Commissioner of Police v Le

[2024] NZHC 1668

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-2419

[2024] NZHC 1668

BETWEEN

COMMISSIONER OF POLICE

Applicant

AND

NHU QUYNH THI LE

Defendant

Hearing:	on the papers
Counsel:	R J McDonald for applicant A Wei for respondent
Judgment:	24 June 2024

JUDGMENT OF JOHNSTONE J

(approving settlement between Commissioner and respondent)

This judgment was delivered by me on 24 June 2024 at 12.30 pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors:
Kayes Fletcher Walker, Auckland

COMMISSIONER OF POLICE v LE [2024] NZHC 1668 [24 June 2024]

[1]    On 13 August 2020, when executing a search warrant, the police found the house at 72 Ransom Smyth Drive, Goodwood Heights, to have been significantly modified for the purpose of commercial-scale cannabis cultivation. All but one room was being used to cultivate cannabis. Amongst the various tents, heat lamps, light shields, timers, irrigation systems, and ducting, were 205 cannabis plants in various stages of growth.

[2]    At the time, the registered  owner  of  the  property  was  the  respondent,  Nhu Quynh Thi Le. Ms Le was not present during the search. She later told the police she had bought the property in late 2018, using money gifted to her by her parents. She had rented it soon afterwards to the man police had found in occupation, and he had been paying her $700 per week in rent.

[3]    In November 2020, the Goodwood Heights property was sold at auction. But before the sale settled, the property was restrained in this proceeding under the Criminal Proceeds (Recovery) Act 2009. The sale was permitted to continue, but after discharge of the mortgage the net proceeds of sale in the sum of $347,000 were retained in the custody and control of the Official Assignee.

[4]    By application dated 20 February 2024, the Commissioner of Police sought a profit forfeiture order in the sum of $421,510, and an asset forfeiture order in respect of the net sale proceeds of 72 Ransom Smyth Drive and the sum of $14,250 cash that had been seized from Ms Le’s Flat Bush home on 14 May 2021.

[5]    The Commissioner and Ms Le have now settled that application between themselves. They ask that I approve their settlement pursuant to s 95 of the Criminal Proceeds (Recovery) Act 2009 (Act), so that it becomes binding.

Background

[6]Police investigation following the search on 13 August 2020 disclosed that:

(a)When Ms Le bought the Goodwood Heights property, she funded the purchase by taking a loan from a trading bank and paying the balance of $191,110.92 from her own resources. Of that amount, at least

$177,290 was funded by cash deposits into her bank accounts, most of which she made herself, and around $20,000 of which were made by the man police found in occupation of the property in August 2020.

(b)Once the property had been bought, and purportedly rented to that man as Ms Le’s tenant, his so-called rental payments to the value of $64,970 were deposited in her bank account in cash.

Approval of settlements under the Act

[7]Section 95 of the Act provides as follows:

95  High  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 approve 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.

[8]    As can be seen, Parliament has expressly empowered the Commissioner to enter into settlements as to the forfeiture of property under the Act, and it has entrusted the High Court with a supervisory jurisdiction to approve settlements when satisfied they are consistent with the purposes of the Act and the overall interests of justice.1

[9]    The primary purpose of the Act as set out in s 3(1) is to establish a regime for the forfeiture of property that has been derived directly or indirectly from significant

1      Commissioner of Police v Know-All Group Ltd HC Auckland CIV-2010-404-403, 7 November 2011 at [11].

criminal activity or which represents the value of a person’s unlawfully derived income.2 Further purposes are stated at s 3(2), as follows:3

(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.

[10]   The requirement expressed in s 95(3) that the Court have regard to the overall interests of justice reflects the strong public interest in litigation under the Act being brought to a prompt conclusion, reflecting the likely costs and risks inherent in the determination of a contested application,4 and the desirability of proceedings under the Act being made on economic and pragmatic grounds reflective of common sense compromise.5

The settlement for approval in this case

[11]The settlement proposed for approval in the present case is that:

(a)the sum of $49,459.70 should be released from restraint, the Official Assignee paying:

(i)$35,270.82 to the Inland Revenue Department; and

(ii)      $14,188.88 to Ms Le;

2      Criminal Proceeds (Recovery) Act, s 3(1).

3      Section 3(2).

4      Commissioner of Police v Cotton [2017] NZHC 21 at [7].

5      Commissioner of Police v Douglas [2015] NZHC 1293 at [6].

(b)the balance of the property restrained in this proceeding, comprised of the net proceeds of sale of the Goodwood Heights property and the sum of $14,250 seized from Ms Le’s home, together with any interest accrued on those amounts, should be made the subject of a type 1 asset forfeiture order;

(c)the Commissioner should have leave under s 47 of the Act not to pursue his application for a profit forfeiture order;

(d)costs are to lie where they fall; and

(e)the settlement fully and finally resolves this proceeding.

Decision

[12]To consider the merits of the settlement, it is necessary to know two things:

(a)First, the Commissioner calculated the sum of $421,510, which he nominated as the value of Ms Le’s allegedly unlawful benefit from significant criminal activity,6 as follows:

(i)$177,290 of unexplained cash deposits used to fund the Goodwood Heights purchase;

(ii)$64,970 of so-called rent, paid in cash;

(iii)$14,250 cash seized from Ms Le’s home; and

(iv)$165,000, being the difference between the November 2020 Goodwood Heights auction sale price of $1,055,000 and the September 2018 purchase price of $890,000.

(b)Second, Inland Revenue assessed Ms Le as liable to pay tax in respect of income derived by her upon the Goodwood Heights purchase and

6      Criminal Proceeds (Recovery) Act, s 52.

later sale. To date, Ms Le has paid $14,188.88 of that liability. The sum of $35,270.82 remains outstanding.

[13]   The first thing is important to know, because it is at best unclear the Commissioner’s calculation was justifiable. Calculation of the value of an investment in residential property by reference to the simple difference between its purchase price and its later sale price may be misleading. Other forms of expense, including interest paid on borrowed capital and tax incurred, are likely to require to be taken into account.

[14]   The second thing is important in an obviously related way, but also because it demonstrates that Ms Le will not, in the event the settlement is approved, recover any net financial advantage following the seizure of all assets the police allege were derived by her from criminal activity.

[15]   Approval of the settlement so that it becomes binding is, in my view, consistent with the purposes of the Act and the overall interests of justice. There will be a saving of time and expense if the proceeding can be resolved by consent without the need for a hearing, and an agreed settlement will allow the parties to have certainty and control as to the outcome. It is nevertheless appropriate that the bulk of the restrained monies are realised for the benefit of the Crown, given the extent to which it appears Ms Le has benefited, directly or indirectly, from significant criminal activity. But it is also appropriate that her part payment to Inland Revenue should be reimbursed, given the savings and certainty just outlined, and the absence of any net financial advantage accruing to Ms Le as a consequence of her investment of allegedly criminally derived cash.

Result

[16]The settlement is approved accordingly.

[17]I make the following orders, so as to give effect to the settlement:

(a)orders under ss 33, 34 and 35 of the Act:

(i)the restraining orders in this proceeding are varied so as to exclude $49,459.70 of the restrained funds from restraint;

(ii)the Official Assignee is directed to transfer:

(1)$35,270.82 of the excluded funds to Inland Revenue on account of Ms Le’s liability in respect of income derived from the Goodwood Heights sale; and

(2)the balance of the excluded funds, comprised of $14,188.88 to a bank account to be nominated by Ms Le;

(b)a type 1 assets forfeiture order under s 50(1) of the Act: that the balance (after compliance with the orders at [17](a)) of the funds restraining in this proceeding, comprised of the net sale proceeds of the Goodwood Heights property, the sum of $14,250 cash seized from Ms Le’s home on 14 May 2021, and any accrued interest, vests in the Crown absolutely and is in the Official Assignee’s custody and control;

(c)granting leave not to pursue the profit forfeiture order application previously brought by the Commissioner in this proceeding, which is dismissed; and

(d)costs: costs lie where they fall in relation to all matters between the Commissioner and Ms Le in this proceeding.

Johnstone J