Application by the Commissioner of the Australian Federal Police (No 2)

1. [1]

   In these proceedings the applicants, Mr Yixiong Chen, Mr Li Ming Hu and his company H & K Finance Services Pty Ltd, seek to recover almost $1 million, $500,000 of which was seized by Australian Federal Police in June 2014 at The Star casino, where a Ms Yuan Te He was attempting to deposit the cash into Mr Chen’s account. The rest of the money, then held in Mr Chen’s account at the National Australia Bank, had earlier that day become the subject of a freezing order made under s 15B of the Proceeds of Crime Act 2002 (Cth).

2. [2]

   Adams J made ex parte restraining orders in June 2014 under s 19 of that Act in relation to the money held in Mr Chen’s NAB account. Examination orders were also then made under s 180 in relation to Mr Chen’s affairs against Mr Chen, Ms He and Mr Shan Ming Lu and in relation to the affairs of H & K, against Mr Lu, then its sole director and shareholder, Mr Chen and Mr Hu.

3. [3]

   Hidden J later made further orders under s 19 in respect of the cash seized at The Star casino, as well as further s 180 examination orders, in relation to Mr Hu, Ms He and Mr Johnny Zhang (see Application of the Commissioner of the Australian Federal Police (Supreme Court (NSW), 23 October 2014, unrep).

4. [4]

   Section 19 requires, amongst other things, that an applicant demonstrate that there are reasonable grounds to suspect that the property in question is the proceeds or instrument of offences there specified. In this case offences under s 142 of the Anti-Money Laundering and Counter Terrorism Financing Act 2006 (Cth) and s 400.9 “Dealing with property reasonably suspected of being proceeds of crime” of the Schedule to the Criminal Code Act 1995 (Cth), were identified by the Commissioner. Section 19 does not require that any person be charged with any offence. In this case, no criminal charges have been laid.

5. [5]

   In August 2014, Mr Chen filed a motion under s 42 of the Proceeds of Crime Act, seeking to have the restraining order revoked and that the order be varied, by excluding funds standing to his credit in the National Australia Bank account.

6. [6]

   Mr Chen did not comply with the directions and orders given in relation to that motion. In January 2015, he filed further motions, seeking leave to rely on further evidence to be filed by 21 February and that the examinations of he, Mr Hu, Ms He and Mr Zhang listed in the Administrative Appeals Tribunal from 3 to 5 February not proceed.

7. [7]

   In January 2015, Davies J extended the time for Mr Chen to file and serve his evidence to 21 February, failing which he was not entitled to rely on any further evidence, without leave of a judge of the Court (see Application by the Commissioner of the Australian Federal Police [2015] NSWSC 77).

8. [8]

   Ultimately, Mr Chen withdrew his August motion, after the examinations proceeded in the Administrative Appeals Tribunal in February and March 2015. In his examination Mr Chen said, amongst other things, that he had opened accounts at the NAB and The Star casino, but that the funds all belonged to Mr Hu.

9. [9]

   Despite this, in July 2015, Mr Chen filed another motion seeking orders excluding from forfeiture his interest in the cash and money in the bank account the subject of the restraining orders. That month Mr Hu also filed a motion seeking similar orders.

10. [10]

    Mr Chen and Mr Hu’s motions were listed for hearing together in September 2015, as the result of consent orders earlier made by the Registrar. A further motion filed by H & K the week before, was also then heard.

The applicants’ case

1. [11]

   The case opened for the applicants was that Mr Chen was a licensed junket gambling operator at The Star casino and that his business involved him bringing gamblers to the casino from overseas. That required him to provide $500,000, kept in an account at the casino. He operated that business with his representative, Ms He.

2. [12]

   Mr Hu’s general assistant, Mr Zhang and Ms Li, his bookkeeper handled cash and did banking on behalf of Mr Hu and his companies. In May 2014 Mr Hu instructed Mr Zhang to take $500,000 cash from a blue bag and to deposit it into H & K’s bank account at the NAB and then to provide Ms He with a bank cheque for $500,000. The cash was kept in the bag in bundles of less than $10,000. Somewhat less than $500,000 was deposited into the NAB account by Mr Zhang, Ms Li and two of his friends recruited for the purpose. A bank cheque was then drawn on the account, but it was later cancelled.

3. [13]

   On 3 June 2014, $500,000 was electronically transferred from the H & K account to Mr Chen’s account at the NAB. Ms He arranged for that money then to be transferred to Mr Chen’s account at the Star casino. It became the subject of the freezing order made that day under s 15B, with the result that it was not received in The Star casino account.

4. [14]

   Ms He then contacted Mr Hu, who was overseas. He then directed Mr Zhang to take another $500,000 cash from a black bag kept at his back office and to take that cash to Ms He at the casino. When the money was counted Ms He discovered that he had delivered only $490,000. She then contacted Mr Zhang, who delivered another $10,000. That was the $500,000 cash seized that day at the casino, as Ms He was attempting to deposit the cash into Mr Chen’s account.

5. [15]

   The explanation provided for Mr Hu having such large sums of cash was submitted to be:

Issues

1. [16]

   It emerged that in issue between the parties was whether the applicants had satisfied the onus which fell upon each of them under s 73 to establish that they had an interest in the money the subject of their applications and that it was not the proceeds of an unlawful activity, or the instrument of a serious offence, both defined terms in the Proceeds of Crime Act.

2. [17]

   In final submissions it was conceded, however, that no basis had been established upon which orders could be made in favour of H & K and that its motion would, accordingly, have to be dismissed. The applicants’ case was finally that property in the money had passed to Mr Chen when it was deposited into his NAB account. Orders were thus sought in favour of Mr Chen in respect of that money and in favour of Mr Hu in respect of the cash seized at The Star casino.

3. [18]

   On the applicants’ case, all of this money was intended to be used by Mr Chen in the junket gambling business which he operated at The Star casino with the assistance of Ms He. Whether that business was his, or in truth Mr Hu’s, was also in issue.

4. [19]

   Not surprisingly, given what the evidence revealed Mr Chen had said when he was examined, while he had earlier filed an affidavit in the proceedings, he finally did not attend to give evidence in support of his case. Evidence was called from Mr Hu, Ms He and Ms Li. Mr Zhang also swore an affidavit, but he did not attend court and contact was not able to be made with him. The result was that the transcript of his examination was tendered by the applicants. The transcript of the examinations of Mr Hu, Mr Lu, his accountant and Mr Chen, were tendered by the Commissioner.

5. [20]

   In Mr Zhang’s case, the whole of the examination transcript was tendered by the applicants, without objection. They had not given notice of their intention to tender that transcript, as required by s 138 of the Proceeds of Crime Act and so they called evidence from Mr Kokles, a member of the Australian Federal Police, who had been present when Mr Zhang had been examined. That was plainly unnecessary in the circumstances and would have been avoided, had the difficulty with Mr Zhang been discussed with the Commissioner’s legal representatives, as it ought to have been, given the requirements of s 56 of the Civil Procedure Act 2005 (NSW), which is concerned with both the Court and the parties pursuing the overriding purpose of that legislation, the just, quick and cheap resolution of the real issues in the proceedings.

6. [21]

   When the Commissioner later sought to tender transcript of the examination of Mr Lu, however, the applicants objected on the basis that the required statutory notice had not been given to them. That objection was not maintained, nor was the objection to the tender of transcripts of the other examinations sought to be tendered by the Commissioner. It was accepted, as it had to be, that the required notice of all of the transcript in question, which had been annexed to an affidavit sworn by Mr Kokles, had been given when that affidavit was served on the applicants in accordance with the orders made in these proceedings, as to the hearing of the applicants’ motions.

7. [22]

   The reason for the applicants’ objections to these transcripts was soon revealed. Not only aspects of Mr Hu’s evidence, but what he had earlier said in his examination, did not support the case which was finally advanced by the applicants. Nor did aspects of what Mr Lu and Mr Chen had said when they were examined.

8. [23]

   Mr Hu’s credibility and that of Ms Li were put in issue. The applicants contended that the evidence which they had given was credible and would be accepted, albeit the problems with Mr Hu’s evidence were acknowledged.

9. [24]

   The failure to call evidence from Mr Lu and Mr Chen’s failure to attend to give evidence in support of his application, gave rise to Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 inferences. I discussed the operation of that principle in Sanchez-Sidiropoulos v Canavan [2015] NSWSC 1139 at [38] -[39]:

10. [25]

    In this case, the unexplained failure to call evidence from Mr Chen and Mr Lu, who it would, given their respective positions, be natural for the applicants to call in advancing their claims, is relevant in determining whether inferences of fact which are open on the evidence should be drawn. Also necessary to consider is that the transcript of their respective examinations suggests that the evidence which they would have given, if called, would have actually damaged the applicants’ cases.

Refusal of the application that the motions be heard together with the Commissioner’s forfeiture applications

1. [26]

   The week before the hearing of the motions, the matter was relisted so that an application by Mr Chen, Mr Hu and H & K, that their motions be heard together with the Commissioner’s forfeiture applications, could be dealt with prior to the commencement of the impending hearing. The Commissioner opposed the application that he be required to press the forfeiture applications.

2. [27]

   It was during the hearing of that application that H & K filed the motion by which it also sought orders and Mr Chen withdrew his August 2014 motion, by which he had sought to have the restraining orders revoked.

3. [28]

   Having heard the parties I refused the application. These are the reasons for that conclusion.

4. [29]

   The parties are bound by the conclusions reached by Adams and Hidden JJ under s 19, which required satisfaction, amongst other things that:

5. [30]

   Contrary to the case advanced in support of the application, what the Commissioner has to prove in order to obtain a forfeiture order in respect of the restrained property, does not mirror what an applicant under s 73 must prove, in order to have the property excluded from a forfeiture order. Section 73 provides:

6. [31]

   By way of contrast s 49 provides:

7. [32]

   It follows that under s 49(3), the restraining orders having now been in force for more than 6 months, Mr Chen’s August 2014 application for the property to be excluded from the restraining orders having been withdrawn and no other such application having been made, the Commissioner is entitled to have a forfeiture order made in relation to the restrained property, without proof of the matters specified in s 49(1)(c), upon proof that reasonable steps have been taken to identify and notify persons with an interest in the property (s 49(1)(e)).

8. [33]

   There is no suggestion that there will be any difficulty in the Commissioner providing such proof.

9. [34]

   Even if Mr Chen had not withdrawn his August 2014 motion, in which event the provisions of s 49(1)(c) would have applied to the Commissioner’s forfeiture application, the tests imposed on the Commissioner by those provisions are relevantly different to those imposed on an applicant by s 73.

10. [35]

    Under s 49(1)(c) the Commissioner must establish either that the restrained property is the proceeds of one or more indictable offences; or proceeds of one or more foreign indictable offences; or proceeds of one or more indictable offences of Commonwealth concern; or an instrument of one or more serious offences.

11. [36]

    Under s 73 an applicant must prove that the property is not proceeds of “unlawful activity”; and, if an offence on which the order was (or would be) based is a “serious offence”, that it is not an instrument of any serious offence.

12. [37]

    These sections use defined terms and concepts. In Part 6-2, the Dictionary to the Act, “unlawful activity” is defined in wide terms to mean an act or omission that constitutes:

13. [38]

    This wide definition includes offences in relation to record keeping, taxes and licensing, which arose for consideration on the cases the parties advanced.

14. [39]

    “Serious offence” is also defined in wide terms in the Dictionary, which it is not necessary to repeat here. In s 329 it is provided:

15. [40]

    Section 330 specifies when property becomes, remains and ceases to be proceeds or an instrument of an offence.

16. [41]

    It follows that the onus imposed on an applicant under s 73(1)(c) is not only onerous, but also quite different to that imposed on the Commissioner under s 49(1)(c), imposing as it does on an applicant under s 73, the need to prove that the restrained property is not the proceeds of unlawful activity, as well as not being the instrument of a serious offence. That is not an obligation imposed by s 49 on the Commissioner.

17. [42]

    In this case, as the Commissioner submitted, the parties had prepared for the hearing of the applications advanced by the motions filed by Mr Chen and Mr Hu, prior to the making of any forfeiture order. By s 75 of the Evidence Act 1995 (NSW), that had the result that the hearsay rule did not apply to those interlocutory proceedings. Until Mr Chen withdrew his August motion, it followed that if the Commissioner was obliged then to pursue the forfeiture application, as well as resisting the motions, obvious prejudice could result, given the different evidentiary rules which apply to final hearings and the onus obligations imposed by s 317 of the Crimes Act.

18. [43]

    As events finally unfolded, however, given the withdrawal of Mr Chen’s August motion, the Commissioner has no obligation to prove the matters specified in s 49(1)(c). In the result, given that the motions pressed concerned the entirety of the property the subject of the restraining orders, if the applicants satisfy the onus imposed on them to meet the requirements of s 73, there will be nothing to which any forfeiture application could attach.

19. [44]

    It became apparent that if the motions were to succeed, the parties will be able to craft orders which will not only reflect that outcome, but will finally dispose of the proceedings. If they fail, the making of the final orders will depend only on the Commissioner leading evidence as to the matters specified in s 49(1)(e), namely that reasonable steps were taken to identify and notify persons with an interest in the property.

20. [45]

    In all of those circumstances, I was satisfied that it was not appropriate or consistent with the requirements of s 56 of the Civil Procedure Act, to require the forfeiture application to be heard at the same time as the applications for exclusion of the property from forfeiture.

Receipt of Mr Hu’s affidavit evidence

1. [46]

   I received Mr Hu’s affidavit evidence over the Commissioner’s objection, being satisfied by his oral evidence, most of which was given with the assistance of a Cantonese speaking interpreter, that what he had there said was his evidence.

2. [47]

   That satisfaction flowed from Mr Hu’s evidence that his first, lengthy affidavit, which became exhibit 1, had been prepared by giving his Cantonese speaking solicitor, Mr Junn, instructions and Mr Junn then preparing the affidavit, which he read to him and also translated into Cantonese. That evidence did not leave open to question that what was deposed to in this affidavit was the evidence which Mr Hu wished to give.

3. [48]

   Mr Hu’s second affidavit, which principally comprised a list of documents there described, together with extracts from some of those documents annexed to the affidavit, had been prepared by another solicitor, Ms Rhadhika Meganathan. She had also witnessed Mr Hu’s execution of the affidavit, after explaining the document to him slowly in English.

4. [49]

   Mr Hu, an Australian citizen who came to Australia in 1989, is an experienced businessman, on his evidence now operating his business ventures in Australia, China, Hong Kong and Macau. In resolving what lay between the parties, account had to be taken of Mr Temby’s submission, that while Mr Hu had needed the assistance of an interpreter when he was examined earlier this year, pursuant to the orders earlier referred to, he had later been able to provide necessary instructions about these proceedings, in English.

5. [50]

   In light of those submissions and the evidence which Mr Hu gave about the preparation of these affidavits, before I decided that he should also have the assistance of an interpreter while giving his evidence in these proceedings, I was satisfied that Mr Hu had sufficient command of English to have given the instructions required for the preparation of his second affidavit and to understand that to which he there deposed.

Mr Hu’s credibility

1. [51]

   It is convenient to next deal with this issue.

2. [52]

   As I have explained, initially it was submitted that while English was not Mr Hu’s first language, he did not require the assistance of an interpreter when giving his evidence. It was soon accepted that he did need such assistance. That was not surprising, given the difficulties which even those whose first language is English can experience, when having to give evidence in a court.

3. [53]

   The evidence Mr Hu gave in cross-examination with the assistance of an interpreter soon, however, departed from evidence which he had given in his affidavits, in relevant respects. His evidence on various matters proved not only to be contradictory, but finally, implausible in relevant respects. I am satisfied that it was also in part false.

4. [54]

   These are the reasons for those conclusions.

5. [55]

   It was finally conceded for the applicants that there were problems with Mr Hu’s evidence, as undoubtedly there were, but it was argued that in assessing his evidence, it would be taken into account that English was not his first language and that he had given his evidence through an interpreter.

6. [56]

   I am well satisfied that the problems with Mr Hu’s evidence were not the result of any language difficulty, or any inadequacy in the interpretation. Mr Hu gave his evidence over 3 days. Both interpreters held a level 3 NAATI qualification in Cantonese to English translation and vice versa. The first interpreter was careful and diligent, asking for explanations of words or questions she had not understood and also asking for questions to be broken up or repeated when necessary. She also asked Mr Hu to repeat or break up answers which he gave, when necessary. The second interpreter adopted a similar approach.

7. [57]

   Mr Hu’s Cantonese speaking solicitor Mr Junn was also present when Mr Hu was giving his evidence. On one occasion, when the first interpreter had used the word “is” rather than the word “was”, the interpretation was corrected as the result of actions which Mr Junn took. On the error being drawn to her attention, the interpreter corrected her interpretation to reflect that Mr Hu had used the word “was”. On some occasions, Mr Hu also answered questions, or sought to clarify answers which he gave, in English.

8. [58]

   In assessing Mr Hu’s credibility, it is necessary to consider his evidence in light of what other evidence revealed as to the reliability of the evidence which he gave.

9. [59]

   Mr Hu’s oral evidence was that he was advised by accountants in both China and Australia. Mr Lu, his Australian accountant, who could plainly have shed considerable light on what was in issue in the proceedings, was not called to give evidence. Much of what he had said in his examination did not support Mr Hu’s evidence, but it was not, however, the applicants’ case that what Mr Lu had said in his examination should be disbelieved.

10. [60]

    In that examination, Mr Lu had said that he was a director and shareholder of H & K from 13 May 2013 to 10 June 2014. That included the time at which, unbeknownst to Mr Lu, Mr Hu directed Mr Zhang to deposit $500,000 into its NAB account and to transfer that sum to Mr Chen’s bank account. On Mr Lu’s account, Mr Hu then had no interest in H & K.

11. [61]

    Mr Lu said that it was he who had registered the company in September 2011, either on the instructions of Mr Hu or Ms Li. She was then an employee of Stella Printing, the commercial printing business which Mr Hu operated through Fordlink Group Pty Ltd. She was the company’s original director and shareholder, but on Mr Hu’s evidence and hers, it was always Mr Hu’s company. On Mr Lu’s understanding, H & K was to be used for finance services. On Ms Li’s evidence, she stepped down from her position with H & K, when she realised that she was not qualified to undertake its business, given applicable licensing requirements.

12. [62]

    Mr Lu said he had no further involvement with H & K until he became the director and shareholder, other than lodging business activity statements and a tax return, which on the instructions of either Mr Hu or Ms Li indicated that there had been no business activity and zero income.

13. [63]

    Mr Lu also said that he took over H & K, intending to have it available as a shelf company for his tax agent practice. He then lodged tax returns and BAS statements, but cancelled its GST registration. He also said that until approached by the Federal Police, he was not aware that H & K had a bank account, was undertaking any business activity, or was transferring any funds, nor did he know Mr Chen. He then approached Mr Hu and Ms Li and was told that there had been a mistake, but he was given no details. It was then that he resigned as a director from H & K and Mr Hu became its director.

14. [64]

    In his first affidavit, Mr Hu deposed to a belief that two of his companies, Fordlink Group Pty Ltd, which trades as Stella Printing and Wei & Ming Group Pty Ltd had both filed tax returns, business activity statements and had paid all their taxes due, as assessed over the years. He gave no such evidence about H & K.

15. [65]

    There was plainly good reason for this. In cross-examination Mr Hu accepted that he had not given relevant instructions to Mr Lu, to enable H & K to file required tax returns or accurate business activity statements; that it did not hold a licence under the National Consumer Credit Protection Act 2009 (Cth); and that it did not keep required records as to its business activities.

16. [66]

    An ASIC search annexed to Mr Hu’s affidavit revealed that H & K had been established in September 2011. The only of its business records annexed to Mr Hu’s first affidavit was an account balance summary of its business cheque account, for the period May 2014 to August 2014.

17. [67]

    Contrary to Mr Lu’s account, Mr Hu said H & K had only filed one tax return, for the year ending June 2012, despite, on his evidence in these proceedings, operating two businesses, one introducing borrowers to the National Australia Bank and perhaps other banks, on which it earned commissions and the other, the junket business, which also generated income. It was Mr Hu who had opened its bank account, but he denied having instructed Mr Zhang to deposit cash into that account in May 2014 in amounts of under $10,000, in order to disguise that the money was coming from him and to avoid bank reporting requirements. That evidence was simply not credible.

18. [68]

    Mr Hu’s evidence as to his mode of operation, which included keeping no records of his or H & K’s business activities or dealings with the cash he kept, when considered with the way in which the money was deposited in 2014 into H & K’s account, made it apparent that various steps taken were deliberate, designed amongst other things to avoid applicable statutory obligations, including in relation to licensing and tax.

19. [69]

    Ms Li, who did not understand that she was at any time a shareholder in the company, resigned her directorship from H & K when she learned that she was not qualified to conduct its mortgage brokerage business, for which she understood a certain certificate was required.

20. [70]

    On Mr Hu’s evidence, H & K had earned income over a number of years from its various activities, including commissions paid to it by banks, including the NAB, as well as earnings generated by the junket business, none of which had been declared.

21. [71]

    During his earlier examination, Mr Hu had said that H & K’s business was rather different, namely, lending money for profit; that anybody found suitable could borrow from it; that it also provided funding to Mr Chen’s junket business, as well as to a lot of other businesses, in sums ranging from a few thousand dollars, to tens of thousands of dollars. He also said that no records were kept at all, he kept everything in his memory and no written contracts were ever entered with any borrowers.

22. [72]

    In cross-examination, Mr Hu said he was so familiar with cash, that he was able to tell whether a bundle of cash contained $10,000, or less, simply by measuring the bundle with his fingers. Even when he received bundles of less than $10,000, he had no need to count the bundle, but could tell it was less than $10,000 by pressing it. He often carried bundles of cash which he used for personal expenses.

23. [73]

    From his oral evidence Mr Hu took, he said, bundles of $10,000 with him when he went to The Star casino, where he also had an account. He also appears himself to have loaned money direct to gamblers at the casino, while he was present there, using that cash, although he claimed not to have charged those borrowers any interest.

24. [74]

    Whatever the true nature and extent of the businesses Mr Hu pursued from time to time through H & K, it undoubtedly generated significant income. What that was has not been disclosed in these proceedings. Its extent can, however, be gleaned from the evidence.

25. [75]

    The applicants submitted that Ms He was a witness of credit, whose evidence would be accepted. On her affidavit evidence, most of the money used in the junket business was provided by Mr Hu, by international money transfers. When clients used funds provided by the junket business to gamble and lost money, they would repay the business, either in cash to her or Mr Hu, or in China to Mr Chen. One client alone, at one point owed $800,000, which was repaid in cash given to her from August 2013 to June 2014. Ms He said that she gave that money either to Mr Hu or Mr Zhang. While The Star casino records provided details of what this client owed, the records Ms He said in her affidavit she kept of these repayments, in a handwritten notebook, were “no longer complete”. Those documents were not tendered.

26. [76]

    Contrary to Ms He’s evidence, Mr Hu’s evidence was that it was through H & K that he used over $1 million in cash which he kept at his business premises at Panania, to fund Mr Chen’s junket business at The Star casino. At one point in cross-examination Mr Hu said that the rate Mr Chen was charged for the money loaned to him was 1% per month, or 12% per annum, the term being for one month, with loans sometimes being repaid a bit early and sometimes a bit late, but that he would receive payments from Mr Chen, rather than from clients. It was his sister, his accountant in China, who calculated that interest.

27. [77]

    At another point, Mr Hu said he loaned many friends money and that they did not have to pay interest, unless borrowing money for business, including Mr Chen. In his earlier examination Mr Hu had said that the rate he charged Mr Chen was 2% per month, but in cross-examination, while he claimed that figure was incorrect, he also said that he did not have a standard rate for the money which he lent. Later, he said that some borrowings and interest had been repaid by deposit into the H & K account, but that he had kept no records of any of these dealings, because it was “so troublesome”. He also said that some loans had been made in China, not Australia and that they were evidenced by H & K’s bank records, but they were also not tendered. In his earlier examination Mr Hu had also said that clients had repaid him borrowings of as much as $1 million.

28. [78]

    On Ms He’s evidence the funds used in the junket programs at The Star casino generated income from another source, commission negotiated in advance with the casino, on the basis of “1.5 plus 0.1”, calculated on turnover. Airfare and accommodation expenses associated with bringing clients on the junket from overseas, were deducted from that commission, on the provision of evidence of those expenses. She found some of those clients and understood that both Mr Hu and Mr Chen found others. She provided Mr Hu and Mr Chen with copies of records provided by The Star casino, as to these earnings. Copies were annexed to her August 2014 affidavit, which evidenced such income being paid by The Star casino on settlement.

29. [79]

    Ms He understood that these earnings were split between Mr Chen and Mr Hu, it having been agreed that she would receive an amount which they determined, generally 10%, to be calculated at the end of the year on the basis of information which she provided to Mr Chen and Mr Hu. There were also other earnings generated by the domestic junket business which Ms He herself operated at the Crown casino in Melbourne, which Mr Hu also funded.

30. [80]

    However these arrangements were implemented, the evidence was that no proper records of these business activities were kept by either Mr Chen, Mr Hu or H & K, nor was the income generated declared, nor applicable taxes paid by any of them.

31. [81]

    Even though the case advanced by the applicants was that the international junket business was Mr Chen’s, in his first affidavit Mr Hu had deposed that it was he who had a junket financing business; that it was he who kept about $1 million in cash at his office in May and June 2014, in order to operate that business; that he worked with Mr Chen, the junket operator and with Ms He, who kept records of the junket business, including overseas transfers into Australia to fund junket programs, money owed by clients, commission earned, repayments clients made and that she routinely reported to him about these business matters. Mr Hu also there said that he had instructed Mr Lu to establish H & K, so that he could run his junket financing business through this vehicle.

32. [82]

    When cross-examined, Mr Hu’s evidence included that he understood that Australians such as he could not operate junkets in casinos in Australia; that he had hired people to come from overseas to operate junkets for him; that Mr Chen was one of those who he had hired to operate junket programs for him; that it was Mr Chen who was authorised to operate overseas junkets at The Star casino; that Mr Chen was also authorised to operate overseas junket programs as a promoter or operator at other Australian casinos in Melbourne and the Gold Coast; and that Mr Hu had also hired Ms He to operate domestic junkets for him at The Star casino in Sydney and the Crown casino in Melbourne.

33. [83]

    After he was given the first of five different warnings under s 128 of the Evidence Act, this one in relation to evidence he gave about Mr Chen obtaining a license to operate junkets, Mr Hu’s oral evidence took a remarkable turn.

34. [84]

    When the cross-examination resumed, Mr Hu was asked further questions about the arrangement under which he had hired Mr Chen. Mr Hu then denied having hired Mr Chen, or that he had hired people from overseas to come to Australia to be authorised to act as junket operators. He even denied earlier having given evidence that he had hired people to come from overseas to act as junket operators for him. Mr Hu’s answers about Mr Chen became increasingly incoherent, consistent with an appreciation, after receiving the s 128 warning, that his earlier evidence disclosed that the junket business in which Mr Chen was involved, was in fact his, and involved Mr Hu in knowing breach of the junket system operating in Australian casinos, including The Star casino in Sydney.

35. [85]

    Mr Hu’s evidence was that he has achieved considerable success in his businesses, which permitted him to have over $1 million in cash on his premises. That evidence contradicted an account which he gave in a declaration which he made in 2012, with Mr Lu’s assistance, after he became a bankrupt in February, which was plainly false. There he declared, amongst other things, having only some $150,000 cash. That declaration also did not reveal the extent of his then business activities, or his other assets, as outlined in the affidavits and oral evidence which he gave in these proceedings and what he earlier said in his examination. In these proceedings, his claimed success, was inconsistent with his 2012 declaration.

36. [86]

    In cross-examination as to his bankruptcy, Mr Hu explained that he had made an arrangement with the creditor, who he claimed he owed only $50,000 or $60,000. Despite his evidence that he had not understood the nature of the declaration he had then made, or what he had there declared, I am satisfied that Mr Hu’s evidence as to these matters, cannot be accepted. On the evidence Mr Hu gave in these proceedings, that declaration was knowingly false.

37. [87]

    Other evidence, including that given by Ms He, to which I will return, supported the conclusion that Mr Hu was a principal in the international junket business in which she was engaged at The Star casino, notionally as Mr Chen’s representative. Mr Hu was not merely its financier.

38. [88]

    The failure of Mr Chen to give evidence to support the case advanced that the junket business was his, not that of Mr Hu, also gave rise to a Jones v Dunkel inference, as I have explained below, more readily permitting this conclusion to be drawn as to Mr Hu’s involvement in the junket business. What Mr Chen had said in his examination also suggested that Mr Hu’s evidence was not entirely truthful.

39. [89]

    Mr Chen then said that while he opened the account at The Star casino and bank accounts at Mr Hu’s request, he did not know the name of the bank. Mr Chen also said that the funds held there belonged to Mr Hu and were managed by Ms He, who he had authorised to operate the accounts.

40. [90]

    Mr Chen said that he did not understand the operational side of the business conducted by Ms He, or the use made of the bank accounts. The people who used the funds, he understood, were friends of Mr Hu, but he did not know their names. They had been selected, he understood, by Mr Hu or Ms He.

41. [91]

    Mr Chen also said that he did not know if the profits of the business were reported to the Australian tax authorities. He had never received any money in relation to the business. While he had agreed with Mr Hu that if there was any profit, he would share in it, together with Ms He, he had not received anything. He was not sure if the casino had paid any commission, but understood that a profit had been made. He also said that Mr Hu was entitled to any profit from the business, which they had first discussed at the end of 2012.

42. [92]

    Mr Chen said that his only involvement was to provide his name for the accounts. He did not know from where Mr Hu had obtained the money used to fund the business and did not know of anyone else who worked for Mr Hu in Australia. He had never agreed to pay Mr Hu any interest on money he provided. Nor did he know how funds came into his accounts, or were moved between accounts. Nor was he told when clients gambled. He also knew nothing of the involvement of H & K, or the transfer from it of $500,000 to his account in June 2014.

43. [93]

    Mr Chen also said that he had spoken to Mr Hu once a month or less, but that they had rarely discussed the business. Occasionally Mr Hu had told him there had been no profit. Mr Chen also said that it was Mr Hu who had hired Ms He, not he. He had had only about 10 text communications with her. Generally they had not discussed the business, but she had told him about his account being frozen and had asked him to come to Australia to attend court.

44. [94]

    Like Mr Lu, Mr Chen was, of course, not cross-examined on this account, which must, accordingly, be approached with some caution. What is apparent, however, is that it did support the first version of the arrangement which Mr Hu described in his evidence in these proceedings, from which he later sought to resile.

45. [95]

    Other difficulties with Mr Hu’s evidence emerged as his cross-examination continued, including his claim on the second day of giving his evidence, that he had become an employee of H & K, from the beginning, when the company was established, even though it had never paid him any wages. That was, he claimed, because it had never made a profit. There was no other evidence which supported that evidence, or which was capable of providing a foundation for the conclusion that such a relationship had ever come into existence.

46. [96]

    As Mr Hu’s cross-examination proceeded, it became apparent that he was answering questions from moment to moment, by whatever then struck him as best advancing the applicants’ cases, no matter how implausible or contradictory his answers became, including in relation to his failure to take steps to have H & K obtain an Australian credit provider’s license, which he understood it required.

47. [97]

    Having considered all of these many difficulties with Mr Hu’s evidence, I finally came to the conclusion not only that Mr Hu did not give his evidence in strict accordance with his oath, but also that he gave false evidence. In the result, unsupported, his evidence cannot provide a proper foundation for any conclusions being reached in favour of the applicants’ cases. Even when supported by the evidence of Ms He, Ms Li and what Mr Zhang said in his examination, Mr Hu’s evidence must be approached with considerable caution.

The onus which falls on the applicants

1. [98]

   In order to succeed, in accordance with s 73 and s 317 of the Proceeds of Crime Act the applicants must prove that:

   1. (1)

      They have an interest in the restrained funds or the restrained cash the subject of their applications; and

   2. (2)

      Their interest is neither the proceeds of unlawful activity or of a serious offence.

2. [99]

   There is no onus falling on the Commissioner to establish anything (see Henderson v Queensland [2014] 52; (2014) 89 ALJR 162). Like that case, here, given the importance of Mr Hu’s evidence to the applicants’ cases, if it is not accepted on the matters which lie in issue between the parties, the applicants’ cases must fail.

3. [100]

   The onus which falls on the applicants to establish their cases under s 73 requires them to establish that the cash totalling about $1 million, which Mr Hu kept at his place of business in 2014, before it eventually become the subject of the restraining orders made in these proceedings, were not the proceeds of any “unlawful activity”. In order to meet that onus, the source of that cash had to be established.

4. [101]

   The question of whether it has been established that this cash was not the proceeds of unlawful activity, must be approached in light of the wide definition of “proceeds” in s 329(1) of the Act. That requires consideration to be given to whether the evidence establishes that the money was not wholly or partly derived or realised, whether directly or indirectly, from the commission of an offence.

5. [102]

   In determining whether it has been established that the money is not the instrument of a serious offence, the wide definition of “instrument” in s 329(2) must be borne in mind.

6. [103]

   That requires consideration to be given to whether the money was used or was intended to be used in, or in connection with the commission of a serious offence. Further, it must be remembered that the money can be proceeds or an instrument of an offence, even if no person has been convicted and that an unlawful activity can be constituted by the act, or omission, that constitutes the unlawful activity.

7. [104]

   The offences which arise for consideration in accordance with s 73, given Mr Hu’s evidence, finally included not only offences under s 142 of the Anti-Money Laundering and Counter Terrorism Financing Act and s 400.9 of the Criminal Code. They, however, are both “serious offences” as defined. They provide:

8. [105]

   What lies between the parties must also be approached in light of the objects of the Proceeds of Crime Act, specified in s 5 to be:

It was Mr Hu’s money which was seized

1. [106]

   The three applicants each have a connection with at least part of the money seized by the Australian Federal Police in June 2014. It was finally not suggested that any of it belonged to H & K. Mr Chen did not appear to give evidence to support the claim that any of the money was his. In his earlier examination he had denied having any right to the money, including that deposited into his bank account. He said it all belonged to Mr Hu.

2. [107]

   The evidence I have already discussed is consistent with the steps taken by Mr Hu to have the money deposited into Mr Chen’s NAB account in June 2014, being pursued not only to conceal that he was, in reality, a principal in the junket business being conducted at The Star casino in Mr Chen’s name by Ms He, but also to avoid reporting and other obligations. It was initially Mr Hu’s evidence in these proceedings and in his own earlier examination, that the business was his. His later disavowal of that evidence cannot, in the circumstances, be accepted as true.

3. [108]

   In the result, no order can be made in favour of Mr Chen in these proceedings. The only potential recipient of an order is Mr Hu. Even if I had not reached that conclusion, as I will explain, no order could be made in Mr Chen’s favour because the onus imposed by s 73 has not been met.

The source of Mr Hu’s cash

1. [109]

   In order to succeed, Mr Hu had to establish that he had acquired the cash which he kept at his business premises by lawful means. The evidence did not, however, establish the source of the cash which ultimately became the subject of the restraining orders made in these proceedings by Adams and Hidden JJ.

2. [110]

   There is no suggestion of any illegality in operating a business using cash. There was no issue that how cash is dealt with is, however, regulated by various statutory requirements as to record keeping and when income and profits are generated, by reporting and tax obligations. These obligations were not complied with by Mr Hu or H & K. That made it difficult for the applicants to establish a lawful source of the money they seek to recover.

3. [111]

   Mr Hu’s evidence was that in June 2014 he kept over $1 million in cash in two bags, one black and the other blue, at his business premises at Panania, which he used to finance the junket business. In his earlier examination he had said that he had kept up to $1.2 million cash in two compartments of a briefcase. He also then said that he had kept lots of bags there, as well as some backpacks, but only two of the bags had contained cash. In his examination, Mr Zhang said that he had seen more than two bags when Mr Hu told him to take the cash in May 2014, to deposit in the H & K account, although he had not looked inside the other bags.

4. [112]

   Ms He’s evidence was that she was employed by The Star casino from 2004 to 2012, until she became involved, she understood, in Mr Chen’s international junket business. She said that she had worked in that business since about October 2012 as his Australian representative, after she was approached by Mr Hu. It was Mr Hu who asked her how he should normally provide funds to the casino for the junket business to operate. She advised him that:

5. [113]

   Mr Hu also told Ms He that he would have at the least half a million dollars cash ready to fund the junket in such situations. Mr Hu’s evidence in cross-examination was he had filled the black bag in which he kept some of the cash with $500,000 in $10,000 bundles, some of which he used from time to time. Later he said that he had filled it only once. The blue bag contained amounts of less than $10,000.

6. [114]

   When funds were deposited into Mr Chen’s account, Ms He understood that reporting requirements were triggered. That helps explain why Mr Hu did not direct that the $500,000 cash Ms He required in May 2012, be deposited straight into Mr Chen’s account at The Star casino, but instead directed that it be deposited into H & K’s bank account, by deposits of less than $10,000 at various NAB branches, over several days; after which a bank cheque was drawn on the account in Mr Chen’s favour.

7. [115]

   Ms He said that the $500,000 had to be deposited into Mr Chen’s front money account each time a junket program operated at The Star casino and that the account, had to be brought back to zero, at the end of each program. That could be achieved either by transfer to another casino account, a bank account, by payment in cash or chips. In the case of Mr Chen’s junkets, settlements were generally paid in cash, which she gave to Mr Zhang or Mr Hu. She also gave Mr Hu copies of settlement statements provided by The Star casino. In her cross-examination she said that she gave Mr Chen, who was usually in China, copies of statements when she saw him. Otherwise she assumed that Mr Hu had also received them on Mr Chen’s behalf.

8. [116]

   Star casino records relating to Mr Chen’s account were annexed to Ms He’s affidavit. As she deposed, they showed activity from October 2012, involving large amounts of money deposited and withdrawn from those accounts, including by electronic funds transfer. Ms He said that at the end of a program she returned the funds to Mr Hu. She also gave him or Mr Zhang cash repayments which she received from clients, she understood, she said in her cross-examination, as a way of Mr Hu being repaid money he had loaned to Mr Chen. On occasions that involved large sums of cash, which she gave either to Mr Hu or Mr Zhang, at the casino or her home. It also emerged in her cross-examination that Ms He’s domestic junket business conducted at the Crown casino in Melbourne was also funded by Mr Hu.

9. [117]

   At the end of such junkets Ms Chan gave the whole sum, including any commission paid, to Mr Hu. What she earned in Mr Chen’s junket business at the Star and Crown casinos and in her own business, was calculated and paid to her only at the end of the year, when she calculated how much profit had been earned in the overall operation. She understood that Mr Chen and Mr Hu would agree on how much she was to receive, generally 10% and that they kept the rest. She did not know how the remainder was split between them. Mr Chen said in his examination that he had never received anything.

10. [118]

    On his evidence, Mr Hu is now involved in various businesses in Australia, China, Hong Kong and Macau. Some of those businesses were conducted through four companies. Mr Hu has a half interest in Wei & Ming Group, of which he is the only director in Australia. On his evidence, it invests in property in Australia and overseas and also imports goods into Australia from China each month. He is the person in Australia who conducts business on its behalf here. He is also the sole director and shareholder of Fordlink Group, which operates the Stella Printing business. Mr Hu also operated H & K, in the way earlier discussed. Since 2013, he has been its sole director, shareholder and secretary. He also operated Nansheng Investments Pty Ltd for a period. He also, himself, loaned money to gamblers.

11. [119]

    In his first affidavit, Mr Hu’s evidence was that the cash he kept in his office in May and June 2014 came from a mix of repayment of money from junket clients and cash withdrawals from the Stella Printing NAB account and the Wei & Ming Group NAB accounts. Where the money originally provided to such junket clients had come from, was not disclosed.

12. [120]

    Mr Hu kept no records of the source of the over $1 million cash he kept at his premises, or what he used it for, although at one point he said such records could be found in bank records. That was patently incorrect. On his evidence, as well as using the cash be kept to finance the junket business, he often took bundles of $10,000 with him when he went to The Star casino, using some of that money for personal expenses, such as paying for restaurants and also himself lending money to gamblers there. He also said that he regularly caused his employees to carry large amounts of cash.

13. [121]

    Mr Hu sought to establish that the source of this cash was not unlawful activity, by the evidence given in his second affidavit, exhibit 2, that from July 2007 to October 2011, he and his companies controlled or had available to them capital sums in excess of $35 million, comprising:

14. [122]

    What the applicants did not attempt was to lead evidence which traced any of this money into the cash kept by Mr Hu, in the two bags described in his evidence.

15. [123]

    Mr Hu gave no evidence in his affidavit that he had used any of these funds to finance his junket business in 2014. Nor did he call evidence from Mr Lu or Ms Li to explain what use had been made of these various funds. In the case of the $1.9 million loan from the NAB in October 2011, Mr Hu said in cross-examination that those funds were borrowed by another of his companies, Nansheng Investments, of which he was also sole director and shareholder and were used in its business. That company was deregistered in 2013 and the borrowings were repaid. The $2.8 million borrowed in May 2011 by the Wei & Ming Group, he said, were used in its business, but for what, was not revealed. Its activities, he said, included investing in property overseas.

16. [124]

    In cross-examination, Mr Hu also identified those of the funds identified in his affidavit, which he said came to him personally, but what use he made of those funds was not disclosed, other than by what Mr Hu then volunteered, namely, that they were used to buy land, jewellery, some shares and other investments. On further questioning he claimed that he had also made some of those funds available to H & K by way of loan, after September 2011, but he provided no details.

17. [125]

    It was evident from Mr Hu’s cross-examination that he considered it unnecessary to keep any records of any loans he made to his companies, or repayments which they made to him, or to distinguish between himself and those companies. He responded at one point to a question about money he was owed with: “I established these companies so why would they owe me money?”

18. [126]

    In cross-examination, Mr Hu also said, however, that he had made loans to Fordlink and Wei & Ming, when those companies were established. He claimed at one point that they had exceeded $3 million. At another, that they could have exceeded $6 million. He also said that cash withdrawals from their bank accounts were used in repayment of those borrowings. No documents were tendered to support such lending or repayments. It emerged that such records did not exist, on Mr Hu’s evidence, because he considered it unnecessary to keep them.

19. [127]

    The result was that there was no record of Mr Hu lending money to any of his companies, or of the repayments which he claimed were the source of some of the cash which he kept to fund the junket business. Nor did the evidence establish the source of the funds which Mr Hu claimed to have originally loaned the companies. The inference that it was the funds identified in his affidavit cannot be drawn, particularly when the declaration Mr Hu made in his 2012 bankruptcy is taken into account.

20. [128]

    Annexed to Mr Hu’s affidavit were a limited range of business records, including NAB statements of three cheque accounts. In Fordlink’s case those records dated from 6 April 2011 to March 2014. Handwritten on those documents was the word ‘cash’, against various debits. The evidence did not reveal who had written that word. Nor was it Mr Hu’s evidence that it was those withdrawals which had been used for the junket business. Further, Mr Hu said at one point in cross-examination that Stella Printing had engaged over 50 contractors and that it might have paid some of them by cash cheque, on presentation of their invoices. On Ms Li’s evidence, payments in cash had been made each week. It follows that these records were incapable of establishing that any particular withdrawal from these accounts was paid to Mr Hu in cash, or that it eventually became the subject of the restraining orders made in these proceedings.

21. [129]

    In the case of Wei & Ming Group, the statements annexed were for the period 22 April 2011 to 24 April 2014. There was similar handwriting on those documents, but the evidence also did not reveal whose it was, or what had been done with those withdrawals. Those documents were thus also incapable of establishing that any particular withdrawal from this account was paid to Mr Hu and eventually became the subject of the restraining orders.

22. [130]

    Nor were any records kept of Mr Hu’s dealings with H & K, to whom he said he loaned the money it used for the junket business, or of its dealings with Mr Chen, or with Mr Chen’s clients, some of whom, on Mr Hu’s evidence, made payments in cash of borrowings they had received from Mr Chen together with interest, direct to H & K’s bank account, or in cash to him through Ms He.

23. [131]

    Mr Hu said that he had not kept any records about the junket business, or the cash he had kept in bags in his office, for a long time. He claimed that relevant records were provided by bank records, but the only bank records of H & K which were tendered, related to 2014. Those documents established the deposits made into the account in sums of less than $10,000 in May 2014, but that established nothing as to the source of the cash used to make those deposits.

24. [132]

    Given the problems with Mr Hu’s evidence, I am satisfied that no inferences favourable to the cases which the applicants advanced can be drawn from his evidence, or these unexplained documents. Ms Li was Mr Hu’s book-keeper and Mr Lu his accountant. No evidence was called from either of them about these records or what they concerned. The proper inference is that their evidence would also not have assisted the applicants’ cases.

25. [133]

    The result is that the source of the cash Mr Hu used to finance his junket business, has simply not been established.

That the cash was not the proceeds of unlawful activity or the instrument of serious offences has also not been established

1. [134]

   Favourable conclusions are not available in relation to the cash Mr Hu kept at his premises.

2. [135]

   There was no issue between the parties that failing to lodge BAS statements and tax returns and pay applicable taxes involved offences under the Tax Administration Act 1953 (Cth), and that carrying on an unlicensed credit activity involved an offence under the National Consumer Credit Protection Act.

3. [136]

   There was also no issue that offences under s 142 of the Anti-Money Laundering and Counter Terrorism Financing Act and s 400.9 “Dealing with property reasonably suspected of being proceeds of crime” of the Schedule to the Criminal Code Act, are both serious offences as defined in the Proceeds of Crime Act 2002. Pertinently, ‘proceeds of crime’ is defined in s 400.1 of the Criminal Code to mean:

4. [137]

   Mr Hu claimed in his examination that he did not know at particular times what profit had been made from his lending activities. He acknowledged that he had failed to discuss his tax obligations with Mr Lu at relevant times, even though he had sufficient time to have done so, when he was in Australia from time to time. Given his evidence as to the way in which he and his companies operated; the way in which the cash he kept was dealt with; his evidence that other of his companies had met their tax obligations; and his silence as to H & K in that regard, the Commissioner’s case that the applicants have not proved, on the balance of probabilities, that the restrained money was not the proceeds of unlawful activity, or the instrument of a serious offence, must be accepted.

5. [138]

   True it is that unless income, expenses and losses are established, profit and taxable income cannot be identified, nor can conclusions be reached as to whether applicable tax was payable. Given the onus which fell on the applicants, these were matters which they had to address, if their cases were to succeed. They made no attempt to do so.

6. [139]

   The proper inference from the evidence I have earlier discussed is that the real reason for the method of operation Mr Hu pursued, in his various business activities, was to help conceal various unlawful activities, including in relation to tax and licensing obligations which fell both on he and the companies he operated. Further, that the money the subject of these applications was, at least in part, likely to have been derived or realised from the commission of such offences, including that involved in operating an unlicensed credit business, failing to disclose taxable income and pay taxes which would have been assessed, had tax returns been filed.

7. [140]

   It was not only Mr Hu and H & K, while it was associated with him, which failed to abide by their regulatory obligations in relation to record keeping. Fordlink and Wei & Ming also failed to keep relevant records, although they at least filed tax returns. H & K failed to abide by its obligations in relation to providing business activity statements, filing tax returns and paying taxes and licensing. Mr Hu appears to have filed tax returns, from 2004 until the year ending June 2013, but he too did not comply with all of his tax obligations, including as to disclosure of income, or his own apparent licensing obligations, given the loans he made to gamblers. Those failures involved relevant unlawful activities. The evidence has not established that the money the subject of these applications were not the proceeds of such activities.

8. [141]

   Whatever cash Mr Hu kept from time to time in bags over the years that he operated the junket business, about which he kept no records, it was plainly not earning income which it would have generated, if, for example, it had been kept in an interest bearing account at a bank. It follows that this unusual method of business operation not only reduced Mr Hu’s potential earnings, it also attracted obvious security risks, as well as involving various breaches of regulatory obligations.

9. [142]

   On Ms He’s evidence, such problems could have easily been avoided and the operation of the junket business considerably simplified, if Mr Hu had kept the cash needed to fund a last minute junket, in an account at The Star casino, to which she was given access. She, Mr Chen and Mr Hu each had accounts there. Under The Star casino rules, in the case of junket operators like Mr Chen, front money accounts could be operated only when junket programs were operating. Other front money accounts could be operated as personal accounts. Mr Chen also had a safe keeping account at The Star casino, to which transactions could be directed, even when a program was not operating. Ms He was authorised to operate both of his accounts when a junket was operating.

10. [143]

    Ms He also had her own front money and safe keeping accounts at the Star casino, to which she had access, whether or not a junket program was operating. There was no evidence that she had access to Mr Hu’s Star casino account, but on her evidence money could have been deposited and transferred from either her account, or Mr Hu’s account, into Mr Chen’s account, if she had been given the necessary authority to operate Ms Hu’s account. Transfers could then have been made, whenever required at short notice, by a transaction she could have made at the cage at The Star casino. Money kept in such accounts would not have earned any interest, but that would have made no difference to Mr Hu, given where he kept the cash.

11. [144]

    Mr Hu denied that he could have kept the cash in an account at The Star casino for Ms He to access, but he did not explain why. On Ms He’s evidence, it could not be doubted that he could have kept the money in such an account; that she could have been authorised to access the funds in that account; and that it would then have been available whenever a junket program was operated. The applicants urged that Ms He was a witness of truth whose evidence would be accepted. It did not, however, support their case.

12. [145]

    In the result, it must be concluded that there was never any need for Mr Chen to have kept cash as he did in bags at his business premises. The proper inference is that the reason for the method of operation Mr Hu adopted, was not the one he claimed in his evidence. The evidence as to Mr Hu’s approach record keeping, described finally as having been “lamentable”, in fact revealed that it had involved various breaches of regulatory obligations. The proper inference is that had required records been kept, they would have revealed relevant offending.

13. [146]

    Favourable conclusions in relation to the 55 deposits by which the cash kept in Mr Hu’s blue bag in bundles of less than $10,000 was deposited into H & K’s account in May 2014, at a time when on Mr Lu’s account, Mr Hu had no relationship with that company, are also not available.

14. [147]

    How cash is dealt with is important for the safety of those who may have to deal with it, particularly those who may be called upon to transport it from time to time, as Ms He, Ms Li and Mr Zhang were. On Ms Li’s evidence she became so concerned about carrying large amounts of cash in 2012, after experiencing an incident in which she believed she had been followed, while carrying a large amount of cash, that she refused to carry sums greater than $10,000, unless accompanied by Mr Hu or Mr Zhang. Ms He gave evidence of having similar concerns. In May 2014 this practice was not adhered to.

15. [148]

    There was no issue that over the period 19 to 23 May 2014, 55 cash deposits, totalling $495,750 were deposited into the account by separate deposits made by Ms Li and Mr Zhang, as well as by two of Mr Zhang’s friends, who he recruited for the purpose of making those deposits, in different NAB branches across the city. The deposits ranged from $5,000 to $9,800. Thereby the NAB’s reporting obligation, if a cash deposit of $10,000 or more is made, was avoided and the connection between the money and Mr Hu, when it was transferred to Mr Chen’s account, was concealed. Ms He did not know the source of that money. It was the applicants’ attempt to recover the money in these proceedings, which disclosed the connection.

16. [149]

    On his evidence, Mr Hu did not know about the NAB’s reporting requirements and did not give directions as to how the deposits were to be made, in order to avoid them. As I have explained, his evidence cannot be accepted, evasive, incoherent, implausible and finally, false as it proved to be.

17. [150]

    Contrary to the applicant’s submissions, there was much that was suspicious about those deposits.

18. [151]

    In his earlier examination, Mr Hu had also denied being aware of the reporting requirements relating to deposits of cash of $10,000 or more. He gave similar evidence at the hearing. The applicants’ case was that the way in which the money was deposited into H & K’s account, was not the result of Mr Hu’s instructions, but of steps taken by Mr Zhang, to deal with the safety concerns raised by dealing with such a large amount of cash.

19. [152]

    Ms Li gave evidence that her experience in 2012, caused her to become frightened of carrying large amounts of cash. That may well be understood. Even without that experience, it can be accepted that there is good reason to be concerned about having to do so. Her evidence and the account which Mr Zhang gave in his examination, supported the applicants’ case that it was for safety reasons that the money Mr Hu had directed be deposited into the H & K account was deposited as it was. These explanations were, however, entirely implausible.

20. [153]

    Mr Zhang providing his friends and Ms Li with huge sums in separate bundles of less than $10,000 taken from the blue bag and asking them to separately deposit each bundles into different branches of the NAB bank, over the course of some days and he doing likewise with the remainder, ensured that reporting requirements were evaded. That was incapable, however, of ensuring the safety of those who had to transport the money, and departed from the prior practice both Ms Li and Ms He described as being designed to ensure their safety.

21. [154]

    In cross-examination, Ms Li confirmed that she had been instructed to deposit the bundles one at a time. Ms Li explained her concerns about her safety when called on to carry very considerable amounts of cash on occasions to and from the bank for Mr Hu or weekly, in order to pay contractors or employees. Her evidence was that even when Mr Hu was overseas, she received her instructions from him, on occasions, through Mr Zhang. That the departure, in May 2014, from the usual practice of her not carrying cash of more than $10,000 by herself, because Mr Zhang had to remain at the office to answer the phone and instead, taking several bundles of $10,000 cash home with her in her car and the next day depositing them into different branches of the NAB, was pursued in order to ensure her safety, may simply not be accepted. It is rather more likely to have increased the risk to her safety.

22. [155]

    It is a matter of plain commonsense that if it was safety which was sought to be ensured, that would have been best done by taking all of the money straight to The Star casino in the bag Mr Hu described, or even better, arranging for a security guard to transport the cash. The steps, in fact, pursued by four people depositing the cash over several days at widely separated NAB branches, were entirely unsafe and can only have been intended to achieve some other purpose. On the evidence, the proper inference is that they were designed to avoid both Mr Hu being identified as the source of the cash and the reporting requirements imposed on the bank, if deposits of over $10,000 were made.

23. [156]

    That conclusion cannot be avoided by the fact that the Stella Printing business was a substantial business which generated cash receipts, evidenced by the selective business records tendered, or by Mr Hu having deposited large sums into various accounts, from time to time. The accounts show various deposits of sums of more and less than $10,000 into bank accounts. That does not establish anything about the deposits made into the H & K account in May 2014.

24. [157]

    What Mr Hu then instructed was entirely consistent with him requiring conduct contrary to s 142 of the Anti-Money Laundering and Counter Terrorism Financing Act to be pursued.

25. [158]

    In the result, for all of these reasons, the Commissioner’s case that the onus falling on the applicants under s 73 of the Proceeds of Crime Act has not been met must be accepted and all three motions dismissed.

Costs

1. [159]

   The usual order is that costs follow the event. That will be the Court’s order, unless the parties approach, within 14 days, to be heard on costs.

Referral - direction

1. [160]

   As I explained earlier, I have come to the conclusion that Mr Hu gave false evidence. He was warned about the consequences of doing so.

2. [161]

   It is necessary, in the circumstances, that the matter be referred. Accordingly I direct the Registrar to refer the matter to the Director of Public Prosecutions for consideration.

3. [162]

   For the reasons given I order that:

   1. (1)

      The applicants’ motions of 14 July 2015, 21 July 2015 and 2 September 2015 are dismissed.

   2. (2)

      Unless the parties approach to be heard within 14 days, the applicants are to bear the Commissioner's costs of the motions, as agreed or assessed.

   3. (3)

      All exhibits and subpoenaed material may be returned forthwith; any exhibits returned must be retained intact by the party or person that produced the material until the expiry of the time to file an appeal, or until any appeal has been determined.