Commissioner of the Australian Federal Police; in re the application of Cui

1. [1]

   HER HONOUR: On 11 March 2015, Weili Cui attended the World Square branch of the National Australia Bank for the purpose of banking $200,000 in cash which she carried into the bank in a black bag. Federal Agent Darren Burtenshaw, a member of the Australian Federal Police, happened to be in the bank at the same time attending to his personal banking. He watched as Ms Cui accompanied NAB staff into an office. She was joined shortly afterwards by a friend, Ms Bei Jiang. In the office, Ms Cui removed two plastic shopping bags from inside the black bag and proceeded to unpack multiple bundles of cash tied with rubber bands. Federal Agent Burtenshaw became suspicious and approached the two women as they left the office. After questioning Ms Cui and making further inquiries, he formed a suspicion regarding the provenance of the cash and seized it.

2. [2]

   The Commissioner of the Australian Federal Police brought proceedings under the Proceeds of Crime Act 2002 (Cth) seeking an order forfeiting the cash to the Commonwealth. On 1 December 2015, Adamson J made an interim restraining order pursuant to s 19(1)(b) of the Act. The only property restrained was the cash.

3. [3]

   By notice of motion filed 7 December 2015, Ms Cui and her husband, Mr Shushan Li, brought an application under s 31 of the Act for an order under s 29 of the Act excluding the cash from the restraining order (leaving nothing to be forfeited). The notice of motion also sought an order pursuant to s 42 of the Act revoking the restraining order but that part of the application was dismissed by consent on 25 May 2016. On 15 August 2016, Fagan J held that the exclusion application must be determined first: Commissioner of the Australian Federal Police v Cui [2016] NSWSC 118. This judgment determines the exclusion application.

4. [4]

   Section 29 requires the Court to make an order excluding an interest in property from a restraining order if the Court is satisfied as to the existence of a “relevant reason” under subs (2) or (3). In the case of a restraining order under s 19, the relevant reason (as it applies in this case) is that the applicant’s interest in the property in question is neither proceeds of an indictable offence nor an instrument of any serious offence: s 29(2)(d).

5. [5]

   In Commissioner of the Australian Federal Police v Lordianto [2017] NSWSC 1196, Simpson J explained at [23] that there are potentially two routes to an exclusion order under s 29:

6. [6]

   The onus of proof is on the applicants to establish on the balance of probabilities that the relevant reason exists: s 317 of the Proceeds of Crime Act. The application cannot succeed unless I am satisfied to that standard that the cash is neither proceeds of an indictable offence nor an instrument of any serious offence, either because it never was or because it has ceased to be. I have concluded that the applicants have failed to discharge that onus, for the following reasons.

Circumstances in which the application is brought

1. [7]

   The circumstances of Ms Cui’s attendance at the bank on the day in question are inherently suspicious. The possession of so much cash alone calls for an explanation; the manner in which it was packaged and conveyed (in rubber bands and plastic bags) was also such as to raise an eyebrow.

2. [8]

   Ms Cui has given inconsistent accounts as to the provenance of the cash. On the day the cash was seized, both she and her husband, Mr Li, agreed to be interviewed by Federal Agent Burtenshaw and another member of the AFP, Federal Agent Blunden. The interviews were conducted with the assistance of a mandarin interpreter through a telephone interpreting service. The transcript reveals that was a difficult process but some answers were unequivocal.

3. [9]

   Ms Cui gave police an account which she now says was a lie. She told police the cash was in two parts. The first was an amount of just under $60,000 which she said she and other family members brought into Australia from China months earlier, on 8 December 2014. Six family members arrived in Australia that day (including Ms Cui, her husband and their two young children). She said they each brought less than $10,000 and that the total amount they brought was $59,000. She said it was money she had earned in China which she converted to Australian currency to bring with her when they migrated to Australia. She was unable to recall the name of the bank account in China from which she withdrew the money or the date on which she did that. She did not think she would have records of that transaction. She said they did not declare the cash when they arrived in Australia because they had been told as long as each person brought in less than $10,000 there was no need to declare it.

4. [10]

   Ms Cui said the other part of the money was the repayment of a debt owed to her by a person in China which had been delivered to her in cash that morning. She said “he knows I’m waiting in Australia so he told his friend in Australia pay the money back in dollars”. She did not know or meet the person in Australia; his assistant brought the money to them. She thought the assistant’s name was Wang. She could not give the name of the person in China, saying he dealt with her husband. She said her friend in China called his friend in Australia. She could not give the number of her friend in China because she “forgot”. She said the money had been delivered to her that morning on the road next to the bank (which Federal Agent Blunden identified as George St). She said it was $150,000 in a plastic bag which she then put in her bag together with the cash from home (now said to be only $50,000).

5. [11]

   Ms Cui’s husband, Mr Li, arrived at the bank while Ms Cui was being interviewed. Police asked him to wait outside while they finished interviewing Ms Cui. They then asked her to leave and they interviewed Mr Li. He told police that all of the cash had come from their home. He said he had $200,000 in cash at home and had requested Ms Cui to bank it. He was unaware how much she had deposited. He said part of the money was brought from China by family members and the other part was money owed to him by Mr Wang which had been brought in by Mr Wang’s associate. As to the cash brought by family members, he said they brought $60,000 with them from China when they came to Sydney in early December 2014. He said that he had declared this on his incoming passenger card (that turned out to be false).

6. [12]

   Mr Li gave a confused account as to the balance of the money and may have been at cross-purposes with the questioner at times. He seemed to be saying that the cash held at home was in three parts: $60,000 they brought into Australia, $40,000 representing a debt that had been repaid to him and $110,000 that a friend brought in for him from China. He said “we had a hundred and seventy thousand and we brought in sixty thousand so I asked Mr Wang to bring a hundred ten thousand dollars for me”. He said that the exchange from Chinese currency (RMB) into Australian dollars (AUD) was made via the Bank of China and the Commercial Merchandise Bank. However, he did not have any records of the exchanges because it took him nine months to exchange all the money. The one thing that was tolerably clear, on his account, was that at least $170,000 of the cash had been brought into Australia from China and that all of it had been held at their home until that morning, when he asked his wife to bank it. The interview concluded when Mr Li became distressed because it was after 3pm and either he or his wife had to collect their daughter, who would have been finished school by then.

7. [13]

   Each applicant swore an affidavit in the proceedings dated 27 November 2015 giving a different version as to the source of the money. The version given in the affidavits, in short, is that the cash was received by Ms Cui on the morning she sought to bank it as part of a currency exchange within Australia. The applicants contend that the affidavits provide the truthful version of events and establish that the alleged offences on which the restraining order was based did not occur (since the cash was not brought into Australia), with the result that “the seized cash cannot be either the proceeds or an instrument of the alleged offences” (written submissions dated 8 March 2017, par 3).

8. [14]

   In their affidavits, the applicants say that, before migrating to Australia, they held substantial funds in China, being the proceeds of sale of a retail company called Aosen established by Mr Li in Shandong. The applicants were shareholders in the company and received RMB 36,860,000 (the equivalent of AUD$7.28 million) upon the sale of their shares in July 2011.

9. [15]

   When Ms Cui and Mr Li decided to migrate to Australia, Ms Cui transferred funds into a bank account in the name of her mother, to which Ms Cui has access. Chinese regulations limit the amount an individual can exchange into foreign currency to USD $50,000 per year. Ms Cui says she was able to circumvent that prohibition using the services of Supay Pty Ltd, a financial services company which provides foreign currency exchange. Through eight online transfers through Supay and the Bank of China, she transferred over $8.3 million dollars to Australia. Each followed a similar pattern: an amount in RMB was transferred from an original account into various other bank accounts at the direction of Supay, exchanged into Australian dollars and then transferred back into an account to which Ms Cui had access.

10. [16]

    Ms Cui said that, when she lived in Shandong Province, she met Bei Jiang (the woman who joined her at the bank on the day the cash was seized). Bei Jiang is the wife of Junguo Wang, who assisted them with their migration. Ms Cui had often mentioned to Junguo Wang that they needed to exchange RMB into Australian dollars. She said that, on the morning of 11 March 2015, Junguo Wang called her regarding a currency exchange opportunity. Her account of the conversation was as follows:

11. [17]

    The arrangement was that Ms Cui would receive Australian currency in cash and would transfer the equivalent amount in Chinese currency electronically. In cross-examination, Ms Cui acknowledged that she was surprised that she would be receiving cash (T24.12, 25.21). She denied that this was because it was unusual to receive cash in a currency exchange, saying she “just felt that it’s a bit different from Supay” and that it would be “troublesome” to count the money (T24.46, 25.16).

12. [18]

    Ms Cui and Mr Wang discussed an appropriate meeting place to make the exchange. They tentatively planned to meet at the Commonwealth Bank downstairs of her home as Ms Cui did “not have computer and USB with [her]” and so could not transfer money to Mr Wang’s associate from home. However, she said she remembered that branch “might not take cash deposit” so she called Mr Wang to arrange a new meeting place. She said when he returned her call they had the following conversation:

13. [19]

    At about 11:30am Ms Cui went with Bei Jiang to Junguo Wang’s office where she met two men. She described them as “a tall and fat man” to whom she refers in her affidavit as “the Fat Man” and a short and skinny man to whom she refers as “the Skinny Man”. She was otherwise unaware of any of their personal details.

14. [20]

    The Fat Man told them he had been referred to them by “Junguo Wang’s friend Kenny” to “come here to exchange the money”. Ms Cui asked the men to accompany her to the bank “to count the cash first and then go to [her] home to transfer the money” but they refused, saying she had to transfer RMB to their nominated account first. According to Ms Cui, the Fat Man said, “After we complete the transaction, I can go to the bank with you to deposit the cash.” Ms Cui said at par 108 of her affidavit:

15. [21]

    Ms Cui went home to collect her USB and laptop in order to make the transfer. She intended initially to make the deposit to her Westpac account. However, when the bank manager Jia Jia did not answer her calls, Ms Jiang suggested she call Michael Wang, a manager at NAB with whom she had met earlier that morning to apply for a loan for a property in Vaucluse which she recently purchased. Ms Jiang called Michael Wang and organised for Ms Cui to make the deposit at NAB later that day.

16. [22]

    At 12:30pm Ms Cui, Ms Jiang, the Fat Man and the Skinny Man met again at Junguo Wang’s office. They went into the conference room and the Skinny Man took money from the bag carried by the Fat Man and started placing it on a scale. When Ms Cui queried why the money was being counted in this way, the Skinny Man said, “We all use scale to count cash in Australia, even banks use a scale to count cash.” The Fat Man reassured her that “counterfeit money is rarely found in Australia.” Ms Jiang confirmed this. At par 120 of her affidavit, Ms Cui said:

17. [23]

    Following a discussion about the exchange rate, the Fat Man asked her to transfer RMB 958,000 into an account under the name Shangzhi Li. Using her laptop, Ms Cui transferred that amount from the account in her mother’s name. They then went to the NAB, arriving shortly after 1:30pm. Ms Jiang and the Fat Man waited outside. The Fat Man had said to Ms Cui, “if the bank staff ask you where did you get so much cash from, just say you brought it from China, or say that the money was returned to you by a friend.” Ms Cui claimed to be unconcerned by the fact that the Fat Man told her to lie to the bank. Her cross-examination included the following exchange (T27.42-28.2 and see T28.37) :

18. [24]

    Inside the bank Ms Cui was met by Michael Wang and bank staff. They took her into an office. As anticipated by the Fat Man, they enquired where she had obtained “so much cash” to which Cui responded “It is a debt that my friend owed to me.” The bank staff and Michael Wang counted the money. Ms Jiang came into the office. The total amount was $200,010. The bank employee asked Ms Cui and Ms Jiang to come with him to collect the deposit receipt. As they left the office an AFP officer approached them and identified himself as Federal Agent Burtenshaw. Ms Cui and Ms Jiang went back into the office with him. Ms Cui said she had the following conversation with Ms Jiang:

19. [25]

    While waiting in the office Ms Cui called her husband and told him that the police came to question her while she was depositing the money (she identified them as Burtenshaw and “Fordham”; the references to Fordham appear to be references to Federal Agent Blunden).

20. [26]

    Ms Cui said that, when her husband arrived, he was brought into the conference room. He asked Ms Cui what she had said to the police. She said “I told them that sixty thousand was brought in from China and all others was a debt paid by friends.”

21. [27]

    Ms Cui said she was then allowed to leave the room. She spoke to Ms Jiang, who said:

22. [28]

    After Mr Li’s interview, Ms Cui was informed that the police were going to seize the money temporarily on the basis that they suspected it came from an illegal source.

23. [29]

    Ms Cui’s affidavit sought to explain why she lied to police. She said she was “nervous and anxious” during the interview. She had just arrived in Australia and was not familiar with Australian law. She said (affidavit par 246):

24. [30]

    She said she thought that “the situation will be even more complex if I told the police the true source of this $200,000 cash … So I did not tell the truth to the police”.

25. [31]

    In cross-examination, Ms Cui maintained that, from the outset, she thought the method of exchange was proper. She accepted in that circumstance that she had no need to lie (T27).

26. [32]

    The applicants both gave evidence that the purpose of the money was to invest and set up a business and to meet their costs of living as well as their children’s expenses.

Legislative framework in which the application is to be determined

1. [33]

   The restraining order was made under s 19 of the Proceeds of Crime Act. That section confers a power the exercise of which is mandatory if the conditions specified in the section are met. Having considered the supporting affidavit sworn by Federal Agent Burtenshaw, Adamson J was satisfied that the conditions of the section were met and that her Honour was accordingly required to make the restraining order: Application by the Commissioner of the Australian Federal Police [2015] NSWSC 1817 at [17].

2. [34]

   The critical requirement under the section was (in the circumstances of the present case) the existence of reasonable grounds to suspect that the property sought to be restrained was the proceeds of an indictable offence or an instrument of a serious offence. The terms “proceeds” and “instrument” are defined in s 329 of the Act. Nothing turns on those definitions. Broadly, property is “proceeds” of an offence if it is derived or realised from the commission of the offence, while property is an “instrument” of an offence if it is used (or is intended to be used) in, or in connection with, the commission of an offence.

3. [35]

   The relevant offences were specified by Federal Agent Burtenshaw in his affidavit in support of the application sworn on 1 October 2015. He deposed to his suspicion that the seized cash was the proceeds of or an instrument of an offence contrary to s 400.9(1) of the Schedule to the Criminal Code Act 1995 (Cth) (dealing with money or property reasonably suspected to be proceeds of crime which has a value of AUD$100,000 or more) and s 53 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (moving physical currency of not less than $10,000 into or out of Australia where a report in respect of the movement has not been given). It was common ground that those offences are indictable offences and serious offences within the meaning of the section.

4. [36]

   Section 400.9 of the Criminal Code provides:

5. [37]

   Section 400.2 relevantly provides that a person “deals with money” if he or she “receives, possesses, conceals or disposes of money or other property”, imports money into Australia or “engages in a banking transaction relating to money or other property.”

6. [38]

   Section 53 of the Anti-Money Laundering and Counter-Terrorism Financing Act makes it an offence to move physical currency of not less than $10,000 into Australia if where a report in respect of the movement has not been given in accordance with the section. The offence is one of strict liability.

7. [39]

   It is not entirely clear from the terms of the affidavit (or indeed the terms of the judgment of Adamson J) whether the restraining order was founded upon an offence contrary to s 400.9(1) based exclusively on the suspicion that physical currency had been moved into Australia contrary to s 53 of the Anti-Money Laundering and Counter-Terrorism Financing Act or whether Federal Agent Burtenshaw also had in mind a discrete offence contrary to s 400.9(1) based on a dealing with money reasonably suspected to be proceeds of crime for some other reason (unrelated to the movement of currency into Australia). The parties’ submissions made conflicting assumptions on that issue.

8. [40]

   As already noted, the exclusion application invokes s 29 of the Proceeds of Crime Act, which provides:

9. [41]

   As stated in the note to s 29(2), a circumstance in which property ceases to be tainted is addressed in s 330(4)(a). That section provides:

Basis for the exclusion application

1. [42]

   In their primary written submissions dated 8 March 2017, the applicants argued a simple proposition. In short, it was submitted that the basis on which the restraining order was granted (the suspicion that the cash had been moved into Australia in contravention of the relevant reporting requirements) is no longer supported by the evidence, which now establishes that the cash was received in Australia as part of a currency exchange.

2. [43]

   As acknowledged in the written submissions at par 26, acceptance of that proposition requires acceptance of the applicants’ contention that the version of events told to Federal Agents Burtenshaw and Blunden on 11 March 2015 was a lie and that the version given in the applicants’ affidavits is the truth.

3. [44]

   Mr Dawson SC, who appears with Mr Mitchell for the applicants, identified a number of reasons why the Court should accept the evidence set out in the applicant’s affidavits. He submitted that their version is supported by the existence of a contemporaneous electronic funds transfer receipt from the China Minsheng Bank dated 11 March 2015. The written submissions also relied on “we-chat” messages between Junguo Wang and “Kenny” allegedly confirming the proposed exchange, but they were in Chinese. Mr Dawson also relied on the evidence that Ms Cui had made many currency exchanges before, using the Supay service. He submitted that the transaction on this occasion was not structured so as to conceal its existence (since the deposit at the bank would in the ordinary course have generated an AUSTRAC report).

4. [45]

   Mr Dawson also relied on the fact that the applicants have provided to the AFP an affidavit of the person who arranged the currency exchange (Jungou Wang) and contact details for the alleged counter-party to the currency exchange, Kenny Ng. He submitted that this demonstrates the applicants’ desire to explain, not to conceal, the circumstances of the currency exchange.

5. [46]

   Even if it is accepted that there was a currency exchange, none of those matters proves the provenance of the cash. The submissions assumed a false dichotomy, namely, that the cash must either have been moved into Australia or have been the subject of the currency exchange transaction. The fact that Ms Cui made an electronic transfer in RMB in exchange for cash in Australian currency does not prove that the cash was not moved into Australia in contravention of s 53 of the Anti-Money Laundering and Counter-Terrorism Financing Act.

6. [47]

   In any event, there are strong reasons to doubt the currency exchange version of events. Mr Li’s version given to the AFP during the interview at the bank is inherently more plausible. He said that all or most of the cash had been moved into Australia (in part by his family, in part by friends who had agreed to bring it to Australia for him) and that all of it had been held at their house until that morning. In saying so, he incriminated himself. The claim now made (to support an application for return of the cash) that he was then lying, combined as it is with an implausible tale that is as self-serving as it is bizarre, must be viewed with a measure of circumspection.

7. [48]

   For those reasons, I do not think it is possible or appropriate to approach the application on the unqualified premise that the version given to police at the bank was a lie and the version given in the affidavits is the truth. It is necessary to evaluate the whole of the evidence making no assumption as to whether any particular version was truthful or otherwise.

8. [49]

   As already noted, the onus of proof is on the applicants to establish on the balance of probabilities that the seized cash is neither proceeds of an indictable offence nor an instrument of any serious offence. However, as also noted above, the parties’ submissions made conflicting assumptions as to the relevant “offence” for the purpose of that inquiry. Upon analysis, I have concluded that, whichever assumption is made, the application must fail.

9. [50]

   An offence contrary to s 400.9(1) of the Criminal Code is committed if a person deals with money (s 400.9(1)(a)) and it is reasonable to suspect that the money is “proceeds of crime” (s 400.9(1)(b)). Mr Dawson accepted that the test under s 400.9(1)(b) is an objective one. However, he submitted that the test is not at large and is limited, not only to the offences specified by Federal Agent Burtenshaw, but also to “the particular conduct by which those offences are alleged to have been committed”.

10. [51]

    If I have understood the submission correctly, it misconceives the predicate of the AFP’s application for a restraining order. For the purpose of making that application, no offences were “alleged to have been committed”. The Court’s power (and obligation) to make a restraining order is predicated upon proof of reasonable grounds to suspect that the property is the proceeds of an indictable offence or an instrument of a serious offence, together with a requirement that an authorised officer in fact holds the relevant suspicion (and does so on reasonable grounds). It is well established that no particular instance of the offence need be proved or even identified. In cases where, as here, the suspicion has not galvanised into an affirmative allegation, and particularly where the source of the suspicion is information provided by the applicants themselves (later claimed to be lies, not admissions), it makes no sense to speak of the inquiry as being confined by reference to the “particular conduct” alleged.

11. [52]

    However, even if that is wrong, and the inquiry under s 29(2) is narrowly confined to a single offence contrary to s 400.9(1) based exclusively on a suspicion that the applicants had dealt with physical currency that had been moved into Australia contrary to s 53 of the Anti-Money Laundering and Counter-Terrorism Financing Act, on the present application the applicants must prove it is not reasonable to suspect that the seized cash is proceeds of any such offence.

12. [53]

    On that assumption, my reasons for concluding that the application must fail can be stated shortly. I am not satisfied that the applicants lied to police as to the transactions they described. I think it is equally possible that what Mr Li said in particular (as to all or most of the cash being money that had been brought into Australia from China by them or at their request) was a truthful admission from which, now that he understands its implications, he seeks to resile. The evidence of the electronic funds transfer is not necessarily inconsistent with that account. The origin of the cash remains unproved by any satisfactory evidence. If the seized cash was moved into Australia in the manner described by Mr Li to police, it is plainly reasonable to suspect that it is proceeds of an offence or series of offences contrary to s 53 of the Anti-Money Laundering and Counter-Terrorism Financing Act. On that analysis, the application must fail.

13. [54]

    Alternatively, proceeding on the broader assumption that Federal Agent Burtenshaw’s suspicion (and Adamson J’s ruling) was not confined to a single offence of dealing with proceeds of a s 53 offence but contemplated any offence contrary to s 400.9(1) based on a suspicion of dealing with the proceeds of some unidentified crime, the evidence also falls short of discharging the applicants’ onus of proof.

14. [55]

    On that hypothesis, the applicants accepted that they must establish, on the balance of probabilities:

15. [56]

    The written submissions on that issue opened with the ambitious proposition that the fact that the AFP has not amended its case to allege that the currency exchange version of events separately gives rise to a relevant suspicion supports an inference that the AFP does not consider it to be suspicious. That submission misconceives the task for the applicants on the present application. By bringing the application, the applicants have assumed the onus of proving that the cash is neither proceeds of an indictable offence nor an instrument of any serious offence. Pointing to the fact that the AFP has not sought to contend otherwise does not discharge that onus.

16. [57]

    It was otherwise submitted that the currency exchange did not contravene s 53 of the Anti-Money Laundering and Counter-Terrorism Financing Act because it was an exchange of currency within Australia, not a movement of currency into Australia. The Commissioner sought to rely on certain deeming provisions to establish the illegality of that transaction on the assumption that it was conducted in the manner alleged. On the conclusion I have reached, it is not necessary to address those submissions. As with other aspects of the application, the applicants’ submission assumed acceptance of their latest version of events. In my assessment, the applicants’ evidence in the proceedings is so unsatisfactory that it is impossible to know where the truth lies. In circumstances where they bear the onus of proof, that is fatal to the success of the application. In particular, as already noted, I think it is quite possible that the cash was brought into Australia in the manner described by Mr Li in his interview with police at the Bank or by some other, unknown person. The applicants could have called “Kenny” to prove otherwise. I am satisfied that the failure to call Kenny gives rise to an inference that his evidence would not have assisted the applicants on this issue.

17. [58]

    Even if that is wrong, the applicants have failed to establish the second element. As submitted by the plaintiff, the circumstances of the transaction are enough to raise a suspicion as to the source of the cash itself (as opposed to the legality of the transaction). The applicants relied on s 400.9(5) of the Criminal Code, which avoids the application of s 400.9(1) “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”. They submitted that they had no reasonable grounds for holding any such suspicion because the money that changed hands at Junguo Wang’s office was raised by lawful means and any suspicion which could be said to have arisen in relation to the dealing could only be based on conduct that occurred after the relevant dealing.

18. [59]

    It was sought to establish the lawful source of the cash by tendering an ASIC search of a company called Aussie Connection Pty Ltd (Ex B). The search recorded Mr Kenny Ng as the director and shareholder of that company. In his affidavit sworn 27 November 2015, Junguo Wang referred to a Mr Kenny Sen Hui Ng (“Kenny”) who was working in Ugg Boots wholesale. Mr Wang said that, in about mid-February 2015, Kenny told him he wanted to exchange Australian dollars into RMB. The Court was invited to infer that the Kenny Ng identified in the ASIC search is the same Kenny who approached Junguo Wang and participated in the currency exchange with Ms Cui (with the assistance of the Fat Man and the Skinny Man). It was submitted on that basis that, rather than being derived from some unlawful activity, the seized cash was the lawful income of Kenny’s legitimate Ugg boot business in Australia.

19. [60]

    The submission called for speculation and I reject it. There is no evidence from Kenny and no evidence whatsoever that any amount of cash he might have wished to exchange for Chinese currency was lawfully derived; the fact (if Kenny was even involved) that the cash was being dealt with outside proper systems of governance of the Ugg boot business, which would have seen it banked into an account of that business, suggests the contrary.

20. [61]

    The plaintiff submitted that the applicants cannot avail themselves of s 400.9(5) as there were reasonable grounds for them to suspect that the money was derived or realised from some form of unlawful activity.

21. [62]

    The applicants submitted that, in considering that issue, the Court could not properly have regard to anything that occurred after they left Mr Wang’s office, such as the conversations with the Fat Man at the bank. That assumes the relevant dealing was the currency exchange at Mr Wang’s office. However, s 400.2 defines dealing with money or other property to include receiving and possessing money (s 400.2(a)) and engaging in a banking transaction relating to money (s 400.2(c)). In my view, Ms Cui’s possession of the money at the bank and her attempt to bank it amounted to a dealing within the meaning of s 400.9(1). On that analysis, the events occurring up to that time (including being told by a participant in the exchange to lie about the source of the money) are appropriately taken into account in determining whether the applicants have discharged the onus of establishing that they fall within s 400.9(5). If those events are taken into account, the applicants’ position is hopeless.

22. [63]

    But even taking the applicants’ submissions at their highest and excluding consideration as to what occurred after Ms Cui left Mr Wang’s office, in my view there was ample reason for her to suspect from the outset that the money was derived from unlawful activity. It was a large amount of cash. That in itself is highly suspicious. Ms Cui was surprised to be asked to accept cash. She was immediately concerned that it might be counterfeit. Yet she asked no questions as to its source. Mr Dawson submitted that the concern as to the money being counterfeit is unrelated to its provenance. I disagree. It was a concern that reveals her assessment of the propriety of those with whom she was dealing.

23. [64]

    When Ms Cui met the men who delivered the cash, they did not give their names. Ms Cui’s preparedness to deal with the men anonymously (evidenced in her persistence in these proceedings in referring to them only as the Fat Man and the Skinny Man) is curious. Their true names have not been ascertained, even though they are evidently known to the supposedly trustworthy Kenny. Even Mr Wang, who organised the exchange at his office and knows Kenny, refers to the men by those names. Mr Dawson submitted that the men’s names are immaterial and that the material fact is the identity and contact details of the person who arranged the transaction (Mr Wang) and the counter-party (Kenny). He noted that Ms Cui has provided that information to the AFP. On the present application, that is unhelpful. It was incumbent on the applicants to adduce evidence from Kenny, if it was likely to be helpful to them.

24. [65]

    Further, the men refused to go to the bank to count the cash until Ms Cui had transferred RMB to their nominated account. They weighed the cash using scales. The exchange was pressed on Ms Cui in circumstances of some urgency on terms largely dictated by Mr Wang and Kenny via the Fat Man and the Skinny Man.

25. [66]

    I am not satisfied within the terms of s 400.9(5) that the applicants had no reasonable grounds for suspecting that the money was derived or realised from some form of unlawful activity. It follows that I am not satisfied on the balance of probabilities that the seized cash is neither proceeds of an indictable offence nor an instrument of any serious offence.

The third party issue

1. [67]

   In light of my conclusions on the foregoing issues, it is not necessary to determine an alternative submission put by the applicants. The submission invoked s 330(4)(a) of the Proceeds of Crime Act, which provides:

2. [68]

   The applicants submitted that they were a third party who acquired the money in the circumstances stipulated in the section. The conclusions I have reached above are fatal to that argument. It follows from my earlier conclusions that the applicants have failed to establish that the circumstances of their receipt and possession of the cash would not arouse a reasonable suspicion that the property was proceeds of an offence or an instrument of an offence.

3. [69]

   The plaintiff submitted that, in that event, the exclusion application can and should be determined on that basis alone, without the need to consider or determine the other issues raised by s 330(4).

4. [70]

   Ordinarily, it is appropriate for a judge sitting at first instance to proceed to determine all issues in the proceedings against the risk of error in any of the preceding determinations. The plaintiff’s reason for suggesting a different approach in the present case is to obviate the risk of inconsistent jurisprudence. After I reserved my decision in the present case, the Western Australia Supreme Court (Allinson J) published the decision in Commissioner of the Australian Federal Police v Kalimuthu (No 3) [2017] WASC 108. The plaintiff has appealed against that decision. In his supplementary submissions, the plaintiff submitted that, in the event that I find it necessary to decide the “third party issue”, I should reserve my decision until the Western Australian Court of Appeal has determined the appeal. As at the date of this judgment, the appeal has not been determined (I do not know whether it has even been heard). The plaintiff has also drawn my attention to other decisions published since Kalimuthu, including the decision of Simpson J in Lordianto cited above. I do not think it is necessary to address those decisions.

5. [71]

   In circumstances where the proper construction of the section is to be considered at an appellate level and where it is not necessary for me to determine the issue in any event (according to the conclusions I have reached), I consider the appropriate course is to proceed to determine the application now, as submitted by the plaintiff.

6. [72]

   For those reasons, I make the following orders:

   1. (1)

      the applicants’ application to have the seized cash excluded from the restraining order made by Adamson J on 1 December 2015 is dismissed;

   2. (2)

      I order the applicants to pay the Commissioner’s costs of the application.