THE COMMISSIONER, NEW ZEALAND POLICE v CLARK [2020] NZHC 735

THE COMMISSIONER, NEW ZEALAND POLICE v CLARK [2020] NZHC 735 [9 April 2020]IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYI TE KŌTI MATUA O AOTEAROATE WHANGANUI-A-TARA ROHECIV-2016-485-223[2020] NZHC 735BETWEEN THE COMMISSIONER, NEW ZEALANDPOLICEApplicantAND WHARE CLARKFirst RespondentAND SIOBHAN ANDREA EDWINAWILLIAMSSecond RespondentAND BRONSON JAMES KARAKAThird RespondentAND NEW ZEALAND HOME LENDINGLIMITEDFirst Interested PartyHearing: On the papersCounsel: S B McCusker for ApplicantC Nicholls for First RespondentR M Stoop for Second and Third RespondentJudgment: 9 April 2020JUDGMENT OF GRICE J(Settlement under s 95 of Criminal Proceeds (Recovery) Act 2009Introduction[1] This is an application for asset and profit forfeiture orders sought by theCommissioner under the Criminal Proceeds (Recovery) Act 2009 (the CPRA).[2] The forfeiture application was opposed by the first, second, and thirdrespondents. A defended hearing had been set down for two days commencing on23 March 2020 .[3] The parties have now reached agreement on a proposed settlement and seekapproval from the Court in accordance with s 95 of the CPRA.[4] There is no dispute about the facts giving rise to the application. The evidenceis set out in affidavits. I am satisfied the settlements should be approved in their terms.[5] I set out the background and terms of settlement based on the jointmemorandum provided by counsel.Background[6] This proceeding arises out of a Wellington Police Covert Operations Groupinvestigation (Operation Province) involving the sale of cannabis by occupants at theproperty located at 31 Parenga Street, Wainuiomata between November 2011 toApril 2016.[7] Operation Province terminated on 14 April 2016. As a consequence:(a) The first respondent (Mr Clark) was convicted of six counts of selling,or offering to sell a Class C controlled drug pursuant to s 6(1)(e) of theMisuse of Drugs Act (the MoDA), and conspiracy to supply cannabiscontrary to s 6(2A)(c) of the MoDA.(b) The second respondent (Ms Williams) was discharged withoutconviction in relation to the offence of permitting premises to beused for the sale of cannabis pursuant to s 12(1) of the MoDA.(c) The third respondent (Mr Karaka) was convicted in relation to sixcounts of selling or offering to sell a Class C drug, possession for thesupply of cannabis and conspiracy to supply cannabis.[8] On 1 September 2016, the Court made an on notice restraining order overthe following property in connection with Operation Pr ovince:1(a) All interests in the property at 31 Parenga Street, Wainuiomataregistered in the name of Ms Williams (the Parenga Street property).(b) Funds totalling approximately $49,264.85 attributed to New ZealandHome Loan Limited account in the name of Ms Williams (the NZHLFunds).(c) Funds totalling approximately $9,074.11 attributed to the KiwibankLimited account in the name of Mr Karaka (the Kiwibank Funds).(d) Cash totalling $1,730 seized from the third respondent from hisbedroom on 14 April 2016 (the $1,730 cash).[9] On 1 April 2019, the Commissioner filed an application for assets and profitforfeiture orders over the property referred above.Significant criminal activity[10] There is no dispute between the parties that the offences Mr Clark andMr Karaka were convicted of constitute "significant criminal activity" for thepurposes of the Act. Both were convicted of offences punishable by a maximumterm of imprisonment of five years or more.[11] There is also no dispute between the parties that both Mr Clark and Mr Karakaunlawfully benefited from their significant criminal activity as follows:(a) The Commissioner alleged Mr Clark benefited to the amount of$31,960. Mr Clark acknowledged that he received a benefit from hissignificant criminal activity but estimates the value of his benefit to be$16,683.1 A without notice restraining order over the same property had earlier been made on 12 April 2016.(b) The Commissioner alleged that Mr Karaka received a benefit of$24,290. Mr Karaka did not dispute this figure. This is presumed tobe the value of his benefit pursuant to s 53 of the CPRA.[12] Ms Williams, while not convicted of an offence which would constitutesignificant criminal activity, was joined as a respondent to these proceedings on thebasis of her ownership of the Parenga Street property and the NZHL account, in whichthe Commissioner alleged Mr Clark had an interest.Property subject to forfeitureThe Parenga Street property[13] The Commissioner alleged that Mr Clark had an interest in the Parenga Streetproperty on the basis of:(a) His effective control over the property. Mr Clark lived at the premisesand from 2 July 2001 to 20 August 2008 was jointly the registeredproprietor with Ms Williams.(b) His regular financial contributions to the property which wereapplied by Ms Williams to the mortgage.(c) An interest pursuant to the Property (Relationships) Act 1976 (thePRA) owing to the length of time Mr Clark and Ms Williams had beenliving together.[14] Mr Clark and Ms Williams allege:(a) They separated in 2003. On 31 July 2008 they entered into arelationship property agreement (the RP Agreement) formalising theirseparation.(b) The RP Agreement states that Ms Williams had, at all times, been thesole contributor to the mortgage over the Parenga Street Property, andthat Mr Clark had been added to the title in 2001 for the purposes ofguaranteeing refinancing. The parties agreed that the property wouldbe transferred to Ms Williams free from any claim by Mr Clark underthe PRA. The terms of the RP Agreement would also survivereconciliation.(c) Mr Clark moved back into the Parenga Street Property from 2012 upuntil the termination of Operation Province in April 2016. Mr Clarkand Ms Williams did not reconcile during this period and did not sharea bedroom. Ms Williams moved out of the Parenga Street property in2015. Mr Clark paid Ms Williams rent throughout the period he stayedat the Parenga Street property, which was commensurate with his levelof income from paid employment.[15] The Commissioner was not aware of the existence of the RP Agreement untilit was produced by Ms Williams in her affidavit of 11 July 2019. The Commissionerhad limited information as to Mr Clark and Ms Williams' living arrangements untilthis time.[16] The Commissioner has now undertaken inquiries and is satisfied as to thelegitimacy of the RP Agreement.[17] The Commissioner acknowledges it is unlikely that Mr Clark has an interest inthe Parenga Street Property which is capable of being realised under a profit forfeitureorder (either by way of an effective control order or a claim under the PRA), or thatMr Clark's rental contributions were paid out of tainted funds from his significantcriminal activity.The NZHL Funds[18] Ms Williams states that all of the money belonging in the NZHL belonged toher son, Tuhiwai Tapa. Ms Williams deposes that MrTapa used the NZHL account ashe did not have a bank account of his own, and that Ms Williams used the money inthese accounts to reduce her own mortgage payments while Mr Tapa saved money topurchase a property of his own.[19] Mr Tapa stated that he used the NZHL account to make large deposits, andprovided evidence of transactions in support of this claim in an affidavit.[20] The Commissioner is satisfied that Mr Clark does not have an interest in thecontents of the NZHL account, which is capable of being realised as part of a profitforfeiture order.[21] Ms Williams agrees, however, that the interest which has accrued on theNZHL Funds may be forfeit as part of Mr Karaka's proposed profit forfeitureorder, in order to meet his admitted unlawful benefit.The Kiwibank funds[22] The Kiwibank funds are held in a bank account registered in the name ofMr Karaka.[23] Mr Karaka accepts that he has an interest in the Kiwibank funds which iscapable of being realised under a profit forfeiture order.The $1,730 Cash[24] The $1,730 cash was seized from Mr Karaka's person and his bedroom ontermination of Operation Province on 14 April 2016.[25] Mr Karaka accepts that he has an interest in the $1,730 cash which is capableof being realised under a profit forfeiture order.Terms of settlementSettlement with Mr Clark[26] It is accepted that Mr Clark received an unlawful benefit from his significantcriminal activity. However the Commissioner acknowledges that he is unable toestablish that Mr Clark has an interest in either the Parenga Street property or theNZHL Funds.[27] Before a profit forfeiture order can be made the Commissioner must establishthat the respondent has interests in the relevant property.2 No profit forfeitureagainst Mr Clark is able to be made despite his admitted unlawful benefit.[28] Accordingly, the Commissioner and Mr Clark seek settlement on thefollowing terms:(a) No profit forfeiture order against Mr Clark is to be made; and(b) Costs lie where they fall.Settlement with Mr Karaka[29] The Commissioner and Mr Karaka agree that a profit forfeiture order can bemade on the following terms:(a) Mr Karaka's unlawful benefit is $24,290.(b) The maximum recoverable amount is $24,290.(c) The property to be realised is as follows:(i) The Kiwibank funds along with any accrued interest;(ii) The $1,730 cash; and(iii) The interest which has accrued on the funds in the NZHLaccount while under restraint. As at 17 December 2020, thebank account interest was valued at $3,193.20.[30] The Commissioner has undertaken that he will not instruct the OfficialAssignee to enforce any outstanding balance under the profit forfeiture orderagainst Mr Karaka, and that the profit forfeiture order will be in full and finalsettlement of all claims the Commissioner has against Mr Karaka in this proceeding.2 Doorman v Commissioner of Police (2014) 2 NZLR 173.Settlement with Ms Williams[31] Upon the making of the profit forfeiture order against Mr Karaka in thisproceeding, the Commissioner agrees that the Parenga Street property and the NZHLfunds should be released from restraint and returned to Ms Williams.Approval of settlement[32] Under s 95 of the Act, the High Court must approve a settlement if it is satisfiedit is consistent with the purposes of the Act and the overall interests of justice.[33] As Muir J observed in Commissioner of Police v Wellington,3 whether asettlement is in the interests of justice is a broad inquiry taking into account the savingsof time and costs and the litigation risks to the parties. Decisions to settle proceedingsunder the Act may be made on economic and pragmatic grounds and often reflect acommon-sense compromise between the parties.[34] I am satisfied the settlement reached as set out above is consistent with thepurposes of the Act and the overall interests of justice as:(a) The forfeiture of the Kiwibank funds and the $1,730 cash pursuantto Mr Karaka's profit forfeiture order is consistent with the purposeof the Act to eliminate the chance for persons to profit fromundertaking or being associated with significant criminal activity.(b) The Commissioner acknowledges that the evidential position haschanged considerably since the filing of Mr Clark and Ms Williams'affidavits in mid-2019. The Commissioner is satisfied that, based onthe evidence currently before the Court, Mr Clark is unlikely to .havean interest in the NZHL funds or the Parenga Street property. TheCommissioner says he is unaware of any other property which Mr Clarkmay have an interest in which might be realised under a profit forfeitureorder.3 Commissioner of Police v Wellington [2018] NZHC 2502 at [14].(c) Ms Williams' offer to forfeit the interest accrued from the NZHL Fundsas part of Mr Karaka's forfeiture order is a pragmatic compromise,particularly in circumstances where Mr Karaka has no interest in theproperty. In the Commissioner's view, the proposed profit forfeitureorder is therefore a better outcome than if the matter went to a defendedhearing.(d) Mr Clark's alleged unlawful benefit is comparatively low(approximately $16,683–$31,690) and it would not be an efficient useof the Commissioner's resources to devote further time to his forfeitureapplication, particularly in circumstances where Mr Clark has noidentifiable property to his name.[35] The two days that had been set down to hear this matter will now not berequired. There will be a saving of time and cost to all parties involved if thisapplication can be dealt with by consent.Orders sought[36] Accordingly, I make the following orders or directions by consent:(a) Orders are made reflecting the proposed settlement terms recordedabove in accordance with the draft profit forfeiture order filed by theCommissioner.(b) That the fixture set down for 23 March 2020 is vacated.(c) No order as to costs._________________Grice J