THE COMMISSIONER OF NZ POLICE v LIU & ORS [2017] NZHC 1897

THE COMMISSIONER OF NZ POLICE v LIU & ORS [2017] NZHC 1897 [10 August 2017]IN THE HIGH COURT OF NEW ZEALANDCHRISTCHURCH REGISTRYCIV-2017-409-515[2017] NZHC 1897IN THE MATTER of an application pursuant to ss 22, 24 and25 of the Criminal Proceeds (Recovery)Act 2009BETWEEN THE COMMISSIONER OF THE NEWZEALAND POLICEApplicantAND TONG LIUFirst RespondentMENG SIAO GUANSecond RespondentANZ BANK OF NEW ZEALANDLIMITEDFirst Interested PartyHearing: (On the papers)Appearances: C J Lange and K South for ApplicantJudgment: 10 August 2017JUDGMENT OF NICHOLAS DAVIDSON J (WITH REASONS FOR WITHOUT NOTICE RESTRAINING ORDER)Background[1] This Judgment relates to the without notice restraining order made in favour of the applicant on 1 August 2017, a copy of which Order is attached.[2] The applicant sought orders without notice in respect of properties at 8 Rawnsley Terrace, Wigram, Christchurch and funds held in an ANZ New Zealand Limited (ANZ) account no. 01 1842 0030390 50.[3] The application was supported by affidavit evidence of Detective Duncan Bull. Counsel advised than an on notice application for a restraining order would be filed in respect of the same property and on the same grounds. An order made on application without notice ceases to be in force seven days after the date on which it is made, but continues in force if an application is made on notice before the seven day is up, and until that application is disposed of. At the date of this Judgment that application has been filed in Court.Grounds of the without notice application[4] The application was based on the grounds that the Court could be satisfied there is a risk of the property sought to be restrained being destroyed, disposed of, altered, or concealed if notice was given to the respondent or an interested party, that the Court could be satisfied that there are reasonable grounds that the respondents unlawfully benefited from significant criminal activity, and the property to which the application relates is tainted property.[5] Investigations were ongoing and the property may be the subject of forfeiture application on different grounds from those on which a restraining order was sought.[6] Section 22 of the Criminal Proceeds (Recovery) Act 2009 provides:22 Application for restraining order without notice(1) A court that receives an application for a restraining order may, on the request of the applicant, consider the application without notice being given to any or all of the persons mentioned in section 21(1)(a) if the court is satisfied that there is a risk of the proposed restrained property being destroyed, disposed of, altered, or concealed if notice were given to the person or those persons.(2) If an application is made for a restraining order without notice, the court must, so far as it is practicable and consistent with the interests of justice, ensure that the application is dealt with speedily.(3) Any provisions of this subpart that relate to restraining orders applied for on notice apply, with any necessary modifications, to restraining orders applied for without notice.[7] The Court of Appeal's remarks in Vincent v Commissioner of Police,1illustrate the interrelationship between urgency and the admissibility of evidence:[47] By way of explanation, restraining orders will often need to be obtained in situations of urgency, as is illustrated by the provision for"without notice" applications. They are, as we have said, temporary orders,which give the police time to gather further evidence, and may lead to forfeiture but only on the completion of further processes. Retraining orders are issued on the basis of reasonable grounds to believe, rather than proof, that the target has unlawfully benefitted from significant criminal activity. This means, in our view, that the affidavits such as those filed by the two police officers are admissible, without the need for a formal application under s 19 of the Evidence Act. Rather, they fall within r 7.30 of the High Court Rules and s 20 of the Evidence Act. The alternative to allowing what are, technically at least, hearsay statements in affidavits such as those at issue would be to require a very elaborate evidentiary basis for the issue of restraining orders, which would be impractical and inconsistent with the approach taken in other contexts. We note that the same approach has been taken in other jurisdictions which have legislation similar to the Act.[8] In Crown Solicitor at Invercargill v Lang,2 Fogarty J called a "without notice" restraining order a "precautionary step":[11] Section 26 can be read as one power to make two orders which must be made together. But this application is ex parte. It is for interim relief. It is not a final order. It is a precautionary step to preserve the property for the hearing of the issue as to whether it should be acquired by the Crown.[9] Thus, no final determination is made. There is no exactitude in the extent of the restraint, as opposed to that which may ultimately be forfeited.[10] The restraining order may extend to tainted property, even if the respondent does not have an interest in the property restrained, or has benefit from significant criminal activity. Section 5 of the Act provides:tainted 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 criminal activity; and1 Vincent v Commissioner of Police [2013] NZCA 412 at [47].2 Crown Solicitor at Invercargill v Lang [2012] NZHC 2584.(b) includes any property that has been acquired as a result of, or directly or indirectly derived from, more than 1 activity if at least 1 of those activities is a significant criminal activity[11] All that is required is that there must be a link, even if indirect, in whole or in part between the alleged significant criminal activity and the property. So, an entire house property may be tainted even though it is only partially acquired from such significant criminal activity.[12] "Significant criminal activity" is defined in the Act.6 Meaning of significant criminal activity(1) In this Act, unless the context otherwise requires, significant criminal activity means an activity engaged in by a person that if proceeded against as a criminal offence would amount to offending—(a) that consists of, or includes, 1 or more offences punishable by a 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 or derived.(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 offence in connection with the activity; or(b) the person has been acquitted of an offence in connection with the activity; or(c) the person's conviction for an offence in connection with theactivity has been quashed or set aside.(3) Any expenses or outgoings used in connection with an activity of the kind described in subsection (1) must be disregarded for the purposes of calculating the value of any property, proceeds, or benefits under subsection (1)(b).[13] Under s 25 of the Act, there must be reasonable grounds to believe not only did the respondent unlawfully benefit from significant criminal activity but he, she or it, has an interest in or effective control over property identified in the application.25 Making restraining order relating to all or part of respondent'sproperty(1) A court hearing an application for a restraining order relating to allor part of a respondent's property may, if the court is satisfied it hasreasonable grounds to believe that the respondent has unlawfully benefited from significant criminal activity, make an order that the property it specifies in the order (restrained property)—(a) is not to be disposed of, or dealt with, other than is provided for in the restraining order; and(b) is to be under the Official Assignee's custody and control.(2) A restraining order made under subsection (1) may relate to any of the following:(a) all of a respondent's property (including property acquiredafter the making of the order):(b) specified parts of a respondent's property:(c) all of a respondent's property (including property acquiredafter the making of the order) other than specifically excluded property.Evidence[14] I am satisfied that the respondents have an interest in the property sought to be restrained because they are owners of the property at 8 Rawnsley Terrace, Christchurch and the funds in the ANZ Bank account number: 01 1842 0030390 50, are in the name of Ms Guan and Mr Liu being the respondents.[15] There are a number of grounds set out in the memorandum in support of the application which are based on the evidence of the detective as to why the respondents have benefited from significant criminal activity, and I take the following from the memorandum:(a) The first respondent, Mr Liu, is clearly connected to the storage unit at which Mr Miao was arrested on 11 May 2016. Mr Liu was named as the second point of contact on the lease document.(b) Mr Liu is identified as being a bulk or wholesale customer of Fei HEon Fei HE's Wechat messages;(c) Ms Guan's name and address was located on boxes containingpsychoactive substances at the storage unit on 11 May 2016 and she is therefore connected to such product;(d) Cash totalling $90,801.60 has been identified as being deposited intoMs Guan and Mr Liu's joint Westpac account and Liu's ANZ accountin a manner that is both consistent with the activities of others in this conspiracy, and in a manner inconsistent with the activities and earnings of a student with limited declared earnings in New Zealand.(e) Large sums of money have been transferred to accounts held by Ms Guan and Mr Liu from China using intermediaries therefore concealing the true source of the funds and there is no known legitimate source of these funds being paid to these two persons who entered here on student visas.(f) Funds totalling $357,107.00 were traced as transfers from China paid into Chinese account holders in New Zealand. The funds were thentransferred to Ms Guan's Westpac account from which the balance of $522,268.22 was paid to Davidson Legal Limited for the purchase of 8 Rawnsley Terrace.(g) Mr Liu and Ms Guan's declared earnings with Inland Revenue are limited to Ms Guan's wages from her employment. Since 2013 Ms Guan has only declared $31,928.00 in earnings.(h) Mr Liu and Ms Guan have received income from unexplained sources that vastly exceeds their legitimate earnings in New Zealand and for which there is no known legitimate source either in China or in New Zealand. They frequently receive highly unusual payments from other Chinese associates and conduct their bank accounts in a manner that is inconsistent with their declared earnings. Westpac bank has also filed an STR detailing the unusual operation of their bank accounts.(i) There are reasonable grounds to believe the first and second respondents have been involved in significant criminal activity and having been deriving profits form that significant criminal activity.(j) There are reasonable grounds to believe that the property at 8 Rawnsley Terrace is tainted property in that it has been acquired as a result of significant criminal activity, and that the funds in the ANZ bank account the subject of this application are also tainted and the proceeds of significant criminal activity.[16] I have considered the evidence of Detective Bull and these grounds are all made out on the evidence. I am satisfied that the respondents are associates of others already charged in relation to a syndicate associated with criminal activity to do with psychoactive substances, with a high risk they will be informed of the steps the Commissioner has taken on this application. The money in the respondents' jointANZ bank account may be withdrawn at any time. An attempt to dispose or remove of that property is a reasonable expectation. The grounds on which the without notice application was made are all made out.[17] This Judgment constitutes the Reasons for the Order made on 1 August 2017..Nicholas Davidson JSolicitors:Raymond Donnelly & Co., ChristchurchSCHEDULETHE COMMISSIONER OF NZ POLICE v LIU & ORS [2017] NZHC 1897 [10 August 2017]