Commissioner of Police v Liu
[2023] NZHC 894
•21 April 2023
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2022-404-1480
[2023] NZHC 894
UNDER the Criminal Proceeds (Recovery) Act 2009 BETWEEN
COMMISSIONER OF POLICE
Applicant
AND
YANXIAN LIU
Respondent
Hearing: On the papers Counsel:
M R Harborow and C R Purdon for the Applicant Respondent in person
Judgment:
21 April 2023
JUDGMENT OF GAULT J
This judgment was delivered by me on 21 April 2023 at 3:30 pm pursuant to r 11.5 of the High Court Rules 2016.
Registrar/Deputy Registrar
……………………………………
Parties / Solicitors:
Mr M R Harborow and Mr C R Purdon, Meredith Connell, Office of the Crown Solicitor, Auckland The Respondent
COMMISSIONER OF POLICE v LIU [2023] NZHC 894 [21 April 2023]
[1] The parties, the Commissioner of Police and Mr Liu, have filed a joint memorandum dated 24 March 2023 seeking Court approval of a proposed settlement pursuant to s 95 of the Criminal Proceeds (Recovery) Act 2009 (the Act).
Factual background
[2] On 23 June 2021, while executing a search warrant at Mr Liu’s residential address at 27 Norana Avenue, Favona, Auckland for an unrelated matter, Police and the New Zealand Customs Service located cash totalling $141,480 (Cash). Also seized along with the Cash was approximately 14,000 uncustomed Chinese cigarettes and 1,500 grams of tobacco,1 a cigarette making machine and Mr Liu’s phone containing images of persons gambling with large sums of cash and a “tick list” which appeared to show moneys owed to Mr Liu by various gamblers. Customs confirmed there is no record of Mr Liu ever paying duty or GST on imported cigarettes or tobacco.
[3] Mr Liu made admissions to Police that the Cash is the proceeds of Mahjong gambling at the Nan Xin restaurant in Newmarket, of which he claims to be a part owner. Enquiries with the Department of Internal Affairs (DIA) have confirmed that there is no record of an approved Class 3 Gambling licence being issued to a society, corporate society or any other promoter to conduct Mahjong gambling in the Newmarket area.
[4] Mr Liu has previously made admissions to Police that he is involved in ‘loan sharking’, lending money to people. He is not, and there is no record he has ever been, a registered financial services provider, nor has he declared any such earnings to Inland Revenue.
[5]No criminal charges were laid against Mr Liu in relation to the search.
The proceeding
[6] On 26 August 2022, the Commissioner filed an on-notice application for a restraining order under ss 24 and 25 of the Act over the Cash on the basis that it represented the proceeds of three intertwined limbs of significant criminal activity,
1 79 cartons of cigarettes and four bags of loose tobacco.
namely illegal gambling, the unlawful provision of financial services and the sale of uncustomed cigarettes. The documents were served on 30 August 2022.
[7] On 22 September 2022, the application was first called before Harvey J, who adjourned it for four weeks, to 20 October 2022, to enable Mr Liu sufficient opportunity to instruct counsel and take any steps in opposition, if he so wished. The minute was served on 27 September 2022.
[8] On 20 October 2022, the application came before Davison J. There was no appearance by or on behalf of Mr Liu. The application was granted without opposition and the restraining order was made, as sought by the Commissioner, over the Cash. The restraining order was served on 22 November 2022.
Significant criminal activity
[9] The Commissioner’s case is that Mr Liu operates illegal Mahjong gambling games, from which he earns money, and during which he sells uncustomed cigarettes and offers credit to gamblers.
Illegal gambling
[10] The Mahjong gambling at the restaurant that Mr Liu participated in, and profited from, is illegal gambling. Under s 9 of the Gambling Act 2003, gambling is prohibited and illegal unless it is authorised by or under that Act and complies with that Act and any relevant licence, game rules and minimum standards;2 authorised by or under the Racing Industry Act 2020 and complies with that Act and any regulations;3 or is private gambling.4
[11] Prior Police involvement at the Nan Xin restaurant confirmed that illegal Mahjong gambling takes place at that establishment, and enquiries with the DIA established that there are no gambling licences issued to conduct Mahjong gambling in the Newmarket area.
2 Gambling Act 2003, s 9(1)(a).
3 Section 9(1)(b).
4 Section 9(1)(c).
[12] The illegal gambling is significant criminal activity because Mr Liu has acquired proceeds or benefits of more than $30,000 from this activity.
Unlawful provision of financial services
[13] As someone in the business of providing a financial service, including being a creditor, Mr Liu was required to be registered under s 11 of the Financial Service Providers (Registration and Dispute Resolution) Act 2008. It is an offence to knowingly breach that provision.5
[14] The unlawful provision of financial services is significant criminal activity because Mr Liu has acquired proceeds or benefits of more than $30,000 from this activity.
Sale of uncustomed cigarettes
[15] The sale of uncustomed cigarettes is an offence under the Customs and Excise Act 2018, namely defrauding customs revenue6 and for the sale of uncustomed goods.7 The packaging on the Chinese cigarettes contained no health warnings as required for all cigarettes sold in New Zealand, suggesting that they were of foreign origin.
[16] The sale of uncustomed cigarettes is significant criminal activity because the offences have a maximum penalty of five years’ imprisonment and/or because Mr Liu has acquired proceeds or benefits of more than $30,000 from this activity.
Mr Liu’s position
[17] Mr Liu is self-represented but agrees he has had the opportunity to seek legal advice in respect of the settlement. He has elected not to engage the service of a lawyer. On 2 March 2023, Detective Wyllie met with Mr Liu at his address and provided him with a copy of the Commissioner’s letter proposing settlement. Mr Liu advised Detective Wyllie that the Commissioner should “just take it”. Detective
5 Financial Service Providers (Registration and Dispute Resolution) Act 2008, s 11. Maximum penalty 12 months’ imprisonment and or $100,000 fine.
6 Customs and Excise Act 2018, s 371.
7 Section 373.
Wyllie advised Mr Liu to seek legal advice and to advise before 24 March 2023 if he wished to accept the Commissioner’s offer. Mr Liu wishes to conclude matters as set out in the joint memorandum without further delay.
Proposed settlement
[18] The terms of the agreement between the Commissioner and Mr Liu to settle the matter of civil forfeiture, subject to the Court’s approval under s 95 of the Act, are that:
(a)an assets forfeiture order be made under s 50(1) of the Act, by consent, over the Cash seized, and any interest accrued;
(b)Mr Liu agrees to abandon any and all claims he has (under the Act or otherwise) to any of the Cash;
(c)this settlement is in full and final settlement of the question of civil forfeiture of the Cash in CIV-2022-404-1480; and
(d)costs in relation to this matter would lie where they fall.
[19]The approximate value of the property being forfeited as at 20 March 2023 is
$142,538.41.
Applicable principles
[20]Section 95 of the Act provides:
95High 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 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.
[21]The purposes of the Act are set out in s 3, which provides:
3 Purpose
(1)The primary purpose of this Act is 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
(d) 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.
[22] The language in s 95(3)(b) of “the overall interests of justice” indicates that a broad enquiry is required.8 Relevant principles to be borne in mind are the time and cost savings to the parties,9 and that settlements may be made on economic and pragmatic grounds, reflecting a common sense compromise. There is a strong public interest in litigation being brought to a prompt conclusion provided the settlement reflects the likely costs and risks inherent in the determination of a contested application. The Court’s approval is not a rubber-stamping exercise.
8 Commissioner of Police v Li [2018] NZHC 1566 at [32].
9 Commissioner of Police v Zhang [2016] NZHC 930 at [8]. See also Commissioner of Police v Kree [2013] NZHC 2972 at [11].
[23]Section 50(1) of the Act provides that:10
(1) If, on an application for an assets forfeiture order, the High Court is satisfied on the balance of probabilities that specific property is tainted property, the Court must make an assets forfeiture order in respect of that specific property.
[24]Tainted property is defined in the Act:11
tainted property—
(a)means any property that has, wholly or in part, been –
(i)acquired as a result of significant criminal activity; or
(ii)directly or indirectly derived from significant criminal activity; and
(b)includes any property that has been acquired as a result of, or directly or indirectly derived from, more than 1 activity if at least 1 of those activities is a significant criminal activity.
[25]Significant criminal activity is defined in s 6:
6 Meaning of significant criminal activity
(1)In this Act, unless the context otherwise requires, significant criminal activity means an activity engaged in by a person that if proceeded against as a criminal offence would amount to offending—
(a)that consists of, or includes, 1 or more offences punishable by a maximum term of imprisonment of 5 years or more; or
(b)from which property, proceeds, or benefits of a value of
$30,000 or more have, directly or indirectly, been acquired or derived.
(2)A person is undertaking an activity of the kind described in subsection
(1) whether or not—
(a)the person has been charged with or convicted of an offence in connection with the activity; or
(b)the person has been acquitted of an offence in connection with the activity; or
(c)the person’s conviction for an offence in connection with the activity has been quashed or set aside.
10 Section 50(1) is subject to s 51 which provides for applications to exclude property from an order on the basis of undue hardship but there is no such application here.
11 Section 5(1).
(3)Any expenses or outgoings used in connection with an activity of the kind described in subsection (1) must be disregarded for the purposes of calculating the value of any property, proceeds, or benefits under subsection (1)(b).
Analysis
[26] I am satisfied that the proposed settlement is consistent with the purposes of the Act and the overall interests of justice for the following reasons, which largely reflect the joint memorandum.
[27] First, I accept given the Commissioner’s evidence and Mr Liu’s admissions that the Commissioner has a good case that the Cash was acquired as a result of significant criminal activity, at least in relation to illegal gambling, and is therefore tainted property. Mr Liu admitted to police that the Cash is the proceeds of Mahjong gambling at the restaurant of which he claims to be a part owner. The joint memorandum agrees that the Mahjong gambling that he participated in, and profited from, is illegal gambling. The amount involved well exceeds the $30,000 threshold for significant criminal activity. Even if the Cash was not all the proceeds of gambling as Mr Liu admitted, there is evidence indicating the other offending referred to, and the Commissioner nevertheless has a good case that the Cash was acquired as a result of significant criminal activity.
[28] Secondly, there will be a saving of time and cost if the matter is resolved by consent. As well as the savings to the parties, this will obviate the need for Court time and resource. An agreed settlement will allow the parties to have certainty and control as to the outcome.
[29]Thirdly, the proposed settlement will ensure the Cash is forfeited.
[30] Finally, while Mr Liu is self-represented, Detective Wyllie explained the settlement documents to him and he said he understood and confirmed he was happy to sign. As well as the joint memorandum, he signed a letter accepting the offer of settlement and an assets forfeiture order. The letter confirmed he had been advised to seek legal advice but did not wish to do so and was happy for the matter to be concluded.
[31] For these reasons, I am satisfied that the proposed settlement is consistent with the purposes of this Act and the overall interests of justice. It should be approved.
[32] As requested by the parties, I note the further terms of settlement referred to in the joint memorandum, namely that Mr Liu agrees to abandon any and all claims he has (under the Act or otherwise) to the Cash; and that the settlement is in full and final settlement of the question of civil forfeiture of the Cash in this proceeding.
Result
[33] The proposed settlement outlined in paragraph 6.2 of the joint memorandum dated 24 March 2023 is approved.
[34]I make the following orders:
(a)Assets forfeiture order under s 50(1) of the Criminal Proceeds (Recovery) Act 2009: the $141,480 cash seized by the New Zealand Police on 23 June 2021 at 27 Norana Avenue, Favona, Auckland, and any interest accrued, vests in the Crown absolutely and is in the Official Assignee’s custody and control.
(b)Costs lie where they fall in relation to all matters between the parties in this proceeding.
Gault J
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