Commissioner of Police v Nguyen [2014] NZHC 3395 (22 December 2014)

Last Updated: 26 August 2015

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2011-404-7803 [2014] NZHC 3395

UNDER	Criminal Proceeds (Recovery) Act 2009
BETWEEN	COMMISSIONER OF POLICE Applicant
AND	BRENDON NGUYEN Respondent
AND	QUY NGUYEN Third Party

Hearing:	14 August 2014
Appearances:	M R Harborow for Applicant A J Maxwell-Scott on instructions from R M Mansfield for Respondent
Judgment:	22 December 2014

_{JUDGMENT OF PETERS J}

This judgment was delivered by Justice Peters on 22 December 2014 at 10 am pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Date: ...................................

Solicitors: Meredith Connell, Auckland

Counsel: R M Mansfield, Auckland

A J Maxwell-Scott, Auckland

COMMISSIONER OF POLICE v NGUYEN [2014] NZHC 3395 [22 December 2014]

[1] The Third Party (“Mr Nguyen”) seeks to have a 2007 Chrysler motor vehicle (“the vehicle”) returned to him. The Police seized the vehicle in March 2014 and it has since been held by the Official Assignee. Mr Nguyen’s case is that he is the owner of the vehicle, hence his wish to have it returned.

[2] Both the Commissioner and Mr Nguyen have proceeded on the basis that a restraining order is presently in place in respect of the vehicle and that Mr Nguyen’s application was one to vary an existing restraining order. For reasons I give below, however, I am not satisfied that a restraining order is in place in respect of the vehicle. The parties agreed that, if I came to that conclusion, I should proceed as if I were resolving an opposed application for such an order and that is the course I have adopted.

Background

[3] In November 2011 Brendon Nguyen (“Brendon”), Mr Nguyen’s son, was arrested on a variety of drug related offences. Brendon is presently awaiting trial.

[4] In December 2011, the Commissioner sought a restraining order under the Criminal Proceeds (Recovery) Act 2009 (“Act”) in respect of the vehicle and a Mitsubishi Galant (“Mitsubishi”). There is no dispute that Brendon owned both of these vehicles as at December 2011. Brendon consented to the Commissioner’s application and the Court made a restraining order on 12 December 2011.

[5] The duration of the restraining order was extended, so that it carried through to December 2013 when Courtney J gave directions, by consent, that the Official Assignee should sell the vehicle, and that the net proceeds of sale should be restrained in its place.

[6] To this end Turners Auctions (“Turners”) were engaged and conducted an online auction on 27 February 2014.

[7] There were several bidders for the vehicle, with an online bidder registered as “Quy Nguyen”, that being Mr Nguyen’s name, ultimately being successful and purchasing the vehicle for approximately $33,000.

[8] The purchase price was deposited into Turners’ account on 28 February 2014, following which Brendon uplifted the vehicle from Turners. The vehicle must have ceased to be subject to restraint at the time of sale or, at the latest, on payment of the purchase price. Brendon instructed Turners that the vehicle was to be registered in the name of Mr Nguyen, which it was.

[9] Two weeks later, on 13 March 2014, the Police seized the vehicle from Mr Nguyen’s home (and the address to which Brendon was bailed) and placed it with the Official Assignee.

[10] On 7 April 2014 the Commissioner filed an application for further orders in respect of the proceeds of sale of the vehicle, the Mitsubishi, the (recently re-seized) vehicle and a personalised registration plate “N3KMNT” which Brendon had affixed to the vehicle. The Commissioner sought, first, a profit forfeiture order;¹ alternatively an assets forfeiture order;² alternatively a restraining order under ss 24 or 25 of the Act coupled with an ancillary order permitting (another) sale of the

vehicle and the restraint of the proceeds of the sale.

[11] The proceeding came before Wylie J on 1 May 2014. The Judge’s minute referred to the Commissioner’s application and the advice of counsel for the Commissioner that a third party (Mr Nguyen) wished to claim the vehicle; set out the timetable to be followed regarding that foreshadowed application; and recorded counsel’s agreement that it was premature to make any orders in respect of the application for forfeiture.

[12] There is, however, no record in the minute that the Judge made a restraining order in respect of the vehicle and if the Judge did not make an order on 1 May 2014 then no restraining order is in place.

[13] Counsel proposed that I should proceed on the basis that Wylie J made a restraining order in respect of the vehicle on 1 May 2014, alternatively that I should

_{make a restraining order on the papers and then consider Mr Nguyen’s application}

¹ _{Criminal Proceeds (Recovery) Act 2009, s 55.}

² Section 50.

for variation. I advised counsel that I did not consider that I could assume Wylie J had made an order and so would consider the Commissioner’s application for restraining order, which application had been made pursuant to s 24 alternatively s 25 of the Act. Section 24 provides for the making of a restraining order in respect of specific “tainted” property. Section 25 provides for the making of a restraining order in respect of all or part of a Respondent’s (that is, Brendon’s) property.

Statutory provisions

[14] Section 24 provides:

24 Making restraining order relating to specific property

(1) A court hearing an application for a restraining order relating to specific property may, if the court is satisfied it has reasonable grounds to believe that any property is tainted property, make an order that the property (“restrained property”)—

(a) is not to be disposed of, or dealt with, other than is provided for in the restraining order; and

(b) is to be under the Official Assignee's custody and control.

...

[15] The vehicle is specific property. The issue which arises is whether there are reasonable grounds to believe that the vehicle is “tainted property”, defined in s 5(1) as follows:

tainted property—

(a) means any property that has, wholly or in part, been—

(i) acquired as a result of significant criminal activity; or

(ii) directly or indirectly derived from significant criminal activity; and

(b) includes any property that has been acquired as a result of, or directly or indirectly derived from, more than 1 activity if at least 1 of those activities is a significant criminal activity.

[16] Section 25 provides:

25. Making restraining order relating to all or part of respondent’s property

(1) A court hearing an application for a restraining order relating to all or part of a respondent's property may, if the court is satisfied it has reasonable grounds to believe that the respondent has unlawfully benefited from significant criminal activity, make an order that the property it specifies in the order (“restrained property”)—

(a) is not to be disposed of, or dealt with, other than is provided for in the restraining order; and

(b) is to be under the Official Assignee's custody and control.

...

[17] “All or part of a respondent’s property”, “property” and “interest” are defined

in s 5(1) of the Act as follows:

all or part of a respondent’s property means all or part of the property in which an identifiable respondent has an interest

property—

(a) means real or personal property of any kind—

(i) whether situated in New Zealand or a foreign country; and

(ii) whether tangible or intangible; and

(iii) whether movable or immovable; and

(b) includes an interest in real or personal property

interest, in relation to property of any kind (including, without limitation, restrained property or forfeited property), means—

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

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

[18] In the present case the combined effect of these definitions is to permit the Court to make a restraining order pursuant to s 25 if Brendon has an interest in the vehicle.

Issues

[19] The issues which arise are:

(a) under s 24 – whether there are reasonable grounds to believe that the

vehicle is “tainted property”; or

(b) under s 25 – whether Brendon has an interest in the vehicle.

[20] For completeness I record that this is not a case in which the Commissioner applied to the Court for an order the vehicle should be treated as though Brendon had an interest in it on the basis that Brendon had “effective control”.³ Although some time was devoted to argument as to the degree of control that Brendon exercised in respect of vehicle, the Commissioner did not apply for such an order, as s 58 requires.

Evidence

[21] Detective Sergeant Gray, Mr Nguyen and Brendon gave evidence by way of affidavit and Mr Nguyen and Brendon were cross examined. Mr Nguyen is 68, speaks little English and required an interpreter. The gist of the evidence was as follows.

[22] On 27 February 2014 Brendon told Mr Nguyen that the vehicle was being advertised for sale on Turners’ website and suggested that Mr Nguyen buy it. Mr Nguyen decided he would do so, he says on the basis that the vehicle would belong to him and would be registered in his name but that he would allow Brendon to use it for business purposes. In November 2013 Brendon had commenced business supplying motor vehicle accessories. Brendon has a keen interest in motor vehicles and was employed as a car salesman for seven years. Mr Nguyen’s evidence was that Brendon required the use of a vehicle for his business and he wished to support Brendon in that endeavour. Prior to this, Brendon had used his

_{mother’s or his sister’s vehicle.}

³ Criminal Proceeds (Recovery) Act 2009, s 58.

[23] Brendon sought to register his father as a telephone bidder for the vehicle but Turners advised he would have to bid online. Brendon created an online account for his father but his father did the bidding during the auction and made his own decision as to how much he was willing to pay for the vehicle.

[24] Mr Nguyen’s evidence, and it is common ground the Police were informed of this on seizing the vehicle, was that $25,000 of the purchase price derived from funds he and his wife held in their joint account. These funds were the proceeds of the sale of their motor vehicle (an Audi A6), completed through Brendon’s Trade Me account. The balance of $8000 was said to be a loan to Mr Nguyen from the Nguyens’ daughter, Kimberley, in turn said to derive from the sale of Kimberley’s vehicle on her relocation to Australia. Mr Nguyen’s evidence was that Kimberley’s funds were in his account on the day of the payment to Turners but there is no other evidence to that effect, such as a bank statement. On the contrary there is no entry on the statement in respect of those funds.

[25] On 28 February 2014 Mrs Nguyen attended at the bank and arranged the transfer of funds from her and her husband’s joint account to Turners’ bank account. I accept Brendon’s evidence that he played no part in those arrangements.

[26] Mr Nguyen asked Brendon to arrange a tow truck to uplift the vehicle. The local company could not commit to retrieving the vehicle within the Turners time frame and so on 28 February 2014 Brendon went to Turners’ premises, arranged registration as I have said in [8] above, and then drove the vehicle to his and his parents’ address.

[27] Brendon’s evidence was that he drove the vehicle in the course of his business for the following two weeks but that he was required to ask his father in advance of doing so and that Mr Nguyen would give him the keys as required. Mr Nguyen’s evidence was that he, Mr Nguyen, drove the vehicle once before it was seized.

[28] On the day of the seizure, the Police located the keys in Brendon’s bedroom. There was a conflict on the evidence as to the whereabouts of the ownership papers

which it is unnecessary for me to resolve. Brendon’s personal effects were found in the vehicle as were cans of paint used in his business. Brendon’s personalised plate was also affixed.

Discussion

Section 24

[29] The Commissioner submits that there are reasonable grounds to believe the vehicle is tainted property because the source of the $8,000, said to have come from Kimberley, is unclear.

[30] I accept the Commissioner’s submission that these funds do not appear on the bank statement for the account and also that there was no evidence from Kimberley confirming the loan. I do not consider, however, that these omissions on their own are sufficient to give reasonable grounds to believe that the vehicle is “tainted” in one or more the respects required by the definition in s 5. Given that, I decline to make a restraining order pursuant to s 24 of the Act.

Section 25

[31] The Court may only make a restraining order pursuant to s 25 in respect of “all or part of Brendon’s property”. In the present case that requires Brendon to have an “interest” in the vehicle, as defined in s 5 of the Act.

[32] I am not satisfied that Brendon has a legal or equitable estate or interest in the vehicle. There is no evidence that Brendon contributed any part of the purchase price. Nor is there any evidence that Mr Nguyen gave the vehicle to Brendon.

[33] In essence the Commissioner’s case under s 25 was that, regardless of the source of the purchase price and the name in which the vehicle was registered, in fact the vehicle was Brendon’s, for Brendon to use as and when Brendon wished and that he had the necessary right, power or privilege in connection with the vehicle to give him an interest in the vehicle and thus make the vehicle all or part of his property, as required by s 25.

[34] That submission is not borne out by the evidence. I accept that Brendon used the vehicle for his business, affixed his personalised plate and placed his belongings in the vehicle. I do not, however, consider that use alone of the vehicle, over a two week period, is sufficient to establish that Brendon had a right, power or privilege in connection with the vehicle so as to give him the required interest.

[35] As a result, I am not satisfied that the vehicle is all or part of Brendon’s

property and the prerequisite for a restraining order pursuant to s 25 is not met.

Result

[36] I decline the Commissioner’s application for a restraining order in respect of the vehicle.

Costs

[37] Mr Nguyen is entitled to costs on a 2B basis, together with disbursements, to be fixed by the Registrar if the parties are unable to agree.

..................................................................

M Peters J