COMMISSIONER OF POLICE v SHARMA [2023] NZHC 2959

COMMISSIONER OF POLICE v SHARMA [2023] NZHC 2959 [20 October 2023]IN THE HIGH COURT OF NEW ZEALANDCHRISTCHURCH REGISTRYI TE KŌTI MATUA O AOTEAROAŌTAUTAHI ROHECIV-2023-409-201[2023] NZHC 2959BETWEENCOMMISSIONER OF POLICEApplicantAND NEHA SHARMAFirst RespondentAND AMANDEEP SHARMASecond RespondentAND DIVINE CONNECTION LIMITEDThird RespondentAND ANZ BANK NEW ZEALAND LIMITEDInterested PartyAND OFFICIAL ASSIGNEEInterested PartyAND CHRISTOPHER FERNANDOInterested PartyHearing: 10 October 2023Appearances: K South and K A Courteney for the ApplicantM T Lennard for the First and Second RespondentsB M Finn for the Official AssigneeJudgment: 20 October 2023JUDGMENT OF HARLAND J(Application for early sale order)Introduction[1] The Commissioner of Police (the Commissioner) applies for an early sale orderunder ss 33, 34 and 35 of the Criminal Proceeds (Recovery) Act 2009 (the Act) inrespect of bare land at Knowles Crescent, Kaikoura (the section) owned by the firstand second respondents (the Sharmas). This property is currently the subject of arestraining order, made initially by the Court on a without notice basis, butsubsequently an on notice restraining order was made on 6 June 2023.[2] The application for an early sale order is opposed by the Sharmas.Background[3] Neha Sharma faces two charges of using a forged document,1 and both she andher husband Amandeep Sharma each face two charges of obtaining by deception2 andtwo charges of money laundering.3 The latter two sets of charges are laid asrepresentative charges. All charges have been laid by the Serious Fraud Office.[4] In summary, the forgery charges allege that Mrs Sharma provided two forgedreferences to support her application for the position at Oranga Tamariki and that,subsequently, when she was employed by Waka Kotahi, she again submitted areference which had been forged.[5] The charges of obtaining by deception relate to Mrs Sharma's failure to adviseOranga Tamariki about an alleged conflict of interest. It is alleged that DivineConnection Ltd (Divine Connection), a company in which Mr Sharma was the directorand shareholder, was assigned by Mrs Sharma in her role as property and facilitiesmanager to undertake work for Oranga Tamariki, without Oranga Tamariki beingaware that Divine Connection was linked to Mr Sharma. It is alleged that the goodsand services paid by Oranga Tamariki to Divine Connection amounted to$2,144,615.561 Crimes Act 1961, s 257(1)(b)-(c); maximum penalty ten years' imprisonment.2 Sections 240(1)(a), (2)(b)(a)-(b) and 66; maximum penalty seven years' imprisonment.3 Sections 243(2) and 66; maximum penalty seven years' imprisonment.243(2).[6] The charges alleging money laundering follow on from what happened afterMrs Sharma resigned from Oranga Tamariki on 2 November 2022.[7] On 30 March 2023, search warrants were executed, one at the then residentialaddress of Mr and Mrs Sharma (their family home), the other at the residential addressof the then director of Divine Connection.[8] Following the execution of the search warrant at the Sharmas' address, a realestate agent was instructed by them to sell their family home.[9] On 14 April 2023, the Sharmas flew to India on one-way tickets. Four dayslater, their family home was listed for sale.[10] Before leaving for India, the Sharmas transferred a total of $795,000 from NewZealand accounts to a Bank of India account held in Mr Sharma's name. A total of$791,500 was then transferred into seven other bank accounts associated with MrsSharma's family in India or joint accounts in their names.[11] The Sharmas' family home eventually sold. The funds obtained from this saleare restrained. Another property owned by them at 100 Aldwins Road has also beensold with the funds from it also being restrained. The Sharmas consented to theseproperties being sold.The application and notice of opposition[12] The remaining real estate owned by the Sharmas comprises the section inKaikoura. This section is the subject of the Commissioner's current application. Itwas purchased on 6 October 2021 for $220,000, using what the Commissionercontends were tainted funds.[13] Although the section is subject to the restraining order and the Court hasordered that the rates and any insurance costs for it be funded from the restrained fundsheld by the Official Assignee, the Commissioner submits that the Court should grantthe application for early sale because (and I summarise):(a) the Sharmas had actively marketed the section for sale from 10 October2022 and it remained on the market after they left New Zealand for Indiaon 14 April 2023. Given that they had previously agreed it should be sold,there is no reason why it should not be sold now;(b) although recognising there is little risk of the section deteriorating in value,without regular mowing and/or weed control, it may fall into a deterioratedstate or create a fire risk;(c) it is in the interests of all parties to liquidate the section so that all partiesare aware of the value of funds in the restrained assets pool held on interestbearing deposit by the Official Assignee; and(d) there is no detriment to any party given that the funds realised (as with thetwo other properties already sold) would be held on interest bearingdeposit by the Official Assignee until all matters are resolved.[14] The Sharmas oppose the application. They submit that:(a) there is no evidence that the section is depreciating in value and, in anyevent, it is subject to the restraining order;(b) the assertion that the section may fall into a deteriorated or fire risk stateis speculative but, in any event, the Official Assignee is authorised unders 80 of the Act to expend funds to mow the grass once a month; and(c) they are entitled to the presumption of innocence. They have pleaded notguilty to the charges and elected trial by jury. The trial managementprocess is in its infancy and a trial date has not been allocated. Counselagree that the trial is unlikely to proceed until the end of 2024 at the earliestor more likely in 2025.Discussion[15] Section 35 of the Act provides:35 Types of further orderWithout limiting the generality of section 34(1), a court may, on an applicationunder section 33(1), make 1 or more of the following further orders in relationto restrained property:(e) an order relating to the Official Assignee that—(v) directs the Official Assignee to sell restrained property (including,without limitation, a business) in order to preserve the value of therestrained property:(emphasis added)[16] I agree that, although the making of an early sale order is discretionary,s 35(e)(v) appears to require such an order to be for the purpose of preserving the valueof the restrained property.[17] I agree with the following observations of Cull J in Commissioner of Police vSiloata:4[25] Dealing with early sale orders in general, the Court in Commissionerof Police v Chen observed:5The underlying purpose of the restraining order is to preserve thesubject property because it represents a monetary value of the partiesconcerned. The legislature can be taken to have appreciated thatproperty may be subject to a restraining order for a considerable timeand that circumstances may change over the life of the order so as toput the property at risk. Some risks may be of a kind that actionincluding disposition of the property itself, may be needed to preservethe value that the property represents. If there were no mechanism forresponding to such risks the rational for the scheme would besignificantly undermined.Section 35(e)(v) specifically recognises the need to preserve the valueof the restrained property through the sale of it. There are manyforeseeable circumstances that might justify such an order. Theseinclude a significant drop in the property market, the risk of a mortgageesale and the reduction in value cause by a lack of funds to maintain theproperty.[26] However, sale orders will not automatically be made where restrainedassets are depreciating in value. This Court must consider the nature and valueof the asset(s), the length of time before the substantive proceeding will bedetermined, the extent to which the asset(s) may depreciate during that period4 Commissioner of Police v Siloata [2022] NZHC 1830 at [25]−[26].5 Commissioner of Police v Chen [2013] NZHC 2259 at [30]−[31].and the wishes of the owner of the asset(s) and any other person who mayhave an interest in it.6[18] I also refer to the observations of Venning J in Commissioner of Police vCavanagh where he noted that sale orders are typically pursued where the restrainedassets are likely to have a high depreciation rate combined with costs of storage andinsurance, which ultimately decrease the potential return to the Commissioner and/orthe parties who claim an interest in the asset.7 That is not the situation here.[19] The property in this case is bare land. It was purchased on 6 October 2021 for$220,000. On 10 October 2022, it was placed on the market through the Sharmas' realestate agent with a listing price of $329,000. On 29 March 2023, the asking price wasreduced to $290,000. On 20 April 2023, a week after having left New Zealand forIndia, Mr Sharma contacted the real estate agent saying that they wished to sell theproperty in the next three to four weeks. The property has not sold but is restrained.There is currently no mortgage over the property. Although the value of the section isunable to be clearly ascertained at this time, there is no evidence that it is worth lessthan the price it was purchased for in October 2021. As it comprises bare land, noissues of depreciation arise.[20] There is simply no evidence that an early order for sale is required to preservethe value of this section. In addition, I am not at all persuaded by the argument thatthe property may fall into a deteriorated or fire risk state, or the fact that Kaikoura hasbeen subject to earthquakes might be a powerful or even relevant consideration.[21] The fact that the Sharmas previously agreed to placing the property on themarket for sale and now do not is, in my view, persuasive. The views of the Sharmasneed to be considered. They do not agree to the property being sold at this time, butthey did agree to the family home and the Aldwins Road property being sold. Absentsome evidence establishing that the value of the section needs to be preserved, theSharmas' views should be respected.6 Commissioner of Police v Drummond [2018] NZHC 1730. See also Commissioner of Police vFarrell [2022] NZHC 310.7 Commissioner of Police v Cavanagh [2014] NZHC 2978 at [7].[22] The criminal trial is some time away. Should the Sharmas be acquitted, therewould be no basis to find that the section was purchased using tainted funds. If theSharmas are convicted, there would then need to be an application for civil forfeitureorders. Given the length of time involved, some circumstances might support anapplication for early sale. This is not such a case. I am not satisfied that an order forearly sale of the section is required to preserve the value of it. Neither am I satisfiedthat it is appropriate for any other of the reasons advanced by the Commissioner.Result[23] The application is dismissed with costs reserved.____________________Harland JCounsel:Crown Solicitor's Office, ChristchurchStout Street Chambers, WellingtonLuke Cunningham Clere, Wellington.