Commission of Police v Sulusi
[2023] NZHC 938
•26 April 2023
IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY
I TE KŌTI MATUA O AOTEAROA AHURIRI ROHE
CIV-2020-441-18
[2023] NZHC 938
UNDER the Criminal Proceeds (Recovery) Act 2009 IN THE MATTER OF
an application under s 41 of the Criminal Proceeds (Recovery) Act 2009
BETWEEN
THE COMMISSIONER OF THE NEW ZEALAND POLICE
Applicant
AND
LAKI LEATITALA SULUSI
Respondent
AND
NATASHA LOUISE GRIMMETT
First Interested Party
JOSEPH JOHN MORRELL
Second Interested PartyKANE TUI TAHAU
Third Interested PartyPARMJIT KAUR
Fourth Interested Party
Hearing (by VMR): 24 April 2023 Counsel:
C R Walker for the Applicant No appearance for other parties
Judgment:
26 April 2023
JUDGMENT OF GWYN J
COMMISSIONER OF THE NEW ZEALAND POLICE v SULUSI [2023] NZHC 938 [26 April 2023]
Introduction
[1] The Commissioner of Police (Commissioner) has previously obtained a restraining order in respect of a residential property, a number of vehicles and two transportable cabins.
[2] The restraining order is in effect until 29 March 2024, although the Commissioner expects that an application for forfeiture will be filed and determined prior to that date.
[3] The Commissioner has applied to sell four of the restrained vehicles, on the grounds that it is necessary to preserve their remaining value given the significant storage 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 no appearance for any party other than the Commissioner. Subsequently, counsel for the Commissioner has filed a memorandum outlining the basis for the application for sale orders. The application is also supported by an affidavit of Steven Alexander Quine, a Specialist Investigator in the Police Asset Recovery Unit.
History of the proceeding
Operation Casino
[6] During 2019 and 2020 the Hawke’s Bay Police Organised Crime Unit (OCU) conducted an investigation codenamed Operation Casino that targeted the criminal activities of persons involved in the sale and distribution of methamphetamine in the Hawke’s Bay area. The inquiry centred on the respondent, Laki Sulusi.
[7] The Central Asset Recovery Unit (ARU) was involved in the Operation Casino investigation to assist the criminal team and identify Mr Sulusi’s assets, resulting from his alleged criminal activity, including his assets concealed in the names of third parties.
[8] Operation Casino evidence throughout the 214 days that the first respondent’s phone data was captured, was that Mr Sulusi supplied 313 grams of methamphetamine and conspired to supply a further 6.1 kilograms of methamphetamine. At the time of Mr Sulusi’s alleged offending, 6.413 kilograms was valued at $979,000.
[9] The Operation Casino investigation terminated on 19 May 2020, with the execution of search warrants at Mr Sulusi’s home address and other properties associated with him.
[10] Mr Sulusi was arrested and charged, primarily with serious drug-related offences pertaining to supplying the Class A controlled drug methamphetamine.
[11] The offences that Mr Sulusi was charged with constitute significant criminal activity in terms of s 6 of the Act.
History of proceeding
Restraining order
[12] On 15 May 2020, Cooke J issued a without notice restraining order over the following property:1
(a)All interests in the property situated at 148 Nuffield Avenue, Marewa, Napier.
(b)A Ford Customline, including keys, Registration Number GEH943 (the Customline), 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 Number JSG11 (the Galaxie), and with an unconfirmed registration in the name
1 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 Police v Sulusi CIV-2020-441-18, minute of Cull J, 29 June 2020.
of Joseph Morrell but under the effective control of the respondent Laki Sulusi;
(e)A Harvey Davidson V Rod Muscle 2015, including keys, Registration Number C1AMC (the V Rod), previously registered as B1PFW, and with an unconfirmed registration in the name of Kane Tahau but under the effective control of the respondent Laki Sulusi;
(f)A BMW 530 Saloon 2004, including keys, Registration number MRN33 (the BMW 530) and with an unconfirmed registration in the name of Parmjit Kaur but under the effective control of the respondent Laki Sulusi;
(g)A BMW 258 Saloon 2010, including keys, Registration number LBN106 (the BMW 258) and with an unconfirmed registration in the name of Aleysha Kaye Wickliffe but under the effective control of the respondent Laki Sulusi;
(h)A Ford F100 1956, including keys, Registration Number unknown (the F100), and with an unconfirmed registration but under the effective control of the respondent Laki Sulusi;
(i)A Ford Jailbar motor vehicle unknown year, Registration Number unknown (the Jailbar) and with an unconfirmed registration but under the effective control of the respondent Laki Sulusi;
(j)Two portable wooden cabins, positioned in the back yard of 148 Nuffield Avenue, Marewa, Napier, under the effective control of the respondent Laki Sulusi.
[13] Four of the six vehicles sought for restraint were located and restrained, along with two additional vehicles, being the F100 and the Jailbar. Those two vehicles were restrained 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 order
Without limiting the generality of section 34(1), a court may, on an application under section 33(1), make 1 or more of the following further orders in relation to restrained property:
…
(e) an order relating to the Official Assignee that—
…
(v) directs the Official Assignee to sell restrained property (including, without limitation, a business) in order 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 restrained property”. The applicant does not have to prove that sale is required on the balance of probabilities. 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 in relation to restrained assets such as motor vehicles.3 The reduction in the eventual return caused by the holding costs cannot be sufficient of itself to warrant an order for sale. The relevance of storage and insurance costs has been debated in a number of cases. For example, in Commissioner of Police v Blance, Dobson J referred to Commissioner of Police v Evans where Brown J was not prepared to order immediate sale for a vehicle then valued in excess of $26,000 where there was a prospect that the vehicle would hold its value. However, Dobson J said:4
With respect, I would not go so far as to disregard the relevance of the holding costs in all cases. However, in the case of vehicles that are appropriately treated as investments, or at least where the rate of depreciation has bottomed out, nor can the reduction in the eventual return caused by the holding costs be sufficient of itself to warrant an order for sale.
[17]The authors of Adams continue:5
2 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, the extent to which the asset may depreciate during that period and the wishes of the owner of the asset and any other person who may have an interest in it… although storage and insurance costs were expressly excluded from consideration in Commissioner of Police v Evans (above) at [33], in other cases those costs have been recognised as relevant and considered along with other factors.
[18] In Commissioner of Police v Parker, Hinton J addressed the argument that storage and related costs do not affect the value of the property, as opposed to the net realisable value, and therefore should not justify an order under s 35(e)(v). Putting to one side the issue of whether “value” should be treated “in a net or realisation sense”, Hinton J concluded:6
In any event, I agree with the Commissioner that a sale order is not limited to a sale under s 35(e)(v) of the Act. Section 35 only sets out examples of orders that the Court can make. It expressly does not limit the orders that can be made. That is equally clear from s 34.
I consider a court can order a sale under s 34 where it is necessary to preserve the potential net realisation value (as opposed to the value per se) of the restrained asset, providing a sale is otherwise considered appropriate.
…
I therefore conclude that as a matter of law, the Court is not limited to ordering a sale only under s 35(e)(v) and is therefore not precluded from making an order 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 are subject to the restraining order (vehicles).
2009 Chrysler 300C
[20] When Mr Sulusi was arrested on 19 May 2020, the Chrysler was located parted outside the motel room he occupied; the keys to the Chrysler were in Mr Sulusi’s jacket. 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 and has 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 Jervois Street, Mayfair, Auckland. Mr Quine deposes that when he spoke to the owner of Revolution Motors, Aaron Wilkie, Mr Wilkie confirmed the Galaxie had been delivered 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 to Mr 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 to Detective Shaun Kennard of the Hastings Police on 13 March 2020, when Mr Sulusi stated that he was the owner of the Galaxie.
[25] The Commissioner has provided evidence outlining Mr Sulusi’s effective control of the Galaxie.
[26] The Galaxie was seized pursuant to the restraining order and has been in the custody of the Official Assignee since that date.
[27] The Galaxie is registered in the name of the fifth interested party, Joseph John Morrell. Mr Morrell died on 21 May 2021. At no time since the Galaxie was seized on 19 May 2020 until Mr Morrell’s death, did Mr Morrell claim ownership or any interest in the Galaxie; nor had he taken any step in the proceedings, despite being served 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 May 2020. 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 to have 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 the Ford F100. It had been in his possession for some time, although it was not registered in 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 name the friend.
[31] The Ford F100 was seized under the without restraining order and has been in the custody of the Official Assignee since that date.
[32] No other persons have approached Police or filed evidence claiming ownership of this vehicle since its seizure.
Ford Jailbar
[33] The Ford Jailbar was located at 148 Nuffield Avenue, Marewa, Napier, on 19 May 2020. This was the address of Mr Sulusi’s wife, Natasha Grimmett, the first interested party.
[34] The Ford Jailbar was not registered in anyone’s name, but Mr Quine’s evidence is that it had been in the possession of Mr Sulusi for some time. Mr Quine’s earlier evidence covers Mr Sulusi’s effective control of the vehicle.
[35] On 19 May 2020, when financial investigator Mr Beattie spoke to Mr Sulusi after 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 order and has been in the custody of the Official Assignee since that date. No other persons have approached Police or filed evidence claiming ownership of the vehicle since its seizure.
[37] On 11 September 2020, Mr Sulusi swore an affidavit in response to the proceedings. 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 Ford Jailbar. He did not object to the effective control evidence or explain who the owners of 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, despite being served with all relevant documentation. After his death, his former partner and the executor of his estate, has confirmed that the estate does not wish to pursue any interest in the Ford Galaxie, or to be heard in relation to this application (or any other steps in this proceeding).
Evidence of value
[40] The Official Assignee lists the current valuations for the restrained vehicles as follows:
(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. This compounding fee is settled at the time of the sale of the vehicles. The total projected yearly cost to store the vehicles is $19,710.
Depreciation
[42] Mr Quine’s affidavit refers to the Inland Revenue Schedule of Depreciation Rates for Individual Assets as follows:
Description of the
Property
Current Valuation Future Annual
Depreciation (21%)
Chrysler 300C 2009 $15,500 $3,255 Ford Galaxie convertible $50,000 $10,500 Ford F100 $40,000 $8,400 Ford Jailbar $20,000 $4,200
[43] Based on that depreciation schedule, the Commissioner says the combined cost of storage and depreciation of the vehicles in the first year is $46,065. The Commissioner 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 his affidavit, the vehicles are not “common road vehicles”. For that reason, it is not expected that the vehicles will depreciate at the same rate as common road vehicles.
[45] The Commissioner therefore relies primarily on the ongoing costs of storage of the vehicles as the basis for the application for a sale order. I accept that, as Hinton J held in Commissioner of Police v Parker, the Court can order a sale where it is necessary to preserve the potential net realisation value of the restrained asset. In this case, the anticipated depreciation of the vehicles is not as great as if they were common road 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. The evidence 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 assets and/or those who have an interest in them will be relevant in deciding whether to order sale. Somewhat unusually, in this case neither the respondent, nor any of the interested parties, claim an interest in any of the vehicles.
[47] As to length of time to resolution of the proceeding, Mr Walker anticipates that the Commissioner will make application for forfeiture orders within one to two months
and 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 being filed, it may be sometime before a defended hearing date is available. That favours the making of sale orders now.
[49] Weighing all of these factors I conclude it is appropriate to make the orders sought.
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 restrained property in order to preserve the value of the restrained property:
(i)A Chrysler 300C 2009, including keys, Registration Number LTB272 (the Chrysler), registered in the name of the respondent Laki Sulusi;
(ii)A Ford Galaxie convertible 1963, including keys, Registration Number JSG11, with an unconfirmed registration in the name of Joseph Morrell but previously under the effective control of the respondent Laki Sulusi;
(iii)A Ford F100 1956, including keys, Registration Number unknown, with an unconfirmed registration but previously under the effective control of the respondent Laki Sulusi; and
(iv)A Ford Jailbar motor vehicle unknown year, Registration Number unknown, with an unconfirmed registration but previously under the effective control of the respondent Laki Sulusi.
(b)An order directing the Official Assignee to hold any remaining funds derived from the sale of the property listed above in an interest-bearing trust account until the resolution of the proceedings.
Gwyn J
Solicitors:
Elvidge & Partners, Napier
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