Commissioner of the Australian Federal Police v HWCJ GLB Pty Ltd [2022] NSWSC 1574

Supreme Court New South Wales

Medium Neutral Citation: Commissioner of the Australian Federal Police v HWCJ GLB Pty Ltd [2022] NSWSC 1574 Hearing dates: 3 November 2022 Date of orders: 3 November 2022 Decision date: 03 November 2022 Jurisdiction: Common Law Before: Campbell J Decision: See paragraph 15 Catchwords: CRIME – confiscations – restraining orders – property proceeds of an indictable offence – application for provision of sworn statements – application for examination orders Legislation Cited: Proceeds of Crime Act 2002 (Cth), ss 18, 26, 38, 39, 47, 49, 180, 182 Cases Cited: Ng v the Commissioner of the Australian Federal Police [2022] WASCA 48 Category: Procedural rulings Parties: Commissioner of the Australian Federal Police (Plaintiff) HWCJ GLB Pty Ltd (Defendant) Representation: Counsel: Matthew Short (Plaintiff) No appearance (Defendant)

Solicitors: Australian Federal Police (Plaintiff) File Number(s): 2022/329752

Judgment 1. The summons was filed in court with leave today which I have made returnable instanter. The Commissioner for the Australian Federal Police seeks restraining orders and ancillary relief under the provisions of the Proceeds of Crime Act 2002 (Cth) ("the Act"). Under the provisions of ss 26(4), 39(3)(a) and 182(2) of the Act the Commissioner requests that the summons be heard and determined without notice to any person affected by the orders sought to be made. Having regard to the provisions of the Act and to the matters deposed to in the affidavit of Federal Agent Brendon Smith sworn on 2 November 2022 upon which Mr Short of counsel moves I am satisfied that the Court is required to accede to that application and the matter should proceed on an ex parte basis. 2. The principal relief sought in the summons consists of forfeiture orders under ss 47 and 49 of the Act respectively. However, those matters are for another day and will arise, except in the case of exclusion applications subsequently made, by operation of law. What is before me now and is being dealt with ex parte are prayers 3 to 45. Effectively they seek, as I have said, restraining orders and also orders for the provision of sworn statements under s 39 of the Act and examination orders under s 180 of the Act. There is also an order sought by way of prayer 19 under s 38 of the Act requiring the official trustee in bankruptcy to take custody and control of the property the subject of the application which is specified in Schedules 1 to 8. 3. From Federal Agent Smith's affidavit and from a consideration of the content of Schedules 1 to 8 I can say that each item of property the subject of the proceedings consists of a chose in action enforceable against one or other bank in respect of a large number of bank accounts. The banks involved are the National Australia Bank and the Commonwealth Bank of Australia. As I have said, there are a large number of accounts. From Federal Agent Smith's affidavit, I understand that the basis of the criminal activity central to the application are offences under the Criminal Code (Cth) in the nature of dealing with the proceeds of crime. Effectively, the evidence is that the balances currently standing in each of the bank accounts is the proceeds of a financial scam relating to foreign exchange trading and each of the persons defrauded by the scam are by and large residents of the United States of America who have over the course of the scam deposited an aggregate sum in various bank accounts which amounts to in excess of $100 million. The current balances in the accounts aggregate I am told the still a very large sum of $22 million. 4. The method by which the scam operated has an important Australian connection and indeed the criminal activity of the promoters of the scam came to light through an international law enforcement operation arrangement with the United States Secret Service and the Federal Bureau of Investigation. The victims of the scam after a not very long time became aware of it and made an appropriate complaint to law enforcement authorities. 5. The way things operated, apparently, on the evidence before me is that promoters of the scam, which one may I think assume is an international organised crime network, had an Australian division. The principals, if that is the right expression, of that Australian division recruited Chinese students studying in Australia to lend their identity and their identity documents to the promoters to enable (a) companies to be registered and (b) business bank accounts to be established in the name of those companies to be the repository of the various sums deposited by the victims scammed overseas. One can see the elaborate nature of that organisation from the large number of accounts and the fact that they seem to be divided into different accounts to receive deposits in United States dollars, Canadian dollars, New Zealand dollars and Australian dollars respectively. It is I suppose typical of organised crime in the Courts' experience that low level persons are recruited for small reward; in this case the evidence suggests so far as it goes that a one-off payment of $1,500 was made to each of two students who have been arrested and charged so far, notwithstanding the vast amounts being channelled through the accounts. In any event, I say no more about the students at this stage. 6. The restraining orders in respect of each item of property in schs 8 to 9 are sought under ss 18 and 19 of the Act, as I have said. Under s 18 of the Act a court with proceeds jurisdiction which includes this Court must make a restraining order if certain conditions are satisfied. Those conditions are set out in paras (c) to (f) of subs (1) of s 18. First, a proceeds of crime authority applies for the order. That has occurred here because the Commissioner for the Australian Federal Police is such an authority. Secondly, there are reasonable grounds to suspect that a person has committed a serious offence. I am satisfied that there are such reasonable grounds from my close consideration of Federal Agent Smith's affidavit and the exhibit attached to it as I hope is apparent from the short summary I have given of the facts relating to the nature of the criminality involved. Thirdly, an affidavit has been filed in support of the application that complies with subs (3), I will come back to that, and, fourthly, satisfaction that the authorised officer who made the affidavit holds the suspicion or suspicions stated in the affidavit on reasonable grounds. 7. I am satisfied that subsection (3) of s 18 has been complied with. Federal Agent Smith is an authorised officer and he does have the suspicion that the offence has been committed by named persons and also by persons unknown and the affidavit sets out fully the grounds upon which he holds those suspicions. As I have said, having assessed the material for myself at the level necessary for the purpose of this application I am satisfied that Federal Agent Smith holds the suspicion that he deposes to on reasonable grounds and accordingly I am required by law to make the orders sought in prayers 3 to 10 of the summons. 8. As I have said, relief is also sought under s 19. Once again, the Court must make a restraining order if a proceeds of crime authority applies for the order, the same reasoning applies, and there are reasonable grounds to suspect inter alia that the property listed in the schedules to the summons are the instrument of a serious offence. Additionally, it is necessary that the application is supported by an affidavit of the type I've already referred to, stating that the officer suspects that the property is the proceeds of the offence or an instrument of the offence and sets out the grounds upon which the officer holds that suspicion. The reasons I have already given are sufficient to satisfy those conditions. It seems to me that it is certainly arguable at this interlocutory level that the property, that is to say the chose in action in respect of the bank accounts, is both the proceeds of the offence and an instrument of the offence as the deposit and control of those funds is a means by which the offence was committed. In any event I am satisfied the condition is satisfied or complied with. I am also satisfied that Federal Agent Smith's suspicions about those matters is held on reasonable grounds and accordingly I will make the orders sought in prayers 11 to 18. 9. The money remains in the accounts and the principal offenders have not yet been identified let alone arrested, if they are amenable to law enforcement here. I am told that the NAB has purported to freeze its accounts given the suspicious nature of the transactions but the same cannot be said of the CBA. Given that these as yet unidentified persons have effective control of the bank accounts it is clear that, as Federal Agent Smith points out, they could quickly withdraw funds or otherwise deal with the funds in such a way that the purposes of the Act could readily be defeated. Accordingly, it is appropriate that I make the order sought in prayer 19 under s 38 of the Act that the Official Trustee in Bankruptcy take custody and control of all of the property specified in the schedules. 10. So far as the students who have been recruited to play their part in this offending conduct are concerned, there are a number of them who are identified by name in prayers 20 to 35 and there are a large number of companies involved. Only two of those persons have so far been arrested and charged. Those two persons are now on bail with their passports surrendered as a condition of their bail. One of the other students has, I am informed from the contents of Federal Agent Smith's affidavit, already returned to China but the others appear to be at large in the Australian community which is of course one reason why it's appropriate to deal with these matters ex parte. Each of those persons still has their passport and I accept the evidence again of Federal Agent Smith that each of those persons in their capacity of directors of the corporate entities involved would be in a position to give valuable information about the affairs of each company, the source of the funds, the identity of the persons who recruited them, the running of the corporate entities and the operation of the syndicates. It is also the case that at least in respect of those who still have their passports that they would have the potential to leave the country at very short notice once they become aware of the commencement of these proceedings which would of course also serve to defeat the objects of the legislation and the legitimate attempts by the Commissioner to give effect to its operative provisions. 11. But obviously the requirement that persons who have not been heard provide a sworn statement and submit themselves to a compulsory examination involves a very significant exercise of judicial power. As the unanimous Court of Appeal of the Supreme Court of Western Australia said in Ng v Commissioner of the Australian Federal Police [2022] WASCA 48 at [130]: "It is fundamental to a court's exercise of its judicial power that a party whose rights or interests would be affected by an order of the Court is entitled to be heard. The Court may, however, in exceptional circumstances make an order which affects the rights or interests of a party without notice to the party. Ordinarily a court should only exercise the power to proceed without notice in exceptional or special cases; for example, where there is some extraordinary hazard or compelling urgency. A risk that property may be dissipated so as to frustrate the objects of the law will usually be an exceptional or special case. See International Finance Trust Co Limited v New South Wales Crime Commission (2009) 240 CLR 319; [2009] HCA 49 at [156]." 1. Their Honours went on to expand upon the importance of that general principle, but I think it unnecessary to set out in detail an analysis of their Honours' reasoning. What is said at [130] I think encapsulates it. I accept the submission of Mr Short that although making sworn statement orders and compulsory examination orders ex parte may be no small exercise of judicial power, the exceptions identified by their Honours are engaged here. I have already said that I accept the evidence of Federal Agent Smith in relation to (a) the capacity of bank accounts to be quickly run down and (b) the importance of the evidence that these students may be able to give and (c) their capacity to leave the jurisdiction. Having regard to those factors I am satisfied that the risk that the property will be dissipated and the risks that the object of the Act will be frustrated in this case do at a practical level constitute exceptional or special circumstances justifying the making of these orders on an ex parte basis. 2. In respect of the students who have been arrested the case may be less compelling given their inability to leave the country because of the surrender of their passport. Even so, given that there is a network of criminality involved here, allowing them the opportunity, as it were, to be exceptions from the orders may taint the process in as much as their information and evidence may be affected by delay or by knowledge of the involvement of other persons. I should say in respect of those persons, while this is not definitive, that they did seem to be willing to cooperate with authorities when arrested by police. Although it is not for me to say whether the account given should be accepted or not, they did provide what was useful and candid information to police when interviewed. However, although the position is less clear in respect of them and of course they have been charged I am of the view that they should be included in the sworn statement and compulsory examination orders. 3. As Mr Short has pointed out to me, each of the persons including the two I have referred to specifically has the capacity to make an application to have the order set aside once served if so advised and that reduces the risk of injustice significantly. As I have said, it is also the case that one of the student directors has already left the country, according to the evidence contained in the affidavit and, from immigration documents it can be said that, she has returned to her native China. Whereas there may be difficulties in relation to securing compliance with the orders which of course has given me pause as to whether they should be made as a court will not lightly make orders which cannot be enforced, I am persuaded by the arguments of Mr Short that I should not exclude her from the general regime which is sought to be put in place. Subject to compliance perhaps with Chinese municipal law, there is no reason, for instance, why she could not submit to a compulsory examination for example by audio visual link or indeed perhaps be persuaded to return to Australia to submit to an examination. In any event, perhaps as Mr Short submits, the difficulties with enforcing compliance are a matter for the plaintiff to conjure with and I am not of the view that making the orders in respect of her brings the administration of justice into disrepute. 4. In the circumstances I am persuaded for the reasons I have given that I should make orders giving effect to each of prayers 3 to 45.