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District Court 28 September 2023

R v Zhang

[2023] NSWDC 427

Fraud & dishonesty
CRIME S 400.9(1AB) MONEY LAUNDERING ELEMENTS OF OFFENCE “PROCEEDS OF INDICTABLE CRIME” ALTERNATIVE ROUTES OF PROSECUTION

Citation: R v Zhang [2023] NSWDC 427
Court: District Court of New South Wales
Date: 28 September 2023
Judge: Montgomery DCJ

Background

The accused was charged with dealing in money where it was reasonable to suspect the money was proceeds of indictable crime, with the value of the money at the time being $1,000,000 or more. The charge was brought under s 400.9(1AB) of the Criminal Code Act 1995 (Cth). The dealings were alleged to have occurred between January and April 2022 in Sydney and elsewhere in New South Wales.

The Crown indicated it would pursue two alternative prosecution routes. The first relied on s 400.9(2)(c) of the Criminal Code, which deems it reasonable to suspect money is proceeds of indictable crime where its value is grossly out of proportion to the defendant's income and expenditure. The second route proceeded directly through s 400.9(1AB)(b).

The discrete issue before the court on this voir dire (a preliminary hearing to resolve a specific legal question before or during trial) was whether, when proceeding under the s 400.9(1AB)(b) route, the Crown must prove as an element that the suspected crime was an indictable offence, or whether mere proof of suspicion of "crime" of any kind would suffice.

  • Whether the word "indictable" in s 400.9(1AB)(b) of the Criminal Code carries legal weight as an element of the offence, or whether it has no meaningful work to do.
  • Whether the Crown, when relying on the s 400.9(1AB)(b) route (as distinct from the s 400.9(2) deeming route), must prove beyond reasonable doubt that it is reasonable to suspect the money is proceeds of an offence that may be dealt with as an indictable offence.
  • Whether the Court of Criminal Appeal decisions in Lin v R [2015] NSWCCA 204 and Xue v R [2021] NSWCCA 270 resolve this question, even though those cases addressed earlier or different statutory provisions.

Decision

Montgomery DCJ rejected the Crown's submission that the word "indictable" in s 400.9(1AB)(b) should be read as effectively meaning "crime" of any kind. The court held that the word "indictable" is a deliberate and meaningful qualifier, and that to read it otherwise would render it superfluous both in s 400.9(1AB)(b) and in s 400.9(2). This interpretation was reinforced by the fact that the Criminal Code separately defines "proceeds of general crime" and "proceeds of indictable crime" in s 400.1, and s 400.9 does not appear in the list of offences to which the "proceeds of general crime" definition applies.

The court found that Lin v R, though decided under an earlier version of s 400.9, remained determinative of the present issue. In Lin, the Court of Criminal Appeal was deliberate in identifying the two prosecution routes as genuinely distinct and separate alternatives. The court in the present case emphasised that the "deeming" provisions in s 400.9(2) must not be conflated with the direct route under s 400.9(1AB)(b).

The Crown had relied heavily on Xue v R, in which the Court of Criminal Appeal held that the elements of s 400.9(1) of the Criminal Code were the same as those under s 193C(1) of the Crimes Act 1900 (NSW). However, Montgomery DCJ noted a significant difference: unlike the NSW provision, the Criminal Code provision expressly uses the phrase "proceeds of indictable crime." The court rejected the Crown's argument that this distinction was of no significance.

Montgomery DCJ concluded that for prosecution by the s 400.9(1AB)(b) route, the Crown must prove beyond reasonable doubt that it is reasonable to suspect the money or property is proceeds of an offence of a kind that may be dealt with as an indictable offence, even if that type of offence is in some circumstances dealt with summarily.

Orders Made

No orders were made in this decision.

Key Takeaways

  • The District Court held that "proceeds of indictable crime" in s 400.9(1AB)(b) of the Criminal Code Act 1995 (Cth) is a substantive element of the offence, not surplus language: the Crown must prove it is reasonable to suspect the money derives from an offence of a kind that may be dealt with as an indictable offence.
  • Two genuinely distinct prosecution routes exist under s 400.9: the "deeming" route via s 400.9(2) (where specified conduct, such as gross disproportion between assets and income, raises the requisite suspicion) and the direct route under s 400.9(1AB)(b). Each route carries its own evidentiary requirements, and the two must not be elided.
  • The separate statutory definitions of "proceeds of general crime" and "proceeds of indictable crime" in s 400.1 of the Criminal Code, together with the list of offences to which the "general crime" definition applies (a list that does not include s 400.9), supported the conclusion that the legislature intended these to be meaningfully different concepts.
  • Lin v R [2015] NSWCCA 204 was held to remain determinative even though the version of s 400.9 prosecuted in that case differed from the current provision, because the Court of Criminal Appeal's reasoning about the separate routes applied equally to the current statutory text.
  • Under s 400.13(1B) of the Criminal Code, it remains unnecessary to identify a particular offence or particular offender in order to prove that money is proceeds of indictable crime: the element requires proof of the nature of the predicate offence as a category, not proof of a specific criminal event.

Legislation and Cases Referenced

Legislation:
- Criminal Code Act 1995 (Cth), ss 400.1, 400.9(1), 400.9(1AB), 400.9(2), 400.13
- Crimes Act 1900 (NSW), s 193C(1)

Cases:
- Lin v R [2015] NSWCCA 204
- Xue v R [2021] NSWCCA 270