COMMISSIONER OF POLICE v HINES [2018] NZHC 2488

COMMISSIONER OF POLICE v HINES [2018] NZHC 2488 [21 September 2018]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2015-404-1682[2018] NZHC 2488UNDER the Criminal Proceeds (Recovery) Act 2009BETWEEN COMMISSIONER OF POLICEApplicantAND WILLIAM HINESFirst RespondentTE HERE MAIHI MAAKASecond RespondentContinued over page..Hearing: On the papersCounsel: M Harborow and Y Y Wang for the ApplicantP A Sheat for Fourth Respondent Mr SunJ Long and G Schumacher for Ms GuoJudgment: 21 September 2018JUDGMENT (NO 2) OF MUIR JThis judgment was delivered by me on Friday 21 September 2018 at 3.00 pmpursuant to Rule 11.5 of the High Court Rules.Registrar/Deputy RegistrarDate:.Counsel Solicitors:J Long, Barrister, Auckland Meredith Connell, AucklandAkarana Legal, PanmureTRAVIS JAMES SADLERThird RespondentJIA SUNFourth RespondentFALCO BROUQ CELLAH MAAKAFifth RespondentTINY BIG WORLD LIMITEDInterested PartyIntroduction[1] This is a further application by the Commissioner of Police to approve asettlement under s 95 of the Criminal Proceeds (Recovery) Act 2009 (the Act) in thecontext of proceeding CIV 2015-404-1682.[2] On 10 September 2018, I delivered a judgment approving a settlement betweenthe Commissioner and the interested party, Tiny Big World Ltd.1 The presentapplication 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 supplyingpseudoephedrine, one charge of possession of ephedrine for supply, and one charge ofpossession of methamphetamine for supply. The offending occurred in 2015 while hewas 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, hewas 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 aminimum 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 to2015. 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 (locatedat his residential property, 62 Laurel Oak Road, Schnapper Rock, Auckland) and$9,345 located at his work premises. Significant quantities of methamphetamine werelocated at the same time.[6] Mr Sun is the registered proprietor of 62 Laurel Oak Drive. It has a currentrateable value of $1,400,000 and a BNZ mortgage in the amount of $661,014.81 (asat 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 inpart, from criminal activity and is therefore tainted property. He also contends that thecash located in Mr Sun's possession at the time of his arrest is the proceeds of his drugoffending and is similarly tainted property. The Commissioner's position is that thereis no legitimate explanation for the cash. The Commissioner therefore intended toseek an assets forfeiture order in respect of both the property and the cash. He alsointended to file an application for a profit forfeiture order (intended to be in the orderof $2,000,000) and to which the property and the cash would have been similarlyamenable.Proposed settlement[8] The Commissioner, and counsel for Mr Sun and Ms Guo have agreed to settlethese proceedings as between themselves subject to the Court's approval under s 95 ofthe Act. The terms of the settlement appear from the orders made at the conclusion ofthis judgment.The jurisdiction under s 95[9] Section 95 of the Act governs settlements and provides:95 High Court must approve settlement between Commissioner andother party(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.[10] In enacting s 95, Parliament expressly empowered the Commissioner to enterinto settlements with respondents (and interested parties) relating to the forfeiture ofassets. I accept the proposition in the parties' joint memorandum that Parliament islikely to have had in mind the significant costs associated with a civil litigation andthe benefits to all parties if such proceedings could be resolved in a timely and justway. There is a strong public interest in litigation of this nature being brought to aprompt conclusion provided the settlement reflects the likely costs and risks inherentin the underlying litigation. Parliament has entrusted the Court with supervisoryjurisdiction aimed at ensuring any settlements reached are consistent with its intent inenacting 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 andthe overall interests of justice.[12] The primary purpose of the Act is contained in s 3(1). That is the establishmentof a regime for forfeiture of property that has been derived directly or indirectly fromsignificant criminal activity or that represents the value of a person's unlawfullyderived income. Ancillary purposes are to "eliminate the chance" for persons to profitfrom undertaking or being associated with significant criminal activity (s 3(2)(a)) andto "deter" significant criminal activity (s 3(2)(b)).[13] The overall interests of justice requirement predicates a broad inquiry. As thisCourt has previously said, although it is proper that it should have a supervisoryjurisdiction, it is "equally important that the Court carry out a broad inquiry andacknowledge, 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 Actmay be made on economic and pragmatic grounds and often reflect "a common-sensecompromise" between the parties.5[15] If the Court is satisfied in respect of the two matters identified in s 95(3) thenit must approve the settlement.3 Commissioner of Police v Know-All Group Ltd & Anor HC Auckland CIV-2010-404-403, 7November 2011, per Brewer J at [11].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[2014] NZHC 361.The position of the parties[16] The parties to the proposed settlement submit that it is "consistent with thepurposes of [the] Act and the overall interests of justice". Their joint memorandumnotes:(a) The Commissioner considers he has a strong case to show both thatall of the presently restrained property is tainted property (so as tosupport assets forfeiture orders), as well as that Mr Sun has unlawfullybenefited from significant criminal activity and has interests in theproperty (so as to support a profit forfeiture order). Despite declaringminimal income to Inland Revenue, Mr Sun received substantialunexplained deposits into his bank accounts, acquired 62 Laurel OakDrive and the Cash.(b) The Commissioner does, however, recognise that Ms Guo may havea legitimate claim for relief from any forfeiture order given she retainsan interest in the family home as Mr Sun's former wife. Ms Guostrongly denies any knowledge of or benefit from Mr Sun'sinvolvement in drug or other offending.(c) The Commissioner is prepared to adopt a pragmatic approach towardssettlement as he is not aware of any other major assets which could beapplied towards a potential profit forfeiture order against Mr Sunbeyond the property restrained in this proceeding.(d) Mr Sun disputes the strength of the Commissioner's case. He claimshe did not profit to any significant extent from his drug offending andhas provided explanations for some of the cash and unidentified fundsdeposited into his bank account during the relevant period.(e) Despite that, Mr Sun acknowledges that a contested hearing carrieswith it real risk following his convictions and will take some time tocomplete. He also recognises the mandatory nature of civil forfeitureorders, the statutory presumption in favour of the Commissioner'snominated profit forfeiture figure, and the civil standard of proofapplying to these proceedings.(f) For her part, as noted, Ms Guo denies any knowledge of, involvementin, or benefit from, Mr Sun's criminal offending. She was notimplicated in any of Mr Sun's offending. The Commissioner acceptsthat as Mr Sun's former wife, Ms Guo may have an entitlement to ahalf share in the equity in the family home.6 She too wishes to resolvethe matter in a pragmatic way at this juncture and she recognises thelegal matters acknowledged by Mr Sun.(g) There will be considerable saving of time, resource and especially costto all parties if the proceedings in respect of Mr Sun and Ms Guo canbe 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 senseresolution of the claims. It results in forfeiture of the cash, which I accept as likely tohave been tainted property, and applies all known assets of Mr Sun to potential profitforfeiture orders. At the same time however, it recognises what are likely to have beenMs Guo's relationship property claims and the fact that she was not implicated in anyof the offending. I am satisfied that the settlement meets both the purposes of the Actpreviously 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 thefollowing property, so that it vests in the Crown absolutely and is to bein 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 July2015;(ii) $9,345 cash located at 5/220 Queen Street, Auckland City on28 July 2015;(iii) an additional sum of $422,777, to be paid in accordance withparagraph (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 ordersbeing made; and(ii) $222,777 must be paid within four months of these orders beingmade;(c) pending the receipt of the additional sum of $422,777 by theOfficial Assignee, 62 Laurel Oak Drive is to remain restrained underthe Act,7 subject to paragraphs (d) and (e) below;(d) the restraining order in respect of 62 Laurel Oak Drive is varied underss 33, 34 and 35 of the Act as follows:(i) upon receipt of the sum of $200,000 in accordance withparagraph (b)(i) above, the Official Assignee is to arrange forthe restraining order notation to be removed from the certificateof 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 facilitateborrowing for the purpose of raising the sum of $222,777referred to at paragraph (b)(ii) above.(e) in the event Mr Sun and Ms Guo do pay the Official Assignee the sumof $222,777 in accordance with paragraph (b)((ii) above, upon theOfficial Assignee confirming receipt of the sum in writing, therestraining order in respect of 62 Laurel Oak Drive lapses;(f) in the event Mr Sun and Ms Guo do not pay the Official Assignee thesum of $222,777 in accordance with paragraph (b)(ii) above, thefollowing provisions apply:(i) the Official Assignee is to arrange for the restraining ordernotation to be placed back of the certificate of title of 62 LaurelOak Drive (to the extent necessary);7 For the avoidance of doubt, to the extent necessary, the restraining order over 62 Laurel Oak Driveis extended for a period of 12 months from 6 November 2018 under s 41 of the Act (unless it isbrought to an end earlier in accordance with these orders).(ii) the Official Assignee shall immediately sell 62 Laurel OakDrive for its fair market value;8(iii) he shall apply the proceeds of sale as follows:(A) first, deduct the Official Assignee's costs in effectingthe sale of the property (including any decontaminationcosts) and reimburse his costs in administering thismatter since its inception;(B) second, repay all borrowing secured against theproperty;(C) third, pay the Secretary of Justice the amount (if any)payable by way of legal aid granted to Mr Sun (less anycontributions paid by him);(D) fourth, pay any amounts of reparation, offender levy orfine imposed on Mr Sun;(E) fifth, pay the funds necessary to satisfy the sum owedunder paragraph (b)(i) before forfeiting the sum inaccordance 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 forfeitureorders against Mr Sun and/or Ms Guo; and8 For the purposes of effecting a sale of the property under this paragraph, Guy Francis Sayers ofNapier. Official Assignee, has the power to execute any deed or instrument in the name of theregistered proprietor(s), and to do anything necessary to give validity and operation to the deed ofinstrument.(h) costs will lie where they fall in relation to all matters.__________________________Muir J