GONG v COMMISSIONER OF POLICE [2020] NZCA 598

GONG v COMMISSIONER OF POLICE [2020] NZCA 598 [27 November 2020]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA437/2020[2020] NZCA 598BETWEEN XIAO HUA GONGApplicantAND COMMISSIONER OF POLICERespondentCourt: French and Collins JJCounsel: D P H Jones QC for ApplicantM R Harborow and H E Macdonald for RespondentJudgment:(On the papers)27 November 2020 at 9.00 amJUDGMENT OF THE COURTA The application for leave to appeal is declined.B The applicant must pay costs to the respondent for a standard application on aband A basis and any usual disbursements.____________________________________________________________________REASONS OF THE COURT(Given by Collins J)Introduction[1] Mr Gong applies under s 56(5) of the Senior Courts Act 2016 for leave toappeal an interlocutory judgment of Jagose J,1 who dismissed an application for leave1 Commissioner of Police v Gong [2019] NZHC 3441 [High Court judgment].to appeal his judgment.2 The application is opposed by the Commissioner of Police(the Commissioner).[2] In his judgment Jagose J granted an application by the Commissioner forpre-commencement discovery under r 8.20 of the High Court Rules 2016.The pre-commencement discovery order enables the Commissioner to obtaindocuments he wishes to assess before applying for an assets forfeiture order and/ora profit forfeiture order under the Criminal Proceeds (Recovery) Act 2009 (the Act).3[3] Mr Gong is a Chinese national who resides in Canada. He is the subject ofinvestigations by the Public Security Bureau in China and the Securities Commissionof Ontario.[4] The application for pre-commencement discovery was made in the context ofthe Commissioner having obtained a restraining order under the Act in respect ofproperties, bank accounts and other assets said to have been obtained by Mr Gongfollowing his remission of $77 million to New Zealand.4 It is the Commissioner'scase the money Mr Gong remitted to New Zealand was part of $200 million obtainedthrough a fraudulent pyramid scheme involving the sale of health supplements inChina and Canada.[5] On 6 December 2019, the Commissioner filed a draft originating applicationfor civil forfeiture orders. The draft application identifies a number of predicateoffences in New Zealand, Canada and China, including money laundering,5 fraud6 andreceiving stolen property/proceeds of crimes.7[6] The draft application refers to Mr Gong having committed tax offences inCanada "including filing a false or deceptive return", which are equivalent to those setout in ss 143, 143A and 143B of the Tax Administration Act 1994. The Commissioner2 Commissioner of Police v Gong [2020] NZHC 1667 [High Court leave judgment].3 Criminal Proceeds (Recovery) Act 2009, ss 49 and 52.4 Commissioner of Police v Gong [2017] NZHC 556.5 Crimes Act 1961, s 243; and Criminal Code RSC 1985, c C-46, s 462:31.6 Crimes Act, ss 228 and 240; Criminal Code RSC, c C-46, s 380(1)(a); and Criminal Law of thePeople's Republic of China 1979, art 192.7 Crimes Act, s 246(1); and Criminal Code RSC, c C-46, s 354(1).says he needs Mr Gong's personal tax returns in Canada for the tax years ending31 October 2009 to 31 October 2011 and also Mr Gong's bank records for the tax yearsending 31 October 2006 to 31 October 2016.Grounds of application[7] Six grounds are advanced in support of the application:(a) Pre-commencement discovery has never been used in relation to civilforfeiture applications under the Act. It is said this justifies this Courtdetermining whether or not r 8.20 is appropriate in cases of this kind.(b) The High Court misapplied the scope of r 8.20 by extending itsapplication beyond cases where it is not possible or practicable for anintending plaintiff to formulate a claim without pre-commencementdiscovery.(c) The Commissioner can, if necessary, commence the intendedproceedings and apply to amend the civil forfeiture application unders 47 of the Act.(d) The scope of the pre-commencement discovery is unreasonable andoppressive.(e) Pre-commencement discovery is an abuse of process.(f) It is in the interests of justice to hear the proposed appeal before thesubstantive proceedings are determined.Governing principles[8] The principles that govern applications for leave to appeal an interlocutorydecision under s 56(5) of the Senior Courts Act were recently restated by this Court inGreendrake v District Court of New Zealand.88 Greendrake v District Court of New Zealand [2020] NZCA 122.[9] The ultimate question is whether the interests of justice are served by grantingleave.9 This Court explained:10(a) There is a high threshold that applicants must pass before leave will begranted to appeal under s 56(5) of the Senior Courts Act.(b) An application must identify an arguable error of law or fact.(c) The alleged error should be of general or public importance warrantingdetermination or otherwise be of sufficient importance to the applicantto outweigh any lack of general or precedent value associated with theproposed appeal.(d) The circumstances must warrant further delay in the disposition of theproceeding.AnalysisApplication of r 8.20 to civil forfeiture proceedings[10] The first proposed ground of appeal is based on the argument that r 8.20 hasnot previously been used in relation to civil forfeiture proceedings under the Act.Entwined with this submission is the contention that pre-commencement disclosure isnot an appropriate procedure under the Act.[11] We see no merit in this proposed ground of appeal. Proceedings relating tocivil forfeiture orders are civil proceedings.11 Civil forfeiture orders are originatingapplications,12 meaning r 7.43A(1)(e) of the High Court Rules applies which enablesa Judge to "make any other direction or order that the court may make under theserules" including an order for pre-commencement discovery under r 8.20. There is noprincipled reason why interlocutory steps applicable to civil proceedings should beexcluded from applications for civil forfeiture orders.9 At [6(e)], citing Finewood Upholstery Ltd v Vaughan [2017] NZHC 1679 at [13].10 At [6], citing Finewood Upholstery Ltd v Vaughan, above n 9, at [13].11 Criminal Proceeds (Recovery) Act, s 10.12 High Court Rules 2016, r 19.2(r).No necessity for pre-commencement discovery[12] The second proposed ground of appeal is founded on the settled propositionthat r 8.20 is only engaged where it is impossible or impracticable for the intendedplaintiff to formulate his or her claim. Mr Gong argues the Commissioner already hassufficient evidence to apply for forfeiture orders and that pre-commencementdiscovery is nothing more than a "fishing expedition".[13] Mr Gong's main argument against the scope of pre-commencement discoveryrelates to the Commissioner's desire to obtain tax returns and bank statements fromCanada, which the Commissioner says Mr Gong has previously agreed to provide buthas failed to do so. Mr Gong takes issue with the Commissioner having access to hisCanadian tax and bank records because the Canadian tax authorities have notcommenced proceedings against him. He says absent any credible suggestion of taxoffending in Canada, the Commissioner is acting beyond his authority by trying tofind evidence of tax offending in Canada.[14] The Commissioner says the documents sought relate to, but are not limited to,establishing whether tax offending in Canada should be relied on as discrete predicateoffending, and the documents are also relevant to issues such as the quantum ofunlawful benefit obtained by Mr Gong and the property which the Commissioner saysis liable to be forfeited.[15] The High Court concluded the Commissioner was entitled to claim civilforfeiture orders against Mr Gong, but that it was impossible or impracticable toformulate his claim without reference to the documents which are the subject of ther 8.20 order.[16] The argument put forward on behalf of Mr Gong conflates the criteria for anorder under r 8.20 with the merits of issuing a forfeiture order on the basis Mr Gongengaged in tax offending in Canada, as well as other offences in Canada, China andNew Zealand. Jagose J applied the right test when he determined it was not possibleor practicable for the Commissioner to formulate his claim without assessing thedocuments in issue. Any question about the substantive merits of the Commissioner'sapplication can be determined if civil forfeiture orders are made.Amending an application[17] The third proposed ground of appeal claims the Commissioner can commencethe forfeiture application and, if it becomes necessary to do so, amend the applicationunder s 47 of the Act.[18] This proposed ground of appeal has no merit. The issue before the High Courtwas whether it was impracticable for impossible for the Commissioner to formulatehis application without accessing the documents sought. The fact an application canbe amended once it has been commenced does not impact upon the issues that mustbe addressed in a pre-commencement application.Unnecessary and oppressive[19] The fourth proposed ground of appeal contends that the pre-commencementdiscovery order is unreasonable and oppressive.[20] This proposed ground of appeal is also misconceived. The documents soughtfrom Mr Gong are very basic and of the kind that are routinely sought before forfeitureapplications are commenced. There is nothing unreasonable or oppressive about theterms of the order.Abuse of process[21] The fifth proposed ground of appeal seeks to argue the pre-commencementdiscovery order is an abuse of process because it is not reciprocal. We understand thisargument to mean that as pre-commencement discovery cannot be sought against theCommissioner, then pre-commencement discovery should not be available to theCommissioner.[22] This argument also lacks merit. Rule 8.20 provides for pre-commencementdiscovery to enable a potential plaintiff/applicant to formulate his or her claim. Thereis no need for reciprocal discovery at the pre-commencement stage of proceedings.Pre-commencement discovery is unilateral by nature.Interests of justice[23] The final proposed ground of appeal argues that it is contrary to the interestsof justice for the pre-commencement discovery order to remain in place.This proposed ground of appeal is also without foundation. Any injustice that mayarise through the Commissioner's conduct of this proceeding will be addressed in theHigh Court proceedings and may, if necessary, be the subject of an appeal if civilforfeiture orders are made. It is premature to entertain this proposed ground of appealat this interlocutory stage of the proceeding.Result[24] The application for leave to appeal is declined.[25] The applicant must pay costs to the respondent for a standard application ona band A basis and any usual disbursementsSolicitors:Shieff Angland, Auckland for ApplicantMeredith Connell, Auckland for Respondent