Commissioner of Police v Phan
[2025] NZHC 412
•6 March 2025
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2021-404-000914
[2025] NZHC 412
UNDER the Criminal Proceeds (Recovery) Act 2009 BETWEEN
COMMISSIONER OF POLICE
Applicant
AND
NGA THANH PHAN
First Respondent
PHAN FAMILY TRUSTEE COMPANY LIMITED
Second Respondent
KHANH TRUONG NGUYEN
Third Respondent
DUNG ANH PHAN
Fourth Respondent
Hearing: (On the papers) Counsel:
S Earl and A F Mackenzie for Applicant
K E Hogan for First and Second Respondent
Judgment:
6 March 2025
JUDGMENT OF VENNING J
This judgment was delivered by me on 6 March 2025 at 2.30 pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
Solicitors: Meredith Connell, Auckland Counsel: K E Hogan, Auckland
COMMISSIONER OF POLICE v PHAN [2025] NZHC 412 [6 March 2025]
Introduction
[1] The Commissioner of Police (Commissioner), Ms Nga Phan (Ms Phan) and the Phan Family Trustee Company Limited (PFTC) as trustee of the Kathy Phan Family Trust (the Trust) seek this Court’s approval under s 95(2) of the Criminal Proceeds (Recovery) Act 2009 (the Act) to their proposed settlement in this proceeding.
[2] The Court is required to approve the settlement if satisfied that it is consistent with the purposes of the Act and the overall interests of justice.1
Background
[3] These proceedings (and related criminal charges) arose from a police investigation into a commercial cannabis growing operation. The investigation identified cannabis cultivations at seven residential properties, four of which were owned by Ms Phan and the PFTC as trustee of the Trust. Two were owned by the third respondent who was then Ms Phan’s husband. The final property was owned by Ms Phan’s brother, the fourth respondent.
[4] At all material times Ms Phan and the third and fourth respondents lived together at Ms Phan’s property at 66 Hughs Way, Flat Bush, Auckland. It is not suggested that 66 Hughs Way was used for cannabis cultivation.
[5] Ms Phan ultimately pleaded guilty to four charges of permitting premises to be used for the cultivation of cannabis, one for each of the properties she was associated with at which the cultivations were located.
[6] On 21 May 2021, the Commissioner obtained without notice restraining orders over the properties Ms Phan was associated with, together with other properties including 66 Hughs Way. On 7 July 2021, Lang J granted on notice restraining orders over the same properties. Then, on 12 August 2021 the Commissioner was granted on notice restraining orders over $44,516.36 cash located at Hughs Way during the
1 Criminal Proceeds (Recovery) Act 2009, s 95.
execution of a search warrant on 14 May 2021, and effective control orders that one or both of Ms Phan and Mr Nguyen had interests in the cash.
[7] All of the properties subject to the restraining orders (other than 66 Hughs Way) were sold following default in obligations to their mortgagees. All the proceeds went to the mortgagees.
[8] On 5 July 2024, the Commissioner filed an application for civil forfeiture orders over property of the respondents, including in relation to Ms Phan and PFTC, 66 Hughs Way and the cash that had been located (plus any interest accrued). The Commissioner sought an assets forfeiture order over 66 Hughs Way and the cash, and in the event an order was not made over the whole of the property he sought a profit forfeiture order in the sum of $1,896,176.82. In an amended application filed in February 2025 the Commissioner reduced the sum sought in the profit forfeiture order down to $690,827.
[9] The Court has previously approved settlements between the Commissioner and the third and fourth respondents in the sum of $202,932 in the case of Mr Nguyen, and
$180,000 in the case of Mr Phan, Ms Phan’s brother.
[10] The parties propose a profit forfeiture order be made in the sum of $300,000. The property proposed to be disposed of is the cash (including interest), with the balance to be met by a payment from Ms Phan within six months. The intention is that Ms Phan will either borrow that sum using the equity in 66 Hughs Way (which currently and on Council and banking records, is $1,370,000) or, in the event she is unable to borrow the balance and settle within six months, the Official Assignee will sell that property, holding the balance between the cash (with interest) and $300,000 for the Commissioner. The remainder will be returned to Ms Phan.
Discussion
[11] The Commissioner’s application is supported by a number of affidavits detailing the evidence of Ms Phan’s knowledge of the cannabis operation, the connection with the properties and the basis for the sums now claimed.
[12] There can be no doubt that Ms Phan was involved in a significant illegal cannabis growing operation. Apart from the affidavit evidence, Ms Khan pleaded guilty. Although her sentence appeal was allowed, the appeal judgment records that she had knowledge of the commercial and organised dimension to the operation and knew there was a cultivation of some scale at each of the properties and financially benefited from the drug operation.
[13] The unlawful benefit figure nominated by the Commissioner of $690,827.09 was made up of:
(a) $44,516.36 (the cash);
(b)$10,550 on the basis of evidence of cash spending;
(c)$218,340 cash deposits; and
(d)$417,420.73 of unexplained third party deposits of $1,000 or more, less an allowance for the usual level of third party deposits made into the accounts.
[14] Ms Phan acknowledges that she has the onus to disprove the Commissioner’s asserted quantum but notes that, following expert forensic accounting evidence funded and filed by Ms Phan the quantum pursued by the Commissioner was reduced by more than $1.1 million. Ms Phan says she also received significant amounts of legitimate income during the relevant period.
[15] The evidence confirms that a number of cash deposits were made into Ms Phan’s bank accounts over an extended period between June 2018 and April 2021 from the proceeds of offending. Ms Phan and PFTC’s accounts received $218,340 in cash deposits, $175,140 of which had rent references. I accept the Commissioner’s view that they were not genuine rental payments, for example, only one rental agreement produced by Ms Phan named a person of whom Police or Immigration New Zealand held any record. Next, the purported rental payments were received weeks or months after the tenancies allegedly started and cash deposits did not meet the amounts stated
in the agreements. The payments were not made in regular cycles. Further, cash deposits were made on the same day and at the same branch within a short distance from Ms Phan’s place of work.
[16] Ms Phan only accepts that a sum of $43,950 was the proceeds of crime following Mr Nguyen taking over the management of the properties but I am satisfied the Commissioner makes out his case that the purported rental payments represented in part the benefit to Ms Phan for allowing the properties to be used to grow cannabis.
[17] The cash itself was located in a bag contained in a safe at 66 Hughs Way. The combination of Ms Phan’s and Mr Nguyen’s offending established by their convictions supports the inference the cash was the proceeds of their offending.
[18] There are obvious risks to both parties if the matter were to proceed to a hearing. While the Commissioner’s case against Ms Phan appears strong there is a risk the Court could find that Ms Phan would suffer undue hardship if 66 Hughs Way is forfeited given that it was not used in the commission of the offending and given Ms Phan’s personal circumstances. Ms Phan is now a single mother with four dependent children, two of whom are twins born prematurely with resultant high needs. Further, there is a significant discrepancy between the value of the property, (with Ms Phan’s equity being $1.37 million) compared to the level of “taint” now alleged by the Commissioner. For the purposes of settlement that is a relevant consideration in the Commissioner’s pursuit of a profit forfeiture order.
[19] It is also relevant that the proposed settlement sum of $300,000 is proportionate to the settlements with the other respondents.
[20] Having regard to the above, the Court is satisfied that the proposed settlement meets the purposes of the Act and also the overall interests of justice. I approve it.
[21] The issue, however, is how to implement the agreed settlement, and what orders the Court can make.
[22] As noted, the parties seek a profit forfeiture order in the sum of $300,000. However, s 55(2)(c) provides the order must specify the property to be disposed of (in accordance with s 83(1)). In a recent decision Commissioner of Police v Phan,2 Johnstone J declined to make orders when the property to be disposed of was described as an amount once borrowed by the respondent or an amount once realised by the Official Assignee from the sale of a property, similar to the proposal before the Court in this case. Johnstone J considered that the Court could not make a profit forfeiture order specifying (as is required by s 55(2)(c)) the property to be disposed of in which the respondent “has, or is treated as having, interests” if the property is stated conditionally and is in part non-existent.3
[23] However, in Johnstone J’s view it was not necessary that formal approval of the parties’ settlement should be deferred until the settlement sum had been raised: it was necessary only that the Court should defer its task in deciding upon (and likely making) orders for the sum’s forfeiture.4 He went on to approve the proposed settlement. Although in the case of Commissioner of Police v Do,5 O’Gorman J took a different view and considered a profit forfeiture order could be made in similar circumstances, the parties are content to adopt the process approved by Johnstone J in Commissioner of Police v Phan.
[24] In the present case, given the parties’ agreement to the procedure, I am content to make the orders which the parties seek by consent in this case.
Orders
[25] Accordingly, there will be orders in accordance with para 8.3 of counsels’ joint memorandum.
(a)Extension of restraining orders under s 41 of the Act: The restraining and further orders made by:
2 Commissioner of Police v Phan [2024] NZHC 2952.
3 At [15].
4 At [17].
5 Commissioner of Police v Do [2024] NZHC 3293.
(i)the Honourable Justice Lang on 7 July 2021; and
(ii)the Honourable Justice Robinson on 12 August 2021,
are extended for a period of one year from 7 July 2025 so that they expire on 7 July 2026, unless further extended.
(b)Further orders varying the restraining and further orders under ss 33, 34 and 35 of the Act:
(i)The restraining order over 66 Hughs Way Flat Bush, Auckland, being Lot 189, Deposited Plan 465726, comprised in record of title 621084, registered owner Nga Thanh Phan (Ms Phan) and Phan Family Trustee Company Limited (PFTC) is varied for the exclusive purpose of allowing Ms Phan to borrow against 66 Hughs Way (from a verified source to the satisfaction of the Commissioner) so as to enable her to raise a sum equal to
$300,000 (Proposed Forfeiture Sum) less the value of the
$44,516.36 cash located at 66 Hughs Way on 14 May 2021 and any accrued interest (Cash), such amount being the Borrowed Sum.
(ii)Once borrowed, the Borrowed Sum must immediately be paid to the Official Assignee to be held as restrained property, pending further Court order.
(iii)If the Borrowed Sum is paid to the Official Assignee by 5.00 pm on the date falling six months after the date on which this proposed settlement is approved by the Court (Due Date), the restraining order over 66 Hughs Way is lifted and the Official Assignee must then arrange for the restraining order to be removed from its record of title.
(iv)If the Borrowed Sum is not paid to the Official Assignee by
5.00 pm on the Due Date, the Official Assignee shall then, as soon as reasonably practicable, sell 66 Hughs Way at its fair market value and deal with the proceeds of sale in the following way:
(A)first, deduct the Official Assignee’s actual costs in effecting the sale;
(B)second, repay any borrowings secured against 66 Hughs Way;
(C)third, hold an amount that, together with the Cash, equals the Proposed Forfeiture Sum, pending further Court order; and
(D)finally, return the balance of the sale proceeds to a bank account nominated by Ms Phan.
(v)For the purposes of effecting a sale of 66 Hughs Way, the Official Assignee, including a person delegated his functions and powers under the Act, has the power to execute any deed or instrument in the name of the registered owner(s), and to do anything necessary to give validity and operation to the deed or instrument.
[26]I also note the proposed further terms at para 8.4:
(a)Ms Phan and PFTC abandon all claims they may have (under the Act or otherwise) to the property to be forfeited under this settlement.
(b)The Commissioner will not pursue his application for either a type 1 assets forfeiture order or a profit forfeiture order against Ms Phan or PFTC on the basis of the significant criminal activity as evidenced in the affidavits filed in this proceeding to date.
(c)This settlement is in full and final settlement of the question of civil forfeiture of 66 Hughs Way and the Cash (as between the Commissioner and Ms Phan and PFTC) on the basis of the significant criminal activity evidenced in the affidavits filed in this proceeding to date.
(d)Costs as between the Commissioner and Ms Phan and PFTC in this proceeding are to lie where they fall.
[27] For the reference of the Registrar and the parties, if and when the further final orders are sought it would be convenient if they were referred to me in the first instance given my familiarity with the file.
Venning J
0
2
0