Commissioner of Police v Catley

[2016] NZHC 945

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2015-404-002310 [2016] NZHC 945

UNDER

The Criminal Proceeds (Recovery) Act

2009

BETWEEN

COMMISSIONER OF POLICE Applicant

AND

DARYN BRUCE CATLEY First Respondent

AND

SIMONE PHYLLIPPA MAREE ROSS Second Respondent

AND

STEPHEN JAMES HARLAND Third Respondent

Hearing:	(On the papers)
Counsel:	Mark Harborow and Hannah Clark for the Applicant Annabel Ives for the Second Respondent
Judgment:	11 May 2016

JUDGMENT OF MOORE J

This judgment was delivered by me on 11 May 2016 at 3:00 pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/ Deputy Registrar

Date:

COMMISSIONER OF POLICE v CATLEY & ORS [2016] NZHC 945 [11 May 2016]

Introduction

[1]      I have received a joint memorandum filed by counsel for the Commissioner of Police (“the Commissioner”) and counsel for the second respondent, Simone Ross (“Ms Ross”).

[2]      A half day hearing is set down for 12 May 2016 in relation to only one of the items of property restrained, a silver 2003 Mercedes Benz E55, registration number GRZ50 (“the Mercedes”) registered to Ms Ross.  Ms Ross previously opposed the restraint and sale orders made by the Commissioner.   However, a settlement agreement has been reached.

[3]      Any settlement made in relation to proceedings brought under the provisions of the Criminal Proceeds (Recovery) Act 2009 (“the Act”) is required to be approved by this Court.1

[4]      I approve the settlement for the reasons discussed below.

Background

[5]      The background is that on 15 September 2015 the Police executed search warrants  in Auckland,  Blenheim  and  Christchurch  as  a  result  of  suspicions  the respondents   were   trafficking   large   quantities   of   methamphetamine   between Auckland and Christchurch.  The third respondent, Stephen Harland, was arrested. He was found to be in possession of one kilogram of methamphetamine.

[6]      The first respondent, Daryn Catley (“Mr Catley”) and Ms Ross are in a relationship.   The Police executed search warrants at Mr Catley’s home addresses situated in Christchurch and Greenlane, Auckland.  At the Greenlane address both Mr Catley and  Ms  Ross were present  when  the Police located $6,790  in  cash, approximately one ounce of a white crystalline substance, glass pipes and a set of electronic scales.  In the couple’s bedroom the Police located $152,100 in cash, 14.7

grams of a white crystalline substance and glass pipes.

1      Criminal Proceeds (Recovery) Act 2009, s 95.

[7]      Mr Catley and Ms Ross have declared little or no income to the Inland Revenue Department for the most recent tax year.   Despite the modesty of their apparent means they have accumulated a number of motor vehicles over the last 12 months.  Seven vehicles, as well as the cash located by the Police, were made subject to restraining orders on 5 November 2015.

[8]      The Mercedes is registered to Ms Ross.    It was found at the Greenlane address when the search warrants were executed.

Ms Ross’ affidavit

[9]      On 10  December  2015  Ms  Ross  affirmed  an  affidavit  in  support  of  her opposition to the Commissioner’s application for restraining effective control and sale orders in relation to the Mercedes.

[10]     Ms Ross has no previous convictions.  She said she met Mr Catley early in

2015 when she bought the Mercedes from him.  This was the first time she had met him.  She said she paid about $14,000 for the car which needed a large amount of mechanical work undertaken on it.   After buying the car, Ms Ross commenced a relationship with Mr Catley.  Thus her position is that the car was purchased before or simultaneously with the start of her relationship with Mr Catley and the money used to purchase it was not derived from the proceeds of significant criminal activity.

[11]     On the question of her lack of declared income, Ms Ross stated she resided in Australia between 2011 and 2014.  She provided a copy of her Australian earnings. She stated she brought cash to New Zealand when she returned from Australia; that a friend in Australia sold her car on her behalf for approximately AUD$5,000.   She said she used the combination of these funds to buy the Mercedes from Mr Catley.

Proposed settlement

[12]     The  Commissioner  and  Ms  Ross  have  agreed  to  settle  the  question  of forfeiture of assets in relation to Ms Ross’ interest in the Mercedes subject to the Court’s approval under s 95 of the Act.   In essence, the settlement reflects the following agreement between the parties:

(a)       the Mercedes should be sold by the Official Assignee at a fair market value;

(b)after paying all reasonable costs associated with its sale, half of the remaining balance should be forfeited to the Crown;

(c)       the remaining balance should be returned to Ms Ross; and

(d)      costs should lie where they fall.

[13]     The Commissioner has agreed not to pursue a profit forfeiture order against Ms Ross.  Ms Ross agrees she has no further interest in any of the property presently restrained in this proceeding.

[14]     Given the damage to the vehicle it is difficult to predict with any level of precision what the likely sale proceeds will be.

Legal principles: threshold for settlement approval

[15]     Section 95 of the Act governs Court-approved settlements and provides as follows:

“(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.”

[16]     In enacting s 95 Parliament expressly empowered the Commissioner to enter into settlement discussions with respondents and interested parties regarding the forfeiture of assets.   In doing so, Parliament is likely to have had in mind the significant costs associated with civil litigation and the benefits to all parties if proceedings can be settled and resolved by consent.

[17]     As has been previously observed, Parliament has entrusted the High Court with a supervisory jurisdiction to ensure that settlements are consistent with the parliamentary intention.2

[18]     The primary purpose of the Act is contained in s 3(1); the establishment of a regime for forfeiture of property which has been derived directly or indirectly from significant criminal activity, or that represents the value of a person’s unlawfully derived income.   Ancillary statutory purposes are to “eliminate the chance” for persons to profit from undertaking or being associated with significant criminal activity (s 3(2)(a)) and to “deter” significant criminal activity (s 3(2)(b)).  The Court of Appeal in Hayward v Commissioner of Police recently confirmed the Act has a

“strongly expressed statutory purpose”.3

[19]     The  statutory  language,  “overall  interests  of  justice”,  indicates  a  broad enquiry is required.  In considering whether a settlement is in the interests of justice, relevant factors will include the savings of time and cost, and the litigation risk of a hearing to both the Commissioner and the respondents.4    The Court has recognised the decision to settle proceedings under the Act may be made on economic and pragmatic grounds and reflect a “common sense compromise” between the parties.5

[20]     If the Court is satisfied of the two matters set out in s 95(3) the settlement reached between the parties must be approved.

This case:  threshold for settlement approval met

[21]     Here the parties submit the settlement is consistent with the purposes of the

Act and in the overall interests of justice.  I agree for the following reasons:

(a)       There will be significant savings of time and cost if these proceedings can be resolved by consent without the need for the hearing presently

set down for 12 May 2016.

2      Commissioner of Police v Know-All Group Limited & Anor HC Auckland CIV-2010-404-403,

7 November 2011 per Brewer J at [11].

3      Hayward v Commissioner of Police [2014] NZCA 625 at [29].

4      Commissioner of Police v Kree [2013] NZHC 2972 at [11].

5      Commissioner of Police v Douglas [2015] NZHC 1293 at [6]; Commissioner of Police v Venn

[2014] NZHC 631.

(b)      The vehicle is damaged and not of any particular value.

(c)      The cost of preparation for and attendance at the hearing is likely to be greater than the balance finally available to the Crown once the vehicle is sold.  The parties note the 12 May 2016 hearing relates only to the restraint of the vehicle (rather than its forfeiture), with the consequence that future hearings are likely, if not inevitable, unless the matter settles.

(d)Ms Ross’ position is that she met Mr Catley through the purchase of the vehicle.   Nothing in the Commissioner’s investigations to date discredits or contradicts this explanation.   Any involvement which Ms Ross   had   in   the   significant   criminal   activity   which   the Commissioner relies on occurred after the date on which she met Mr Catley and after she had purchased the vehicle.  The Crown’s case is that Ms Ross played a secondary role to Mr Catley’s drug dealing.

(e)      The settlement may be seen as representing a pragmatic compromise by the Commissioner so as to facilitate the settlement of this litigation which, ultimately, involves only one vehicle of insignificant value.

(f)      Ms Ross agrees the only interest she has in this proceeding is in the Mercedes and that she will not take any further steps in relation to any other property restrained.

(g)The absence of a profit forfeiture order against Ms Ross may relieve her of a residual future debt to the Crown and will allow her to move on from these proceedings.  The settlement will bring her a degree of finality.

(h)The parties wish to have control and certainty as to the outcome of these proceedings.

[22]     Accordingly, I am satisfied the proposed settlement is consistent with the purposes of the Act and is in the overall interests of justice.  In these circumstances the Court is mandated to approve the settlement.

Orders

[23]     Accordingly I make the following orders so as to give effect to the settlement reached:

Sale orders under s 34 of the Act

(a)      The  Official  Assignee  is  to  sell  the  2003  Mercedes  Benz  E55, registration number GRZ50 at a fair market value.

Orders varying restraining orders under s 34 of the Act

(b)The Official Assignee is to pay Ms Ross, after all reasonable costs associated with the sale are paid, half of the balance of the sale proceeds of the Mercedes.

Assets forfeiture orders under s 50(1) of the Act

(c)      The following property vests in the Crown absolutely and is to be under the custody and control of the Official Assignee:

(i)after payment of all reasonable costs associated with its sale, half of the sale proceeds of the Mercedes.

Costs to lie where they fall

(d)      Costs are to lie where they fall as between the Commissioner and

Ms Ross.

[24]     The  Commissioner  agrees  not  to  pursue  a  profit  forfeiture  order  against

Ms Ross.

[25]     Ms Ross agrees that her interest in the Mercedes is her only interest in any of the property presently restrained in these proceedings.  She agrees not to take any further steps in relation to any of the property presently restrained.

[26]     Given that these orders now obviate the necessity for a hearing I vacate the fixture scheduled for 12 May 2016.

Moore J

Solicitors:

Meredith Connell, Auckland

Ms Ives, Auckland