COMMISSIONER OF NEW ZEALAND POLICE v JIANG [2019] NZHC 3318

COMMISSIONER OF NEW ZEALAND POLICE v JIANG [2019] NZHC 3318 [13 December 2019]IN THE HIGH COURT OF NEW ZEALANDCHRISTCHURCH REGISTRYI TE KŌTI MATUA O AOTEAROAŌTAUTAHI ROHECIV-2016-409-000298[2019] NZHC 3318BETWEEN COMMISSIONER OF NEW ZEALANDPOLICEApplicantAND FAN JIANGRespondentHearing: 28 November 2019Appearances: H McKenzie for ApplicantM Starling and N Wham for RespondentC J Lange for Trustee ServicesJudgment: 13 December 2019JUDGMENT OF DUNNINGHAM JThe application[1] This is an application to extend the duration of an on-notice restraining order,so that it will not expire until 15 December 2020, or until these proceedings are earlierfinally concluded.[2] The extension is sought by the applicant on the following grounds:(a) on 1 November 2019 there was a hearing in the High Court atChristchurch relating to the Commissioner's applications, and inparticular, for an order that the respondent Fan Jiang has effectivecontrol of the property at 3 Regalwood Close, Christchurch;(b) the judgment is anticipated to materially affect the proceedings goingforward and is not anticipated to be released in the immediate future;(c) there is no date set for the civil forfeiture hearing;(d) the Commissioner's application for civil forfeiture orders will thereforenot be finally concluded before the on-notice restraining order expires;(e) there is no prejudice to the parties in these particular circumstances ifthe duration of the order is extended;(f) it is in the interests of justice that the duration of the order be extended;and(g) the restraining order will otherwise expire on 16 December 2019.[3] The application is opposed by the respondent. The grounds of oppositionemerging from Mr Starling's submissions are:(a) the onus is on the applicant to demonstrate why an extension isjustified;(b) the delays in this matter proceeding to a civil forfeiture hearing are"largely at the feet of the applicant";(c) the delay is inordinate and inexcusable; and(d) there is prejudice to the respondent in that "evidence will perish aslimitation periods expire and memory of potential witnesses fades" andthe respondent suffers "regular intrusion into the quiet enjoyment of herhome and personal affairs through property inspections and contactfrom Detective Howe".Background[4] Before considering the submissions of the parties, it is useful to give a briefoverview of the history of these proceedings. The applicant applied for a withoutnotice restraining order on 29 April 2016. The grounds on which the orders weresought allege that the property was "tainted property" and that the respondent hadunlawfully benefitted from significant criminal activity in respect of breaches of theResource Management Act 1991, and/or conduct which constituted tax evasion andcontravention of the Tax Administration Act 1994. The orders were sought to avoidthe risk of the property being destroyed, disposed of, altered or concealed, if noticewas given to the respondent.[5] The without notice restraining order was made by Davidson J on 2 May 2016,in relation to a sum of cash and five residential properties, including a residentialproperty at 3 Regalwood Close, Christchurch.[6] On 7 October 2016, the respondent applied for an order striking out theCommissioner's on-notice application for restraining orders on the grounds that thepleading:(a) disclosed no reasonably arguable cause of action or case appropriate tothe nature of the pleading; and(b) was otherwise an abuse of the process of the Court.That application was dismissed in a judgment of Mander J dated 21 November 2016.[7] On 12 December 2016, there was a further call-over of the proceedings.Mr Starling, for the respondent, advised that alternate counsel was being sought todeal with some of the tax-related issues that arose in the proceedings. It seemed at thetime there may be the ability to resolve the issues in relation to the restraining orderand it could progress to a substantive hearing on civil forfeiture orders.[8] On 6 March 2017, the respondent indicated she was still opposing the on-noticeapplication for a restraining order, although she had not yet filed a formal notice ofopposition. Timetabling orders were made to progress the opposed on-noticeapplication for a restraining order so that it could be heard on 21 and 22 August 2017.[9] During 2017, four of the properties which were subject to the restraining orderwere at risk of mortgagee sale. An agreement was negotiated with family members topurchase these properties and the existing restraining order was varied on 2 July 2017to restrain, instead, the net proceeds of sale of those properties after payment of themortgages and other costs.[10] On 14 August 2017, the opposition to the on-notice restraining order waswithdrawn and an on-notice restraining order was made by consent. The hearingscheduled for 21 and 22 August 2017 was vacated.[11] However, when the restraining order was due to expire on 13 August 2018, therespondent again signalled that she would oppose its extension and the matter wasdirected to be scheduled for hearing.[12] However, by 17 December 2018, the respondent and the interested partyconsented to the making of a further restraining order.[13] An application for civil forfeiture orders was made on 14 September 2018 andvaried on 29 August 2019.[14] By early 2019, difficulties arose with the representation of the respondent andinterested parties. Mr Starling was seeking leave to withdraw as counsel as he hadhad difficulty getting instructions from his client. Ms McKenzie had identifieddifficulties in identifying whether the trustees were represented by counsel in theseproceedings, particularly as there had been no appearance for the Trust at call-overs.[15] I scheduled a case management conference for the afternoon of26 February 2019 to address these issues.[16] It was at that call-over that the issue was first raised of whether theCommissioner had the ability to seek or sustain orders over the property at3 Regalwood Close because it was held in trust. However, counsel sought more timeto consider the legal basis for challenging the restraining order over the trust property.That eventually culminated in a hearing on 1 November 2019 as to whether orderscould be sustained over the property at 3 Regalwood Close, such that it could continueto be the subject of restraining orders. In the interim, though, there had been variationof timetabling orders, some by agreement, in part because settlement discussions werepursued.[17] The parties currently await the outcome of my decision on whether restrainingorders can be sustained over 3 Regalwood Close.Should the restraining orders be extended?[18] The application to extend the duration of the restraining orders is made inreliance on s 41 Criminal Proceeds (Recovery) Act 2009. That section provides:41 Extending duration of restraining order(1) If a court has made a restraining order, the applicant for that ordermay, before the restraining order expires, apply to that court to extendits duration.(2) If an application is made under subsection (1), the court may orderthat the operation of the restraining order be extended for a period notexceeding 1 year.(3) The duration of a restraining order may be extended more than onceunder this section.(4) If, before a restraining order would otherwise expire undersection 37(1), an application is made to a court under this section andthe application is granted, the restraining order ceases to be in forceon the date specified in the court's order.[19] As the commentary in Adams notes, the Court may grant multiple extensions.It gives an example where an order may be extended on several occasions whileproceedings on a charge relating to a "qualifying instrument forfeiture offence" isdisposed of.1[20] The power to extend is discretionary, as the Court "may", not "must", grant theextension for a period not exceeding one year.1 Simon France (ed) Adams on Criminal Law - Sentencing (online ed, Thomson Reuters) at[CP41.01].[21] The clear purpose of this section is to ensure that property is not unnecessarilyrestrained for undue periods of time. For example, if the applicant chooses not topursue profit forfeiture orders, then the requirement to actively renew the restrainingorders would ensure they do not endure beyond a maximum of one year. However,assuming there is no change to the information which warranted the grant of therestraining orders in the first place, and the applicant is pursuing a substantiveapplication for civil forfeiture orders in good faith, it would be unlikely that a courtwould decline an extension unless there was some material prejudice to the respondentor an interested party in maintaining the restraining order. However, even then, onewould expect that if the restraining order could be varied to avoid or limit suchprejudice, that would be preferable to refusing an extension.[22] In the present case, the circumstances which warranted the making of therestraining order have not changed, and the Commissioner is pursuing an applicationfor profit forfeiture orders.[23] I am satisfied that there has been no delay in pursuing the application foron-notice restraining orders and then civil profit forfeiture orders by the Commissionerthat is so inexcusable that it would warrant discharging the on-notice restrainingorders. Indeed, when one considers the history of the matter, some of the delay hasbeen occasioned by the respondent taking formal steps in the proceedings, such asapplying for an order striking out the Commissioner's on-notice application or whereMr Starling was unable to obtain instructions from her. Other delays have been withthe respondent's consent, or to accommodate her interests, for example, to seek advicefrom a tax specialist.[24] While Mr Starling argued that the Commissioner did not at times activelypursue his investigations so that the application for civil forfeiture orders couldproceed more promptly, I am satisfied that it was appropriate that the investigation didnot progress while the application to strike-out the application for restraining orderswas on foot, and that, otherwise, the Commissioner has been actively pursuing hisinvestigations.[25] Mr Starling then raised the issue of prejudice to the respondent in having therestraining orders endure. He pointed out that the respondent has had to put up withproperty inspections from the Official Assignee while the restraining orders are inplace, which was an intrusion into her quiet enjoyment of the property. She has alsohad ongoing contact from Detective Howe.[26] However, I consider the inspections by a representative of the OfficialAssignee's office are simply a normal incident of a restraining order. I do not considerit gives rise to undue prejudice to the respondent.[27] The communications which the respondent has had from Detective Howe arepart of the ongoing investigations in relation to the application for civil profit forfeitureorders. They are not an incident of the restraining order and therefore are not relevantto the decision as to whether to grant an extension of the restraining order.[28] For these reasons, I am satisfied that the further on-notice application to extendthe restraining orders made on 19 November 2019 should be granted. On28 November 2019, I made an oral order extending the restraining order on the termssought by the applicant.Solicitors:Raymond Donnelly & Co., ChristchurchM Starling, Barrister, ChristchurchC J Lange, Barrister, Christchurch