Commissioner of Police v Hines [2018] NZHC 2371 (10 September 2018)

Last Updated: 17 October 2018

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2015-404-1682 [2018] NZHC 2371

UNDER	the Criminal Proceeds (Recovery) Act 2009
BETWEEN	COMMISSIONER OF POLICE Applicant
AND	WILLIAM HINES First Respondent TE HERE MAIHI MAAKA Second Respondent Continued over page..............

Hearing:	On the papers
Counsel:	M Harborow and T Bellingham for the Applicant Interested Party in person (L Han)
Judgment:	10 September 2018

JUDGMENT OF MUIR J

This judgment was delivered by me on Monday 10 September 2018 at 3.00 pm Pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date:..............................

Counsel/Solicitors:

Meredith Connell, Auckland

Copy to:

L Han, interested party

COMMISSIONER OF POLICE v HINES [2018] NZHC 2371 [10 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 an application by the Commissioner of Police and Tiny Big World Limited (TBWL) to approve a settlement under s 95 of the Criminal Proceeds (Recovery) Act 2009 (the Act).

[2] TBWL and its sole director and shareholder Mr Han have dispensed with the services of their former counsel. They wish to resolve the matter themselves without further legal assistance. They acknowledge that they have had the opportunity to seek legal advice in relation to the proceeding as well as the settlement proposed in the joint memorandum provided to the Court. They are content to proceed without further legal advice.

Background

[3] The application relates to a property at 149 Marua Road, Mt Wellington. This property is registered in the name of TBWL. It is the subject of without notice restraining orders made on 24 July 2015 and on notice restraining orders made on 6 November 2015.

[4] The Commissioner alleges that 149 Marua Road is tainted property, acquired as a result of significant criminal activity. He also alleges the property was effectively owned and controlled by the first respondent William Hines and that the property was registered in the name of TBWL to conceal its true ownership.

[5] 149 Marua Road is unencumbered. The funds required for its 2015 settlement derive from a series of third party deposits between 5 and 27 March 2015 totalling
$1,024,408.57. The deposits were largely comprised of cash and international money transfers (IMTs). The IMTs total $610,015 and were funded by the fourth respondent’s (Mr Sun) bank in China. Additionally, a cheque of $120,000, used towards the purchase was drawn on Mr Sun’s ANZ account.
[6] On 10 April 2015 Mr Sun was convicted of supplying pseudoephedrine to Mr Hines and members of the Head Hunters gang. He was further convicted of possessing methamphetamine and ephedrine for supply on 28 July 2015.

[7] Intercepted phone conversations over the period 26 March 2015–11 May 2015 identified that Mr Hines and one Allister Vousden were involved in the settlement of the property, had a key to it and were actively arranging for renovation work to be undertaken on it.

[8] Prior to restraint of the property, associates of Mr Hines facilitated the payment of various outgoings. For example, on 14 April 2015 Mr Vousden contacted Water Care to request that the account for 149 Marua Road be transferred to his name as he was “the new owner”.

[9] Mr Han’s case is, however, that 149 Marua Road belonged to his company TBWL. He says that:

(a) He bought the property under the name of TBWL for tax purposes and that Mr Sun was his business manager at the time of the acquisition.

(b) He asked Mr Sun to organise renovations on the property as Mr Han was in China at the time.

(c) He is not aware of nor has he ever met Mr Hines or Mr Vousden.

(d) He asked Mr Sun to rent out the property for him. Mr Sun advised Mr Han that the “garage next door” was interested in renting the property. The garage next door (149 Marua Road) was operated by Ellerslie Collision Repairs Limited (ECRL) of which Mr Vousden is the sole director and shareholder.

(e) He transferred the funds for the purchase of 149 Marua Road to Mr Sun’s bank accounts and used his services to remit that money to New Zealand due to foreign exchange controls in China.

Mr Hines and Mr Vousden

[10] On 13 March 2018 Mr Hines was examined at Auckland Prison pursuant to an examination order granted by the District Court. He stated that he had no interest in 149 Marua Road.

[11] On 15 May 2018, Toogood J approved a settlement and made final orders bringing proceedings, so far as they related to Mr Vousden, to an end. As part of that settlement it was agreed that to the extent Mr Vousden or ECRL was shown to have any interest in or effective control over any other restrained property he did not oppose its forfeiture.

The proposed settlement

[12] The Commissioner, Mr Han and TBWL have, subject to the Court’s approval, agreed to settle the question of forfeiture of assets as between themselves. The proposed settlement is as follows:

(a) the Official Assignee will sell 149 Marua Road at its fair market value;

(b) the Proceeds of sale will be applied in the following manner:

(i) payment of the sum of $500,000 to Mr Han;

(ii) the net balance to be forfeited to the Crown;

(c) the Commissioner will not pursue applications for profit forfeiture orders against either Mr Han or TBWL; and

(d) the costs will lie where they fall in relation to all matters.

[13] The current market value of 149 Marua Road is approximately $1.1 million. Therefore approximately $600,000 will be forfeited to the Crown.

The jurisdiction under s 95.

[14] Section 95 of the Act governs settlements and provides:

95. High Court must approve settlement between Commissioner and other party

(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.

[15] 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.¹

[16] Section 95(3) directs the Court to consideration of the purposes of the Act and the overall interests of justice.

[17] 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

1. Commissioner of Police v Know-All Group Ltd & Anor HC Auckland CIV-2010-404-403, 7 November 2011, per Brewer J at [11].

from undertaking or being associated with significant criminal activity (s 3(2)(a)) and to “deter” significant criminal activity (s 3(2)(b)).

[18] 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”.²

[19] 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.³

[20] If the Court is satisfied in respect of the two matters identified in s 95(3) then it must approve the settlement.

Discussion

[21] In this case the Commissioner considers he has a strong case to show that 149 Marua Road is tainted property (so as to support an assets forfeiture order) and that Mr Hines had interests in (or effective control of) the property (so that it could be made available to satisfy any profit forfeiture order made against him in the future).

[22] The Commissioner recognises, however, that the case is not without risk. In particular he acknowledges that Mr Han may have a legitimate claim for relief from any forfeiture order given that the property was registered in the name of TBWL and that Mr Han strongly denies any knowledge of, or benefit from, Mr Hines and Mr Sun’s involvement in drug or other offending. The Commissioner accepts that he would have difficulty proving that Mr Han knew about or was involved in any such offending. Indeed he was in China at all material times.

² Commissioner of Police v Zhang [2016] NZHC 930 at [8].

³ Commissioner of Police v Douglas [2015] NZHC 1293 at [6]; and Commissioner of Police v Venn

[2014] NZHC 361.

[23] The Commissioner is therefore prepared to adopt a pragmatic approach towards settlement particularly given he is not aware of any significant criminal activity directly involving Mr Han.

[24] For his part Mr Han disputes the strength of the Commissioner’s case. He claims that his company holds the full legal and beneficial interests in 149 Marua Road and, as a corollary, that Mr Hines has no interest at all in it. He says that he was unaware Mr Hines and members of the Head Hunters gang were renovating the property and using it to store vehicles. He recognises, however, that a contested hearing carries with it risk and will take some time to complete.

[25] In my view the proposed settlement represents a pragmatic and common-sense compromise between these competing positions and properly recognises the risk that each party faces were the matter to proceed to trial. I am satisfied that it meets both the purposes of the Act previously identified and the overall interests of justice.

[26] I accordingly approve the settlement.

Orders

[27] I make the following orders to give effect to the settlement reached:

(a) The Official Assignee is directed, under ss 33, 34 and 35 of the Act, to sell the restrained property⁴ at 149 Marua Road, Auckland, registered to Tiny Big World Limited, described in certificate of title NA63C/812 and NA63C/814 (149 Marua Road), as soon as practicable, for its fair market value.

(b) For the purposes of effecting the sale of 149 Marua Road, Guy Francis Sayers of Napier, Official Assignee, has the power to execute any deed or instrument in the name of Leng Han and/or Tiny Big World Limited,

4. To the extent necessary, the restraining order over 149 Marua Road made by Brewer J on 6 November 2015 under the Act is extended for a period of 12 months from 6 November 2018 so that it expires on 6 November 2019 (unless it is brought to an end earlier by virtue of these orders).

and to do anything necessary to give validity and operation to the deed or instrument.

(c) The Official Assignee is directed to deal with the proceeds of sale of 149 Marua Road in the following manner:

(i) first, deduct his reasonable costs in effecting the sale (including decontamination costs and any outstanding land and water rates);

(ii) second, pay $500,000 to Leng Han (without any deduction); and

(iii) third, forfeit the net proceeds to the Crown in accordance with the assets forfeiture order in paragraph (d) below.

(d) An assets forfeiture order under s 50 of the Act, that all net proceeds of sale of 149 Marua Road (after payment of the sums in paragraphs (c)(i) and (c)(ii) above) vest in the Crown absolutely and are to be under the Official Assignee’s custody and control; and

(e) Costs will lie where they fall in relation to all matters.

[28] I note as an additional term of settlement that the Commissioner will not pursue applications for profit forfeiture orders against either Mr Han or TBWL.

Muir J