COMMISSIONER OF THE NEW ZEALAND POLICE v SULUSI [2023] NZHC 938

COMMISSIONER OF THE NEW ZEALAND POLICE v SULUSI [2023] NZHC 938 [26 April 2023]IN THE HIGH COURT OF NEW ZEALANDNAPIER REGISTRYI TE KŌTI MATUA O AOTEAROAAHURIRI ROHECIV-2020-441-18[2023] NZHC 938UNDER the Criminal Proceeds (Recovery) Act 2009IN THE MATTER OF an application under s 41 of the CriminalProceeds (Recovery) Act 2009BETWEEN THE COMMISSIONER OF THE NEWZEALAND POLICEApplicantAND LAKI LEATITALA SULUSIRespondentAND NATASHA LOUISE GRIMMETTFirst Interested PartyJOSEPH JOHN MORRELLSecond Interested PartyKANE TUI TAHAUThird Interested PartyPARMJIT KAURFourth Interested PartyHearing (by VMR): 24 April 2023Counsel: C R Walker for the ApplicantNo appearance for other partiesJudgment: 26 April 2023JUDGMENT OF GWYN JIntroduction[1] The Commissioner of Police (Commissioner) has previously obtained arestraining order in respect of a residential property, a number of vehicles and twotransportable cabins.[2] The restraining order is in effect until 29 March 2024, although theCommissioner expects that an application for forfeiture will be filed and determinedprior to that date.[3] The Commissioner has applied to sell four of the restrained vehicles, on thegrounds that it is necessary to preserve their remaining value given the significantstorage costs incurred to date.[4] It is that application for sale that is for determination.[5] At the first call of the application for sale, on 27 March 2023, there was noappearance for any party other than the Commissioner. Subsequently, counsel for theCommissioner has filed a memorandum outlining the basis for the application for saleorders. The application is also supported by an affidavit of Steven Alexander Quine,a Specialist Investigator in the Police Asset Recovery Unit.History of the proceedingOperation Casino[6] During 2019 and 2020 the Hawke's Bay Police Organised Crime Unit (OCU)conducted an investigation codenamed Operation Casino that targeted the criminalactivities of persons involved in the sale and distribution of methamphetamine in theHawke's Bay area. The inquiry centred on the respondent, Laki Sulusi.[7] The Central Asset Recovery Unit (ARU) was involved in the Operation Casinoinvestigation to assist the criminal team and identify Mr Sulusi's assets, resulting fromhis alleged criminal activity, including his assets concealed in the names of thirdparties.[8] Operation Casino evidence throughout the 214 days that the first respondent'sphone data was captured, was that Mr Sulusi supplied 313 grams of methamphetamineand conspired to supply a further 6.1 kilograms of methamphetamine. At the time ofMr Sulusi's alleged offending, 6.413 kilograms was valued at $979,000.[9] The Operation Casino investigation terminated on 19 May 2020, with theexecution of search warrants at Mr Sulusi's home address and other propertiesassociated with him.[10] Mr Sulusi was arrested and charged, primarily with serious drug-relatedoffences pertaining to supplying the Class A controlled drug methamphetamine.[11] The offences that Mr Sulusi was charged with constitute significant criminalactivity in terms of s 6 of the Act.History of proceedingRestraining order[12] On 15 May 2020, Cooke J issued a without notice restraining order over thefollowing property:1(a) All interests in the property situated at 148 Nuffield Avenue, Marewa,Napier.(b) A Ford Customline, including keys, Registration Number GEH943 (theCustomline), registered in the name of the respondent Laki Sulusi;(c) A Chrysler 300C 2009, including keys, Registration Number LTB272(the Chrysler), registered in the name of the respondent Laki Sulusi;(d) A Ford Galaxie convertible 1963, including keys, Registration NumberJSG11 (the Galaxie), and with an unconfirmed registration in the name1 Commissioner of New Zealand Police v Sulusi CIV-2020-441-18, minute and orders of Cooke J,15 May 2020. Subsequently Cull J granted an on notice restraining order: Commissioner of Policev Sulusi CIV-2020-441-18, minute of Cull J, 29 June 2020.of Joseph Morrell but under the effective control of the respondentLaki Sulusi;(e) A Harvey Davidson V Rod Muscle 2015, including keys, RegistrationNumber C1AMC (the V Rod), previously registered as B1PFW, andwith an unconfirmed registration in the name of Kane Tahau but underthe effective control of the respondent Laki Sulusi;(f) A BMW 530 Saloon 2004, including keys, Registration numberMRN33 (the BMW 530) and with an unconfirmed registration in thename of Parmjit Kaur but under the effective control of the respondentLaki Sulusi;(g) A BMW 258 Saloon 2010, including keys, Registration numberLBN106 (the BMW 258) and with an unconfirmed registration in thename of Aleysha Kaye Wickliffe but under the effective control of therespondent Laki Sulusi;(h) A Ford F100 1956, including keys, Registration Number unknown (theF100), and with an unconfirmed registration but under the effectivecontrol of the respondent Laki Sulusi;(i) A Ford Jailbar motor vehicle unknown year, Registration Numberunknown (the Jailbar) and with an unconfirmed registration but underthe effective control of the respondent Laki Sulusi;(j) Two portable wooden cabins, positioned in the back yard of148 Nuffield Avenue, Marewa, Napier, under the effective control ofthe respondent Laki Sulusi.[13] Four of the six vehicles sought for restraint were located and restrained, alongwith two additional vehicles, being the F100 and the Jailbar. Those two vehicles wererestrained pursuant to the "Global" condition in the without notice restraining order.The Property is now in the custody of the Official Assignee.Sale orders – the law[14] The application is brought pursuant to ss 33-36 of the Criminal Proceeds(Recovery) Act 2009 (the Act). Section 35(e)(v) provides:35 Types of further orderWithout limiting the generality of section 34(1), a court may, on anapplication under section 33(1), make 1 or more of the followingfurther orders in relation to restrained property:(e) an order relating to the Official Assignee that—(v) directs the Official Assignee to sell restrainedproperty (including, without limitation, a business) inorder to preserve the value of the restrained property:[15] The purpose of s 35(e)(v) is stated to be "to preserve the value of the restrainedproperty". The applicant does not have to prove that sale is required on the balance ofprobabilities. The Court simply has to be satisfied that such an order should be made.2[16] Adams on Criminal Law notes that sale orders are not automatically made inrelation to restrained assets such as motor vehicles.3 The reduction in the eventualreturn caused by the holding costs cannot be sufficient of itself to warrant an order forsale. The relevance of storage and insurance costs has been debated in a number ofcases. For example, in Commissioner of Police v Blance, Dobson J referred toCommissioner of Police v Evans where Brown J was not prepared to order immediatesale for a vehicle then valued in excess of $26,000 where there was a prospect that thevehicle would hold its value. However, Dobson J said:4With respect, I would not go so far as to disregard the relevance of the holdingcosts in all cases. However, in the case of vehicles that are appropriatelytreated as investments, or at least where the rate of depreciation has bottomedout, nor can the reduction in the eventual return caused by the holding costsbe sufficient of itself to warrant an order for sale.[17] The authors of Adams continue:52 Commissioner of Police v Parker [2019 NZHC 1506, at [31].3 Simon France (ed) Adams on Criminal Law – Sentencing (online ed, Thomson Reuters) at[CP35.02].4 Commissioner of Police v Blance [2018] NZHC 108 at [51]-[52].5 At [CP35.02].Factors that are taken into account include the nature and value of the asset,the length of time before the substantive proceeding will be determined, theextent to which the asset may depreciate during that period and the wishes ofthe owner of the asset and any other person who may have an interest in italthough storage and insurance costs were expressly excluded fromconsideration in Commissioner of Police v Evans (above) at [33], in othercases those costs have been recognised as relevant and considered along withother factors.[18] In Commissioner of Police v Parker, Hinton J addressed the argument thatstorage and related costs do not affect the value of the property, as opposed to the netrealisable value, and therefore should not justify an order under s 35(e)(v). Putting toone side the issue of whether "value" should be treated "in a net or realisation sense",Hinton J concluded:6In any event, I agree with the Commissioner that a sale order is not limited toa sale under s 35(e)(v) of the Act. Section 35 only sets out examples of ordersthat the Court can make. It expressly does not limit the orders that can bemade. That is equally clear from s 34.I consider a court can order a sale under s 34 where it is necessary to preservethe potential net realisation value (as opposed to the value per se) of therestrained asset, providing a sale is otherwise considered appropriate.I therefore conclude that as a matter of law, the Court is not limited to orderinga sale only under s 35(e)(v) and is therefore not precluded from making anorder under s 34 where there is no or little proven depreciation of the asset.Vehicles subject to application for sale[19] The Commissioner seeks an order to sell the following vehicles which aresubject to the restraining order (vehicles).2009 Chrysler 300C[20] When Mr Sulusi was arrested on 19 May 2020, the Chrysler was located partedoutside the motel room he occupied; the keys to the Chrysler were in Mr Sulusi'sjacket. When spoken to by Detective Sergeant Phillip Sayers of the Hastings Police,Mr Salusi said the Chrysler was his and he had owned it since he last got out of jail.6 Commissioner of Police v Parker [2019] NZHC 1506 at [50]-[55].[21] The Chrysler was seized pursuant to the without notice restraining order andhas been in the custody of the Official Assignee since that date.1963 Ford Galaxie convertible[22] On 19 May 2020 the Galaxie was located at Revolution Motors, 303 JervoisStreet, Mayfair, Auckland. Mr Quine deposes that when he spoke to the owner ofRevolution Motors, Aaron Wilkie, Mr Wilkie confirmed the Galaxie had beendelivered to Revolution Motors by Mr Sulusi to have the starter motor repaired.[23] On 19 May 2020 financial investigator Gordon Beattie from the ARU spoke toMr Sulusi after his arrest. Mr Sulusi stated "I never owned a Galaxie".[24] Those comments are in direct contrast to Mr Sulusi's comments made toDetective Shaun Kennard of the Hastings Police on 13 March 2020, when Mr Sulusistated that he was the owner of the Galaxie.[25] The Commissioner has provided evidence outlining Mr Sulusi's effectivecontrol of the Galaxie.[26] The Galaxie was seized pursuant to the restraining order and has been in thecustody of the Official Assignee since that date.[27] The Galaxie is registered in the name of the fifth interested party, Joseph JohnMorrell. Mr Morrell died on 21 May 2021. At no time since the Galaxie was seizedon 19 May 2020 until Mr Morrell's death, did Mr Morrell claim ownership or anyinterest in the Galaxie; nor had he taken any step in the proceedings, despite beingserved with all documentation in relation to the on-notice restraining order application.1956 Ford F100[28] The Ford F100 was located at Hastings Tyre and Service Centre on 19 May2020. Mr Quine spoke to the owner of the Centre, Mr Matt Bush, at that time.Mr Bush confirmed the Ford F100 had been delivered to the Centre by Mr Sulusi tohave a number of issues repaired, as it had failed a warrant of fitness.[29] Earlier evidence filed by Mr Quine details Mr Sulusi's effective control of theFord F100. It had been in his possession for some time, although it was not registeredin anyone's name.[30] On 19 May 2020, when financial investigator Mr Beattie spoke to Mr Sulusi,after his arrest, Mr Sulusi stated "he was registering it for a friend" but refused to namethe friend.[31] The Ford F100 was seized under the without restraining order and has been inthe custody of the Official Assignee since that date.[32] No other persons have approached Police or filed evidence claiming ownershipof this vehicle since its seizure.Ford Jailbar[33] The Ford Jailbar was located at 148 Nuffield Avenue, Marewa, Napier, on19 May 2020. This was the address of Mr Sulusi's wife, Natasha Grimmett, the firstinterested party.[34] The Ford Jailbar was not registered in anyone's name, but Mr Quine's evidenceis that it had been in the possession of Mr Sulusi for some time. Mr Quine's earlierevidence covers Mr Sulusi's effective control of the vehicle.[35] On 19 May 2020, when financial investigator Mr Beattie spoke to Mr Sulusiafter his arrest, Mr Sulusi stated "It's rubbish, it's worth nothing, it belongs to a mate".Mr Sulusi refused to name the "mate".[36] The Ford Jailbar was seized pursuant to the without notice restraining orderand has been in the custody of the Official Assignee since that date. No other personshave approached Police or filed evidence claiming ownership of the vehicle since itsseizure.[37] On 11 September 2020, Mr Sulusi swore an affidavit in response to theproceedings. The affidavit detailed his interest or otherwise in the restrained vehicles.In effect, Mr Sulusi denied having an interest in the Galaxie, Ford F100 and FordJailbar. He did not object to the effective control evidence or explain who the ownersof those vehicles may be. Mr Sulusi reiterated that he owned the Chrysler.[38] Mr Sulusi is now deceased.[39] Mr Morrell, the fifth interested party, is also deceased. Prior to his death,Mr Morrell did not seek to participate in these proceedings in any respect, despitebeing served with all relevant documentation. After his death, his former partner andthe executor of his estate, has confirmed that the estate does not wish to pursue anyinterest in the Ford Galaxie, or to be heard in relation to this application (or any othersteps in this proceeding).Evidence of value[40] The Official Assignee lists the current valuations for the restrained vehicles asfollows:(a) The Chrysler 300C 2009, Registration LTB272, valued at $15,500.(b) The Ford Galaxie Convertible 1963, valued at $50,000.(c) The Ford F100, valued at $40,000.(d) The Ford Jailbar, valued at $20,000.Storage costs[41] The costs to the Official Assignee to store the vehicles is $13.50 per day. Thiscompounding fee is settled at the time of the sale of the vehicles. The total projectedyearly cost to store the vehicles is $19,710.Depreciation[42] Mr Quine's affidavit refers to the Inland Revenue Schedule of DepreciationRates for Individual Assets as follows:Description of thePropertyCurrent Valuation Future AnnualDepreciation (21%)Chrysler 300C 2009 $15,500 $3,255Ford Galaxie convertible $50,000 $10,500Ford F100 $40,000 $8,400Ford Jailbar $20,000 $4,200[43] Based on that depreciation schedule, the Commissioner says the combined costof storage and depreciation of the vehicles in the first year is $46,065. TheCommissioner says that given the vehicles have a total estimated value of $125,500,the value of the vehicles would reduce significantly if they remain unsold.Discussion[44] Mr Walker, for the Commissioner agreed that, as Mr Quine notes in hisaffidavit, the vehicles are not "common road vehicles". For that reason, it is notexpected that the vehicles will depreciate at the same rate as common road vehicles.[45] The Commissioner therefore relies primarily on the ongoing costs of storageof the vehicles as the basis for the application for a sale order. I accept that, as HintonJ held in Commissioner of Police v Parker, the Court can order a sale where it isnecessary to preserve the potential net realisation value of the restrained asset. In thiscase, the anticipated depreciation of the vehicles is not as great as if they were commonroad vehicles, but it does appear there will be some depreciation in value. In addition,the cost of storage of the vehicles is quite significant, in relation to their value. Theevidence is also that all four vehicles were in need of repairs at the time of seizure.[46] There is another relevant factor. Generally the wishes of the owner of the assetsand/or those who have an interest in them will be relevant in deciding whether to ordersale. Somewhat unusually, in this case neither the respondent, nor any of the interestedparties, claim an interest in any of the vehicles.[47] As to length of time to resolution of the proceeding, Mr Walker anticipates thatthe Commissioner will make application for forfeiture orders within one to two monthsand that those applications will be dealt with within the current restraint period(expiring 29 March 2024).[48] While the Commissioner anticipates an early civil forfeiture application beingfiled, it may be sometime before a defended hearing date is available. That favoursthe making of sale orders now.[49] Weighing all of these factors I conclude it is appropriate to make the orderssought.Result[50] The Commissioner's application for sale orders is granted. There will be:(a) An order directing the Official Assignee to sell the following restrainedproperty in order to preserve the value of the restrained property:(i) A Chrysler 300C 2009, including keys, Registration NumberLTB272 (the Chrysler), registered in the name of the respondentLaki Sulusi;(ii) A Ford Galaxie convertible 1963, including keys, RegistrationNumber JSG11, with an unconfirmed registration in the nameof Joseph Morrell but previously under the effective control ofthe respondent Laki Sulusi;(iii) A Ford F100 1956, including keys, Registration Numberunknown, with an unconfirmed registration but previouslyunder the effective control of the respondent Laki Sulusi; and(iv) A Ford Jailbar motor vehicle unknown year, RegistrationNumber unknown, with an unconfirmed registration butpreviously under the effective control of the respondent LakiSulusi.(b) An order directing the Official Assignee to hold any remaining fundsderived from the sale of the property listed above in an interest-bearingtrust account until the resolution of the proceedings.Gwyn JSolicitors:Elvidge & Partners, Napier