THE COMMISSIONER OF POLICE v BIRKINSHAW [2019] NZHC 314

THE COMMISSIONER OF POLICE v BIRKINSHAW [2019] NZHC 314 [1 March 2019]IN THE HIGH COURT OF NEW ZEALANDPALMERSTON NORTH REGISTRYI TE KŌTI MATUA O AOTEAROATE PAPAIOEA ROHECIV-2014-454-000143[2019] NZHC 314UNDER the Criminal Proceeds (Recovery) Act 2009IN THE MATTER OF an application pursuant to section 35BETWEEN THE COMMISSIONER OF POLICEApplicantAND KATHERINE JANE BIRKINSHAWRespondentERROL MARTINUE DANKLOFFirst Interested PartyPUBLIC TRUSTSecond Interested PartyHearing: 1 March 2019Counsel: J J Harvey and A R Lyne for ApplicantS J Fraser for RespondentD M A Wiseman for Official AssigneeJudgment: 1 March 2019JUDGMENT OF COLLINS JIntroduction[1] The application before me stems from a proceeding commenced by theCommissioner of Police (the Commissioner) for asset forfeiture againstMs Birkinshaw, who was convicted of importing methamphetamine. Ms Birkinshawhas filed an interlocutory application opposing the forfeiture application on the basisof issue estoppel.[2] The essence of Ms Birkinshaw's claim is that, when sentencing her, I recordedthat the Commissioner was seeking forfeiture in the sum of $165,000 and that she didnot oppose paying that sum by way of forfeiture. She received credit for herconcession when I sentenced her. The Commissioner now claims $362,459.25.Ms Birkinshaw says the Commissioner should be estopped from claiming anythingother than $165,000. She pleads the doctrine of res judicata.Background[3] On 21 May 2014, Police executed a search warrant at Ms Birkinshaw'sWorchester Street address in Palmerston North. Police found several items of stolenproperty, nearly 40 grams of methamphetamine, utensils for smokingmethamphetamine and approximately $85,600 in cash.[4] On 23 September 2016, I sentenced Ms Birkinshaw to five years and fourmonths' imprisonment for importing 200 grams of methamphetamine and associatedcharges.1 At the time, the Commissioner and Ms Birkinshaw had reached anarrangement regarding the appropriate forfeiture. The sentencing notes record that:2The Crown seeks forfeiture of $165,000. This is not opposed and you are nowentitled to recognition for that forfeiture and that will be reflected in a furtherreduction of six months' imprisonment.[5] According to affidavits filed for this interlocutory application byMs Birkinshaw and Mr Murray, from the Central Assets Recovery Unit, the $165,000figure was agreed to as a settlement after a discussion between the lawyers on the dayof sentencing.[6] No agreement was ever signed. Between September 2016 and December 2016,the parties attempted to formalise the settlement by way of a memorandum to be filedwith the Court for approval. These attempts faltered because of an unrelated disputebetween Ms Birkinshaw and the Official Assignee. While Ms Birkinshaw was inprison, the Official Assignee evicted her children from the Worchester Street addressdue to the presence of trace amounts of methamphetamine. Ms Birkinshaw1 R v Birkinshaw [2016] NZHC 2257.2 At [39].remediated her property at considerable expense and is now pursuing a claim fordamages against the Official Assignee.[7] The parties kept the Court updated as to the (lack of) progress with thesettlement. On 1 February 2017, a joint memorandum was filed requesting anextension of the restraining order that had been in place while the settlement was beingfinalised. A further extension was sought and granted on 10 July 2017.[8] On 27 November 2017, Mr Fraser, counsel for Ms Birkinshaw, indicated toMr Harvey, counsel for the Commissioner, that Ms Birkinshaw intended to renegotiatethe settlement due to "damage to the house". On 27 March 2018, Mr Fraser confirmedinstructions to negotiate a reduced sum to account for the remedial work required onthe house as a result of the trace amounts of methamphetamine.[9] On 14 September 2018, the Commissioner filed for forfeiture of theWorchester Street property and $86,584.80 in cash, with a total value of $362,459.25.Analysis[10] Section 95 of the Criminal (Proceeds) Recovery Act 2009 (the Act) is centralto the determination of this application. It 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.[11] The issue is whether the relevant portions of my sentencing notes constitutedapproval of the settlement. Mr Fraser submits that the incorporation of the forfeitureagreement into the sentence formed a substantive approval for the purposes of s 95 ofthe Act. Mr Harvey submits that the settlement agreement had yet to be formallyapproved by the Court and that there is such no doctrine as "substantive approval".[12] Mr Harvey also addresses the question of whether the settlement agreementcould be enforced by an equitable estoppel. He says it could not becauseMs Birkinshaw does not come to Court with clean hands, given her attempts torenegotiate the settlement. This ground is not pleaded by Ms Birkinshaw, andMr Fraser does not rely on it. It is also unnecessary to address the point, as if theagreement was not approved under s 95 it is irrelevant whether it was otherwiseenforceable.[13] In my view, the settlement in this case has not been approved by the Court. Atsentencing, I merely said that the Crown sought forfeiture and that it was not opposed.There was no explicit approval of the settlement. It is clear that this was done merelyfor the purpose of taking the matter into account for sentencing purposes. Section 10Bof the Sentencing Act 2002 provides that the sentencing Court must take into accountany forfeiture order "made, or to be made". It is clear, both from the text of mysentencing notes and the context of the settlement discussions that took place on23 September 2014, that I was taking into account the forfeiture order that was to bemade at some future date. This is further supported by the way the parties treated thematter in the following months. For instance, the joint memorandum filed on1 February 2017 included the following statement:There have been settlement discussions between the parties. Further time isrequired to continue with those discussions. If resolution is reached, theparties will seek the approval of the High Court pursuant to section 95 of theCriminal Proceeds (Recovery) Act 2009. It is agreed that the restraining ordershould remain in place.[14] It would be contrary to both the scheme of s 95, and the accepted practice offiling a joint memorandum for approval by the Court, to accept that my sentencingnotes constituted an approval of the settlement in this case. Section 95(3) sets out twocriteria for the Court to be satisfied of before giving approval to a settlement. Thosecriteria are usually addressed in the joint memorandum, and a separate judgment isusually issued to make the necessary orders.3 This is in line with the fact that theCourt's supervisory jurisdiction under s 95 is "not a rubber stamping exercise".4[15] In that context, it would be highly irregular to treat the reference to a forfeituresettlement in a sentencing context as an approval under s 95. Mr Fraser contends thatthe incorporation of the forfeiture settlement into the sentencing of Ms Birkinshawprevents the Commissioner from resiling from it. However, that misunderstands thatsentencing and asset forfeiture are distinct processes. As explained above, the relevantaspect of sentencing is governed by s 10B of the Sentencing Act, not s 95 of the Act.It is entirely legitimate for the Court to take into account an amount of forfeiture thathas not yet been ordered. A natural consequence of this is that there may be occasions,such as the present case, where the forfeiture order is not made in the same terms aswas intended at the time of sentencing.[16] Such a change in circumstances may well be a relevant consideration whenconsidering whether to grant an application for forfeiture, however, it does not advancethe argument for res judicata. Relevantly, Mr Fraser submits that Ms Birkinshaw hasexpended a considerable amount on remediating her house in reliance on the fact itwas not part of the forfeiture settlement. He submits it would be unfair for theCommissioner to alter that position now. This may be a relevant matter forconsideration at the substantive hearing of the forfeiture application.[17] As the settlement was never approved by the Court, there is no res judicata.Result[18] The interlocutory application for an order declaring the Commissioner isestopped from seeking $362,459.25 is dismissed.3 See Simon France (ed) Adams on Criminal Law – Sentencing (online ed, Thomson Reuters) at[CP95.04].4 Commissioner of Police v Know-All Group Ltd HC Auckland CIV-2010-404-403, 7 November2011 at [11].Restraining order[19] The Commissioner has sought an extension of the restraining order until3 February 2020. That application is not opposed. The restraining order is thereforeextended to 3 February 2020.Timetable[20] The substantive proceeding now needs to be diligently progressed. There willbe a case management conference on 29 April 2019, by which date the Court expectscounsel to be in a position to agree to a timetable to advance this matter to a substantivehearing.___________________D B Collins JSolicitors:Ben Vanderkolk & Associates, Palmerston North for ApplicantMeredith Connell, Auckland for Official Assignee