Commissioner of Police v Birkinshaw
[2019] NZHC 314
•1 March 2019
IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY
I TE KŌTI MATUA O AOTEAROA TE PAPAIOEA ROHE
CIV-2014-454-000143
[2019] NZHC 314
UNDER the Criminal Proceeds (Recovery) Act 2009 IN THE MATTER OF
an application pursuant to section 35
BETWEEN
THE COMMISSIONER OF POLICE
Applicant
AND
KATHERINE JANE BIRKINSHAW
Respondent
ERROL MARTINUE DANKLOF
First Interested PartyPUBLIC TRUST
Second Interested Party
Hearing: 1 March 2019 Counsel:
J J Harvey and A R Lyne for Applicant S J Fraser for Respondent
D M A Wiseman for Official Assignee
Judgment:
1 March 2019
JUDGMENT OF COLLINS J
Introduction
[1] The application before me stems from a proceeding commenced by the Commissioner of Police (the Commissioner) for asset forfeiture against Ms Birkinshaw, who was convicted of importing methamphetamine. Ms Birkinshaw has filed an interlocutory application opposing the forfeiture application on the basis of issue estoppel.
THE COMMISSIONER OF POLICE v BIRKINSHAW [2019] NZHC 314 [1 March 2019]
[2] The essence of Ms Birkinshaw’s claim is that, when sentencing her, I recorded that the Commissioner was seeking forfeiture in the sum of $165,000 and that she did not oppose paying that sum by way of forfeiture. She received credit for her concession when I sentenced her. The Commissioner now claims $362,459.25. Ms Birkinshaw says the Commissioner should be estopped from claiming anything other than $165,000. She pleads the doctrine of res judicata.
Background
[3] On 21 May 2014, Police executed a search warrant at Ms Birkinshaw’s Worchester Street address in Palmerston North. Police found several items of stolen property, nearly 40 grams of methamphetamine, utensils for smoking methamphetamine and approximately $85,600 in cash.
[4] On 23 September 2016, I sentenced Ms Birkinshaw to five years and four months’ imprisonment for importing 200 grams of methamphetamine and associated charges.1 At the time, the Commissioner and Ms Birkinshaw had reached an arrangement regarding the appropriate forfeiture. The sentencing notes record that:2
The Crown seeks forfeiture of $165,000. This is not opposed and you are now entitled to recognition for that forfeiture and that will be reflected in a further reduction of six months’ imprisonment.
[5] According to affidavits filed for this interlocutory application by Ms Birkinshaw and Mr Murray, from the Central Assets Recovery Unit, the $165,000 figure was agreed to as a settlement after a discussion between the lawyers on the day of sentencing.
[6] No agreement was ever signed. Between September 2016 and December 2016, the parties attempted to formalise the settlement by way of a memorandum to be filed with the Court for approval. These attempts faltered because of an unrelated dispute between Ms Birkinshaw and the Official Assignee. While Ms Birkinshaw was in prison, the Official Assignee evicted her children from the Worchester Street address due to the presence of trace amounts of methamphetamine. Ms Birkinshaw
1 R v Birkinshaw [2016] NZHC 2257.
2 At [39].
remediated her property at considerable expense and is now pursuing a claim for damages against the Official Assignee.
[7] The parties kept the Court updated as to the (lack of) progress with the settlement. On 1 February 2017, a joint memorandum was filed requesting an extension of the restraining order that had been in place while the settlement was being finalised. A further extension was sought and granted on 10 July 2017.
[8] On 27 November 2017, Mr Fraser, counsel for Ms Birkinshaw, indicated to Mr Harvey, counsel for the Commissioner, that Ms Birkinshaw intended to renegotiate the settlement due to “damage to the house”. On 27 March 2018, Mr Fraser confirmed instructions to negotiate a reduced sum to account for the remedial work required on the house as a result of the trace amounts of methamphetamine.
[9] On 14 September 2018, the Commissioner filed for forfeiture of the Worchester Street property and $86,584.80 in cash, with a total value of $362,459.25.
Analysis
[10] Section 95 of the Criminal (Proceeds) Recovery Act 2009 (the Act) is central to the determination of this application. It provides:
95High Court must approve settlement between Commissioner and other party
(1)The Commissioner may enter into a settlement with any person as to the property or any sum of money to be forfeited to the Crown.
(2)A settlement does not bind the parties unless the High Court approves it.
(3)The High Court must approve the settlement if it is satisfied that it is consistent with—
(a)the purposes of this Act; and
(b)the overall interests of justice.
[11] The issue is whether the relevant portions of my sentencing notes constituted approval of the settlement. Mr Fraser submits that the incorporation of the forfeiture agreement into the sentence formed a substantive approval for the purposes of s 95 of
the Act. Mr Harvey submits that the settlement agreement had yet to be formally approved by the Court and that there is such no doctrine as “substantive approval”.
[12] Mr Harvey also addresses the question of whether the settlement agreement could be enforced by an equitable estoppel. He says it could not because Ms Birkinshaw does not come to Court with clean hands, given her attempts to renegotiate the settlement. This ground is not pleaded by Ms Birkinshaw, and Mr Fraser does not rely on it. It is also unnecessary to address the point, as if the agreement was not approved under s 95 it is irrelevant whether it was otherwise enforceable.
[13] In my view, the settlement in this case has not been approved by the Court. At sentencing, I merely said that the Crown sought forfeiture and that it was not opposed. There was no explicit approval of the settlement. It is clear that this was done merely for the purpose of taking the matter into account for sentencing purposes. Section 10B of the Sentencing Act 2002 provides that the sentencing Court must take into account any forfeiture order “made, or to be made”. It is clear, both from the text of my sentencing notes and the context of the settlement discussions that took place on 23 September 2014, that I was taking into account the forfeiture order that was to be made at some future date. This is further supported by the way the parties treated the matter in the following months. For instance, the joint memorandum filed on 1 February 2017 included the following statement:
There have been settlement discussions between the parties. Further time is required to continue with those discussions. If resolution is reached, the parties will seek the approval of the High Court pursuant to section 95 of the Criminal Proceeds (Recovery) Act 2009. It is agreed that the restraining order should remain in place.
[14] It would be contrary to both the scheme of s 95, and the accepted practice of filing a joint memorandum for approval by the Court, to accept that my sentencing notes constituted an approval of the settlement in this case. Section 95(3) sets out two criteria for the Court to be satisfied of before giving approval to a settlement. Those criteria are usually addressed in the joint memorandum, and a separate judgment is
usually issued to make the necessary orders.3 This is in line with the fact that the Court’s supervisory jurisdiction under s 95 is “not a rubber stamping exercise”.4
[15] In that context, it would be highly irregular to treat the reference to a forfeiture settlement in a sentencing context as an approval under s 95. Mr Fraser contends that the incorporation of the forfeiture settlement into the sentencing of Ms Birkinshaw prevents the Commissioner from resiling from it. However, that misunderstands that sentencing and asset forfeiture are distinct processes. As explained above, the relevant aspect of sentencing is governed by s 10B of the Sentencing Act, not s 95 of the Act. It is entirely legitimate for the Court to take into account an amount of forfeiture that has not yet been ordered. A natural consequence of this is that there may be occasions, such as the present case, where the forfeiture order is not made in the same terms as was intended at the time of sentencing.
[16] Such a change in circumstances may well be a relevant consideration when considering whether to grant an application for forfeiture, however, it does not advance the argument for res judicata. Relevantly, Mr Fraser submits that Ms Birkinshaw has expended a considerable amount on remediating her house in reliance on the fact it was not part of the forfeiture settlement. He submits it would be unfair for the Commissioner to alter that position now. This may be a relevant matter for consideration at the substantive hearing of the forfeiture application.
[17]As the settlement was never approved by the Court, there is no res judicata.
Result
[18] The interlocutory application for an order declaring the Commissioner is estopped from seeking $362,459.25 is dismissed.
3 See Simon France (ed) Adams on Criminal Law – Sentencing (online ed, Thomson Reuters) at [CP95.04].
4 Commissioner of Police v Know-All Group Ltd HC Auckland CIV-2010-404-403, 7 November 2011 at [11].
Restraining order
[19] The Commissioner has sought an extension of the restraining order until 3 February 2020. That application is not opposed. The restraining order is therefore extended to 3 February 2020.
Timetable
[20] The substantive proceeding now needs to be diligently progressed. There will be a case management conference on 29 April 2019, by which date the Court expects counsel to be in a position to agree to a timetable to advance this matter to a substantive hearing.
D B Collins J
Solicitors:
Ben Vanderkolk & Associates, Palmerston North for Applicant Meredith Connell, Auckland for Official Assignee
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