Commissioner of Police v Huang
[2024] NZHC 111
•8 February 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2021-404-002300
[2024] NZHC 111
UNDER The Criminal Proceeds (Recovery) Act 2009 BETWEEN
COMMISSIONER OF POLICE
Applicant
AND
YONGHAO HUANG
Respondent
Hearing: (On the papers) Counsel:
Alex Mackenzie and Fiona Wu for the Applicant Paul Dacre KC for the Respondent
Judgment:
8 February 2024
JUDGMENT OF MOORE J
This judgment was delivered by me on 8 February 2024 at 3:00 pm pursuant to Rule 11.5 of the High Court Rules.
Registrar / Deputy Registrar Date:
COMMISSIONER OF POLICE v HUANG [2024] NZHC 111 [8 February 2024]
Introduction
[1]These proceedings were set down for a one day fixture on 24 October 2023.
[2] However, in advance of the hearing, counsel advised that they had undertaken settlement discussions and reached a proposed settlement.
[3] Section 95 of the Criminal Proceeds (Recovery) Act 2009 (“the Act”) requires any such settlement to be approved by the Court.
[4] Counsel have since filed a joint memorandum in support of the proposed settlement dated 5 December 2023 (“the Joint Memorandum”). I approve the settlement for the reasons more fully described below.
The background
[5] The proceedings arose following a series of Police investigations in 2019 into the drug offending and money laundering activities of the Comanchero Motorcycle Club (“the Comancheros”).
[6] At the time of the investigation, the respondent, Mr Huang, was the sole director and shareholder of the luxury vehicle dealership, New Zealand Baili Enterprises (“NZBE”).
[7] The applicant, the Commissioner of Police (“the Commissioner”) claims that between 1 September 2019 and 31 April 2020, Mr Huang received cash payments from Nathan Nauer, an associate of the Comancheros, knowing or being reckless as to whether the cash was sourced from crime. In return for the cash, Mr Huang sold Mr Nauer a number of luxury vehicles at inflated prices. The cash was in part payment for these vehicles.
[8] The Commissioner claimed that Mr Huang’s acceptance of these amounts constituted an unlawful benefit to him from receiving and money laundering.
Alternatively, the Commissioner’s case was that certain property owned by Mr Huang that are subject to restraining orders, was tainted property.
[9] The investigation established that on five occasions between December 2019 and 22 February 2020, Mr Huang sold luxury vehicles to Mr Nauer and accepted substantial part payments for those vehicles in cash, often at unusual locations such as the Gillies Avenue Badminton Court carpark.
[10] Another incident on 9 December 2019 involved Mr Huang receiving $100,000 cash from Mr Nauer and, on Mr Nauer’s instructions, paying it into a solicitor’s trust account on Mr Nauer’s behalf. The purpose of the arrangement was to obfuscate the true source of the cash.
[11] The money laundered by Mr Huang was the proceeds of the Comancheros dealing in class A controlled drugs.
[12] Mr Huang and Mr Nauer were jointly charged with six counts of money laundering. The charges reflected the six transactions described above. They both pleaded guilty to all charges on 9 May 2022.
[13] For the purposes of the Commissioner’s proceeding, Mr Huang’s convictions for money laundering are conclusive proof that he committed the offence.
[14] On 24 May 2023, Mr Huang was sentenced to two years and eight months’ imprisonment which was reduced to nine months’ home detention on appeal.
[15]The summary of facts to which he pleaded guilty recorded that he:
(a)received actual cash proceeds of $420,000 from Mr Nauer over the course of the six transactions described above;
(b)was aware as a car dealer of the statutory obligations under the Anti- Money Laundering and Countering Financing of Terrorism Act 2009 to
report any cash payments of $10,000 or more to Police and he accepted he failed to do so;
(c)agreed to keep the vehicles under NZBE’s name at Mr Nauer’s request, despite harbouring suspicions about this request. However, Mr Huang did not wish the vehicles to be in his custody should they be impounded by the Police. As such, Mr Huang drafted misleading, post-dated lease agreements and did not document the actual sales that occurred; and
(d)frequently discussed crime and gang related activity with Mr Nauer, to which Mr Nauer intimated he had some link or inside knowledge. Ultimately, he decided to accept the cash because his business was performing poorly.
The proposed settlement
[16] The Commissioner, Mr Huang and a Ms Zhai, who the Commissioner acknowledges is entitled to relief under s 66 of the Act, have reached agreement on the forfeiture of assets between them, subject to the Court’s approval under s 95 of the Act.
[17]The proposed settlement is on the following terms:
(a)asset forfeiture orders under s 50 of the Act may be made by consent over the following property:
(i)the Edwards Lane Half-Share; and
(ii)the proceeds of sale of the 2020 Ducati Panigale V4 Super Bike, registration C5AUP registered to Mr Huang;
(b)Mr Huang is to pay to the Official Assignee a sum of $200,000 (“the Settlement Sum”) within 12 months of the date of approval of the settlement by the Court;
(c)the restraining order over 56 Barbarich Drive is to be varied to permit further borrowing against it from a legitimate lender to the satisfaction of the Commissioner, for the exclusive purpose of enabling Mr Huang to raise the Settlement Sum;
(d)upon the Official Assignee providing written confirmation that the Settlement Sum has been paid in full, the restraining order over 56 Barbarich Drive is lifted and is to be removed from the record of the title of the property (in the event the Settlement Sum is not paid within time, the Official Assignee will sell 56 Barbarich Drive to obtain the Settlement Sum);
(e)Mr Huang and Ms Zhai are to abandon all claims they may have under the Act or otherwise to any property to be forfeited;
(f)the settlement is in full and final settlement of the current proceeding brought by the Commissioner against Mr Huang under the Act; and
(g)costs are to lie where they fall.
[18] The approximate value of the property being forfeited is $421,400. The approximate value of the property currently subject to restraining orders, but which will not be forfeited, is approximately $549,940.
[19] However, the $549,940 encompasses the entire equity in 56 Barbarich Drive. After adjusting for Ms Zhai’s expected quantum relief under s 66 of the Act (which the Commissioner did not oppose), the approximate value of the property subject to restraining orders is that attributed to Mr Huang and available to be forfeited, but which will not be, is approximately $174,940.
The law
Section 95 of the Act provides as follows:
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.
[21] Section 95 had no predecessor under the former legislation (Proceeds of Crime Act 1991). 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 cost associated with civil litigation and the benefits to all parties if proceedings can be settled and resolved by consent.
[22] As has been previously observed, Parliament has entrusted the High Court with a supervisory jurisdiction to ensure that settlements are consistent with Parliament’s intent in enacting the statute.1
[23] The primary purpose of the Act is contained in s 3(1); the establishment of a regime for the 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
1 Commissioner of Police v Know-All Group Limited HC Auckland CRI-2010-404-403, 7 November 2011 at [11].
in Hayward v Commissioner of Police affirmed the Act has a “strongly expressed statutory purpose”.2
[24] The statutory language, that is the “overall interest of justice”, indicates a broad inquiry 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 respondent.3 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.4
The case: Threshold for settlement approval met
[25] The parties submit the proposed settlement is consistent with the purposes of the Act and is in the overall interest of justice for the following reasons, bearing in mind the principles in s 95(3) of the Act:
(a)Time and cost will be saved if the matter is resolved by consent without the need for further litigation.
(b)It is appropriate that all of the property be forfeited to the Crown in recognition of the fact that it has likely been derived from significant criminal activity.
(c)The majority of Mr Huang’s equity in the restrained assets will be realised for the benefit of the Crown with $421,400 out of $596,340 being forfeited. That is appropriate in this case given the scale of Mr Huang’s underlying criminal offending.
(d)While the $421,400 is lower than the $970,000 unlawful benefit nominated by the Commissioner, Mr Huang’s total equity in the property available to be forfeited once Ms Zhai’s innocent interest is excluded, is approximately $596,340. Given the Commissioner did not
2 Hayward v Commissioner of Police [2014] NZCA 625 at [29].
3 Commissioner of Police v Kree [2013] NZHC 2972 at [11].
4 Commissioner of Police v Douglas [2015] NZHC 1293 at [6].
oppose Ms Zhai’s relief claim, he accepts the total value of any property forfeited at a forfeiture hearing would be unlikely to exceed $596,340.
(e)The assets with a value of $421,400 to be forfeited are commensurate with the $420,000 in cash Mr Huang laundered (and on the Commissioner’s case, received) as recorded in the summary of facts to which he pleaded guilty. The Commissioner also acknowledges that the argument that Mr Huang’s net financial position was only marginally improved following the sales of the vehicles to Mr Nauer, as the vehicles were sold at slightly inflated prices.
(f)The Commissioner also recognises the difficulty of proving that Mr Huang received the difference of $550,000 (between $970,000 and
$420,000). That is particularly so given the cash transactions the Commissioner alleges took place were inherently clandestine and deliberately concealed. As above, the Commissioner also recognises that Ms Zhai’s relief claim would likely to succeed, resulting in no more than $596,340 in value being forfeited.
(g)For his part, Mr Huang acknowledges the risk inherent in litigation and sees pragmatic advantages in having control and certainty over the outcome. Mr Huang also seeks to achieve finality in this matter for his partner, Ms Zhai, an innocent third party.
(h)Finally, the settlement appropriately recognises the interests of Ms Zhai in terms of forgoing the application for forfeiture of 56 Barbarich Drive.
[26] I agree that the proposed settlement should be approved by the Court for the reasons advanced.
Result
[27] The proposed settlement as outlined at [3.2] of the Joint Memorandum is approved.
[28]I make the orders set out at [6.1] of the Joint Memorandum. .
[29] I also note the further terms of the proposed settlement outlined at [6.2] of the Joint Memorandum, as requested.
Moore J
Barristers/Solicitors: Meredith Connell, Auckland Mr Dacre KC, Auckland
Mr McNally, Auckland Ms Ding, Auckland
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