COMMISSIONER OF POLICE v SHAHIDAN [2021] NZHC 2502

COMMISSIONER OF POLICE v SHAHIDAN [2021] NZHC 2502 [22 September 2021]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2020-404-0594[2021] NZHC 2502BETWEEN COMMISSIONER OF POLICEApplicantAND SHAHIDRAWADEY BIN SHAHIDANRespondentHearing: On the papersCounsel: M Harborow and A Masters for applicantRespondent in personJudgment: 22 September 2021JUDGMENT OF KATZ J[Costs]This judgment was delivered by me on 22 September 2021 at 3:30 pmPursuant to Rule 11.5 High Court RulesRegistrar/Deputy RegistrarSolicitors: Meredith Connell, AucklandCopy to: S B Shahidan (respondent)Introduction[1] Having successfully obtained restraining orders against Shahidrawadey binShahidan under the Criminal Proceeds (Recovery) Act 2009 ("the Act"), theCommissioner of Police now seeks increased costs against Mr Shahidan on a 2B scalebasis with a 50 per cent uplift (totalling $32,623.50).[2] The Commissioner submits that it was clear that Mr Shahidan was not tellingthe truth throughout the hearing of the Commissioner's application, and that he hasacted in a way that contributed unnecessarily to the time and expense of theproceeding.[3] Mr Shahidan has not filed a memorandum in response to the Commissioner'scosts memorandum. Counsel for the Commissioner attempted to contact Mr Shahidanby email on two occasions but did not receive a response.Background[4] The Commissioner alleges that Mr Shahidan has unlawfully benefited fromsignificant criminal activity through involvement in money laundering, receiving andthe unlawful provision of financial services through two companies, Venus FinancialMarkets Ltd (trading as VenusFX) and Igateway Ltd. Funds held in two Bank ofNew Zealand bank accounts ("Igateway Funds") are alleged by the Commissioner tobe the proceeds of this criminal activity.[5] Restraining orders under the Act were made over the Igateway Funds on awithout notice basis. The Commissioner then applied, on notice to Mr Shahidan, forthose orders to be continued. Mr Shahidan opposed the Commissioner's application.[6] Restraining orders are interim in nature.1 They have a statutory life of12 months but may be extended upon application.2 Restraining orders do not inthemselves forfeit property rights.3 Their purpose is to maintain the status quo pending1 Vincent v Commissioner of Police [2013] NZCA 412 at [45].2 Criminal Proceeds (Recovery) Act 2009, ss 37(1) and 41.3 Commissioner of Police v Li [2014] NZHC 479 at [5].determination of an application by the Commissioner for civil forfeiture orders(asset forfeiture orders and/or profit forfeiture orders).4 The threshold for grantingrestraining orders (reasonable grounds for belief that a person has unlawfullybenefitted from significant criminal activity) is lower than that for granting asset orprofit forfeiture orders (proof on the balance of probabilities).[7] Due to their interim nature, and the relatively low threshold for granting them,it is relatively uncommon for applications for restraining orders to be opposed. Mostrespondents focus their efforts on the substantive forfeiture application. Mr Shahidan,however, elected to oppose the application for restraining orders.[8] On 8 June 2021, following a contested hearing, I granted the Commissioner'sapplication.5 I found that there were reasonable grounds to believe that Mr Shahidanhad engaged in significant criminal activity, and that he had unlawfully benefitted fromthat activity.Should the Commissioner be awarded increased costs?[9] The Court has a general discretion as to costs.6 The general rule, however, isthat a party who fails with respect to a proceeding should pay costs to the party whosucceeds.7 That rule applies to applications for restraining orders under the Act.8 TheCourt's discretion includes whether to grant an award for increased costs or indemnitycosts.9[10] The Commissioner submits that there would be grounds for an award ofindemnity costs in this case as Mr Shahidan acted frivolously and improperly indefending the application. The Commissioner acknowledges that Mr Shahidan wasentitled to defend the application but submits that the manner in which he did so wasimproper. He submits that it was clear that Mr Shahidan was not telling the truththroughout the proceeding, and that such conduct would justify an award of indemnity4 At [5].5 Commissioner of Police v Shahidan [2021] NZHC 1328.6 High Court Rules 2016, r 14.1.7 Rule 14.2(1)(a).8 Commissioner of Police v Antolik [2017] NZHC 86 at [2] citing Commissioner of Police v SteppingStone Finance Ltd [2013] NZHC 1537 at [3]-[6].9 High Court Rules 2016, r 14.6(1).costs. Nevertheless, the Commissioner does not seek indemnity costs, but rather seeksincreased costs, submitting that doing so is "generous".[11] The Court may order a party to pay increased costs if the party opposing costshas contributed unnecessarily to the time or expense of the proceeding or a step in itby, among other things:(a) taking or pursuing an unnecessary step or an argument that lacksmerit;10 or(b) failing, without reasonable justification, to admit facts, evidence,documents, or accept a legal argument.11[12] I accept the Commissioner's submission that Mr Shahidan contributedunnecessarily to the time or expense of the proceeding through the manner in whichhe advanced his opposition. Mr Shahidan's evidence at the hearing lacked credibilityand he advanced grounds of opposition that were clearly unmeritorious and entirelyimplausible.[13] For example, Mr Shahidan claimed that the Igateway Funds were the proceedsof his business providing system software services. It was simply not credible,however, that Mr Shahidan, working on his own, was able to generate a revenue ofover $2 million for software programming services over a seven month period whenhe was also working fulltime as the Chief Operating Officer for VenusFX. Nor did heproduce any contemporaneous records to corroborate his claim to have been providingsoftware services, as one would expect where those services were generating revenueexceeding $2 million.[14] Mr Shahidan claimed to have had only a minor role in VenusFX, primarily asa programmer doing technical work on the "back end of the system". He said that hewas not involved in financial matters. Evidence put to him in cross-examination,however, showed that Mr Shahidan was a much more central figure in VenusFX than10 Rule 14.6(3)(b)(ii).11 Rule 14.6(3)(b)(iii).he was willing to admit. Amongst other things, he is shown in YouTube videos givingspeeches promoting the scheme, encouraging investment in the scheme and, later,fronting up to disgruntled investors.[15] Mr Shahidan also advanced spurious explanations about VenusFX's Facebookpresence. He suggested that a Facebook page titled "VenusFX", which posted aboutforeign exchange trading, was not really VenusFX's Facebook page at all. Further, heclaimed to have no knowledge as to why there would be instructions on the VenusFXFacebook page to deposit investment funds into Igateway Ltd's bank accounts inNew Zealand – accounts that were under Mr Shahidan's sole control. He suggestedthat some unknown person must have made this request, for unknown reasons. Hecould not explain, however, why one depositor had referenced their deposit into theIgateway bank account as "VenusFX".[16] I am satisfied that Mr Shahidan contributed unnecessarily to the time orexpense of the proceeding by advancing grounds of opposition to the application thatwere entirely without merit, and which were supported by evidence that lackedcredibility. This put the Commissioner to considerable additional expense.[17] I therefore consider that Mr Shahidan's conduct of the proceeding warrants anaward of increased costs.Result[18] I order Mr Shahidan to pay the Commissioner increased costs on a 2B scalebasis with a 50 per cent uplift, together with reasonable disbursements, in the totalsum of $32,623.50.____________________________Katz J