Commissioner of Police v Phan

[2025] NZHC 213

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-914

[2025] NZHC 213

UNDER

Criminal Proceeds (Recovery) Act 2009

BETWEEN

COMMISSIONER OF POLICE

Applicant

AND

NGA THANH PHAN

First Respondent

AND

PHAN FAMILY TRUSTEE COMPANY LIMITED

Second Respondent

AND

KHANH TRONG NGUYEN

Third Respondent

AND

DUNG ANH PHAN

Fourth Respondent

Hearing:	on the papers
Counsel:	S M Earl and A F MacKenzie for applicant Third respondent self-represented
Judgment:	19 February 2025

JUDGMENT OF JOHNSTONE J

(approval of settlement between Commissioner and third respondent)

This judgment was delivered by me on 19 February 2025 at 3pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors: MC, Auckland

COMMISSIONER OF POLICE v PHAN [2025] NZHC 213 [19 February 2025]

[1]    The Commissioner of Police and the third respondent in this proceeding, Khanh Trong Nguyen, have entered a settlement relating to property which may be forfeited to the Crown. They seek that this Court approves their settlement, so that it becomes binding. The Court must do so, if satisfied that the settlement is consistent with the purposes of the Criminal Proceeds (Recovery) Act 2009, and the overall interests of justice.

Background

[2]    On  16  December  2020,  the   police   executed   a   search   warrant   at   115 Boyd Access Road, Whangaripo, a residential property held in Mr Nguyen’s registered ownership. They found there a substantial cannabis growing operation.

[3]    Around  eight  months  before  this  search,  Mr  Nguyen  had  purchased   115 Boyd Access Road, for $760,000. He paid a deposit, in two instalments totalling

$153,492.70, $73,000 of which came by way of  transfer from a bank account in   Ms Phan’s name. During the previous year, the bank account had received

$108,026.20 from unidentified third parties. The balance of the purchase price of  115 Boyd Access Road was funded by way of a loan from a trading bank, supported by a mortgage. Repayments  of  this  loan  were  made  from  a  bank  account  in  Mr Nguyen’s name. That account had received $25,500 in cash deposits and $4,680 in transfers from unknown third parties.

[4]    Mr Nguyen was not living at the 115 Boyd Access Road property when it was searched by the police in  December  2020.  Instead,  he  lived  at  66 Hughs Way, Flat Bush, with other parties in this proceeding: his then partner, Nga Thanh Phan, and Ms Phan’s brother, Dung Anh Phan.

[5]    On 16 April 2021, the police executed a search warrant at the Hughs Way home, and found $44,516.36 in cash (the Cash). Also on 16 April 2021, the police executed search warrants and found substantial cannabis growing operations at other properties:

(a)a residential property at 8 Savina Court, Flat Bush, held in Mr Nguyen’s registered ownership;

(b)residential properties in Takanini, Sandringham, Pukekohe and Tuakau, held in the registered ownership of Ms Phan and her trustee company,

Phan Family Trustee Company Limited; and

(c)a residential property at 25 Artillery Drive, Papakura, held in Mr Phan’s registered ownership.

[6]    In the period of around ten years prior to the commencement of this proceeding, Mr Nguyen’s bank accounts (excluding accounts shared with Ms Phan) received unexplained amounts totalling $148,080.

[7]    Various properties have been held pursuant to restraining orders issued in this proceeding. Of particular relevance:

(a)The property at 115 Boyd Access Road was sold on 24 May 2021, after the Commissioner had on 21 May filed an application without notice for its restraint, but prior to its restraint being granted. For that reason, without notice restraining orders were amended by consent to attach to the property’s net sale proceeds of $222,932.77. These have since been held on interest-bearing account in the custody and control of the Official Assignee.

(b)The Cash has been banked and similarly held by the Official Assignee.

(c)Mr Nguyen’s other residential property, at 8 Savina Court, was sold by a trading bank, in favour of which he had entered a mortgage, exercising its unrestrained interest as mortgagee. No net sale proceeds were derived from the sale.

[8]    By application dated 5 July 2024, the Commissioner applied for civil forfeiture orders in respect of the restrained property and the respondents, Ms Phan, her trustee company, Mr Nguyen and Mr Phan.

[9]    In December 2024, Lang J approved a settlement, entered between the Commissioner and Mr Phan, addressing the question of what forfeiture orders should

be made in respect of Mr Phan, the 25 Artillery Drive property and a motor vehicle, in respect of which he was said to have interests.

[10]   The balance of the Commissioner’s civil forfeiture application (the Commissioner’s Forfeiture Application) is set for a two-day hearing, commencing on 11 March 2025.

The settlement

[11]The essence of the settlement the subject of the approval request is that:

(a)Of  the  net   sale  proceeds   derived  from   115  Boyd  Access Road,

$20,000 should be released from restraint and provided to Mr Nguyen.

(b)Mr Nguyen abandons all claims to the balance of the Sale Proceeds, and to the Cash.

(c)The Commissioner and Mr Nguyen agree that the  balance  of  the Sale Proceeds (including accrued interest) should, immediately, be made the subject of a type 1 assets forfeiture order. The Commissioner points out in this regard that Ms Phan has confirmed by affidavit that she had never held an interest in 115 Boyd Access Road or its Sale Proceeds.

(d)On the other hand, Ms Phan claims that the Cash is hers. The Commissioner and Mr Nguyen anticipate the question of forfeiture of the Cash being determined at or following the hearing commencing on

11 March 2025, or upon approval of any settlement between the Commissioner, Ms Phan and Ms Phan’s trustee company. If, in that context, the Court finds Mr Nguyen to have an interest in some or all of the Cash, that portion of the Cash should be forfeited to the Crown by way of type 1 assets forfeiture order.

(e)The Commissioner will not pursue the balance of his forfeiture application, for either a type 1 assets forfeiture order or a profit

forfeiture order, insofar as it is directed against Mr Nguyen and property in which he has interests, and is based upon criminal activity indicated by the affidavits filed in this proceeding to date.

(f)The settlement is full and final in respect of this proceeding.

(g)Costs as between the Commissioner and Mr Nguyen in this proceeding will lie where they fall.

Approval of settlements under the Act

[12]   Parliament has empowered the Commissioner to enter into settlements as to the forfeiture of property under the Act, and has entrusted the High Court with a supervisory jurisdiction to approve settlements when satisfied they are consistent with the purposes of the Act and the overall interests of justice.1

[13]   The primary purpose of the Act as set out in s 3(1) is to establish a regime for the forfeiture of property that has been derived, directly or indirectly, from significant criminal activity, or which represents the value of a person’s unlawfully derived income. Further purposes are stated at s 3(2).

[14]   The requirement expressed in s 95(3) that the Court have regard to the overall interests of justice reflects the strong public interest in litigation under the Act being brought to a prompt conclusion, reflecting the likely costs and risks inherent in the determination of a contested application,2 and the desirability of proceedings under the Act being made on economic and pragmatic grounds reflective of common sense compromise.3

Decision

[15]   Approval of the settlement so that it becomes binding is, in my view, consistent with the purposes of the Act and the overall interests of justice.

1      Criminal Proceeds (Recovery) Act 2009, s 95; Commissioner of Police v Know-All Group Ltd HC Auckland CIV-2010-404-403, 7 November 2011 at [11].

2      Commissioner of Police v Cotton [2017] NZHC 21 at [7].

3      Commissioner of Police v Douglas [2015] NZHC 1293 at [6].

[16]   There is a sufficient basis for a type 1 assets forfeiture order in respect of the entirety of the net sale proceeds of 115 Boyd Access Road. That said, release of the sum of $20,000 recognises a modest degree of litigation risk arising from Mr Nyugen’s assertions, that the funds used to pay the deposit and the loan repayments relating to 115 Boyd Access Road were not derived, directly or indirectly, from cannabis cultivating. Further, the forfeiture of property worth around $200,000, and the relinquishment of Mr Nguyen’s interest (if any) in the Cash appears broadly proportionate to the scale of financial benefit he appears to have derived from unknown sources during the period of several months prior to his arrest in Flat Bush in April 2021. And there will be a saving of time and expense if the proceeding can be resolved by consent without the need for a hearing, and the settlement will allow the parties to have certainty and a degree of control as to the outcome.

Result

[17]The settlement between the Commissioner and Mr Nguyen is approved.

[18]I make the following orders, so as to give effect to the settlement:

(a)Further orders under ss 33 and 35 of the Act:

(i)The restraining orders of Lang J dated 7 July 2021 relating to the net sale proceeds of the property at 115 Boyd Access Road, Whangaripo (Sale Proceeds) are varied to exclude from restraint the sum of $20,000 (Excluded Funds).

(ii)The Official Assignee is directed to transfer the Excluded Funds to a bank account to be nominated by Mr Nguyen.

(b)A type 1 assets forfeiture order under s 50(1) of the Act:

(i)The Sale Proceeds (including any accrued interest) vest in the Crown absolutely and are in the Official Assignee’s custody and control.

[19]   For the reasons outlined above, the Cash remains under restraint, pending determination of the balance of the Commissioner’s Forfeiture Application.

Johnstone J