Commissioner of Police v Cho [2018] NZHC 2748

Commissioner of Police v Cho [2018] NZHC 2748 [24 October 2018]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2011-404-7212[2018] NZHC 2748UNDER the Criminal Proceeds (Recovery) Act 2009BETWEEN COMMISSIONER OF POLICEApplicantAND ALLEN BRYAN CHORespondentHearing: On the papersCounsel: MR Harborow and LJ Fraser for applicantPF Wicks QC for respondentJudgment: 24 October 2018JUDGMENT OF FITZGERALD J[Approval of settlement]This judgment was delivered by me on 24 October 2018 at 11 am],pursuant to Rule 11.5 of the High Court Rules.Registrar/Deputy RegistrarDateSolicitors: Meredith Connell, AucklandTo: P Wicks QC, Auckland[1] The parties apply by joint memorandum for Court approval of a settlementpursuant to s 95 of the Criminal Proceeds (Recovery) Act 2009 (the Act).Background[2] Mr Harborow and Mr Wicks QC, counsel for the applicant and respondentrespectively, explain in their joint memorandum that in 2010, Police began aninvestigation which targeted the large-scale importation and distribution of controlleddrug analogues (class C controlled drugs) in the forms of pills, code named "OperationArk". The investigation established that the respondent, Mr Cho, was a large-scaledealer and distributor of these pills.[3] Mr Cho pleaded guilty to and was convicted of 14 offences of selling class Ccontrolled drugs, 17 offences of possessing a class C controlled drug for sale and threeoffences of offering to sell a class C controlled drug. He was sentenced to homedetention for 10 months on 28 March 2018.1[4] In parallel with the criminal proceedings, restraining orders were granted overproperty related to Mr Cho's offending which he either owned or over which he wasdeemed to have effective control. Most recently, on-notice restraining orders weremade over that property, on 21 February 2018.[5] The parties' joint memorandum sets out in detail the particular assets that arepresently restrained. These extend to various motor vehicles (or the proceeds fromsale of them); the contents of certain bank accounts; approximately $660,000 in cash;and a property located in the State of New Jersey, United States of America (the "USProperty").[6] The total value of the restrained property is estimated at approximately$1.158 million.1 R v Cho [2018] NZHC 561.The proposed settlement[7] The parties have now reached a settlement, subject to the Court's approvalunder s 95 of the Act. The proposed settlement is as follows:(a) assets forfeiture orders are to be sought by consent under s 50 of theAct over all of the restrained property but with the exceptions asoutlined below;(b) Mr Cho is to pay the Official Assignee USD 235,950 and that sum willbe forfeited to the Crown. The US Property is to be released from therestraining orders to facilitate the borrowing of this sum against theproperty by Mr Cho's parents;(c) the proceeds of sale of the 1992 silver Nissan Skyline registrationMAXSPD will be released from the restraining orders and paid to anaccount nominated by Mr Cho;(d) the 2001 silver BMW 540i registration GAG488 will be released fromthe restraining orders;(e) the Commissioner will not pursue an application for profit forfeitureorders against Mr Cho; and(f) costs are to lie where they fall.[8] The monetary value of the settlement will involve approximately $1,130,000being forfeit to the Crown. The approximate quantum to be returned to Mr Cho is$30,000.Legal principles[9] The legal principles are not in dispute and have been addressed on a numberof occasions in recent High Court decisions. I can do no better than respectfully adoptthe recent summary by Muir J in Commissioner of Police v Wellington:2[10] Section 95 of the Act governs settlements and provides:95 High Court must approve settlement between Commissionerand other party(1) The Commissioner may enter into a settlement with anyperson as to the property or any sum of money to be forfeitedto the Crown.(2) A settlement does not bind the parties unless the High Courtapproves it.(3) The High Court must approve the settlement if it is satisfiedthat it is consistent with—(a) the purposes of this Act; and(b) the overall interests of justice.[11] In enacting s 95, Parliament expressly empowered the Commissionerto enter into settlements with respondents (and interested parties) relating tothe forfeiture of assets. I accept the proposition in the parties' jointmemorandum that Parliament is likely to have had in mind the significantcosts associated with a civil litigation and the benefits to all parties if suchproceedings could be resolved in a timely and just way. There is a strongpublic interest in litigation of this nature being brought to a prompt conclusionprovided the settlement reflects the likely costs and risks inherent in theunderlying litigation. Parliament has entrusted the Court with supervisoryjurisdiction aimed at ensuring any settlements reached are consistent with itsintent in enacting the legislation and with the overall interests of justice.3[12] Section 95(3) directs the Court to consideration of the purposes of theAct and the overall interests of justice.[13] The primary purpose of the Act is contained in s 3(1). That is theestablishment of a regime for forfeiture of property that has been deriveddirectly or indirectly from significant criminal activity or that represents thevalue of a person's unlawfully derived income. Ancillary purposes are to"eliminate the chance" for persons to profit from undertaking or being2 Commissioner of Police v Wellington [2018] NZHC 2502 (footnotes in original).3 Commissioner of Police v Know-All Group Ltd HC Auckland CIV-2010-404-403, 7 November2011, per Brewer J at [11].associated with significant criminal activity (s 3(2)(a)) and to "deter"significant criminal activity (s 3(2)(b)).[14] The overall interests of justice requirement predicates a broad inquiry.As this Court has previously said, although it is proper that it should have asupervisory jurisdiction, it is "equally important that the Court carry out abroad inquiry and acknowledge, where appropriate, that settlements can be inthe interests of justice, bearing in mind the savings of time and cost and thelitigation risks to the parties".4[15] The Court has recognised that decisions to settle proceedings underthe Act may be made on economic and pragmatic grounds and often reflect "acommon-sense compromise" between the parties.5[16] If the Court is satisfied in respect of the two matters identified ins 95(3) then it must approve the settlement.Analysis[10] Having reviewed the papers and considered the matters raised in counsels' jointmemoranda dated 5 and 16 October 2018, I am satisfied that it is appropriate toapprove the proposed settlement.[11] A compelling factor in my view, is that the vast majority of the restrained assetsare to be forfeit under the proposed settlement. The relatively modest amount of therestrained assets which will not be subject to the settlement in my view properlyreflects that pursuing a forfeiture order through a substantive hearing to conclusionwill inevitably involve not insignificant time (including the allocation of scarce Courtresources away from other litigants) and cost. In my view, these factors are well-balanced by a very modest proportion of the overall assets being excluded fromforfeiture.[12] I also acknowledge the Commissioner's acceptance that part of the purchaseprice of the US Property was paid by Mr Cho's father and that sum was acquiredlegitimately. The Commissioner is accordingly content to settle on the basis thatMr Cho's contribution to the US Property only is forfeit, which in my view representsa fair and reasonable outcome. The Commissioner is not aware of any other significantassets which could be applied towards a profit forfeiture order against Mr Cho.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.[13] I am also mindful that both parties are represented by experienced and seniorcounsel who will no doubt have fully considered the benefits and disadvantages ofsettlement versus proceeding to a full hearing, and the residual risks involved.[14] I am accordingly fully satisfied that the proposed settlement is consistent withthe purposes of the Act as well as being in the overall interests of justice.Result[15] I accordingly approve the settlement.[16] In order to give effect to the settlement, and by consent, I make orders inaccordance with paragraph 3.2 of the parties' joint memorandum dated 16 October2018.____________________Fitzgerald J