Commissioner of the Australian Federal Police v HWCJ GLB Pty Ltd (No 3)

1. [1]

   On 30 April 2024, I gave judgment in Commissioner of the Australian Federal Police v HWCJ GLB Pty Ltd (No 2) [2024] NSWSC 482. These reasons are to be read together with that decision.

2. [2]

   In Commissioner of the Australian Federal Police v HWCJ GLB Pty Ltd [2022] NSWSC 1574, Campbell J made orders pursuant to the Proceeds of Crime Act 2002 (Cth) (“POCA” or “the Act”) restraining funds held to the credit of the five corporate defendants in various accounts with a number of Australian banks. My judgment in Commissioner of the Australian Federal Police v HWCJ GLB Pty Ltd (No 2) concerned the distribution of funds held in various of those accounts pursuant to applications made under the POCA. The background to the applications is set out in that judgment.

3. [3]

   In short, proceedings were brought by the Commissioner against the corporate defendants for the restraint, and ultimately forfeiture, of funds held by those entities. Those funds were obtained as a result of frauds committed against a large number of persons. The applicants that participated in the proceedings leading to my judgment in Commissioner of the Australian Federal Police v HWCJ GLB Pty Ltd (No 2) (the original applicants) were victims of that fraud. Each sought orders that would have the effect of distributing to them their interest in the restrained funds. There was no issue that each was entitled to a share of the funds. The hearing conducted over three days from 26 to 28 February 2024 was primarily concerned with the method by which the interests of the various applicants should be calculated.

4. [4]

   Subsequent to the hearing of the applications in February 2024 but prior to the delivery of my judgment, a further seven applicants (the new applicants) came forward, claiming an interest in the restrained funds.

5. [5]

   The various accounts with respect to which this litigation is concerned are set out in Commissioner of the Australian Federal Police v HWCJ GLB Pty Ltd (No 2) at [10]. The orders of 30 April 2024 provide for payment to the original applicants of funds in those accounts. With respect to the majority of the accounts, the making of the orders would extinguish the funds in the particular account, leaving nothing for the new applicants. Given this, the orders made by me on 30 April 2024 were immediately stayed, pending resolution of the claims of the new applicants. That stay was subsequently extended on 17 May 2024 and remains in place.

6. [6]

   Various of the orders sought by the new applicants will, if made, affect (at least some of) the orders made by me on 30 April 2024. The impact of the new applications varies across the different accounts. As a result, different positions were (at least initially) taken by various of the original applicants with respect to the claims of the new applicants. These reasons concern interests in funds in the following accounts (“the relevant accounts”):

7. [7]

   That is, these reasons concern each of the accounts dealt with in Commissioner of the Australian Federal Police v HWCJ GLB Pty Ltd (No 2) with the exception of the GSL Bud accounts.

8. [8]

   With respect to the relevant accounts, it was agreed that the new applications could be determined on the papers, without the need for a further hearing. The need for a hearing with respect to the GSL Bud accounts has not yet been finally resolved. It is, however, undesirable to further delay the making of orders with respect to the relevant accounts while the position with respect to the GSL Bud accounts is determined.

9. [9]

   At a directions hearing on 19 June 2024 concerned with how to deal with the new applications, no opposition was indicated to orders being made in favour of new applicants, distributing to them their interest in the relevant accounts, that interest being determined by application of the same method of distribution determined to be appropriate for the particular account in my judgment of 30 April 2024. As a result, proposed consent orders were drafted by the Commissioner and circulated to the applicants. In the event, each of the applicants agreed with the consent orders with the exception of one, who, for reasons that are unclear, indicated they neither consented to, nor opposed, the making of the orders.

10. [10]

    In the circumstances referred to above, any further hearing was dispensed with by agreement of the parties, with the matter to be determined on the papers. In determining the applications I have had regard to the affidavits of the applicants filed in support of the motions, the Commissioner’s proposed Agreed Facts filed 1 July 2024 (which had obtained the agreement of relevant applicants) and the affidavit of Charlie Nasr, forensic accountant, filed 24 June 2024. That material sets out the contributions made by the new applicants to the relevant accounts. The evidence satisfies me that funds contributed to the relevant accounts by each of the new applicants were obtained from a source such that the applicant is not, under the Act, disentitled to relief with respect to that interest.

11. [11]

    Various of the applicants have provided reasons as to why they did not participate in the hearing of the matter in February. Those reasons attest to the various ways in which the assumption that all relevant persons were appropriately notified was misplaced. While some applicants have not provided a clear explanation, I am satisfied that the failure of the new applicants to come forward at an earlier time and participate in the February hearing should not disentitle them to relief.

12. [12]

    The affidavit of Mr Nasr sets out the entitlement of all applicants in the relevant accounts based on their interest calculated by either the pari passu methodology or by engaging the hybrid methodology, as those terms were used in Commissioner of the Australian Federal Police v HWCJ GLB Pty Ltd (No 2). There is, in my view, with respect to each of the relevant accounts, no reason to apply a different method of distribution to that adopted with respect to that account in Commissioner of the Australian Federal Police v HWCJ GLB Pty Ltd (No 2), for the reasons given in that judgment.

13. [13]

    The stay of the orders insofar as it applies to the relevant accounts should be discharged. Orders should be made in favour of new applicants Xiao Ni Xu (039), Tom Fuh Shiong Fan (040), Laurence Jou (041), Malik Greene (042) and Ven Tow Lee (043), each of whom contributed funds to at least one of the relevant accounts. It will be necessary to vary the orders made on 30 April with respect to the accounts LJYINUSD01 and JCJHEUSD01 to adjust the interests of the original applicants in accordance with Mr Nasr’s revised calculations taking into account the new applicants.

Orders

1. [14]

   In order to give effect to the above, I make the orders set out below: