Commissioner of Police v Lau
[2019] NZHC 3343
•17 December 2019
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2014-404-003295
[2019] NZHC 3343
UNDER the Criminal Proceeds (Recovery) Act 2009 BETWEEN
COMMISSIONER OF POLICE
ApplicantAND
YAT MING LAU
First Respondent
SHUO CHANG
Second Respondent
Hearing: 29-30 October 2019 Counsel:
MR Harborow and HE Macdonald for Applicant MN Pecotic for Second Respondent
Judgment:
17 December 2019
JUDGMENT OF DOWNS J
This judgment was delivered by me on Tuesday, 17 December 2019 at 11 am pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Solicitors/Counsel:
Meredith Connell, Auckland. MN Pecotic, Auckland.
COMMISSIONER OF POLICE v LAU [2019] NZHC 3343 [17 December 2019]
The case
[1] Yat Ming Lau imported pseudoephedrine to New Zealand. He was charged, convicted and imprisoned. The Commissioner of Police sought related profit and asset forfeiture orders against him. The Commissioner and Mr Lau have since settled; they seek approval of that under the Criminal Proceeds (Recovery) Act 2009.1 Shuo Chang was in a relationship with Mr Lau. The Commissioner seeks profit and asset forfeiture orders against Ms Chang on the basis she too benefitted from Mr Lau’s significant criminal activity. Ms Chang denies this.
Background
[2] ContacNT is rich in pseudoephedrine, a Class B controlled drug. In 2013, a New Zealand Customs operation revealed Mr Lau and others were importing ContacNT. Between July and October that year, Customs intercepted eight packages containing 11.4 kilograms of ContacNT. Customs did not intercept 14 related packages.
[3] Mr Lau was arrested October 2013. He was charged with nine importation offences: one for each intercepted package; and a representative charge for the 14 un-intercepted packages. Mr Lau was found guilty of five charges: the representative charge and four specific package charges.
[4] Judge Sinclair sentenced Mr Lau to seven years’ imprisonment.2 The Judge concluded the representative charge concerned 1.45 kilograms of ContacNT—the average weight of the intercepted packages.3 The Judge found Mr Lau imported at least 5.5 kilograms of ContacNT.
[5] The Commissioner seeks a profit forfeiture order of $2,115,000. This is the likely value of the pseudoephedrine across all 22 packages, which are believed to have contained 31 kilograms of that substance. The Commissioner relies on financial
1 The Act.
2 R v Lau [2015] NZDC 24480 at [50].
3 At [36].
evidence not available to the criminal court, and the civil, non-conviction-based regime created by the Act.
[6] The financial evidence is this. Between December 2007 and May 2014, more than $1.3 million was deposited to the bank accounts of Mr Lau and Ms Chang.4 Much was cash. $679,316.81 went to Ms Chang’s bank accounts. Again, much was cash:
$442,659.31. Another $194,976.50 came into Ms Chang’s bank accounts from finance companies and money remitters. In the same period, Mr Lau and Ms Chang spent
$293,285.17 on jewellery and luxury items. Ms Chang’s credit card was used to pay for $191,216.92 of these purchases. Mr Lau’s declared annual income was less than
$50,000. Ms Chang’s was less than $40,000.
[7] The Commissioner contends Ms Chang actively assisted Mr Lau’s criminal activity. Alternatively, the Commissioner argues these sums are so large Ms Chang must have known what Mr Lau was doing.
The property
[8]Four pieces of property are implicated.
[9] First, restrained funds following the sale of realty at Richard Farrell Avenue, Remuera. This property was owned by the Mings Trust of which Mr Lau was settlor; a trustee (with his parents); a discretionary beneficiary; and final beneficiary. Richard Farrell Avenue’s purchase was funded by Ms Tam, Mr Lau’s mother. On December 2012, the property was refinanced with two loans. The Commissioner contends $72,920 from significant criminal activity was used to service both.
[10] Second, a property at Rukutai Street, Orakei.5 Ms Chang is its registered owner. Ms Chang bought Rukutai Street from Mr Lau and his family in March 2012. Ms Chang paid $490,000, including $151,533 by bank cheque. The Commissioner contends this cheque involved the transfer of $150,000 from Mr Lau to Ms Chang through an intermediary, Mr Han. Ms Chang denies this.
4 Criminal Proceeds (Recovery) Act 2009, s 5, defines “relevant period of criminal activity” as the seven-year period prior to an application being made.
5 Rukutai Street.
[11] Third, a BMW car. The BMW is registered to Ms Chang. In April and May 2014, Ms Chang made two payments totalling $25,000 to Mega Trade (AKL) Ltd, a company owned by Mr Lau.6 Ms Chang made both using funds from overseas. On 13 June 2014, Mega Trade transferred the BMW to Ms Chang. The Commissioner argues this constitutes an attempt by Mr Lau and Ms Chang to put the BMW beyond the Crown’s reach. Ms Chang denies this. And, she says she bought the BMW using money from her parents in China.
[12]Fourth, cash found at Mr Lau’s business premises: NZ$4,000 and US$3,500.
Settlement with Mr Lau
[13]The proposed settlement entails:
(a)An assets forfeiture order in relation to:
(i)The restrained funds arising from the sale of Richard Farrell Avenue and related interest, less $100,000. This sum is to be returned to Ms Tam.
(ii)Both sums of cash and related interest.
(b)Mr Lau’s consent to forfeiture of any interests he has in Rukutai Street and the BMW (if the Commissioner establishes he has such interests).
(c)Costs to lie where they fall.
[14] Section 95 of the Act provides the High Court must approve settlement if satisfied it is consistent with the purposes of the Act, and the overall interests of justice.7 Muir J summarised the approach the Courts have taken to s 95 in Commissioner of Police v Wellington:8
[11] In enacting s 95, Parliament expressly empowered the Commissioner to enter into settlements with respondents (and interested parties) relating to
6 Mega Trade.
7 Criminal Proceeds (Recovery) Act, s 95(3).
8 Commissioner of Police v Wellington [2018] NZHC 2502 at [11]–[16].
the forfeiture of assets. I accept the proposition in the parties' joint memorandum that Parliament is likely to have had in mind the significant costs associated with a civil litigation and the benefits to all parties if such proceedings could be resolved in a timely and just way. There is a strong public interest in litigation of this nature being brought to a prompt conclusion provided the settlement reflects the likely costs and risks inherent in the underlying litigation. Parliament has entrusted the Court with supervisory jurisdiction aimed at ensuring any settlements reached are consistent with its intent in enacting the legislation and with the overall interests of justice.
[12] Section 95(3) directs the Court to consideration of the purposes of the Act and the overall interests of justice.
[13] The primary purpose of the Act is contained in s 3(1). That is the establishment of a regime for forfeiture of property that has been derived directly or indirectly from significant criminal activity or that represents the value of a person's unlawfully derived income. Ancillary 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)).
[14] The overall interests of justice requirement predicates a broad inquiry. As this Court has previously said, although it is proper that it should have a supervisory jurisdiction, it is “equally important that the Court carry out a broad inquiry and acknowledge, where appropriate, that settlements can be in the interests of justice, bearing in mind the savings of time and cost and the litigation risks to the parties”.
[15] The Court has recognised that decisions to settle proceedings under the Act may be made on economic and pragmatic grounds and often reflect “a common-sense compromise” between the parties.
[16] If the Court is satisfied in respect of the two matters identified in s 95(3) then it must approve the settlement.
[15]I am satisfied settlement should be approved.
[16] Most of the assets attributed to Mr Lau are to be forfeited. $625,705 will go to the Crown, including 86 per cent of the funds from the sale of Richard Farrell Avenue. Settlement gives effect to the statutory purpose of eliminating opportunity for profit from significant criminal activity. Settlement is in the interests of justice because it recognises Ms Tam’s potential claim. As will be recalled, Ms Tam—Mr Lau’s mother—funded the purchase of Richard Farrell Avenue. And, settlement significantly reduces the time and cost otherwise needed to resolve this limb of the case. As Muir J noted in Wellington, there is a strong public interest in litigation of this nature being resolved promptly and efficiently.
Ms Chang
[17] The Commissioner seeks a profit forfeiture order against Ms Chang; alternatively, asset forfeiture orders.
Profit forfeiture orders
[18]Section 55 of the Act states:
55 Making profit forfeiture order
(1) The High Court must make a profit forfeiture order if it is satisfied on the balance of probabilities that—
(a)the respondent has unlawfully benefited from significant criminal activity within the relevant period of criminal activity; and
(b)the respondent has interests in property.
(2) The order must specify—
(a)the value of the benefit determined in accordance with section 53; and
(b)the maximum recoverable amount determined in accordance with section 54; and
(c)the property that is to be disposed of in accordance with section 83(1), being property in which the respondent has, or is treated as having, interests.
(3) Subsections (1) and (2) are subject to section 56.
(4) A profit forfeiture order is enforceable as an order made as a result of civil proceedings instituted by the Crown against the person to recover a debt due to it, and the maximum recoverable amount is recoverable from the respondent by the Official Assignee on behalf of the Crown as a debt due to the Crown.
[19] The phrase “relevant period of criminal activity” creates a seven-year window from the date of the application for the profit forfeiture order, here 12 December 2007 until 26 May 2014.9
[20]The section requires the Court to determine:
9 Or earlier restraining order application; see s 5(1).
(a)On the balance of probabilities, whether Ms Chang unlawfully benefitted from significant criminal activity during the relevant period.
(b)The value of that benefit (in accordance with s 53).
(c)The maximum recoverable amount (in accordance with s 54).
(d)What property should be realised to meet the order; and whether property should be excluded due to undue hardship.
Unlawful benefit?
[21]Section 7 of the Act provides:
In this Act, unless the context otherwise requires, a person has unlawfully benefited from significant criminal activity if the person has knowingly, directly or indirectly, derived a benefit from significant criminal activity (whether or not that person undertook or was involved in the significant criminal activity).
[22] As will be apparent, the Commissioner does not need to prove Ms Chang has participated in the significant criminal activity, only she knowingly benefitted from it.10
[23] The Commissioner places weight on the dissonance between the declared incomes of Mr Lau and Ms Chang, and funds entering their bank accounts. Between 2008 and 2014, Mr Lau’s average, annual taxable income was $44,933. Between 2008 and 2013, Ms Chang’s average, annual taxable income was $38,341. However, between December 2007 and May 2014, Mr Lau and Ms Chang received
$1,328,567.88 in unexplained funds. $679,316.81 entered Ms Chang’s accounts. As observed, $442,659.31 of this comprised cash.
[24] The Commissioner also places weight on the amount spent by Mr Lau and Ms Chang on jewellery and luxury items. As noted earlier, the pair spent $293,285.17 this way between December 2007 and May 2014. Ms Chang’s credit card was used
10 Wilful blindness is enough: Commissioner of Police v Wong [2015] NZHC 158 at [77], citing
Vincent v Commissioner of Police [2013] NZCA 412.
to pay for approximately two-thirds. The Commissioner says this spending is irreconcilable with declared income. Luxury spending stopped shortly after Mr Lau’s arrest in October 2013. The Commissioner says this is no coincidence.
[25] Ms Chang testified. Ms Chang said she and Mr Lau were still in the early stages of their relationship when he was arrested, and she did not know he was importing drugs. Ms Chang said the deposits to her bank accounts reflected five lawful sources:
(a)She would buy her friends luxury items, and they would reimburse her by depositing cash.
(b)She received money from her parents, who live in China.
(c)She frequently purchased items for the BB Club, Mr Lau’s business, because she was a manager. She would be reimbursed by cheque or cash.
(d)Investments.
(e)Loan repayments from Mr Lau’s brother, Yat Fin Lau, of $190,000.
[26] On behalf of Ms Chang, Ms Pecotic places weight on travel records. These show Ms Chang was out of the country for long periods during Mr Lau’s offending (including a 10-month trip to China from November 2012). Ms Pecotic submits Ms Chang’s travel was consistent, and she continued to travel after Mr Lau’s arrest. Nothing suggests a spike in travel which might indicate a sudden influx of money due to significant criminal activity.
[27] I find it (much) more likely than not Ms Chang unlawfully benefitted from significant criminal activity. I find Ms Chang knew Mr Lau was repeatedly importing pseudoephedrine to New Zealand, and helped conceal his likely interests in property. I reject Ms Chang’s contrary testimony.
[28] First, the dissonance between declared income and bank deposits is striking, especially as much was cash.
[29] Second, Ms Chang’s expenditure on jewellery and luxury items is irreconcilable with her declared income. This spending stopped shortly after Mr Lau’s arrest.11 The significance of this is self-evident.
[30] Third, Ms Chang’s explanations do not withstand scrutiny. Her claims she received reimbursements for luxury purchases for others, and BB Club reimbursements, do not explain how so much money came into her accounts. Mr Houng Lee, a financial analyst with Police, assessed both aspects. Mr Lee said
$51,530 of deposits may be attributable to luxury good reimbursements, and
$62,035.94 potentially attributable to BB Club reimbursements. This leaves $566,750 unaccounted for. No serious challenge was made to this evidence. Indeed, in cross-examination, Ms Chang accepted the $51,530 figure accounted for all significant spending on behalf of others. Moreover, a friend of Ms Chang’s gave evidence that while Ms Chang did buy some luxury goods for friends, Ms Chang also bought many for herself.
[31] Ms Chang’s claim she received funds from her parents lacks support. Ms Chang provided the Commissioner documents from finance companies showing funds sent to her from China. However, all involve transactions after Mr Lau’s arrest. In any event, these documents do not show who sent the money.
[32] Ms Chang’s parents did not testify. Ms Chang said she did not wish to trouble them with this case, and she had given the Commissioner their contact details. The latter is inaccurate. Ms Chang provided the Commissioner their identification details, not more. The Commissioner’s attempts to contact them were unsuccessful. If Ms Chang’s parents were a material source of her wealth, it is odd they did not say so. Absence of related documentary evidence is also odd.
[33] Ms Chang’s claim she had large investments also lacks support. Ms Chang produced a document showing the existence of a term deposit in 2003 for $160,000.
11 The last purchase was on 31 December 2013.
However, in cross-examination, Ms Chang accepted this money had been spent by 2007 (May of that year is the beginning of the relevant period).
[34]Ms Chang’s claim she loaned $190,000 to Mr Lau’s brother, including
$150,000 in one sum, emerged in cross-examination. Ms Chang did not assert this in either of her two affidavits.12 Ms Chang said a handwritten agreement existed in relation to the $150,000 loan, but she no longer had this. Ms Chang acknowledged she did not specify the term of this loan or say what interest was payable. Mr Lee found some evidence to support a possible 2012 loan by Ms Chang to Mr Lau’s brother, but this was confined to $35,000.
[35] Ms Chang said the money she loaned Mr Lau’s brother came from her parents. This proposition enjoys no support either.
[36] Fourth, Ms Chang has had a long and close association with Mr Lau irrespective of their later, intimate relationship. The two met 2002 and quickly became, on Ms Chang’s evidence, “good friends”. From about 2003, Ms Chang lived at Richard Farrell Avenue (excluding periods she spent in China). Contrary to Ms Chang’s evidence, Mr Lee’s financial analysis implies Ms Chang did not pay Mr Lau rent. In 2004, Ms Chang went to China with Mr Lau. In 2006, a Mercury Energy power account described Ms Chang as Mr Lau’s “wife”. From 2007, Ms Chang worked at the BB Club, Mr Lau’s business. In 2011, the two formed a company. Between October 2009 and April 2014, $187,000 was transferred between the bank accounts of Ms Chang and Mr Lau. Consequently, the precise commencement of Ms Chang’s and Mr Lau’s intimate relationship is not important, still less indicative of when Ms Chang knew about Mr Lau’s offending.
[37] Put another way, even if Ms Chang is correct the intimate relationship did not begin much before Mr Lau’s arrest (October 2013)—a proposition of dubious veracity—Ms Chang has long been Mr Lau’s close friend. This provides support for Ms Chang’s knowledge of Mr Lau’s significant criminal activity.
12 Each is sparse.
[38] Fifth, Ms Chang helped Mr Lau conceal likely interests in both Rukutai Street and the BMW. Ms Chang bought Rukutai Street from Mr Lau and his family on 30 March 2012. She partially funded the purchase using a bank cheque for $151,533.
$150,000 entered Ms Chang’s bank account that same day. The balance had been modest: $502.85. Le Han deposited these funds. On 5 April 2012, Mr Lau bought a bank cheque for $150,000 payable to Mr Han.
[39] Ms Chang said Mr Lau contributed no money to the purchase. Rather, she had earlier loaned Mr Lau “roughly” $150,000, and he repaid this by repaying Mr Han the
$150,000 Mr Han had deposited to Ms Chang’s account. However, Mr Han did not testify; no record exists of Ms Chang’s alleged loan(s) to Mr Lau; and, the first bank transfer of funds from Ms Chang to Mr Lau was in June 2012—after Rukutai Street’s purchase.
[40] Ms Chang bought the BMW on 13 June 2014, so, well after Mr Lau’s arrest. In April and May that year, Ms Chang made two payments totalling $25,000 to a company owned by Mr Lau.13 Bank narrations refer to the BMW. Ms Chang made both using funds from overseas. Though Ms Chang says the money came from her parents, there is no evidence to support this, documentary or otherwise. Ms Chang insured the BMW and another car. She listed Mr Lau as the driver for the BMW, but listed herself and Mr Lau as the other car’s drivers.
[41] Sixth—and contrary to Ms Pecotic’s submission—Ms Chang’s travel patterns have changed since 2013. Ms Chang’s long China trips stopped. Indeed, Ms Chang did not travel in 2015 or 2016. These changes support the conclusions Ms Chang’s spending has been funded by Mr Lau’s significant criminal activity, and Ms Chang had knowledge of that.
[42] The Commissioner also contended Ms Chang helped Mr Lau import pseudoephedrine. Ms Chang was in China when the packages of ContacNT were imported here. All came from China. Fourteen SIM cards were found in Mr Lau’s and Ms Chang’s bedroom, including three inside a Louis Vuitton purse and another in
13 Mega Trade.
a Louis Vuitton handbag. In September 2013, Ms Chang received a $10,000 deposit from one of Mr Lau’s co-offenders, Jia Sun.
[43] It is possible Ms Chang helped Mr Lau to import pseudoephedrine. However, the evidence does not establish it is more likely than not Ms Chang did so.14
[44] I summarise. I find Ms Chang unlawfully benefitted from Mr Lau’s significant criminal activity, as she knew of it; benefitted from it; and helped conceal Mr Lau’s likely interests in property. But, I do not accept Ms Chang helped import pseudoephedrine.
Value of the unlawful benefit?
[45] Because the Commissioner has proved Ms Chang has unlawfully benefitted from significant criminal activity, that benefit is presumed to be the figure stated by the Commissioner in his application: $2,115,000.15 The presumption is rebuttable on the balance of probabilities.
[46]Ms Chang emphasises the criminal court found Mr Lau imported at least
5.5 kilograms of ContacNT, a much lower quantity than the 31 kilograms on which the Commissioner’s figure is based. True, but this does not help. The criminal court did not have the benefit of the financial evidence. And as observed, the Act creates a civil, non-conviction-based regime. Consequently, Ms Chang must disprove the Commissioner’s figure. Her submission does not engage such proof.
[47] Ms Chang notes drug importers sometimes conduct dummy or “dry-runs”, in which no drugs are sent in the test package. Mr Jamieson, a customs officer, agreed. But, this does not help Ms Chang either. This does no more than establish the possibility of a dummy run; it does not make it more likely than not a dummy run occurred in this case. The onus is on Ms Chang to prove, and to the civil standard.
14 I place no weight on a photograph adduced by the Commissioner from a memory card found at Richard Farrell Avenue. The photograph shows pseudoephedrine concealed in a hollowed-out book, replete with an apparently female finger. The photograph is dated 21 June 2011. The Commissioner says the finger must be Ms Chang’s, because Mr Lau’s then partner was not in the country. I disagree. The finger could be Ms Chang’s—or that of any other female.
15 Criminal Proceeds (Recovery) Act, s 53.
[48] Finally, Ms Chang contends the use of an average weight from the caught packages across the uncaught ones is speculative. This submission may have purchase in a criminal case, in which the prosecution must prove the charge beyond reasonable doubt. However, the submission does not address the onus on Ms Chang to disprove the Commissioner’s figure. Katz J captured the point well in Commissioner of Police v Tang:16
… The figure of $360,000 is presumed to be the correct benefit amount unless and until Mr Tang proves otherwise. Mr Tang cannot do this by simply “critiquing” aspects of the Commissioner's methodology as, ultimately, precisely how the Commissioner calculated his benefit figure is irrelevant. Mr Tang must adduce his own evidence to establish, on the balance of probabilities, that the true benefit figure was less than $360,000.
[49]The value of the unlawful benefit remains $2,115,000.
Maximum recoverable amount?
[50] Section 54 provides the maximum amount recoverable in a profit forfeiture order is the value of the unlawful benefit, less “the value of any property forfeited to the Crown as a result of an assets forfeiture order made in relation to the same significant criminal activity to which the profit forfeiture order relates.”17 This is designed to prevent double recovery on the Commissioner’s part.18
[51] The settlement with Mr Lau involves asset forfeiture orders of $625,705.66. His case concerns “the same significant criminal activity” to which Ms Chang’s “profit forfeiture order relates”.19 So, the statute implies the “maximum amount recoverable” is “the value of the unlawful benefit”—$2,115,000—less $625,705.66.
[52] The Commissioner contends the value of Mr Lau’s asset forfeiture orders should not be deducted, a submission supported by observations of Nation J in Commissioner of Police v Musson.20 Nation J accepted s 54(1) “was designed to avoid
16 Commissioner of Police v Tang [2013] NZHC 1750 at [39].
17 Criminal Proceeds (Recovery) Act, s 54(1)(b).
18 Simon France (ed) Adams on Criminal Law – Sentencing (online looseleaf ed, Thomson Reuters) at [CP54.01].
19 Criminal Proceeds (Recovery) Act, s 54(1)(b).
20 Commissioner of Police v Musson [2016] NZHC 43 at [35].
double counting in the determination of a profit forfeiture order”.21 However, the Judge was troubled at the prospect one offender might retain the benefits of crime through deduction of the value of co-offender’s asset forfeiture order:22
… There should be implied into s 54(1)(b) the words required to ensure that a person who has benefited from significant criminal activity is not able to retain some or all of the value of those benefits through deduction of the value of property which the Commissioner is recovering through an assets forfeiture order against another person who also, albeit separately, benefited from the significant criminal activity.
The legislation should not be applied in a way that allows a number of respondents to bring into account against the value of what they might have to forfeit to the Commissioner, the amount which the Commissioner is recovering from one person in relation to the benefits that person obtained and the property which that person owns. Section 54(1)(b) should thus be applied as if it reads:
Deducting from that the value of any property forfeited to the Crown as a result of an assets forfeiture order made in relation to property owned by the respondent and in relation to the same significant criminal activity to which the profit forfeiture order relates.
[53] I acknowledge the Judge’s concern. One of the Act’s purposes is to “eliminate the chance for persons to profit from … significant criminal activity”.23 Another is the deterrence of significant criminal activity.24 The Act clearly contemplates joint and several liability, not an accounting-style approach.
[54] On the other hand, s 54 does envisage the deduction of the value of any property forfeited to the Crown “in relation to the same significant criminal activity to which the profit forfeiture order relates”. Ms Chang benefitted from Mr Lau’s significant criminal activity, not her own. And, there is little prospect Ms Chang will retain the benefit of significant criminal activity because the figure chosen by the Commissioner is the value of all pseudoephedrine imported, and the net figure ($1,489,294.34) is appreciably more than the sum deposited to the bank accounts of Mr Lau and Ms Chang in the relevant period ($1,328,567.88).
[55]I deduct $625,705.66. The maximum recoverable amount is $1,489,294.34.
21 Commissioner of Police v Musson, above n 20, at [33].
22 At [34]–[35].
23 Criminal Proceeds (Recovery) Act, s 3(2)(a) (emphasis added).
24 Section 3(2)(b).
Which property should be realised?
[56] It is common ground Ms Chang is the registered owner of Rukutai Street and the BMW. Mr Lau’s likely interest in both is addressed by his consent to forfeiture. This leaves undue hardship. Section 56 provides:
56 Exclusion of respondent’s property from profit forfeiture order because of undue hardship
(1) The High Court may, on an application made by the respondent before a profit forfeiture order is made, exclude certain property from being able to be realised under section 55(2)(c) if it considers that, having regard to all of the circumstances, undue hardship is reasonably likely to be caused to the respondent if the property were realised.
(2) The circumstances the Court may have regard to under subsection (1) include, without limitation,—
(a)the use that is ordinarily made, or was intended to be made, of the property that is, or is proposed to be, the subject of the profit forfeiture order; and
(b)the nature and extent of the respondent’s interest in the property; and
(c)the circumstances of the significant criminal activity to which the profit forfeiture order relates.
(3) After a profit forfeiture order is made, nothing in this section prohibits a respondent from realising the property that was excluded from being able to be realised under section 55(2)(c) if—
(a)after realising other property under that section there is still a debt owed to the Crown under section 55(4); and
(b)the respondent agrees to realise the excluded property in order to pay all or part of that debt.
[57] Ms Chang contends she will suffer significant hardship, especially in relation to Rukutai Street. She purchased it as an investment and will lose the opportunity of significant capital gain in the event of forfeiture.
[58] I do not consider loss of an investment property amounts to undue hardship. Undue hardship requires hardship going beyond that which would ordinarily be caused to a respondent from forfeiture. Even forfeiture of a family home does not necessarily suffice.25 Mr Lau partially funded Rukutai Street’s purchase, and Ms Chang happily
25 See, for example, Commissioner of Police v de Wys [2018] NZHC 609 at [60]–[61].
enjoyed the benefits of his significant criminal activity. Forfeiture is entirely consistent with the Act’s purposes. So too forfeiture of the BMW. Any other conclusion would be pusillanimous.
Asset forfeiture order?
[59] My conclusions imply Rukutai Street and the BMW are tainted property. However, it is unnecessary to address the Commissioner’s application for asset forfeiture orders as it was advanced as an alternative to the application for a profit forfeiture order.
Orders
[60]I approve settlement through orders at [13].
[61]I make a profit forfeiture order against Ms Chang:
(a)The value of the benefit of the significant criminal activity is
$2,115,000.
(b)The maximum recoverable amount is $1,489,294.34.
(c)Rukutai Street and the BMW vehicle may be disposed of in accordance with s 83(1) to satisfy the profit forfeiture order.
……………………………..
Downs J
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