Commissioner of Police v Nonu
[2017] NZHC 459
•15 March 2017
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2016-404-001921 [2017] NZHC 459
UNDER the Criminal Proceeds (Recovery) Act
2009
BETWEEN
COMMISSIONER OF POLICE Applicant
AND
PAUL JOHN NONU Respondent
Hearing: (On the papers) Counsel:
Mark Harborow and David Wiseman for the Applicant
John Munro for the RespondentJudgment:
15 March 2017
JUDGMENT OF MOORE J
This judgment was delivered by me on 15 March 2017 at 4:30 pm pursuant to Rule 11.5 of the High Court Rules.
Registrar/ Deputy Registrar
Date:
COMMISSIONER OF POLICE v NONU [2017] NZHC 459 [15 March 2017]
Introduction
[1] I have received a joint memorandum filed by counsel for the Commissioner of Police (“the Commissioner”) and counsel for the respondent, Mr Nonu for the purpose of assisting the Court to determine whether to approve a settlement under s 95 of the Criminal Proceeds (Recovery) Act 2009 (“the Act”). Any settlement made in relation to proceedings brought under the provisions of the Act is required to
be approved by this Court.1
[2] I approve the settlement for the reasons discussed below.
Background
[3] In May 2015 the Police commenced an investigation into the manufacture, supply and distribution of methamphetamine by Mr Nonu and others, codenamed Operation Albert. Intercepted communications indicated that Mr Nonu was purchasing methamphetamine precursor materials from an associate and arranging for other associates to manufacture methamphetamine. Mr Nonu would then take possession of the manufactured methamphetamine and on-sell it.
[4] On 13 December 2015 Mr Nonu was arrested as he drove away in his Mercedes vehicle from an associate’s home address. Upon arrest, Mr Nonu was found to have seven grams of methamphetamine, eight snaplock bags and $400 cash on his person. A further sum of cash was located in the Mercedes. The same day the Police conducted a search of Mr Nonu’s home address in Albany. In the course of this search the Police located a Toyota Hilux, a Harley Davidson motorcycle and
$2,213.20 in cash.
[5] On 14 December 2015 the Police executed a search warrant at Mr Nonu’s sister’s Hillcrest home. At that address a clandestine methamphetamine laboratory was located and a kilogram of ephedrine was discovered buried in the garden. The
Police also found 18 litres of hypophosphorus acid and 6.5 kilograms of iodine,
1 Criminal Proceeds (Recovery) Act 2009, s 95.
reagents commonly found in connection with the illicit manufacture of methamphetamine.
[6] Mr Nonu was charged with various serious drug dealing offences including conspiracy to supply methamphetamine, possession of methamphetamine to supply, participation in an organised criminal group, possession of equipment with intent, possession of materials with intent and possession of a precursor substance with intent.
[7] On 8 November 2016 Mr Nonu sought a sentence indication at the Auckland District Court. On 15 November 2016 he accepted the indication and pleaded guilty to the charges of conspiracy to manufacture methamphetamine, two charges of conspiracy to supply methamphetamine, possession of methamphetamine for supply and possession of equipment, materials and precursor substances with intent to manufacture methamphetamine. He is due to be sentenced on 26 May 2017.
Applications
[8] On 15 August 2016 the Commissioner filed an application for restraining and
civil forfeiture orders in respect of the following property (“the property”):
(a) a 2005 Mercedes-Benz 55 AMG motor vehicle, registration number HEH81, registered to Niu Era Security Limited (“the Mercedes”), being the vehicle Mr Nonu was driving on 13 December 2015 when he was stopped by the Police;
(b) a 2013 Harley Davidson V-Road Motorcycle, registration number
A3RKY, registered to Mr Nonu (“the motorcycle”);
(c) a 2007 Toyota Hilux utility motor vehicle, registration number
EAE310 registered to Mr Nonu (“the Hilux”); and
(d)a total of $3,023.60 cash (“cash”) variously located on Mr Nonu’s person on 13 December 2015 as well as in the Mercedes and inside the property at Fairview Heights.
[9] The Commissioner has also sought asset forfeiture orders in respect of the property and has a profit forfeiture order in the sum of $242,982.60 being the quantum of the unlawful benefit allegedly derived by Mr Nonu.
[10] The Mercedes, motorcycle and Hilux have since been sold by the Official
Assignee pursuant to sale orders obtained by the Commissioner on 30 September
2016. The Official Assignee retains custody and control of the sale proceeds.
[11] In the last two years Mr Nonu has been in receipt of a very modest income which is insufficient to permit the acquisition of the Mercedes, motorcycle, Hilux and the large quantity of cash.
[12] Mr Nonu is the sole director and 51 per cent shareholder of Niu Era Security Limited (“Niu Era”), a company incorporated on 23 August 2011. An analysis of the Niu Era bank accounts shows that over the period from 3 January 2014 to 10 August
2015, the major source of the funds into the company accounts was unexplained cash deposits totalling $72,880, in amounts varying from $1,000 to $10,000.
[13] Inland Revenue records reveal that Mr Nonu declared no income for the tax years 2013 through to 2015. In 2016 Mr Nonu’s total declared income was $4,480 paid to him by Niu Era.
[14] Despite this lack of legitimate income Mr Nonu has acquired the assets set out above paying for both the Mercedes and motorcycle mainly in cash. He has also managed to meet his various living expenses and acquire illegal drugs and precursor substances.
Proposed settlement
[15] Counsel for the Commissioner and Mr Nonu have engaged in settlement discussions regarding the possible settlement of these proceedings. The parties have agreed to settle the matter of forfeiture of assets as between themselves, subject to the Court’s approval under s 95 of the Act.
[16] The parties have agreed that the property should be forfeited to the Crown. The proposed settlement of the Commissioner and Mr Nonu is as follows:
(a) asset forfeiture orders are to be made under s 50 of the Act in respect of:
(i) the proceeds of sale of the Mercedes; (ii) the proceeds of sale of the motorcycle; (iii) the proceeds of sale of the Hilux; and (iv) the cash.
[17] The settlement also contemplates that:
(a) the Commissioner withdraws his application for a profit forfeiture order against Mr Nonu;
(b) Mr Nonu will not pursue any application for relief from forfeiture;
and
(c) costs will lie where they fall in relation to all matters.
Legal principles: threshold for settlement approval
[18] Section 95 of the Act governs Court-approved settlements and 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 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.”
[19] Section 95 had no predecessor under the former legislation (Proceeds of Crime Act 1991). In enacting this section, Parliament expressly empowered the Commissioner to enter into settlement discussions with respondents and interested parties regarding the forfeiture of assets. In doing so, Parliament is likely to have had in mind the significant costs associated with civil litigation and the benefits to all parties if proceedings can be settled and resolved by consent.
[20] As has previously been observed, Parliament has entrusted the High Court with a supervisory jurisdiction to ensure that settlements are consistent with the parliamentary intention.2
[21] The primary purpose of the Act is contained in s 3(1); the establishment of a regime for the forfeiture of property which has been derived directly or indirectly from significant criminal activity or that represents the value of a person’s unlawfully derived income. Ancillary statutory 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)). The Court of Appeal in Hayward v Commissioner of Police recently affirmed the Act
has a “strongly expressed statutory purpose”.3
[22] The statutory language – “overall interests of justice” – indicates a broad inquiry is required. In considering whether a settlement is in the interests of justice, relevant factors will include the savings of time and cost and the litigation risk of a
hearing to both the Commissioner and the respondent.4 The Court has recognised
2 Commissioner of Police v Know-All Group Ltd HC Auckland CIV-2010-404-403, 7 November
2011 per Brewer J at [11].
3 Hayward v Commissioner of Police [2014] NZCA 625 at [29].
4 Commissioner of Police v Kree [2013] NZHC 2972 at [11].
the decision to settle proceedings under the Act may be made on economic and
pragmatic grounds and reflect a “common sense compromise” between the parties.5
[23] If the Court is satisfied of the two matters set out in s 95(3) the settlement reached between the parties must be approved.
This case; threshold for settlement approval met
[24] Reflecting the principles in s 95(3) the parties submit the settlement is consistent with the purposes of the Act and is in the overall interests of justice. I agree for the following reasons:
(a) time and cost will be saved if the matter is resolved by consent without the need for further litigation;
(b)it is appropriate that all of the property be forfeited to the Crown in recognition of the fact that it has likely been derived from significant criminal activity;
(c) the Commissioner considers he has a strong case for a profit forfeiture order but is willing to resolve the matter in a pragmatic way. In particular, the Commissioner is unaware of any other significant assets beyond the property attributable to Mr Nonu which could be realised to meet a profit forfeiture order;
(d) Mr Nonu acknowledges that a hearing carries a degree of risk for him.
Specifically, he has acknowledged this by virtue of his guilty pleas that he possessed substantial quantities of materials, equipment and precursor substances with intent, and that he conspired to both manufacture and supply methamphetamine. He wishes to resolve the matter in a way which provides him with some degree of control and
certainty as to outcome; and
5 Commissioner of Police v Douglas [2015] NZHC 1293 at [6]; Commissioner of Police v Venn
[2014] NZHC 361.
(e) the parties consider this represents a fair and reasonable settlement. It recognises the strengths of the Commissioner’s case. The absence of a profit forfeiture order against Mr Nonu will relieve him of any significant residual debt to the Crown in the future.
[25] Accordingly, I am satisfied that the proposed settlement is consistent with the purposes of the Act and it is in the overall interests of justice. In these circumstances the Court is mandated to approve settlement.
Orders
[26] Accordingly I make the following orders so as to give effect to the settlement reached:
(a) asset forfeiture orders under s 50(1) of the Act over the following property, so that it vests in the Crown absolutely and is to be in the Official Assignee’s custody and control:
(i) proceeds of sale of the Mercedes; (ii) proceeds of sale of the motorcycle; (iii) proceeds of sale of the Hilux; and (iv) the cash;
(b)the Commissioner withdraws his application for a profit forfeiture order against Mr Nonu and that aspect of the Commissioner’s application dated 15 August 2016 is dismissed;
(c) Mr Nonu will not pursue any application for relief from forfeiture;
and
(d)costs are to lie where they fall in relation to all matters as between the parties.
[27] These orders having been made it is now no longer necessary for this matter to be listed in the Duty Judge’s list on 8 March 2017. That hearing is vacated and
the appearances of counsel excused.
Moore J
Solicitors:
Meredith Connell, Auckland
Mr Munro, Auckland
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