Commissioner of Police v Douglas

[2015] NZHC 1293

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-4694 [2015] NZHC 1293

IN THE MATTER

of an application under the Criminal

Proceeds (Recovery) Act 2009

BETWEEN

THE COMMISSIONER OF POLICE Applicant

AND

WAYNE LESLIE DOUGLAS First Respondent

NEAL MEDHURST NICHOLLS Second Respondent

OWEN FRANCIS TALLENTIRE Third Respondent

Hearing:

On the Papers

Appearances:

D Johnstone and R McCougrey for Applicant
R M Mansfield for Mr Nicholls, Mrs Nicholls and trustee of the
Dime and Boston Trusts

T Simmonds for Paul Capital Ltd and Mr Goodwin as trustee of the Paua Capital Trust

Judgment:

9 June 2015

JUDGMENT OF WHATA J

This judgment was delivered by Justice Whata on

9 June 2015 at 4.00 p.m., pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Date:

Solicitors:

Meredith Connell, Auckland

Copy to:
R M Mansfield, Auckland

T Simmonds, Auckland

THE COMMISSIONER OF POLICE v DOUGLAS [2015] NZHC 1293 [9 June 2015]

[1]      The Commissioner of Police, Mr Nicholls and various interested parties have reached agreement in relation to certain restraining orders that might be made under the Criminal Proceeds (Recovery) Act 2009.  They now seek this Court’s approval of the agreement reached and any consequential restraining and other orders.

Background

[2]      Helpfully the joint memorandum of counsel sets out the relevant background namely:

2.1Capital  +  Merchant  Finance  Limited  (CMF)  traded  as  a  finance company offering property and investment loans, and accepting deposits from the public.

2.2On 23 November 2007, CMF was placed into receivership owing approximately  7,000  secured  debenture  holder  Investors  around

$167 million.

2.3At relevant times, Mr Nicholls was one of CMF’s directors, along with Wayne Leslie Douglas (Mr Douglas) and Owen Francis Tallentire (Mr Tallentire).

2.4By March 2010, the Serious Fraud Office (SFO) had commenced to investigate a suspected fraud committed by the directors of CMF.

2.5On 19 July 2012, following a trial before Wylie J, sitting in the High Court at Auckland as a Judge alone, each of the directors was found guilty  of  various  charges  of  theft  as  a  person  in  a  special relationship.

2.6On   31  August   2012,   Wylie   J   sentenced   them   to   terms   of imprisonment.   As is set out in   Wylie J’s sentencing remarks (annexure A to the affidavit of Stephen Peat dated 31 October 2013), Mr  Nicholls  (along  with  Mr  Douglas)  was  convicted  of  three charges, relating to transactions respectively known as Numeria 1, Clyde 1 and Clyde 2.  Mr Tallentire was convicted of two charges, relating to the Clyde 1 and Clyde 2 transactions.

2.7The amounts obtained as a consequence of the Numeria 1, Clyde 1 and Clyde 2 transations, and the dates on which those amounts were obtained are as follows:

(a)      Numeria  1  -  $6  million  on  31  November  2004  and

$1,660,000 on 24 December 2004;

(b)      Clyde 1 - $7.7 million on 3 November 2006; and

(c)      Clyde 2 - $4.4 million on 3 November 2006.

2.8On 20 December 2012, the Court of Appeal dismissed appeals by all three respondents against conviction and sentence.   On 19 April

2013, the Supreme Court dismissed an application by Mr Douglas and Mr Nicholls for leave to appeal.

[3]      An investigation by Detective Stephen Peat of the New Zealand Police Asset Recovery Unit disclosed that Mr Nicholls had contingent interests in various properties. The parties have agreed upon settlement in relation to those properties on the following terms:

(a)       Mr Nicholls and/or the interested parties will, within one month of the date of settlement (19 May 2015), arrange for Bank of New Zealand to release rather than enforce its security in respect of the Paua Capital Term Deposit.   For this purpose, the Commissioner consents to an alternate security to the value of the current security over the Paua Capital Term Deposit ($225,000) being placed upon

590 Great South Road and/or 720 Remuera Road.

(b)      The current restraining orders should be varied to:

(i)        Permit registration of an alternate security in favour of Bank of New Zealand upon 590 Great South Road and/or 720

Remuera Road, in accordance with paragraph 4.1(a) above;

and

(ii)       Direct that neither the Official Assignee nor any other party should take steps to advertise the fact of restraint of 590

Great South Road and/or 720 Remuera Road, or to register

the restraint against the certificate of title of those properties, pending   expiry   of   the   12-month   period   specified   at paragraph 4.1(d)(ii) below.

(c)       The Court should be invited to approve the settlement.

(d)       If the settlement is approved, then upon release of the Bank of New Zealand’s security in accordance with paragraph 4.1(a) above, the Commissioner will apply to amend the application to seek the following orders with the other parties’ consent:

(i)        Asset forfeiture orders in respect of the Paua Capital Term Deposit totalling $1,000,000 (plus interest to the date of the orders), and the Paua Capital Carter Atmore Funds (plus interest to the date of the orders);

(ii)       A profit forfeiture order stating a benefit amount of the value of the forfeited Paua Capital property plus an agreed sum of

$800,000  to  be  paid  within  12  months  from the  date  of

settlement (19 May 2015).   The agreed sum of $800,000 shall be derived from the sale of 590 Great South Road and/or 720 Remuera Road.

(iii)      The   maximum   recoverable   amount   under   the   profit forfeiture order shall be only the Paua Capital property plus an agreed sum of $800,000 if it is not paid within 12 months from the date of settlement (19 May 2015) as required in (ii) above.  If this condition applies, the property to be disposed of in accordance with s 83(1) of the Act to meet this agreed sum is 590 Great South Road and/or 720 Remuera Road.

(iv)     Directions to give effect to the orders at paragraph 4.1(d)(ii)

and (iii) above, as far as they apply, are as follows:

(A) 590 Great South Road and/or 720 Remuera Road are to remain under restraint on the previous terms, except as released under

4.1(d)(iv)(E) and except that either property may be disposed of

as follows below;

(B) The legal owners may sell either or both properties on terms pre-approved by the Official Assignee, such approval not to be unreasonably withheld, and on condition that the agreed sum of

$800,000 shall be paid from the net sale proceeds to the Official Assignee for disposal in accordance with the above profit forfeiture order; and

(C) In  the event the agreed sum of $800,000 is not paid to the Official Assignee within 12 months of the date of the date of settlement (19 May 2015), the Official Assignee may enforce the profit forfeiture order by sale of either 590 Great South Road and/or 720 Remuera Road;

(D) For the purposes of effecting a sale of 590 Great South Road and/or  720  Remuera  Road  in  accordance  with  paragraph

4.1(d)(iii)(C) above, Guy Francis Sayers of Napier, Official Assignee,  shall  have  the  power  to  execute  any  deed  or instrument  in  the  name  of  Josephine  Bremner  Nicholls  and

Jeremy James Mallaby Goodwin, and to do anything necessary to give validity and operation to the deed or instrument.

(E) For  the  purposes  of  4.1(d)(iv)(B)  above,  the  owners  of  720

Remuera  Road  may apply to  the ASB Bank to  increase the amount of the existing loan facility from $360,000 to $450,000

and the facility is released from restraint and therefore available for the use of the owners.

(e)       The settlement is conditional on the above orders not being opposed by any party, including the Bank of New Zealand.

Assessment

[4]      The  threshold  for  approval  is  set  out  at  s 95  of  the  Criminal  Proceeds

(Recovery) Act 2009, namely:

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.

[5]      The parties jointly submit settlement is consistent with the purposes of the

Act in the overall interests of justice, and in particular, they say that:

(a)       There   will   be   a   saving   of   time   and   especially   cost   if   the

Commissioner’s application can be dealt with by consent.

(b)The Commissioner considers he has a strong case, but acknowledges a contested hearing carries some level of risk.  In particular, the extent of the established offending by Mr Nicholls and/or any financial gain derived by him, the current financial position of Mr Nicholls as an undischarged bankrupt and the competing interests of the interested parties, all of which need to be acknowledged.

(c)      The respondent and the interested parties while considering that they believe  they  have  respective  strong  cases,  acknowledge  that  a contested hearing carries some level of risk for them also.

(d)The parties wish to resolve the matter in a way that provides them with control and certainty as to outcome.

[6]      I agree.  The agreement represents a common sense compromise that serves the purposes of the Act and the overall interests of justice.

[7]      There shall be an order approving the settlement accordingly, together with the following consequential orders as sought:

(a)       Immediate variation of the current restraining orders to:

(i)Permit registration of an alternate security in favour of Bank of New Zealand upon 590 Great South Road and/or 720 Remuera Road, in accordance with paragraph 3(a) above.

(ii)Direct that neither the Official Assignee nor any other party should take steps to advertise the fact of restraint of 590 Great South Road and/or 720 Remuera Road, or to register the restraint against the Certificate of Title to those properties, pending further order of the Court.

(b)An order for non-publication of the details of the properties referred to above,  and  the mechanism  by which  the forfeiture order is  to  be satisfied, until such time as it is satisfied or 19 May 2016 whichever happens first.   For avoidance of doubt, however, the fact of the forfeiture order and its approximate amount ($1.8 million) is not the subject of any orders for non-publication.

(c)      Upon the release of the Bank of New Zealand security in accordance with paragraph 3(a) above, the Commissioner will apply to amend the application to seek consent orders in the terms outlined above.

(d)A further joint memorandum confirming the position is to be filed on or before 28 June 2015.