 142 offence had been committed and that the money in the account was the proceeds of that offence (at [43]), but not of an offence under s 400.9 (at [85]). As to the s 400.9 offence, his Honour took the view at [55] that: "Section 400.9(1)(b) requires that it is 'reasonable to suspect that money or property is the proceeds of crime' when the person deals with the money. The act of dealing cannot itself be the conduct which constitutes the offence from which the money or property is derived. In that case, the money or property would become proceeds of crime only after the dealing occurred. Rather, there must be an offence, anterior to the dealing, which gives the money the status of proceeds of crime by the time the dealing occurs."
Support for that conclusion was found in Chen v Director of Public Prosecutions (Cth) [2011] NSWCCA 205; (2011) 83 NSWLR 224, where an appeal against conviction of a dealing with proceeds of crime offence under s 400.5 of the Criminal Code arose for consideration. The primary offence there was one against s 31 of the Financial Transaction Reports Act 1988 (Cth). There it was observed at [18] that: "…where a single charge is laid in respect of a number of instances of conduct, engaged in at different times, the value of the money is to be calculated, pursuant to s 400.12, at the time of the last transaction: before that, the sum of the values of the money cannot be known. Yet at no time was the money the subject of any particular transaction properly describable as proceeds of a crime committed in the past, because the crime had not been committed until that transaction was complete."
Mitchell J also observed that s 400.9(2)(aa) also provided relevant deeming mechanisms, where conduct involves a number of transactions, structured or arranged to avoid reporting requirements. These considerations do not arise in this case, concerned as it is with the possession of the cash found in the suitcase.
In Milne, it was an offence under s 400.3 which arose for consideration, Mr Milne having effected a disposal of shares in a publicly listed company, Admerex Ltd, by the company under his control, Barat Advisory Pty Ltd swapping the Admerex shares for shares in a Swiss company, Temenos Group AG. He intended that Barat would not declare the capital gain from that transaction in its income tax return for 2005. The question was whether the Admirex shares had become an "instrument of crime" within the meaning of s 400.3(1) of the Criminal Code.
It was concluded that they had not, the question turning on the fault element of that offence, the required intention being that the shares would become an "instrument of crime". The crime identified was under s 134.2 of the Criminal Code, obtaining a financial advantage by deception. There was no issue that a deliberate failure to make a declaration as to the capital gain involved Barat obtaining a financial advantage against the Commonwealth.
The case turned on the construction of the word "used" in s 400.3(1). For the shares to have become an instrument of crime, they had to be used for the purpose of commission of an offence (see at [33]). It was concluded that disposal of the shares did not involve their intended use within the meaning of the definition of "instrument of crime". It was explained at [37] that: "The definition of "instrument of crime" and the deployment of that term in s 400.3(1)(b)(ii) require a temporal separation between the requisite dealing and the intended use of the property. They also require an instrumental connection between the intended use of property and the commission or facilitation of the commission of an offence. Conduct involving property which is no more than a necessary condition of the commission of a subsequent offence does not on that account amount to the use of the property in or to facilitate the commission of that offence. Nor is the instrumental connection demonstrated merely by an intention to take advantage of circumstances arising after and as a result of the requisite dealing. A fortiori, that is the case where that property has been put beyond the reach of the accused by sale to a third party."
Purposive construction, it was held, did not permit the expansion of the scope of a criminal offence beyond its textual limits, to encompass the sale of the shares, that being the necessary condition for the subsequent tax offence which it facilitated at [37]).
It followed, it was argued for Ms Vo, that James J's approach to the question of whether possession of cash involved in a s 400.9 offence was sufficient to amount to a use of the cash, as defined in s 329(2)(b) of the Act, in or in connection with the commission of the offence, so as to amount to an instrument of that offence, was wrong. It was also submitted that the presence of the cash was merely a condition precedent to the commission of the offence, rather than it being used, in or in connection with the offence. Further, that such possession could not amount to use of the property in or in connection with the commission of the offence.
I do not agree.
An offence under s 400.9 comprises three physical elements: first, specified conduct, including dealing with money, which may include possession of cash, given the provision made in s 400.2(a); second, it being reasonable to suspect that the money is proceeds of crime; and third, that its value is $100,000 or more (see s 4.1 and Lin v R [2015] NSWCCA 204; (2015) 297 FLR 457 at [15]). There being no fault element specified in s 400.9, intention is thus the fault element for the physical elements of the offence (see s 5.6(1) of the Criminal Code). Accordingly, to commit a s 400.9 offence, it is sufficient for an offender to intend to take possession of more than $100,000 cash, which it is reasonable to suspect is proceeds of crime. That it is the proceeds of any particular prior offence, need not be established.
As Edelman J discussed in Commissioner of the Australia Federal Police v Courteney Investments Ltd [2015] WASC 101 at [492], (another case concerned with shares and their disposal, rather than possession of cash reasonably suspected to be the proceeds of crime), in resolving whether the property in question was used "in" or "in connection" with a particular offence, it is necessary to pay close attention to both the nature of the offence and the particular facts involved in its commission.
In that case, Edelman J considered that the "giving away" of the interest in the shares was capable of being a use in connection with the non-disclosure offence there in question. The argument that it was sufficient to establish the necessary connection, on the basis that but for the existence of the shares, the offence could not have been committed, was not accepted. His Honour accepted that a counterfactual connection with the property was insufficient to establish a use, either in or in connection with the commission of the offence. The manner of the use of the interest in the shares, by causing the shares to be voted without disclosure of interest, was, however, accepted as being a use of the shares in connection with the offence (at [507] - [513]). That non-disclosure was found to have been an intentional act, designed to facilitate concealment of the relevant interest and therefore, a use of the interest, in connection with the commission of the non-disclosure offence.
As discussed in Lin v R (at [13] - [14]), the s 400.9 offence differs from other offences specified in s 400, in that it does not require proof of the actual commission of another offence, but it is concerned with other past or completed offending, from which property is derived or realised.
Where the property involved in such an offence is cash, its presence is undoubtedly a condition precedent to the commission of the s 400.9 offence, as was submitted for Ms Vo. It is taking possession of such cash, with the requisite intention, which constitutes the s 400.9 offence.
In such a case there is not "a mere counterfactual connection" between the cash and the offending. It is the use which the offender makes of the cash, by taking possession of it, while having the necessary intention, which results in the commission of the s 400.9(1) offence.
In an offence which results from conduct of that kind, it is unarguable, it seems to me, that the cash is an instrument of that offence, as that term is defined in s 329(2)(a), it having been used as it was, in the commission of the offence. That the same cash has also been used in or in connection with, or is the result of, other earlier offending, does not detract from that conclusion.

The cash was also the proceeds of the s 400.9 offence

Property, including cash, can undoubtedly be the subject of more than one offence. It can also be the subject of a s 400.9 offence. That section itself comprehends the notion that the cash has already been the subject of some other, earlier unspecified offending. Under s 400.9, each person who takes possession of the cash, with the requisite intention, commits such an offence.
The definition of "proceeds" of crime is concerned with property derived or realised from the commission of an offence.
The cash here in question was found in Ms Vo's possession at Sydney airport, she having travelled there from Melbourne, after she retrieved the suitcase which held the cash, which, she said on her arrest, she intended to use to gamble at The Star casino.
The evidence relied on when the restraining order was sought, established that it was reasonable to suspect that the cash found in Ms Vo's possession was the proceeds of crime, as I have explained. On the case she advanced in these proceedings in June, she accepted that she could not establish that it was not the proceeds of an indictable offence, or of an unlawful activity. That accords with the evidence received at the hearing of the forfeiture application, which I have earlier discussed. The inference from her admissions, as I have explained, is also that it was not lawfully derived.
In s 336 "Meaning of derived", it is provided that: "A reference to a person having derived *proceeds, a *benefit, *literary 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, benefit, literary proceeds or wealth directly or indirectly."
That provision requires still that attention be paid to the ordinary meaning of the word "derive". The relevant Macquarie Dictionary definition includes is "1. (sometimes followed by from) to receive or obtain from a source or origin."
The evidence did not establish from whom Ms Vo took possession of the cash, but its possible sources include someone else involved in other, earlier offending or from a victim of such offending, or from the commission of another offence, a tax offence, for example. It follows that either directly, or indirectly, the cash the proceeds of that earlier offending also became the proceeds of a s 400.9 offence, when possession of it was taken by a person who had the requisite intent. The cash was thereby received, or obtained, by the person who committed the s 400.9 offence.
The word "realise" is not specifically dealt with in the Act and so must be given its ordinary meaning. The relevant definition in the Macquarie Dictionary is: "… 4. to convert into cash or money: to realise securities. 5. to obtain as a profit or income for oneself by trade, labour, or investment. 6. to bring as proceeds, as from a sale: the goods realised $1000. … 8. to convert property or goods into cash or money. 9. to realise a profit."
Whoever had possession of the cash before it came into Ms Vo's possession, she took it in a suitcase to Sydney airport, where it was seized from her, she intending to use it, she said at the casino. Contrary to her claims, on the balance of probabilities, the evidence establishes that she had not acquired the cash by lawful means and that it was realised from the commission of a s 400.9 offence, it having been obtained when possession was taken of it, with the requisite intent.
In the result, there can be no question that this cash was also the proceeds of a s 400.9 offence, as s 329(1) provides.

Orders

The usual order as to costs is that they follow the event. That would mean an order in favour of the Commissioner, as agreed or assessed.
The parties should confer and provide orders reflecting the conclusions here reached, within 14 days.
The Commissioner has liberty to approach if the order in relation to the Lalor property is to be pressed. If not, that aspect of the summons should be dealt with in the orders which should also include: "All exhibits and subpoenaed material may be returned forthwith; any exhibits returned must be retained intact by the party or person that produced the material until the expiry of the time to file an appeal, or until any appeal has been determined."
The matter will be listed at 9:30am on 4 November 2015 for mention.

Amendments 04 November 2015 - Amendments to paragraphs [16], [21], [22], [25], [34], [47], [89], [108] and catchwords - typographical errors Amendment to paragraph [47] - addition of "the interest is neither" 04 November 2015 - corrected paragraph numbering 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: 04 November 2015

Proceeds of Crimes Act 2002(Cth)

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