Xue v R

Court of Criminal Appeal (NSW)|2021-09-08|Before: Beech-Jones CJ, Hulme J, Adams J, Jones CJ

The applicant's evidence

The applicant's case was that he was an employee of Sino and was paying Sino's business expenses in China including to Mr Li Daan.

Mr Mundt (forensic accountant)

The applicant's forensic accountant Michael Mundt (exhibit 10) offered the opinion that Sino continued to trade in July 2017, and that it was possible those transactions represented trading activities of Sino, based on the volume of deposits through the account in that month.
Mr Mundt agreed with Mr Gadate's opinion that he was unable to correlate the applicant's declared income with his bank accounts.

Unavailable witnesses

Four affidavits were tendered on the basis that the makers were unavailable as they were in China (s 65, Evidence Act).
Mr Huang Tian stated that in 2016 he met Mr Qian, who asked him to receive packages on his behalf in China. Mr Tian's role was to organise customs clearance. He participated in this arrangement until Mr Qian stopped paying him. He sent Mr Qian an invoice for the money owing, which was annexed to his affidavit. In July 2017, Mr Tian received a payment of 101,925.74 CNY from the applicant's Chinese bank account. A receipt of this payment was also annexed to his affidavit. He took this to be the final payment from Mr Qian as it was the amount shown on the invoice.
Mr Shuguang Dai stated that he had known Mr Daan since 2015 and had business dealings with him. He said that he met the applicant in 2016 and Mr Qian in 2017. He said that he knew Mr Qian and Mr Daan had business dealings (he did not elaborate on the basis of this knowledge). Mr Dai stated that in April 2017 he received 1,000,000 CNY from the applicant's Chinese bank account and understood these funds to be related to business dealings Mr Daan had with Mr Qian in Australia. He did not explain the basis of this understanding. He said that the money was payment for debts owed to him by Mr Daan. No annexures relating to that payment were provided.
Mr Jintian Yao said he had known the applicant since 2016. He was an employee of China Post Group. In May or June 2016, he met Mr Qian who commenced using the services of China Post Group in Guangzhou. On 20 July 2017, China Post Group received 48,338.74 RMB from the applicant's bank account in China. He understood these funds to be related to outstanding payments accumulated by Mr Qian. No supporting evidence or annexures were provided.
Mr Jiongmin Chen said that he had known the applicant since 2013. He said that in April 2017 Mr Qian met with him and the applicant in China. Mr Qian enquired as to whether he could open a bank account in China to facilitate the payment of people he owed in China for his business. The applicant said that he had been doing this for Mr Qian as an employee for one month. He was unable to organise a bank account for Mr Qian due to government policy and the need for Mr Qian to be in China. The applicant told Mr Chen that he would continue to make payments on behalf of Mr Qian because the bank account could not be organised.

Exhibit 20

Exhibit 20 comprised screenshots of WeChat messages between the applicant and Mr Qian that were not on Mr Qian's phone. Those messages had been translated into English and disclosed the following.
On 22 May 2017 at 2:21am, the applicant said to Mr Qian: "For the $76500, it will be settled with Da'an at an exchange rate of 5.17 while Da'an will settle with Brother Four and 5.175. [calculations about currency rates] Hence, Da'an should additionally pay CNY 20,058.3 for the second transaction.
Seven minutes later, the applicant said: "For the $500,000, it will be settled with Da'an at an exchange rate of 5.1206 while Da'an will settle with Brother Four at 5.1102. [calculations about currency rates] Total to be transferred to Da'an 13660.5 + 5000005.11020.96 = CNY 2,466,556.5"
Five minutes later, the applicant said: "$489800 - $15 (service charges) at an exchange rate of 5.2454, is converted into CNY 2,569,118.24 2017/05/19-/2017/05/22 CNY 2,466,566.5 transferred to Da'an Balance: CNY 102,551.74 At the exchange rate of 5.2454, equivalent to AUD 19,550 + 10,200 $29,750 in total, $14,875 per capita Original AUD amount 14000 + 15500 - 3600 = $25,900 25900 - 14875 = $11,025."
Two minutes later, the applicant said: "Boss, please confirm the above when you get up. I just finished reconciliation with Da'an. Good night."
Mr Qian did not reply to any of those messages. Twelve hours later, at 2pm that afternoon, Mr Qian sent the following message: "Can you do me the favour of transferring CNY 15,000 to Sichuan on my behalf?
The applicant then requested an account number which Mr Qian provided. The applicant sent a screenshot of the transfer.

The primary judgment

The primary judge provided reasons for her verdicts on 17 June 2020. Ground 2 concerns the adequacy of these reasons. Given this criticism, I have summarised her Honour's judgment in some detail. Apart from grounds 1 and 4, which contend that her Honour erred as to the relevant elements of the offence and defence, no ground of appeal contends for any misdirection by her Honour. Accordingly, I do not propose to set out the legal directions. Nor do I propose to summarise the findings on count 1, upon which the applicant was acquitted.
Her Honour identified the elements of the offence under s 193C(1) as I have set out above at [16], the relevant definitions in s 193A and the terms of the statutory defence in s 193C(4).
Her Honour noted the accused's submission that for counts 2, 4, 5 and 6 he was not dealing in Australian currency as referred to in each count and responded by observing at [12] that this was "a particular" and no application for directed verdicts had been made at the close of the Crown case.
Her Honour then noted the accused's submission that a bank account represents a chose in action and is "not by definition Australian currency" and went on to state "it could not be said that Xue did deal in Australian currency, he dealt in funds in his bank account as placed there by Qian". Her Honour concluded at [11] that the evidence established that the accused, in his dealings with Mr Qian, indirectly dealt with Australian currency.
Her Honour next addressed a submission made by the accused that now forms part of ground 1, namely, whether the actual offence from which the funds were derived needed to be identified by the Crown. Her Honour noted the terms of s 193F(1) (extracted above at [20]) and then stated the following at [13]: "However, it was submitted that what was required was for an offence to be identified in the evidence: AWS [91]. It is agreed that there is no evidence as to the source of the funds or of a particular crime. The accused relied upon Chen v DPP [2011] NSWCCA 205, a decision considering a different offence provision, to support this submission. This provision requires proof of not only a belief but that the property is the proceeds of crime. It is accepted that the offence provisions, and their Commonwealth counterparts, concern markedly different elements. There is unquestionably a hierarchy of offending included in Part 4AC of the Act. Fairly, reference was also made to the single judge decision in DPP v Ngo [2012] NSWSC 1521 wherein the aptness of the reasoning in Chen to an offence under an offence similar to the index offence provision was considered. I do not consider that Chen is binding authority in determining this offence provision. I am assisted by the consideration of Button J in Ngo. I determine that I am required to be satisfied that the property was derived from a non-specific serious offence."
Her Honour then noted that the Crown relied upon the circumstance provided for in s 193C(3)(e) where the value of the property is "grossly out of proportion to the [accused's] income and expenditure over a reasonable period within which the dealing occurs". Her Honour then gave an overview of the evidence of Mr Qian at [15] and that of the accused at [16].
Her Honour gave herself a warning under s 165 concerning the evidence of Mr Qian and gave reasons for doing so (at [20]-[33]). She also gave herself a "Murray" direction (Murray v The Queen (2002) 211 CLR 193; [2002] HCA 26). She concluded of Mr Qian at [34]: "I accept that he was imprecise on occasion such as when his company was registered and the facts surrounding its deregistration. However, he was consistent on its business structure and its financial position as confirmed by records. He had been friendly with the accused and engaged in business activity with him. The accused was residing at his home in March 2017. There was evidently a closeness between the two."
Her Honour went on to summarise the evidence of Mr Qian and the accused at [35]-[54] setting out where the accused disputed the evidence of Mr Qian.
Her Honour gave herself a "Mahmood" direction (Mahmood v State of Western Australia (2008) 232 CLR 397; [2008] HCA 1) in relation to two witnesses: Tang Qing Jun and Li Daan and set out her reasons for doing so in circumstances where the Crown opposed such a direction for Mr Daan. As will be seen below, the applicant contends for error in the manner in which her Honour dealt with the evidence of Mr Daan. Her Honour concluded the following on this question at [61]-[62]: "I propose to take into account the absence of Li Daan on the basis he was referred to in messages produced by Mr Qian to the police. I am unable to conclusively determine whether Mr Qian did volunteer more about Li Daan given the imprecise questioning of Det Hudson. I would favour Det Hudson's evidence. The reference to 'Daan' in the WeChat conversations should have provoked some inquiry by police. As a matter of prudence I direct myself that there could and should have been further inquiries to locate both witnesses. I will take into account the absence of this evidence in determining whether I should entertain a reasonable doubt about the accused's guilt. Tang Qing Jun impacts directly on count 1. Li Daan impacts across the remaining counts."
Her Honour then went on to direct herself on the question of assessing reliability at [64]-[71] including the evidence of the accused (at [72]-[76]). She also gave herself a character direction at [77]-[80].
Her Honour then went on to consider and direct herself in relation to the expert evidence at [81]-[104], including a warning concerning unavailable documents given that Sino did not produce any documents in response to a subpoena issued on behalf of the accused.
Her Honour noted that although both experts had access to the Supay currency exchange records and the Australian business and personal bank records and the available tax returns for both Mr Qian and the accused, neither had access to any accounts in China. Her Honour noted the following as to Sino's wage outgoings at [89]: "Sino's wage outgoings varied over the financial years. Mr Gadate noted $38,670 recorded as wage withdrawal in bank details in the 2016-2017 financial year: at [46]. In the last available records for the year ending 2015 the total wages bill was under $180,000 [Ex 10 annexure L]. The accused tendered documents stating that the accused's salary in 2017 was $190,000 per annum [Ex 8, part 19 and 22]. I note that the Sino bank records do reflect regular salary payments to either one or two persons weekly in the amount of $1108 each. There was no evidence about these payments but payments on occasion were transferred to Mr Qian and his wife's personal account. I infer some payments were to Ms Xu and possibly Mr Qian. This quantum is well below that claimed by the accused to be his salary."
Her Honour went on to note at [90]-[92]: "In both the 2017 and 2018 financial years the accused declared no income from salary or wages. The tax records available for the accused's companies declared either no income or a loss. The accused paid the 20% deposit for his home purchase with the cheque relevant to count 3, and a further $160 000 from an unknown source. Both experts opine that the accused's declared income did not correlate with his bank accounts. In the period July 2016 through to July 2017 Sino deposited a total of $2,072,000.86 with $1,686,992.40 of this amount being deposited between 7 March and 10 July 2017. The deposits in April, May and July far exceed any other month and correlate with similar excessive withdrawals to Supay. During the 13 months only $38,670 is noted as 'Wages / Salary'."
Her Honour noted that Mr Mundt gave different evidence to Mr Gadate as to the cessation of trading by Sino in 2017. He offered the opinion that Sino continued to trade beyond the date it was deregistered (14 May 2017) noting that its ABN was not cancelled until 23 August 2017. Her Honour summarised Mr Mundt's evidence at [94]-[96].
At [99] her Honour noted the Crown submission that Mr Gadate's evidence supported Mr Qian's evidence that he would receive sums of money, deposit that money into the Sino account and then transfer it to the accused's Chinese bank account using Supay. In each instance, the final destination of the money received by Mr Qian (or a substantial portion of it) was the accused's bank account, through a transaction in which the accused facilitated the exchange of a token. That is, Mr Gadate's evidence was consistent with Mr Qian's evidence that the money moved in a circuit from a person with whom the accused, either directly or indirectly, was in contact with (as demonstrated by the communication of the token), to Mr Qian, and then to the accused's own bank account, such amounts being grossly out of proportion to the accused's income and expenditure during the relevant period. Her Honour concluded as follows at [103]-[104]: "I note the opinion evidence from Mr Mundt. After reviewing the source documents and the opinions offered I accept the evidence of Mr Gadate. On the available records the amount of money is disproportionate to the regular trading of Sino. I am satisfied beyond reasonable doubt and determine that the money was not money related to the business operations of Sino."
Her Honour then considered the evidence of the four unavailable witnesses relied upon by the accused whose affidavits were read but the Crown was not able to cross-examine. Her Honour summarised this evidence, and the submissions made in relation to them, at [105]-[124]. Her Honour noted that the accused relied upon this evidence to support the proposition that he was employed by Mr Qian and that he conducted acts in relation to Sino's business. The evidence in the exhibits asserted payments from the accused's bank account: exhibit 12 referred to a payment on 19 April 2017, exhibit 11 referred to a payment in July 2017 and exhibit 13 referred to a payment on 20 July 2017. Her Honour directed herself at [109] that: "I determine that I should exercise caution in deciding whether to accept any of this evidence given the limitations arising from an absence of specificity about numerous aspects and that it has not been tested. The failure to specify the basis of knowledge renders some aspects of the evidence unsatisfactory."
Her Honour then summarised the evidence of Huang Tian (exhibit 11), Dai Shuguang (exhibit 12), Yao Jintian (exhibit 13), Chen Jiongmin (exhibit 14) as well as the competing submissions about the weight to be given to their evidence from [110]-[121] before summarising the respective cases again as follows: "Mr Qian accepted he provided the document confirming employment. He said this document was false and was provided to support the accused's home loan application. He said the accused was not employed by Sino. Mr Qian provided this evidence under the protection of a s 128 certificate. Mr Qian said the pay slips he was shown were not from his company. The home loan application, Ex 19, dated 2 May 2017, attaches the confirmation of employment and sole payslip documents. The accused paid the deposit of 20%, being $320 000. Half of this payment, being the $158,000 paid, is relevant to count 3. In summary, the accused's case is that he denied handling any money as suggested for count 1. He accepted his involvement with the transactions supporting the other counts but claimed he was not dealing with the proceeds of crime. A consideration under s.193[3] Crimes Act is where an accused nominates that any handling was at the request of another person. It is a relevant concern where the accused fails to nominate that person. The accused did not fail to provide information. He nominated Mr Qian as that person. He sought to rely upon the statutory defence that he had no reasonable grounds for suspecting the money was the proceeds of crime, as defined."
Her Honour then noted at [125] that the Crown relied upon the circumstance provided for in s 193C(3), that the value of the property involved in the dealing was, in the opinion of the trier of fact, grossly out of proportion to the accused's income and expenditure over a reasonable period within which the dealing occurred.
Her Honour then summarised the accused's evidence in detail from [129]-[157]. I do not propose to repeat that summary here although it is to be noted that her Honour made a number of observations during that summary as follows: 1. At [131] her Honour noted the accused's evidence about the significance of the $5 note at T 220-221 and described it as "unsatisfactory". 2. At [133]-[134] her Honour referred to the accused's evidence about the WeChat message on 10 April 2017 at T 232-233 and noted that it did not accord with the terms of the message. 3. At [138] her Honour referred to the accused's evidence about the WeChat message on 15 May 2017 at T 241-244 and noted his evidence that he had "no idea" why Mr Qian told him to be careful. 4. At [139] her Honour referred to the accused's evidence about the WeChat message on 3 and 4 July at T 247-249 and in particular that the transaction involved Mr Qian paying local members of the Daigou group in Australian dollars for those members to then arrange their Chinese contacts to pay Mr Daan: T 249. Her Honour said of this: "There was no explanation in the evidence as to why any money would be remitted to the accused or Sino as indicated in the message". 5. At [140] her Honour referred to the accused's evidence about the WeChat message on 4 July at T 250 in which Mr Qian mentioned a preference for an office as "people are willing to kill for $200,000". Her Honour noted that the accused's explanation required "consideration of the message flow" and that he did "not produce any messages to support his defence". 6. At [141] her Honour referred to the message sent by the accused with a break-down of $10, $20 and $50 note denominations amounting to $8280 and noted that this "was not explained in evidence". 7. At [142]-[143] her Honour summarised the accused's evidence about Mr Qian giving $200,000 cash to be exchanged with Chinese Yuan to repay Mr Daan by depositing into the accused's account and that Supay would be used: T 252. He said he had no reason to suspect anything suspicious: T 253. Her Honour observed the following at [144]: "This explanation is difficult to follow. I understand that Supay may have offered a better rate than a mainstream bank. However, Supay could just as readily have been used to pay directly to Li Daan's account in China rather than the accused's account in China." 1. At [147] her Honour referred to the evidence that the accused sent a message to Mr Qian saying, "thanks for your effort" and noted that "[t]his message does not readily reconcile with Mr Qian being the employer in the relationship". 2. At [149] her Honour noted the message by the accused "more work, request to move 30" and his explanation that it was a message from the broker that he only forwarded without understanding the content: T 268. Her Honour noted the accused's evidence that he was only an intermediary between the broker and Mr Qian and didn't stop to think what it was about as it was none of his business: T 269. Her Honour observed that: "The timing of the messages reflects they came in quick succession. On his evidence his role as merely forwarding messages presents [as] entirely surplus and pointless." 1. At [151] her Honour stated "I do not accept the accused's evidence that he was merely forwarding messages from the broker". 2. At [153] her Honour noted the accused's evidence that he did not understand from the messages with Mr Qian that Mr Qian was receiving cash in Australian dollars and observed that that evidence did not reconcile with the contents of the WeChat messages about counting money. 3. At [154] her Honour noted the accused's evidence that the money going through his account was from Mr Qian to pay debts to Mr Daan and his belief that the money he paid for debts was about $20,000 to $30,000: T 271. He confirmed this was only in September 2016 to early 2017: T 275. In re-examination he was directed to his wife's payment on 22 May 2017 at the request of Mr Qian of about $2,800 on behalf of Sino to China Post. Of this her Honour observed at [155] that: "If this was the case then there would be no basis for repaying $158,000 in April 2017. The evidence from the witnesses in China does not account for this payment."
Her Honour then addressed the evidence and submissions concerning the statement of DSC Bayliss, who was relied upon as an expert in money laundering (Ex C, Annexure 6). It was noted that the Crown submitted that many of the features of money laundering activities described by Detective Bayliss could be seen in the transactions described by Mr Qian.
At [160] her Honour noted that both parties relied upon the WeChat messages and at [162] her Honour noted: "Within the messages the accused refers to Mr Qian as 'boss'. Mr Qian explained this was culturally appropriate. The accused relied upon it as denoting their relationship as employer and employee."
Her Honour then summarised the evidence in support of each of the six counts in the indictment from [163]-[226]. Count 1 was dealt with at [167]-[179]; count 2 at [180]-[192], count 3 at [193]-[200], count 4 at [201]-[208], count 5 at [209] and count 6 at [210]-[226]. I do not consider it necessary to summarise those passages.
From [229] her Honour set out her findings. At [229]-[230] she observed that: "I have considered the accused's account in evidence. I consider that the accused was unimpressive in responding to questions. I take into account that he denied the allegations. Just because I do not consider his denials to be persuasive does not mean that I would necessarily find him guilty of one or more counts in the indictment. He does not assume any onus other than that contained in s 193C[4]."
As for Mr Qian her Honour observed the following at [232]-[233]: "I have been cautious in my assessment of the reliability of the Mr Qian by carefully considering his evidence and how it sits with other evidence in the trial. He did not give his evidence in a manner suggestive of fabrication although he was on occasion imprecise or flippant. Much of his evidence, other than the role ascribed to the accused, is consistent with other available evidence. On his own account he was prepared to sign a document knowing it to be false, and to deposit money into the accused's account falsely purporting it to be salary, knowing this information would be used to support a home loan application. This is likely criminal conduct and well warranted Mr Qian's concern about ensuring protection against self-incrimination. This was information he volunteered against interest."
After referring to the respective submissions about Mr Qian, her Honour stated at [237]: "I have considered his evidence against the submissions concerning issues impacting on reliability. The accused submitted that I should direct myself that he may be unreliable because he gave his evidence under the protection of a s 128 certificate. Unusually however there was no submission advanced by either party that I would determine that he was unreliable based on a finding that he was or may have been criminally involved in the subject offending. Similarly, the accused submitted that I would not accept the evidence wherein Mr Qian admitted, under protection of a s 128 certificate, that he was complicit in providing false material to support a home loan for the accused. That is, that acceptance of criminal conduct was submitted to be false and this false acknowledgment of possible fraud rendered his evidence unreliable."
At [238] her Honour noted that although she had only referred to some of the evidence and exhibits, she had reviewed all the evidence and carefully considered the submissions.
As for count 1 her Honour noted at [240]-[241]: "There is no support for Mr Qian's evidence on count 1. I am mindful of the caution I should exercise given that Mr Qian is the sole witness and that he was complicit in dealing with money such as would invoke a possible prosecution. Taking a conservative view of the evidence based on these warnings, and not because of any intrinsic concern about the evidence of Mr Qian, I am unable to be satisfied beyond reasonable doubt that the accused was involved in this transaction. Accordingly, I find him not guilty of count 1. This determination is not because of any adverse determination of Mr Qian's reliability." (emphasis added)
At [242] her Honour noted that the remaining counts each involved more than $100,000 and she was satisfied beyond reasonable doubt that element 3 (the amount) was proven for each count. Her Honour then stated the following at [243]-[250] as to why she was also satisfied of the other two elements: "I have considered the evidence as to the source of the money. I note that Mr Qian gave evidence that the money involved in each transaction was not related to the Sino business. Mr Qian accepted on occasion he provided cash to the accused. After an absence of under a month the accused returned to Australia from China and within a day paid $158,000 in cash to obtain the bank cheque. If the money was not related to Sino, then there are reasonable grounds to suspect that the money is the proceeds of crime. I accept that Sino was predominantly a cash business however Mr Qian did not accept that his involvement was with Sino money. I have considered the circumstance of the accused handling a large sum of cash as he accepted he did. I am satisfied beyond reasonable doubt of element 2 that there are reasonable grounds to suspect that the money is the proceeds of crime. For counts 2, 4, 5 and 6 I have considered the circumstances of Mr Qian's dealing with the money. There is no direct evidence that the money was related to Sino's business. The manner of depositing the money in Australia for some counts is not consistent with business transactions although I take heed that there is no evidence that accused knew of this procedure. I have considered the expert evidence analysing Sino and have considered the direction that arises given the unavailability of fulsome records. I am satisfied beyond reasonable doubt that the money involved is grossly out of proportion to the Sino business, and the accused's income. I do not accept the money was related to the conduct of the Sino business. If the money is not related to the conduct of Sino's business then there is [no] known legitimate source. I accept that for each remaining count that there are reasonable grounds to suspect that the money is the proceeds of crime. Element 2 is proven beyond reasonable doubt. I am satisfied of each element beyond reasonable for counts 2 through to 6."
Finally, her Honour dealt with the statutory defence at [251]-[267]. She noted the accused's reliance upon good character and submitted that in discharging his onus he relied upon: 1. The evidence, on balance, was that the funds were predicated on the issue of a $5 note as identification. Furthermore, to the knowledge of the accused, these funds were derived or realised from the income of Sino; 2. Objectively, the funds that were transferred into his bank account in China came from Supay directly from the bank account of Sino; 3. Objectively, the funds which followed the $5 note exchange went directly into the bank account of Sino; 4. It is submitted that there are no reasonable grounds for the accused to suspect that the property was substantially derived or realised, directly or indirectly, from a crime; 5. At all material times the accused considered the funds to be properly those of Sino. The contrary was not suggested to the accused; 6. The task of a Court in assessing whether the accused had no reasonable grounds for suspecting is assisted by consideration of the seminal case on suspicion being George v Rockett (1990) 170 CLR 104; [1990] HCA 26 at 112: "When a statute prescribes that there must be 'reasonable grounds' for a state of mind - including suspicion and belief - it requires the existence of facts which are sufficient to induce that state of mind in a reasonable person." 1. The statutory defence under s 193C(4) requires the Court to replace the last three words quoted, "a reasonable person", with "the accused."
Her Honour went on at [254] to consider the reliability of the accused. She noted: "I found the accused to be unimpressive. Part of this assessment was on demeanour. I note the caution to be adopted in reliance upon demeanour. Examples supportive of my concern based on responses include the following. His various accounts that he did not understand the quantum of money being discussed was not convincing. He said if it was in bundles of 10,000 it was customary to use a 'w'. Yet even when he was undoubtedly engaged in such amounts he accepted the 'w' was not used. His explanation for the message about Li Daan and the girl being 'afraid' was not consistent with the context and terms of the text. Also, his explanation for merely forwarding messages between the broker and Mr Qian."
Her Honour went on at [255] to find that she was not satisfied that the accused was employed by Sino. She noted that he relied upon the letter of employment, the various payslips, the deposit into his account noted as "salary" and the WeChat conversation on 19 May 2017. It was also noted that the accused did not declare a salary on his tax return. Her Honour took into account the purported salary and considered that against an absence of success in a similar business, an absence of any relevant qualifications and a review of the available records of salaries otherwise paid by Sino (at [256]).
Her Honour noted at [257] that she accepted the evidence that the accused on occasion made payments on behalf of Sino to assist Mr Qian but that these payments did not denote employment. Her Honour then went on at [258] to refer to the four witnesses relied upon by the accused. In relation to their evidence, she stated: "I accept that four witnesses have provided accounts of their dealings with the accused and/or Mr Qian. I accept there is a very general commonality. There is confirmation of the accused paying sums of money purportedly on behalf of Mr Qian and statements by the accused about his role. The evidence has limitations that impact upon the probative value. However, whilst acknowledging the shortfalls I will consider that it does provide some support for the accused's evidence. "
Her Honour then noted at [259] that the financial spreadsheets prepared by the accused and the comments about exchange rates reflect that the two were involved in financial transactions. As for the fact that the accused referred to Mr Qian as "boss", her Honour did not regard the use of "boss" to determine roles but accepted it was evidence of cultural usage. Her Honour noted that Mr Qian denied that the accused was employed by Sino.
Her Honour then addressed the evidence of repayments relevant to count 3. Her Honour noted that this assertion was "intertwined with his assertion that he had been an employee of Sino", which her Honour had not accepted. It was noted that there was no evidence of his or his family's payments to this extent prior to April and that the only proof of a payment made by him or his family using their own money in the relevant time period was of a modest amount, that being 15,000 CNY (exhibit 20). Her Honour was satisfied that there was some relationship between the accused and Mr Qian; the WeChat messages demonstrated a financial relationship between them involving moving money.
As for Sino, her Honour accepted at [263]-[264] Mr Qian's evidence that Sino was a freight business and that he was almost exclusively organising collection of goods in Australia to forward and deliver overseas, mostly in China. She also accepted Mr Qian's evidence that he had costs associated with ports and post in China and that he had limited payments to Sino in China. She considered that the WeChat conversations support his evidence. Her Honour went on to state at [265]: "I do not accept that the money was part of a broker system used by Sino. I do not accept that the accused believed this to be the case. The accused's evidence about the WeChat messages was unimpressive and not credible. On his account he was a General Manager. Yet his evidence was that most messages were of no interest to him and he merely was a conduit forwarding messages."
Her Honour then concluded her reasons at [266]-[268] as follows: "The conduct of the accused, including the token system, is consistent with the described characteristics of money laundering contained in the expert evidence. I determine that at the time of the dealing that the accused has failed to satisfy that on balance that he had no reasonable grounds to suspect that the money was substantially derived or realised, directly or indirectly, from an act or omission constituting an offence against a law in force in the Commonwealth, a State or a Territory or another country. I find the accused guilty of counts 2, 3, 4, 5 and 6."

Ground 1

The applicant's first ground of appeal was as follows: "Ground 1: The primary judge misdirected herself with respect to what it was that was required to be established by the Crown before the elements provided for by S.193C(1) could be satisfied, particularly: (a) by finding that S.193C(1)(b) could be satisfied by the Crown proving that the property the subject of each of counts 2 to 6 was derived from a non-specific serious offence or offences; (b) by failing to identify an offence or offences from which the property the subject of each of counts 2 to 6 was derived and by failing to identify that such offence or offences was or were serious offence(s) as defined; (c) by concluding from the overall circumstances that it was reasonable to suspect that the property the subject of each of counts 2 to 6 was the proceeds of a serious offence and thus was proceeds of crime; and (d) by failing to make any finding(s) as to the derivation or possible derivation or realisation of the property the subject of each of counts 2 to [6] the indictment when determining that it was reasonable to suspect that the said property was the proceeds of crime."

Applicant's submissions

In written submissions, the applicant noted that while the Money Laundering provisions of the Criminal Code (Cth) had been considered in decisions such as in Chen v Director of Public Prosecutions (Cth) (2011) 83 NSWLR 224; [2011] NSWCCA 205 ("Chen"), which her Honour referred to, there has been less consideration of Pt 4AC of the Crimes Act. The applicant relied on Chen as authority for the proposition that all offences under Pt 4AC require "ascertainment of the property as proceeds of crime". Reliance was also placed on the decision of R v McKellar (No 3) [2014] NSWSC 106 in which Button J held that the principles in Chen applied (by analogy) to Pt 4AC of the Crimes Act.
The applicant submitted that the Crown had to prove beyond reasonable doubt that the "property" (the banknotes received by Mr Qian and transferred to the applicant's bank account in China) was derived from a serious offence.
Prior to the hearing of this appeal, the Crown drew the Court's attention to the decision in Lin v R [2015] NSWCCA 204; (2015) 253 A Crim R 1 ("Lin"). In that matter this Court held at [26] that s 400.9 of the Criminal Code (which is in the same terms as s 193C of the Crimes Act) did not require the identification of a "predicate" offence or class of offences as proof of any of the circumstances identified in subs (2). I will return to consider this decision further below.
In argument before this Court, counsel for the applicant submitted that Lin was distinguishable on a number of bases. Reliance was placed on the fact that it dealt with s 400.9 of the Criminal Code, rather than the analogous provision of the Crimes Act and that s 400.9 provides that absolute liability applies to subs (1)(b) and (c) and no such provision was included in s 193C. This was said to be relevant on the basis that, on the applicant's case, there was both a mental and a physical element in s 193C(1)(b). It was submitted that proof of one of the circumstances in s 193C(3) only established the mental element of "suspicion" but could not establish the physical element, that being, in the applicant's submission, that the property was proceeds of crime.
It was submitted that the reference to "reasonable grounds to suspect" that the property was proceeds of crime required proof that an accused actually suspected or had knowledge of reasonable grounds to suspect that the property was proceeds of crime, because otherwise the legislature would have made the offence one of absolute liability. It was submitted that the Crown could not establish that there were reasonable grounds for suspicion without proving that the property was actually the proceeds of crime.
In relation to the "physical element", it was submitted that proof of the physical element required an identification of an indictable offence from which the proceeds were alleged to be derived.
Counsel for the applicant further relied on the defence in subs (4) (that the defendant had no reasonable grounds to believe the property was proceeds of crime) as support for the proposition that subs (1)(b) had a mental element attaching to the defendant's state of mind, as well as a physical element.
The applicant submitted that a penal provision should not be given a broad interpretation and further submitted that it was unlikely that the legislature intended to create an offence punishable by 5 years imprisonment with no mental element.
It was further submitted that if the Court did not accept that argument, the Court would find that Lin was wrongly decided.
It was further submitted that the Crown could not establish that the applicant "dealt with" the property, being the banknotes, as defined by s 193A, because he did not "deal with" any banknotes (the property as particularised in the indictment) because he simply received a chose in action, that being a credit in his bank account in China. It was not conceded before this Court that the applicant engaged directly or indirectly in a transaction by arranging for Mr Qian to pick up the banknotes or requesting for them to be transferred to his bank account in China. It was submitted that the relevant conduct had to occur in New South Wales and that no such geographical nexus could be established.
Finally, the applicant submitted that the circumstance set out in subs 193C(3)(e) (the property was disproportionate to the person's income and expenditure) could only be assessed when the property the subject of the dealing was in the person's possession. It was submitted that because the applicant was never in possession of the banknotes, the Crown could not rely on that subsection. It was further submitted that this subsection focussed on the derivation of the property and required an identification of its source.
Crown submissions
The Crown relied on Lin and submitted that the provisions of ss 193C and 400.9 were relevantly the same and the same principles applied. It was submitted that Lin was plainly correct and was determinative of the question. The Crown further submitted that the reasoning in Lin did not rely in any way on the offence in s 400.9 of the Criminal Code being one of absolute liability.
The Crown submitted that s 193C had a similar structure to s 527C of the Crimes Act (goods in custody) and similarly only required proof of a dealing with property and an objectively reasonable suspicion on behalf of the tribunal of fact: R v Chan (1992) 28 NSWLR 421; Anderson v Judges of the District Court of New South Wales (1992) 27 NSWLR 701.
In relation to the submission that the applicant did not "deal with" the property because he was in China, the Crown noted that the applicant's trial counsel opened with a concession that indirect dealing was established and no jurisdictional argument would be advanced. That concession was maintained in closing submissions. The Crown submitted that a geographical nexus under s 10C of the Crimes Act was established by the applicant requesting Mr Qian to receive money on his behalf, facilitating the exchange of $5 note tokens and receiving the money as all of these actions took place at least partly in NSW and had an effect in NSW.
In relation to the argument that s 193C(3)(e) required the property to be in the person's possession, it was submitted that indirect dealing would often not involve actual possession by an applicant person. It was submitted that the provision only required dealing (directly or indirectly) with property grossly disproportionate to a person's income and expenditure.
In relation to count 3, it was submitted that her Honour provided clear reasons for finding that the funds did not originate from Sino and that once that argument was rejected the applicant was dealing with a large sum of cash from an unknown source, and that this clearly established objectively reasonable grounds for the requisite suspicion.

Consideration: Ground 1

As set out above at [131], her Honour was satisfied that the Crown only had to establish that the property was derived from a non-specific serious offence. The applicant's primary complaint under this ground was that her Honour erred in so finding. It was contended, inter alia, that the Crown was required to prove the foundational offence from which the funds were derived.
The applicant relied upon the decisions in Chen (which concerned s 400.5 of the Criminal Code), R v Ansari & Anor (2007) 70 NSWLR 89; [2007] NSWCCA 204 ("Ansari") (which concerned s 400.3(2) of the Criminal Code), R v McKellar (No 3) (which concerned s 193B(2) of the Crimes Act) and Director of Public Prosecutions (Cth) v Ngo [2012] NSWSC 1521; (2012) 227 A Crim R 287 (which concerned s 400.9 of the Criminal Code). None of these decisions concerned what the Crown is required to prove in a prosecution under s 193C(1) of the Crimes Act or its equivalent Commonwealth offence contained in s 400.9 of the Criminal Code. The exception to this is Ngo in which, although the Crown argued that Chen did not apply to an offence against s 400.9 of the Criminal Code, Button J concluded at [41] that it was unnecessary to decide that question.
The complaint made under this ground is answered by the decision of this Court in Lin which did consider and determine the elements to be proved in respect of an offence under s 400.9 of the Criminal Code. In Lin the applicant appealed under s 5F(3)(a) of the Criminal Appeal Act against an interlocutory ruling which held that the Commonwealth Director of Public Prosecutions (CDPP) was not required to particularise the indictable offence(s) from which the proceeds of crime were alleged to be wholly or partly derived or realised in respect of an offence under s 400.9(1) of the Criminal Code. As in this case, the Crown in Lin relied on the fact that the amount involved was grossly out of proportion to the applicant's income and expenditure over the period during which the transactions occurred. The Crown also relied on subs (2)(e): the applicant stated that the money belonged to another person for whom he could not provide any contact details.
Simpson AJA (R A Hulme and Bellew JJ agreeing) noted that s 400.9 creates an offence of a different character to the offences under ss 400.3-400.8. Her Honour noted at [13] that an offence under s 400.9(1) does not contemplate proof of the actual commission of an indictable offence, rather it is sufficient to prove that there has been a dealing with money or property which it is reasonable to suspect is the proceeds of an indictable offence. Simpson AJA went on to observe at [22] that subs (2) expands the ambit of subs (1)(b) by providing that the physical element in subs (1)(b) (reasonable suspicion that the money or property is the proceeds of crime) is satisfied by proof of the conduct in subs (2). Her Honour held at [26] that: "… the purpose of s 400.9(2) is to expand the operation of s 400.9(1)(b) in order to encompass conduct that does not fall within the definition of 'proceeds of crime'. It is therefore inappropriate to require the Director to identify a 'predicate' indictable offence the subject of the charge. When sub-s (2) is invoked, a 'predicate' offence is not required. Any one or more of the circumstances specified in sub-s (2) is sufficient to prove the element of a s 400.9 offence required by sub-s (1)(b). That is what the Director is obliged to particularise."
In finding that ss 400.3-400.8 of the Criminal Code are distinguishable from s 400.9, Simpson AJA also distinguished the observations made about those sections in the earlier decisions in Chen and Ansari. As noted above, the trial judge distinguished the decision in Chen on a similar basis, although her Honour's attention had not been drawn to the decision in Lin.
I am satisfied that the decision in Lin answers this ground. When this decision was brought to the attention of senior counsel for the applicant, it was submitted that Lin was distinguishable because it concerned the offence in s 400.9(1) of the Criminal Code rather than s 193C(1) of the Crimes Act. I do not accept that to be the case.
First, I do not accept that the two sections are dissimilar in their terms. I have set out the terms of s 193C above at [16]. Section s 400.9 is, relevantly in these terms: 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 indictable crime; and (c) at the time of the dealing, the value of the money and other property is $100,000 or more. Penalty: Imprisonment for 3 years, or 180 penalty units, or both. (2) For the purposes of this section, it is taken to be reasonable to suspect that money or other property is proceeds of indictable crime if: (a) the conduct constituting the offence involves a number of transactions that are structured or arranged to avoid the reporting requirements of the Financial Transaction Reports Act 1988 that would otherwise apply to the transactions; or (aa) the conduct involves a number of transactions that are structured or arranged to avoid the reporting requirements of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 that would otherwise apply to the transactions; or (b) the conduct involves using one or more accounts held with ADIs in false names; or (ba) the conduct amounts to an offence against section 139, 140 or 141 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006; or (c) 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; or (d) the conduct involves a significant cash transaction within the meaning of the Financial Transaction Reports Act 1988, and the defendant: (i) has contravened his or her obligations under that Act relating to reporting the transaction; or (ii) has given false or misleading information in purported compliance with those obligations; or (da) the conduct involves a threshold transaction (within the meaning of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006) and the defendant: (i) has contravened the defendant's obligations under that Act relating to reporting the transaction; or (ii) has given false or misleading information in purported compliance with those obligations; or (e) the defendant: (i) has stated that the conduct was engaged in on behalf of or at the request of another person; and (ii) has not provided information enabling the other person to be identified and located. (4) Absolute liability applies to paragraphs (1AA)(b) and (c), (1AB)(b) and (c), (1)(b) and (c) and (1A)(b) and (c). (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.
It can be seen that the offence under s 193C(1) is relevantly similar to that in s 400.9 of the Criminal Code. Whereas s 193C(1) refers to dealing with "property", s 400.9 refers to dealing with "money or other property" and whereas s 193C(1) requires there to be "reasonable grounds to suspect that the property is proceeds of crime", s 400.9 speaks of it being "reasonable to suspect that the money or property is proceeds of indictable crime".
Further support for the proposition that the two offences are relevantly similar is to be found in the legislative history of the offence in s 193C(1). Section 193C was enacted by the Confiscation of Proceeds of Crime Amendment Act 2005 (NSW). That Act inserted the whole of Pt 4AC into the Crimes Act, replacing the Confiscation of Proceeds of Crime Act 1989 (NSW). When s 193C was first enacted it provided that: 193C Dealing with property suspected of being proceeds of crime (1) A person who deals with property that is property that there are reasonable grounds to suspect is proceeds of crime is guilty of a summary offence. Maximum penalty: 50 penalty units or imprisonment for 2 years, or both. (2) It is a defence to a prosecution for an offence under this section if the defendant satisfies the court that the defendant had no reasonable grounds for suspecting that the property was substantially derived or realised, directly or indirectly, from an act or omission constituting an offence against a law in force in the Commonwealth, a State or a Territory or another country.
In the second reading speech to the Act, it was noted that (New South Wales Legislative Assembly, Parliamentary Debates (Hansard), 26 October 2005): "… Amendments to the money laundering provisions will implement an agreement reached by the Council of Australian Governments at its Summit on Terrorism and Multi-Jurisdictional Crime to reform money laundering laws. Those reforms will strengthen New South Wales criminal asset confiscation laws, target terrorist fundraising and other money-laundering schemes, and ensure that such laws are an effective deterrent to profit-motivated crime. … In addition to being part of a national initiative to address money laundering and organised criminal networks, the amendments will ensure that the New South Wales anti-money laundering regime is consistent with international standards set by the OECD's Financial Action Task Force on Money Laundering. The New South Wales money laundering offence is currently found in the Confiscation of Proceeds of Crime Act 1989. The bill will re-enact an improved form of the existing money laundering offence in the Crimes Act 1900 and create additional money laundering offences. … Section 193B will create three offences for dealing with the proceeds of crime, that is, any property, including money, that is derived from the commission of a serious offence. 'Dealing with' includes receiving, possessing, concealing or disposing of property. First, it will be an offence for a person to deal with the proceeds of crime knowing they are proceeds of crime and intending to conceal that they are proceeds of crime. This offence will carry a maximum penalty of 20 years imprisonment. Second, it will be an offence for a person to deal with the proceeds of crime knowing they are proceeds of crime. This offence will carry a maximum penalty of 15 years imprisonment. Third, it will be an offence for a person to deal with the proceeds of crime being reckless as to whether they are proceeds of crime. This offence will carry a maximum penalty of 10 years imprisonment. Section 193C will create a summary offence for dealing with property where there are reasonable grounds to suspect the property is the proceeds of crime. This offence will carry a maximum penalty of 50 penalty units and/or 2 years imprisonment. It will be a defence to a prosecution for this offence if the defendant satisfies the court that the defendant had no reasonable grounds for suspecting that the property was the proceeds of crime."
Part 4AC of the Crimes Act was amended by the Criminal Legislation Amendment (Organised Crime and Public Safety) Act 2016 (NSW). The 2016 amendments included the addition of subs (3) (circumstances in which it is deemed that there are reasonable grounds to suspect that the property is proceeds of crime) and the division of the offence into two offences of different amounts and with different maximum penalties.
In the second reading speech to the 2016 Act, the following was said (New South Wales Legislative Assembly, Parliamentary Debates (Hansard), 22 March 2016): "Schedule 2 amends the Crimes Act 1900 to recast the offence of dealing with property suspected of being proceeds of crime so as to adopt certain provisions of the corresponding offence in the Commonwealth Criminal Code Act 1995. The amendments create two levels of the offence of dealing with property suspected of being the proceeds of crime, with a maximum penalty of three years imprisonment if the property is valued under $100,000 and five years imprisonment if valued at $100,000 or more. The increased penalties will provide a strong deterrent to moving criminal proceeds, which is a significant enabler of organised crime. Drawing on the provisions in the Commonwealth Criminal Code Act 1995, the amendments also provide for a non-exhaustive list of conduct and circumstances that can constitute reasonable grounds to suspect that property is the proceeds of crime. For example, this could include dealings that are structures to avoid certain reporting requirements, or dealings that involve using one or more accounts held in false names." (emphasis added)
Thus, it can be seen that the legislative intention of the 2016 amendments was that s 193C would reflect s 400.9 of the Criminal Code.
Secondly, I do not accept the applicant's submission that the inclusion of 400.9(4) changes the meaning of the elements of the offence in s 400.9(1) so that they differ to s 193C(1). It is to be accepted that subs (4) removes any fault element from s 400.9(1)(b) and (c) and precludes any reliance on a defence of mistake of fact (as set out in s 9.2 of the Criminal Code); but subs (5) provides for a defence in the same terms as s 193C(4), namely, that an applicant will not be liable if he or she proves (on the balance of probabilities) 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. In that respect, there is no effective difference between s 400.9(1) of the Criminal Code and s 193C(1) of the Crimes Act insofar as the elements of the offence are concerned.
Thirdly, the applicant submitted that s 193C of the Crimes Act needs to be construed in the context of Pt 4AC as a whole. So much is accepted but the applicant's contention that the words "serious crime" are to be read into s 193C(1)(b) and that, in effect, the source of the property must be proved by the Crown overlooks the fact that in both Pt 4AC of the Crimes Act and ss 400.3-400.9 of the Criminal Code, there are other offences with higher maximum penalties in different statutory terms which do require particularisation of a particular class of indictable offence from which the property is alleged to be derived. When s 193C is construed in its statutory context, the result is inevitably the same as that found by the Court in Lin. The existence of a mental element in s 193C(1)(b) does not align with the structure of s 193C as a whole, in particular with the statutory defence in subs (4).
Fourthly, the applicant relied on the observation of Button J in R v McKellar (No 3) that Chen applied by analogy to Pt 4AC of the Crimes Act. Despite this the applicant submitted that the decision in Lin did not apply by way of analogy to Pt 4AC. There is an inconsistency in this position.
The applicant's final argument was that this Court would find that Lin was plainly wrong and should not be followed on the basis that it was an appeal under s 5F(3)(a) of the Criminal Appeal Act and was thus not properly considered by this Court. That submission must be rejected. There is nothing in the judgment of Lin which suggests anything other than a comprehensive exposition of the arguments and a considered result.
For these reasons, I am satisfied that the elements of the offence under s 400.9(1) of the Criminal Code are the same as those under s 193C(1) of the Crimes Act. The trial judge correctly identified the elements the Crown must prove to the criminal standard which accord with the elements identified in Lin at [15].
Three other complaints were made under this ground.
The first argument is that the applicant did not "deal with" the Australian currency the subject of counts 2 and 4-6 because he was in China at the time, and the "dealing" must involve conduct occurring within NSW. This was not the focus of any argument before the trial judge as defence counsel at trial opened with a concession that an indirect dealing was established on each count and thus no jurisdictional argument was being run. That concession was maintained in the closing address.
I am satisfied that there was a sufficient territorial nexus with NSW in this matter. The relevant provision is s 10C of the Crimes Act, which displaces the operation of s 12 of the Interpretation Act 1987 (NSW): DRJ v Commissioner of Victims Rights (No 2) (2020) 103 NSWLR 692; [2020] NSWCA 242 at [9]-[11], [31(2)]. Section 10C provides as follows: 10C Extension of offences if there is a geographical nexus (1) If - (a) all elements necessary to constitute an offence against a law of the State exist (disregarding geographical considerations), and (b) a geographical nexus exists between the State and the offence, the person alleged to have committed the offence is guilty of an offence against that law. (2) A geographical nexus exists between the State and an offence if - (a) the offence is committed wholly or partly in the State (whether or not the offence has any effect in the State), or (b) the offence is committed wholly outside the State, but the offence has an effect in the State.
The Crown case on counts 2 and 4-6 was that the applicant dealt with the Australian currency indirectly by requesting Mr Qian to receive it on his behalf, facilitating the exchange of the $5 note photograph as a token, requesting Mr Qian to transfer it to the his bank account in China and receiving the money into his own bank account (see [189], [205] and [223] of the primary judgment). These actions all took place at least partly in NSW and had an effect in NSW. A sufficient geographical nexus for the offences was clearly established.
The second argument was that the Crown could not establish that the applicant "dealt with" the property, being the banknotes, as defined by s 193A. The property was particularised in the indictment as the Australian currency. The applicant contends that what he "dealt with" was a chose in action, that being a credit to his bank account in China. No issue was taken at trial about this until closing addresses and her Honour was satisfied that the type of property was merely a particular. No error is disclosed in this approach. As stated above, the applicant dealt with the money indirectly, which is how the Crown brought its case.
Further, I have set out the definition of "property" for the purpose of the Crimes Act above at [11]. That includes "every description of real and personal property … and includes not only property originally in the possession or under the control of any person, but also any property into or for which the same may have been converted or exchanged". I am satisfied that it is broad enough to cover what occurred in this matter.
The third and final submission raised under this ground was that the Crown could only rely on s 193C(3)(e) (the property was disproportionate to the person's income and expenditure) when the property the subject of the dealing was in the person's possession. It was submitted that because the applicant was never in possession of the physical property (the banknotes), the Crown could not rely on that subsection.
There is no basis in the language of the statute for reading any such limitation into s 193C(3)(e). No basis for doing so was clearly articulated. Given that indirect dealings are caught by s 193C(1), the legislature must have contemplated that such dealings would often not involve the property being in the applicant's actual possession. I accept the Crown submission that so long as the element of "dealing" is established, then the question of whether the property's value is grossly out of proportion to the applicant's income and expenditure can be taken into account in considering the second element in s 193C(1).
In any event, reliance on s 193C(3)(e) was not the sole basis on which her Honour was satisfied of the second element. The Crown also relied on the nature and circumstances of the transaction to establish a reasonable suspicion, including a large sum of cash, the token system, an anonymous, clandestine money drop in a public place, and disguising the transfer of funds out of the country as a legitimate business transaction. I am satisfied that these factors together provide an ample basis for concluding that the money could reasonably be suspected of being proceeds of crime.
I would dismiss this ground.

Ground 2

The second ground of appeal was as follows: "Ground 2: When concluding that it was reasonable to suspect that the property the subject of each of counts 2 to 6 was the proceeds of crime the primary judge failed to employ a process of reasoning that sufficiently analysed the principles of law applicable to and which justified the making of the ultimate findings of fact underpinning that conclusion."

Applicant's submissions

The applicant submitted that the primary judge made an error of law by failing to provide reasons for her Honour's findings of guilt on counts 2-6. It was submitted that her Honour merely found that Mr Qian did not give evidence in a manner suggestive of fabrication, that his evidence was consistent with the surrounding evidence (save to the extent that the applicant asserted Mr Qian was directing him), that the evidence of the applicant was "unimpressive" and went on to conclude that the offences were established beyond reasonable doubt. It was submitted that even if the primary judge preferred the evidence of Mr Qian to that of the applicant, her Honour could not have found the offences proved on the available evidence.

Crown submissions

The Crown submitted that her Honour's reasons indicated that she approached Mr Qian's evidence with caution and carefully considered the submissions made on behalf of the applicant about Mr Qian's reliability.
It was submitted that all the circumstances relied upon by the Crown established the necessary elements without the need for a complete acceptance of Mr Qian's evidence or a complete rejection of the applicant's evidence.

Consideration: Ground 2

Section 133 of the Criminal Procedure Act sets out the requirement for a trial judge sitting alone in a criminal trial on indictment to give reasons as follows: 133 Verdict of single Judge (1) A Judge who tries criminal proceedings without a jury may make any finding that could have been made by a jury on the question of the guilt of the applicant person. Any such finding has, for all purposes, the same effect as a verdict of a jury. (2) A judgment by a Judge in any such case must include the principles of law applied by the Judge and the findings of fact on which the Judge relied. (3) If any Act or law requires a warning to be given to a jury in any such case, the Judge is to take the warning into account in dealing with the matter. (emphasis added)
In Fleming v The Queen (1998) 197 CLR 250; [1998] HCA 68, the High Court observed the following at [28] regarding s 33(2) of the Criminal Procedure Act, the legislative predecessor to s 133(2): "…whilst s 33(2), when specifying that which a 'judgment' must include, does not use the expression 'reasons for judgment', it should not be taken as intending that the requirements of s 33(2) be satisfied merely by a bare statement of the principles of law that the judge has applied and the findings of fact that the judge has made. Rather, there must be exposed the reasoning process linking them and justifying the latter and, ultimately, the verdict that is reached."
In Douglass v The Queen [2012] HCA 34; (2012) 290 ALR 699, the High Court considered the adequacy of reasons of a trial judge sitting without a jury in a child sexual assault trial. In the reasons for finding the offence proved beyond reasonable doubt the trial judge stated that he accepted the evidence of the complainant and made no mention at all of the appellant's evidence in his findings. The South Australian Court of Criminal Appeal dismissed the appeal. On appeal the High Court (French CJ, Hayne, Crennan, Kiefel and Bell JJ) observed the following at [12]: "The Court of Criminal Appeal's reliance on McHugh JA's statements in Soulemezis was misplaced. Soulemezis concerned the sufficiency of the reasons of a judge of the Compensation Court of New South Wales in a proceeding in which the right of appeal was confined to a question of law or in relation to the admission or rejection of evidence. It was an error to view the appellant's trial as reducing to a case of 'word against word'. It is a characterisation which fails to recognise that the resolution of a criminal case does not depend on whether the evidence of one witness is preferred to that of another. The resolution of a criminal trial depends upon whether the evidence taken as a whole proves the elements of the offence beyond reasonable doubt."
The Court went on to state at [14]: "In this case, the failure to record any finding respecting the appellant's evidence left as one possibility that the judge simply preferred CD's evidence and proceeded to convict upon it applying a standard less than proof beyond reasonable doubt. The absence of reasons sufficient to exclude that possibility constituted legal error."
More recently in DL v The Queen (2018) 266 CLR 1; [2018] HCA 26 Nettle J stated at [131]-[132] that: "… a trial judge will ordinarily be expected to expose his or her reasoning on points critical to the contest between the parties. This applies both to evidence and to argument. If a party relies on relevant and cogent evidence which the judge rejects, the judge should provide a reasoned explanation for the rejection of that evidence. If the parties advance conflicting evidence on a matter significant to the outcome, both sets of evidence should be referred to and reasons provided for why the judge prefers one set of evidence to the other. Similarly, while a judge is not required to deal with every argument and issue that might arise in the course of a trial, if a party raises a substantial argument which the judge rejects, the judge should refer to it and assign reasons for its rejection. And in providing reasons, the judge is required to make apparent the steps he or she has taken in reaching the conclusion expressed, for reasons are not intelligible if they leave the reader to speculate as to which of a number of possible paths of reasoning the judge may have taken to that conclusion. Failure sufficiently to expose the path of reasoning is therefore an error of law. … It follows that a judge's failure to deliver adequate reasons is an error of law productive of a miscarriage of justice which, subject to application of the proviso, will necessitate that a conviction be set aside." (footnotes omitted)
I cannot accept the applicant's contention that her Honour did not adequately expose her reasoning with respect to the evidence of Mr Qian and the applicant. I have set out her Honour's reasons in some detail above. Her Honour identified the basis to suspect that the money the subject of each count was the proceeds of crime, as outlined above at [154]. To make that finding it was not necessary for Mr Qian's evidence to be completely accepted, or for the applicant's to be completely rejected. Her Honour's reasoning was adequately explained and took into account the applicant's evidence and his counsel's arguments.
In the applicant's submissions on count 3 (made under ground 1 but more aptly relevant under this ground) it was submitted that her Honour did not provide adequate reasons for concluding that the money collected by the applicant was unrelated to Sino's business activities and that there were thus reasonable grounds to suspect that it was proceeds of crime. But her Honour did provide her reasons for this finding at [243]-[249]. The dealing concerned a large amount of cash from an unknown source. There were reasonable grounds to suspect the money was the proceeds of crime for the reasons I have provided above at [206].
Three further specific complaints under this ground were made during oral submissions. It was contended that her Honour's reasons were inadequate as to: why the applicant's evidence of being employed by Mr Qian was rejected (given the payslips post-dated the bank loan); the significance of the evidence of Mr Daan; and the significance of the four defence witnesses whose affidavits were read. These same three complaints were made again under ground 3. Rather than considering the same arguments twice, I will address these arguments under ground 3. For the reasons set out below, I do not accept the applicant's criticisms of the manner in which her Honour dealt with these three matters.
Ground 2 should be dismissed.

Ground 3

The third ground relied upon by the applicant was as follows: "Ground 3: The verdicts upon counts 2 to 6 are unreasonable and/or cannot be supported having regard to the evidence."

Applicant's submissions

The primary contentions under this ground were that the primary judge could not have found that the money was derived from an indictable offence; that a proper consideration of the evidence led to the inevitable conclusion that the applicant was an employee of Mr Qian and was using the money to pay suppliers in China; and that her Honour should have found that the defence under s 193C(4) was made out.
Further, it was submitted that her Honour should have had a reasonable doubt based on: 1. The four unavailable defence witnesses (summarised above at [115]-[119]); 2. The sworn evidence of witnesses that was tendered by consent (such as Jack Wang); and 3. The documents tendered without objection including the payslips said to be from Sino and WeChat messages in which the applicant called Mr Qian "boss".
The nub of the applicant's defence under s 193C(4) was that he was employed by Sino and was receiving the money as part of his employment for the purposes of paying Sino's business expenses in China. The applicant explained that this arrangement was necessary because he had a bank account in China and Mr Qian did not.
The applicant asserted that most of Sino's expenses in China were paid by Mr Daan, and that was where the funds were directed. The applicant relied on the fact that Sino failed to produce documents under subpoena relating to its business records and did not lodge tax returns in 2016, 2017 or 2018.
The applicant also relied on exhibit 20, which included screenshots of WeChat messages sent by the applicant to Mr Qian on 22 May 2017. Those messages are summarised above at [121]-[126]. The applicant set out various calculations of amounts and exchange rates and repeatedly mentioned funds being "settled" with Mr Daan and "Brother Four" and funds being transferred to Mr Daan. After setting out three such calculations, the applicant said, "Boss, please confirm the above when you get up. I just finished reconciliation with Da'an. Good night."
The applicant's evidence about exhibit 20 was that he was talking about Mr Daan's "service" and needed permission from Mr Qian to transfer the funds to Mr Daan on behalf of Sino. He explained that some of the calculations related to a small profit made through Supay's advantageous exchange rate and said that Mr Qian offered to share this profit with him, but he declined. The applicant said he only deducted his "salary" from the amounts.
Exhibit 20 also showed Mr Qian asking the applicant to transfer 15,000 CNY to a postal company in Sichuan and providing bank account details. The applicant said that he transferred these funds on behalf of Sino for its business expenses.
It was submitted that exhibit 20 was evidence of the applicant being employed by Sino, being paid wages by Sino and paying Sino's business expenses in China with the funds provided by Mr Qian.
Counsel for the applicant also relied on the descriptions given in the Supay invoices, which included "business", "purchasing stock", "payment of goods" and "logistics". It was submitted that this was evidence of Sino's income and expenditure at the relevant times and evidence that Mr Qian was depositing money into foreign accounts, including that of the applicant, to pay for the business expenses of Sino.
Counsel for the applicant submitted that the WeChat messages mentioning Mr Daan supported the applicant's case. On 11 July 2017, the applicant sent a message to Mr Qian saying "1,033,320.00 rmb has been transferred to LI, DA AN". On 19 July 2017, the applicant sent a screenshot of amount "payable to Da An" with amounts of $498,200 and $700,000 converted into RMB at different exchange rates. It was submitted that this was evidence that Mr Qian was initiating payments to Mr Daan for expenses incurred by him.
It was submitted that her Honour's conclusion at [49]-[50] that Sino had been operating since 2011 and clearly had a system in place for facilitating payments in China, was not reasonably open based on the WeChat messages from the applicant about payments to Mr Daan.
The applicant also relied on the affidavit of Junjian Wang. It was submitted that this evidence was important for three reasons: as evidence of the income and expenditure of Sino in 2017; as evidence of the use of bank accounts in China (including the applicant's account) to pay expenses in China; and as clear evidence of Mr Qian dealing with large sums of cash for the benefit of himself or Sino.
The applicant also relied on the affidavit of Michael Mundt (exhibit 10). It was submitted that his evidence was "not challenged". It was submitted that his evidence was important because it demonstrated that Sino continued operating until the financial year ending 30 June 2018, and that the income of Sino in the 2016-17 financial year was approximately $3 million. It was further submitted that it demonstrated that Sino had not filed tax returns for three financial years (ending June 2016, 2017 and 2018) and that despite operating in 2017, Sino did not produce any documents under subpoena relating to its business operations.
It was submitted that the effect of the above evidence was that Sino had significant cash income, in the order of $10,000 per day, as initially stated by Mr Qian to the NSW Crime Commission but subsequently retracted in cross-examination. It was submitted that all of the above evidence weakened the Crown case and supported the conclusion that the applicant had no reasonable grounds to suspect that the money was proceeds of crime.
The applicant also relied on payslips as support for his employment with Sino (exhibit 22). Particular reliance was placed on the payslips which post-dated the applicant's home loan application, including payslips dated 20 July 2017 and 3 August 2017. It was submitted that these documents were likely to be genuine because they were not prepared for the purposes of the home loan application and they reflected ongoing employment since March 2017. It was submitted that her Honour erred in rejecting these documents because they could not be "proven to be forgeries" even if Mr Qian's evidence was that they were not generated by Sino and that Sino's payslips looked different.
As to the applicant's income generally, it was submitted that the Crown could not prove the circumstance in s 193C(3)(e) (that the property was disproportionate to the applicant's income and expenditure) without adducing evidence about the applicant's income in China.
It was submitted that the applicant was only asked about his income in Australia and not any income he was receiving in China. It was further submitted that the applicant had referred to having some savings in China in 2015 and being supported by his family and his wife's family. It was submitted that "income" should not have been given a narrow construction and should have taken into account any funds available to the applicant.
The applicant also relied on the WeChat messages in which he called Mr Qian "boss" as support for the proposition that he was an employee of Sino and was taking directions from Mr Qian. Mr Qian said that this was a sign of respect as he was the older of the two and it was culturally appropriate for the applicant to refer to him in this way.
It was submitted that the above evidence established that the applicant had no reasonable grounds to believe that the property was proceeds of crime as he was simply carrying out his functions as an employee of Sino.

Crown submissions

In relation to the applicant's reliance on exhibit 20, the Crown submitted that the calculations of payments to Mr Daan at various exchange rates did little to contradict Mr Qian's evidence. It was submitted that the messages themselves revealed a greater involvement in the transactions than the applicant admitted. It was further submitted that the interpretation advanced by the applicant required an acceptance of other aspects of his evidence, such as the "broker" system and his role as an employee of Sino.
The Crown submitted that even if the applicant was not directly cross-examined on the messages in exhibit 20 it was squarely put to him that he was not an employee of Sino and was not receiving the money for the purpose of paying Sino's business expenses. In relation to the second page of messages in exhibit 20, in which Mr Qian asked the applicant to make a small payment to a logistics company, the Crown noted that Mr Qian readily agreed that he occasionally made such requests and the trial judge accepted that the payment in exhibit 20 occurred. It was submitted that it did not assist the applicant in establishing that he made much larger payments on behalf of Sino.
In relation to the descriptions on the Supay invoices it was submitted that even if Mr Qian was not cross-examined about the entries it was consistent with the transfers being secretive and designed to avoid currency restrictions. It was submitted that the descriptions should not be taken at face value.
As to Mr Wang's statement, it was submitted that it only established that the applicant told Mr Wang the payment was for courier costs but did not establish as a fact that it was true.
In relation to Mr Mundt's opinion that Sino continued trading until the financial year ending on 30 June 2018, it was submitted that his line of reasoning was not strong as it relied on the volume of transactions in July 2017 which had been established as originating from the money received from Mr Turkdogan. In relation to Mr Mundt's opinion that Sino had a turnover of $3 million in the financial year ending 30 June 2017 it was submitted that the basis of this opinion was Mr Qian's evidence before the Crime Commission (not his evidence at trial) and an analysis of a series of transactions including those subject of the alleged offences. Her Honour considered Mr Mundt's evidence and ultimately accepted Mr Gadate's evidence that the amount of money was disproportionate to the regular trading of Sino. It was submitted that this finding was open to her Honour.
In relation to the payslips (exhibit 22), it was submitted that even if this evidence provided some limited support for the applicant's case, it did not require the trial judge to find that the defence was made out. Her Honour identified a number of unsatisfactory elements including the difficulty in reconciling the amounts on the payslip with the one payment of $3,600 made to the applicant as well as the other evidence about payment of wages made by Sino.
It was submitted that this Court would be satisfied that it was open to her Honour to find the applicant guilty on counts 2-6.

Consideration: Ground 3

In Filippou v The Queen (2015) 256 CLR 47; [2015] HCA 29 the High Court stated the applicable test for determining whether a verdict is unreasonable under the first limb in s 6(1) of the Criminal Appeal Act as follows at [12] per French CJ, Bell, Keane and Nettle JJ: "Authority makes plain that a jury's finding of guilt is not to be disturbed unless it appears that there is no or insufficient evidence to support the finding, or the evidence is all the one way, or the finding is otherwise unreasonable, or unless there has been a misdirection leading to a miscarriage of justice. It follows perforce of s 133(1) of the Criminal Procedure Act that, in the case of an appeal against a judge's finding of guilt, the finding is not to be disturbed under the first limb of s 6(1) of the Criminal Appeal Act unless there is no or insufficient evidence to support the finding, or the finding is otherwise unreasonable, or the evidence was all the one way, or the judge has so misdirected himself or herself on a matter of law as to result in a miscarriage of justice." (footnote omitted)
Gageler J stated it this way at [83]: "Irrespective of whether it is applied in an appeal against conviction following a jury trial or in an appeal against conviction following a trial by judge alone, the question under the first limb is always whether the ultimate finding of guilt was one which was open to the tribunal of fact on the whole of the evidence."
It was further noted in Filippou v The Queen that "the question for the Court of Criminal Appeal was not whether it was 'satisfied that the judge's account was correct' but whether her Honour's findings as to the sequence of events were not reasonably open" (per French CJ, Bell, Keane and Nettle JJ at [56]).
In Ford v R [2020] NSWCCA 99, Brereton JA observed the following in relation to the relevant considerations on appeal from a judge alone trial at [56]: "… in the context of a judge alone trial, the availability of reasons for a judge's decision will inform consideration of whether it is unreasonable, because, unlike in a jury trial, the process of reasoning is exposed. Drawing on the authorities to which reference has been made, they may for present purposes, in the context of an appeal to this Court from a conviction by judge alone, be stated as follows: (1) First, the question for the Court is whether it thinks that, upon the whole of the evidence, it was open to the trial judge to be satisfied beyond reasonable doubt that the appellant was guilty. (2) Secondly, to address that question, the Court must make its own independent assessment of the sufficiency and quality of the evidence. (3) Thirdly, although it will not suffice to set aside the conviction if it appears only that it was possible on the evidence for the trial judge to reach a different conclusion, the conviction must be set aside if the Court decides that the trial judge should have had a reasonable doubt about the appellant's guilt (in the sense that he or she must, as distinct from might, have entertained such a doubt), even if there was sufficient evidence in law to support it. (4) Fourthly, a doubt experienced by the Court will generally be a doubt which the trial judge ought also to have experienced, and if the Court is left in reasonable doubt after giving full weight to the primacy of the trial judge, it is only where the trial judge's advantage in seeing and hearing the evidence is capable of resolving the doubt that the Court can conclude that there was no miscarriage of justice." (footnotes omitted)
With these principles in mind, I turn to consider the complaints made on behalf of the applicant under this ground.
As the Crown identified, the applicant relied primarily on the lack of evidence proving that the money was derived from the commission of a serious offence, which I have already addressed under ground 1. The submissions under this ground otherwise focussed on the operation of the statutory defence in s 193C(4). I shall address the discrete arguments made in connection with this submission below.

Employment by Sino

Her Honour did not accept the applicant's evidence that he was employed by Sino and was receiving the money as part of his employment for the purposes of paying Sino's business expenses in China. I am satisfied that it was open to her Honour to arrive at this conclusion. Her Honour noted that the applicant did not declare a salary on his tax return. She assessed his claims about his salary in the context that he had no relevant qualifications, an absence of success in similar businesses and that the responsibilities and duties associated with his alleged role were low-level. It was open to her Honour to accept the evidence of Mr Qian who denied that the applicant was employed by Sino.
The applicant placed particular weight on the payslips (exhibit 22), but her Honour accepted the evidence of Mr Qian on this topic. It was open to her Honour to do so. His evidence was that they were forgeries. It is to be accepted that some of the payslips post-dated the applicant's home loan application (including payslips dated 20 July 2017 and 3 August 2017). But given that Mr Qian denied that they were authentic and said that Sino's payslips looked different to those produced by the applicant, that does not take the matter any further. Nor do I accept the argument that her Honour erred in rejecting these documents because they could not be "proven to be forgeries", given Mr Qian's evidence on this subject. In any event, her Honour was entitled to consider this aspect of the evidence in the context of the transactions overall.
The applicant's explanation of the events seems to me to involve unnecessary double-handling of the funds. He explained that this process was necessary because he had a bank account in China and Mr Qian did not. But Mr Qian's evidence was that he did have a bank account in China and had used this account since he started his business in 2011. He explained that he had registered a company in Shenzhen whose bank account he used to pay expenses in China.
The applicant also stated that it was necessary to transfer funds to his account, via Supay, to take advantage of the exchange rate offered by Supay. He said that this was better than transferring the money directly to Mr Daan through Supay because an exchange rate would be "set" with Mr Daan of, for example, 5.1 RMB per AUD but that Supay would offer 5.2 RMB per AUD. This allowed him to siphon off additional RMB before transferring the money to Mr Daan. The trial judge noted at [142]-[143] that this evidence was difficult to follow and did not explain why the money could not be transferred directly to Mr Daan. Moreover, the applicant's explanation assumed that Mr Daan knew the amount of AUD being transferred to China and had fixed an exchange rate to determine the amount of RMB he expected to receive. This explanation by the applicant is more consistent with money laundering rather than the reimbursement of Sino's business expenses in China. If Mr Daan was being reimbursed for Sino's expenses in China, he would have no reason to know how many AUD were being transferred and would only be concerned with the re-payment of a fixed amount in RMB.
As for the submission that the descriptions given in the Supay invoices supported the defence case (the transactions were described as "business", "purchasing stock", "payment of goods" and "logistics"), her Honour dealt with this argument and was satisfied that there could well be business reasons why Mr Qian would have put these vague descriptions on those invoices.
As for the affidavit of Junjian Wang, I am satisfied that this evidence supports the Crown case. The evidence of Mr Wang was consistent with Mr Qian needing to transfer the cash he received which was subject of counts 5 and 6 through alternate means other than through Supay to the applicant. It does not establish that the applicant worked for Mr Qian or that the $160,000 in cash was pertinent to Sino's business dealings.
As for the fact that in the WeChat messages the applicant calls Mr Qian "boss", it was open to her Honour to accept Mr Qian's evidence that this usage was a sign of respect as he was the older of the two and it was culturally appropriate for the applicant to refer to him in this way.

The funds belonged to Sino

I have considered the affidavit of Michael Mundt (exhibit 10). The high point of his evidence as it pertained to the applicant's defence at trial was his opinion that Sino continued operating until the financial year ending 30 June 2018, and that the income of Sino in the 2016-17 financial year was approximately $3 million. I do not accept the submission made in this Court that this evidence was unchallenged. Mr Gadate arrived at a different conclusion and the Crown at trial submitted that his evidence should be preferred to that of Mr Mundt. Just because Mr Mundt was not cross-examined does not mean that his evidence must be accepted.
Mr Mundt's opinion was that Sino continued to trade beyond July 2017. This was on the basis that although Sino was deregistered on 14 May 2017, its ABN was not cancelled until 23 August 2017. On this issue, her Honour noted at [96] that she did not accept that the evidence that Mr Qian was "in the process" of re-registering the company in December 2017 meant that the business continued operating throughout 2017.
Another basis upon which the Crown invited the trial judge to reject Mr Mundt's opinion that Sino continued to trade in July 2017 was that his opinion was premised on transactions related to money received from Mr Turkdogan and there was no evidence to infer that the transactions were related to Sino's business activities. The difficulty is that Mr Mundt's opinion was in part dependent on his instructions and was inconsistent with Mr Qian's evidence.
A number of submissions were made in this Court to the effect that certain evidence was "unchallenged". Just because a witness is not cross-examined, does not mean that their evidence must be accepted. The trial judge was confronted by a similar approach. For example, at [86] of her Honour's judgment she noted that the applicant had submitted that a "fact not in dispute" was that Sino had a potential gross income in the 2016-2017 year of $8 million. As her Honour noted, that was not an accepted fact, it was not comfortably supported by the evidence and it was ultimately conceded that it could not be satisfied on balance.
Her Honour accepted the evidence of Mr Gadate over that of Mr Mundt and was satisfied that the amount of money dealt with over the period of the indictment was disproportionate to the regular trading of Sino.
It is to be accepted that Mr Qian resiled from his initial evidence to the Crime Commission that Sino had cash income in the order of $10,000 per day. But I am not satisfied that exhibit 20 supports the applicant's contention that he was settling business expenses for Sino through money transferred to the applicant's account in China. On the contrary, it supports the contention that he was involved in money laundering.

The significance of the reference to Mr Daan in exhibit 20

The applicant's case was that most of the money he received was paid to Mr Daan as reimbursement for Sino's expenses. Mr Qian denied this. The applicant submitted that Mr Qian's omission of reference to Mr Daan in his police statement (which was tendered at the trial) means that his denials ought not to be accepted. It seems to me that there may have been some confusion about this evidence at the trial.
Mr Qian's evidence was that he knew Mr Daan but denied ever using Mr Daan to pay Sino's business expenses in China. His evidence was that he had told the police about Mr Daan in his police interview statement. Detective Hudson denied this and said that all the information given by Mr Qian, other than general conversation, was put in his statement to police. But in Mr Qian's statement to police he said that he believed the person the applicant was sending the money to in China was called "An" and that the applicant sometimes forwarded messages to him from "An". He explained that a WeChat message from the applicant saying "AN has to pay on behalf of Brother No.4 first" meant that Brother No.4 was the person An had to pay after receiving money from the applicant.
In relation to the charts sent by the applicant via WeChat on 19 July 2017 (annexed to his statement), Mr Qian explained that he believed this represented the breakdown of how the applicant transferred the money to "An" once he received it. Those charts referred to the amount "payable to DA AN".
The WeChat messages annexed to Mr Qian's statement to police mentioned "AN", "DA AN" and "Li Da An" several times. All of those messages appeared to refer to the same person, being the person whom the applicant was paying money to in China. All of the messages relating to Mr Daan were sent by the applicant. The messages referred to "settlement" amounts with "DA AN", amounts payable to Da An, the applicant being "chased" by "AN", talking to "DA AN", or "DA AN" going "mad" due to delays in the money being transferred. The applicant also referred to a "problem" with the person who "collects money on DA AN's end" in relation to a proposed collection of money by Mr Qian on 10 April 2017.
On 5 July 2017, the applicant said, "I have told AN that [we] would try to convince Brother No.4 to move it according to today's XE. There is no other choice even if it's at a loss…". This conversation appeared to relate to a fall in the exchange rate.
Although the trial judge seemed to accept the defence submission that Mr Qian had not mentioned Mr Daan to police when making his statement, it seems to me that the fact "An" is the same person may not have been fully comprehended by her Honour. Mr Qian's evidence was that the name would have been spelt differently in Mandarin and he said that he could not recognise the name when it was put to him in English. He denied using Mr Daan for "factoring". When exhibit 20 was put to him in cross-examination (including a screenshot of WeChat messages using Mr Daan's name in Mandarin) he agreed that he had met Mr Daan and said that he had told police about Mr Daan.
I have considered the series of WeChat messages sent by the applicant to Mr Qian on 22 May 2017. As set out above, it includes the applicant's various calculations of amounts and exchange rates and repeatedly refers to the funds being "settled" with Da'an and "Brother Four" and funds being transferred to Da'an. After setting out three such calculations the applicant said, "Boss, please confirm the above when you get up. I just finished reconciliation with Da'an. Good night." These messages were tendered by the applicant but were not on Mr Qian's phone.
Contrary to the applicant's evidence, it seems to me that the discussions about the percentage that the applicant, Mr Daan and Mr Qian might be paid is consistent with their involvement in money laundering. There would be no need for such discussions if, as the applicant contended, money was simply being sent from Mr Qian to the applicant to pay Sino's expenses. I am supported in this conclusion by Senior Constable Bayliss' evidence about the use of daigou businesses by money laundering syndicates. His evidence was that once the funds arrived in China, the daigou business would receive a percentage "cut" of the profit.
Another difficulty with the applicant's reliance on exhibit 20 is that Mr Qian at no stage engaged in any of the conversations about Mr Daan. One interpretation of these messages is that Mr Qian was not particularly interested in what the applicant was doing with Mr Daan as it was the applicant who was the ringleader and Mr Qian was simply the courier. In other WeChat extracts tendered by the Crown it is clearly the applicant who is telling Mr Qian what to do.
When regard is had to other evidence at trial, it was open to her Honour to reject the applicant's contention that exhibit 20 established that the applicant was employed by Sino, being paid wages by Sino and paying Sino's business expenses in China with the funds provided by Mr Qian.

The applicant's income

I have already considered under ground 1 the first aspect of the applicant's submission that the Crown could not prove the circumstance in s 193C(3)(e), that being the contention that the subsection could not be assessed until the applicant had actual possession of the property. Counsel for the applicant also submitted that the tribunal of fact could not properly assess the question without evidence about the applicant's income in China. The applicant's evidence at trial in relation to his income was as follows: "Q. Now putting aside any money that you say you were paid by Sino, were you receiving any other income during the 2016/2017 financial year? A. WITNESS: No."
The submission made by senior counsel at the hearing of this appeal was that, contrary to the terms of the question, the applicant was only talking about his income in Australia and he could have been receiving income in China. That submission must be rejected. There was no ambiguity in the terms of the question asked.
The applicant's evidence was that he had savings in China and was being supported by his family and his wife's family. The evidence of his age, lack of tertiary qualifications and lack of success in his previous enterprises is also relevant to the question of any supposed wealth in China, of which there was no evidence.

The four unavailable witnesses

As for the four unavailable witnesses, I have summarised their evidence above. Her Honour noted that the position of the Crown was that those affidavits contained hearsay representations, were vague and at times the facts asserted were unclear. Her Honour noted at [109] that the failure to specify the basis of the knowledge of each of these deponents rendered some aspects of their evidence unsatisfactory.
Her Honour noted in relation to Huang Tian's evidence (at [110]-[111]) that he believed the money was paid on behalf of Mr Qian but he had no knowledge of that fact, and that the only basis for his belief was that he thought the applicant was working for Mr Qian.
Similarly, her Honour noted at [113] Dai Shuguang's evidence that he "knew" that Mr Daan and Mr Qian had business dealings, but he did not say what those dealings were or how he knew this information. He "understood" the amount of $200,000 paid to him by the applicant related to business dealings between Mr Daan and Mr Qian but did not indicate how he knew this.
As for Yao Jintian's evidence, he said he "understood" that the applicant used his account to make outstanding payments for postage owed by Mr Qian but, as her Honour pointed out at [116], there was no indication as to the basis for this understanding. This affidavit did no more than assert a belief without foundation.
Finally, Chen Jiongmin was informed by the applicant that he was used by Mr Qian to facilitate the payment of accounts. As her Honour noted at [119], there was no indication as to when the applicant told him this. Her Honour went on to note the Crown submission that this evidence was no more than a hearsay representation which merely relayed things said to him by the applicant.
In addition to noting the limitations of these affidavits her Honour returned to their evidence at [258] and noted that the evidence was that the witnesses were paid money by the applicant "purportedly" on behalf of Mr Qian but that this evidence had limitations which impacted on its probative value. Her Honour accepted that it provided "some" support for the applicant's version but was not ultimately satisfied, having regard to all of the evidence, that the defence had been established. It was open to her Honour to approach that evidence in the manner she did.

Conclusion

Overall, I am satisfied that it was open to her Honour to be satisfied beyond reasonable doubt of the applicant's guilt on counts 2 to 6.
The transactions included large sums of cash, a token system initiated by the applicant, clandestine money drops in public places, and an unnecessarily complex method of transferring funds out of the country. The evidence of Mr Gadate was that the funds were significantly out of proportion to Sino's ordinary trading activities and both accountants agreed that the records they were provided with could not be reconciled with the applicant's claims as to his employment and salary.
There were a number of aspects of the applicant's evidence which her Honour found unsatisfactory. It was open to her Honour to reject the applicant's evidence that the money was part of a broker system used by Sino. She described his evidence about the WeChat messages as "unimpressive and not credible". It was open to her Honour to make that finding in light of the applicant's evidence that he was a General Manager and was paid $190,000 per year yet most of the messages were of no interest to him and he "merely was a conduit" for forwarding messages. I have already summarised the other difficulties she had with his evidence above at [156]-[159].
Accordingly, I would dismiss this ground.

Ground 4

The applicant's fourth ground of appeal was as follows: "Ground 4: The primary judge erred when determining that the defence provided for by S.193C(4) had not been made out."

Applicant's submissions

Counsel for the applicant submitted that s 193C(4) must be read as stating that the applicant had no reasonable grounds for believing that the property was derived from a serious offence and that the offence in question had to be identified.
The applicant went on to submit that the primary judge erred in focussing on the state of mind or knowledge of the applicant when, in the applicant's submission, the proper test involved an evaluation of a reasonable person in the position of the applicant. The applicant submitted that on this objective test her Honour would have concluded that the defence was made out and acquitted the applicant.

Crown submissions

The Crown relied on Yacoub v R [2021] NSWCCA 166 (considered below) and submitted that the trial judge applied the correct test and no error had been made out.

Consideration: Ground 4

This ground overlaps with ground 1 to some extent. Just as I was satisfied that the Crown is not required to identify any offence, let alone a "serious offence", from which the funds were derived, it follows that the same finding applies under this ground.
In any event, this ground can be answered by the decision in Yacoub v R, which concerned an appeal against conviction in respect of an offence under s 193C(1), where Basten JA stated at [21] (Walton and Adamson JJ agreeing): "The prosecution had to establish that, objectively, there were 'reasonable grounds to suspect' that the property was the proceeds of crime. That did not turn on the state of mind of the accused. The defence, on the other hand, was entirely concerned with the state of mind of the accused."
The trial judge applied the correct test (at [251] and [267]). There was no requirement to read down the defence to refer to a "serious offence", to identify the offence in question, or to consider the position of a reasonable man in the applicant's position.
In the circumstances of this case, to make out the defence the applicant bore the onus of persuading the tribunal of fact on the balance of probabilities to accept his evidence as to the way the transactions took place. Her Honour gave appropriate consideration to the evidence adduced by the applicant and the arguments made on his behalf, at [251]-[267] and elsewhere in the reasons. As stated above, there were a number of unsatisfactory aspects to the applicant's account, including the nature of his purported employment with Sino and his interpretation of the WeChat exchanges, as set out above under ground 3. It was well open to her Honour to reject the applicant's evidence on this question.
No error has been demonstrated in her Honour's approach to the statutory defence. Ground 4 should be dismissed.

ORDERS

I would propose the following orders: 1. Leave to appeal against conviction is granted. 2. The appeal is dismissed. ***** 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: 15 November 2021

Confiscation of Proceeds of Crime Amendment Act 2005(NSW)

Criminal Legislation Amendment (Organised Crime and Public Safety) Act 2016(NSW)

Crimes Act 1900(NSW)ss 193A, 193B, 193C, 193F

Judgment

BEECH-JONES CJ at CL: I have reviewed the record of the trial. I agree with the reasons of N Adams J and the orders her Honour proposes.
R A HULME J: The comprehensive reasons provided by N Adams J accord with my own assessment of the evidence at trial and the disposition of each of the grounds of appeal. I agree with the orders her Honour proposes.
N ADAMS J: The applicant, Mr Juan Xue, appeals under s 5 of the Criminal Appeal Act 1912 (NSW) against his convictions on five counts of dealing with property in circumstances where there were reasonable grounds to suspect it was proceeds of crime contrary to s 193C(1) of the Crimes Act 1900 (NSW). On 1 June 2020, he pleaded not guilty to the following six charges: Count 1: That between 1 March 2017 and 8 March 2017 at Sydney in the State of NSW South Wales, did deal with property, being approximately $100,000 in Australian currency, in circumstances where there are reasonable grounds to suspect that the approximately $100,000 in Australian currency are proceeds of crime. Count 2: That between 1 April 2017 and 20 April 2017 at Sydney in the State of NSW South Wales, did deal with property, being approximately $400,000 in Australian currency, in circumstances where there are reasonable grounds to suspect that the approximately $400,000 in Australian currency are proceeds of crime. Count 3: That on 26 April 2017 at Sydney in the State of NSW South Wales, did deal with property, being approximately $158,000 in Australian currency, in circumstances where there are reasonable grounds to suspect that the approximately $158,000 in Australian currency are proceeds of crime. Count 4: That between 20 April 2017 and 19 May 2017 at Sydney in the State of NSW South Wales, did deal with property, being approximately $489,850 in Australian currency, in circumstances where there are reasonable grounds to suspect that the approximately $489,850 in Australian currency are proceeds of crime. Count 5: That between 1 June 2017 and 15 July 2017 at Sydney in the State of NSW South Wales, did deal with property, being approximately $498,200 in Australian currency, in circumstances where there are reasonable grounds to suspect that the approximately $498,200 in Australian currency are proceeds of crime. Count 6: That between 1 June 2017 and 15 July 2017 at Sydney in the State of NSW South Wales, did deal with property, being approximately $700,000 in Australian currency, in circumstances where there are reasonable grounds to suspect that the approximately $700,000 in Australian currency are proceeds of crime.

(2020) 103 NSWLR 692

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