Gwe v Commissioner of the Australian Federal Police

BATHURST CJ: I have had the advantage of reading the judgment of the President in draft. I agree with the orders his Honour proposes and with his reasons.

BELL P: Before the Court is an application for leave to appeal from a decision of Rothman J (the primary judge) who dismissed an application by Mr Yoo Tak Gwe (Mr Gwe) and his wife Ms Tan Soi Hoang (Ms Hoang) (together, the Applicants) for orders pursuant to ss 29 and 31 of the Proceeds of Crime Act 2002 (Cth) (the Act) that certain property be excluded from freezing orders which had been made ex parte on 9 July 2015 following an application to the Supreme Court of New South Wales by the Commissioner of the Australian Federal Police (the Commissioner), pursuant to s 19 of the Act.

The relevant property was described in the freezing orders as:

The three Rocket Loan Accounts were apparently opened in association with the acquisition of the three Zetland properties.

The Applicants are residents of Indonesia where they own and work together in a wholesale packaging company which imports and resells packaging for cosmetic products such as lipstick and perfume. The Applicants, on the evidence before the Court, have visited Australia on three or four occasions, most recently for relevant purposes in July 2015 on the day following the making of the ex parte freezing orders. Those freezing orders included an order that the Applicants both be examined pursuant to s 180 of the Act. Those examinations relevantly took place on 23 and 24 July 2015 respectively, and were conducted by Mr O’Mahoney of counsel (the s 180 examination).

On 22 January 2016, the Applicants filed a notice of motion seeking the relief which was the subject of the judgment currently under appeal. That application was supported by affidavits from both of the Applicants. In response, the Commissioner relied upon an affidavit of Mr Darren James Burtenshaw (Mr Burtenshaw) sworn 9 July 2015 which had been relied on to obtain the original ex parte freezing orders. The Commissioner also relied upon a second affidavit of Mr Burtenshaw sworn 15 July 2016 and tendered two exhibits to the respective Burtenshaw affidavits. The Commissioner also relied on an affidavit of Ms Marie Elizabeth Johnston (Ms Johnston), affirmed 4 July 2016, which principally exhibited banking records of Westpac Banking Corporation (Westpac) and the transcripts of the s 180 examinations of the Applicants.

The basis for the application for the exclusion of the property was that the Applicants had an interest in the property within the meaning of the Act, and that that interest was neither “proceeds” of an offence nor an “instrument of an offence”: see s 29(2)(b) of the Act. By s 330(4)(a) of the Act, property only ceases to be “proceeds of an offence” or “an instrument of an offence”:

“Sufficient consideration” is defined in s 338 of the Act as meaning:

The Applicants’ case was that they had provided sufficient consideration for the property, and that they neither knew nor had any reasonable suspicion that the property was “proceeds of an offence.”

The Applicants did not contest that there was a basis for the ex parte freezing orders, because there had been deposits that disclosed “structured payments” contrary to s 142 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (the AML Act). Indeed, the primary judge held at [17]-[18] that:

Later, at [87]-[89], the primary judge said:

It was accepted both at first instance and in this Court that the Applicants did not know that the payments into their accounts were “structured payments” of a kind that breached the AML Act.

The primary judge dismissed the Applicants’ notice of motion with costs. Relevantly for present purposes, the primary judge held at [136] that the property the subject of the freezing orders was not acquired for sufficient consideration within the meaning of s 330(4)(a) of the Act because the consideration was furnished “well before the commission of the offence and was not an acquisition at a time after the commission of the offence” (the consideration issue), and, at [163], that the Applicants (on whom the onus lay under s 317 of the Act) had not established that they had acquired the relevant property “in circumstances that would not arouse a reasonable suspicion” within the meaning of s 330(4)(a) of the Act (the reasonable suspicion issue).

In relation to the consideration issue, the Applicants in this Court submitted, correctly, that the primary judge’s finding with respect to consideration was inconsistent with the High Court’s recent decision in Lordianto v Commissioner of the Australian Federal Police (2019) 266 CLR 273; [2019] HCA 39 (Lordianto) which was delivered after delivery of the judgment currently under appeal. The Commissioner accepted that, in light of what was said in Lordianto, this point, reflected in the Commissioner’s first ground of appeal, should succeed.

Although the Commissioner originally resisted the grant of leave to appeal, he retreated from that stance in light of his concession in relation to the consideration issue. That concession did not resolve the appeal, however, as the Applicants recognised that they also needed to succeed in relation to the reasonable suspicion issue in order to overcome the primary judge’s decision.

Before turning to consider how that was dealt with at first instance and the Applicants’ attack on the primary judgment in that regard, more needs to be said in relation to the Zetland Properties and the Westpac Accounts.

According to their evidence, the Applicants became interested in investing in real property in NSW after attending a presentation in late 2012 in Jakarta by a company called Centurion which was promoting a residential development situated in or to be situated in Zetland, an inner city suburb of Sydney. The Applicants claimed that they proposed ultimately to retire to Australia where they had a nephew named David to whom they were evidently close.

Two of the Zetland Properties were purchased on 3 December 2012 for $690,000 and $700,000. The first page of the respective contracts records that there was a 10% deposit in respect of each acquisition.

The third of the Zetland Properties was purchased by contract dated 26 February 2013 for $705,000.

The Zetland Properties were jointly purchased by the Applicants.

According to Ms Hoang, the paperwork for these acquisitions was arranged by a representative of Centurion in Jakarta who, according to Ms Hoang, was also responsible for the opening of the five Westpac accounts. As indicated at [3] above, three of these accounts were home loan accounts, and the other two accounts were savings accounts.

Although she claimed not to speak English and gave her evidence in the course of the s 180 examination through an interpreter, Ms Hoang said that the representative of Centurion showed her how to transfer funds from the savings accounts to the home loan accounts using Westpac’s internet banking facility (which was in English).

Ms Hoang also accepted in the course of her s 180 examination that she would receive bank statements in relation to the Westpac accounts by post. She also indicated that she received such hard copy bank statements “[m]aybe once a month or more”. These were in evidence and, to the extent that they contained text, this was in English.

Although the contracts of sale in relation to the Zetland Properties were dated December 2012 and February 2013, it would appear that settlement in relation to those sales did not occur until sometime after mid 2014. This emerges from the affidavit of Ms Johnston which exhibited loan offer documents associated with the Rocket Loan Accounts. These documents are variously dated 14 May 2014, 15 May 2014 and 1 July 2014. In addition, the Applicants’ “Westpac Choice” trading account records three “withdrawals for settlement” of $135,151.15, $136,957.93 and $139,057.55 respectively on 8 October 2014.

The Applicants’ “Westpac Choice” account (account no. 62-1187) appears to have been opened in or about February 2013. A bank statement for the period from 28 February 2013 to 28 May 2013 disclosed an opening balance and a closing balance of $0.00 with no credit or debit activity in that period.

In relation to the period 28 May 2013 to 28 August 2013, a deposit of $100,000 was recorded on 9 July 2013, described in the statement as “Deposit Victoria Park East WA”. The same bank statement reveals that on 12 July 2013 that amount was withdrawn by reason of an internet online banking funds transfer.

The next Westpac Choice bank statement for the period 28 August 2013 to 28 November 2013 disclosed an opening balance and a closing balance of $0.00 with no credit or debit activity in that period.

The next Westpac Choice bank statement for the period 28 November 2013 to 28 February 2014 disclosed an opening balance of $0.00 and a closing balance of $10,005. It also disclosed total credits to the account of some $220,105 and total debits of $210,100 in this period.

The bank statement for this period discloses that seven deposits were made to this account by “internet online banking”. These are shown in the following table:

The bank statement for the same period also contains the following deposit entries:

Two internet transfers each in the sums of $100,000 were effected on 10 and 11 February 2014.

The Westpac Choice bank statement for the period 28 February 2014 to 28 May 2014 discloses an opening balance of $10,005 and a closing balance of $2,105. The statement also discloses total credits in that period of $184,100 and total debits of $192,000.

There were three internet online banking deposits in this period comprising deposits of $15,000 and $5,000 on 1 April 2014 and $40,000 on 3 April 2014.

The balance of the deposits for this period were made, according to the bank statement, at various Westpac branches on the dates and in the amounts shown in the following table:

The Westpac Choice bank statement for the period 28 May 2014 to 28 August 2014 discloses an opening balance of $2,105 and a closing balance of $502,083. The statement also discloses total credits in that period of $499,978 and total debits of $0.

There were five internet online banking deposits in this period, as shown in the following table:

One further deposit for this period was made on 22 August 2014, according to the bank statement, for the amount of $69,978.00 and with the transaction description, “RTGS High Value Payment Ref No 0385791 Henry Wijaya”.

The Westpac Choice bank statement for the period 28 August 2014 to 8 October 2014 discloses an opening balance of $502,083 and a closing balance of $241,916.37. The statement also discloses total credits in that period of $151,000 and total debits of $411,166.63.

The internet online banking deposits during this period are as shown in the following table:

The balance of the deposits for this period were made, according to the bank statement, at various Westpac branches on the date and in the amounts shown in the following table:

Ms Hoang made it clear in her evidence in the s 180 examination that she had complete responsibility for the Applicants’ financial affairs including the financial affairs of their company in Indonesia, and that her husband, Mr Gwe, did not take any interest in the financial aspects of the company, he being principally concerned with marketing.

In her affidavit, Ms Hoang said at paras 45-49 as follows:

These paragraphs do not explain how money was transferred into or otherwise deposited in either the Westpac Choice account or the Westpac eSaver account. Earlier in her affidavit at para 34, however, Ms Hoang gave evidence as to how she used Indonesian money changers to “send funds to Australia to service our mortgages over a number of properties that we own in Sydney”.

In short, Ms Hoang said that the Applicants’ business used money changers to remit funds to their international suppliers, as well as to send funds to Australia in order to save foreign exchange charges that would be rendered if such transfers were effected by an Indonesian bank. This process evidently involved Ms Hoang using two money changers in Jakarta to whom she would transmit monies from her and her husband’s Indonesian bank accounts, or to whom she would provide cash. Those transmitted amounts would then be transferred by the money changers to the Applicants’ nominated Australian bank accounts. At paras 35(h) and (i) of her affidavit, Ms Hoang described the procedure she followed once funds had been transferred to the money changers:

Ms Hoang continued in para 36 of her affidavit to say that, whenever she asked the money changer, “Rosiyana”, to remit monies overseas, she would never receive a receipt and that “[n]ormally the rates are confirmed by telephone and I would transfer the money to the money exchanger” in the way described in the affidavit.

In her s 180 examination, Ms Hoang was asked questions in relation to her use and knowledge of the Westpac bank accounts. The relevant portion of the transcript is set out below:

Later, the following exchange occurred:

Later still, when being asked about a Westpac Choice bank statement recording transactions in June 2015 (which it was not suggested she had received by mail in Indonesia prior to the examination), Ms Hoang reiterated her earlier evidence that she would only look at the total balance and “never paid any attention” to individual entries. The evidence continued:

The following exchange also took place:

The thrust of Ms Hoang’s evidence, both in the s 180 examination and in her affidavit before the primary judge, was that she did not look at any individual transactions disclosed on her hard copy Westpac Choice bank statements or available on the Westpac internet banking platform to which she had electronic access.

It has already been noted that, at first instance, the Applicants did not contest that there was a basis for the ex parte freezing orders because there had been deposits that disclosed “structured payments”, contrary to s 142 of the AML Act.

It was accepted by the Commissioner that, at least for the purposes of the appeal, all of the moneys that found their way into the Westpac accounts and the Zetland Properties derived from payments made by the Applicants to the two Indonesian money lenders, to whom reference has already been made. This was said to be reflected in the unchallenged finding by the primary judge at [135] that:

This concession might be thought to have been surprising given the apparent absence of detailed evidence from Ms Hoang at first instance setting out and documenting all of the amounts transmitted to the money lenders in Indonesia and detailing a broad equivalence, after allowing for fees and exchange rate erosion, with the amounts deposited into the Westpac accounts. It is not for this Court, however, to second-guess the making of concessions by Commonwealth entities represented by experienced counsel and to proceed, in the absence of a Notice of Contention and in light of the concession, other than on the basis that consideration had been furnished for all of the property that was the subject of the freezing orders.

This concession, together with the concession in relation to the consideration issue (see [14] above), meant that what had been the principal issue before the primary judge was the sole issue in this Court, namely, the question whether the frozen property was acquired by the Applicants in circumstances that would not arouse a reasonable suspicion that the property was proceeds of an offence.

Ms Hoang was not cross-examined in the proceedings at first instance for the purposes of challenging the evidence summarised at [50] above. Indeed, she was not cross-examined at all notwithstanding that, in submissions filed prior to the hearing before the primary judge, it had been put on behalf of the Commissioner that:

Notwithstanding this signalling of an intention to cross-examine, senior counsel for the Commissioner did not cross-examine either Ms Hoang or Mr Gwe. It will be necessary to return to the significance of the failure to cross-examine later in these reasons.

The primary judge, having noted at [139] that “the evidence is uncontroverted and unchallenged that the defendants did not know that the property had been transferred in a manner which resulted in the funds being the proceeds or an instrument of an offence”, proceeded to the question of whether or not the property had been transferred in circumstances that would arouse a reasonable suspicion that the property was proceeds of an offence. The primary judge’s key findings in this regard are contained in [141]-[153] of his judgment as follows :

The Applicants rely on two grounds of appeal and accept that they must succeed on both. The Commissioner’s concession in relation to the first ground of appeal relating to the consideration issue has already been noted, as has his acceptance, in light of the concession, that leave to appeal from the decision of the primary judge should be granted.

The second ground of appeal is as follows:

The reference to “tabs 1 and 4 of exhibit MEJ-1” in the particulars to the second ground of appeal is a reference to various Westpac bank statements evidencing the deposits into the Applicants’ bank accounts.

Before turning to consider the second ground of appeal, it is desirable to note what the High Court has said in relation to s 330(4)(a) of the Act which was central to the present case.

Section 330(4)(a) of the Act was the subject of detailed consideration in Lordianto. At [68] of Lordianto, the plurality observed:

Mr Walker SC, who appeared for the Applicants, did not gainsay this analysis, and rejected the submission that his submissions in some way ran contrary to it. They did not.

At [89] of Lordianto, the plurality said in relation to the reference to “reasonable suspicion” in s 330(4)(a) of the Act that:

The last sentence of this paragraph adopted a proposition stated by Maxwell P and Chernov JA (with whom Neave JA relevantly agreed) in Director of Public Prosecutions v Le (2007) 17 VR 352; [2007] VSCA 18 at [24], as follows:

On appeal to the High Court, (see Director of Public Prosecutions for the State of Victoria v Le (2007) 232 CLR 562; [2007] HCA 52 (Le)), Kirby and Crennan JJ (with whom Gleeson CJ relevantly agreed) said at [127]-[128]:

The significance of these citations for present purposes is that an assessment of whether or not, for the purposes of s 330(4)(a) of the Act, property is acquired by a third party in “circumstances that would not arouse a reasonable suspicion that the property was proceeds of an offence”, whilst to be made objectively, must nevertheless be undertaken in light of the actual knowledge of the party seeking the exclusion order. Thus, if a person with the applicant’s knowledge (“knowing what she knew” in the passage from Le at [24]) would not have had a reasonable suspicion, then this element of s 330(4)(a) will be satisfied.

Against this background, what separated the parties in the present case may be concisely identified. Mr Walker submitted that, in the absence of challenge by cross-examination, the primary judge was bound to accept Ms Hoang’s evidence (both that given on affidavit and in the s 180 examination) that she had no awareness of the structured nature of the deposits into the Westpac Choice account because she only ever looked at and was concerned with the balance of that account, and not its underlying activity. As such, he submitted, without granular knowledge of multiple individual deposits into that account in sums of less than $10,000, there was nothing that Ms Hoang had actual knowledge of that would have aroused any suspicion in her mind (or that of a reasonable person with her knowledge) as to the use of the bank account in a way that contravened s 142 of the AML Act.

Mr Moses, on the other hand, submitted that Ms Hoang did not in terms say in her affidavit that she was not aware of the multiple deposits which, taken together, amounted to an offence. He said that it was in her power to have said this and that, as the Applicants bore the onus of establishing a lack of any factual basis for reasonable suspicion, it had not been incumbent on him to cross-examine Ms Hoang in the proceedings at first instance.

The submission, made on more than one occasion, that there was no evidence from Ms Hoang that she was unaware of the fact of the structured payments into the Westpac Choice savings account, should be rejected. Both in the course of her s 180 examination in the passages set out at [46] – [49] above and in her affidavit (see [44] above), Ms Hoang had made it clear that she did not look at and, by necessary implication, had no knowledge of the fact or detail of multiple individual deposits into the Westpac account. It was only through and with such knowledge that she could, objectively assessed, have had a reasonable ground for suspicion.

As the primary judge emphasised on more than one occasion, this evidence was unchallenged and uncontradicted. The evidence could have been challenged and Ms Hoang confronted in cross-examination. The Commissioner had signalled an intention to do so in preliminary submissions, see [55] above. But for whatever reason, Ms Hoang’s consistent evidence was not challenged.

A cross-examiner’s failure to challenge evidence is a calculated forensic step. Indeed, it has been described at the highest level as a “gamble” and one that can be lost: Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361; [2011] HCA 11 at [74] (Kuhl). At [74], Heydon, Crennan and Bell JJ said:

In a separate speech in Browne v Dunn at 76-77, Lord Halsbury had said:

In Precision Plastics Pty Limited v Demir (1975) 132 CLR 362 at 370-371; [1975] HCA 27 (Precision Plastics), Gibbs J (with whom Stephen and Murphy JJ agreed) said:

Whilst it may not be usual or a particularly prudent practice, It was not “inherently incredible” that Ms Hoang only consulted the balance of her accounts as disclosed on her hard copy and electronic bank statements. Ms Hoang did not speak English and, on her evidence, her interest was solely in knowing that the total amounts she had provided to the money changers had been transmitted. No other evidence was led to contradict her evidence given in the s 180 examination and her affidavit that she did not know of the individual deposits, cf. Masterton Homes Pty Ltd v Palm Assets Pty Ltd (2009) 261 ALR 382; [2009] NSWCA 234 at [105].

The consequence of the failure to cross-examine Ms Hoang in the present case was, consistently with Precision Plastics (see also Allied Pastoral Holdings Pty Ltd v Commissioner of Taxation [1983] 1 NSWLR 1; (1983) 70 FLR 447 (Allied Pastoral)), that it could not be submitted that Ms Hoang had actual knowledge of the structured nature of payments made into the Westpac Choice account. There was no basis for the primary judge to reject (and the primary judge quite correctly did not reject) the consistent evidence Ms Hoang had given in her affidavit and in the course of the s 180 examination, namely that all she was ever aware of was the balance of the bank account, and that she did not know that there were or would be a number of small individual transactions deposited into that account in Australia which together represented the flow of her funds.

Further, the fact that Lordianto and Le focus on actual rather than constructive knowledge meant that it was not to the point that Ms Hoang had documents in her possession or access to information electronically that, had she consulted them or interrogated the internet platform, she would have learnt of the structured deposits being made into the bank accounts. As Mr Walker put the matter in his reply:

Ms Hoang’s lack of actual knowledge of the structured payments which, in light of the absence of cross-examination, the primary judge was bound in the circumstances to accept was no doubt what led the primary judge to resort in [146]-[148] of his judgment to the example of structured deposits being made into the bank account over 11 days, coupled with Ms Hoang’s evidence that she was told by the money changers that moneys transferred to them would then take 3-5 days to be received into the Westpac accounts: see [44] above.

The difficulty with the example constructed by the primary judge is that it simply could not be related to the evidence which disclosed the vast majority of the structured deposits being made periodically within 3-4 days of each other. There were no strings of deposits of amounts under $10,000 over 11 days, as contemplated in the primary judge’s example, and, as was pointed out in argument, in any event, even where there were multiple deposits over the course of a smaller number of days, some of these exceeded the $10,000 threshold, a fact that might well be thought, even if Ms Hoang had been aware of it, to be inconsistent with a money laundering exercise.

In short, Ms Hoang did not have knowledge of the scenario envisaged by the primary judge from which a reasonable suspicion “would or may” have arisen (see [147]), namely of account balances of $27,000, $54,000 and $81,000 respectively on days 3, 6 and 9 following a transfer to the money lender in Indonesia of $100,000 on “day 0”, because his Honour’s example was entirely theoretical and bore no relationship to the transactional history on the accounts. (Even if it did, it is not apparent why the fact that the bank account was increasing by increments of $27,000 would put its holder on notice of a series of individual payments of $9,000 each.)

The example given by the primary judge, with respect, involved an attribution to the “reasonable person” contemplated by the objective nature of the inquiry under s 330(4)(a) of the Act of “some (arbitrary) state of knowledge of the relevant circumstances, on the basis of which it can be said that he/she would have formed a suspicion”, to borrow the language of the Victorian Court of Appeal in Le: see [65] above. As Mr Walker submitted, the example given by the primary judge was “entirely hypothetical”, involved an “assumption which is counterfactual” and “is utterly bereft of any anchoring in any facts”. He described it as “an artificial construct” that was “neither never put to our client, nor much more to the point has any factual anchorage at all”.

In written submissions, the Commissioner countered that the primary judge’s example was merely “a hypothetical illustration”. A “hypothetical illustration” is not a sound basis, however, upon which to rest a central conclusion, still less when that conclusion relies upon inferences as to what may be deduced from the checking of a balance once every three days, and those inferences were never put to the relevant witness.

The Commissioner also advanced the submission that the “apparent delays and irregular patterns” in the receipt of payments into the bank accounts “support an inference that Ms Hoang had reason to, and did, check the account balance on a daily basis across periods which spread over more than 2 or 3 days”. This may have been a fruitful line of cross-examination, but it was not pursued or even attempted in the proceedings before the primary judge, and the basal considerations of fairness upon which Browne v Dunn rests dictate that it cannot be embraced or advanced in the way the Commissioner sought to do in his written submissions. As Hunt J said in his well-known decision in Allied Pastoral at 16:

The Commissioner also submitted that “nowhere in her evidence did Ms Hoang say that she had no reason to be inspecting the ‘home-screen’ every second or third day or that she had no reason to do so for the purpose of seeing if the money had arrived. Again, Ms Hoang’s evidence was silent on these matters.” This submission is based upon the same inference referred to in the previous paragraph.

Fully accepting that Ms Hoang and her husband bore the onus under s 317 of the Act, there was no need for Ms Hoang to give such evidence in chief given her other evidence (including that given on her s 180 examination) that she was not aware of the structured nature of the payments and only ever looked at the balance of the accounts: see [46]-[49] above. There is only so far that one can go in proving a negative: Apollo Shower Screens Pty Ltd v Building and Construction Industry Long Service Payments Corporation [1985] 1 NSWLR 561 at 564-565; (1985) 10 IR 88. Ms Hoang cannot be criticised for not anticipating a submission based upon a hypothetical example advanced by the primary judge in his judgment, and one which was never put to her by the Commissioner in circumstances where it was plain that her position and evidence was that she had no actual knowledge of the structured payments.

This was sufficient evidence, in my opinion, from which the negative proposition that the Applicants were required by s 330(4)(a) to establish, could be inferred, and it was for the Commissioner to “deal with that evidence either by submission or argument” (Rockcote Enterprises Pty Ltd v FS Architects Pty Ltd; Carelli v FS Architects Pty Ltd [2008] NSWCA 39 at [78]) or, as Windeyer J put it in Purkess v Crittenden (1965) 114 CLR 164 at 171; [1965] HCA 34, “throwing the matter into doubt”; see also Henderson v State of Queensland (2014) 255 CLR 1; [2014] HCA 52 at [90]. The way that needed to be done in the present case was by pressing the inference for which the Commissioner contended on Ms Hoang by way of cross-examination.

It follows that the critical aspect of the primary judge’s reasoning on the s 330(4)(a) question was, with respect, flawed. Evidence was adduced of Ms Hoang’s actual knowledge, namely of the balance only of the accounts, which, as the primary judge rightly emphasised, was neither challenged nor controverted. The primary judge’s conclusion at [146] that that fact “does not necessarily result in Ms Hoang being unaware of the circumstances that the monies were transferred in amounts less than $10,000, which, thereby, constituted an offence” led his Honour to an exercise in speculation based upon an example that obtained no foundation in the facts of the case. The speculative nature of his Honour’s reasoning was manifested in his statement at [148], based upon his hypothetical example that “an examination of the ‘home screen’ would, or may, disclose circumstances that showed the structuring of the transfer in amounts less than the funds that were required to be transferred and raise significant suspicion” (emphasis added).

For these reasons, the Applicants’ attack on the primary judge’s reasoning on this issue must succeed and the second ground of appeal is made out.

That conclusion still leaves the question as to whether an exclusion order should have been made in relation to the seized property.

In light of the Commissioner’s acceptance that the Applicants did not have actual knowledge that the property the subject of the freezing orders constituted “proceeds of an offence”, and that sufficient consideration had been provided (to the money lenders) in relation to the funds which were translated into the frozen property, the only issue needing to be established by the Applicants was the negative proposition contained in s 330(4)(a) of the Act.

For the reasons given above, that proposition was established, and the appeal should be allowed.

For all of the above reasons, the following orders should be made:

EMMETT AJA: These proceedings are concerned with the Proceeds of Crime Act 2002 (Cth) (the Proceeds Act), which provides a mechanism for the confiscation of the proceeds of crime. Under Pt 2.1 of the Proceeds Act, restraining orders can be made against property on grounds that relate to possible forfeiture or confiscation orders.

Thus, under s 19, if, relevantly, the Commissioner of the Australian Federal Police (the Commissioner) applies for a restraining order in respect of property and there are reasonable grounds to suspect that the property is the proceeds of an indictable offence or an instrument of a serious offence, and certain other prerequisites are satisfied, the Supreme Court is required to order that the property must not be disposed of or otherwise dealt with by any person. Under s 29, the Court must exclude a specified interest in property from such an order if an application is made, relevantly, under s 31, and the Court is satisfied that the relevant reason exists for excluding the interest. Under s 31, a person may apply for an order under s 29 if a restraining order has been made that covers property in which the person claims an interest.

Under s 330(4)(a), property ceases to be the proceeds of an offence or an instrument of an offence, relevantly, if each of the following prerequisites is satisfied:

Mr Yoo Tak Gwe and Ms Tan Soi Hoang (together the Property Owners) arranged for payments in Indonesian currency to be made over a period of time to money changers in Indonesia on the basis that the equivalent in Australian dollars would be credited to accounts of the Property Owners with Westpac Banking Corporation (Westpac) in Australia. Funds were subsequently so credited to the accounts with Westpac. Part of the funds so credited was applied by the Property Owners in part payment of the purchase prices for three properties situated in Zetland, New South Wales (the Zetland Properties). The balance of the purchase prices for the Zetland Properties was borrowed from Westpac on the security of mortgages of the Zetland Properties. Further parts of the funds so credited to accounts with Westpac were applied in repayment of the moneys borrowed by the Property Owners from Westpac.

On 9 July 2015, a judge of the Common Law Division made restraining orders under the Proceeds Act, relevantly, in respect of the Zetland Properties and five accounts of the Property Owners with Westpac (the Restrained Accounts). By notice of motion filed on 22 January 2016, the Property Owners applied, relevantly, for orders under ss 29 and 31 of the Proceeds Act in relation to the Zetland Properties and the Restrained Accounts. The Property Owners contended that they had a property interest in the Zetland Properties and the Restrained Accounts and that, by the operation of s 330, neither was proceeds of an offence or an instrument of an offence. On 29 June 2018, for reasons published on that day, another judge of the Common Law Division (the primary judge) ordered that the application be dismissed with costs. By summons filed on 27 September 2018, the Property Owners seek leave to appeal from the orders made by the primary judge.

The evidence discloses that large numbers of deposits were made to the Restrained Accounts in sums under the amount of $10,000. That mechanism was clearly designed to avoid the operation of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth). However, the unchallenged and uncontroverted evidence on behalf of the Property Owners was that they were unaware of those facts and were unaware of the arrangements whereby funds more or less equivalent to the funds provided to the money changers in Indonesia were credited to the Restrained Accounts.

It is accepted by the Commissioner that the second prerequisite for the operation of s 330(4)(a) does not entail constructive or imputed knowledge. It must follow that the circumstances referred to in the third prerequisite must be limited to facts that are actually known to a person applying for an order pursuant to ss 29 and 31.

The question raised in the proceedings is whether the third prerequisite for the operation of s 330(4)(a) described above has been satisfied. That is to say, the question is whether the Zetland Properties and the Restrained Accounts were acquired by the Property Owners in circumstances that would not arouse a reasonable suspicion that they were proceeds of an offence or an instrument of an offence.

I have had the advantage of reading in draft form the proposed reasons of the President. I agree with his Honour that the negative proposition contained in s 330(4)(a) was established. Accordingly, in light of the Commissioner’s acceptance that the Property Owners did not have actual knowledge that the Zetland Properties and the Restrained Accounts constituted proceeds of an offence and that sufficient consideration had been provided to the money changers in relation to the funds that were translated into the Zetland Properties and the Restrained Accounts, the appeal should be allowed. I agree with the orders proposed by the President.