COMMISSIONER OF POLICE v PARKES & ORS [2019] NZHC 639

COMMISSIONER OF POLICE v PARKES & ORS [2019] NZHC 639 [29 March 2019]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2016-404-000590[2019] NZHC 639UNDER The Criminal Proceeds (Recovery) Act 2009BETWEEN COMMISSIONER OF POLICEApplicantAND GERRARD GORDON PARKESFirst RespondentAND WHITNEY CHANTEL HARRISSecond RespondentAND ROGER EMMANUEL AL HACHACHEThird RespondentAND TONI CLARE NIKORAFourth RespondentHearing: (On the papers)Counsel: K Eastwood and Y Wang for ApplicantS Hewson for Third RespondentJudgment: 29 March 2019JUDGMENT OF MOORE JThis judgment was delivered by me on 29 March 2019 at 3:00 pmpursuant to Rule 11.5 of the High Court Rules.Registrar/ Deputy RegistrarDate:Introduction[1] I have received a joint memorandum filed by counsel for the Commissioner ofPolice ("the Commissioner") and counsel for Roger Emannuel Al Hachache, the thirdrespondent. The memorandum invites the Court to approve a proposed settlementreached between the Commissioner and Mr Al Hachache under s 95 of the CriminalProceeds (Recovery) Act 2009 ("the Act").[2] Any settlement made in relation to proceedings brought under the provisionsof the Act is required to be approved by this Court.1Background[3] Mr Al Hachache was arrested on 31 March 2016 following the termination ofa large scale Police investigation codenamed "Operation Bunk".[4] This investigation targeted Mr Parkes, the first respondent, and a number of hisassociates who were believed to be involved in the manufacture and supply ofcontrolled drugs, including methamphetamine.[5] In the course of the inquiry Mr Al Hachache (and another) were identified.Their role included supplying Mr Parkes with ephedrine, a class B controlled drug.The ephedrine was used by Mr Parkes to manufacture methamphetamine which hethen supplied to others, including Mr Al Hachache who, himself, supplied the drug toa customer on four occasions.[6] Following termination a number of search warrants were executed includingthose of Mr Al Hachache's business. This was Osaka Tyres situated in Otahuhu.Mr Al Hachache was living at the address at the time the search warrants wereexecuted.1 Criminal Proceeds (Recovery) Act 2009, s 95.[7] During the search the Police located and seized three plastic bags containingapproximately 3 kilograms of ephedrine. These were hidden in the rims of car wheels.Close by was a quantity of cash totalling $105,200. Further cash was found in theboot. This totalled $66,585.79. Also located were Sky City Casino chips valued at$6,500.[8] Following a jury trial in this Court in July 2017 Mr Al Hachache was foundguilty of:(a) possession of ephedrine for supply (x 1);(b) supplying ephedrine (representative); and(c) supplying methamphetamine (x 4).[9] On 14 August 2017 Mr Al Hachache was sentenced to eight years'imprisonment.2[10] At sentencing Fitzgerald J observed that the combination of the convictionsand the large sums of cash revealed that "this was no small operation".3These proceedings[11] Between March and November 2016, the Commissioner applied for andobtained seven sets of restraining orders in relation to various properties associatedwith the respondents.[12] The following restrained properties were attributed to Mr Al Hachache:(a) bank account proceeds of $85,965.41 formerly held in Westpac NZ inthe name of R H Auto Trading Limited;2 R v Al Hachache [2017] NZHC 1929 at [39].3 R v Mr Al Hachache above n 1 at [8].(b) funds of $7,804 held by Flight Centre NZ Limited representing a refundof airline tickets previously purchased by Mr Al Hachache;(c) a collection of 135 bottles of wine and spirits seized from Osaka Tyresduring the search;(d) $640 cash seized from the office of Osaka Tyres during the search;(e) Sky City Casino chips valued at $6,500 and bank account proceeds tothe total value of $66,585.79 representing New Zealand and foreigncash located in the boot of the car parked at Osaka Tyres during thesearch; and(f) $105,020 cash from inside a tyre rim at Osaka Tyres.[13] The total estimated value of the restrained property attributed toMr Al Hachache is $285,000 (plus interest accruing on the monetary funds subsequentto their restraint).Application for civil forfeiture orders[14] On 3 August 2018 the Commissioner filed an application for civil forfeitureorders (with supporting evidence) against the respondents. This was in relation to allof the property restrained at that date.[15] In respect of Mr Al Hachache, the Commissioner has applied for assetforfeiture orders over the property outlined above and a profit forfeiture order againsthim in the sum of $773,975.79. Mr Al Hachache has not filed any documents inopposition.Terms of the proposed settlement[16] The Commissioner and Mr Al Hachache have now agreed to settle the questionof the civil forfeiture of assets as between themselves, subject to the Court's approvalunder s 95(3) of the Act.[17] The proposed terms of settlement as between the Commissioner andMr Al Hachache are:(a) asset forfeiture orders made by consent under s 50 of the Act over allthe restrained property attributed to Mr Al Hachache except for a sumof $5,000 which will be returned to Mr Al Hachache, to be paid into abank account nominated by him;(b) the Commissioner will not pursue his application for a profit forfeitureorder against Mr Al Hachache and that part of his application for civilforfeiture orders will be dismissed;(c) the settlement is made in full and final settlement of the currentproceedings against Mr Al Hachache under the Act;(d) in accordance with [17](c) Mr Al Hachache will abandon all claims hemight have in relation to any of the property restrained in theseproceedings, either under the Act or otherwise, and will undertake notto take any steps to oppose the civil forfeiture of that property; and(e) costs will lie where they fall.[18] The total value of the property which would be forfeited to the Crown as aresult of the proposed settlement is approximately $280,000. As noted, a modest sumof $5,000 would be returned to Mr Al Hachache from the restrained property.Legal principles: Threshold for settlement approval[19] Section 95 of the Act governs Court-approved settlements and provides asfollows:"(1) The Commissioner may enter into a settlement with any person as tothe property or any sum of money to be forfeited to the Crown.(2) A settlement does not bind the parties unless the High Court approvesit.(3) The High Court must approve the settlement if it is satisfied that it isconsistent with—(a) the purposes of this Act; and(b) the overall interests of justice."[20] Section 95 had no predecessor under the former legislation (Proceeds of CrimeAct 1991). In enacting s 95, Parliament expressly empowered the Commissioner toenter into settlement discussions with respondents and interested parties regarding theforfeiture of assets. In doing so, Parliament is likely to have had in mind the significantcost associated with civil litigation and the benefits to all parties if proceedings can besettled and resolved by consent.[21] As has been previously observed, Parliament has entrusted the High Court witha supervisory jurisdiction to ensure that settlements are consistent with theparliamentary intention.4[22] The primary purpose of the Act is contained in s 3(1); the establishment of aregime for the forfeiture of property which has been derived directly or indirectly fromsignificant criminal activity or that represents the value of a person's unlawfullyderived income. Ancillary statutory purposes are to "eliminate the chance" for personsto profit from undertaking or being associated with significant criminal activity(s 3(2)(a)) and to "deter" significant criminal activity (s 3(2)(b)). The Court of Appealin Hayward v Commissioner of Police recently affirmed the Act has a "stronglyexpressed statutory purpose".54 Commissioner of Police v Know-All Group Limited HC Auckland, CRI-2010-404-403,7 November 2011 per Brewer J at [11].5 Hayward v Commissioner of Police [2014] NZCA 625 at [29].[23] The statutory language, that is "overall interests of justice", indicates a broadinquiry is required. In considering whether a settlement is in the interests of justice,relevant factors will include the savings of time and cost and the litigation risk of ahearing to both the Commissioner and the respondent.6 The Court has recognised thedecision to settle proceedings under the Act may be made on economic and pragmaticgrounds and reflect a "common sense compromise" between the parties.7This case: Threshold for settlement approval met[24] Reflecting the principles in s 95(3) the parties submit the settlement isconsistent with the purposes of the Act and is in the overall interests of justice. I agreefor the following reasons:(a) the overwhelming majority of the restrained property attributed toMr Al Hachache would be realised for the benefit of the Crown. Thetotal value is approximately $280,000. I agree this is appropriate, giventhe serious nature of the criminal offending underlying this proceeding;(b) the Commissioner's case is strong. Mr Al Hachache's only declaredpersonal income for 2010 to 2016 was $6,429.42 derived from socialwelfare benefits in the 2012 tax year. Furthermore, despite being thesole director and shareholder of Osaka Tyres, he declared no personalincome from the company. Despite this he was in possession of assetsvalued in excess of $285,000 at the time of the search, including$170,000 in bundles of cash, much of it secreted at the premises. Noexplanation has been given for the source of these assets;6 Commissioner of Police v Kree [2013] NZHC 2972 at [11].7 Commissioner of Police v Douglas [2015] NZHC 1293 at [6]; Commissioner of Police v Venn[2014] NZHC 361.(c) I also agree that the Commissioner has a strong case to show thatMr Al Hachache has unlawfully benefited to a substantial degree fromthe drug offending so as to support a profit forfeiture order being madeagainst him. Over a 14 month period from January 2015Mr Al Hachache's personal bank accounts received cash deposits witha total value of $18,980. Osaka Tyres received unexplained cashdeposits totalling $138,380. Three kilograms of ephedrine was foundin Mr Al Hachache's possession during the search. The approximatevalue of the drug is $255,000. Before being remanded on bail inDecember 2016 Mr Al Hachache turned over more than $4,626,120.40at the Sky City Casino during the eight month period from December2016, a period when he declared no sources of income;(d) the Commissioner is not aware of any unrestrained assets ofsignificance which could be applied to meet the likely shortfall($488,975.79) between the profit forfeiture order sought by theCommissioner ($773,975.79) and the value of the restrained propertypresently available to meet it (approximately $285,000). Forfeiture ofthe specified items of restrained property via asset forfeiture orders (asis proposed by the parties) would relieve Mr Al Hachache of anyresidual debt to the Crown. The modest sum proposed to be returnedto Mr Al Hachache ($5,000) will also assist him to make a fresh starton his release; and(e) all parties acknowledge there will be significant savings of time andcost if Mr Al Hachache's interests in the proceeding can be resolved byconsent without the need for litigation. An agreed settlement wouldalso allow the parties to have certainty and control as to the outcome.Orders sought: The proposed settlement[25] The Commissioner and Mr Al Hachache jointly seek the following orders byconsent, so as to give effect to the terms of the settlement:(a) further orders under ss 34 and 35 of the Act, in particular the followingproperty is released from the restraining orders made by Thomas J on16 August 2016 and is to be returned to Mr Al Hachache, to a bankaccount nominated by him:(i) funds to the value of $5,000 formerly held in Westpac NZLimited bank account 03-0207-0839428-025 in the name ofR H Auto Trading Limited;(b) assets forfeiture orders under s 50(1) of the Act over the followingproperty, so that the property vests in the Crown absolutely and is to bein the Official Assignee's custody and control:(i) all remaining funds formerly held in Westpac NZ Limited bankaccount 03-0207-0839428-025 in the name of R H Auto TradingLimited, valued at approximately $80,965.41, and any accruedinterest;(ii) funds to the value of $7,804 formerly held by Flight CentreNZ Limited, representing a refund of airline tickets previouslypurchased by Mr Al Hachache, and any accrued interest;(iii) a collection of 135 bottles of wine and spirits seized by policefrom the premises of Osaka Tyres and Car Repair Limited at32 Saleyards Road, Otahuhu, Auckland on 1 April 2016;(iv) $640 cash seized by police from the office at Osaka Tyres on1 April 2016, and any accrued interest;(v) funds to the value of NZD$66,585.79 held in the OfficialAssignee's trust account, representing the following sums ofcash located by Police inside the boot of a Mercedes motorvehicle parked at Osaka Tyres on 1 April 2016:(1) NZD$13,800 cash;(2) a separate bundle of NZD$29,050 cash;(3) US$14,700 cash;(4) FJ$5,405 cash; and(5) any accrued interest;(vi) funds to the value of $6,500 held in the Official Assignee's trustaccount, representing the Sky City Casino Chips valued at$6,500 located by Police inside the boot of a Mercedes motorvehicle parked at Osaka Tyres on 1 April 2016, and any accruedinterest;(vii) $105,020 cash seized by Police from inside a sealed tyre locatedin the workshop at Osaka Tyres on 1 April 2016, and anyaccrued interest;(c) the Commissioner's application for a profit forfeiture order againstMr Al Hachache, contained at paragraph l(b) of his application for civilforfeiture orders (dated 3 August 2018) is dismissed; and(d) costs as between the Commissioner and Mr Al Hachache lie where theyfall in relation to all matters.[26] In addition, the parties asks the Court to record the further terms of settlementbetween the Commissioner and Mr Al Hachache:(a) the settlement is in full and final settlement of the current proceedingsbrought by the Commissioner against Mr Al Hachache under the Act;and(b) Mr Al Hachache abandons all claims he might have in relation to anyof the remaining property restrained in these proceedings, either underthe Act or otherwise, and undertakes not to take any steps to oppose thecivil forfeiture of that property.Orders[27] I am satisfied that the proposed settlement is consistent with the purposes ofthe Act and is in the overall interests of justice. In these circumstances the Court ismandated to approve the settlement.[28] I thus make orders in terms of [25](a) to (d) and [26](a) and (b).Moore JSolicitors:Mr Hewson, AucklandMeredith Connell, Auckland