Commissioner of Police v Know-All-Group Ltd HC Auckland CIV-2010-404-403

[2011] NZHC 1710

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2010-404-403

BETWEEN  THE COMMISSIONER OF POLICE Applicant

ANDKNOW-ALL GROUP LTD First Respondent

ANDYUEN YAM LI Second Respondent

Judgment:      7 November 2011

JUDGMENT OF BREWER J

This judgment was delivered by me on 7 November 2011 at 10:30 am pursuant to Rule 11.5 High Court Rules.

Registrar/Deputy Registrar

SOLICITORS

Meredith Connell (Auckland) for Applicant

Neumegen and Company (Auckland) for Respondents

COUNSEL

David PH Jones QC

THE COMMISSIONER OF POLICE V KNOW-ALL GROUP LTD HC AK CIV-2010-404-403 7 November

2011

[1]      On  27  January  2010  the  Commissioner  of  Police  filed  an  on-notice application for restraining orders against the first respondent and the second respondent pursuant to the Criminal Proceeds (Recovery) Act 2009 (―the Act‖).

[2]      The application related to real property at 77A Victoria Street, Auckland,

77B Victoria Street, Auckland and 56 Gilletta Road, Lynfield.   It also related to

$2,495.154.60   cash   seized   by  Police  at   the   first   respondent’s   premises   on

19 December 2006.  The application alleged that 77A Victoria Street appeared to be owned by the second respondent, and 77B Victoria Street appeared to be owned by the second respondent, a Ms Liu and a Mr Sze.  The property at 56 Gilletta Road appeared to be owned by Ms Liu and the cash appeared to be owned by the first respondent, the second respondent and a Mr Shih (who was deceased).

[3]      The grounds on which the orders were sought were as follows:[1]

[1] On notice application for restraining orders dated 26 January 2010, at para 2.

(a)      Know-All Group  Ltd and Ms Li have unlawfully benefitted from significant criminal activity;

(b)Ms Li has effective control over the property at 77B Victoria Street, Auckland, and it should for the purposes of this application be regarded as her property; and

(c)       The Cash is tainted property.

[4]      The application was served on Ms Liu and Mr Sze.

[5]      The  first  and  second  respondents  opposed  the  application  for  restraining orders by notice of opposition dated 16 February 2010.  Their grounds in doing so were:[2]

[2] Notice of opposition of respondents to application for restraining orders dated 16 February 2010, at para 3.

(a)       There are no or insufficient grounds on which it can be shown under s 25  that  the  respondents  unlawfully  benefited  from  significant criminal activity.

(b)      The  properties  were  purchased  prior  to  any  alleged  significant criminal activity occurred (sic).

(c)       The cash is not the property of the respondents.

(d)      Such other grounds as may be set out in any amended notice of opposition and/or evidence adduced in this proceeding.

[6]      Restraining orders were granted by Rodney Hansen J on 7 February 2011. His Honour found:[3]

The evidence adduced on behalf of the Commissioner builds a picture of a family enterprise conducted internationally in which Mr Shih, Ms Li and their two sons were actively involved.  While from mid-2004 Mr Shih was primarily responsible for the day to day operations of the Auckland business, Ms Li continued to have an active, perhaps even a directing, role.   In my view, the totality of the evidence establishes reasonable grounds to believe that Ms Li was aware of the unlawful activities of the Auckland operation and,  through  remittances  to  accounts  in  New  Zealand  and  elsewhere  in which she was directly or indirectly beneficially interested, she benefited from such activity.

[3] The Commissioner of Police v Know-All Group Ltd HC Auckland CIV-2010-404-403 7 February

2011 at [31].

[7]      The  approximately $2.5  million  in  cash  (plus  interest)  was  subsequently forfeited to the Crown.

[8]      By an application dated 9 February 2011 the applicant sought the forfeiture of the three real properties described above.  That application was set down for hearing in this Court commencing on 8 November 2011.  The second respondent opposed the forfeiture.   She denied any responsibility for criminal activity occurring at the properties.  The allegation was that the properties had been used for the laundering of large amounts of money which were the proceeds of methamphetamine dealing. The money was laundered through the first respondent which had its premises at the Victoria Street properties.   The second respondent had asserted that if any such money laundering was taking place it was the responsibility of her late ex husband, Mr Shih.

[9]      On 4 November 2011 a memorandum of counsel was received regarding a proposed settlement of the application for forfeiture.  Annexed to it is a copy of a

settlement agreement signed by or on behalf of the applicant, the second respondent

and Mr Sze as an interested party.  The basis of the settlement agreement is that the Victoria  Street  properties  can  be  forfeited  to  the  Crown  and  the  applicant  will abandon his claim to the Gilletta Road property.

[10]     Section 95 of the Act provides:

(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]     The approval by this Court of a proposed settlement is not a rubber stamping exercise.  Parliament has entrusted the Court with a supervising jurisdiction aimed at ensuring that settlements are consistent with Parliament’s intent in enacting the statute.

[12]     The purpose of the Act is set out in s 3:

(1)      The primary purpose of this Act is to establish a regime for the forfeiture of property—

(a)       that has been derived directly or indirectly from significant criminal activity; or

(b)       that represents the value of a person's unlawfully derived income.

(2)      The criminal proceeds and instruments forfeiture regime established under this Act proposes to—

(a)       eliminate the chance for persons to profit from undertaking or being associated with significant criminal activity; and

(b)      deter significant criminal activity; and

(c)       reduce the ability of criminals and persons associated with crime or significant criminal activity to continue or expand criminal enterprise; and

(d)      deal with matters associated with foreign restraining orders and foreign forfeiture orders that arise in New Zealand.

[13]     The joint memorandum of counsel provides relevantly as follows:

5.In short, the Commissioner’s case is that the second respondent was responsible for the laundering of large amounts of money which was the  proceeds  of  methamphetamine  dealing.     The  money  was laundered through the first respondent, which had premises at 77A and 77B Victoria Street, Auckland.

6.The  second respondent  denies  the  claim,  and  asserts  that if  any money laundering was taking place, it was the responsibility of her late ex-husband Mr Shih.

7.The Commissioner does not accept the second respondent’s denials, and has filed evidence tending to demonstrate that she was aware of, and participated in, the money laundering at the premises of the first respondent.

8.Nevertheless, the parties have agreed to settle the claim on the basis set out above, principally for the following reasons:

(a)      there will be a considerable saving of time and, especially, cost, if the litigation is settled;

(b)      there being apparent force in the position of both sides, the parties acknowledge that no outcome is certain.

[14]     Having read the documents filed in this Court, I am satisfied that approving the settlement is consistent with the purpose of the Act and with the interests of justice because:

(a)       The  principal  person  concerned  with  the  criminal  activity  was

Mr Shih.  He is now dead;

(b)A   significant   asset   related   to   the   criminal   activity   was   the approximately $2.5 million in cash.  That has already been forfeited to the Crown;

(c)      The properties used by the first respondent for the criminal activity were the Victoria Street properties.  Under the settlement they will be forfeited to the Crown;

(d)The second respondent had a basis for contesting forfeitures based on denials of complicity in the criminal activity.

[15]     Accordingly, I am satisfied that the settlement provides for the forfeiture of property representing – at least in part – the value of unlawfully derived income; and in the circumstances of the case it is in the overall interests of justice.

Decision

(1)      The settlement is approved.

(2)In accordance with the settlement the Victoria Street properties are forfeited and will be disposed of in accordance with s 83(1) of the Act.

(3)      The restraining order against the Gilletta Road property is discharged.

(4)The  order  at  (2)  above  will  take  effect  on  the  date  that  the  mortgages registered against those properties by ANZ National Bank Ltd are discharged and the titles to the properties are unencumbered.

(5)The order at (3) above will take effect on the date that the order at (2) takes effect.

(6)Leave is reserved to the parties to apply for variations or amendments to the orders herein for the purpose of better giving effect to the settlement, said

leave to expire on the dates that the orders at (2) and (3) above take effect.

Brewer J