Introduction
On 30 October 2017, Wilson J refused to make an exclusion order under section 29 of the Proceeds of Crime Act 2002 (POCA) in Commissioner of the Australian Federal Police v Jieying Sun [2017] NSWSC 1476.
Basic facts
The Commissioner had obtained a restraining order under section 19 of the POCA over funds standing to the credit of a bank account and a residential property in New South Wales.
The restraining order had been obtained on the basis of an asserted suspicion that:
- the chose in action against the bank (relevantly the funds standing to the credit of the bank account) was derived from dealing in the proceeds of crime in contravention of section 400.9 of the Criminal Code;
- the property had been purchased with some of the funds from that bank account, as well as a loan obtained by deception through the provision of false employment information.
In order to obtain the exclusion order, the applicant for exclusion (who was the account holder and registered proprietor of the property) had to satisfy the Court on the balance of probabilities that the restrained property was neither “proceeds” nor an “instrument”. She failed to do so.
Discussion
Wilson J was scathing of the evidence given by the applicant. She found her, and the evidence of her father, entirely unsatisfactory.
The case highlights the importance of bearing in mind the onus and burden of proof when acting on behalf of an applicant in an exclusion application. If the evidence of the applicant for exclusion is rejected, and bearing in mind the fact that the applicant for exclusion bears the onus of proof, the exclusion application must fail. As to that, at [90], Wilson J stated the following:
Informed by my rejection of the reliability of the evidence of the respondent and Mr Sun, I am, firstly, unable to conclude to the civil standard that the respondent has demonstrated that the relevant property is neither the proceeds of an indictable offence, nor an instrument of a serious indictable offence. Secondly, even if Ms Sun or her father can be regarded as a “third person” (something of which I am not convinced), I cannot conclude that she acquired the property in circumstances that would not arouse reasonable suspicion. For the reasons set out below, the respondent’s application must fail.
The evidence on behalf of the applicant for exclusion was that her father was a wealthy Chinese businessman, who had arrange the “transfer” of large amounts of money from China to Australia to assist the applicant, who was living and studying in Australia. The money was provided by the father’s company in China to a person not known to either the father or the applicant on the understanding that it would then be “transferred” to Australia.
In fact, large cash deposits were made into the applicant’s bank account in Australia, rather than electronic transfers directly from China.
Wilson J found that the manner in which the money was received by the applicant was such as to “readily excite suspicion in a reasonable person” that there was something untoward (at [127]).
Further, Wilson J found that the provision of false payslips and income information to the bank which then provided a loan which was used in the acquisition of the property was conduct with the intention to defraud by false or misleading statements contrary to section 192G of the Crimes Act (at [119]). On that basis, Wilson J also found that the property constituted proceeds of an offence.
Lastly, Wilson J commented on the recent decision of Simpson J in Lordianto. That decision was the subject of an earlier Asset Confiscation Update (Edition 3/2017). In Lordianto, Simpson J had found that the making of structured deposits into a bank account did not result in the acquisition of property in the bank account (i.e. the acquisition of the relevant chose in action). Simpson J had determined that the chose in action was created upon the opening of the account and that the deposits into the account merely change the value of that pre-existing chose in action.
Wilson J disagreed and stated (at [134]):
Respectfully, I am unable to agree with such an interpretation of “acquisition”. Property may well have been acquired when the respondent opened her CBA account on 8 August 2014, but further property was acquired when the deposits were made to it on 11 and 12 August 2014.
The disagreement by Wilson J is important having regard to the appeals presently pending, both in WA and NSW in various “cuckoo-smurfing” cases. Those cases were also the subject of discussion in an earlier Asset Confiscation Update (Edition 3/2017).
