Commissioner of Police v Cho

[2018] NZHC 2748

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2011-404-7212 [2018] NZHC 2748

UNDER	the Criminal Proceeds (Recovery) Act 2009
BETWEEN	COMMISSIONER OF POLICE Applicant
AND	ALLEN BRYAN CHO Respondent

Hearing:	On the papers
Counsel:	MR Harborow and LJ Fraser for applicant PF Wicks QC for respondent
Judgment:	24 October 2018

JUDGMENT OF FITZGERALD J [Approval of settlement]

This judgment was delivered by me on 24 October 2018 at 11 am], pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:           Meredith Connell, Auckland

To:  P Wicks QC, Auckland

Commissioner of Police v Cho [2018] NZHC 2748 [24 October 2018]

[1]      The parties apply by joint memorandum for Court approval of a settlement pursuant to s 95 of the Criminal Proceeds (Recovery) Act 2009 (the Act).

Background

[2]      Mr Harborow and Mr Wicks QC, counsel for the applicant and respondent respectively, explain in their joint memorandum that in 2010, Police began an investigation which targeted the large-scale importation and distribution of controlled drug analogues (class C controlled drugs) in the forms of pills, code named “Operation Ark”.  The investigation established that the respondent, Mr Cho, was a large-scale dealer and distributor of these pills.

[3]      Mr Cho pleaded guilty to and was convicted of 14 offences of selling class C controlled drugs, 17 offences of possessing a class C controlled drug for sale and three offences of offering to sell a class C controlled drug.   He was sentenced to home detention for 10 months on 28 March 2018.1

[4]      In parallel with the criminal proceedings, restraining orders were granted over property related to Mr Cho’s offending which he either owned or over which he was deemed to have effective control.  Most recently, on-notice restraining orders were made over that property, on 21 February 2018.

[5]      The parties’ joint memorandum sets out in detail the particular assets that are presently restrained.  These extend to various motor vehicles (or the proceeds from sale of them); the contents of certain bank accounts; approximately $660,000 in cash; and a property located in the State of New Jersey, United States of America (the “US Property”).

[6]      The  total  value  of  the  restrained  property  is  estimated  at  approximately

$1.158 million.

1      R v Cho [2018] NZHC 561.

The proposed settlement

[7]      The parties have now reached a settlement, subject to the Court’s approval under s 95 of the Act. The proposed settlement is as follows:

(a)assets forfeiture orders are to be sought by consent under s 50 of the Act over all of the restrained property but with the exceptions as outlined below;

(b)Mr Cho is to pay the Official Assignee USD 235,950 and that sum will be forfeited to the Crown.  The US Property is to be released from the restraining orders to facilitate the borrowing of this sum against the property by Mr Cho's parents;

(c)the proceeds of sale of the 1992 silver Nissan Skyline registration MAXSPD will be released from the restraining orders and paid to an account nominated by Mr Cho;

(d)the 2001 silver BMW 540i registration GAG488 will be released from the restraining orders;

(e)the Commissioner will not pursue an application for profit forfeiture orders against Mr Cho; and

(f)       costs are to lie where they fall.

[8]      The monetary value of the settlement will involve approximately $1,130,000 being forfeit to the Crown.  The approximate quantum to be returned to Mr Cho is

$30,000.

Legal principles

[9]      The legal principles are not in dispute and have been addressed on a number of occasions in recent High Court decisions. I can do no better than respectfully adopt the recent summary by Muir J in Commissioner of Police v Wellington:2

[10]      Section 95 of the Act governs settlements and provides:

95       High 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]      In enacting s 95, Parliament expressly empowered the Commissioner to enter into settlements with respondents (and interested parties) relating to the  forfeiture  of  assets.    I  accept  the  proposition  in  the  parties’ joint memorandum that Parliament is likely to have had in mind the significant costs associated with a civil litigation and the benefits to all parties if such proceedings could be resolved in a timely and just way.  There is a strong public interest in litigation of this nature being brought to a prompt conclusion provided the settlement reflects the likely costs and risks inherent in the underlying litigation.  Parliament has entrusted the Court with supervisory jurisdiction aimed at ensuring any settlements reached are consistent with its intent in enacting the legislation and with the overall interests of justice.3

[12]      Section 95(3) directs the Court to consideration of the purposes of the

Act and the overall interests of justice.

[13]      The primary purpose of the Act is contained in s 3(1).  That is the establishment of a regime for forfeiture of property that has been derived directly or indirectly from significant criminal activity or that represents the value of a person’s unlawfully derived income.  Ancillary purposes are to “eliminate  the  chance” for  persons  to  profit  from  undertaking or  being

2      Commissioner of Police v Wellington [2018] NZHC 2502 (footnotes in original).

3      Commissioner of Police v Know-All Group Ltd HC Auckland CIV-2010-404-403, 7 November

2011, per Brewer J at [11].

associated  with  significant  criminal  activity  (s  3(2)(a))  and  to  “deter”

significant criminal activity (s 3(2)(b)).

[14]      The overall interests of justice requirement predicates a broad inquiry. As this Court has previously said, although it is proper that it should have a supervisory jurisdiction, it is “equally important that the Court carry out a broad inquiry and acknowledge, where appropriate, that settlements can be in the interests of justice, bearing in mind the savings of time and cost and the litigation risks to the parties”.4

[15]      The Court has recognised that 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.5

[16]      If the Court is satisfied in respect of the two matters identified in s 95(3) then it must approve the settlement.

Analysis

[10]     Having reviewed the papers and considered the matters raised in counsels’ joint memoranda dated 5 and 16 October 2018, I am satisfied that it is appropriate to approve the proposed settlement.

[11]     A compelling factor in my view, is that the vast majority of the restrained assets are to be forfeit under the proposed settlement.  The relatively modest amount of the restrained assets which will not be subject to the settlement in my view properly reflects that pursuing a forfeiture order through a substantive hearing to conclusion will inevitably involve not insignificant time (including the allocation of scarce Court resources away from other litigants) and cost.  In my view, these factors are well- balanced by a very modest proportion of the overall assets being excluded from forfeiture.

[12]     I also acknowledge the Commissioner’s acceptance that part of the purchase price of the US Property was paid by Mr Cho’s father and that sum was acquired legitimately.   The Commissioner is accordingly content to settle on the basis that

Mr Cho’s contribution to the US Property only is forfeit, which in my view represents a fair and reasonable outcome. The Commissioner is not aware of any other significant

assets which could be applied towards a profit forfeiture order against Mr Cho.

4      Commissioner of Police v Zhang [2016] NZHC 930 at [8].

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

[2014] NZHC 361.

[13]     I am also mindful that both parties are represented by experienced and senior counsel who will no doubt have fully considered the benefits and disadvantages of settlement versus proceeding to a full hearing, and the residual risks involved.

[14]     I am accordingly fully satisfied that the proposed settlement is consistent with the purposes of the Act as well as being in the overall interests of justice.

Result

[15]     I accordingly approve the settlement.

[16]     In order to give effect to the settlement, and by consent, I make orders in accordance with paragraph 3.2 of the parties’ joint memorandum dated 16 October

2018.

Fitzgerald J