BETWEEN COMMISSIONER OF POLICE Applicant AND ERNIE O’NEAL PAUL First Respondent DANIEL ELIU Second Respondent AND JOHN PAUL ALEXANDER First Interested Party

[2023] NZHC 3754

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

I TE KŌTI MATUA O AOTEAROA AHURIRI ROHE

CIV-2020-441-19

[2023] NZHC 3754

UNDER

the Criminal Proceeds (Recovery) Act 2009

IN THE MATTER OF

an application under ss 21, 24, 25 and 41

BETWEEN

COMMISSIONER OF POLICE

Applicant

AND

ERNIE O’NEAL PAUL

First Respondent

DANIEL ELIU
Second Respondent

AND

JOHN PAUL ALEXANDER

First Interested Party

Hearing (by VMR):	18 December 2023
Counsel:	M J M Mitchell for the Applicant
Judgment:	18 December 2023

JUDGMENT OF GWYN J

(Profit forfeiture order)

Solicitors:
Crown Solicitor, Napier

COMMISSIONER OF POLICE v PAUL [2023] NZHC 3754 [18 December 2023]

[1]                 A restraining order was granted in favour of the Commissioner on 18 August 2020.1 The order has been extended over time, most recently on 9 November 2023 when McQueen J extended the duration of the restraining order until 22 December 2023.2

[2]                 In the meantime, the Commissioner filed an application for a forfeiture order in respect of the property subject to the restraining order. An amended application has subsequently been filed by the Commissioner and served on the first respondent (Ernie Paul) on 15 November 2023, and on the first interested party (John Paul) on 14 and 15 November 2023. Neither of these parties has taken any steps in the proceedings. The second respondent, Mr Eliu, is deceased.

[3]                 The Commissioner now seeks determination of the forfeiture application prior to the expiry of the restraining order, on 22 December 2023.

[4]                 The property currently restrained, and in respect of which the Commissioner seeks a profit forfeiture order, is as follows:

(a)Cash totalling $229,960.00 seized from the second  respondent  Daniel Eliu, at Auckland on 19 April 2020, but under the effective control of the first respondent (Ernie Paul);

(b)Cash totalling $26,755.00 seized from the first respondent (Ernie Paul) at Arbroath Avenue, Hastings on 19 April 2020;

(c)A Harley Davidson V Rod Muscle 2016, including keys, registration B6PYK  with  the  unconfirmed  registration   in   the   name   of   John Alexander Paul but under the effective control of the first respondent (Ernie Paul); and

1      Commissioner of Police v Paul HC Napier CIV-2020-441-19, 18 August 2020 (Minute of Dobson J).

2      Commissioner of Police v Paul HC Napier CIV-2020-441-19, 9 November 2023 (Minute of McQueen J).

(d)An Indian Scout Bobber 2018, including keys, registration B3NZR with the unconfirmed registration in the name of Lowgro Signs Limited, a company owned by Jared Granger Matthews but under the effective control of the first respondent (Ernie Paul).

(the property)

[5]                 The forfeiture order is sought on the grounds that the respondents have in the relevant period of criminal activity (being 18 August 2013 to 18 August 2020) unlawfully benefitted to the value of $290,215 from the sale of the Class A controlled drug methamphetamine.

[6]                 The application for forfeiture  order  is  supported  by  an  affidavit  of  Steven Quine, Specialist Investigator with the New Zealand Police.

[7]                 As Mr Quine’s affidavit sets out, during 2019 and 2020, the Hawkes’ Bay Police Criminal Investigation Branch (Hawkes’ Bay CIB) conducted an investigation, code-named Operation Casino. The investigation targeted the activities of an organised criminal group involved in the sale and distribution of methamphetamine in the Hawkes’ Bay area.

[8]                 During the investigation, Police executed surveillance device warrants on the phone numbers used and operated by the respondents and their associates. Analysis of their electronic communications revealed that the first respondent arranged to purchase two kilograms of methamphetamine from a supplier in Auckland and the second respondent was employed to facilitate the purchase and to deliver the methamphetamine to the first respondent. The agreed purchase price was $260,000, plus a “delivery fee” of $20,000. The purchase price was subsequently adjusted upward.

[9]                 After intercepted communications between the first and second respondents indicated that the deal had occurred, the second respondent was stopped, travelling in a vehicle containing $229,960 in cash. A further $26,755 in cash was located at the first respondent’s home.

[10]             The first respondent is a beneficiary, with no additional source of identified legitimate income.

[11]             Subsequently, the first respondent pleaded guilty to conspiracy to deal methamphetamine. The second respondent pleaded guilty to two charges of conspiracy to deal methamphetamine and four charges of supplying methamphetamine.

Profit forfeiture order

[12]             The Commissioner submits that the proposed forfeited property is tainted because:

(a)the respondents were involved in a large scale methamphetamine supply operation which resulted in significant profit;

(b)the cash seized from the respondents, based on their declared incomes, could not have been earned or accrued legitimately;

(c)the cash seized represents the proceeds of methamphetamine sales and cash intended to be used to purchase more methamphetamine;

(d)the Indian Scout Bobber 2018 was paid for in cash, and in a method consistent with an attempt to hide its true ownership, indicative of it being purchased using the proceeds of crime, namely the sale of methamphetamine;

(e)the Harley Davidson V Rod Muscle 2016 was likely purchased with funds obtained from the sale of methamphetamine;

(f)no party involved in these proceedings has filed an interest in any of the restrained vehicles, with the registered owner of the Indian Scout Bobber 2018 filing an affidavit attempting to distance himself from these proceedings; and

(g)the respondents have not provided any evidence to show that the cash or the restrained vehicles were obtained lawfully.

[13]             The application sought profit and asset forfeiture orders in the alternative, but the Commissioner elects to pursue the profit forfeiture application.

The law

[14]             The Criminal Proceeds (Recovery) Act 2009 (Act) provides for the making of a profit forfeiture order under s 55:

55 Making profit forfeiture order

(1)The High Court must make a profit forfeiture order if it is satisfied on the balance of probabilities that—

(a)the respondent has unlawfully benefited from significant criminal activity within the relevant period of criminal activity; and

(b)the respondent has interests in property.

…

[15]“Unlawful benefit” is defined as follows:3

In this Act, unless the context otherwise requires, a person has unlawfully benefited from significant criminal activity if the person has knowingly, directly or indirectly, derived a benefit from significant criminal activity (whether or not that person undertook or was involved in the significant criminal activity).

[16]“Significant criminal activity” is in turn defined:4

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 the threshold amount or more have, directly or indirectly, been acquired or derived.

3      Section 7.

4      Section 6.

(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 the activity 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).

[17]             Read together, those provisions require the Court to be satisfied that it is more likely than not that the respondent has received some benefit from criminal activity. If so, and provided the respondent has some interest in property that may be realised, the Court must grant a profit forfeiture order.

[18]             Under s 53 of the Act the value of the unlawful benefit will be the value stated in the application, absent any rebuttal of that by the respondent(s).

[19]             The Court is also required to state the maximum recoverable amount, in order to avoid any double counting in situations where both asset and profit forfeiture orders are made.

[20]             I am satisfied that in the relevant period of criminal activity, being 18 August 2013 to 18 August 2020, the respondents unlawfully benefited to the value of $290,215 from the sale of the Class A controlled drug methamphetamine.

[21]I grant an order in the following terms:

(a)the value of the benefit determined in accordance with s 53 of the Act is $290,215;

(b)the maximum recoverable amount is $290,215; and

(c)the following property is to be realised:

(i)the Harley Davidson V Rod Muscle 2016, including keys, Registration B6PYK with the unconfirmed registration in the name of John Alexander Paul but under the effective control of the first respondent Ernie Paul;

(ii)the Indian Scout Bobber 2018, including keys, Registration B3NZR with the unconfirmed registration in the name of Lowgro Signs Limited, a company owned by Jared Granger Matthews but under the effective control of the first respondent Ernie Paul;

(iii)the cash totalling $229,960.00 seized from the second respondent Daniel Eliu, at Auckland on 19 April 2020, but under the effective control of the first respondent Ernie Paul – plus any accrued interest; and

(iv)the cash totalling $26,755.00 seized from the first respondent Ernie Paul at Arbroath Avenue, Hastings on 19 April 2020 – plus any accrued interest.

Effective control order

[22]             The Commissioner also seeks an order that the two motorbikes listed at [4(c)and (d)] above were under the effective control of the first respondent, Ernie Paul.

[23]Section 17A of the Act governs effective control orders:

17A Court may treat effective control over property as interest in property

(1)If the High Court is satisfied that a respondent has effective control over property, the Court may, on an application made by the Commissioner, order that the property is to be treated as though the respondent had an interest in the property specified by the Court.

(2)An order under subsection (1) may—

(a)be made even if the respondent has no interest in the property; and

(b)specify an interest that differs from the interest that the respondent has in the property.

[24]             The Court must be satisfied on the balance of probabilities that the respondent is a true owner of the property.5 The Court may consider:6

the practical reality of ownership, rather than being limited by legal forms… The fundamental question is whether, in fact, the respondent has the capacity to control, use, dispose of, or otherwise treat the property as their own.

[25]             The Commissioner submits that both motorcycles were purchased by or on behalf of Ernie Paul, were available for his use and were registered in the name of others in an attempt to conceal their true ownership:

(a)The Harley Davidson was purchased and registered to the first respondent before being transferred into the name of an associate.

(b)The Harley Davidson and its keys were located during the search warrant executed at the first respondent’s address on 19 April 2020.

(c)The first respondent has been stopped by Police on two occasions, riding the Harley Davidson.

(d)The first respondent asked an associate, Jared Matthews, to purchase the Indian bike using cash that he supplied.

(e)Mr Matthews registered the Indian bike under his company’s name, but has no interest in the Indian bike.

[26]             Accordingly, I make an order under s 17A of the Act that the following property be treated as though Ernie Paul had the following interest in it:

(a)Full beneficial ownership of the Harley Davidson V Rod Muscle 2016, including keys, registration B6PYK with the unconfirmed registration in the name of John Alexander Paul (“the Harley Davidson”); and

5      Commissioner of Police v McGoldrick-Savaii [2018] NZHC 936 at [42].

6      Commissioner of Police v Read [2015] NZHC 2055 at [60] (citations omitted).

(b)Full beneficial ownership of the Indian Scout Bobber 2018, including keys, registration B3NZR with the unconfirmed registration in the name of Lowgro Signs Limited, a company owned by Jared Grander Matthews (“the Indian”).

Gwyn J