Commissioner of the Australian Federal Police v Phan (No 2) [2024] QSC 264

SUPREME COURT OF QUEENSLAND CITATION: Commissioner of the Australian Federal Police v Phan (No 2) [2024] QSC 264 PARTIES: COMMISSIONER OF THE AUSTRALIAN FEDERAL POLICE (applicant) v NGOC TANG PHAN (first respondent) THI LE TRAN (second respondent) PETER THONG VAN PHAM (third respondent) TOMMY DUONG (fourth respondent) MEN EN QUACH (fifth respondent) CU VAN TRAN (sixth respondent) YILIANG CHEN (seventh respondent) FILE NO: 6937 of 2020 DIVISION: Trial Division PROCEEDING: Application ORIGINATING COURT: Supreme Court at Brisbane DELIVERED ON: 5 November 2024 DELIVERED AT: Brisbane HEARING DATE: 22 June 2023 JUDGE: Davis J ORDER: 1. Pursuant to s 180 of the Proceeds of Crime Act 2002 (Cth), it is ordered that: The fifth respondent be examined about the affairs of the first and second respondents, and Thi Cam Yen Phan. Thi Cam Yen Phan be examined about the affairs of the first, second, and fifth respondents. -- 1 of 12 -- 2 Joanne Quach be examined about the affairs of the first, second, and fifth respondents, and Thi Cam Yen Phan. Ngoc Phu Phan be examined about the affairs of the first and second respondents, Thi Cam Yen Phan, and Kathy Thuy Phan. Binh Van Nguyen be examined about the affairs of the first, second, third, and fifth respondents and Janice Heberling. The first respondent be examined about the affairs of the second through seventh respondents (inclusive), Thi Cam Yen Phan, Joanne Quach, Thi La Tran, Ngoc Phu Phan, Binh Van Nguyen, My Linh Thi Train, Kathy Thu Phan, and Bich-Hoa Tran. The second respondent be examined about the affairs of the first and third through seventh respondents (inclusive), Thi Cam Yen Phan, Joanne Quach, Thi La Tran, Ngoc Phu Phan, Binh Van Nguyen, My Ling Thi Tran, Kathy Thuy Phan, and Bich-Hoa Tran. The third respondent be examined about the affairs of the first, second, and sixth respondents, Binh Van Nguyen, and Lien Nguyen. The fourth respondent be examined about the affairs of the first and second respondents, and My Linh Thi Tran. My Linh Thi Tran be examined about the affairs of the first, second, and fourth respondents. Kathy Thuy Phan be examined about the affairs of the first and second respondents, and Ngoc Phu Phan. Bich-Hoa Tran be examined about the affairs of the first and second respondents. 2. The parties file and exchange written submissions on costs by 12 November 2024. 3. The question of costs will be determined on any written submissions filed without further oral hearing. -- 2 of 12 -- 3 CATCHWORDS: CRIMINAL LAW – PROCEDURE – CONFISCATION OF PROCEEDS OF CRIME AND RELATED MATTERS – FORFEITURE OR CONFISCATION – PROCEDURE – INVESTIGATION AND EXAMINATION – where the first respondent was convicted of drug trafficking in 2020 – where the Australian Taxation Office assessed income against the first respondent – where the applicant seeks examination orders under s 180 of the Proceeds of Crime Act 2002 (Cth) (POCA) in relation to various people – where there is no opposition to the orders sought by the applicant except for the examination of the fifth respondent’s daughter, Joanne Quach – where Joanne Quach became a beneficiary to her grandfather’s life insurance policy – where upon death of Joanne Quach’s grandfather and whilst she was still under the age of 18, Joanne Quach received $145,751.24 to a bank account in her name – where the bank account was allegedly being controlled by the fifth respondent – where there was $55,302.95 of cash deposited into Joanne Quach’s bank account over an approximate four year period – where the fifth respondent, still allegedly in control of Joanne Quach’s account, used $130,000.00 towards the repayment of his loan for the purchase of a property originally owned by the first respondent – where the applicant says that the cash deposits and loan repayment were purposed to defeat creditors under the POCA if the first respondent was convicted – where the applicant seeks to examine Joanne Quach about the affairs of the first respondent, the first respondent’s wife (the second respondent), the fifth respondent and Joanne Quach’s mother in relation to the cash deposits and loan repayment – whether the application to examine Joanne Quach under s 180 of the POCA ought to be granted Drugs Misuse Act 1986 (Qld), s 5 Proceeds of Crime Act 2002 (Cth), s 180, s 182 Commissioner of the Australian Federal Police v Phan [2022] QSC 45, related Commissioner of the Australian Federal Police v Tjongosutiono (2018) 329 FLR 103; [2018] NSWSC 48, cited Commissioner of the Australian Federal Police v Wen (2017) 322 FLR 32; [2017] VSC 391, cited Director of Public Prosecutions (Cth) v Chan [2001] NSWSC 251, cited Hanson v Goomboorian Transport Pty Ltd (2019) 3 Qd R 375; [2019] QCA 41, considered COUNSEL: G Handran KC with A Hughes for the applicant J D Godbolt for the fifth respondent and Joanne Quach -- 3 of 12 -- 4 SOLICITORS: G Handran KC with A Hughes, briefed directly by the Commissioner of the Australian Federal Police Criminal Assets Litigation Section for the applicant Morgan Mac Lawyers for the fifth respondent and Joanne Quach [1] The Commissioner of the Australian Federal Police (the Commissioner) seeks examination orders under the Proceeds of Crime Act 2002 (Cth)1 (POCA) against a number of people, including Joanne Quach. [2] There is no opposition to the orders except as they relate to Joanne Quach. I will make those non contentious orders. Joanne Quach resists an order subjecting her to compulsory examination. Background [3] The first respondent (Ngoc Phan) and the second respondent (Thi Tran) are husband and wife. Ngoc Phan was convicted on 24 April 2020 of trafficking in dangerous drugs2 and other related offences, by his own plea of guilty. He was sentenced to 17 years and six months imprisonment. [4] The Australian Taxation Office issued assessments against the first and second respondents for various substantial amounts. Those assessments led to the bankruptcy of Ngoc Phan and Thi Tran. [5] Peter Thong Van Pham, the third respondent, has some link to Thi Cam Chi Phan (Gina Phan). Gina Phan is Ngoc Phan’s sister. Tommy Duong, the fourth respondent, is the nephew of Ngoc Phan and Thi Tran. Tommy Duong’s mother, My Linh Thi Tran is Thi Tran’s sister. [6] The fifth respondent, Men En Quach (Men Quach) is Ngoc Phan’s brother-in-law, he being married to Ngoc Phan’s sister, Thi Cam Yen Phan. The sixth respondent, Cu Van Tran (Cu Tran) is Thi Tran’s brother and consequently, Ngoc Phan’s brother-in- law. Cu Tran and the seventh respondent, Yiliang Chen, are directors of a company called Kingdom No. 1 Pty Ltd. Cu Tran, that company and assets held by it, are of interest to the Commissioner. [7] Central to the current dispute is a property on the Gold Coast being 95 Compass Drive (the Compass Drive house). Ngoc Phan purchased the Compass Drive house and title was registered in his name. The Commissioner alleges that the house was purchased, at least in part, from the proceeds of Ngoc Phan’s trafficking in dangerous drugs. [8] In January 2015, Men Quach purchased the Compass Drive house from Ngoc Phan and title was registered in his name. It is alleged by the Commissioner that the Compass Drive house is within the reach of orders under the POCA and it seeks its forfeiture. 1 Chapter 3, Part 3-1. 2 Drugs Misuse Act 1986, s 5. -- 4 of 12 -- 5 [9] Joanne Quach is the daughter of Men Quach. As at 19 June 20233, she was 21 years of age. At the time Men Quach acquired the Compass Drive house she was 13 years of age. [10] Joanne Quach, at relevant times, held an account with the Commonwealth Bank of Australia being Account Number 064794-1006690 (the 6690 account). [11] Ngoc Luong Phan was Ngoc Tang Phan’s and Thi Phan’s father and therefore Men Quach’s father-in-law and Joanne Quach’s grandfather. On 6 July 2019, Ngoc Luong Phan died. [12] A term life insurance policy was held which ensured the life of Ngoc Luong Phan. In the mass of materials that were read in the current application, I cannot locate a copy of the policy or the terms and condition which may govern it.4 [13] What is before me is a Nomination of Beneficiaries form signed 22 April 20185, well over a year before Ngoc Luong Phan died. That form shows: (a) the “policy owner” is Ngoc Luong Phan; (b) until 22 April 2018, the nominated beneficiaries for the death benefit were Ngoc Tang Phan and Thi Kim Loan Phan in equal shares; and (c) by the nomination form, Ngoc Luong Phan removed his son, Ngoc Tang Phan and daughter, Thi Kim Loan Phan as beneficiaries and replaced them with Joanne Quach, who thereby became entitled to 100 per cent of the death benefit under the life policy. [14] From April 2018, Joanne Quach paid the premiums on her grandfather’s life policy. [15] Between 12 January 2018 and 19 October 2021, there were cash payments of $55,032.95 made to account 6690. Over this period Joanne Quach would have been aged between 16 and 19 years. [16] On 26 September 2019, the sum of $145,751.24 was paid to Joanne Quach pursuant to the life insurance policy held by Ngoc Luong Phan. That money was paid into account 6690. [17] Joanne Quach then placed $15,000 into a savings account she held, and then paid $130,000 to the loan account whereby Men Quach was the debtor, he having used the money advanced by the bank towards the purchase of the Compass Drive house. [18] In October 2019, Men Quach drew $50,000 on the loan account and paid that to Joanne Quach who then paid that sum to Robertson O’Gorman solicitors on account of fees for acting for their client, Ngoc Tang Phan. 3 When she signed her affidavit, filed 20 June 2023. 4 Often an insurance policy document does nothing except record certain details and agreements and refer to a separate document which contains standard terms and conditions. 5 Affidavit of Joanne Quach, filed 20 June 2023, Exhibit JQ-1. -- 5 of 12 -- 6 Statutory basis for the application [19] Examination orders are governed by Part 3-1 of Chapter 3 of POCA. Section 180 provides: “Examination orders relating to restraining orders (1) If a *restraining order is in force, the court that made the restraining order, or any other court that could have made the restraining order, may make an order (an examination order) for the examination of any person, including: (a) a person whose property is, or a person who has or claims an *interest in property that is, the subject of the restraining order; or (b) a person who is a *suspect in relation to the restraining order; or (c) the spouse or *de facto partner of a person referred to in paragraph (a) or (b); about the *affairs of a person referred to in paragraph (a), (b) or (c). (2) The *examination order ceases to have effect if the *restraining order to which it relates ceases to have effect.” [20] There is no doubt that the applicant is authorised by POCA to apply for examination orders.6 [21] The order which is sought in relation to Joanne Quach is: “Pursuant to s 180 of the Act7, Joanne Quach be examined about the affairs of the First, Second and Fifth Respondents, and Thi Cam Yen Phan.” [22] Therefore, the order seeks an examination of her about the affairs of Ngoc Tang Phan, Thi Lee Tran, Joanne’s father, Men Quach, and her mother, Yen Phan. [23] Men Quach is a person prescribed by s 180(a), as he claims an interest in the Compass Drive house. Ngoc Tang Phan is a person prescribed by s 180(1)(b). Thi Tran is the spouse of Ngoc Tang Phan and is therefore a person prescribed by s 180(1)(c). Thi Phan is the spouse of Men Quach and is therefore a person prescribed by s 180(1)(c). [24] The restraining orders were made upon suspicions formed by Federal Agent Tracey Lee Lancashire. By force of the POCA, restraining orders can be made upon evidence of a reasonable suspicion by a Federal police officer of certain things.8 [25] There is no statutory basis upon which the suspicions of a Federal Agent have any statutory force on an application for an examination order. This has not dissuaded FA Lancashire from expressing her views. Although I have previously found that FA 6 Proceeds of Crime Act 2002, s 182. 7 A reference to Proceeds of Crime Act 2002. 8 Chapter 2, Part 2-1. -- 6 of 12 -- 7 Lancashire has formed and expressed suspicions without reasonable grounds to do so9, her views at least form an articulation of some basis upon which the examination might be justified in the sense of identifying the areas of inquiry which might be pursued. [26] In her affidavit filed 27 April 2023, FA Lancashire deals with various financial discoveries that she has made. She makes some assertions: “(o) In relation to CBA 064794-10046690 (CBA 6690) held by Joanne Quach: (i) Cash deposits totalling $55,032.95 were made to the account between 12 January 2018 and 19 October 2021; and (ii) On 26 September 2019, $145,751.24 was deposited to the account, being the life insurance payout following the passing of Yen Phan and the First Respondent’s father. (p) Joanne Quach became the sole beneficiary of the life insurance policy on April 2018, despite the premium payments being paid by the First Respondent and his sister, Thi Kim Loan Phan, between 2005 and 2017. The following transactions, amongst others, ensued: (i) On 26 September 2019, $130,000 was transferred from CBA 6690 to the WBC 037167-561343 (WBC 1343) Compass Drive loan; (ii) On 26 September 2019, $15,000 was transferred from CBA 6690 to CBA 064794-10091117 held by Joanne Quach; and (iii) On 21 October 2019, $50,000 was transferred from the WBC 1343 to the Robertson O’Gorman Lawyers trust account via CBA 6690 and WBC 5114. I am aware Robertson O’Gorman were the legal representatives for the First Respondent between at least September 2019 and May 2020." And then expresses these suspicions: “(b) Joanne Quach’s CBA 6690 account, referred to at subparagraph 28(o) and 28(p)(iii), was under the effective control of Yen Phan and the Fifth Respondent; (c) the $50,000 payment to Robertson O’Gorman, referred to at subparagraph 28(p)(iii), was made from CBA 6690 on behalf of the First Respondent and the funds were under the First Respondent’s effective control; 9 Commissioner of the Australian Federal Police v Phan [2022] QSC 45 at [104]. -- 7 of 12 -- 8 (d) Joanne Quach became the sole beneficiary of her grandfather’s life insurance policy to defeat the First Respondent’s creditors and, in part, to maintain the Compass Drive property; (e) there is no clear delineation between the finances of the fifth Respondent and Yen Phan, and the finances of Thi La Tran; (f) the Fifth Respondent, Yen Phan, Joanne Quach and Thi La Tran did not have the financial means to justify the amounts of money flowing through their accounts, and in the case of the Fifth Respondent, justifying the purchase of 95 Compass Drive; and (g) examination of the Fifth Respondent, Yen Phan, Joanne Quach and Thi La Tran will provide information about the acquisition and effective control of 95 Compass Drive.” Federal Agent Lancashire’s reasoning [27] There are significant problems with FA Lancashire’s theory that Joanne Quach is part of a conspiracy to defeat Ngoc Tan Phan’s creditors. [28] Firstly, the assertion that the $50,000 paid to Robertson O’Gorman is money under the effective control of Ngoc Tang Phan will no doubt come as a shock to those solicitors. It is also inconsistent with the evidence. [29] Robertson O’Gorman entered into an agreement with Joanne Quach whereby she would provide funds for the express purpose of the solicitors providing legal services to Ngoc Tang Phan. Those legal services were specified in the agreement between Joanne Quach and Robertson O’Gorman. The solicitors are contractually obliged to deal with the money in the manner they have agreed with Joanne Quach that they will deal with it. The money obviously is not under the effective control of Ngoc Tang Phan. [30] What FA Lancashire may be attempting to articulate is that unbeknown to Robertson O’Gorman, the payment to them was made at the direction of Ngoc Tang Phan from money over which he had effective control. However, the funds which were provided by Joanne Quach to Robertson O’Gorman were drawn from a loan account held by Men Quach. If Men Quach wishes to put himself in debt to assist his brother-in-law then he is entitled to do so. There is nothing unlawful about a third party funding the defence of a suspect the subject of a restraining order. The real point is whether by arrangement between Ngoc Tang Phan and Men Quach, Ngoc Tang Phan is in effective control of the Compass Drive house and any loan funds that can be raised upon a mortgage of it. [31] There are significant difficulties with FA Lancaster’s theory that Joanne Quach is part of a conspiracy to defeat the creditors of Ngoc Tang Phan by becoming the beneficiary of Ngoc Luong Phan’s insurance policy. [32] Joanne Quach became the only beneficiary of the life insurance policy by force of an action of the “owner” of the policy, Ngoc Luong Phan. It was he who changed the nomination of beneficiary of the policy. The policy is not before me. However, the -- 8 of 12 -- 9 evidence of the nomination and the fact that the insurer evidently accepted it strongly suggests that the nomination was lawful. [33] The suggestion that that action was taken “to defeat” the creditors of Ngoc Tang Phan and to pay off some of the debt attributed to the Compass Drive house is not sustainable. The right to payment of the benefit of any term life policy only accrues upon the happening of an event (death of the insured) while the premium is current. To keep the policy current the premiums must be paid. Putting aside any right which a party might have for some reason or another in the proceeds if the insured event occurs, the party with the power of nomination can nominate whoever they want to take the benefit. [34] It is common for example for wills to be altered to exclude beneficiaries who are bankrupt or who are vulnerable to some potential claim. That action may result in less money being available to creditors of the excluded beneficiary than would have been the case if the beneficiary had not been excluded. The power of nomination of a beneficiary under an insurance policy operates in the same way. [35] Mr Handran KC initially attempted to defend FA Lancaster’s reasoning but then submitted that the entitlement to the proceeds was dependent upon who contributed to the premiums over the life of the policy. In support of that proposition he cited Hanson v Goomboorian Transport Pty Ltd10. That case is no authority for any such principle. [36] In Hanson, premiums were paid on a term life policy by the person who was the life insured. She paid the premiums over the life of the policy from late 2006 until her death in early 2015. After her death, it became evident that she had been misappropriating funds from her employer, Goomboorian Transport Pty Ltd. Four of the monthly premiums that had been paid could be traced to the stolen funds. One of the four that could be so traced was the last premium paid. The trial judge found that as the payment for the last premium could be traced to the misappropriated funds, Goomboorian Transport was entitled to the entirety of the amount paid upon death. The Court of Appeal reversed that decision based on a proper construction of the policy and the principles laid down by the House of Lords in cases concerning premiums paid on life policies which can be traced to a third party’s misappropriated funds. [37] Hanson has no relevance here if Ngoc Tang Phan has voluntarily paid the premiums on behalf of Ngoc Luong Phan. Absent any agreement between Ngoc Tang Phan and Ngoc Luong Phan, as to the distribution of the proceeds, and absent any bases upon which some trust might arise, Ngoc Tang Phan would have no interest in the death benefit and Ngoc Luong Phan could nominate a beneficiary at his will and the benefit would flow pursuant to that nomination. [38] Mr Handran in argument conceded that the submission based on Hanson was made “off the top of my head”. The submission was obviously not properly thought through and is of no assistance. 10 (2019) 3 Qd R 375. -- 9 of 12 -- 10 [39] The real question is as to how the provisions of the POCA may operate so as to bring the payout under the life policy within its ambit. There is nothing in either Mr Handran’s written or oral submissions which attempts that exercise. Should orders be made? [40] Examinations are provided for in Part 3-1 of Chapter 3 of the POCA. Chapter 3 is entitled “Information gathering” and examinations are one of the methods by which information is gathered. Therefore, the POCA provides coercive investigative powers which can be used throughout the course of the proceedings.11 Indeed, the powers cannot be utilised unless and until a restraining order is obtained. [41] Once it is accepted that the examination power is investigative, and obviously designed to assist the responsible authority in the proceedings, it follows that usually it would be appropriate to make an order if the preconditions of s 180 are met.12 However, there still remains a discretion not to make an order, and a factor against making an order is where there is no proper explanation as to how the examination would advance claims by the Commissioner under the POCA or where it appears that the examinee will be unlikely to provide evidence to advance such claims.13 [42] Here, there are basically two lines of inquiry that are sought to be made. The first concerns the insurance policy and the subsequent payment to Robertson O’Gorman (the insurance policy issue). The second concerns the cash payments of $55,032.95 made to account 6690 between January 2018 and October 2021 (the cash payments issue). If the only subject matter for examination was the insurance policy issue, then I would refuse the application for the following reasons: (a) Joanne Quach clearly paid premiums on her grandfather’s life policy; (b) Ngoc Luong Phan was the owner of the policy; (c) there is no illegal activity alleged against Ngoc Luong Phan; (d) the death benefit was paid to Joanne Quach pursuant to the policy; (e) the submissions that the payment of the death benefit could somehow be open to attack under the POCA are muddled are not properly thought through; and (f) the theories proffered by FA Lancashire as to why she thinks examination is a legitimate avenue of inquiry are illogical. [43] In my view, the position is different in relation to the unexplained cash issue. Joanne Quach’s uncle conducted a substantial illicit drug trafficking business for a number of years. The evidence shows that Joanne Quach’s father, Men Quach, purchased the Compass Drive house from Ngoc Tang Phan on terms that I previously found were other than commercial.14 In addition, there appears to be unexplained cash deposited to Joanne Quach’s bank accounts. At the time of most of these payments Joanne Quach was a minor. 11 Commissioner of the Australian Federal Police v Tjongosutiono (2018) 329 FLR 103 at [96]. 12 Commissioner of the Australian Federal Police v Wen (2017) 322 FLR 32 at [35]. 13 Director of Public Prosecutions (Cth) v Chan [2001] NSWSC 251. 14 Commissioner of the Australian Federal Police v Phan [2022] QSC 45 at [105]. -- 10 of 12 -- 11 [44] In those circumstances, unexplained cash deposits to account 6690 become relevant lines of inquiry into the affairs of Ngoc Tang Phan, Thi Lee Tran and Yen Phan. [45] By s 180 of the POCA, the role of the court is to make “an examination order” for the examination of a person “about the affairs of [a relevant] person”. As already observed, Ngoc Tang Phan, Thi Lee Tran, Men Quach and Yen Phan are all relevant persons. [46] There appears to be no power to restrict the subject matter of the examination. I can find no authority recognising such a power. Division 2 of Part 3-1 of Chapter 3 concerns the issue of examination notices and then Division 3 concerns conducting the examinations. The examiner is clearly exercising administrative not judicial power. The power must be exercised for the purposes of the POCA and must be relevant to those purposes. The examiner, in my view, would have to be satisfied that the insurance issue is relevant before examining on that issue. Conclusions [47] For the reasons given, I will make an order for the examination of Joanne Quach. As earlier explained, there is no opposition to orders for the examination of others and so I will make those orders. [48] At the hearing, the parties thought it appropriate they be heard further on the question of costs. I will make directions for that to occur. Orders [49] It is ordered: 1. Pursuant to s 180 of the Proceeds of Crime Act 2002 (Cth): The fifth respondent be examined about the affairs of the first and second respondents, and Thi Cam Yen Phan. Thi Cam Yen Phan be examined about the affairs of the first, second, and fifth respondents. Joanne Quach be examined about the affairs of the first, second, and fifth respondents, and Thi Cam Yen Phan. Ngoc Phu Phan be examined about the affairs of the first and second respondents, Thi Cam Yen Phan, and Kathy Thuy Phan. Binh Van Nguyen be examined about the affairs of the first, second, third, and fifth respondents and Janice Heberling. The first respondent be examined about the affairs of the second through seventh respondents (inclusive), Thi Cam Yen Phan, Joanne Quach, Thi La Tran, Ngoc Phu Phan, Binh Van Nguyen, My Linh Thi Train, Kathy Thu Phan, and Bich-Hoa Tran. The second respondent be examined about the affairs of the first and third through seventh respondents (inclusive), Thi Cam Yen Phan, Joanne Quach, -- 11 of 12 -- 12 Thi La Tran, Ngoc Phu Phan, Binh Van Nguyen, My Ling Thi Tran, Kathy Thuy Phan, and Bich-Hoa Tran. The third respondent be examined about the affairs of the first, second, and sixth respondents, Binh Van Nguyen, and Lien Nguyen. The fourth respondent be examined about the affairs of the first and second respondents, and My Linh Thi Tran. My Linh Thi Tran be examined about the affairs of the first, second, and fourth respondents. Kathy Thuy Phan be examined about the affairs of the first and second respondents, and Ngoc Phu Phan. Bich-Hoa Tran be examined about the affairs of the first and second respondents. 2. The parties file and exchange written submissions on costs by 12 November 2024. 3. The question of costs will be determined on any written submissions filed without further oral hearing. -- 12 of 12 --