Commissioner of Police v Lin
[2022] NZHC 1061
•16 May 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2020-404-1952
[2022] NZHC 1061
UNDER the Criminal Proceeds (Recovery) Act 2009 BETWEEN
COMMISSIONER OF POLICE
Applicant
AND
BO LIN
First Respondent
QIANNAN TANG
Second RespondentJIALIANG DU
Third Respondent
On papers Counsel:
S M Earl and S E Cann for applicant Y Mortimer-Wang for first respondent K E Hogan for second respondent
D P H Jones QC and T Cheung for third respondent
Judgment:
16 May 2022
JUDGMENT OF TOOGOOD J
This judgment was delivered by me on 16 May 2022 at 12pm, pursuant to r 11.5 of the High Court Rules
Solicitors:
Registrar/Deputy Registrar Date:
Crown Solicitor, Auckland for applicant K3 Legal, Auckland for first respondent
Cook Morris Quinn, Auckland for second respondent McLeod & Associates, Auckland for third respondent
COMMISSIONER OF POLICE v BO LIN [2022] NZHC 1061 [16 May 2022]
[1] The Commissioner of Police commenced proceedings against the respondents under the Criminal Proceeds (Recovery) Act 2009 (the Act). Restraining and other orders were made under the Act in October and November 2020 and were extended in November 2021 to expire on 18 May 2022. No application for civil forfeiture orders under the Act has been filed.
[2] The parties have now reached agreement on the terms of a proposed settlement for which they seek approval of the Court under s 95 of the Act. In summary, the proposed settlement involves the making of a consent profit forfeiture order involving the payment of $900,000.
[3] I have taken my summary of the background to the proposed settlement from the joint memorandum of counsel filed on 9 May 2022. I am grateful to counsel for their assistance.
Background
Uncustomed cigarettes
[4] This proceeding arose from an investigation by New Zealand Customs Service (Customs) in relation to undeclared Chinese cigarettes imported into New Zealand by the respondents via Enternal Trading Limited (Enternal).
[5]The respondents are all linked to Enternal:
(a)Mr Lin is the sole director and shareholder of Enternal Trading Limited;
(b)Ms Tang is Mr Lin’s partner and an employment agreement with Enternal states that Ms Tang has been the Business Development Specialist since February 2018;
(c)Mr Du stated to Customs that he had worked in sales and marketing for Enternal since 2014 and was the sales manager;
(d)Mr Du was also a director of Enternal between 23 March 2017 and 19 August 2017, which Mr Du stated was for the purpose of obtaining insurance for Enternal.
[6] On 17 July, 20 July and 23 July 2019, the Ministry for Primary Industries and Customs inspected a 40-foot container at the Auckland Port which had recently arrived from China. The container was imported by Enternal. Mr Du was present at the Auckland Port during the inspections.
[7] The container contained foodstuffs, with 483,400 Chinese cigarettes concealed inside the boxes of food (the intercepted cigarettes). Customs then initiated an investigation into Enternal, Mr Lin and Mr Du.
[8] On 20 July 2019, having been made aware of the interception, Mr Lin sent a WeChat message to the supplier of the goods imported in the container. Mr Lin told the supplier that there were cigarettes in his container that should not be there and asked what was going on as he did not import them. When Customs inspected Mr Lin’s phone, they discovered that all WeChat conversations prior to 20 July 2019 (the date the intercepted cigarettes were initially located) had been deleted.
[9] On 1 August 2019, Customs searched the home address of Mr Lin and Ms Tang at 39 Laburnum Road, New Windsor, Auckland. A handwritten note was found in a rubbish bin in Mr Lin and Ms Tang’s bedroom. It contained what appeared to be a plan to follow, and explanations to offer, in the event that Customs discovered the uncustomed cigarettes, including contacting the domestic wholesaler querying why there were cigarettes in the imported goods and evidencing some of the WeChat record.
[10] On 1 August 2019, Customs also searched Mr Du’s home address, 18 Pinefield Road, Whenuapai, Auckland and located five cartons of cigarettes in Mr Du’s vehicle, four of which were in the boot of the vehicle concealed in the boot lining tray (car cigarettes).
[11] On 2 August 2019, Customs searched two storage units linked to Mr Du. One storage unit had been rented by Mr Du since November 2016. The second storage unit was rented by Mr Du in his partner’s name on 16 July 2021.
[12] Customs found a total of 603,880 uncustomed Chinese cigarettes, which were not New Zealand labelled, hidden in the storage unit registered to Mr Du’s partner (storage cigarettes).
[13] CCTV footage obtained by Customs showed Mr Du moving the storage cigarettes from his storage unit to the storage unit rented in his partner’s name on 16 July 2019 and in the days after the inspection of the container.
[14] The total duty (excise and cigarette duty) and GST payable on all of the cigarettes located by Customs is estimated to be $1,209,670.42.
Criminal proceedings
[15] Uncustomed goods are those on which duty has become due and payable, but has not been paid. It is an offence pursuant to ss 371 and 372 of the Customs and Excise Act 2018 to defraud Customs revenue and possess uncustomed goods.
[16] Mr Lin and Enternal pleaded guilty to defrauding Customs in relation to the intercepted cigarettes. On 21 August 2020, Mr Lin was sentenced to nine months’ home detention, and Enternal was fined $25,000. The Court noted at Mr Lin’s sentencing that he is effectively Eternal’s “alter ego”. Mr Lin accepted in the course of the criminal proceeding that a note located at his house outlined a detailed plan of how to create a false paper trail in relation to the intercepted cigarettes.
[17] Mr Du was charged and convicted following trial of possession of uncustomed goods in relation to the storage cigarettes (but found not guilty of defrauding Customs in respect of the intercepted cigarettes).1 On 9 February 2021, he was sentenced to
1 Mr Lin was convicted of defrauding Customs in relation to 483,600 cigarettes, where the unpaid duty and GST was $537.542.38. There were actually slightly fewer cigarettes in the container (483,400) resulting in an unpaid duty of $537,320.07 as outlined at [14].
two months’ home detention. Mr Du was not charged with any criminal offences in relation to the car cigarettes.
[18] Ms Tang was not charged with any criminal offences in relation to the uncustomed cigarettes.
[19] I am informed that, if the Commissioner was to file an application for civil forfeiture orders, the unlawful benefit figure would be likely to exceed his current evaluation. It would take account of payments made by Enternal and a related company which were not declared to the Commissioner of Inland Revenue.
[20] The proposed settlement, details of which are set out below, include the payment of $600,000 by Mr Lin and a contribution of $300,000 by Mr Du. Ms Tang will not contribute money towards the settlement. Payment of the agreed sums will be secured in the meantime by the retention of assets which are subject to restraining orders.
[21] Section 95 of the Act provides that 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, but that a settlement does not bind the parties unless it is approved by the High Court. The High Court must approve the settlement if it is satisfied that it is consistent with:
(a)the purposes of the Act; and
(b)the overall interests of justice.
[22]I have taken into account the following considerations:
(a)civil litigation incurs substantial costs for the parties, a significant portion of which would not usually be recoverable under the rules of Court relating to payments of costs;
(b)it is in the public interest to avoid the burden on the Court of complex and lengthy civil litigation;
(c)there is also strong public interest in litigation of this nature being brought to a prompt conclusion, so long as the settlement reflects the likely costs and risks inherent in the determination of a contested application;2
(d)approval of any settlement by the Court acting in its supervisory jurisdiction requires consideration of the legislative intent and the overall interests of justice and is not a rubber-stamping exercise;3 and
(e)a broad inquiry is required, recognising that the decision to settle proceedings under the Act may be made on economic and pragmatic grounds and often reflects a “common sense compromise” between the parties.4
[23] In the present case, I accept the submissions of counsel that the proposal for a payment of $900,000 to the Crown, against the Commissioner’s preliminary estimate of the unlawful benefit of just over $1.2 million, is appropriate given the scale of the underlying criminal offending, particularly by Mr Lin and Mr Du.
[24] Although Ms Tang is considered to have unlawfully benefited from the significant criminal activity alleged, she played a lesser role and the Commissioner is prepared to settle on the basis of payments by the respondents who were predominant.
[25] The apportionment between Mr Lin and Mr Du reflects the respective roles of Mr Lin and Enternal (of which Mr Lin was the sole director and shareholder) and Mr Du, bearing in mind that Mr Du was found not guilty by a jury of defrauding Customs in relation to the intercepted cigarettes.
[26] Arguable disputes have been raised by the respondents regarding the Commissioner’s case and counsel have raised legal issues which, if resolved in the respondents’ favour, could lead to reductions in the recoverable amount.
2 Commissioner of Police v Cotton [2017] NZHC 21 at [7].
3 Commissioner of Police v Bradley HC Rotorua CIV-2011-463-675, 5 July 2012 at [9];
Commissioner of Police v Veevers [2017] NZHC 80 at [10].
4 Commissioner of Police v Douglas [2015] NZHC 1293 at [6]; Commissioner of Police v Venn
[2014] NZHC 361.
[27] Having regard to the nature of the offending; the admissions of the respondents; the cost and inconvenience of a lengthy civil proceeding, not only to the parties but also for the Court; the matters that are arguable in opposition to the Commissioner’s claims and usual litigation risks, I am satisfied that the proposed settlement meets the purposes of the Act and is consistent with the overall interests of justice.
[28]Accordingly, I make the following orders:
Restraining orders
Extension of restraining orders under s 41(2) of the Act:
1.I order that the restraining orders over:
(a)39 Laburnum Road, New Windsor, Auckland, record of title unique identifier NA5A/813, registered owner Bo Lin;
(b)3 Hutchinson Avenue, New Lynn, Auckland, record of title unique identifier NA46C/1437, registered owner Qiannan Tang; and
(c)18 Pinefield Road, Whenuapai, Auckland, record of title unique identifier 748572, registered owner Jialiang Du and Rongtai Trustee Limited,
made by van Bohemen J on 18 November 2020 are extended for a further period of one year from 18 May 2022 to 18 May 2023, provided that should Mr Du’s payment be made by 17 May 2022, pursuant to orders 2(f) and (g), the restraining order over 18 Pinefield Road shall be lifted, pursuant to order 2(h).
Further orders under s 34 of the Act
2.I order as follows:
Ms Tang
(a)The restraining order over the $6,000 cash (including any interest accrued)5 found during the search of 39 Laburnum Road on 1 August 2019 is rescinded and the Official Assignee is directed to pay this sum into a bank account nominated by the second respondent, Ms Tang.
(b)The restraining order over 3 Hutchinson Avenue is rescinded and is to be removed from the record of title.
Mr Lin
(c)Before paying Mr Lin’s payment to the Official Assignee, Mr Lin shall provide evidence, in affidavit form, with supporting documentation, to demonstrate to the Commissioner’s satisfaction, the source and legitimacy of Mr Lin’s payment (and the Commissioner may request further evidence/information if he considers that necessary).
(d)Mr Lin’s payment shall then be paid to the Official Assignee by 5 pm on 1 July 2022.
(e)Upon the Official Assignee providing written confirmation that Mr Lin’s payment has been paid, the restraining order over 39 Laburnum Road shall be lifted and the Official Assignee shall then immediately arrange for the restraining order to be removed from the record of title of 39 Laburnum Road.
Mr Du
(f)Before the payment of $249,209.31 (Mr Du’s payment) is made to the Official Assignee, Mr Du shall provide evidence, in affidavit form, with
5 Interest of $13.47 as at 28 February 2022.
supporting documentation, to demonstrate to the Commissioner’s satisfaction, the source and legitimacy of Mr Du’s payment (and the Commissioner may request further evidence/information if he considers that necessary).
(g)Mr Du’s payment shall then be paid to the Official Assignee by 5 pm on 17 May 2022.
(h)Upon the Official Assignee providing written confirmation that Mr Du’s payment has been paid, the restraining order over 18 Pinefield Road shall be lifted and the Official Assignee shall then immediately arrange for the restraining order to be removed from the record of title of 18 Pinefield Avenue.
Profit forfeiture
3.I order as follows:
Profit forfeiture order against Mr Lin and Mr Du under s 55 of the Act:
(a)The value of the benefit determined in accordance with s 53 of the Act is, as the case requires, $900,000.
(b)The maximum recoverable amount is $900,000.
(c)The following property shall be disposed of in accordance with s 83(1) of the Act:
Mr Lin
(i)$600,000 which Mr Lin shall pay to the Official Assignee by 5 pm on 1 July 2022; or
(ii)if $600,000 is not paid by Mr Lin to the Official Assignee by 5 pm on 1 July 2022, all interests in 39 Laburnum Road,
New Windsor, Auckland, record of title unique identifier NA5A/813, registered owner Bo Lin.
Mr Du
$300,000 made up of:
(A)$11,165 cash found during the search of 18 Pinefield Road, on 1 August 2019 including any accrued interest (total amount including interest is $11,190.07);
(B)the proceeds of sale of a 2017 Mercedes Benz GLC220D vehicle, registration KHD546 (Mercedes) formerly registered to Mr Du, including any accrued interest (total amount including interest is $39,600.62); and
(C)Mr Du’s payment ($249,209.31) which must be paid to the Official Assignee by 5 pm on 17 May 2022; or
(iv)if Mr Du’s payment ($249,209.31) is not paid to the Official Assignee by 5 pm on 17 May 2022, all interests in 18 Pinefield Road, Whenuapai, Auckland, record of title unique identifier 748572, registered owner Jialiang Du and Rongtai Trustee Limited.
Additional orders
I make the following orders:
Additional orders necessary and convenient for giving effect to the profit forfeiture order under s 59 of the Act:
Mr Lin
(a)In the event that the profit forfeiture order is to be met by the disposal of the property referred to in order 3(c)(ii), the Official Assignee shall,
as soon as is reasonably practicable, sell 39 Laburnum Road at its fair market value and deal with the proceeds of sale in the following way:
(i)first deduct the Official Assignee’s actual costs in effecting the sale;
(ii)second, repay any borrowings secured against the property;
(iii)third, apply $600,000 toward profit forfeiture order 3;
(v)finally, return the balance to Mr Lin to a bank account nominated by him.
(b)For the purposes of effecting a sale of 39 Laburnum Road, the Official Assignee (including a person delegated his functions and powers under the Act) has the power to execute any deed or instrument in the name of the registered proprietor of the property, and to do anything necessary to give validity and operation to the deed or instrument.
Mr Du
(c)In the event the total sum obtained from the net proceeds of the sale of the Mercedes (including any accrued interest), Mr Du’s cash (including any accrued interest) and Mr Du’s payment exceeds $300,000 (the amount required to meet profit forfeiture order 3(c)(iii)), the Official Assignee shall return the residual amount to Mr Du to a bank account nominated by him.
(d)In the event that the profit forfeiture order is to be met by the disposal of the property referred to in order 3(c)(iv), the Official Assignee shall, as soon as is reasonably practicable, sell 18 Pinefield Road at its fair market value and deal with the proceeds of sale in the following way:
(i)first deduct the Official Assignee’s actual costs in effecting the sale;
(ii)second, repay any borrowings secured against the property;
(iii)third, apply $249,209.31 toward profit forfeiture order 3; and
(iv)finally, return the balance to Mr Du to a bank account nominated by him.
(e)For the purposes of effecting a sale of 18 Pinefield Road, the Official Assignee (including a person delegated his functions and powers under the Act) has the power to execute any deed or instrument in the name of the registered proprietor of the property, and to do anything necessary to give validity and operation to the deed or instrument.
(f)Should Mr Du’s payment of $249,209.31 (or any part of it) not be paid by 17 May 2022, interest will run on any unpaid amount at five per cent per annum on a daily basis (the gross unpaid amount).
(g)Should the gross unpaid amount be paid, the sale process for 18 Pinefield Road, referred to in order 4(d) will cease and all reasonable costs incurred on that process will be payable by Mr Du.
Costs
[29] Costs shall lie where they fall in relation to all matters as between the Commissioner and Mr Lin, Ms Tang and Mr Du.
[30]I note that the following further terms are included in the agreed settlement:
(a)if 39 Laburnum Road is disposed of pursuant to orders 3(c)(ii) and 4(a), Mr Lin and Ms Tang abandon all claims they may have, under the Act or otherwise, to 39 Laburnum Road;
(b)if 18 Pinefield Road is disposed of pursuant to orders 3(c)(iv) and 4(d), Mr Du abandons all claims he may have, under the Act or otherwise, to 18 Pinefield Avenue;
(c)the Commissioner will not bring any further application for forfeiture orders against Mr Lin, Ms Tang and Mr Du with regard to the significant criminal activity alleged in this proceeding to date; and
(d)the settlement is in full and final settlement of the current proceedings brought by the Commissioner against Mr Lin, Ms Tang and Mr Du under the Act.
Toogood J
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