Commissioner, New Zealand Police v Clark
[2020] NZHC 735
•9 April 2020
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2016-485-223
[2020] NZHC 735
BETWEEN THE COMMISSIONER, NEW ZEALAND POLICE
ApplicantAND
WHARE CLARK
First Respondent
AND
SIOBHAN ANDREA EDWINA WILLIAMS
Second Respondent
AND
BRONSON JAMES KARAKA
Third Respondent
AND
NEW ZEALAND HOME LENDING LIMITED
First Interested Party
Hearing: On the papers Counsel:
S B McCusker for Applicant
C Nicholls for First Respondent
R M Stoop for Second and Third RespondentJudgment:
9 April 2020
JUDGMENT OF GRICE J
(Settlement under s 95 of Criminal Proceeds (Recovery) Act 2009
Introduction
[1] This is an application for asset and profit forfeiture orders sought by the Commissioner under the Criminal Proceeds (Recovery) Act 2009 (the CPRA).
THE COMMISSIONER, NEW ZEALAND POLICE v CLARK [2020] NZHC 735 [9 April 2020]
[2] The forfeiture application was opposed by the first, second, and third respondents. A defended hearing had been set down for two days commencing on 23 March 2020.
[3] The parties have now reached agreement on a proposed settlement and seek approval 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 evidence is 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 joint memorandum provided by counsel.
Background
[6] This proceeding arises out of a Wellington Police Covert Operations Group investigation (Operation Province) involving the sale of cannabis by occupants at the property located at 31 Parenga Street, Wainuiomata between November 2011 to April 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 the Misuse of Drugs Act (the MoDA), and conspiracy to supply cannabis contrary to s 6(2A)(c) of the MoDA.
(b)The second respondent (Ms Williams) was discharged without conviction in relation to the offence of permitting premises to be used for the sale of cannabis pursuant to s 12(1) of the MoDA.
(c)The third respondent (Mr Karaka) was convicted in relation to six counts of selling or offering to sell a Class C drug, possession for the supply of cannabis and conspiracy to supply cannabis.
[8] On 1 September 2016, the Court made an on notice restraining order over the following property in connection with Operation Pr ovince:1
(a)All interests in the property at 31 Parenga Street, Wainuiomata registered in the name of Ms Williams (the Parenga Street property).
(b)Funds totalling approximately $49,264.85 attributed to New Zealand Home Loan Limited account in the name of Ms Williams (the NZHL Funds).
(c)Funds totalling approximately $9,074.11 attributed to the Kiwibank Limited account in the name of Mr Karaka (the Kiwibank Funds).
(d)Cash totalling $1,730 seized from the third respondent from his bedroom on 14 April 2016 (the $1,730 cash).
[9] On 1 April 2019, the Commissioner filed an application for assets and profit forfeiture orders over the property referred above.
Significant criminal activity
[10] There is no dispute between the parties that the offences Mr Clark and Mr Karaka were convicted of constitute “significant criminal activity” for the purposes of the Act. Both were convicted of offences punishable by a maximum term of imprisonment of five years or more.
[11] There is also no dispute between the parties that both Mr Clark and Mr Karaka unlawfully 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 his significant 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 to be the value of his benefit pursuant to s 53 of the CPRA.
[12] Ms Williams, while not convicted of an offence which would constitute significant criminal activity, was joined as a respondent to these proceedings on the basis of her ownership of the Parenga Street property and the NZHL account, in which the Commissioner alleged Mr Clark had an interest.
Property subject to forfeiture
The Parenga Street property
[13] The Commissioner alleged that Mr Clark had an interest in the Parenga Street property on the basis of:
(a)His effective control over the property. Mr Clark lived at the premises and from 2 July 2001 to 20 August 2008 was jointly the registered proprietor with Ms Williams.
(b)His regular financial contributions to the property which were applied by Ms Williams to the mortgage.
(c)An interest pursuant to the Property (Relationships) Act 1976 (the PRA) owing to the length of time Mr Clark and Ms Williams had been living together.
[14]Mr Clark and Ms Williams allege:
(a)They separated in 2003. On 31 July 2008 they entered into a relationship property agreement (the RP Agreement) formalising their separation.
(b)The RP Agreement states that Ms Williams had, at all times, been the sole contributor to the mortgage over the Parenga Street Property, and that Mr Clark had been added to the title in 2001 for the purposes of
guaranteeing refinancing. The parties agreed that the property would be transferred to Ms Williams free from any claim by Mr Clark under the PRA. The terms of the RP Agreement would also survive reconciliation.
(c)Mr Clark moved back into the Parenga Street Property from 2012 up until the termination of Operation Province in April 2016. Mr Clark and Ms Williams did not reconcile during this period and did not share a bedroom. Ms Williams moved out of the Parenga Street property in 2015. Mr Clark paid Ms Williams rent throughout the period he stayed at the Parenga Street property, which was commensurate with his level of income from paid employment.
[15] The Commissioner was not aware of the existence of the RP Agreement until it was produced by Ms Williams in her affidavit of 11 July 2019. The Commissioner had limited information as to Mr Clark and Ms Williams’ living arrangements until this time.
[16] The Commissioner has now undertaken inquiries and is satisfied as to the legitimacy of the RP Agreement.
[17] The Commissioner acknowledges it is unlikely that Mr Clark has an interest in the Parenga Street Property which is capable of being realised under a profit forfeiture order (either by way of an effective control order or a claim under the PRA), or that Mr Clark’s rental contributions were paid out of tainted funds from his significant criminal activity.
The NZHL Funds
[18] Ms Williams states that all of the money belonging in the NZHL belonged to her son, Tuhiwai Tapa. Ms Williams deposes that MrTapa used the NZHL account as he did not have a bank account of his own, and that Ms Williams used the money in these accounts to reduce her own mortgage payments while Mr Tapa saved money to purchase a property of his own.
[19] Mr Tapa stated that he used the NZHL account to make large deposits, and provided 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 the contents of the NZHL account, which is capable of being realised as part of a profit forfeiture order.
[21] Ms Williams agrees, however, that the interest which has accrued on the NZHL Funds may be forfeit as part of Mr Karaka’s proposed profit forfeiture order, 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 of Mr Karaka.
[23] Mr Karaka accepts that he has an interest in the Kiwibank funds which is capable 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 on termination of Operation Province on 14 April 2016.
[25] Mr Karaka accepts that he has an interest in the $1,730 cash which is capable of being realised under a profit forfeiture order.
Terms of settlement
Settlement with Mr Clark
[26] It is accepted that Mr Clark received an unlawful benefit from his significant criminal activity. However the Commissioner acknowledges that he is unable to establish that Mr Clark has an interest in either the Parenga Street property or the NZHL Funds.
[27] Before a profit forfeiture order can be made the Commissioner must establish that the respondent has interests in the relevant property.2 No profit forfeiture against Mr Clark is able to be made despite his admitted unlawful benefit.
[28] Accordingly, the Commissioner and Mr Clark seek settlement on the following 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 be made 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 NZHL account while under restraint. As at 17 December 2020, the bank account interest was valued at $3,193.20.
[30] The Commissioner has undertaken that he will not instruct the Official Assignee to enforce any outstanding balance under the profit forfeiture order against Mr Karaka, and that the profit forfeiture order will be in full and final settlement 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 this proceeding, the Commissioner agrees that the Parenga Street property and the NZHL funds 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 satisfied it 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 a settlement is in the interests of justice is a broad inquiry taking into account the savings of time and costs and the litigation risks to the parties. Decisions to settle proceedings under the Act may be made on economic and pragmatic grounds and often reflect a common-sense compromise between the parties.
[34] I am satisfied the settlement reached as set out above is consistent with the purposes of the Act and the overall interests of justice as:
(a)The forfeiture of the Kiwibank funds and the $1,730 cash pursuant to Mr Karaka’s profit forfeiture order is consistent with the purpose of the Act to eliminate the chance for persons to profit from undertaking or being associated with significant criminal activity.
(b)The Commissioner acknowledges that the evidential position has changed considerably since the filing of Mr Clark and Ms Williams’ affidavits in mid-2019. The Commissioner is satisfied that, based on the evidence currently before the Court, Mr Clark is unlikely to .have an interest in the NZHL funds or the Parenga Street property. The Commissioner says he is unaware of any other property which Mr Clark may have an interest in which might be realised under a profit forfeiture order.
3 Commissioner of Police v Wellington [2018] NZHC 2502 at [14].
(c)Ms Williams’ offer to forfeit the interest accrued from the NZHL Funds as part of Mr Karaka’s forfeiture order is a pragmatic compromise, particularly in circumstances where Mr Karaka has no interest in the property. In the Commissioner’s view, the proposed profit forfeiture order is therefore a better outcome than if the matter went to a defended hearing.
(d)Mr Clark’s alleged unlawful benefit is comparatively low (approximately $16,683–$31,690) and it would not be an efficient use of the Commissioner’s resources to devote further time to his forfeiture application, particularly in circumstances where Mr Clark has no identifiable property to his name.
[35] The two days that had been set down to hear this matter will now not be required. There will be a saving of time and cost to all parties involved if this application 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 recorded above in accordance with the draftprofit forfeiture order filed by the Commissioner.
(b)That the fixture set down for 23 March 2020 is vacated.
(c)No order as to costs.
Grice J
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