Commissioner of Police v Khan
[2025] NZHC 419
•6 March 2025
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE
CIV-2024-419-8
[2025] NZHC 419
UNDER the Criminal Proceeds (Recovery) Act 2009 BETWEEN
COMMISSIONER OF POLICE
Applicant
AND
ROYCE KHAN
Respondent
Hearing: On the papers Counsel:
L Lai for Applicant
Judgment:
6 March 2025
JUDGMENT OF WILKINSON-SMITH J
This judgment was delivered by me on 06/03/2025 at 4 pm Pursuant to Rule 11.5 of the High Court Rules
…………………………
Registrar/Deputy Registrar
Solicitors/Counsel:
Hamilton Legal Ltd, Hamilton
COMMISSIONER OF POLICE v KHAN [2025] NZHC 419 [6 March 2025]
[1] The Commissioner of Police (Commissioner) seeks a type 1 assets forfeiture order under the Criminal Proceeds (Recovery) Act 2009 (Act) over the following property:
(a) A total of $57,572.60 cash, comprising: (i)
$43,328.80 located and seized by police from a Mazda vehicle used by the respondent (Mr Khan) on 11 April 2020;
(ii)
$9,463.80 located and seized by police from Mr Khan’s residential address in Hamilton (residential address) on 11 April 2020; and
(iii)
$4,780 located and seized by police from the residential address on 24 April 2020
(together, the Cash).
Background
[2] On 11 April 2020, police carried out a warrantless search of a Mazda motor vehicle after noticing a strong odour of cannabis during a vehicle stop. Mr Khan was the driver of the vehicle. The vehicle stop and search took place as Mr Khan pulled into his residential address.
Among other things, police located:
(a)51.6 ounces of cannabis; and
(b)$43,328.80 cash (Mazda Cash).
[4] Subsequently, police conducted a search of the residential address and located, among other things:
(a)21.2 ounces of cannabis; and
(b)$9,463.80 cash (Residential Address Cash).
[5] On 24 April 2020, police executed a search warrant at the residential address in relation to an unrelated matter and located:
(a)323 grams (approximately 11.4 ounces) of cannabis;
(b)$4,780 cash in the bedroom (Bedroom Cash); and
(c)$980 cash in the living room (Living Room Cash).
[6] Enquiries by police established that the Living Room Cash belonged to a person who is not involved in these proceedings. The Living Room Cash was returned to that person.
[7] On 4 December 2020, Mr Khan was sentenced to nine months’ home detention following guilty pleas to three charges of possession of cannabis for supply. Under s 47 of the Evidence Act 2006, Mr Khan’s convictions are conclusive proof that he committed the offending.
[8] On 11 March 2022, an investigator spoke with Mr Khan and obtained a notebook statement from him. Mr Khan stated that:
(a)the Mazda Cash, Residential Address Cash and Bedroom Cash (which, together, constitute the Cash) were proceeds from the sale of cannabis; and
(b)he understood police intended to seek forfeiture of the Cash, and he did not have any interest in the Cash.
[9] Mr Khan signed the investigator’s notebook entry and confirmed the statements were true and correct.
The current proceedings
[10] On 15 January 2024, the Commissioner made an on notice application for a restraining order (prior to civil forfeiture order) and a type 1 assets forfeiture order (Application).
[11] On 6 March 2024, this matter came before the High Court for a first call. On that date, a restraining order was made in respect of the Cash.1
[12] Section 50 of the Act governs the making of a type 1 assets forfeiture order. Section 50(1) provides that:
(1) If, on an application for a type 1 assets forfeiture order, the High Court is satisfied on the balance of probabilities that specific property is tainted property, the Court must make a type 1 assets forfeiture order in respect of that specific property.
[13] Because no person has claimed an interest in the cash, s 50(4) of the Act applies. That section provides:
(4)Despite subsection (1), the Court may not make a type 1 assets forfeiture order in relation to property that no person has claimed an interest in, unless the Court is satisfied, on the balance of probabilities, of the following additional matters:
(a)that a restraining order was earlier made in relation to the same property; and
(b)that the restraining order has been in place for a period of at least 1 year; and
(c)that the Commissioner has contacted or made all reasonable efforts to contact any person the Commissioner believes may have an interest in the property.
[14]Section 37 of the Act also relevantly provides:
(1)A restraining order expires on the earlier of the following:
(a) the date that is the end of the period that is 1 year after the date on which the restraining order is made:
(b) the date of the making or declining of a forfeiture order associated with the same property.
1 See Commissioner of Police v Khan [2024] NZHC 462.
(2)Despite subsection (1),—
…
(e)if a restraining order relates to property in which no person has claimed an interest, the restraining order expires on the date that the relevant application for a forfeiture order is determined, which must not be determined earlier than 1 year after the making of the restraining order.
[15] Mr Khan was served with the restraining order on 3 May 2024. He has taken no further steps in the proceeding. He does not claim any interest in the Cash.
[16] In this case, the criminal proceedings against Mr Khan ended with his sentencing on 4 December 2020. An issue arises as to the basis upon which police held the Cash between 4 December 2020 and 6 March 2024.
[17] Slessor v Commissioner of Police dealt with an appeal relating to an $84,000 profit forfeiture order made against Ms Slessor in the High Court after she unlawfully benefitted from the manufacture and supply of methamphetamine.2 The High Court had determined that $28,778 in cash which had been seized could be used to partially satisfy the profit forfeiture order. Ms Slessor appealed in relation to forfeiture of the cash, contending that the police illegally retained the cash after her criminal proceedings were at an end.
[18]The Court of Appeal referred to the earlier case of R v Collis.3
[19] In that case, police found cannabis and around $103,000 in cash during a search of the respondent’s home. Mr Collis was found guilty of possessing cannabis for supply, and was sentenced to three and a half years’ imprisonment and fined
$17,500. The cash was produced as an exhibit at trial, where Mr Collis denied knowledge of it. He later applied to the District Court for an order that the cash be returned to him, testifying in Court that he had obtained the cash through drug dealing. A charge of selling cannabis was laid, but Mr Collis was subsequently discharged for
2 Slessor v Commissioner of Police [2023] NZCA 612.
3 R v Collis [1990] 2 NZLR 287 (CA).
what the Court of Appeal described as “technical reasons”.4 The District Court Judge effectively held that the cash belonged to Mr Collis and could be returned to him, ordering that the money be paid to the Commissioner of Inland Revenue in reduction of Mr Collis’ outstanding tax liability. It could not be forfeited under s 32(3) of the Misuse of Drugs Act 1975 because Mr Collis had not received any money “in the course of or consequent upon” the commission of the offence for which he had been convicted, (that is, possessing cannabis for the purpose of supply, not supplying or selling cannabis), nor was it in his possession “for the purpose of facilitating the commission of an offence against” s 6 of the Misuse of Drugs Act.5
[20] The Crown appealed and argued that the illegality principle prevented the District Court Judge from making an order in relation to the property which would have a beneficial consequence for Mr Collis. The appeal was dismissed. Two points were considered important: first, the police no longer had any right to hold the cash; and secondly, to uphold a refusal to return the cash would result in its confiscation or forfeiture despite the absence of any statutory power to do so.6
[21] In Ms Slessor’s case, the Court of Appeal found that forfeiture of the cash was overlooked at Ms Slessor’s sentencing in 2011.7 The police retention of the cash became unlawful on or about 27 May 2015.8
[22] The Court of Appeal in Slessor held that the High Court was correct to order forfeiture of the cash despite the illegality principle because forfeiture was not contrary to the public interest. The Court of Appeal said that to apply the illegality principle would be contrary to the public interest as a (wholly) disproportionate response to the police illegality in retaining the cash.9 The case involved no bad faith on the part of the police. Ms Slessor did not seek the return of the cash until police raised the possibility in October 2020 — 13 years after its seizure.10 Further, the cash was
4 R v Collis, above n 3, at 290.
5 At 290.
6 R v Collis, above n 3, at 293.
7 Slessor v Commissioner of Police, above n 2, at [40].
8 At [41].
9 At [51].
10 At [52],
unquestionably derived from, or in connection with, drug dealing.11 The Court also held that declining forfeiture would be disproportionate to the impropriety, which was modest and absent bad faith.12
[23] The Court of Appeal also said that the Commissioner’s claim to forfeiture of the cash was not reliant on the impropriety. Under the Act, the cash could be forfeited irrespective of whether it had been retained by police. There was therefore no material linkage between the impropriety and forfeiture.13
[24] I have set out these cases because in this case, police seized the cash and retained it following Mr Khan’s sentencing absent any restraining order or legal basis to hold it.
[25] The situation here is distinguishable from the facts of Slessor and Collis because Mr Khan does not claim any ownership of, or interest in, the Cash. He acknowledged that it came from the proceeds of cannabis dealing but did not claim that it was his money. That is not necessarily an illogical position. Those who deal in illicit drugs may do so on behalf of others and may quite genuinely not claim an interest in the entire amount seized. They may also decline to claim an interest because they realise the implications of doing so when the money is clearly tainted.
[26] However, even without any claimant, there is no proper basis for police to simply hold cash seized as part of a criminal investigation after the proceedings are at an end. Forfeiture orders should have been sought much earlier.
[27] This case is analogous to Slessor in that it seems likely that police simply overlooked the need for an order for forfeiture of the cash at Mr Khan’s sentencing.
[28] I am satisfied that the Cash is tainted property and is properly able to be forfeited in accordance with s 50(1) of the Act. There is no claimant affected by the period of apparent unlawful retention of the Cash by police between 4 December 2020 and 6 March 2024. Even if the Cash were not “tainted”, it was always liable to
11 At [53].
12 At [54].
13 At [55].
forfeiture pursuant to s 155 of the Search and Surveillance Act, as it is unclaimed. That section provides:
(1)A thing that is seized or produced is forfeited to the Crown if—
(a)the owner or person entitled to possession of the thing is not established within 60 days after the date on which the thing was seized or produced; and
(b)the thing—
(i)is not, at the expiry of that period, still required for investigative or evidential purposes; and
(ii)has not been disposed of or sold by order of the court within that period.
(2)For the purpose of trying to establish ownership of any thing to which this section applies, the person who has custody of the thing must (unless it is impossible or impracticable to make contact) advise the following people of the effect of this section:
(a)any person who produced the thing or from whom the thing was seized:
(b)the occupier or owner of the place or vehicle where the thing was before it was produced or seized:
(c)any other person who, in the opinion of the person in whose custody the thing is, may be affected by the forfeiture of the thing.
[29] The proper procedure for dealing with the Cash was not followed initially, but I am satisfied that it is in the interests of justice to order the forfeiture of the Cash under the Act.
[30] The Cash has now been restrained for one year. In serving the restraining order on Mr Khan, the Commissioner has made all reasonable efforts to contact any person he believes may have an interest in the Cash. Therefore, s 50(4) of the Act does not prevent a type 1 assets forfeiture order being made.
[31] It is in the interests of justice to make the type 1 assets forfeiture order for the following reasons:
(a)Each amount of cash covered by the Application was either located pursuant to statutory search powers or a search warrant and was found together with a commercial quantity of cannabis.
(b)Mr Khan, although denying any interest in the cash, told police that it was proceeds from the sale of cannabis.
Result
[32] The Commissioner’s Application is granted. I make a type 1 assets forfeiture order in respect of the Cash described at 3(a) of the Application, together with any interest that has accrued in respect of that Cash since its seizure on 11 and 24 April 2020. Specifically, the Cash is:
(a)A total of $57,572.60 cash, comprising:
(i)$43,328.80 located and seized by police from a Mazda vehicle used by the respondent (Mr Khan) on 11 April 2020;
(ii)$9,463.80 located and seized by police from Mr Khan’s residential address in Hamilton (residential address) on 11 April 2020; and
(iii)$4,780 located and seized by police from the residential address on 24 April 2020.
[33] The combined property now vests in the Crown absolutely and is in the custody and control of the Official Assignee.
Wilkinson-Smith J
0
2
1