Commissioner of the Australian Federal Police v Phan & Ors [2022] QSC 45

CRIMINAL LAW - PROCEDURE - CONFISCATION OF PROCEEDS OF CRIME - RESTRAINING OR FREEZING ORDER - VARIATION EXEMPTION OR RELEASE - where a restraining order was obtained against the fifth respondent's property pursuant to the Proceeds of Crime Act 2002 (Cth) (POCA) - where the first and second respondents were the suspects - where an authorised officer formed a reasonable suspicion that the property was proceeds of crime - where an authorised officer formed a suspicion that the property was under the effective control of the first respondent - where the fifth respondent applied for the release of the property from the restraining order - whether the suspicions held by the authorised officer were formed on reasonable grounds - whether the fifth respondent has demonstrated that there were no grounds to support the restraining order.

Proceeds of Crime Act 1987 (Cth)

Proceeds of Crime Act 2002 (Cth), s 5, s 18, s 42, s 47, s 73, s 74, s 77, s 329, s 330, s 337, s 338

Confiscation that Counts: A review of the Proceeds of Crime Act 1987; ALRC Report 87

A v New South Wales [2007] HCA 10; (2007) 230 CLR 500, cited

Commissioner of the Australian Federal Police v Fernandez [2017] NSWSC 1197, cited

Commissioner of the Australian Federal Police v Tjongosutiono [2018] NSWSC 48; (2018) 329 FLR 103, cited

Director of Public Prosecutions (Cth) v Kamal [2011] WASCA 55; (2011) 248 FLR 64, cited

Director of Public Prosecutions (Cth) v Tan [2003] NSWSC 717, cited

George v Rockett [1990] HCA 26; (1990) 170 CLR 104, followed

Hussien v Chong Fook Kam [1969] UKPC 26; [1970] AC 942, cited

Kable v Director of Public Prosecutions (NSW) [1996] HCA 24; (1996) 189 CLR 51, cited

Lee v Director of Public Prosecutions (Cth) [2009] NSWCA 347; (2009) 235 FLR 122, cited

Mai v Commissioner, Australian Federal Police (2020) 62 VR 118, followed

New South Wales v Robinson [2019] HCA 46; (2019) 266 CLR 619, cited

Peacock v The King [1911] HCA 66; (1911) 13 CLR 619, cited

Queensland Bacon Pty Ltd v Rees [1966] HCA 21; (1966) 115 CLR 266, cited

R v Elfar; R v Golding; R v Sander [2017] QCA 149, cited

R v Phan [2020] QSC 95, related

R v Rondo [2001] NSWCCA 540; (2001) 126 A Crim R 562, followed

Ruddock v Taylor (2005) 222 CLR 612, cited

Saad v Commissioner of Australian Federal Police [2021] VSCA 246, cited

State of New South Wales v Smith [2017] NSWCA 194; (2017) 95 NSWLR 662, cited

L Crowley QC with A Hughes for the respondent/applicant

Morgan Mac Lawyers for the applicant/fifth respondent

Commissioner of the Australian Federal Police Criminal Assets Litigation Section for the respondent/applicant

• [1] Men En Quach[1] is the registered proprietor in fee simple of a house and land being 95 Compass Drive on the Gold Coast (the Compass Drive house).
• [2] The Commissioner of the Australian Federal Police (the Commissioner) obtained a restraining order over the Compass Drive house and other property pursuant to the provisions of the Proceeds of Crime Act 2002 (Cth) (POCA).
• [3] Mr Quach applies for the revocation of the restraining order as it relates to the Compass Drive house.

The Proceeds of Crime Act 2002

• [4] Since 1987, there has been Commonwealth legislation whose specific purpose is the confiscation of the proceeds of crime.[2] That legislative scheme depended upon the conviction of an accused being achieved.
• [5] As a result of a Commonwealth Law Reform Commission report,[3] the POCA was passed. That provides for two schemes of criminal confiscation. One depends upon the conviction of an offender (the conviction based scheme) and one does not (the non‑conviction based scheme). The non‑conviction based scheme essentially provides for confiscation based on civil proof of offending.[4]
• [6] Central to both the conviction based scheme and the non‑conviction based scheme are restraining orders. Property is restrained pursuant to various provisions and then, depending upon whether resort has been had to the conviction based scheme or the non‑conviction based scheme, other provisions provide ultimately for the forfeiture of the property restrained. There are various procedures which may lead to the property avoiding forfeiture.
• [7] Here, the Commissioner has moved against Mr Quach and other respondents under the non‑conviction based scheme. The conviction based scheme is irrelevant to the current proceedings.
• [8] Section 18 of the POCA is one of the sections which provide for restraining orders under the non‑conviction based scheme. In this case, there is a restraining order and it was obtained under s 18.
• [9] Relevantly, s 18 provides:

"18 Restraining orders-people suspected of committing serious offences

(1) A court with proceeds jurisdiction must order that:

(a) property must not be disposed of or otherwise dealt with by any person; or

(b) property must not be disposed of or otherwise dealt with by any person except in the manner and circumstances specified in the order;

(c) a proceeds of crime authority applies for the order; and

(d) there are reasonable grounds to suspect that a person has committed a serious offence; and

(e) any affidavit requirements in subsection (3) for the application have been met; and

(f) the court is satisfied that the authorised officer who made the affidavit holds the suspicion or suspicions stated in the affidavit on reasonable grounds.

(2) The order must specify, as property that must not be disposed of or otherwise dealt with, the property specified in the application for the order, to the extent that the court is satisfied that there are reasonable grounds to suspect that that property is any one or more of the following:

(a) all or specified property of the suspect

(aa) all or specified bankruptcy property of the suspect ...

(c) specified property of another person (whether or not that other person's identity is known) that is subject to the effective control of the suspect;

(d) specified property of another person ( whether or not that other person's identity is known) that is:

(i) in any case - proceeds of the offence; or ...

(3) The application for the order must be supported by an affidavit of an authorised officer stating:

(a) that the authorised officer suspects that the suspect committed the offence; and

(b) if the application is to restrain property of a person other than the suspect but not to restrain bankruptcy property of the suspect-that the authorised officer suspects that:

(i) the property is subject to the effective control of the suspect; or

(ii) in any case-the property is proceeds of the offence; or

(iii) if the offence to which the order relates is a serious offence-the property is an instrument of the offence.

The affidavit must include the grounds on which the authorised officer holds those suspicions. ..."

• [10] The dictionary to the POCA, which is s 338, provides various definitions relevant to s 18. They are, relevantly here:

(a) the Commissioner of the Australian Federal Police; or

(b) the DPP.[5]

(a) any of the following, if authorised by the Commissioner of the Australian Federal Police:

(i) an AFP member;

(ii) an AFP employee within the meaning of the Australian Federal Police Act 1979; ...

(a) an indictable offence punishable by imprisonment for 3 or more years, involving:

(i) unlawful conduct relating to a narcotic substance; or

(ia) unlawful conduct constituted by or relating to a breach of Part 9.1 of the Criminal Code (serious drug offences); or

(ii) unlawful conduct constituted by or relating to a breach of section 81 of the Proceeds of Crime Act 1987 or Part 10.2 of the Criminal Code (money-laundering); or

(iii) unlawful conduct by a person that causes, or is intended to cause, a benefit to the value of at least $10,000 for that person or another person; or

(iv) unlawful conduct by a person that causes, or is intended to cause, a loss to the Commonwealth or another person of at least $10,000; or

(aa) unlawful conduct by a person that consists of an indictable offence (the 3 year offence) punishable by imprisonment for 3 or more years and one or more other indictable offences that, taken together with the 3 year offence, constitute a series of offences:

(i) that are founded on the same facts or are of a similar character; and

(ii) that cause, or are intended to cause, a benefit to the value of at least $10,000 for that person or another person, or a loss to the Commonwealth or another person of at least $10,000; or ...

property means real or personal property of every description, whether situated in Australia or elsewhere and whether tangible or intangible, and includes an interest in any such real or personal property.

interest, in relation to property or a thing, means:

(a) a legal or equitable estate or interest in the property or thing; or

(b) a right, power or privilege in connection with the property or thing;

whether present or future and whether vested or contingent.

bankruptcy property of a person means property that:

(a) is vested in another person under subsection 58(1) of the Bankruptcy Act 1966 but immediately before being so vested was:

(i) property of the person; or

(ii) subject to the effective control of the person; or ...

(a) in relation to a restraining order (other than a restraining order made under section 29A) or a confiscation order (other than an unexplained wealth order) - the person who:

(i) has been convicted of; or

(ii) has been charged with, or is proposed to be charged with; or

(iii) if the order is a restraining order - is suspected of having committed; or ..."

• [11] Section 329 and 330 of the POCA define "proceeds and instrument" of an offence and prescribes when property is "proceeds" or an "instrument". Here, the allegation is that the Compass Drive house is proceeds. Sections 329 and 330, relevantly, are:

(a) it is wholly derived or realised, whether directly or indirectly, from the commission of the offence; or

(b) it is partly derived or realised, whether directly or indirectly, from the commission of the offence;

whether the property is situated within or outside Australia. ...

(3) Property can be proceeds of an offence or an instrument of an offence even if no person has been convicted of the offence.

(4) Proceeds or an instrument of an unlawful activity means proceeds or an instrument of the offence constituted by the act or omission that constitutes the unlawful activity.

330 When property becomes, remains and ceases to be proceeds or an instrument

(1) Property becomes proceeds of an offence if:

(a) the property is wholly or partly derived or realised from a disposal or other dealing with proceeds of the offence; or

(b) the property is wholly or partly acquired using proceeds of the offence; or

(c) an encumbrance or a security on, or a liability incurred to acquire, retain, maintain or make improvements to, the property is wholly or partly discharged using proceeds of the offence; or

(d) the costs of retaining, maintaining or making improvements to the property are wholly or partly met using proceeds of the offence; or

(e) the property is improved using proceeds of the offence;

including because of one or more previous applications of this section. ...

(3) Property remains proceeds of an offence or an instrument of an offence even if:

(a) it is credited to an account; or

(b) it is disposed of or otherwise dealt with.

(4) Property only ceases to be proceeds of an offence or an instrument of an offence:

(a) if it is acquired by a third party for sufficient consideration without the third party knowing, and in circumstances that would not arouse a reasonable suspicion, that the property was proceeds of an offence or an instrument of an offence (as the case requires); or ...

(6) Property becomes, remains or ceases to be proceeds of an unlawful activity, or an instrument of an unlawful activity, if the property becomes, remains or ceases to be proceeds of the offence, or an instrument of the offence, constituted by the act or omission that constitutes the unlawful activity. ...

• [12] The meaning of "effective control" is defined by s 337, which provides:

(1) Property may be subject to the effective control of a person whether or not the person has:

(a) a legal or equitable estate or interest in the property; or

(b) a right, power or privilege in connection with the property.

(2) Property that is held on trust for the ultimate benefit of a person is taken to be under the effective control of the person.

(4) If property is initially owned by a person and, within 6 years either before or after an application for a restraining order or a confiscation order is made, disposed of to another person without sufficient consideration, then the property is taken still to be under the effective control of the first person.

(4A) In determining whether or not property is subject to the effective control of a person, the effect of any order made in relation to the property under this Act is to be disregarded.

(5) In determining whether or not property is subject to the effective control of a person, regard may be had to:

(a) shareholdings in, debentures over or directorships of a company that has an interest (whether direct or indirect) in the property; and

(b) a trust that has a relationship to the property; and

(c) family, domestic and business relationships between persons having an interest in the property, or in companies of the kind referred to in paragraph (a) or trusts of the kind referred to in paragraph (b), and other persons.

(6) For the purposes of this section, family relationships are taken to include the following (without limitation):

(a) relationships between de facto partners;

(b) relationships of child and parent that arise if someone is the child of a person because of the definition of child in section 338;

(c) relationships traced through relationships mentioned in paragraphs (a) and (b).

(7) To avoid doubt, property may be subject to the effective control of more than one person."

• [13] Property which is restrained under s 18 as part of the non‑conviction based scheme may be forfeited under s 47. That provides:

"47 Forfeiture orders - conduct constituting serious offences

(1) A court with proceeds jurisdiction must make an order that property specified in the order is forfeited to the Commonwealth if:

(a) the responsible authority for a restraining order under section 18 that covers the property applies for an order under this subsection; and

(b) the restraining order has been in force for at least 6 months; and

(c) the court is satisfied that a person whose conduct or suspected conduct formed the basis of the restraining order engaged in conduct constituting one or more serious offences.

(2) A finding of the court for the purposes of paragraph (1)(c) need not be based on a finding as to the commission of a particular offence, and can be based on a finding that some serious offence or other was committed.

(3) The raising of a doubt as to whether a person engaged in conduct constituting a serious offence is not of itself sufficient to avoid a finding by the court under paragraph (l)(c).

(4) Despite subsection (1), the court may refuse to make an order under that subsection relating to property that the court is satisfied:

(a) is an instrument of a serious offence other than a terrorism offence; and

(b) is not proceeds of an offence;

if the court is satisfied that it is not in the public interest to make the order."

• [14] Forfeiture can be avoided in one of two ways. The first is if the restraining order is revoked. By that process, property is removed from the restraining order and the property does not then meet the fate provided by s 47. Section 42 provides:

(1) A person who was not notified of the application for a restraining order may apply to the court to revoke the order.

(a) within 28 days after the person is notified of the order; or

(b) if the person applies to the court, within that period of 28 days, for an extension of the time for applying for revocation-within such longer period, not exceeding 3 months, as the court allows.

(2) The applicant must give written notice to the responsible authority and the Official Trustee of both the application and the grounds on which the revocation is sought.

(3) However, the restraining order remains in force until the court revokes the order.

(4) The responsible authority may adduce additional material to the court relating to the application to revoke the restraining order.

(5) The court may revoke the restraining order if satisfied that:

(a) there are no grounds on which to make the order at the time of considering the application to revoke the order; or

(b) it is otherwise in the interests of justice to do so."

• [15] The second avenue to avoid forfeiture is exclusion of the property from the forfeiture order. That necessitates an application under s 74 and orders being made under s 73. They, relevantly, provide:

(1) A person may apply for an exclusion order if a forfeiture order that could specify property in which the person claims an interest has been applied for, but is yet to be made. ...

(1) A court that made a forfeiture order, or that is hearing, or is to hear, an application (a forfeiture application) for a forfeiture order, must make an order excluding a specified interest in property from forfeiture (an exclusion order) if:

(a) a person applies for the exclusion order; and

(b) the forfeiture order, or the forfeiture application, specifies property in which the applicant has an interest; and

(c) if the forfeiture order was (or the forfeiture order applied for would be) made under section 47 or 49 - the court is satisfied that the applicant's interest in the property is neither of the following:

(i) proceeds of unlawful activity;

(ii) if an offence on which the order was ( or would be) based is a serious offence-an instrument of any serious offence; and ...

(2) An exclusion order must:

(a) specify the nature, extent and value (at the time of making the order) of the interest concerned; and

(b) direct that the interest be excluded from the operation of the relevant forfeiture order; and ..."[6]

• [16] The first (Phan) and second (Tran) respondents to the principal application are de facto spouses. They are "suspects" for the purposes of s 18 of the POCA, although the Compass Drive house only directly concerns Phan.
• [17] The third respondent (Pham) appears not to be related to Phan or Tran. There is some evidence[7] that Pham's partner, Lieu Ngyen, has a link through Binh Van Ngyen to Phan's sister, Thi Cam Chi Phan (Gina Phan), but that need not be explored.
• [18] The fourth respondent (Duong) is the son of Tran's sister, My Linh Thi Tran, and is therefore the nephew of Phan and Tran.
• [19] Mr Quach[8] is married to Phan's sister, Thi Cam Yen Phan (Thi Phan), and is therefore Phan's brother-in-law.
• [20] Cu Van Tran[9] (Cu Tran) is Tran's brother and is therefore Phan's brother-in-law. He is a director with Yiliang Chen (the seventh respondent) in a company called Kingdom No 1 Pty Ltd.
• [21] The family relationships have some significance. Tracey Lee Lancashire is a Federal Agent and member of the AFP.[10] She swore an affidavit in support of the restraining order and has since sworn further affidavits.
• [22] Ms Lancashire swore to holding various suspicions in relation to the Compass Drive house and other property which have been transferred to various people from Phan and Tran. Ms Lancashire suspected that the transfers[11] had been "financed in part through the movement of money through extended family members of [Phan and Tran]".[12]

• [23] The Commissioner is a "proceeds of crime authority" and Ms Lancashire is an "authorised officer".[13]
• [24] Ms Lancashire swore to her suspicion that:

1. Phan committed serious offences, offences relating to a narcotic substance, offences against the Bankruptcy Act 1966, and other offences;

2. various properties, including the Compass Drive house, were acquired by Phan from the proceeds of his offending.

• [25] There is no submission on behalf of Quach that those suspicions were not reasonably held. Phan was sentenced to 17½ years imprisonment for a large and sophisticated drug trafficking business that he conducted.[14] There is evidence of significant suspicious deposits being made to accounts controlled by him.
• [26] Mr Quach purchased the Compass Drive house. He obtained a loan from Westpac Bank, drew on that loan, paid out an existing loan and took a transfer of the Compass Drive house which is now registered in his name.
• [27] Ms Lancashire's various affidavits are confusing because she has not followed the statutory scheme. To obtain a restraining order, she must comply with the affidavit requirements in s 18(3). To do that, she must:

1. swear that she holds a suspicion as to the commission of the relevant offence by Phan;

2. swear that she holds a suspicion as to one of the three matters prescribed by s 18(3)(b). Here, only two are really relevant:

"(i) the property is subject to the effective control of [Mr Phan]

(ii) ... the property is proceeds of [Mr Phan's] offence";

3. swear to the grounds upon which she holds the suspicions.

[28] Instead, Ms Lancashire swears to her suspicion of all manner of factual matters which may form the grounds of her suspicion. In that way, she confuses the statutorily required "suspicion" with the grounds supporting the suspicion.

• [29] Ms Lancashire's various affidavits, as later analysed, in effect swear to suspicion of three things:

1. The Compass Drive house is the proceeds of Phan's offending in the hands of Mr Quach because Phan made various deposits of money (proceeds) enabling Mr Quach to either acquire or maintain ownership of the Compass Drive house.

2. The Compass Drive house is the proceeds of crime because it having originally been acquired by Phan from the proceeds of his offending, has not ceased to be proceeds upon the acquisition by Mr Quach as:

(a) the acquisition was not of "sufficient consideration"; or

(b) Mr Quach either has, or ought to have, had a reasonable suspicion that the Compass Drive house was the proceeds of Phan's[15] offending; or

(c) the Compass Drive house is under the effective control of Phan.

• [30] The issue between the parties on the present application is whether the Compass Drive house is now proceeds of crime. The revocation application will fail if there are reasonable grounds for Ms Lancashire suspecting:

1. Mr Quach did not acquire the Compass Drive house for sufficient consideration without Quach knowing that the property was the proceeds of crime or he acquired it in circumstances where a reasonable suspicion would arise that it was; or

2. proceeds of Phan's offending have contributed to Mr Quach's acquisition or holding of the Compass Drive house; or

3. the Compass Drive house is under the effective control of Phan.

• [31] Property can be under the effective control of a suspect in various different circumstances.[16] As later explained, Ms Lancashire has not clearly articulated the basis upon which the Compass Drive house is under the effective control of Phan.
• [32] Ms Lancashire's first affidavit (the first Lancashire affidavit) was filed on 26 June 2020. There were problems with the exhibits to that affidavit which were not discovered until after the restraining orders were made. A second affidavit (the second Lancashire affidavit) was filed.
• [33] In the first Lancashire affidavit, Ms Lancashire explained her investigations and considerations about the transfer of the Compass Drive house from Phan to Mr Quach.
• [34] The registered transfer of the property shows a price of $1,100,000. The transfer occurred on 14 January 2015.
• [35] Several bank accounts were identified as being relevant to the payment of the purchase price and other things. The first is Westpac Loan Account 037 167-561343 (Loan AC 1343). That is a loan account in the name of Mr Quach. It is the loan he established to purchase the Compass Drive house. The second is Westpac Account 732 172-875114 (AC 5114). This is an account in Mr Quach's name and is an account from which payments due under the Loan AC 1343 were paid. Another account in Mr Quach's name is Westpac Account 037 165-174155 (AC 4155). Mr Quach's wife, Thi Phan, holds St George Bank Account 114 879-412362948 (AC 2948)
• [36] Deposits of $241,280 were made to AC 5114 prior to the loan which is Loan AC 1343:

16 December 2014, Commonwealth Bank of Australia (CBA) bank cheque drawn by "Sandy Chon"

18 December 2014, CBA bank cheque drawn by Winners Choice Real Estate Trust

7 January 2015, transfer from AC 4155 held by Quach

• [37] Settlement occurred on 9 January 2015. The settlement statement disclosed:

CHEQUE DETAILS (these are the cheques that the

Seller requires and the total amount will equal to the at

Buyer & seller agreed to provide to Seller directly $ 192,853.51

• [38] Mr Quach short settled by $192,853.51. He paid at settlement $916,983.59 plus stamp duty and solicitors' fees of $44,655. The sum of $696,667.70 was paid from the money he advanced through Loan AC 1343 with the balance coming from AC 5114.
• [39] Phan's accounts that were scrutinised included Suncorp Account 484 799-502724669 (AC 4669) and a loan account being Suncorp home loan account 484 799-108146739 (Loan AC 6739).
• [40] The deposits to Phan's accounts were relevant to the application for the restraining order as it formed the basis of suspicion that the Compass Drive house was the proceeds of Phan's drug trafficking. As earlier observed, the issue between Mr Quach and the Commissioner at present is whether the Compass Drive house ceased to be proceeds upon acquisition by Mr Quach. Therefore, the deposits to Phan's accounts are of little relevance to the present application and a full analysis of those accounts is not necessary.
• [41] Ms Lancashire deposed to being unable to identify payment of the balance purchase price of $192,853.51 to Mr Phan.
• [42] She did identify a number of deposits which were suspicious to her:

Transfers from Trieu Nguyen's Westpac Account 732 172-881709 to AC 5114, various totalling

Five cash deposits to AC 2948 which is an account held by Yen Phan, Mr Quach's wife

Deposit to AC 5114, CBA bank cheque drawn by Winners Choice Real Estate Trust

• [43] A list of the deposits totalling $44,770 became Appendix 2 to the first Lancashire affidavit and a list of the five deposits totalling $25,500 became Appendix 3. I have attached Appendix 2 as Schedule 1 to these reasons and Appendix 3 as Schedule 2.
• [44] Ms Lancashire observed that a search of Phan and Tran's residence located a deposit slip for $1,000 dated 28 April 2015 to AC 2948 annotated with "Yen" in handwriting. The relevance of that is very limited.
• [45] From the evidence identified by her, Ms Lancashire formed various suspicions. She swore:

"B.4 Suspicions arising from the investigation of 95 Compass Drive

(a) the unexplained deposits to Loan AC 1343, AC 4669, AC 5114 and AC 2948, referred to in paragraphs 108,[17] 132,[18] 133,[19] 135[20] and 136,[21] were the proceeds of PHAN's alleged drug trafficking activities;

(b) TRAN was responsible for the unexplained cash deposits referred to in subparagraphs 108(c),[22] 108(e)[23] and 108(f);[24]

(c) TRAN was aware she was dealing with the proceeds of PHAN's drug trafficking activities;

(d) QUACH and Yen PHAN's reported income does not support the purchase of 95 Compass Drive or the cash deposits to their accounts;

(e) the four deposits made prior to the issue of Loan AC 1343 were facilitated by PHAN to enable QUACH to acquire 95 Compass Drive, being:

(i) the three deposits totalling $241,280, made to AC 5114 (referred to in paragraph 127); and

(ii) the deposit of $14,200, made to AC 2948 (referred to in paragraph 136);

(f) the difference between the agreed purchase price and the actual settlement amount paid by QUACH, being the shortfall of $192,853.51 that was agreed to be paid by QUACH directly to PHAN, was never paid (referred to in paragraphs 129 and 130);

(g) PHAN transferred this property to QUACH at an undervalue as the property was purchased in 2012 for $1,000,000 and transferred to QUACH in 2015 for $1,100,000;

(h) QUACH is married to PHAN's sister Thi Cam Yen Phan; and

(i) the relationship between QUACH and PHAN, the timing and circumstances of the transfer of the property the partial provision of acquisition costs and partial reimbursement of acquisition costs, make me suspicious that QUACH was aware of PHAN and TRAN's intention to enter into bankruptcy and avoid their liabilities to the ATO."

"B.5 Basis for suspicion that PHAN retains effective control of 95 Compass Drive

B.5.1 Execution of Search Warrant on Principal Residence

139. During the execution of the Search Warrant on PHAN and TRAN's Principal Residence, the following document which post-date the transfer of the property to QUACH relating to 95 Compass Drive was seized:

(a) A St George deposit slip to account '#########2948' for $1,000 dated 28 April 2015, annotated with 'Yen' in handwriting.

Exhibited hereto and marked 'TL-35' is the St George deposit slip to account '#########2948' for $1,000 dated 28 April 2015.

(a) the unexplained cash deposits to QUACH (AC 5114), totalling $44,770 (referred to in paragraph 133) were paid to QUACH by or on behalf of PHAN and TRAN. The purpose of these deposits was to cover the mortgage commitments for 95 Compass Drive, and to give the impression that QUACH, as the owner of 95 Compass Drive, was making the payments due under the mortgage over that property;

(b) the cash deposits to AC 2948 totalling $25,500 (referred to in paragraph 135) are suspected of being reimbursement for the difference between the loan deposit of $265,000.89 (referred to in paragraph 128) and the funds totalling $241,280 that were deposited to QUACH's account AC 5114 prior to settlement (referred to in paragraph 127);

(c) the cash deposit to St George account '#########2948' marked 'Yen', referred to in subparagraph 139(a) and seized from PHAN's Principal Residence, relates to a deposit by PHAN or TRAN to AC 2948 held by Yen PHAN;

(d) 'Trieu NGUYEN' (referred to in paragraph 104) is PHAN's brother, Trieu Phong NGUYEN, born 6 April 1978, formerly known as Tinh Ngoc PHAN;

(e) the cash transfers to AC 5114 by Trieu NGUYEN (referred to in paragraph 131) were provided to him by PHAN and/or TRAN to give the impression that QUACH was genuinely repaying the 95 Compass Drive home loan and conceal the true origin of the funds; and

(f) at all relevant times, PHAN retained effective control of 95 Compass Drive."

• [46] Of some significance were the cash payments to AC 5114 totalling $44,700.[25] There were 21 of these payments. Twenty of them were made between 13 August 2015 and 30 August 2016, and were of various amounts, none of which exceeded $3,300. The last payment was made about 18 months later and was in an amount of $8,000 paid on 27 February 2018.
• [47] It can be seen that, apart from the final payment, the series of deposits ends on 30 August 2016.
• [48] Phan was arrested by police in September 2016. Given that the cash payments coincidentally ceased upon Mr Phan's arrest, Ms Lancashire drew an inference that he was involved in the making of the deposits.
• [49] In support of the present application, Mr Quach swore an affidavit which responded to the first Lancashire affidavit. What he says follows.
• [50] In 2001, Mr Quach purchased a property in Green Valley, New South Wales being an address of 17 Thursday Place (the Thursday Place property). He paid $313,000 for that property. He exhibited to his affidavit a letter from his lawyers confirming settlement.
• [51] In March 2010, Mr Quach's mother purchased another property in New South Wales. This was at 104 Prairie Vale Road, Bossley Park (the Bossley Park property). Mr Quach's mother paid $665,000 for that property. Mr Quach exhibits a solicitor's letter which sets out the settlement figures.
• [52] In order to purchase the Bossley Park property, Mr Quach's mother required a bank loan. That loan was secured in part by a mortgage over the Thursday Place property.
• [53] As the Bossley Park property was larger than the Thursday Place property, and given that Mr Quach and his wife then had three children, it was agreed that Mr Quach's family would move to the Bossley Park property and his mother would reside at the Thursday Place property.
• [54] In 2013, Mr Quach's mother sold the Bossley Park property for $710,000. Mr Quach exhibits to his affidavit a copy of the contract of sale.
• [55] Once the Bossley Park property was sold, Mr Quach's family moved back to live in the Thursday Place property and his mother vacated the Thursday Place property and moved to live with Mr Quach's sister.
• [56] Mr Quach's mother paid the proceeds of the sale of the Bossley Park property to Mr Quach who then began to search for a property which could house both his immediate family and his mother.

1. the deposit of 6 December 2014, being the bank cheque drawn by Sandy Chon for $50,000, was a payment from Mr Phan adjusting the purchase price after the bank valuation;

2. the deposit on 17 December 2014 to AC 5114 of $118,106.95 was the sale proceeds of the Oliveri Crescent property;

3. the deposit of $51,280 made on 18 December 2014 to AC 5114 was the balance of the deposit paid by the purchaser on the sale by Mr Quach of the Oliveri Crescent property;

4. the deposit to AC 5114 of $140,000 on 7 January 2015 was a redraw on the mortgage over the Thursday Place property.

• [77] The third Lancashire affidavit was sworn in response to Mr Quach's affidavit. In the third Lancashire affidavit, the final suspicions held by Ms Lancashire are articulated. Further material was filed by the Commissioner and Mr Quach. Before analysing the third Lancashire affidavit and the other material, it is necessary to consider the principles relevant to applications under s 42 of the POCA and the notion of a "reasonable suspicion".

The approach to the application under s 42

• [78] By s 42(5) of the POCA, a restraining order may only be revoked if the court is satisfied that there are "no grounds on which to make the order at the time of considering the application to revoke the order".[29] The reference to "no grounds" is not a reference to grounds of the suspicion which founded the application under s 18.
• [79] The "grounds" referred to in s 42(5) are the grounds to make the order under s 18. It follows that if the court concluded that there was not reasonable grounds for the authorised officer to hold the relevant suspicion, the basis for revocation of the restraining order would be made out because there would then be "no grounds" for the restraining order. An applicant for orders under s 42 does not have to demonstrate there are "no grounds" for the suspicion. The applicant need only establish that there are no reasonable grounds for the suspicion.[30]

• [80] Often a statute will prescribe the state of a designated person's mind as a condition upon which an executive or judicial power may be exercised. Sometimes that state of mind may be a "belief" in the existence of some fact. Here, it is a "reasonable suspicion".[31]
• [81] The authorised officer, here Ms Lancashire, must hold a "suspicion" and that suspicion must be made on "reasonable grounds". There is a subjective element (holding the suspicion) and an objective element (the suspicion is on reasonable grounds) to the exercise.[32]
• [82] A suspicion of the existence of something is a state of intellectual conviction less than the belief in the existence of something. Hussien v Chong Fook Kam[33] was a case where a power of arrest was dependent upon the formation by a police officer of a "reasonable suspicion" that the person then arrested had committed an offence. Of the notion of a "suspicion", Lord Devlin said:

"Suspicion in its ordinary meaning is a state of conjecture or surmise where proof is lacking: 'I suspect but I cannot prove.' Suspicion arises at or near the starting-point of an investigation of which the obtaining of prima facie proof is the end."[34]

• [83] That statement of principle has been consistently followed.[35]
• [84] In the earlier case of Queensland Bacon Pty Ltd v Rees,[36] which was an insolvency case, Kitto J observed:

"A suspicion that something exists is more than a mere idle wondering whether it exists or not; it is a positive feeling of actual apprehension or mistrust, amounting to 'a slight opinion, but without sufficient evidence', as Chambers's Dictionary expresses it. Consequently, a reason to suspect that a fact exists is more than a reason to consider or look into the possibility of its existence. The notion which 'reason to suspect' expresses in sub-s (4) is, I think, of something which in all the circumstances would create in the mind of a reasonable person in the position of the payee an actual apprehension or fear that the situation of the payer is in actual fact that which the sub-section describes - a mistrust of the payer's ability to pay his debts as they become due and of the effect which acceptance of the payment would have as between the payee and the other creditors."[37]

• [85] In R v Rondo,[38] Smart J observed "[a] reasonable suspicion involves less than a reasonable belief but more than a possibility".[39]
• [86] Once a suspicion has been expressed and the grounds identified, the question of whether the grounds are "reasonable" and therefore support the suspicion "... involves asking whether those grounds would in all the circumstances create in the mind of a reasonable person an apprehension that an offence had been committed or that relevant property was the proceeds or an instrument of an offence".[40]
• [87] A "suspicion" is something short of both belief and proof. It follows then that in any one given factual circumstance, there may be reasonable suspicion of the existence of different conflicting facts. In that sense, the position is the antithesis of the obligation of the Crown in a criminal trial to disprove all reasonable hypotheses consistent with innocence.[41]

The third Lancashire affidavit and consideration of reasonable suspicion

• [88] Ms Lancashire's third affidavit, as I have already observed, answers Mr Quach's. Her function at this point is to consider the new evidence and reconsider her suspicions.[42] Ultimately, she swore that she maintained the suspicions which she held in the first affidavit.
• [89] Ms Lancashire said that she maintained her suspicion that the Compass Drive house is under the effective control of Mr Phan. She says this is so for the following reasons:

1. unexplained deposits to Mr Quach's accounts prior to the purchase;

2. unexplained deposits to Mr Quach's accounts after the purchase;

3. ATO records showing that the deposits are inconsistent with the reported income of Mr Quach and his wife, Thi Phan;

4. the fact that there was a shortfall in the purchase price paid;

5. the sale of the Compass Drive house at "what I continue to suspect is an undervalue";

• [90] Much of the third Lancashire affidavit is a rehash of earlier affidavits and quite unnecessary. As will be seen, she maintains certain suspicions in the face of compelling evidence to the contrary.
• [91] Ms Lancashire relies on the ATO records and draws a conclusion that the reported income does not support the various deposits identified in the first Lancashire affidavit. A good number of the deposits have been explained to have come from legitimate sources, including the sale of properties. Those explanations are corroborated by legitimate documents. As observed though, some are unexplained and these are not supported by the income as reported in the taxation returns.
• [92] Ms Lancashire points out that there are various deposits which are not explained in Mr Quach's affidavit. Those are:

1. The five deposits to AC 2948 totalling $25,500.

3. Deposit of $1,000 on 18 January 2016 to AC 5114.

4. Deposit of $1,400 on 1 February 2016 to AC 5114.

5. Deposit of $8,000 on 27 February 2018 to AC 5114.

• [93] Ms Lancashire conducted investigations with rental authorities which failed to corroborate the existence of rental arrangements concerning the Thursday Place property. The coincidence that cash payments stopped about the time of Phan's arrest remains unexplained.
• [94] Ms Lancashire explained that the Thursday Place property was the subject of a New South Wales police raid on 19 August 2016. The house was found to not be inhabited and cannabis was found there to be growing hydroponically. Investigations showed that the electricity account was transferred to an "Adam Pannu" on 9 May 2015. It has not been transferred to Raylee Turner. All this casts some considerable doubt upon the veracity of Mr Quach's account of the rental history of the property and therefore the source of many of the cash payments.
• [95] While Mr Quach asserts that he paid Phan for the shortfall at settlement of the purchase of the Compass Drive house, there is no evidence of that money passing to Phan or anyone at his direction.
• [96] The suspicion as to the Compass Drive house being sold at undervalue is based on two separate suspicions. The first is that the sale price of $1,100,000[43] is below the property's then true value. Ms Lancashire asserted her suspicion about that in her first affidavit and maintained it in her third.[44]
• [97] Ms Lancashire's suspicion that the transfer price was less than the actual value is based solely on:

1. the property was purchased by Mr Phan in 2012 for $1,000,000;

2. it was sold three years later to Mr Quach for $1,100,000.[45]

• [98] From those two facts, Ms Lancashire presumably (although this is not clear) relies upon her own experience that real estate appreciates. She seemingly draws the conclusion that a property purchased for $1,000,000 in 2012 ought to be worth more than $1,100,000[46] in 2015.
• [99] Ms Lancashire is a police officer, not a valuer. She simply ignores the valuation obtained by Westpac. The bank is a body independent from Mr Quach, Mr Phan and every other person relevant to these proceedings. The bank did not rely on any opinion of its own employees. It retained a registered valuer, Mr Ben Windsor, who is employed by Herron Todd White, a well-known firm of valuers. He valued the property at $1,050,000 and a copy of the valuation was available to Ms Lancashire. In the face of uncontradicted independent expert evidence as to value, Ms Lancashire chooses to rely upon her own lay experience to found a suspicion that the sale price was below value. Ms Lancashire's suspicion ignores the relevant evidence. It is not a reasonable suspicion.
• [100] A second basis for the assertion that the Compass Drive house has been disposed of at less than true value is based on the unexplained deposits. What is suspected is that whatever the transfer price, it simply was not paid. In effect, Mr Phan has financed the transfer, or at least part of the transfer, himself.
• [101] The fact that there was a shortfall at settlement shows that the parties were not conducting themselves in the way parties would in a usual commercial transaction. There is other evidence which supports this. For example, the contract did not bear a purchase price. Some evidence (Mr Quach's) shows that the shortfall was paid from legitimate sources. However, given that there is no evidence of the funds being received by Phan, there are grounds for suspecting that the money has not been paid.
• [102] Based on the evidence which she has identified, Ms Lancashire asserts, in effect, that Mr Phan had effective control because he has funded the purchase.
• [103] Ms Lancashire does not specifically address s 337 of the POCA which defines "effective control". By s 337(2), property held on trust for a person is under the effective control of the person and by s 337(7), property may be under the effective control of more than one person. Therefore, if Mr Quach holds the property beneficially for himself and Phan, then the property is under the control of Mr Phan.

"4. Quach has now been subject to a detailed scrutiny of the affairs of himself, his wife and his daughter in relation to a property purchased by him well over five years ago. In acquiring that property he incurred a significant mortgage liability. The following brief additional submissions are made:

(i) Quach purchased the property in January 2015 and no action was taken to restrain the property until well over five years later;

(ii) Quach significantly changed his affairs by way of a sale of the property at Olivera Crescent in order to partly fund his purchase and later sold a further property at Thursday Place in order to reduce his level of mortgage debt so that the property could be retained;

(iii) A further significant part of the funds paid into the property have come from a life insurance payout;

(iv) Quach has reduced the loan generally over the previous 5½ years by regular mortgage repayments."

• [111] "Interests of justice" as a ground to revoke a restraining order was added by amendment after a successful challenge on Kable principles[48] to a scheme contained in the Criminal Assets Recovery Act 1990 (NSW).
• [112] The concept of the "interests of justice" in the context of the POCA, and like state legislation, has been considered in various cases[49] but it is unnecessary to analyse them. Here, the point is raised but was not pressed at all in oral argument.
• [113] The objects of the POCA include to deprive offenders of the proceeds of benefits of crime.[50] Here, the suspicion which founds the restraining order is that Mr Quach has received valuable real estate and is holding some interest for Phan, a serious offender.
• [114] Against that are considerations that:

1. there has been delay in pursuing Mr Quach's interest in the Compass Drive house;

2. Mr Quach has invested his own money in the property.

• [115] That second consideration is accommodated by s 77 of the POCA. Mr Quach may apply for a compensation order to protect his legitimate interests.
• [116] Delay has not prejudiced Mr Quach. He may pursue his interest in the Compass Drive house and s 77(1)(c) and (2) will operate so that he will benefit from any increase in value since he acquired it.
• [117] In the circumstances, it is not in the public interest to make a revocation order.
• [118] The application must be dismissed.
• [119] The parties agreed at the hearing of the application that if Mr Quach failed, the costs ought be reserved. That is appropriate.
• [120] It is ordered:

Between 13 August 2015 and 27 February 2018, 21 unexplained cash deposits were made to QUACH's account, AC 5114, totalling $44,770. They were made at various branches in New South Wales and Queensland. The details of the deposits are:

1. on 13 August 2015, a deposit of $3,120 at Cabramatta NSW;

2. on 26 August 2015, a deposit of $1,560 by "Phu Hoang Nguyen" at Cabramatta NSW;

3. on 16 September 2015, a deposit of $1,050 at Kent Street, New South Wales;

4. on 1 October 2015, a deposit of $1,040 at Kent Street NSW;

5. on 2 October 2015, a deposit of $3,300 at Inala Qld;

6. on 15 October 2015, a deposit of $1,040 at Cabramatta NSW;

7. on 27 October 2015, a deposit of $2,000 at Cabramatta NSW;

8. on 23 November 2015, a deposit of $2,080 at Cabramatta NSW;

9. on 18 December 2015, a deposit of $2,080 (further details are unknown);

10. on 18 January 2016, a deposit of $1,000 at Runaway Bay Qld;

11. on 21 January 2016, a deposit of $1,040 at Cabramatta NSW;

12. on 1 February 2016, a deposit of $1,400 at Runaway Bay Qld;

13. on 2 March 2016, a deposit of $1,500 at Runaway Bay Qld;

14. on 4 April 2016, a deposit of $1,500 at Runaway Bay Qld;

15. on 11 April 2016, a deposit of $2,080 by at Cabramatta NSW;

16. on 9 May 2016, a deposit of $2,080 at Bankstown NSW;

17. on 2 June 2016, a deposit of $2,500 at Runaway Bay Qld;

18. on 4 July 2016, a deposit of $2,000 at Cabramatta NSW;

19. on 1 August 2016, a deposit of $2,200 at Cabramatta NSW;

20. on 30 August 2016, a deposit of $2,200 at Cabramatta NSW; and,

21. on 27 February 2018, a deposit of$8,000 at RedbankPlaza Qld;.

Between 13 January 2015 and 13 October 2015, five unexplained cash deposits, totalling $25,500, were made to St George account 114879-412362948 (AC 2948), held by QUACH's wife, Yen PHAN. The details of the deposits are:

[1] The fifth respondent in the principal application.

[2] Proceeds of Crime Act 1987 (Cth).

[3] Confiscation that Counts: A review of the Proceeds of Crime Act 1987; ALRC Report 87.

[4] See generally Lee v Director of Public Prosecutions (Cth) [2009] NSWCA 347; (2009) 235 FLR 122 at [17].

[5] Which is defined as the Commonwealth Director of Public Prosecutions; Proceeds of Crime Act 2002 (Cth), s 338.

[6] All the legislative notes in all the sections that have been set out in these reasons have been deleted.

[7] Affidavit of Tracey Leigh Lancashire, filed 26 June 2020 (first Lancashire affidavit), paragraphs 10(a) and 12.

[10] She is an "authorised officer" for the purposes of swearing affidavits under s 18 of the Proceeds of Crime Act 2002 (Cth).

[11] Including the transfer of the Compass Drive house.

[12] First Lancashire affidavit, paragraph 11.

[13] Proceeds of Crime Act 2002 (Cth), ss 18 and 338.

[14] R v Phan [2020] QSC 95.

[15] Proceeds of Crime Act 2002 (Cth), s 330.

[16] Proceeds of Crime Act 2002 (Cth), s 337.

[17] Various deposits to AC 4669 totalling $265,000 between 5 June 2012 and 15 June 2012.

[18] Deposit of $6,000 to Loan AC 1343 on 19 February 2016.

[19] Deposits to AC 5114 totalling $44,700 between 13 August 2015 and 27 February 2018, see paragraph [43] of these reasons and Schedule 1.

[20] Deposits made to AC 2948 of $25,500 between 13 January 2015 and 13 October 2015.

[21] Deposit of $14,200 to AC 2948 on 23 December 2014.

[22] Deposit to Loan AC 6739 of $15,000 on 8 June 2012.

[23] Deposit to Loan AC 6739 of $10,000 on 13 June 2012.

[24] Deposit to Loan AC 6739 of $10,000 on 15 June 2012.

[25] See paragraph [43] and Schedule 1 to these reasons.

[26] Of which $916,983.59 was paid to Phan. The rest was stamp duty and solicitors' fees.

[27] The total loan facility limit less some fees.

[28] The shortfall sum of $192,853.51 less the deposit of $95,000.

[29] Or it otherwise in the interests of justice to do so, s 42(5)(b).

[30] Mai v Commissioner of the Australian Federal Police (2020) 62 VR 118 at [59] and Lee v Director of Public Prosecutions [2009] NSWCA 347; (2009) 75 NSWLR 581 at [30]. And see also Director of Public Prosecutions (Cth) v Tan [2003] NSWSC 717.

[31] Proceeds of Crime Act 1987, s 18(3).

[32] See Mai v Commissioner, Australian Federal Police (2020) 62 VR 118 at [61], and in a different context see A v New South Wales [2007] HCA 10; (2007) 230 CLR 500 at [70].

[33] [1969] UKPC 26; [1970] AC 942.

[35] George v Rocket [1990] HCA 26; (1990) 170 CLR 104, Ruddock v Taylor (2005) 222 CLR 612 and New South Wales v Robinson [2019] HCA 46; (2019) 266 CLR 619.

[36] [1966] HCA 21; (1966) 115 CLR 266.

[37] At 303, followed in George v Rocket [1990] HCA 26; (1990) 170 CLR 104 at 115-116.

[38] [2001] NSWCCA 540; (2001) 126 A Crim R 562.

[39] At [53], and see also State of New South Wales v Smith [2017] NSWCA 194; (2017) 95 NSWLR 662 at [117] and [118] and R v Elfar; R v Golding; R v Sander [2017] QCA 149 at [32] reported in part at [2017] QCA 170; [2018] 1 Qd R 608.

[40] Mai v Commissioner, Australian Federal Police (2020) 62 VR 118 at [68].

[41] Peacock v The King [1911] HCA 66; (1911) 13 CLR 619.

[42] Mai v Commissioner of the Australian Federal Police (2020) 62 VR 118 at [59].

[44] Third Lancashire affidavit [66] referring back to the first Lancashire affidavit, paragraph [138(g)].

[47] The total of $44,770; see Schedule 1 to these reasons.

[48] Kable v Director of Public Prosecutions (NSW) [1996] HCA 24; (1996) 189 CLR 51.

[49] Commissioner of the Australian Federal Police v Fernandez [2017] NSWSC 1197, Commissioner of the Australian Federal Police v Tjongosutiono [2018] NSWSC 48; (2018) 329 FLR 103, Director of Public Prosecutions v Kamal [2011] WASCA 55; (2011) 248 FLR 64, Saad v Commissioner of Australian Federal Police [2021] VSCA 246.

[50] Section 5.