Commissioner of Police v Kree

[2013] NZHC 2972

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-004884

CIV-2012-404-000110 [2013] NZHC 2972

UNDER  Criminal Proceeds (Recovery) Act 2009

BETWEEN  THE COMMISSIONER OF POLICE Applicant

ANDBONNA ANG KREE First Respondent

LEAKHANA KREE Second Respondent

KOSORL POV KREE Third Respondent

LOELAK PHALANGKUN Fourth Respondent

PANHA NI KREE Fifth Respondent

VEARY KREE Sixth Respondent

PATRICK THOMAS HINCHEY Seventh Respondent

Hearing:                   11 November 2013

Appearances:           D Johnstone and T Refoy-Butler for Applicant

A Couchman for First Respondent

S Patel for Second and Fifth Respondents and two applicants seeking relief for forfeiture and also on instructions for A Beach for applicant seeking relief

M Ryan for Fourth Respondent (granted leave to withdraw) P Tomlinson for Sixth and Seventh Respondents

Judgment:                11 November 2013

ORAL JUDGMENT OF VENNING J

THE COMMISSIONER OF POLICE v KREE [2013] NZHC 2972 [11 November 2013]

Solicitors:           Crown Solicitor, Auckland

Copy to:            A Couchman, Auckland

S Patel, Auckland
M Ryan, Auckland

P Tomlinson, Auckland

A Beach, Auckland

Introduction

[1]      The Commissioner of Police has sought restraining and forfeiture orders in relation to the property of the first to seventh respondents.  All respondents with the exception of the third and fourth respondents have taken active steps in opposition to the Commissioner’s application.  The fourth respondent was for a time represented by Mr Ryan.  He has confirmed that he has no further instructions from the fourth respondent and has sought and been granted leave to withdraw.

[2]      The application for forfeiture orders was to be heard as a fixture for three to four days this week.   Counsel have confirmed that, subject to the approval of the Court, an overall resolution has been reached with the respondents who are represented.    I  have  dealt  with  this  file  during  the  course  of  its  interlocutory processes and am familiar with the general background to it.

Background

[3]      In summary, the background is that in November 2010 the police conducted a search at 59 Ransom Smyth Drive, being the home address of the third and fourth respondents, the property being registered in the name of the first respondent.  The police located NZ$29,835 and foreign currency which converted to NZ$12,397.  In addition the police found 54 grams of a substance believed to be methamphetamine, and various drug paraphernalia.   The police also searched a property at 5 Gerona Place, Manukau, being the home address of Thanchanok Manawangphiphat, registered to the sixth respondent.  The police located various drug paraphernalia at that address.  The third and fourth respondents, and Manawangphiphat were arrested and charged with supply and sale of the Class A controlled drug methamphetamine and possession of precursor substances for the purpose of manufacture and sale. They were duly convicted and sentenced in June 2012.

The applications

[4]      By way of applications dated 14 January 2011 and 6 November 2012 the

Commissioner sought civil forfeiture orders under the Act in respect of:

(a)       the cash seized from 59 Ransom Smyth Drive.;

(b)further funds to the value of $185,769.41 seized from bank accounts in the name of the first and second respondents;

(c)      109 Everglade Road, Manukau, excluding the registered mortgage in favour of Kiwibank Limited, a property registered in the name of the fifth respondent;

(d)      59 Ransom Smyth Drive, a property registered to the first respondent;

(e)      5 Gerona Crescent, Manukau, a property registered in the name of the sixth respondent;  and

(f)       63 Old Lake Road, North Shore, a property registered in the names of the sixth and seventh respondents.

[5]      In the event an asset forfeiture order was not made the Commissioner sought profit forfeiture orders, based on an analysis of unexplained income.  The analysis of unexplained income from the various respondents totalled $1,827,000.

The respondents’ positions

[6]      As noted the respondents who are represented opposed the Commissioner’s applications.   They offered explanations for the income which the Commissioner alleged was unexplained.  They pointed to legitimate income streams and advanced those as the source of the income, in particular:

(a)      $34,080 attributed to the first respondent was derived from rental income;

(b)$54,175.33 attributed to the seventh  respondent was derived from legitimate inheritance and other minor income;

(c)      $120,600 attributed to Kruy Sok was money derived from legitimate savings.

[7]      Other explanations were put forwarded, including that cash was transported to New Zealand in large quantities from Cambodia, the source of which was said to be in part at least because the fifth respondent’s partner was independently wealthy. The respondents  also asserted the unlawful benefit arising by the cash deposits attributed to the third and fourth respondents of $364,067.41, (which included cash deposits made into the fifth respondent’s credit card account after he allowed the third  respondent  to  use  it,  while  subject  to  electronic  monitoring),  should  be recovered by the Commissioner direct from the third and fourth respondents and deducted from the unexplained funds total.

[8]     While not necessarily accepting all the explanations proffered by the respondents, the Commissioner accepted that the detail of the information provided in relation to the rental income, the inheritance and other sources referred to, particularly in relation to Kruy Sok had some force.

Settlement

[9]      In preparation for the fixture this week counsel for the Commissioner and for the respondents have negotiated a settlement.  Settlement is of course subject to the Court’s approval.  Section 95 of the Criminal Proceeds (Recovery) Act 2009 applies. That provides the Court must approve the settlement if it is satisfied it is consistent with the purposes of the Act and the overall interests of justice.  The parties support the proposed settlement and have filed a comprehensive memorandum in support.

[10]     I accept that the settlement proposed is consistent with the purposes of the

Act.  It will mean that:

(a)      the affected respondents will not oppose the Commissioner’s claim in relation to a profit forfeiture order in the sum of $364,067.41 against the third and fourth respondents, to be met from the cash found at 59

Ransom Smyth Drive;

(b)effective control orders will be made against the sixth respondent in respect of the bank funds and three properties;

(c)       a profit forfeiture order will be made against the sixth respondent specifying the value at $1,100,000;

(d)the  property  at  59  Ransom  Smyth  Drive  will  be  released  from restraint;  and

(e)       a mechanism will be put in place for the profit forfeiture order to be met from the property subject to the effective control orders.

[11]     I  accept  also  that  the  overall  interests  of  justice  support  the  proposed settlement.  There will be a saving of time and cost to the Commissioner and to the respondents.   The Commissioner properly acknowledges a litigation risk.   Equally the affected respondents acknowledge the strength of the application and the risk to them if the hearing proceeds.

[12]     For those reasons I accept that it is appropriate for the orders to be made. Indeed, having satisfied myself that the purposes of the Act and the overall interests of justice are served by the proposed settlement I am directed to approve it.

Orders

[13]     Accordingly I make the following orders:

(a)       an effective control order under s 58 of the Act, in particular:

(i)        the following property (the Property) is to be treated as though

Veary Kree had an interest in it all:

(A)      funds to the value of $185,769.41 seized from the bank accounts  of  Bonna  Kree  and  Loelak  Kree  on  18

November 2010 (the bank funds):

ASB Account Number:

12-3032-0777715-83 – $101,003.57

ASB Account Number:

12-3032-0777715-84 – $60,063.74

Kiwibank Account Number:

38-9003-0678125-05 – $24,702.10

(B)      109 Everglade Rd, Manukau, described in Certificate of  Title  NZ58A/847,  being  lot  10,  deposited  plan

105439, excluding the interest of Kiwibank Limited under the registered mortgage 8548542.3;

(C)5 Gerona Crescent, Manukau, described in Certificate of Title NZ134B/647,  being  Lot  17,  deposited  plan

206110;

(D)      63   Old   Lake   Road,   North   Shore,   comprised   in Certificate of Title NZ24A/817, being Lot 3A, deposited plan 48271;

(collectively the Houses)

(b)      a profit forfeiture order under s 53 of the Act in respect of Veary

Kree, in particular:

(i)the value of the benefit determined in accordance with s 53 of the Act is $1,100,000;

(ii)      the maximum recoverable amount is $1,100,000;

(iii)the  property  that  is  to  be  disposed  of  in  accordance  with s 83(1) is the Property;

(c)       additional directions pursuant to s 59 of the Act, in particular:

(i)the  Official  Assignee  may have  immediate  recourse  to  the bank funds in part-satisfaction of the profit forfeiture order;

(ii)however, the Official Assignee may not dispose of the Houses to discharge the profit forfeiture order prior to 11 May 2014 (as outlined below);

(iii)instead, the existing restraining orders in this proceeding are varied so that the affected respondents may sell, or re- mortgage,  the  Houses  on  the  terms  pre-approved  by  the Official Assignee in writing;

(iv)in  the  event  of  sale  or  re-mortgaging  of  the  Houses,  the proceeds of that transaction must be provided to the Official Assignee to be applied in accordance with s 83(1) of the Act;

(v)      in the event the profit forfeiture order is not satisfied by 11

May 2014, the Official Assignee will dispose of the Houses and apply the money resulting from the disposal in accordance with s 83(1) of the Act;

(vi)in the event sale of the Houses by the Official Assignee is required, the Official Assignee or his authorised delegate shall be authorised to execute any deed or instrument necessary to give effect to the sale, and to do anything reasonably necessary to give validity and operation to the deed or instrument;

(vii)     leave reserved to all parties to apply on 48 hours’ notice in the

event any difficulties arise in relation to implementation;

in relation to the respondents represented before the Court today.

[14]     That leaves the position of the Commissioner’s application in relation to the third and fourth respondents.  I accept on the affidavit evidence before the Court that the Commissioner is entitled to relief against the third and fourth respondents by way of a profit forfeiture order.

[15]     There will be a profit forfeiture order in the sum of $364,067.41 against the third and fourth respondents jointly and severally, together with a related order that that profit forfeiture order is to be met from the cash found by the police at 59

Ransom Smyth Drive being the $NZ29,835 and the foreign currency converted to

NZ$12,397.

[16]     I make no order for costs.

Third party applications

[17]    Third parties had made applications for relief against forfeiture.   As a consequence of this overall settlement counsel representing them has confirmed that their  applications  for  relief  may  be  treated  as  abandoned.    They  are  dismissed

accordingly.

Venning J

Solicitors:           Crown Solicitor, Auckland

Copy to:            A Couchman, Auckland

S Patel, Auckland

M Ryan, Auckland

P Tomlinson, Auckland
A Beach, Auckland