COMMISSIONER OF POLICE v FRANKLIN [2023] NZHC 1610

COMMISSIONER OF POLICE v FRANKLIN [2023] NZHC 1610 [27 June 2023]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2021-404-420[2023] NZHC 1610BETWEEN COMMISSIONER OF POLICEApplicantAND WAYNE BRENDON FRANKLINRespondentHearing: On the papersAppearances: S M Earl for ApplicantP F Wicks KC for RespondentJudgment: 27 June 2023JUDGMENT OF JOHNSTONE JThis judgment was delivered by me on 27 June 2023 at 3pmpursuant to r 11.5 of the High Court Rules.Registrar/Deputy RegistrarSolicitors:MC, Auckland[1] In this proceeding, the Commissioner of Police applied for:(a) a profit forfeiture order against Wayne Franklin, in effect requiringpayment of $694,755.90 from interests in a property at28B Portage Road, New Lynn, Auckland (excluding those of acaveator), and $12,050 cash seized by police at447 Otira Highway, Kumara, West Coast on 16 May 2020; or(b) in the event a profit forfeiture order is not made, asset forfeiture ordersvesting the above property in the Crown.[2] The Commissioner and Mr Franklin have agreed a settlement. They jointlyinvite the Court to approve the settlement under s 95 of theCriminal Proceeds (Recovery) Act 2009 (the Act).Background[3] Police attended at 447 Otira Highway, Kumara on 15 and 16 May 2020.Mr Franklin was present. Police found, amongst other things, 670 grams ofmethamphetamine and the cash mentioned above (Search Evidence).[4] Mr Franklin was charged with offending against the Misuse of Drugs Act 1975.In March 2021, Judge Farish at the Greymouth District Court ruled that the searchevidence was obtained unlawfully, and would be inadmissible at trial. The Crownoffered no evidence at Mr Franklin's criminal trial and his charges were dismissed.[5] The Commissioner's forfeiture application, outlined in essence above, wasfiled on 7 October 2022. It relied in part on the Search Evidence ruled inadmissiblein the criminal proceeding, and further upon statements Mr Franklin made oncompulsory examination under s 107 of the Act. On 27 April 2023, Woolford J ruledboth the Search Evidence and Mr Franklin's statements admissible.11 Commissioner of Police v Franklin [2023] NZHC 727.Settlement for approval[6] The settlement, which will bind the parties in the event this Court approves it,2is that:(a) an assets forfeiture order will be made under s 50(1) of the Act, byconsent, over:(i) 12,050 cash seized by Police at 447 Otira Highway on 16 May2020, and any interest accrued;(b) a profit forfeiture order will be made, limited to the sum of$392,705.90 (Settlement Sum);(c) payment of the Settlement Sum referred to in paragraph (b) will be metby way of borrowing from a legitimate lender to the satisfaction ofthe Commissioner, within three months of the proposed settlementbeing approved (with the payment to be made directly by the lenderto the Official Assignee);(d) upon the Official Assignee providing written confirmation thattheSettlement Sum has been paid, the restraining order over28B Portage Road will be lifted and removed from the record of titleof 28B Portage Road;(e) in the event the Settlement Sum is not paid in accordance withparagraph (c), the Official Assignee will sell 28B Portage Road at fairmarket value to obtain the Settlement Sum from the sale proceeds,with any remaining proceeds to be paid to a bank account nominatedby Mr Franklin);(f) Mr Franklin is to abandon all claims he may have, under the Act orotherwise, to any of the property to be forfeited;(g) the settlement is in full and final settlement of the current proceedingsbrought by the Commissioner against Mr Franklin under the Act;(h) the settlement does not entail any admission of liability orwrongdoing by Mr Franklin; and(i) costs will lie where they fall.2 Criminal Proceeds (Recovery) Act, s 95(2).Approval of settlements under the Act[7] Section 95 of the Act provides as follows:High Court must approve settlement between Commissioner and otherparty(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.[8] As can be seen, Parliament has expressly empowered the Commissioner toenter into settlements as to the forfeiture of property under the Act, and it has entrustedthe High Court with a supervisory jurisdiction to approve settlements when satisfiedthey are consistent with the purposes of the Act and the overall interests of justice.3[9] The primary purpose of the Act as set out in s 3 is to establish a regime for theforfeiture of property that has been derived directly or indirectly from significantcriminal activity or which represents the value of a person's unlawfully derivedincome.4 Further purposes include those of eliminating opportunities to profit fromundertaking or being associated with significant criminal activity, and deterringsignificant criminal activity.5[10] The requirement expressed in s 95 that the Court have regard to the overallinterests of justice reflects the strong public interest in litigation under the Act beingbrought to a prompt conclusion, reflecting the likely costs and risks inherent in thedetermination of a contested application,6 and the desirability of proceedings under3 Commissioner of Police v Know-All Group Ltd HC Auckland CIV-2010-404-403, 7 November2011 at [11].4 Criminal Proceeds (Recovery) Act, s 3(1).5 Section 3(2).6 Commissioner of Police v Cotton [2017] NZHC 21 at [7].the Act being made on economic and pragmatic grounds reflective of common sensecompromise.7Decision[11] Here, the Commissioner considers he has a good case to show that Mr Franklinhas unlawfully benefited from significant criminal activity (so as to support aprofit forfeiture order) and that the cash found at Otira Highway, Kumara is tainted(so as to support an assets forfeiture order), particularly as the Search Evidence andMr Franklin's statements on compulsory examination have been found by this Courtto be admissible. However, Mr Franklin disputes the strength of the Commissioner'scase. In particular, he disputes that the methamphetamine found at Otira Highwaybelonged to him, and that he unlawfully benefited from the distribution ofmethamphetamine. He recognises nevertheless that the civil standard of proof applies.[12] Approval of the settlement so that it becomes binding is, in my view, consistentwith the purposes of the Act and the overall interests of justice. While Mr Franklinhas provided an explanation for unexplained funds being paid into bank accountsowned and controlled by him, and the Commissioner both disputes that explanationand suggests it may, in any event, reflect tax evasion on his part, there exists a degreeof litigation risk as to whether each party's preferred outcome would be achievedfollowing a contested hearing. If such a hearing can be avoided, there will be a savingof considerable time and cost. Further, an agreed settlement will allow the parties tohave certainty and control in the meantime.[13] The settlement is approved accordingly.Result[14] I make the following orders, so as to give effect to the settlement:(a) Assets forfeiture order under s 50(1) of the Act: the following propertyvests in the Crown absolutely and is in the Official Assignee's custodyand control:7 Commissioner of Police v Douglas [2015] NZHC 1293 at [6].(i) $12,050 cash seized by Police at 447 Otira Highway on 16May 2020, and any interest accrued; and(b) Profit forfeiture order under s 55(1) of the Act: a settlement sum of$392,705.90 (Settlement Sum) being met in either of the followingways:(i) a payment met by way of borrowing from a legitimate lender tothe satisfaction of the Commissioner by 5pm on the date fallingthree months from the approval of this settlement (Due Date),with the Settlement Sum being paid directly by the lender to theOfficial Assignee; or(ii) the amount held by the Official Assignee in accordance withparagraph (c)(iv)(C) below if Mr Franklin fails to pay theSettlement Sum by the Due Date.(c) Additional orders necessary and convenient for giving effect to theprofit forfeiture order made in respect of the Settlement Sum unders 59 of the Act:(i) the restraining order over 28B Portage Road is varied to allowMr Franklin to borrow against the property from a legitimatelender to the satisfaction of the Commissioner for the exclusivepurpose of enabling Mr Franklin to raise the Settlement Sum;(ii) upon the Official Assignee providing written confirmation thatthe Settlement Sum has been paid by 5pm on the Due Date, therestraining order over 28B Portage Road is lifted and theOfficial Assignee must then immediately arrange for therestraining order to be removed from the record of title of28B Portage Road;(iii) in the event that the Settlement Sum is not paid by 5pm on theDue Date, Mr Franklin must take steps to remove the caveatregistered against the title of 28B Portage Road;(iv) the Official Assignee shall then, as soon as is reasonablypracticable, sell 28B Portage Road at its fair market value anddeal with the proceeds of sale in the following way:(A) first, deduct the Official Assignee's actual costs ineffecting the sale;(B) second, repay any borrowings secured against theproperty;(C) third, hold an amount equal to the Settlement Sum andeffect forfeiture of that amount in accordance withparagraph 6.1(b)(ii) above;(D) finally, return the balance to a bank accountnominated by Mr Franklin.(d) Costs: costs lie where they fall in relation to all matters between theCommissioner and Mr Franklin.[15] I note the further terms of the settlement as follows:(a) Mr Franklin abandons all claims he may have, under the Act orotherwise, to any of the property being forfeited;(b) the settlement is in full and final settlement of this proceeding broughtby the Commissioner against Mr Franklin under the Act;(c) the settlement does not entail any admission of liability or wrongdoingby Mr Franklin;(d) the settlement is not binding on any other party, including theCommissioner of Inland Revenue._____________Johnstone J