Commissioner of Police v Rodriguez
[2022] NZHC 3164
•30 November 2022
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE
CIV-2019-419-150
[2022] NZHC 3164
BETWEEN COMMISSIONER OF POLICE
Applicant
AND
ANDREINA GAMEZ RODRIGUEZ
First Respondent
AND
MAP AND ASSOCIATES TRUSTEE COMPANY
Second Respondent
AND
BANK OF NEW ZEALAND
Interested Party
Hearing: 11 October 2022 Appearances:
J N Hamilton for Applicant
K E Cornegé & C S Frost for First Respondent
Judgment:
30 November 2022
JUDGMENT OF PAUL DAVISON J
This judgment was delivered by me on 30 November 2022 at 4:30pm pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Solicitors:
Crown Solicitor, Hamilton Tompkins Wake, Hamilton
COMMISSIONER OF POLICE v RODRIGUEZ [2022] NZHC 3164 [30 November 2022]
Introduction
[1] The Commissioner of Police (the Commissioner) applies pursuant to s 41 of the Criminal Proceeds (Recovery) Act 2009 (the Act), for an order extending the duration of the restraining order made by Peters J on 14 December 2021 for a period of 12 months ending on 10 September 2022. On 24 August 2022 Harland J made an order that the restraining order made by Peters J on 14 December 2021 is extended until determination of the Commissioner’s substantive application for extension.
[2] Ms Andreina Gamez Rodriguez (the first respondent) does not oppose the application in full, but says that any extension of the restraining order should be conditional on the Commissioner commencing forfeiture proceedings by 10 March 2023, and also providing an undertaking as to damages pursuant to s 29 of the Act.
Background
[3] On 29 March 2019 USD 11,850,000 was transferred into a Bank of New Zealand (BNZ) bank account registered to the second respondent, MAP and Associates Trustee Co Ltd. The money was transferred following the realisation of a portfolio account in the name of the first respondent with the Lombard Odier and CIE (Bahamas) Limited Bank (Lombard Odier Bank). The wire transfer was made from the Lombard Odier Bank from an account in the name of the first respondent. The first respondent’s name and address were stated as “Andreina GAMEZ RODRIGUEZ, CLL LOS JABILLOS C CLL LOS VE/MANGOS CLUB HIPICO, CARACAS, VENEZUELA”.
[4] The Commissioner claims that the funds are derived from the dishonest and fraudulent conduct of the first respondent’s husband Louis Carlos De’Leon Perez (Mr De’Leon), and were transferred to New Zealand by the first respondent for the purpose of concealing or disguising the source of the funds. The Commissioner alleges that by doing so the first respondent has committed the criminal offence of money laundering.1
1 Crimes Act 1961, s 243(2).
[5] On 12 June 2019 the Commissioner made a without notice application for restraining orders. On 13 June 2019 Woolford J granted the application. On the following day, 14 June 2019, the Commissioner filed an on notice application. On 12 December 2019 Moore J granted the Commissioner’s application and made a restraining order pursuant to s 25 of the Act (the restraining order).2
[6] On 9 December 2020 Gordon J made an interim order extending the restraining order pending determination of the Commissioner’s application to extend the restraining order. And on 8 March 2021 I made an order extending the restraining order for a period of nine months commencing from 12 December 2020 and to expire on 10 September 2021.3 In her judgment delivered on 14 December 2021, Peters J made an order extending the restraining order for a further period of 12 months from 10 September 2021.4
[7] On 10 August 2022 the Commissioner applied for an extension of the restraining order for a further period of 12 months commencing 10 September 2022, and on 24 August 2022 Harland J made an order extending the restraining order made by Peters J on 14 December 2021 until determination of the Commissioner’s present application.
[8] It is not necessary for the purposes of this judgment to set out the factual background in any detail, as the factual background to the present application is set out in the previous judgments of this Court referred to above.5
[9] It appears that as at December 2021 on the basis of the evidence then before the Court, it was considered likely that a 12 month extension of the restraining order would afford the Commissioner sufficient time to complete his investigation and file an application for a civil forfeiture order. In granting the 12 month extension sought by the Commissioner Peters J said:6
2 Commissioner of Police v Rodriguez [2019] NZHC 3265.
3 Commissioner of Police v Rodriguez [2021] NZHC 425.
4 Commissioner of Police v Rodriguez [2021] NZHC 2223.
5 See Commissioner of Police v Rodriguez, above n 3, at [3]–[8].
6 Commissioner of Police v Rodriguez, above n 4.
[49] I accept that it is now more than two years since the order was made and I also accept that Ms Gamez Rodriguez can be said to be incurring loss, in the sense that the funds might be invested for a better return than is presently achieved on term deposit. I also accept Ms Cornegé’s submission that, in declining to require the Commissioner to give an undertaking, Davison J appears to have anticipated that Ms Gamez Rodriguez could sue the Commissioner for damages if it transpired that the order was unjustified, whereas that may not be so.
[50] However, I consider these matters outweighed by others, and I am satisfied that it is appropriate to extend the duration of the order by 12 months, and without imposing a condition that the Commissioner file an application for a civil forfeiture order by a particular date, or that he provide an undertaking. Rather, the extension is conditional on the Commissioner providing Ms Cornegé with an update on progress no later than 31 March 2022; continuing to progress the investigation with all possible expedition; and his filing an application for forfeiture as soon as he is able to do so, if that point is reached within the term of the extension. Any further evidence from Mr Russell must address compliance with these conditions.
[51]The countervailing matters to which I referred are as follows.
[52] First, I accept that the investigation is complex. For instance, I said in [24] above that Mr Russell was continuing to investigate the source of the remaining funds transferred from the Sands account to the Lombard account. On the latest iteration of Mr Russell’s “wiring diagram”, and if Mr Russell’s present understanding is correct, the USD component of the sum to which I referred reflects four payments from a Fribourg account with the “International Union Bank” in Panama. It is the source of these funds that Mr Russell is now seeking to ascertain.
[53] Secondly, I am satisfied the Commissioner is acting expeditiously. It is, of course, incumbent upon the Commissioner to conduct his part of the investigation as quickly as possible and, on my view of it, he is doing so. However, the Commissioner has no control over how quickly the overseas authorities respond to requests for information, if they respond at all. I am not persuaded that anything much turns on the unsuccessful request to the Swiss authorities for information on Fribourg, or Mr Russell’s failure to disclose this. The part of Mr Russell’s request to the Swiss authorities in relation to the Sands account is progressing, so it was not a wasted exercise. As to Ms Cornegé’s submission that Mr Russell ought not to have sent the order for examination referred to above, Ms Gamez Rodriguez would have understood from Mr Russell’s email that her participation was voluntary. Certainly her participation was not forthcoming.
[54] Thirdly, progress is being made. As I have said, Mr Russell now has the affidavits referred to in [23] above.
[55] Fourthly, I do not accept Ms Cornegé’s submission that the Commissioner’s case is weak. As matters stand, there is a Court of Appeal judgment, upholding Moore J, that there are reasonable grounds to suspect Ms Gamez Rodriguez of having benefited from significant criminal activity. Davison J described it as a “strong” prima face case.
[56] Fifthly, Ms Gamez Rodriguez might expedite the investigation by providing information to the Commissioner. As I understand it from counsel, Ms Gamez Rodriguez may also make a proposal to the Official Assignee as to how the funds might be invested. Accordingly, it is open to Ms Gamez Rodriguez to mitigate the adverse effects of the order but she has not done so. In those circumstances, I do not consider it would be fair to require the Commissioner to give an undertaking.
[57] Sixthly, although I accept that a better return might have been achieved on the funds, I have reservations as to whether any alternative investment option is available to Ms Gamez Rodriguez at present, at least in New Zealand. I asked Ms Cornegé how Ms Gamez Rodriguez’s position would be advanced if the order were to expire. Ms Cornegé submits this would have the effect of “untainting the funds”. Ms Hamilton submits that this is not so and the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 would continue to apply.
[58] I consider Ms Hamilton likely to be correct on this score, at least in present circumstances. Any financial institution asked to receive and invest the funds, even in smaller tranches, will still be required to satisfy themselves of the legitimacy of the source of the funds. As I have said, the BNZ was on immediate enquiry and there is no reason to believe another institution will respond differently.
[59] I have not imposed a condition requiring the Commissioner to file an application for a civil forfeiture order during or at the end of the extension, I see no advantage in doing so as it may only see the application filed prematurely.
Evidence
[10] The Commissioner’s investigation into the source of the USD 11,850,000 transferred by the first respondent on 29 March 2019 to the BNZ account registered to the second respondent, is being conducted by the Asset Recovery Unit (ARU) of the Police. In support of this application the Commissioner relies on the evidence contained in the affidavit of Bruce Russell who is the Police investigator with responsibility for conducting the investigation into the funds and their source. Mr Russell has sworn five previous affidavits in support of the Commissioner’s applications for the making and extension of the restraining order over the funds.
[11] In his sixth affidavit sworn 9 August 2022 filed in support of the current application Mr Russell provides an account of the progress made with the investigation and enquiries he has made seeking information from the Bahamas, Switzerland, Venezuela, Panama, Antigua and Barbuda.
[12] Mr Russell says that the Commissioner’s investigation has been diligently pursued and progress has been made although delayed responses to Mutual Legal Assistance Treaty (MLAT) requests have frustrated progress to a significant extent. He notes that the timelines of responses to these requests is not something that the Commissioner can influence in a proactive way. Mr Russell says that while the investigation has been progressed, it has only done so to the point where he considers that further time is required in order to obtain further evidence.
Information sought from the Bahamas
[13] As regards his efforts to obtain information from the Bahamas, Mr Russell explains that as a result of an MLAT request the Office of the Attorney General of the Bahamas obtained an order from the Supreme Court of the Commonwealth of the Bahamas on 10 December 2021 requiring Deltec Bank & Trust Ltd (Deltec Bank) with which Societe Generale Private Banking (Bahamas) (“Societe Generale (Bahamas)”) has been merged, to provide information regarding 10 bank accounts to determine whether there was evidence that the accounts had been involved in any intermingling of funds sourced from the criminal activities in which the first respondent’s husband Mr De’Leon and his co-offenders were involved. Mr Russell’s analysis and review of the information received enabled him to identify the owners of eight of the 10 accounts. Neither the first respondent nor Mr De’Leon were nominal owners of any of the 10 accounts, however Mr Russell says that transactions occurring in some of the accounts suggests that they are likely to be the beneficial owners of the accounts or have a beneficial interest in some of them.
[14] Mr Russell says that his analysis of transactions conducted through the 10 accounts, together with transactions occurring in the Panama based Sands Trading International (Sands Trading) account, has identified a total of 891 transactions outside of routine portfolio trading transactions and routine internal bank transactions, many of which require further investigation. He says that some of these transactions suggest that they were the direct proceeds of corrupt payments made for the benefit of Mr De’Leon and his co-offenders. Mr Russell says that many of the 891 transactions involve accounts of people and entities said by USA authorities to have been involved in the broader corruption scheme in respect of which Mr De’Leon and his co-offenders
face charges. Mr Russell says that the existence of the Societe Generale (Bahamas) accounts was not previously known to the USA authorities and consequently it has not been possible for the Commissioner’s investigation to obtain information from the USA investigators so as to accelerate the conclusion of the Commissioner’s investigation.
[15] Nevertheless, Mr Russell says that a process has been commenced between the New Zealand Police and the USA authorities to arrange for a New Zealand Police Officer to work in the USA with their investigators to obtain further evidence regarding the suspect transactions conducted through the 10 Societe Generale (Bahamas) accounts. Mr Russell says that two of the 10 accounts do not record the names of their facility holders contrary to the requirements of the Bahamas’ Financial Transactions Reporting Act 2018 (the “no-name accounts”). Mr Russell’s review of the account opening data for the other eight accounts shows that in most instances the account was introduced to Societe Generale (Bahamas) by Maxime Rambaud who appears to have been a USA based representative of Societe Generale Private Banking (Suisse). The same account opening documents for some of those eight accounts also record the involvement of a Swiss lawyer named Christian Fischele.
[16] Mr Russell says that his review of the significant transactions that occurred in the two “no-name” accounts in the period commencing from the opening of the accounts through until 24 July 2014 which was the date of the last transfer from the accounts to the Sands Trading account, has led him to the conclusion that the two “no- name” accounts in Societe Generale (Bahamas) are beneficially owned by the first respondent and Mr De’Leon. Mr Russell says that he has identified five withdrawals totalling USD 60,290 narrated as “Luis Carlos De Leon”, and two withdrawals totalling USD 5,047,971.56 narrated, “Andreina Gamez Rodriguez”. He also identified transfers made to and from Sands Trading account number [redacted].
[17] Mr Russell’s analysis of another of the Societe Generale (Bahamas) accounts (number [redacted]) held in the name Logistica Logscargo (Logistica) identified four deposits into the account totalling USD 5,117,000. Mr Russell has established that the Logistica account is nominally owned by Ricardo Lugo Rodriguez (Ricardo Lugo) and Adrian Requena Dugum (Adrian Requena) who are both Venezuelan residents and
close associates of Mr De’Leon and who are reported in public domain sources as having been involved with him in corrupt activities. Mr Russell’s review of the Logistica account transactions established outwards transfers to the Sands Trading account totalling USD 8,355,250 and inwards transfers from the Sands Trading account totalling USD 2,950,000. Mr Russell has concluded that his analysis and the quantum of the transfers suggests that the first respondent and Mr De’Leon are likely to have a beneficial interest in the Logistica account as well as the Sands Trading account.
[18] Following his analysis of the information and records obtained from Deltec Bank regarding the 10 Societe Generale (Bahamas) accounts, Mr Russell initiated a further MLAT request to the Bahamas authorities which was transmitted by Crown Law on 3 May 2022. This request sought evidence of data and evidence regarding nine specific transactions by which money was transferred between Logistica and the Sands Trading account [redacted]. The nine transactions Mr Russell wishes to investigate are in each case narrated as being sourced from “FRIBOURG CONSULTING” (Fribourg). Mr Russell says that as regards the Sands Trading account five transactions narrated as having been sourced from Fribourg and one narrated as being from the Davos International Bank of Antigua and Barbuda together total USD 7,857,782 and EUR 460,000. The four transfers credited to the Logistica account narrated as sourced from Fribourg total USD 5,117,000.
[19] Mr Russell says that he received a further response from Deltec Bank via the Bahamas Central Authority on 15 June 2022, however the requested information was not available, and so on the basis of all the available evidence obtained from Deltec Bank, it is not possible to identify the account(s) that were the source of the deposits into the Sands Trading account [redacted] and the Logistica account [redacted] that are narrated as being from Fribourg. Mr Russell says that given the funds narrated as having been sourced from Fribourg and processed through the Logistica and Sands Trading accounts have indirectly funded the United States Dollars restrained in New Zealand, the Commissioner’s investigation continues to seek to identify the original source of those funds. At the time when Mr Russell swore his affidavit in August 2022 no MLAT requests made to the Commonwealth of the Bahamas remained outstanding and the Commissioner did not intend to make any further requests.
Switzerland
[20] Mr Russell says that in his previous affidavit sworn on 20 August 2021, he outlined the background to the MLAT request to Switzerland. He says that on 16 November 2021 the Swiss Prosecutor issued a decision ordering documents obtained from the Swiss law firm Reymond Ulmann and Associates (Reymond Ulmann) to be remitted to New Zealand. Reymond Ulmann being the law firm with which the lawyer Mr Christian Fischele is associated. Mr Russell says that he believes that Mr Fischele has provided legal services to the first respondent and Mr De’Leon and that he was the Director and President of Sands Trading. Mr Russell says that the decision of the Swiss Prosecutor directing the remittance of documents to New Zealand has been appealed, however Swiss law prevents the Prosecutor advising the name of the person or party who filed the appeal. Mr Russell notes that the Swiss Prosecutor has advised that the Swiss Federal Criminal Court delivered a decision on 24 June 2022 in which it rejected the arguments advanced by the appellant. The Prosecutor advised that the appellant had until 4 July 2022 to lodge a further appeal with the Swiss Supreme Court. On 4 August 2022 the Swiss Prosecutor advised that no appeal has been filed and at the time he swore his affidavit in August, Mr Russell was still waiting to receive the requested documents.
[21] Mr Russell says that he expects that the documents provided by the Swiss authorities will need to be translated as has been the case with documents obtained by means of previous MLAT requests. Mr Russell expects that analysis of the material obtained as a result of the MLAT of Switzerland and Antigua and Barbuda will provide evidence to enable a further request to be made of Switzerland with a view to sourcing the Fribourg banking records. Mr Russell says that it appears from a letter annexed to an affidavit of Ms Findley filed in support of the first respondent’s notice of opposition that it is likely that the first respondent herself provided the Swiss Prosecutor’s letter to her New Zealand based counsel.7 The letter dated 29 July 2021 was sent by the Swiss Federal Prosecutor to Jean-Marc Carnice, a Swiss lawyer representing Fribourg Consulting Corp, and is produced as an exhibit in an affidavit filed in support of the
7 The letter dated 29 July 2021 was sent by the Swiss Federal Prosecutor to Jean-Marc Carnice, a Swiss lawyer representing Fribourg Consulting Corp.
first respondent’s notice of opposition to the Commissioner’s Application to Extend Duration of Restraining Order.
[22] He says this suggests that the first respondent is likely to have been providing instructions to Swiss based counsel involved in Reymond Ulmann’s response to the Swiss Prosecutor’s MLAT process. Mr Russell says that if that is the case, the first respondent is likely to have been in a position to influence whether or not Reymond Ulmann appealed the Swiss Prosecutor’s decision to remit the documents sought in the MLAT request to New Zealand, knowing that the process of an appeal was likely to take at least six months.
[23] Mr Russell says that although he had not yet received and analysed the requested material, he expected that when he does it is likely that at least one further supplementary MLAT request of Switzerland will be necessary for the purpose of obtaining transaction histories on accounts likely to be operated with at least two different Swiss banks by Fribourg. He says that despite the usual efficiency of the Swiss authorities and their ability to relatively quickly provide responses to MLAT requests, he expects that the Commissioner’s investigation will require at least a further period of 12 months in order to obtain the evidence available from Switzerland.
Venezuela
[24] In his affidavit Mr Russell also outlines the progress which has been made with MLAT requests for information from Venezuela which has been delayed by the slow response from the Venezuelan Central Authority. He says that on 19 April 2022 Crown Law were able to re-establish contact with the Venezuelan Central Authority after a period of almost 18 months. Thereafter apart from initial correspondence from the Venezuelan Central Authority apologising for the delay and advising that they were carrying out the necessary processes and would be responding “in the next few days” nothing further had been received as at August 2022.
Panama
[25] In relation to Panama, Mr Russell says that the Panamanian Central Authority has responded to a MLAT request and has provided some 330 pages of information
comprised of documents in both English and Spanish. The Spanish documents have been translated and the final translations were provided to Mr Russell on 24 February 2022. Mr Russell says that his review of the Panama material has established that Fribourg was incorporated in Panama on 8 July 2009, and on 30 July 2009 it granted a Power of Attorney to Adrian Requena. On 22 October 2009 Fribourg granted a Power of Attorney to the first respondent. And on 13 November 2009 the company issued all 100 bearer shares to the first respondent. On 16 November 2009 the company gave the first respondent authority to open a bank account at Millennium Bank Privée (Switzerland). On 22 July 2010 the company granted a Power of Attorney to Mr De’Leon.
[26] Other documents obtained from Panama show that Sands Trading was incorporated on 6 December 2010 as a bearer shares company with its registered agent the Panamanian law firm Mossack Fonseca. The documents also show that Sands Trading was directed by the Swiss lawyer, Christian Fischele and by a British Virgin Islands registered company, Denco Intertrade. Mr Russell says that from public domain sources he has established that Christian Fischele was also a director of Denco Intertrade. Mr Russell says however that the information provided by the Panamanian Central Authority did not contain any documentary evidence to show the source of the five transfers comprising part of the USD 7,857,782.02 and EUR 460,000 made to the Sands Trading account from Fribourg. He notes that is because the International Union Bank Panama appears to have simply been a correspondent bank used for the transfer of funds by an as yet unidentified third party bank or banks.
Antigua and Barbuda
[27] Mr Russell says that on 1 October 2021 he submitted a request to Crown Law seeking an MLAT request of Antigua and Barbuda on the basis of his belief that Fribourg was the operator of an account at the Davos International Bank of Antigua and Barbuda. The formal request was transmitted on 17 December 2021. Mr Russell says that in an email exchange between the Central Authority of Antigua and Barbuda and Crown Law on 9 August 2022, legal counsel in Antigua and Barbuda advised that the Central Authority had obtained a court order to obtain the requested records.
Having regard to that response, Mr Russell says that he does not expect that a formal response from Antigua and Barbuda is likely in the near future.
Further investigation
[28] Mr Russell explains that in order for the Commissioner’s investigation to progress, further time is required to:
(a)receive, have translated, and then review material yet to be received from Switzerland, and Antigua and Barbuda;
(b)generate any further MLAT requests considered necessary following a review of the material yet to be received from Switzerland, and Antigua and Barbuda in response to MLAT requests. Mr Russell expects the Commissioner to generate further MLAT requests of the jurisdictions identified as those in which the accounts of Fribourg are located, with a view to identifying the sources of the funds transferred to Logistica and narrated as made by Fribourg. Depending on what is discovered from that process there may be a need for further MLAT requests in an effort to trace the source of the funds; and
(c)work with USA authorities to gather evidence supporting the Commissioner’s belief that some funds transferred into the 10 Societe Generale (Bahamas) accounts are either the direct or indirect proceeds of payments made in furtherance of the corrupt activities in which Mr De’Leon was involved.
[29] Mr Russell says that the Commissioner’s investigation is prolonged largely because of the fact that all of the evidence required is located offshore, and because of the time it takes to untangle the web and use of different entities and people in different jurisdictions. He says that the use of different entities and people in different jurisdictions as appears from the Commissioner’s investigation to date, is consistent with classic internationally recognised methodologies for money laundering, designed to frustrate the tools available to law enforcement agencies in their efforts to trace funds to their source and identify their beneficial owner(s).
[30] Mr Russell notes that notwithstanding the first respondent’s claim that the Commissioner’s investigation has been unduly prolonged and prejudicial to her, she has repeatedly declined to assist the Commissioner in terms of the investigation into the source of the funds sent to New Zealand.
Submissions
The Commissioner
[31] In support of the application seeking an extension of the restraining order for a further 12 months commencing on 10 September 2022, Ms Hamilton for the Commissioner submits that there are reasonable grounds to believe that the first respondent has benefitted from significant criminal activity and the Commissioner requires further time to complete enquiries.
[32] Ms Hamilton notes that although the first respondent does not reside in New Zealand the Commissioner has issued repeated invitations to her via her New Zealand counsel requesting her to engage with his investigators. There has been no response to these requests. Ms Hamilton notes that many of the documents sought by the Commissioner are likely to be readily available to the first respondent should she wish to provide them to the Commissioner, and yet she has chosen not to provide them. Ms Hamilton notes that the Act provides for the Commissioner to apply to the Court for an examination order which if granted requires a person against whom it is made to answer questions relevant to the Commissioner’s investigation, supply information and to produce relevant documents for inspection.8
[33] Ms Hamilton says that the Commissioner’s employment of that process reduces the time otherwise required to locate and source financial records and information. Here however the Commissioner is investigating what appears to be complex money laundering involving multiple foreign jurisdictions and entities, and he is unable to apply for an order compelling the first respondent to provide information and documents necessary to investigate the source(s) of the funds transmitted to New Zealand.
8 Criminal Proceeds (Recovery) Act 2009, ss 106–107.
[34] Ms Hamilton submits that as well as the first respondent’s refusal to engage with the Commissioner, there is evidence from which it can be reasonably inferred that she has actively obstructed the Commissioner’s investigation, specifically by delaying receipt of documents sought by the Commissioner in the MLAT request of Switzerland. Counsel submits that unless the Commissioner is given the time necessary to undertake his investigation and make enquiries, there is a risk that the first respondent’s own obstructive efforts will frustrate the investigation into criminal offending and New Zealand will be seen as a jurisdiction which is unable to effectively investigate criminal money laundering, and consequently be seen as a haven for such offenders.
[35] Ms Hamilton cites a number of cases where repeat extensions of restraining orders have been granted to enable the Commissioner to pursue his investigation. Counsel notes in The Commissioner of Police v Cheng,9 an application for an extension of a restraining order was made in circumstances where the initial restraining order had been in place for four years. Ms Hamilton notes that in that case as here, the respondents had not co-operated with the Commissioner which had meant that he had had to wait for the information while it was provided through the MLAT process, and also like the case here, the Commissioner was investigating complex suspected money laundering.
[36] In response to the first respondent’s submission that the Court should require the Commissioner to provide an undertaking as to damages pursuant to s 29 of the Act, Ms Hamilton submits that undertakings under the Act are fundamentally different in nature from undertakings as to damages given in civil proceedings in the context of applications for interim orders and injunctions.
[37] Ms Hamilton says that there are two stages to consider as regards a s 29 undertaking. The first being when the court is asked to make an order which if made effectively requires the Commissioner to be liable for damages and loss due to the restraining order in the event the Commissioner’s substantive civil forfeiture relief claim eventually fails. The second step being the enforcement stage. Ms Hamilton
9 The Commissioner of Police v Cheng [2020] NZHC 1861.
says that at this second stage, although the court retains a discretion not to enforce the undertaking, it will only do so in special or compelling circumstances. Referring to the wording of s 29(1) and the court’s power to require an applicant for a restraining order to “give satisfactory undertakings”, Ms Hamilton submits that the first stage at which the undertaking is sought is of particular significance as this stage involves the court considering the applicant’s liability and determining whether the undertaking is “satisfactory” having regard to the losses the respondent claims to be suffering as a result of the restraining order. Counsel submits that s 29(1) therefore requires the court to adopt a nuanced approach which requires consideration of the potential loss that could be suffered by the respondent and an assessment as to whether the undertaking will be “satisfactory” in the sense of providing an adequate and enforceable means of the respondent recovering their loss from the applicant, in the event that the applicant fails to succeed in obtaining a civil forfeiture order.
[38] Ms Hamilton says that here, the Court has been fully informed of the factors which have delayed the Commissioner’s investigation which include the first respondent’s own attempts to delay and frustrate the investigation. She submits that the first respondent has not shown that an extension of the restraining order has caused her or will cause her damage or loss warranting the ordering of an undertaking being given to her by the Commissioner.
Ms Andreina Gamez Rodriguez — the first respondent
[39] Ms Cornegé says that the first respondent is the owner of the funds which total over NZD 18 million, and which have been restrained since June 2019 in accordance with an order made pursuant to s 25 of the Act. Ms Cornegé notes that the restrained funds are held by the Official Assignee and are currently earning interest of between
1.9 and 3.8 per cent per annum.
[40] Ms Cornegé submits that a restraining order made under the Act, unless extended, is to remain in force for a period of 12 months, and is intended to be a temporary restraint pending the commencement of civil forfeiture proceedings. Ms Cornegé says that the Act does not permit open-ended investigations. Counsel submits that it is apparent from the scheme of the Act that it is intended to strike a balance between the broad powers given to the Commissioner to restrain, investigate
and recover proceeds of crime, and the prejudice caused to an individual due to them losing the use of or access to their own property to do with as they choose.
[41] Ms Cornegé submits that the balance between the Commissioner’s interests and the private individual’s interests is achieved and safeguarded by several key provisions of the Act including the 12 month limit on the duration of restraining orders, unless extended. She submits that the 12 month period represents Parliament’s view of the expected and appropriate time period for the restraint phase. Ms Cornegé also notes that the Commissioner is not granted the power to extend the 12 month period as of right, and may only do so by way of an application to the High Court. Ms Cornegé says that the Act expressly contemplates the necessity arising for variation of restraining orders to take account of information obtained by the Commissioner which may make it unnecessary for the Commissioner to maintain a restraining order over all of the property or assets initially restrained.
[42] Ms Cornegé submits that the court’s power to order an applicant to give an undertaking provides a measure of protection for the person whose funds or assets are restrained. Counsel submits that by making provision for undertakings to be given Parliament has recognised that such may be necessary to strike a fair balance between the Commissioner and a respondent whose property is being restrained. Ms Cornegé submits that it is significant that the Act enables the court to order an undertaking notwithstanding also finding that reasonable grounds exist to restrain assets.
[43] Ms Cornegé notes that the initial restraining order was made in June 2019, and the Commissioner has since applied for extensions in December 2020, August 2021, and September 2021. Counsel further notes that in granting the extension from 10 September 2021 for 12 months, the Court made the order conditional on the Commissioner providing the first respondent’s solicitors with an update as to progress by 31 March 2022, proceeding with the investigation with all possible expedition, and filing an application for civil forfeiture as soon as he is able to do so. Ms Cornegé says however, that in the update report and in support of the present application for a further 12 month extension, the Commissioner says that it is likely that he will be making yet another application to extend the restraining order when the period of the 12 month extension he is currently seeking ends. Counsel submits that there must
come a time when the Commissioner accepts that after several years of investigating the source of the funds, he is not sufficiently confident of being able to make a case against the first respondent, and he should allow the restraining order to lapse and the funds to be released.
[44] As I noted at the outset, Ms Cornegé explains that the first respondent does not oppose the Commissioner’s application in full, but seeks that any extension that is granted be made conditional on the Commissioner commencing civil forfeiture proceedings by 10 March 2023, and providing an undertaking as to damages pursuant to s 29. Counsel says that if the Commissioner’s application is granted it will mean that the first respondent has lost the ability to access her own money and the ability to earn reasonable investment returns on her funds for nearly four and a half years, with over three years having already passed, and with no guarantee as to if or when the Commissioner will commence civil proceedings.
[45] As regards an undertaking as to damages and costs, Ms Cornegé says that if the extension sought is granted and the first respondent is ultimately successful she will have been deprived of the opportunity to invest her money for several years and her investment income losses and legal costs incurred will be significant. She notes however, that the first respondent is not required to prove actual loss before the court will order the Commissioner to give her an undertaking. She submits that all that needs to be demonstrated at this stage is the risk of loss, not the precise form or quantum of loss. Ms Cornegé says that the likelihood of loss and the extent of such loss are relevant factors to be taken into account in the overall assessment of whether an undertaking should be ordered. She submits that the phrase “satisfactory undertakings” in s 29(1) does not suggest that the scope of the liability to be covered by an undertaking needs to be finally resolved or particularised in the undertaking itself. And she says that in the event of the undertaking being enforced the court would still need to determine the causal connection between the restraining order and the damage to determine quantum.
[46] As regards the loss and prejudice being caused by the restraining of the funds Ms Cornegé refers to the evidence in the four affidavits of Mr Martin Fine of the second respondent. Mr Fine states that the first respondent’s funds were intended to
be invested, and as a result of the restraining order she has lost the opportunity to invest the funds more profitably than is the case currently with the funds under the control of the Official Assignee, and during a period when interest rates have been particularly low. As a result she has and will continue to suffer substantial losses. Ms Cornegé notes Mr Fine’s evidence in opposition to the Commissioner’s earlier application for an extension that he considers that had the funds been able to be invested in various equities and managed funds, they would have earned over NZD 600,000 more than they would have earned in a term deposit account. Mr Fine subsequently revised this amount to around NZD 1 million. In his affidavit affirmed on 3 September 2021 Mr Fine says that upon receipt of the funds the Official Assignee converted the United States Dollars to New Zealand Dollars which has exposed the funds to currency exchange risk which as at 3 September 2021 amounted to a loss of NZD 1,279,439.
[47] Ms Cornegé also notes that in his recent affidavit of 7 September 2022, Mr Fine states that he expects that while even a well-managed fund would show slower (or negative) growth over the recent period compared to previous periods he has commented on, he considers that any losses over the recent period would be highly unlikely to have outweighed the gains that will have been missed by the inability to have the funds invested since they were restrained. He further says that the exchange losses he has referred to are unlikely to be reversed as there is no reason to believe that the New Zealand Dollar will improve significantly against the United States Dollar at this time. He says that more importantly the continued restraint of the funds for a further 12 months means that the first respondent risks missing out on the opportunity to take investment positions now while the markets are low, and which would maximise her investment returns when the markets climb again.
[48] Ms Cornegé also submits that the issue of whether or not the funds could have been invested upon arriving in New Zealand because of issues relating to compliance with the requirements of the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML Act), is not a matter that can be appropriately determined at this stage. She submits that had the funds not been restrained, steps could have been taken to clarify any issues or questions raised regarding compliance. Ms Cornegé submits that the Court should assess the question of the length of an extension period
and whether an undertaking is appropriate on the basis that the AML Act requirements could have been satisfied.
[49] Ms Cornegé also notes that an undertaking as to damages will only respond if either forfeiture proceedings are not commenced by the specified date or the Commissioner is unable to prove that the first respondent has unlawfully benefitted from significant criminal activity. Should either outcome eventuate the Crown will only be required to compensate the first respondent for loss she can prove. Ms Cornegé says that if the Commissioner’s case against the first respondent is as strong as Mr Russell says it is, then the Commissioner has nothing to fear. She says however that the Commissioner’s claims “ring hollow” as despite an extensive investigation spanning the past three and a half years, the Commissioner is not prepared to even commit to a date by which he will file a forfeiture application in the next 12 months.
[50] Ms Cornegé submits that although there is not a presumption in favour of the court ordering that an undertaking be given by the Commissioner, in the present case, having regard to the significant delay and ongoing prejudice to the first respondent caused by the extended duration of the restraining order, an undertaking is appropriate.
[51] Responding to Ms Hamilton’s submission regarding the first respondent’s failure to give evidence in relation to this application and not complying with the Commissioner’s request that she agrees to take part in an examination and voluntarily provide the information Mr Russell is seeking, Ms Cornegé submits that no adverse inference can and should be drawn from the position taken by the first respondent. She says that the first respondent’s position of declining to co-operate with the Commissioner is readily justifiable because of the way in which the Commissioner previously arranged for the first respondent to be served with a notice for examination, notwithstanding that she was not in New Zealand and the Commissioner had no statutory power to compel her to co-operate. In response to Ms Hamilton’s submission that the first respondent has actively obstructed the Commissioner’s ongoing investigation by delaying the receipt of documents sought in the MLAT request of Switzerland, Ms Cornegé says that the Commissioner’s contention regarding the first respondent appears to be a suggestion that it is somehow inappropriate for a company to exercise its legal rights. She submits that it cannot be said that Fribourg’s action of
exercising its legal rights amounts to the first respondent obstructing the Commissioner’s investigation and it cannot justify an adverse inference against her in her personal capacity being drawn.
[52] Ms Cornegé acknowledges that the more recent delays to the investigation resulting from the Commissioner waiting for responses from MLAT requests do not appear to have been caused by undue delay on the Commissioner’s part. She nevertheless submits that the Commissioner’s investigation having now been underway for over three and a half years and involving several overseas jurisdictions has reached the point where viewed overall, the delay is plainly unreasonable. Ms Cornegé says that there must be a point at which the Commissioner’s restraint of property while conducting an investigation will become unreasonable. She says if that point has not yet been reached it will be soon. She accordingly submits that the Court should exercise its supervisory jurisdiction to order a shorter extension of the restraining order than sought by the Commissioner and thereby make an order requiring an undertaking to be given to hold the Commissioner accountable for the loss the first respondent has and will suffer should the Commissioner’s investigation not be commenced by a specified date, or if it does, should it ultimately fail to establish that the restrained funds were derived from significant criminal activity.
[53] In conclusion, Ms Cornegé says that the first respondent seeks the opportunity to make submissions on costs. She says that regardless of the outcome, it is not reasonable for the first respondent to be put to the cost of responding to repeated extension applications prior to the determination of any potential forfeiture application.
Law
[54]Section 41 of the Act provides:
41 Extending duration of restraining order
(1)If a court has made a restraining order, the applicant for that order may, before the restraining order expires, apply to that court to extend its duration.
(2)If an application is made under subsection (1), the court may order that the operation of the restraining order be extended for a period not exceeding 1 year.
(3)The duration of a restraining order may be extended more than once under this section.
(4)If, before a restraining order would otherwise expire under section 37(1), an application is made to a court under this section and the application is granted, the restraining order ceases to be in force on the date specified in the court’s order.
[55] Section 42 of the Act confers power on the court to vary a restraining order when making an order extending the duration of the restraining order pursuant to s 41(2) of the Act. And s 29(1) confers power on the court to require an applicant for a restraining order, or an applicant for an extension of the duration of a restraining order under s 41, to give “satisfactory undertakings with respect to the payment of damages or costs, or both, in relation to the making, operation, or extension of the duration of the restraining order”.
[56] Sections 41 and 42 of the Act vest a wide discretion in the court to extend a restraining order.10 Restraining orders are essentially interim orders for a restricted period, which are made to preserve property while the Crown collects evidence to support an application for forfeiture.11 Where the circumstances that warranted the making of the restraining order remain, and the Commissioner has not delayed pursuing an application for a profit forfeiture order, it is unlikely a court will decline an extension unless there is some material prejudice caused to the respondent in maintaining the order.12
[57]The Court of Appeal in Yan v Commissioner of Police observed that:13
[39] There is a strong public interest in preventing criminals from benefiting as a result of significant criminal activity and, accordingly, a strong public interest in preserving tainted property prior to forfeiture being reasonably obtainable and preventing dissipation of those assets. On the other hand, a restraining order represents a significant infringement of property rights and has the potential to cause considerable injustice should it transpire
10 Simon France (ed) Adams on Criminal Law – Sentencing (online ed, Thomson Reuters) at [CP41.02].
11 Vincent v Commissioner of Police [2013] NZCA 412 at [45(a)].
12 Commissioner of New Zealand Police v Jiang [2019] NZHC 3318 at [21].
13 Yan v Commissioner of Police [2015] NZCA 576, [2016] 2 NZLR 593 (footnote omitted).
the order was not justified. Section 29 provides a potential safeguard against the latter injustice.
[40] Having regard to the breadth of the wording of s 29, it is unhelpful to go beyond the general statement of principle endorsed by Lang J in this case, namely that the discretion “should be exercised according to considerations of justice and fairness and to diminish the possibility of oppression and injustice”. The inquiry is essentially fact-dependent and the weight to be afforded any particular factor, for example the fact business assets are involved, will necessarily vary from case to case. There are no presumptions either way.
[58] The Court of Appeal set out a non-exhaustive list of factors that a court should take into account when deciding whether to order an applicant to give an undertaking:14
(a)the personal circumstances of the respondent or respondents;
(b)delay;
(c)the nature of the asset;
(d)the likelihood of loss being suffered as a result of the restraint;
(e)the extent of any likely loss;
(f)the conduct of the Commissioner;
(g)the strength of the Commissioner’s case; and
(h)the existence of a meaningful alternative avenue of redress.
[59] The Court also observed that a significant period without progress being made towards a forfeiture hearing may of itself afford grounds for requiring an undertaking to be given regardless of the reasons for the delay.15 A party seeking an undertaking does not have to prove actual loss. However, the likelihood of loss and the extent of
14 At [41].
15 At [44] and [60].
that loss are relevant factors, and the more likely the loss is to occur, the stronger the argument for an undertaking.16
[60] In Commissioner of Police v Salter the Commissioner had applied under the Act for restraining orders over properties belonging to a company and its shareholders alleging that it had been systematically non-compliant with health and safety and hazardous substances legislation over a period of seven years during which it had unlawfully benefited from significant criminal activity.17 The company and shareholders did not oppose the restraining orders provided the Commissioner gave an undertaking to pay any consequential damages and costs. Justice Palmer said:
[49] The novelty of the proceedings appears to have generated evidence and arguments that risk complicating the otherwise straightforward issue here: whether to order the Commissioner to give an undertaking as to damages and costs or not. Section 29 of the Act provides a clear discretion for the Court to order the Commissioner to provide an undertaking. The Court’s exercise of discretion must reflect the purposes of the Act. I do not accept the Commissioner’s submission that the Court of Appeal held in Yan v Police that lack of engagement by the respondents about an issue to date means he should not be required to give an undertaking. As the Court of Appeal held in Yan, there are no presumptions either way. There is a public interest in ensuring the proceeds of crime regime operates effectively and a public interest in protecting those subject to it from potential injustice. Those considerations need to be balanced, in the context of the facts of the case.
Discussion
[61] I am satisfied from Mr Russell’s evidence that the Commissioner has progressed his investigation efficiently and conscientiously and he has not contributed to the significant delays that have occurred since the restraining order was made on 13 June 2019. The investigation is inherently complicated by the fact that it requires extensive enquiries to be made out of New Zealand and information sought from a number of foreign jurisdictions by the MLAT procedures. Once a MLAT request is made, the delay in obtaining a response is entirely dependent on the speed with which the foreign central authority responds, and as is evident here, in some instances the delays can be significant. While the reasons for delays and whether or not the Commissioner as applicant has been responsible for the delays are not determinative, in this instance I consider that the complex nature of the investigation which requires
16 At [71].
17 Commissioner of Police v Salter [2021] NZHC 1531.
the obtaining of financial records and information from foreign jurisdictions is a significant factor favouring the granting of an extension of the restraining order.
[62] Also significant is the fact that the criminal activity that is being investigated is that of money laundering the substantial proceeds of significant criminal activity. Money laundering is an offence under s 243 of the Crimes Act 1961. Those engaged in the practice of money laundering and the concealment of large sums of money are known to employ sophisticated financial structures that are designed to conceal and obscure the source and movement of funds from one entity to another with the intention of making it extremely difficult if not impossible for regulatory and criminal investigators to penetrate the deliberate obfuscation and ascertain the true source of the illegally acquired funds. Here the Commissioner alleges that the financial structure that he is investigating has been established and operated so as to prevent law enforcement authorities from discovering the true source of the funds which were transmitted to New Zealand.
[63] I am satisfied by the evidence produced by the Commissioner regarding the financial structure of bank accounts and the transfer of funds described by Mr Russell in his evidence and depicted in the diagram he has prepared and attached to his most recent affidavit, that there appears to be no commercial purpose to the structure by which money narrated as coming from “Fribourg Consulting” appears to have been moved into and possibly between 10 Societe Generale (Bahamas) bank accounts including two “no-name” accounts and one in the name of Logistica, and on into accounts held in the name Sands Trading and Lombard Odier CIE Bahamas before being transferred by Lombard Odier to the Bank of New Zealand on 29 March 2019. There are features of the financial structure and movement of funds within the structure that strongly suggest that its intention and purpose was concealment of the source of the funds transferred between the entities comprising the structure.
[64] I am also satisfied that Mr Russell’s evidence shows that the first respondent is connected with Fribourg Consulting which appears to have been either the source of the funds or close to the source of the funds that were transferred to Sands Trading and to the Logistica account at Societe Generale (Bahamas). The first respondent’s connection with Fribourg is further supported by the letter dated 29 July 2021 sent by
the Swiss Federal Prosecutor to Jean-Marc Carnice, a Swiss lawyer representing Fribourg Consulting Corp, which letter is exhibited to the affidavit of Ms Findley who is a Legal Assistant employed by the first respondent’s New Zealand solicitors, Tompkins Wake. In her affidavit Ms Findley states that Tompkins Wake received a copy of the letter from the Swiss Federal Prosecutor’s Department to BianchiSchwald LLC, the solicitors for Fribourg Consulting Corp, and subsequently obtained a certified translation of it. The first respondent’s New Zealand solicitors’ receipt of the letter sent to the Swiss lawyers representing Fribourg in Switzerland is further evidence of a connection between the first respondent and Fribourg and therefore also connected with Fribourg’s appeal against the Swiss Prosecutor’s decision to send documents requested by the MLAT request to New Zealand.
[65] On the basis of Mr Russell’s evidence regarding the delay caused by the lodging of an appeal against the decision of the Swiss Prosecutor’s decision to direct the sending of MLAT requested documents to New Zealand, and the letter from the Swiss Prosecutor exhibited to the affidavit of Ms Findley, I find that the first respondent was either directly or indirectly involved in and responsible for the appeal by or on behalf of Fribourg against the decision directing the documents to be sent to the New Zealand central authority. It therefore appears that the first respondent has actively contributed to the occurrence of the delays experienced by the Commissioner in obtaining documents and information required to progress the investigation.
[66] I note Ms Cornegé’s submission that no adverse inference should be drawn from Fribourg having exercised its legal right to appeal the decision of the Swiss Federal Prosecutor. The Swiss Prosecutor’s decision was delivered on 15 November 2021 and following Fribourg’s appeal, it was not expected to be determined until June 2022. While Fribourg was legally entitled to bring an appeal, it must have been known by those persons responsible for or involved in making the decision to appeal, including the first respondent herself, that doing so would significantly delay the Commissioner’s investigation. In my view an assessment of the credibility of the first respondent’s claim to be prejudiced by reason of the delays which have occurred, is informed by her connection with the decision by Fribourg to exercise its right of appeal which directly contributed to the Commissioner’s investigation being delayed for over six months during 2021–2022. Having acted to either cause or contribute significantly
to the delay encountered by the Commissioner as a result of the Fribourg appeal, she cannot plausibly claim to be prejudicially affected by it.
[67] It is also relevant that the first respondent has declined to engage with the Commissioner for the purpose of an examination and to enable the Commissioner to obtain the documents and information necessary to progress and complete his investigation. I agree with Ms Hamilton’s submission for the Commissioner, that the first respondent will obviously have the ability to readily access the requested information and provide it to the Commissioner’s investigator if she chose to do so. While she is not under any legal obligation to provide the requested information and the Commissioner has no ability to compel her to undergo an examination for the purpose of determining the source of the funds, in my view she cannot credibly contend that she is prejudiced by reason of the delays the Commissioner is experiencing in progressing his investigation into the source of the suspect funds.
[68] I am satisfied on the basis of the evidence contained in Mr Russell’s affidavits that the documents and information that have been obtained and assembled thus far by the Commissioner provide strong support for his belief that the funds transferred to the BNZ on 29 March 2019 for the first respondent are the proceeds of significant criminal activity in which her husband Mr De’Leon was involved in Venezuela. The delay of three and a half years since the restraining order was made on 13 June 2019 is principally due to the necessity for the Commissioner to make international enquiries, the inherently slow process of MLAT requests, the complex nature of the financial structure and transactions under investigation which appear to have been designed to conceal the source and beneficial ownership of the funds, and the actions of the first respondent herself by which she has either extended the duration of the investigation or actively frustrated the progress of the investigation.
[69] I note that Mr Fine says that the first respondent is from “an affluent” family. And while Mr Hine says that she is prejudiced by the delays and has and will suffer significant financial loss, there is no evidence to suggest that she is suffering financial hardship of a kind that has or may affect her ability to meet her living expenses or affects her wellbeing in any way. That being the case, while the continued restraint of
the funds may result in the first respondent suffering loss, the loss if it is incurred will be limited to financial loss.
[70] And there is nothing in the conduct of the Commissioner or his investigators which I consider militates against a further extension of the restraining order.
[71] I accept Mr Russell’s evidence and explanation that the circumstances of this investigation and the slow progress made to date is such that another 12 months’ extension from 10 September 2022 is required to enable the investigation to continue. I also consider that the information and evidence gathered to date, justify and reinforce the Commissioner’s belief that the funds are the proceeds of significant criminal activity. Having regard to the cogent nature of the evidence gathered by the Commissioner to date supporting that belief, it is my view that it is clearly in the public interest that the investigation continue to enable further evidence to be obtained and in order that the investigation can be completed and enable the Commissioner to determine whether to proceed with bringing a civil claim for forfeiture.
[72] This present case is quite unlike the more usual kind in which the Commissioner seeks orders for the recovery of criminal proceeds in respect of money, property and assets located within New Zealand. Here the Commissioner is unable to utilise the statutory provisions of ss 106–107 of the Act to readily obtain relevant information and documents. In a case such as the present involving an investigation requiring enquiries to be made overseas and the obtaining of documents and information from other jurisdictions, the lengthy delays to date must be viewed against that wider context, and take account of the evidence suggesting that those responsible have gone to extraordinary efforts to conceal the true source of the funds by using a complex and elaborate structure within which to move the funds.
[73] Moreover in an investigation of this nature where the ability of the Commissioner to make progress is to a large extent dependent on the actions of overseas officials in carrying out and responding to MLAT requests, it is not appropriate to impose a time limit on the Commissioner’s investigations by stipulating a date by which an application for a civil forfeiture order must be made or the restraining order will lapse. Such an approach would impose an unnecessary and
inappropriate time limit on the Commissioner’s ability to investigate serious criminal offending. The Court has the power to extend the restraining order for a period of 12 months and there is no limit on the number of times that the restraining order can be extended. On each application the Court has the opportunity to assess the interests of justice and to allow or disallow the application. Where, as is the case here, the Commissioner is proceeding conscientiously and is making demonstrable progress in gathering cogent evidence to support his or her belief that the restrained funds are the proceeds of significant criminal activity, an order to extend the restraining order will be necessary to ensure that the Commissioner’s investigation is not frustrated and rendered nugatory.
[74] The first respondent’s interests must also be evaluated and assessed in light of her conduct and ability to readily accelerate progress of the investigation by her co- operation. In my view the context of the present application and the reasons for the extended delays encountered by the Commissioner in progressing the investigation can be readily distinguished from the factual background in Salter in which Palmer J rejected the Commissioner’s submission regarding the effect of the respondent’s lack of engagement as bearing on whether or not he should be required to give an undertaking. In that case the respondents resided in New Zealand and were amenable to the Commissioner’s use of the ss 106–107 powers of examination and production of documents. Here the first respondent is not subject to those provisions, and while under no legal obligation to do so, she has chosen not to engage with the Commissioner, knowing that by doing so the Commissioner’s investigation will inevitably be delayed while enquiries of foreign jurisdictions are conducted.
[75] Having adopted that course, and it appears having also contributed to the delay by means of the appeal against the Swiss Federal Prosecutor’s decision regarding the sending of documentation regarding Fribourg to New Zealand, the first respondent’s lack of engagement is in my view a relevant factor against the ordering of an undertaking. By choosing not to engage with the Commissioner and by actively taking steps contributing to the delay the Commissioner’s investigation has encountered, she cannot with any credibility claim to be adversely prejudiced by it.
[76] I accordingly find that the purposes of the Act and the interests of justice are best served by a further extension of the restraining order for a period of 12 months commencing 10 September 2022.
[77] These reasons also inform my conclusion that this is not a case where it would be appropriate to make an order under s 29 directing the Commissioner to give an undertaking as to damages to the first respondent. I do not consider the matters raised by the first respondent and her claim to have suffered financial loss as a result of the lengthy period which has elapsed since the restraining order was made on 13 June 2019, are such that the interests of justice favour ordering the Commissioner to provide an undertaking as to damages. The complex nature of the matters under investigation together with the need for the Commissioner to have recourse to MLAT requests to obtain information, inevitably means that the investigation will encounter delays while awaiting information from overseas jurisdictions. The Commissioner has limited ability to expedite the process of obtaining information from foreign jurisdictions, and must patiently await receipt of the requested information. And so quite unlike an investigation carried out within New Zealand, the progress of an investigation of the kind here is largely dictated by matters outside the control of the Commissioner. Where a party under investigation also acts to extend the delay being encountered by the Commissioner’s investigation, such conduct is also a factor that I consider to be relevant to an assessment of the overall interests of justice, and the issue of whether the Court should order the giving of an undertaking.
[78] Having regard to each of the factors identified by the Court of Appeal in Yan v Commissioner of Police as they relate to the circumstances of this case, I do not consider it to be in the interests of justice to require an undertaking to be given. In my view the Commissioner’s investigation to date has established cogent evidence to support his suspicion that the funds are the proceeds of significant criminal activity. The delays encountered by the Commissioner’s investigation are the inevitable consequence of the nature of the investigation and the need to source information from foreign jurisdictions. While the first respondent is at risk of suffering a financial loss as a consequence of the funds being restrained, she has chosen not to utilise her ability to accelerate a conclusion of the investigation being reached by engaging with the Commissioner and voluntarily providing the requested information. While under no
legal obligation to do so, the plausibility of her claim to suffer prejudice by reason of the restraining order and subsequent delay is significantly diminished, and the interests of justice do not favour the making of an order requiring the Commissioner to give an undertaking as to damages under s 29 of the Act.
[79] As to costs, I reject the submission made on behalf of the first respondent that it is not reasonable for her to be put to the cost of repeated applications for extension of the restraining order prior to the determination of any potential forfeiture application. For the reasons I have set out above, I consider that the necessity for this application is because of the nature and complexity of the investigation, the necessity of enquires in foreign jurisdictions and the inability of the Commissioner to utilise the statutory powers to obtain the required information that would be available to him in respect of a person in New Zealand. An application such as the present is required to enable the court to assess and determine whether an extension of the restraining order is justified having regard to the purposes of the Act and the interests of justice by reason of its effect on the owner of the restrained funds. As I have said, having chosen not to engage with the Commissioner and his investigation, the first respondent’s claim of being prejudiced by delay warrants little credit, and having unsuccessfully opposed the application she is liable to an award of costs.
Result
[80] I make an order pursuant to s 41(2) of the Criminal Proceeds (Recovery) Act 2009 extending the restraining order for a period of 12 months commencing 10 September 2022.
[81] I decline to make an order pursuant to s 29 of the Criminal Proceeds (Recovery) Act requiring the Commissioner to give an undertaking as to damages.
[82] The Commissioner having succeeded in his application is entitled to an award of costs. I direct the Commissioner to file and serve a costs memorandum not exceeding four pages in length excluding the cover page and any annexures or schedules. The Commissioner’s costs memorandum is to be filed within 10 working days from the date of delivery of this judgment.
[83] I direct the first respondent to file and serve her costs memorandum in reply within 10 working days following service on her of the Commissioner’s costs memorandum. The first respondent’s costs memorandum is also not to exceed four pages in length, excluding the cover page and any annexures or schedules.
[84] Following the filling of the costs memoranda by the parties in accordance with these directions, I shall determine the Commissioner’s costs award on the papers.
Paul Davison J
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