THE COMMISSIONER OF POLICE v KEEN (AKA CHEN) [2020] NZHC 2369

THE COMMISSIONER OF POLICE v KEEN (AKA CHEN) [2020] NZHC 2369 [11 September 2020]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV2013-404-001779[2020] NZHC 2369IN THE MATTER OF an application pursuant to the MutualAssistance in Criminal Matters Act 1992 andthe Criminal Proceeds (Recovery Act) 2009BETWEEN THE COMMISSIONER OF POLICEApplicantAND CHEN KEEN (AKA JACK CHEN)First RespondentAND MAY HAO (AKA MAY WANG)Second RespondentAND YE FANGThird RespondentHearing:Further Submissions:20 August 202027 August and 3 September 2020Appearances: B Chamley for the ApplicantJ D Turner for the First and Third RespondentsNo appearance for the Second RespondentK C Grant for Natural Dairy (NZ) Ltd (Interested Party)Judgment: 11 September 2020JUDGMENT OF CAMPBELL JThis judgment was delivered by me on 11 September 2020 at 11.30amPursuant to Rule 11.5 of the High Court RulesRegistrar/Deputy RegistrarSolicitors/counsel:Crown Law, WellingtonMcVeagh Fleming Lawyers, AlbanyChapman Tripp, AucklandIntroduction[1] On 24 July 2020 the applicant (the Commissioner) applied for a one-yearextension of the registration of a foreign restraining order. The restraining order wasmade in the High Court of the Hong Kong Special Administrative Region of thePeople's Republic of China. It was first registered in New Zealand on 2 September2013. Registration was under the Mutual Assistance in Criminal Matters Act 1992(MACMA) and the Criminal Proceeds (Recovery) Act 2009 (CPRA).[2] This Court has, since the initial registration in September 2013, extended theregistration of the restraining order several times, under s 137 of the CPRA. It hadlast been extended on 21 August 2019. That extension was to expire on 2 September2020. The Commissioner sought a further extension under s 137 of the CPRA to 2September 2021.[3] The respondents and interested parties were served. None opposed theextension as such. The first and third respondents filed a notice of opposition, but insubstance it was an application for the restraining order to be varied. There was noopposition by the Commissioner, nor by any interested party, to the variation proposedby the first and third respondents.[4] Accordingly, after hearing briefly from the parties at the first call of theapplication on 20 August 2020, by minute dated 21 August 2020 I extendedregistration of the restraining to 2 September 2021, subject to the variation sought bythe first and third respondents.Dispute over notice order[5] There was a related matter on which the parties were not in agreement. Whenthis Court extended the restraining order in August 2019, the Court made an additionalorder. The order was that if the Commissioner or any other party applied to vary orcancel the restraining order, it should give Natural Dairy (NZ) Holdings Ltd (one ofthe interested parties) fifteen working days' notice, so that Natural Dairy could file anyapplication necessary to protect its position. I will refer to this as the "notice order."[6] The background to the notice order is that Natural Dairy says it is the victim ofthe fraud that is the basis of the restraining order. It is pursuing civil proceedings inHong Kong against the respondents. Ms Grant, who appeared for Natural Dairy,confirmed (at the first call on 20 August 2020) that when the order was sought in 2019Natural Dairy told the Court that it was intending to seek orders preventing forfeitureof the New Zealand-based assets that are the subject of the restraining order, and thatit was preparing to apply for civil freezing orders over those New Zealand assets. Shetold me that Natural Dairy had not, in the year since, pursued either of those matters,and that this was largely because Natural Dairy had obtained the protection of thenotice order.[7] In advance of the first call of the application on 20 August 2020, theCommissioner filed a memorandum raising some practical issues with the notice order.The first and third respondents shared the Commissioner's concern about those issues.By contrast, Natural Dairy filed a memorandum dated 18 August 2020 in which itsupported the notice order. In that memorandum Natural Dairy sought eitherconfirmation that the notice order continued to have effect, or an ancillary order givingNatural Dairy either 24-hour notice or same-day notice of any variation or cancellationof the restraining order.[8] At the first call on 20 August 2020 I raised with counsel my concern aboutwhether there was any jurisdictional basis to make (or continue) the notice order, oreven to make either of the alternative orders that Natural Dairy sought (which are justvariations on the notice order). My concern, which I expressed in provisional terms,was that there was no provision in the CPRA that explicitly allows such an order to bemade (whether for a domestic restraining order or for a foreign restraining order). Anotice order seemed to be outside the purpose of the CPRA. The purpose of arestraining order under the CPRA (whether a domestic or foreign order) seemed to beto freeze the position so that the state was able to recover the proceeds of crime. Suchan order was not intended to act as a proxy freezing order for civil claimants.[9] Because this jurisdictional issue had not been addressed by counsel in thememoranda filed before the first call, I offered the parties the opportunity to makewritten submissions on that issue. They accepted. I made timetable directions forsubmissions in my minute, indicating that I would then determine the issue on thepapers.[10] Natural Dairy filed submissions on 27 August 2020, the Commissioner on3 September 2020. The first and third respondents chose not to make submissions.Is there a jurisdictional basis for the notice order?[11] Natural Dairy submitted that there were two jurisdictional bases for a Courtordering that notice be given to an interested party prior to the variation or cancellationof a foreign restraining order. The first was through provisions in the CPRA that allowfurther orders to be made in respect of restrained property: ss 28 and 33–35. Thesecond was through the inherent jurisdiction of the Court to regulate its ownprocedure.Jurisdiction under the CPRA[12] I start by observing that, subject to one specific point raised by theCommissioner, whether there is jurisdiction to make a notice order cannot depend onwhether the restraining order (to which the notice order would be ancillary) is a foreignorder or a domestic order. If Natural Dairy is correct that there is such jurisdiction,the jurisdiction is equally available in respect of a domestic restraining order. This isreflected in Natural Dairy's submissions, which focused on provisions that apply toboth domestic and foreign restraining orders.[13] Natural Dairy submitted that ss 28 and 33–35 of the CPRA are expressed inbroad terms, and provide jurisdiction for an order requiring notice to be given prior tothe variation or cancellation of a restraining order.1 I accept that the provisions are inbroad terms. Section 28 allows a court to "make a restraining order subject to anyconditions the court thinks fit". Section 33 allows a person to apply for a "furtherorder" associated with a restraining order. On such an application the Court may,under s 34(1), "if it considers it appropriate, make further orders in relation to the1 By s 134(1)(h) of the CPRA, ss 28 and 33–35 apply to foreign restraining orders as well as todomestic restraining orders.restrained property". Section 35 provides for a range of orders that may be made unders 34, but expressly does not limit the generality of s 34(1).[14] But the discretionary jurisdiction conferred on the Court under these provisionsmust, as with any statutory discretion, be exercised in accordance with the purpose of(here) the CPRA.2 Section 3 sets out the purpose of the CPRA:3 Purpose(1) The primary purpose of this Act is to establish a regime for theforfeiture of property—(a) that has been derived directly or indirectly from significantcriminal activity; or(b) that represents the value of a person's unlawfully derivedincome.(2) The criminal proceeds and instruments forfeiture regime establishedunder this Act proposes to—(a) eliminate the chance for persons to profit from undertaking orbeing associated with significant criminal activity; and(b) deter significant criminal activity; and(c) reduce the ability of criminals and persons associated withcrime or significant criminal activity to continue or expandcriminal enterprise; and(d) deal with matters associated with foreign restraining orders andforeign forfeiture orders that arise in New Zealand.[15] A restraining order is not an end in itself. Its purpose is to preserve propertypending the bringing of a forfeiture application.3 Forfeiture is the primary purpose.[16] In a domestic context, any forfeiture is to the Crown, not to victims of theunderlying criminal activity.4 In the foreign context, the CPRA presumes the same toapply. While the CPRA does not stipulate that forfeiture is to a state entity (that being2 Fleetwing Farms Ltd v Marlborough District Council [1997] 3 NZLR 257 (CA) at 267 perRichardson P for the Court; and R v Knight [1998] 1 NZLR 583 (CA) at 587 per Richardson P forthe Court.3 Commissioner of Police v Yan [2015] NZHC 2544 at [27]. This case concerned a domesticrestraining order, but the same point applies to a foreign restraining order. For example, a foreignrestraining order lapses when a foreign forfeiture order is registered in New Zealand in respect ofthe same property: s 136(1)(c) CPRA.4 Criminal Proceeds (Recovery) Act 2009, s 50(3).a matter that will be governed by the law of the foreign country), foreign restrainingand forfeiture orders can be registered only at the request of a foreign country.5[17] The notice order does not fit this purpose. The avowed purpose of the noticeorder is to give Natural Dairy notice of variation or cancellation of the restrainingorder, so that Natural Dairy can take steps to protect its position (such as by seeking acivil freezing order) before the restraining order is varied or cancelled.6 But thepurposes of the CPRA do not include protection of civil claimants from the risk of adefendant (even an allegedly criminal defendant) putting assets beyond their reach (byremoval from the jurisdiction, dissipation, and so on).[18] Natural Dairy submitted that the CPRA facilitated victim recovery through itsrelief from forfeiture provisions, such as s 66, and that this supported jurisdiction tomake a notice order. The CPRA does have provisions that give some protection tothird parties who claim to have an interest in the property that is subject to restraint orto forfeiture. But those provisions are designed to protect third parties from the effectsof the restraint or of the forfeiture. They are not designed to protect third parties fromthe risk of an allegedly criminal defendant putting assets beyond their reach. Theprovisions do not lend any support to the argument that making a notice order is inaccordance with the purpose of the CPRA.[19] Finally, Natural Dairy submitted that a key purpose of the CPRA was toeliminate the chance for persons to profit from significant criminal activity: s 3(2)(a).It said that removal of the notice order would run counter to that purpose, because itwould increase the likelihood that restraint orders could be varied or fall away withoutNatural Dairy having an opportunity to seek civil freezing orders. This, it would said,would create an opportunity for the first and third respondents to dissipate assets orremove them to another jurisdiction where recovery was more difficult.5 Mutual Assistance in Criminal Matters Act 1992, s 54; and Criminal Proceeds (Recovery) Act2009, s 132.6 In a memorandum dated 18 August 2020 counsel for Natural Dairy said that a notice order would"allow Natural Dairy to take urgent steps to protect its position before the restraining orders ceaseto have effect".[20] I do not accept that submission, for two reasons. First, s 3(2)(a) says that it isthe forfeiture regime established "under this Act" that is proposed to eliminate thechance for persons to profit from significant criminal activity. The forfeiture (andrestraint) regime established under the CPRA is one that is under the control of thestate. There is no hint anywhere in the CPRA that it is intended that private individuals(or corporations) have a role to play under the CPRA in eliminating the chance forcriminal profiteering.[21] Secondly, it is not correct that removal of the notice order would depriveNatural Dairy of the opportunity to seek civil freezing orders. When Natural Dairysought the notice order in August 2019 it told this Court that it intended to seek civilfreezing orders. It said that it was "currently in the process of preparing its applicationfor this purpose". The notice order was sought simply as an interim measure. NaturalDairy has had ample opportunity to apply for a freezing order in this Court, but hasapparently taken no steps to do so.7[22] For the above reasons, I conclude that making a notice order is not inaccordance with the purposes of the CPRA. Sections 28 and 33–35 of the CPRAtherefore do not provide jurisdiction to make such an order. I am comforted in thisconclusion by the fact that Natural Dairy could not point me to any case in which suchan order has been made.8The Court's inherent jurisdiction[23] Natural Dairy submitted that a proceeding under the CPRA is subject not onlyto the provisions in the CPRA, but also (as a civil proceeding) to the High Court Rules2016, and to the Court's inherent jurisdiction.[24] I accept that a proceeding under the CPRA is subject to the Court's inherentjurisdiction, and that this provides a basis for the Court to make ancillary procedural7 Natural Dairy advised that it had applied for a freezing order in the Hong Kong courts.8 I exclude the instance case, as the minute of Duffy J in which her Honour made the order does notexplore the basis for it. This reflects the fact that Natural Dairy's request (by memorandum) forthe notice order was not met with any opposition.orders.9 But, as Ms Fenton for the Commissioner submitted, the Court should exerciseits inherent jurisdiction in harmony with the relevant legislative scheme.10 I haveconcluded above that the notice order is not in accordance with the purposes of theCPRA. That conclusion equally prevents resort to the Court's inherent jurisdiction.The Commissioner's other argument[25] The above is sufficient to conclude that the Court has no jurisdiction to makethe notice order. For completeness I also note another argument that theCommissioner put forward against the making of the notice order. This argument was,as I have foreshadowed, particular to the regime for foreign restraining orders.[26] The Commissioner submitted that the notice order might require it to take ordefer taking steps that conflict with its statutory powers and obligations. Thissubmission largely rested on s 136 of the CPRA, which provides for the duration of aforeign restraining order that has been registered in New Zealand:136 Duration of foreign restraining order registered in New Zealandand associated further orders(1) The registration of a foreign restraining order in New Zealand expireson the earliest of the following dates:(a) the date when the foreign restraining order to which it relatesexpires or is revoked:(b) the date that is the end of 2 years after the date on which theforeign restraining order is registered in New Zealand:(c) the date when the Commissioner registers a foreign forfeitureorder in New Zealand in respect of some or all of the propertyspecified in the foreign restraining order:(d) the date on which the registration of the foreign restrainingorder in New Zealand has been cancelled under section 58 ofthe Mutual Assistance in Criminal Matters Act 1992.(2) Despite subsection (1), if the registration of a foreign restraining orderin New Zealand is extended as a result of an application to the HighCourt, it expires on the date specified by the High Court under section137.9 Natural Dairy relied, correctly, on Commissioner of Police v Yan [2015] NZHC 2544 for thisproposition.10 R v Moke and Lawrence [1996] 1 NZLR 263 (CA) at 268–269.(3) On the expiry of the registration of a foreign restraining order in NewZealand, any further order made in relation to the foreign restrainingorder also expires.[27] The Commissioner's concern was that the registration of a foreign restrainingorder might expire under s 136(1)(a) as a result of the underlying foreign restrainingorder ceasing to have effect (by itself expiring or being revoked). The Commissionersaid that it was implicit in the CPRA that if the foreign country informed New Zealandthat the foreign restraining order had expired or been revoked, the Commissioner wasobliged to take steps, reasonably promptly, to bring that to the Court's attention and totake relevant steps in connection with the assets. The Commissioner submitted thatthat obligation was inconsistent with a notice order that required it to first give 15days' notice if it applied to vary or cancel the registration of the restraining order, orif it sought to obtain custody of the assets from the Official Assignee.[28] Natural Dairy took a different view of s 136. It relied on s 136(2), whichprovides that "despite" s 136(1), where the restraining order has been extended as aresult of an application to the High Court (as in this case), the order expires on the datespecified by the High Court under s 137. Natural Dairy said that the "despite" madeit clear that, where the restraining order has been extended by the High Court, expiryis governed by s 136(2), which overrides s 136(1). On this view, there was now noprospect of this restraining order expiring under s 136(1)(a), and no prospect of theconflict that is of concern to the Commissioner.[29] Usually the word "despite" would mean that expiry would be governed bys 136(2) (where it applies) in place of s 136(1). But I do not think that, read in context,that is the meaning of s 136. Such a meaning would produce absurd consequences.The restraining order would continue to be registered when it had expired in its homecountry (s 136(1)(a)), when the Commissioner had registered a foreign forfeiture orderin respect of the same assets (s 136(1)(c)), and even when registration had beencancelled under s 58 of the MACMA (s 136(1)(d)). I do not think that these absurdconsequences could have been intended. Section 136(2) applies where the duration ofregistration has been "extended". This presupposes a fixed time limit on the durationof registration. The only fixed time limit in s 136(1) is that in s 136(1)(b). Interpretedin context, s 136(2) therefore overrides only s 136(1)(b).[30] It is therefore possible that, as the Commissioner argued, the notice orderwould conflict with steps that the Commissioner would be obliged to take if theregistration of the foreign restraining order expired under s 136(1)(a). But that is nota matter that I have to decide, given my conclusion above that there is no jurisdictionto make the notice order.Should the notice order continue, or should it be revoked?[31] This Court made the notice order on 21 August 2019. The order is not limitedin time (in particular, it is not limited to the period of the one-year extension to2 September 2020). It presently continues to have effect as an order of this Court.[32] I therefore asked the parties whether, on the assumption that I concluded thatthere was no jurisdictional basis for the notice order, there was any basis on which theorder should continue, or any basis on which it should instead be rescinded. Neitherparty made submissions on that point.[33] I am of the view that the order should be rescinded. The order was madewithout any argument on, or consideration of, the jurisdictional point. The orderappears to have been an interlocutory order, and so may be rescinded under rule 7.49.Alternatively, if it was not an interlocutory order, it must have been a "further order"purportedly made under s 34 of the CPRA. In that event, s 34(2)(b) empowers theCourt to continue to make further orders at "any later time" prior to expiry of therestraining order. Such a further order can, under the broad terms of s 35, includerescinding the earlier order.Result[34] I rescind the notice order made by this Court on 21 August 2019.[35] I decline Natural Dairy's request for a notice order in different (or any) terms.[36] If there is any issue of costs between the Commissioner and Natural Dairy,brief memoranda (of no more than two pages each) may be filed.______________________Campbell J