Commissioner of the Australian Federal Police v Nguyen [2016] NSWSC 883

Supreme Court New South Wales

Medium Neutral Citation: Commissioner of the Australian Federal Police v Nguyen [2016] NSWSC 883 Hearing dates: 16 – 17 June 2016 Date of orders: 17 June 2016 Decision date: 17 June 2016 Jurisdiction: Common Law Before: Fagan J Decision: 1. The amended notice of motion filed 30 May 2016 is dismissed. 2. The applicant Thi Huyen Nguyen is to pay the costs of the Commissioner of the Australian Federal Police. Catchwords: CRIMINAL LAW – proceeds of crime – notice of motion for revocation of restraining orders Legislation Cited: Anti-Money Laundering and Counter Terrorism Financing Act 2006 (Cth) Criminal Code (the Schedule to the Criminal Code Act 1995 (Cth) Proceeds of Crime Act 2002 (Cth) Category: Procedural and other rulings Parties: Thi Huyen Nguyen (Applicant) Commissioner of the Australian Federal Police (Respondent) Representation: Counsel: Mr P Singleton (Applicant) Ms E Cheeseman SC/Ms V O'Halloran (Respondent)

Solicitors: Ms K Thi Nguyen, Sydney Criminal Lawyers (Applicant) Ms P Kelton, Australian Federal Police (Respondent) File Number(s): 2015/338397 Publication restriction: Nil

Judgment 1. On 16 November 2015 Hidden J made restraining orders in these proceedings pursuant to s 19 Proceeds of Crime Act 2002 (Cth) against funds standing to the credit of three bank accounts in the name of Thi Huyen Nguyen and three further accounts in the name of her sister Thi Oanh Nguyen. For brevity and clarity, and without intending any disrespect, I will refer to these parties hereafter as Huyen and Oanh. The orders of Hidden J were made ex parte. 2. On 20 January 2016 Lindsay J made further restraining orders under the same section in respect of three further bank accounts in the name of Huyen and two parcels of real property of which she is registered proprietor. His Honour made ancillary orders permitting the National Australia Bank (NAB) to deal with the properties in accordance with the terms of mortgages over them and for the Trustee in Bankruptcy to take custody of the restrained funds in the bank accounts and the properties. Lindsay J's orders were also made ex parte. 3. Before the Court is an amended Notice of Motion filed 30 May 2016 by which Huyen applies under s 42 Proceeds of Crime Act to have Lindsay J's orders of 20 January 2016 revoked. The Notice of Motion also seeks an order under s 24(2) for Huyen's reasonable living expenses to be paid out of the restrained property. This part of the Notice of Motion was abandoned toward the end of the hearing on 16 June 2016. 4. Section 42 is in these terms: "42 Application to revoke a restraining order (1) A person who was not notified of the application for a *restraining order may apply to the court to revoke the order. (1A) The application must be made: (a) within 28 days after the person is notified of the order; or (b) if the person applies to the court, within that period of 28 days, for an extension of the time for applying for revocation—within such longer period, not exceeding 3 months, as the court allows. (2) The applicant must give written notice to the *responsible authority and the *Official Trustee of both the application and the grounds on which the revocation is sought. (3) However, the *restraining order remains in force until the court revokes the order. (4) The *responsible authority may adduce additional material to the court relating to the application to revoke the *restraining order. (5) The court may revoke the *restraining order if satisfied that: (a) there are no grounds on which to make the order at the time of considering the application to revoke the order; or (b) it is otherwise in the interests of justice to do so." 1. Huyen qualifies under subs (1) of s 42 as a person eligible to make the present application. She was not notified of the application to Lindsay J which resulted in the subject orders being made. 2. The application has been brought within the time limited by subs (1A). The original Notice of Motion, of which the document now before the Court is an amendment, was filed on 17 February 2016 within 28 days of Huyen receiving notification of the 20 January 2016 orders. Such notification was sent out to her by the respondent, to whom I will also refer as "the Commissioner", on 21 January 2016: Exhibit 1. 3. Subsection (2) of s 42 has been partly satisfied. Notice of this application was given to the Commissioner who is the "responsible authority" as defined in s 338. However, notice of the grounds of the application was not adequately given. Huyen's solicitors sent an email to the Commissioner's representatives on 12 May 2016 which simply said that the grounds relied upon were those "provided by s 42(5)(a) and s 42(5)(b) of the POC Act". This is not a specification of grounds within the meaning of what is intended by subs (2). If that were all that were required, subs (2) would be redundant because, in terms of merely framing legal grounds or criteria, pars (a) and (b) of subs (5) are always the matters of which one or both must be satisfied if an application for revocation is to succeed. 4. The clear purpose of subs (2) is to require the applicant to particularise his or her attack upon an existing restraining order, not merely to recite the statutory formulation of the test for overturning it. Exactly this point was made in a letter of reply to the applicant's solicitors from the Commissioner's solicitor dated 20 May 2016. This was, in turn, met by a long rejoinder of 27 May 2016 denying, on behalf of the applicant, the obligation to provide any clearer specification of grounds. 5. Notwithstanding that Huyen was unwilling to particularise the basis upon which she would contend that there were "no grounds on which to make" the orders impugned (s 42(5)(a)) or that "the interests of justice" required that they be set aside (s 42(5)(b)). This rejoinder letter sought confirmation from the Commissioner of the limits of the evidence upon which he would rely for the hearing of the Notice of Motion. 6. No expansion of the basis upon which Huyen would argue that Lindsay J's orders should be revoked was forthcoming until counsel for Huyen proffered to the Court written submissions after the commencement of the hearing of the Notice of Motion on 16 June 2016. In the event, the Commissioner was able to respond to the Notice of Motion sufficiently for his purposes by reading the affidavits which had supported the original applications to Hidden J and to Lindsay J. If the Commissioner had not been able to respond, it would have been open to him to have the Notice of Motion dismissed summarily for want of compliance with the requirement of notice of grounds as stipulated in subs (2) of s 42. Alternatively, the Commissioner could have applied for an adjournment for the purpose of gathering additional evidence if the belated notification of grounds of the application were perceived to make that necessary. 7. Either way, the recalcitrance of Huyen about disclosing the basis of her application had the potential for this hearing of her Notice of Motion, listed for a full day, to be vacated. The failure of the applicant to foreshadow her case also put the Court in a position of not being able to anticipate what the issues would be and not being able to read in advance of the hearing the affidavit evidence and the balance of the Court file in a directed way. The result was an unnecessarily protracted and inefficient hearing. It is only because the Commissioner was able to adapt to Huyen's case, as ultimately revealed, that it became possible for the Court to deal with the matter in the allocated time. 8. Withholding the applicant's case in this manner was in this case, and will usually be, very disruptive. It is strongly deprecated by the Court. To avoid this in future cases, the Commissioner should seek an order from the Registrar, at the time when the hearing date for a Notice of Motion of this nature is listed, requiring the applicant to provide a written outline of its case under s 42 at least two weeks before the hearing date. Further, rather than relying upon the authority of my interpretation of subs (2) of s 42, it would be highly beneficial to the fair and efficient conduct of applications of this type, which are a common occurrence, for that subsection to be amended by Parliament to require that notice be given of "both the application and full detailed particulars of the grounds on which the revocation is sought". 9. The applicant tendered no evidence in support of her Notice of Motion. The respondent read affidavits of Federal Agent Morgen Blunden sworn 16 November 2015 and of Federal Agent Trenton Schmidt affirmed 20 June 2016. These were the affidavits relied upon in the applications to Hidden J and to Lindsay J respectively. Objections were taken to pars 16, 21, 25, 38, 42, 51 to 54, 58 to 65 and 68(d) of Mr Blunden's affidavit but I allowed those paragraphs. Objections were taken to Federal Agent Schmidt's affidavit, as per a schedule which I have marked for identification 1 and which I will leave with the file. This listed a large number of paragraphs but I allowed all of them as well. The objections were, for the most part, to relevance and to conclusory statements of the deponents. As will be seen, the matter to be proved in order to support the order under s 19, as made by Lindsay J, included the existence of a suspicion held by a police officer on reasonable grounds. The suspicion which is relevant on the facts of this case is as to the commission of offences the elements of which include further matters of which no more than a reasonable suspicion needs to be shown. It is inherent in a case involving proof of such a state of mind that evidence from police officers of their conclusions and beliefs will be admissible. It is admissible in this case. 10. The issue on the Notice of Motion is whether the Commissioner's affidavits fail to provide grounds for those of Lindsay J's orders which it is sought to have revoked. This proceeding is not by way of an appeal from his Honour's orders which, of course, could not be entertained by a single judge sitting in the Common Law Division. But because the Commissioner has not filed any evidence additional to that which was before Lindsay J the question under s 42(5)(a), whether there are "grounds on which to make the [subject orders] at the time of considering the application to revoke" is a question to be answered by looking at the same evidence as that which his Honour read. 11. The applicant does not invoke the general ground of the "interests of justice" (provided for by s 42(5)(b)) as a basis for her revocation application. 12. As the orders were originally made under s 19 Proceeds of Crime Act, it is necessary to set out that section for the purpose of seeing whether the two affidavits relied upon by the Commissioner are sufficient to fulfil its requirements. Section 19 provides, omitting irrelevant words and subsections: "19 Restraining orders—property suspected of being proceeds of indictable offences etc. (1) A court with *proceeds jurisdiction must order that: (a) property must not be disposed of or otherwise dealt with by any person; or (b) property must not be disposed of or otherwise dealt with by any person except in the manner and circumstances specified in the order; if: (c) a *proceeds of crime authority applies for the order; and (d) there are reasonable grounds to suspect that the property is: (i) the *proceeds of … any other *indictable offence, … or an *indictable offence of Commonwealth concern (whether or not the identity of the person who committed the offence is known); or (ii) an *instrument of a *serious offence; and (e) the application for the order is supported by an affidavit of an *authorised officer stating that the authorised officer suspects that: (i) in any case—the property is proceeds of the offence; or (ii) if the offence to which the order relates is a serious offence—the property is an *instrument of the offence; and including the grounds on which the authorised officer holds the suspicion; and (f) the court is satisfied that the *authorised officer who made the affidavit holds the suspicion stated in the affidavit on reasonable grounds." 1. The Commissioner's affidavits show that Huyen's occupation was given on business records relating to international funds transfers dating from March 2013 as "student". Business records of the same kind for May 2013 and October 2015 give her occupation as "sales representative". Statements of a bank account at the Commonwealth Bank of Australia ("CBA") in her name show regular fortnightly deposits with the narration "Salary ACE Insurance Li" at the rate of about $4,000 per month in the period July to September 2015. The documents I have referred to so far constitute admissible evidence from which it may be inferred, and was inferred by the Commissioner's deponents, that her income in the period from early 2013 to late 2015 has been either nil (as a student) or no more than $4,000 per month (as a sales representative). 2. Huyen ceased to work as a sales representative on 23 October 2015. She has only subsequently obtained part-time work from Friday 10 June 2016. Other documents annexed to the Commissioner's affidavits show that Huyen purchased a house property at Edgeware Road, Enmore in 2013 for $1,050,000. This is one of the properties restrained by Lindsay J's orders of 20 January 2016. The purchase was completed and the transfer signed on 2 August 2013. There is no indication on title searches or in any other documentary evidence before me that any borrowing was undertaken in order to fund this purchase. Huyen was a 28-year-old student in August 2013. The question arises as to how she was able to purchase outright a house in Enmore for $1,050,000 at that time. Ten months later, on 26 June 2014, Huyen borrowed from the NAB, secured by a mortgage of the Enmore property, a sum of $900,000. 3. In mid-2014, Huyen bought a further house at Bridge Road, Forest Lodge. For this she paid $1,700,000. This is the second property restrained by the orders of Lindsay J. The purchase was apparently settled on about 29 July 2014. In part the acquisition of this property was funded by a loan from the NAB of $1,100,000 drawn down at settlement and secured by mortgage of the Forest Lodge property. 4. For each of these property transactions admissible Land and Property Information searches, lending contracts and other business records are in evidence. The three bank accounts in the name of Huyen, which were restrained by Hidden J's orders made 16 November 2015, held balances totalling $358,000 at the date of restraint. The three further bank accounts in her name, restrained by Lindsay J's orders, held a total of approximately $2 million as at 20 January 2016. Bank statements constituting admissible business records are in evidence to establish these figures. In addition, Huyen has admitted to having, as at March 2016, and continuing to the present, a further bank account, which is unrestrained, containing $60,000. Thus, by simple arithmetic applied to the assets and liabilities which are proved by admissible documentary evidence, it can be seen that Huyen has net assets of $3 million represented by real property and cash at bank totalling $5 million and bank liabilities totalling $2 million. 5. The bank statements for the various accounts to which I have referred show numerous cash deposits of sums just under $10,000 made in the second half of 2015. These constitute strong evidence that the person who made the deposits did so in contravention of s 142 Anti-Money Laundering and Counter Terrorism Financing Act 2006 (Cth). Section 43 of that Act, read in conjunction with the Act's definitions of various terms used, requires that reporting entities, which includes banks, "must report to the Chief Executive Officer of AUSTRAC transactions which involve cash movements of $10,000 or more". Section 142 of the Act in subs (1) creates an offence, punishable by imprisonment for five years, if a person is a party to a transaction which is reportable under s 43 and carries it out in a manner and form which would give rise to a reasonable conclusion that the transaction was conducted in that manner and form for the "sole or dominant purpose of ensuring, or attempting to ensure, that the money or property involved in the transaction was transferred in a manner and form that would not give rise to a threshold transaction that would have been required to have been reported under section 43". 6. There is admissible evidence, in the form of business records of the banks at which a number of accounts in the name of Huyen and Oanh are held, which provides a strong basis for inferring that two of the three bank accounts of Huyen which were restrained by Hidden J's orders of 16 November 2015 have received numerous cash deposits deliberately structured to avoid the reporting obligation of s 43. Also two of the three further accounts restrained under Lindsay J's orders exhibit a similar pattern, supporting the same inference. The structured deposits were made between June and October 2015. Two of the three bank accounts in the name of Oanh which were restrained by the orders of 16 November 2015 exhibit similar features. 7. It is a strong inference that such deposits would not have taken place without the knowledge and concurrence of the account holder. Thus, there is a strong basis for suspecting that both Huyen and Oanh have committed, either as principals or as accessories, numerous offences against s 142 Anti-Money Laundering and Counter Terrorism Financing Act during the last six months of 2015. The admissible evidence also provides a reasonable basis for suspicion that Huyen has committed the offence of dealing in property reasonably suspected of being proceeds of crime contrary to s 400.9(1) Criminal Code (the Schedule to the Criminal Code Act 1995 (Cth)). That subsection is 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 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." 1. Subsection (2) provides that element (b) of this offence is "taken to be satisfied" if: "The value of the money and property involved in the conduct is, in the opinion of the trier of fact, grossly out of proportion to the defendant's income and expenditure over a reasonable period within which the conduct occurs." 1. In this subsection the word "income" used in conjunction with the word "expenditure" appears to me to denote receipts on revenue account. That is receipts derived from personal exertion, from the conduct of a business, from investments and the like. The word "income" is not apt to denote capital receipts (such as the proceeds of sale of assets) or other inflows of funds (such as gifts). On that construction, the combined net value of the cash at bank and of the equity in real property in Huyen's name appears "grossly out of proportion" to her "income". This analysis is sufficient to support a reasonable suspicion that she has committed offences against s 400.9(1). 2. Breaches of s 400.9(1) are punishable by imprisonment for three years. The offences which it is reasonable to suspect, on the basis of the admissible evidence presented in this case, would involve unlawful conduct having a benefit in excess of $10,000. Consequently, the breaches of s 400.9(1), which may be suspected here, would be serious offences within the definition of that term within s 338 Proceeds of Crime Act. 3. Subsection (5) of s 400.9 provides as follows: "(5) This section does not apply if the defendant proves that he or she had no reasonable grounds for suspecting that the money or property was derived or realised, directly or indirectly, from some form of unlawful activity. Note: A defendant bears a legal burden in relation to the matter in subsection (5) (see section 13.4)." 1. This subsection would enable Huyen to defend any charge against her pursuant to s 400.9(1) if she could show that her bank balances and/or the funds used to acquire the real properties came from legitimate sources. Her counsel points to an inflow of approximately $1.5 million to bank accounts in the name of Huyen transferred by her sister from Vietnam in early 2013. There were four large transfers on three dates, between January and May of 2013. Huyen's counsel suggests that these inflows of funds provide explanation for her considerable net assets which, as mentioned, appear grossly out of proportion to her income. The transfers, however, do not, without more, provide any explanation of anything. I reject the submission from the applicant's counsel that these transfers from Oanh could be characterised as "income" for the purposes of s 400.9(2)(c). Without more information, which could only come from Huyen or her sister, nor would these inflows in early 2013 support any defence under subs (5). 2. In order to try to characterise these inflows as unimpeachable legitimate sources of funds, without having adduced any evidence about them, applicant's counsel relied upon a portion of the affidavit of Morgen Blunden, which was read before both Hidden J and Lindsay J. Under a heading "Disclosure of Other Matters", at pars 66 to 68 Federal Agent Blunden deposed to the transfers which I have mentioned. 3. When that affidavit was sworn, the Commissioner was applying to Hidden J for restraining orders which did not affect the items of real property or the bank accounts which Lindsay J later restrained. He was then seeking to restrain, amongst other things, the balances totalling about $358,000 in a group of bank accounts in the name of Huyen. In those circumstances it was appropriate for the deponent to inform Hidden J of these transfers from Vietnam which would have to be taken into account in determining whether, notwithstanding the inflow of funding from that source, the officer's suspicions regarding the balances in the bank accounts which the Commissioner was trying to restrain satisfied the criteria for restraint under s 19 Proceeds of Crime Act. 4. In par 68 Federal Agent Blunden deposed that, "notwithstanding" these inflows between January and May 2013, he maintained the suspicions set out in the affidavit that the funds in the bank accounts then sought to be restrained were proceeds of crime. 5. Applicant's counsel seizes upon the words "disclosure" and "notwithstanding" as if they constituted an admission against the Commissioner that these inflows could not be proceeds of crime; that their receipt could not constitute the handling of proceeds of crime contrary to s 400.9(1) Criminal Code and that, rather, they were necessarily innocent receipts which would go towards explaining balances held. That is an attempt to read far too much into the use of these two words by Federal Agent Blunden. It is quite apparent, from the affidavit of Federal Agent Schmidt, that, two months later, in the second half of January 2016, the latter officer had formed the suspicion that the two items of real property had been acquired using funds which were the proceeds of crime and it is a fair reading of his affidavit that he suspected that the crimes involved may have been offences against s 400.9(1). 6. It has been mentioned above that Oanh's bank accounts have been the subject of inflows of structured deposits of cash in the second half of 2015. The source of the funds which she transferred to Huyen in early 2013 is left completely unexplained by the applicant. 7. The source of the funds which came into the hands of Huyen by June 2013 for the purpose of purchasing the Enmore property and by August 2014 to supply the $600,000 equity necessary to buy the Forest Lodge property is completely unexplained in any innocent fashion. 8. There is a reasonable ground for suspecting that the funds which were used to settle the properties on both dates had been handled in contravention of s 400.9(1). The result of the use of those funds to acquire the two parcels of real property is sufficient to enable the properties themselves to be characterised as proceeds of crime. The definition of that term in s 329 of the Proceeds of Crime Act is as follows: "329 Meaning of proceeds and instrument (1) Property is proceeds of an offence if: (a) it is wholly derived or realised, whether directly or indirectly, from the commission of the offence; or (b) it is partly derived or realised, whether directly or indirectly, from the commission of the offence; whether the property is situated within or outside *Australia." 1. In the same section, subs (2) provides the definition of an "instrument of an offence" as follows: "(2) Property is an instrument of an offence if: (a) the property is used in, or in connection with, the commission of an offence; or (b) the property is intended to be used in, or in connection with, the commission of an offence; whether the property is situated within or outside *Australia." 1. Where it is reasonable to suspect that the funds used to acquire the properties have been handled in contravention of s 400.9(1), it is also reasonable to suspect that the properties acquired with those funds have been derived "directly or indirectly from the commission of the offence". 2. Returning to s 19, on the above analysis it appears to me that the evidence referred to in these reasons provides reasonable grounds to suspect that the two items of real property are the proceeds of an indictable offence. 3. The application for the orders in respect of those two items of real property was supported by the two affidavits to which I have referred, both affidavits being of authorised officers within the meaning of the Act and Federal Agent Schmidt's affidavit stating that he suspects that the two items of real property are proceeds of an offence. For reasons that I have given, I consider that the affidavits sufficiently state the grounds upon which the officer held that suspicion. He has not spelt out in legal analysis just exactly how the offence which he suspects has been committed. It is in the nature of the section, which requires proof of suspicion of an offence, that an officer would not in all cases be able to do that. But by analysing the material upon which he has explicitly relied for his suspicion one can see that it is reasonably supported. Consequently it appears to me that he holds the suspicions stated on reasonable grounds, as required by subpar (f) of s 19(1). 4. On the hearing of the application the applicant's counsel submitted that Lindsay J's order number 5 was indivisible. It is an order that the property specified in schedule 4 to the orders be restrained and not otherwise dealt with. Schedule 4 sets out the particulars of three bank accounts, two of them are NAB accounts, the combined balances of which total approximately $2 million. The applicant's counsel accepts that the prerequisites in s 19 could be established in respect of these two accounts by the evidence that is before the Court on the present Notice of Motion. He submits, however, that that evidence would not substantiate the requirements of s 19 in relation to the third count restrained, which is an ANZ bank account holding a relatively small balance. 5. The applicant's submission that the order is indivisible is made to support the argument that, in the absence of justification for restraining the third bank account, that which is held at the ANZ Bank, the entire order must fall. This simply does not follow. It is an order which operates with respect to three separate bank accounts. If grounds for revocation were made out in relation to its effect upon only one bank account then it could be revoked, so far as it applies to that bank account. 6. In the event it does not appear to me that there is an absence of grounds for the order to extend to the ANZ account. Because of the very large sums of money held at various times in bank accounts in the name of Huyen and the large and valuable transactions in property and the significant number of separate bank accounts in the name of herself and her sister, there are reasonable grounds for suspecting that any money held anywhere by the applicant Huyen would be the proceeds of the commission of an indictable offence. The tracing of money from one account to another is not capable of being carried out rigorously but there are sufficient indications that very large sums may be, on reasonable grounds, suspected of being proceeds of offences of the nature to which I have referred. 7. Section 317 of the Proceeds of Crime Act has the effect that the onus lies upon the applicant to prove the matters which have to be substantiated on an application under s 42. That means that it fell to the applicant to prove that the evidence which was relied upon by the Commissioner, which was the same as that which had been before Lindsay J, would not satisfy the prerequisites and criteria of s 19. The applicant has failed to discharge that onus for the reasons that I have given. 8. The orders of the Court are: 1. The amended Notice of Motion filed 30 May 2016 is dismissed. 2. The applicant Thi Huyen Nguyen is to pay the costs of the Commissioner of the Australian Federal Police.