COMMISSIONER OF POLICE v YANG & CHEN [2016] NZHC 895

COMMISSIONER OF POLICE v YANG & CHEN [2016] NZHC 895 [5 May 2016]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2013-404-005032CIV-2014-404-000319[2016] NZHC 895BETWEEN COMMISSIONER OF POLICEApplicant in both proceedingsAND ZHI WEI YANGRespondent in CIV-2013-404-005032CHAO YING CHENRespondent in CIV-2014-404-003019Hearing: On the papersCounsel: M Harborow for ApplicantA Couchman for Mr YangP Tomlinson for Ms ChenJudgment: 5 May 2016JUDGMENT OF WYLIE JThis judgment was delivered by Justice Wylieon 5 May 2016 at 3.00pmpursuant to r 11.5 of the High Court RulesRegistrar/Deputy RegistrarDate:Solicitors:Crown Solicitor, AucklandA Couchman, AucklandP Tomlinson, AucklandIntroduction[1] On 19 February 2014 the Commissioner of Police obtained restraining orders against inter alia Mr Yang and Ms Chen. At the relevant time they were partners.The assets restrained included various bank accounts in Ms Chen's name, a bank account in the name of a Ms Zeng (Mr Yang's former wife), an account in the nameof a Mrs Bihua Li, and a number of residential properties.[2] The Commissioner is seeking to forfeit the restrained assets. I have received a joint memorandum from counsel, addressing a proposed settlement. The memorandum is signed by counsel for the Commissioner, Mr Yang, Ms Chen, and Ms Zeng. Ms Zeng is an interested third party, and as I have noted above, one of the accounts restrained belongs to her. Another interested third party, Bihua Li, who isMs Chen's mother, has already reached a settlement with the Commissioner. Orders were made by Heath J in that regard on 31 March 2016.Factual Background[3] The factual background is helpfully set out in counsel's joint memorandum.[4] In brief, Mr Yang came to police attention during a police operation known as Operation Ghost. That operation involved an investigation into the importation and supply of significant amounts of pseudoephedrine. The evidence gathered by the police indicated that during much of 2013, Mr Yang was a very substantial wholesaler of pseudoephedrine in the form of ContacNT granules. It appeared that he may also have been involved in pseudoephedrine dealing in New Zealand from about 2009.[5] Mr Yang had a modest income, but he spent substantial sums of money at Sky City casino and he was living well beyond his means. He left New Zealand in November 2013 and he has not returned.[6] Mr Yang left behind him a significant asset base in New Zealand, including real estate and funds held in various bank accounts over which he held power of attorney.[7] Intercepted phone communications indicated that Ms Chen took over MrYang's criminal activity after he left New Zealand. Again, she had a modest income.Indeed she was in receipt of state funded benefits. However there were significant assets under her control, including thousands of dollars in bank accounts. She was also the owner of two of the properties noted above. Those properties were unencumbered.[8] Ms Zeng resides in Australia. She and Mr Yang met in about 1990. They initially married, but were later divorced. Ms Zeng contributed funds to the purchaseof a property, prior to the commencement of Mr Yang's criminal offending. There were however substantial cash deposits into Ms Zeng's New Zealand bank accountswhilst she was living in Australia. The Commissioner has asserted that these deposits were made by Mr Yang, and that they represented the fruits of his criminal enterprise.Proposed Settlement[9] The parties have agreed to settle the question of the forfeiture of assets as between themselves, subject to obtaining this Court's approval under s 95 of theCriminal Proceeds (Recovery) Act 2009 (the Act).[10] The parties are agreed that with certain limited exceptions, the property currently restrained should be forfeited to the Crown. The approximate value of the property to be forfeited to the Crown is $4,447,175. The parties are also agreed that various items of property should be released from the restraining orders and returned to the parties. The total value of the property proposed to be released to Mr Yang, Ms Chen and Ms Zeng and also to Bihua Li is $213,076, although the precise value of some of the items of jewellery proposed to be returned to Ms Chen is uncertain.Legal principles[11] Section 95 of the Act governs any such settlement. It provides as follows:95 High Court must approve settlement between Commissioner and other party(1) The Commissioner may enter into a settlement with any person as to the property or any sum of money to be forfeited to the Crown.(2) A settlement does not bind the parties unless the High Court approves it.(3) The High Court must approve the settlement if it is satisfied that it is consistent with—(a) the purposes of this Act; and(b) the overall interests of justice.[12] It is clear that Parliament has expressly empowered the Commissioner to enter into settlement discussions with respondents and interested parties regarding the forfeiture of restrained assets. Parliament has entrusted the Court with a supervisory jurisdiction. It must ensure that any settlements reached are consistentwith Parliament's intent in enacting the Act, and with the overall interests of justice.Analysis[13] Here, I am satisfied that the threshold criteria are met.[14] The primary purpose of the Act is contained in s 3(1) – the establishment of a regime for the forfeiture of property that has been derived directly or indirectly fromsignificant criminal activity, or that represents the value of a person's unlawfullyderived income. There are ancillary purposes – namely to eliminate the chance that persons should profit from undertaking or being associated with significant criminal activity, and to deter significant criminal activity.[15] Here the primary purpose of the Act is met by the proposed settlement. The restrained property to be forfeited to the Crown is property that is likely to have been derived from criminal activity. I am also satisfied that the proposed settlement, involving forfeiture of almost $4.5 million in assets, appropriately recognises the strength of the Commissioner's case for forfeiture.[16] Some assets are to be returned to the parties. I am satisfied that this is appropriate. The proposed settlement recognises the contribution made to the purchase of real estate in this country by Ms Zeng prior to the commencement of any known criminal offending. The return of jewellery to Ms Chen recognises the sentimental value of those items to her. The modest monetary sums being released to Ms Chen and Mr Yang reflect the costs they have incurred in these proceedingsand can be seen as representing a pragmatic compromise by the Commissioner so as to facilitate the settlement of this litigation.[17] I am also required to be satisfied that the proposed settlement is in the overall interests of justice. I am satisfied in that regard. There will be a significant saving of time and cost if the proceedings are resolved by consent without the need for further Court hearings. The settlement recognises the litigation risk that any hearing has, both for the Commissioner and for the respondents. Commonly in civil proceedings, settlements are made on pragmatic grounds which reflect a commonsense compromise between the parties. I am satisfied that the present case does reflect such a commonsense compromise. The compromise will relieve all parties of the burden of proceeding to trial, and give all certainty as to the outcome.[18] Accordingly, I approve the settlement and make the following orders:Orders varying the restraining orders in CIV-2013-404-005032 and CIV- 2014-404-003019 under ss 34 and 35 of the Act:(a) the Official Assignee is directed to release the following property as soon as practicable from restraint and return it to Ms Chen:(i) the items of jewellery seized by police from 12A Nash Road, Mount Roskill, Auckland on 4 December 2013. These itemsshould be released to Ms Chen's counsel, Peter Tomlinson;(ii) the former balance of Ms Chen's bank accounts: 11-7247- 0642111-55 ($4,492.62) and 12-3018-0206449-00 ($7,298.42). This payment should be made to the trust account of McLeod & Associates ASB bank account 12-3109-0042726-02.(b) the Official Assignee is directed to make the following payments as soon as practicable from the sum of $210,000 formerly held in Kiwibank account 38-9015-0152235-00 in the name of 21st Century International Limited (now held by the Official Assignee):(i) $25,000 to Mr Yang;(ii) $30,000 to Ms Chen;(iii) $100,000 to Ms Zeng.These payments should be made to the trust account of McLeod & Associates bank account 12-3109-0042726-02.Assets forfeiture orders in CIV-2013-404-5032 and CIV-2014-404-003019 under s 50(1) of the Act:(c) the following property vests in the Crown absolutely and is to be in the custody and control of the Official Assignee:(i) 48 Penney Avenue, Mount Roskill, Auckland, described in certificate of title NA21B/88;(ii) 12A Nash Road, Mount Roskill, Auckland, described in certificate of title 546162;(iii) 3/32 Canal Road, Avondale, Auckland, described in certificate of title NA46D/757;(iv) 2/31 Nikau Street, New Lynn, Auckland, described in certificate of title NA36C/135;(v) all funds formerly held in Bank of New Zealand bank accounts 02-0152-025629-00 and 02-0524-011413-97;(vi) all funds formerly held in ASB bank accounts 12-3043- 0411866-00; 12-3043-0411866-72 and 12-3188-0153028-00;(vii) all funds formerly held in ANZ bank account 01-0183-068699- 55;(viii) to the extent not released pursuant to paragraph (b) above, all funds formerly held in the Kiwibank bank account 38-9015- 0152235-00;(ix) numerous bundles of cash, totalling $24,965, located by police at 12A Nash Road, Mount Roskill, Auckland on 4 December 2013;(x) a quantity of foreign currency, totalling $2,465.49, located by police at 12A Nash Road, Mount Roskill, Auckland on 4 December 2013.Directions to the Official Assignee necessary and convenient for giving effect to the assets forfeiture orders under s 59(1) of the Act:(d) the Official Assignee may:(i) realise as soon as practicable 48 Penney Avenue, Mount Roskill, Auckland; 12A Nash Road, Mount Roskill, Auckland; 3/32 Canal Road, Avondale, Auckland and 2/31 Nikau Street, New Lynn, Auckland; and(ii) then discharge the assets forfeiture order in accordance with s 82(1) of the Act without the need to wait for the expiry of the specified period under s 82(2).Costs(e) costs lie where they fall as between all parties._____________________________Wylie J