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High Court of New Zealand Decisions |
Last Updated: 17 October 2018
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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
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CIV-2015-404-1682
[2018] NZHC 2488 |
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UNDER
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the Criminal Proceeds (Recovery) Act 2009
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BETWEEN
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COMMISSIONER OF POLICE
Applicant
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AND
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WILLIAM HINES
First Respondent
TE HERE MAIHI MAAKA
Second Respondent
Continued over page..............
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Hearing:
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On the papers
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Counsel:
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M Harborow and Y Y Wang for the Applicant P A Sheat for Fourth Respondent
Mr Sun
J Long and G Schumacher for Ms Guo
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Judgment:
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21 September 2018
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JUDGMENT (NO 2) OF MUIR J
This judgment was delivered by me on Friday 21 September 2018 at 3.00 pm pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date:...............................
Counsel Solicitors:
J Long, Barrister, Auckland Meredith Connell, Auckland Akarana Legal, Panmure
COMMISSIONER OF POLICE v HINES [2018] NZHC 2488 [21 September 2018]
TRAVIS JAMES SADLER
Third Respondent
JIA SUN
Fourth Respondent
FALCO BROUQ CELLAH MAAKA
Fifth Respondent
TINY BIG WORLD LIMITED
Interested Party
Introduction
[1] This is a further application by the Commissioner of Police to approve a settlement under s 95 of the Criminal Proceeds (Recovery) Act 2009 (the Act) in the context of proceeding CIV 2015-404-1682.
[2] On 10 September 2018, I delivered a judgment approving a settlement between the Commissioner and the interested party, Tiny Big World Ltd.1 The present application relates to a settlement between the Commissioner, the fourth respondent (Mr Sun) and his former wife, Ningyi (Angie) Guo.
Background
[3] On 10 September 2017, Mr Sun pleaded guilty to one charge of supplying pseudoephedrine, one charge of possession of ephedrine for supply, and one charge of possession of methamphetamine for supply. The offending occurred in 2015 while he was on bail for earlier drug offending, which took place in 2013 and for which he was, on 10 December 2015, sentenced to six years’ imprisonment. On 13 January 2017, he was sentenced for the 2015 offending by Lang J.2 A further four years’ imprisonment (cumulative on his existing sentence of six years’ imprisonment) was imposed with a minimum period of period of imprisonment of two years and six months.
[4] Mr Sun did not declare any income to Inland Revenue in the tax years 2011 to 2015. In the 2009 and 2010 tax years, his total declared income was $65,831.
[5] At the time of his arrest, Mr Sun was in possession of $67,878.45 cash (located at his residential property, 62 Laurel Oak Road, Schnapper Rock, Auckland) and
$9,345 located at his work premises. Significant quantities of methamphetamine were located at the same time.
[6] Mr Sun is the registered proprietor of 62 Laurel Oak Drive. It has a current rateable value of $1,400,000 and a BNZ mortgage in the amount of $661,014.81 (as at 25 June 2018).
1 Commissioner of Police v Hines [2018] NZHC 2371.
2 R v Sun [2017] NZHC 6.
The Commissioner’s case
[7] The Commissioner’s case is that 62 Laurel Oak Drive was acquired, at least in part, from criminal activity and is therefore tainted property. He also contends that the cash located in Mr Sun’s possession at the time of his arrest is the proceeds of his drug offending and is similarly tainted property. The Commissioner’s position is that there is no legitimate explanation for the cash. The Commissioner therefore intended to seek an assets forfeiture order in respect of both the property and the cash. He also intended to file an application for a profit forfeiture order (intended to be in the order of $2,000,000) and to which the property and the cash would have been similarly amenable.
Proposed settlement
[8] The Commissioner, and counsel for Mr Sun and Ms Guo have agreed to settle these proceedings as between themselves subject to the Court’s approval under s 95 of the Act. The terms of the settlement appear from the orders made at the conclusion of this judgment.
The jurisdiction under s 95
[9] Section 95 of the Act governs settlements and provides:
(1) The Commissioner may enter into a settlement with any person as to the property or any sum of money to be forfeited to the Crown.
(2) A settlement does not bind the parties unless the High Court approves it.
(3) The High Court must approve the settlement if it is satisfied that it is consistent with—
(a) the purposes of this Act; and
(b) the overall interests of justice.
[10] In enacting s 95, Parliament expressly empowered the Commissioner to enter into settlements with respondents (and interested parties) relating to the forfeiture of assets. I accept the proposition in the parties’ joint memorandum that Parliament is
likely to have had in mind the significant costs associated with a civil litigation and the benefits to all parties if such proceedings could be resolved in a timely and just way. There is a strong public interest in litigation of this nature being brought to a prompt conclusion provided the settlement reflects the likely costs and risks inherent in the underlying litigation. Parliament has entrusted the Court with supervisory jurisdiction aimed at ensuring any settlements reached are consistent with its intent in enacting the legislation and with the overall interests of justice.3
[11] Section 95(3) directs the Court to consideration of the purposes of the Act and the overall interests of justice.
[12] The primary purpose of the Act is contained in s 3(1). That is the establishment of a regime for forfeiture of property that has been derived directly or indirectly from significant criminal activity or that represents the value of a person’s unlawfully derived income. Ancillary purposes are to “eliminate the chance” for persons to profit from undertaking or being associated with significant criminal activity (s 3(2)(a)) and to “deter” significant criminal activity (s 3(2)(b)).
[13] The overall interests of justice requirement predicates a broad inquiry. As this Court has previously said, although it is proper that it should have a supervisory jurisdiction, it is “equally important that the Court carry out a broad inquiry and acknowledge, where appropriate, that settlements can be in the interests of justice, bearing in mind the savings of time and cost and the litigation risks to the parties”.4
[14] The Court has recognised that decisions to settle proceedings under the Act may be made on economic and pragmatic grounds and often reflect “a common-sense compromise” between the parties.5
[15] If the Court is satisfied in respect of the two matters identified in s 95(3) then it must approve the settlement.
4 Commissioner of Police v Zhang [2016] NZHC 930 at [8].
5 Commissioner of Police v Douglas [2015] NZHC 1293 at [6]; and Commissioner of Police v Venn
The position of the parties
[16] The parties to the proposed settlement submit that it is “consistent with the purposes of [the] Act and the overall interests of justice”. Their joint memorandum notes:
(a) The Commissioner considers he has a strong case to show both that all of the presently restrained property is tainted property (so as to support assets forfeiture orders), as well as that Mr Sun has unlawfully benefited from significant criminal activity and has interests in the property (so as to support a profit forfeiture order). Despite declaring minimal income to Inland Revenue, Mr Sun received substantial unexplained deposits into his bank accounts, acquired 62 Laurel Oak Drive and the Cash.
(b) The Commissioner does, however, recognise that Ms Guo may have a legitimate claim for relief from any forfeiture order given she retains an interest in the family home as Mr Sun’s former wife. Ms Guo strongly denies any knowledge of or benefit from Mr Sun’s involvement in drug or other offending.
(c) The Commissioner is prepared to adopt a pragmatic approach towards settlement as he is not aware of any other major assets which could be applied towards a potential profit forfeiture order against Mr Sun beyond the property restrained in this proceeding.
(d) Mr Sun disputes the strength of the Commissioner’s case. He claims he did not profit to any significant extent from his drug offending and has provided explanations for some of the cash and unidentified funds deposited into his bank account during the relevant period.
(e) Despite that, Mr Sun acknowledges that a contested hearing carries with it real risk following his convictions and will take some time to complete. He also recognises the mandatory nature of civil forfeiture orders, the statutory presumption in favour of the Commissioner’s nominated profit forfeiture figure, and the civil standard of proof applying to these proceedings.
(f) For her part, as noted, Ms Guo denies any knowledge of, involvement in, or benefit from, Mr Sun’s criminal offending. She was not implicated in any of Mr Sun’s offending. The Commissioner accepts that as Mr Sun’s former wife, Ms Guo may have an entitlement to a half share in the equity in the family home.6 She too wishes to resolve the matter in a pragmatic way at this juncture and she recognises the legal matters acknowledged by Mr Sun.
(g) There will be considerable saving of time, resource and especially cost to all parties if the proceedings in respect of Mr Sun and Ms Guo can be resolved by consent now, without the need for further litigation.
6 Hayward v Commissioner of Police [2014] NZCA 625 at [26].
[17] In my view, the proposed settlement represents a pragmatic and common sense resolution of the claims. It results in forfeiture of the cash, which I accept as likely to have been tainted property, and applies all known assets of Mr Sun to potential profit forfeiture orders. At the same time however, it recognises what are likely to have been Ms Guo’s relationship property claims and the fact that she was not implicated in any of the offending. I am satisfied that the settlement meets both the purposes of the Act previously identified and the overall interests of justice.
[18] I accordingly approve the settlement.
[19] I make the following orders to give effect to the settlement reached:
(a) assets forfeiture orders under s 50(1) of the Act by consent over the following property, so that it vests in the Crown absolutely and is to be in the Official Assignee’s custody and control;
(i) $67,878.25 cash located at 62 Laurel Oak Drive, Schnapper Rock, Auckland (62 Laurel Oak Drive) on 28 July 2015;
(ii) $9,345 cash located at 5/220 Queen Street, Auckland City on 28 July 2015;
(iii) an additional sum of $422,777, to be paid in accordance with paragraph (b) below;
(b) Mr Sun and/or Ms Guo must pay the Official Assignee the sum of
$422,777 as follows:
(i) $200,000 must be paid within 10 working days of these orders being made; and
(ii) $222,777 must be paid within four months of these orders being made;
(c) pending the receipt of the additional sum of $422,777 by the Official Assignee, 62 Laurel Oak Drive is to remain restrained under the Act,7 subject to paragraphs (d) and (e) below;
(d) the restraining order in respect of 62 Laurel Oak Drive is varied under ss 33, 34 and 35 of the Act as follows:
(i) upon receipt of the sum of $200,000 in accordance with paragraph (b)(i) above, the Official Assignee is to arrange for the restraining order notation to be removed from the certificate of title of 62 Laurel Oak Drive; and then
(ii) 62 Laurel Oak Drive may be transferred to Ms Guo and her step- mother, Shi Wen; and
(iii) Ms Guo may utilise 62 Laurel Oak Drive as security to facilitate borrowing for the purpose of raising the sum of $222,777 referred to at paragraph (b)(ii) above.
(e) in the event Mr Sun and Ms Guo do pay the Official Assignee the sum of $222,777 in accordance with paragraph (b)((ii) above, upon the Official Assignee confirming receipt of the sum in writing, the restraining order in respect of 62 Laurel Oak Drive lapses;
(f) in the event Mr Sun and Ms Guo do not pay the Official Assignee the sum of $222,777 in accordance with paragraph (b)(ii) above, the following provisions apply:
(i) the Official Assignee is to arrange for the restraining order notation to be placed back of the certificate of title of 62 Laurel Oak Drive (to the extent necessary);
(iii) he shall apply the proceeds of sale as follows:
(A) first, deduct the Official Assignee’s costs in effecting the sale of the property (including any decontamination costs) and reimburse his costs in administering this matter since its inception;
(B) second, repay all borrowing secured against the property;
(C) third, pay the Secretary of Justice the amount (if any) payable by way of legal aid granted to Mr Sun (less any contributions paid by him);
(D) fourth, pay any amounts of reparation, offender levy or fine imposed on Mr Sun;
(E) fifth, pay the funds necessary to satisfy the sum owed under paragraph (b)(i) before forfeiting the sum in accordance with the assets forfeiture order at paragraph (a)(iii) above;
(F) finally, return any remaining sale proceeds to Mr Sun;
(g) the Commissioner will not pursue applications for profit forfeiture orders against Mr Sun and/or Ms Guo; and
Muir J
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