COMMISSIONER OF POLICE v LIU [2023] NZHC 894

COMMISSIONER OF POLICE v LIU [2023] NZHC 894 [21 April 2023]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2022-404-1480[2023] NZHC 894UNDER the Criminal Proceeds (Recovery) Act 2009BETWEEN COMMISSIONER OF POLICEApplicantAND YANXIAN LIURespondentHearing: On the papersCounsel: M R Harborow and C R Purdon for the ApplicantRespondent in personJudgment: 21 April 2023JUDGMENT OF GAULT JThis judgment was delivered by me on 21 April 2023 at 3:30 pmpursuant to r 11.5 of the High Court Rules 2016.Registrar/Deputy RegistrarParties / Solicitors:Mr M R Harborow and Mr C R Purdon, Meredith Connell, Office of the Crown Solicitor, AucklandThe Respondent[1] The parties, the Commissioner of Police and Mr Liu, have filed a jointmemorandum dated 24 March 2023 seeking Court approval of a proposed settlementpursuant to s 95 of the Criminal Proceeds (Recovery) Act 2009 (the Act).Factual background[2] On 23 June 2021, while executing a search warrant at Mr Liu's residentialaddress at 27 Norana Avenue, Favona, Auckland for an unrelated matter, Police andthe New Zealand Customs Service located cash totalling $141,480 (Cash). Also seizedalong with the Cash was approximately 14,000 uncustomed Chinese cigarettes and1,500 grams of tobacco,1 a cigarette making machine and Mr Liu's phone containingimages of persons gambling with large sums of cash and a "tick list" which appearedto show moneys owed to Mr Liu by various gamblers. Customs confirmed there is norecord of Mr Liu ever paying duty or GST on imported cigarettes or tobacco.[3] Mr Liu made admissions to Police that the Cash is the proceeds of Mahjonggambling at the Nan Xin restaurant in Newmarket, of which he claims to be a partowner. Enquiries with the Department of Internal Affairs (DIA) have confirmed thatthere is no record of an approved Class 3 Gambling licence being issued to a society,corporate society or any other promoter to conduct Mahjong gambling in theNewmarket area.[4] Mr Liu has previously made admissions to Police that he is involved in 'loansharking', lending money to people. He is not, and there is no record he has ever been,a registered financial services provider, nor has he declared any such earnings to InlandRevenue.[5] No criminal charges were laid against Mr Liu in relation to the search.The proceeding[6] On 26 August 2022, the Commissioner filed an on-notice application for arestraining order under ss 24 and 25 of the Act over the Cash on the basis that itrepresented the proceeds of three intertwined limbs of significant criminal activity,1 79 cartons of cigarettes and four bags of loose tobacco.namely illegal gambling, the unlawful provision of financial services and the sale ofuncustomed cigarettes. The documents were served on 30 August 2022.[7] On 22 September 2022, the application was first called before Harvey J, whoadjourned it for four weeks, to 20 October 2022, to enable Mr Liu sufficientopportunity to instruct counsel and take any steps in opposition, if he so wished.The minute was served on 27 September 2022.[8] On 20 October 2022, the application came before Davison J. There was noappearance by or on behalf of Mr Liu. The application was granted without oppositionand the restraining order was made, as sought by the Commissioner, over the Cash.The restraining order was served on 22 November 2022.Significant criminal activity[9] The Commissioner's case is that Mr Liu operates illegal Mahjong gamblinggames, from which he earns money, and during which he sells uncustomed cigarettesand offers credit to gamblers.Illegal gambling[10] The Mahjong gambling at the restaurant that Mr Liu participated in, andprofited from, is illegal gambling. Under s 9 of the Gambling Act 2003, gambling isprohibited and illegal unless it is authorised by or under that Act and complies withthat Act and any relevant licence, game rules and minimum standards;2 authorised byor under the Racing Industry Act 2020 and complies with that Act and anyregulations;3 or is private gambling.4[11] Prior Police involvement at the Nan Xin restaurant confirmed that illegalMahjong gambling takes place at that establishment, and enquiries with the DIAestablished that there are no gambling licences issued to conduct Mahjong gamblingin the Newmarket area.2 Gambling Act 2003, s 9(1)(a).3 Section 9(1)(b).4 Section 9(1)(c).[12] The illegal gambling is significant criminal activity because Mr Liu hasacquired proceeds or benefits of more than $30,000 from this activity.Unlawful provision of financial services[13] As someone in the business of providing a financial service, including being acreditor, Mr Liu was required to be registered under s 11 of the Financial ServiceProviders (Registration and Dispute Resolution) Act 2008. It is an offence toknowingly breach that provision.5[14] The unlawful provision of financial services is significant criminal activitybecause Mr Liu has acquired proceeds or benefits of more than $30,000 from thisactivity.Sale of uncustomed cigarettes[15] The sale of uncustomed cigarettes is an offence under the Customs and ExciseAct 2018, namely defrauding customs revenue6 and for the sale of uncustomed goods.7The packaging on the Chinese cigarettes contained no health warnings as required forall cigarettes sold in New Zealand, suggesting that they were of foreign origin.[16] The sale of uncustomed cigarettes is significant criminal activity because theoffences have a maximum penalty of five years' imprisonment and/or because Mr Liuhas acquired proceeds or benefits of more than $30,000 from this activity.Mr Liu's position[17] Mr Liu is self-represented but agrees he has had the opportunity to seek legaladvice in respect of the settlement. He has elected not to engage the service of alawyer. On 2 March 2023, Detective Wyllie met with Mr Liu at his address andprovided him with a copy of the Commissioner's letter proposing settlement. Mr Liuadvised Detective Wyllie that the Commissioner should "just take it". Detective5 Financial Service Providers (Registration and Dispute Resolution) Act 2008, s 11. Maximumpenalty 12 months' imprisonment and or $100,000 fine.6 Customs and Excise Act 2018, s 371.7 Section 373.Wyllie advised Mr Liu to seek legal advice and to advise before 24 March 2023 if hewished to accept the Commissioner's offer. Mr Liu wishes to conclude matters as setout in the joint memorandum without further delay.Proposed settlement[18] The terms of the agreement between the Commissioner and Mr Liu to settlethe matter of civil forfeiture, subject to the Court's approval under s 95 of the Act, arethat:(a) an assets forfeiture order be made under s 50(1) of the Act, by consent,over the Cash seized, and any interest accrued;(b) Mr Liu agrees to abandon any and all claims he has (under the Act orotherwise) to any of the Cash;(c) this settlement is in full and final settlement of the question of civilforfeiture of the Cash in CIV-2022-404-1480; and(d) costs in relation to this matter would lie where they fall.[19] The approximate value of the property being forfeited as at 20 March 2023 is$142,538.41.Applicable principles[20] Section 95 of the Act 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.[21] The purposes of the Act are set out in s 3, which provides:3 Purpose(1) The primary purpose of this Act is establish a regime for the forfeitureof 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(d) 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 ordersand foreign forfeiture orders that arise in New Zealand.[22] The language in s 95(3)(b) of "the overall interests of justice" indicates that abroad enquiry is required.8 Relevant principles to be borne in mind are the time andcost savings to the parties,9 and that settlements may be made on economic andpragmatic grounds, reflecting a common sense compromise. There is a strong publicinterest in litigation being brought to a prompt conclusion provided the settlementreflects the likely costs and risks inherent in the determination of a contestedapplication. The Court's approval is not a rubber-stamping exercise.8 Commissioner of Police v Li [2018] NZHC 1566 at [32].9 Commissioner of Police v Zhang [2016] NZHC 930 at [8]. See also Commissioner of Police vKree [2013] NZHC 2972 at [11].[23] Section 50(1) of the Act provides that:10(1) If, on an application for an assets forfeiture order, the High Court issatisfied on the balance of probabilities that specific property istainted property, the Court must make an assets forfeiture order inrespect of that specific property.[24] Tainted property is defined in the Act:11tainted property—(a) means any property that has, wholly or in part, been –(i) acquired as a result of significant criminal activity; or(ii) directly or indirectly derived from significant criminalactivity; and(b) includes any property that has been acquired as a result of, or directlyor indirectly derived from, more than 1 activity if at least 1 of thoseactivities is a significant criminal activity.[25] Significant criminal activity is defined in s 6:6 Meaning of significant criminal activity(1) In this Act, unless the context otherwise requires, significant criminalactivity means an activity engaged in by a person that if proceededagainst as a criminal offence would amount to offending—(a) that consists of, or includes, 1 or more offences punishable bya maximum term of imprisonment of 5 years or more; or(b) from which property, proceeds, or benefits of a value of$30,000 or more have, directly or indirectly, been acquired orderived.(2) A person is undertaking an activity of the kind described in subsection(1) whether or not—(a) the person has been charged with or convicted of an offencein connection with the activity; or(b) the person has been acquitted of an offence in connection withthe activity; or(c) the person's conviction for an offence in connection with theactivity has been quashed or set aside.10 Section 50(1) is subject to s 51 which provides for applications to exclude property from an orderon the basis of undue hardship but there is no such application here.11 Section 5(1).(3) Any expenses or outgoings used in connection with an activity of thekind described in subsection (1) must be disregarded for the purposesof calculating the value of any property, proceeds, or benefits undersubsection (1)(b).Analysis[26] I am satisfied that the proposed settlement is consistent with the purposes ofthe Act and the overall interests of justice for the following reasons, which largelyreflect the joint memorandum.[27] First, I accept given the Commissioner's evidence and Mr Liu's admissionsthat the Commissioner has a good case that the Cash was acquired as a result ofsignificant criminal activity, at least in relation to illegal gambling, and is thereforetainted property. Mr Liu admitted to police that the Cash is the proceeds of Mahjonggambling at the restaurant of which he claims to be a part owner. The jointmemorandum agrees that the Mahjong gambling that he participated in, and profitedfrom, is illegal gambling. The amount involved well exceeds the $30,000 thresholdfor significant criminal activity. Even if the Cash was not all the proceeds of gamblingas Mr Liu admitted, there is evidence indicating the other offending referred to, andthe Commissioner nevertheless has a good case that the Cash was acquired as a resultof significant criminal activity.[28] Secondly, there will be a saving of time and cost if the matter is resolved byconsent. As well as the savings to the parties, this will obviate the need for Court timeand resource. An agreed settlement will allow the parties to have certainty and controlas to the outcome.[29] Thirdly, the proposed settlement will ensure the Cash is forfeited.[30] Finally, while Mr Liu is self-represented, Detective Wyllie explained thesettlement documents to him and he said he understood and confirmed he was happyto sign. As well as the joint memorandum, he signed a letter accepting the offer ofsettlement and an assets forfeiture order. The letter confirmed he had been advised toseek legal advice but did not wish to do so and was happy for the matter to beconcluded.[31] For these reasons, I am satisfied that the proposed settlement is consistent withthe purposes of this Act and the overall interests of justice. It should be approved.[32] As requested by the parties, I note the further terms of settlement referred to inthe joint memorandum, namely that Mr Liu agrees to abandon any and all claims hehas (under the Act or otherwise) to the Cash; and that the settlement is in full and finalsettlement of the question of civil forfeiture of the Cash in this proceeding.Result[33] The proposed settlement outlined in paragraph 6.2 of the joint memorandumdated 24 March 2023 is approved.[34] I make the following orders:(a) Assets forfeiture order under s 50(1) of the Criminal Proceeds(Recovery) Act 2009: the $141,480 cash seized by the New ZealandPolice on 23 June 2021 at 27 Norana Avenue, Favona, Auckland, andany interest accrued, vests in the Crown absolutely and is in the OfficialAssignee's custody and control.(b) Costs lie where they fall in relation to all matters between the parties inthis proceeding.________________________________Gault J