Commissioner of Police v Scott
[2019] NZHC 2555
•8 October 2019
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2017-404-002637
[2019] NZHC 2555
UNDER the Criminal Proceeds (Recover) Act 2009 BETWEEN
COMMISSIONER OF POLICE
Applicant
AND
MATTHEW JOHN SCOTT
First Respondent
MARIO HABULIN
Second RespondentNGOC HOA DO THI
Interested Party
Hearing: On the papers Counsel:
M R Harborow for the Applicant
M McCarty for the Second Respondent
Judgment:
8 October 2019
JUDGMENT OF WOOLFORD J
[on application for approval of proposed settlement]
This judgment was delivered by me on Tuesday, 8 October 2019 at 3:00 pm pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date:
Solicitors / Counsel:
Meredith Connell (Office of the Crown Solicitor), Auckland Ms M-A McCarty, Tauranga
COMMISSIONER OF POLICE v SCOTT [2019] NZHC 2555 [8 October 2019]
[1] In this proceeding the Commissioner of Police (the Commissioner) obtained on notice restraining and further orders under the Criminal Proceeds (Recovery) Act 2009 (the Act) against the respondents.
[2] The Commissioner is yet to file a formal application for civil forfeiture orders. However, the Commissioner and the second respondent, Mr Habulin, now seek the Court’s approval under s 95 of the Act to settlement of the litigation between themselves.
Background
[3] In August 2017, the New Zealand Police and the New Zealand Customs Service commenced a joint investigation targeting Mr Scott, Mr Habulin and two other persons, who were believed to be involved in the importation of controlled drugs into New Zealand. Intercepted communications revealed that Mr Scott was expecting a consignment of 46 kilograms of cocaine smuggled on board the Maersk Antares container ship, which was scheduled to arrive at Tauranga on 11pm on 31 October 2017.
[4] On the evening of 31 October 2017, Police observed Mr Scott, Mr Habulin and others, launch a boat and anchor it nearby the Antares. At around midnight, Mr Habulin was seen to get into the water and climb up the rudder of the Antares, disappearing from view for a time before re-emerging holding two large duffel bags, which he passed to Mr Scott and another person who were waiting in the boat.
[5] On 1 November 2017, Police and Customs executed a search warrant at a rented property in Mount Manganui, where the group had been observed unloading the duffel bags, locating approximately 46 kilograms of cocaine.
[6] Police also carried out a search of Mr Scott’s home address in Auckland and located:
(a)Five blocks of cocaine, each weighing approximately one kilogram, three of which were wrapped in green tape (identical to the packages of cocaine located in Mount Manganui);
(b)One bag of methamphetamine weighing approximately one kilogram;
(c)One bag of cocaine weighing approximately 20 grams; and
(d) Cash of $623,627.10.
[7] In addition to the importation on 31 October 2017, Mr Habulin was charged with importing cocaine on two further occasions – 1 June 2017 and 18 July 2017. In connection with the importation charges, Mr Habulin was charged with supplying cocaine and laundering cash proceeds of those sales.
[8] The Commissioner obtained on notice restraining and further orders, restraining the following property:
(a)$3,913.35 held in a Westpac Bank account in the name of Mr Scott;
(b)$100,000 previously held in an ASB Bank term deposit in the name of Ngoc Hoa Do Thi’
(c)$623,627.10 cash seized by Police on 1 November 2017, from Mr Scott’s Auckland address;
(d)Seabob underwater scooter, registered to Mr Scott;
(e)$61,111 from the sale of 2017 Volkswagon Amarok, previously registered to Mr Scott; and
(f)Limited edition Breitling watch, Avenger model, seized by Police on 1 November 2017 from Mr Scott’s home address.
[9] On 27 June 2019, Mr Habulin pleaded guilty and was convicted of six charges: one of importing cocaine (on three occasions), one of possession of cocaine for supply, two of supplying cocaine, one of money laundering (on a number of occasions), and one of participating in an organised criminal group. He is due to be sentenced in the High Court at Tauranga on 25 October 2019.
[10] Following the conclusion of the related criminal proceedings against Mr Scott and Mr Habulin, the Commissioner intends to file an application for civil forfeiture orders. It was intended that this would include an application for a profit forfeiture order against Mr Scott and Mr Habulin (jointly and severally). The unlawful benefit figure nominated by the Commissioner in such an application would be substantial (likely over $11 million) and would rely on the value of the cash and controlled drugs that were seized by Police on 1 November 2017, and the value of cash funds that were laundered by Mr Scott and Mr Habulin.
[11] The Commissioner also intends to apply for assets forfeiture orders over all of the property that was derived in whole or in part from the importation, sale and supply of cocaine and the laundering of the proceeds of that offending, rendering the property tainted property.
[12] Of the restrained property, the Police maintain Mr Habulin was associated with the cash found at Mr Scott’s Auckland address and the $100,000 term deposit. The cash was located in proximity to very substantial quantities of cocaine and methamphetamine and the unavoidable inferences that this was the proceeds of drug sales. In addition, the surveillance evidence shows that Mr Habulin provided the cash that formed the term deposit of $100,000 in the name of Ms Thi.
Proposed settlement between the Commissioner and Mr Habulin
[13] As noted, counsel for the Commissioner and counsel for Mr Habulin have conferred and have reached a proposed settlement as to the civil forfeiture of the relevant property, subject to this Court’s approval under s 95 of the Act.
[14]The terms of the proposed settlement are as follows:
(a)Mr Habulin will undertake not to take any steps to oppose civil forfeiture orders being made over any of the property, either via assets forfeiture orders under s 50(1) of the Act, or realisation of the property to meet any profit forfeiture order that is made against Mr Scott under s 55(1) of the Act.
(b)The settlement as between the Commissioner and Mr Habulin is in full and final terms. In particular, the Commissioner will not pursue a profit forfeiture order against Mr Habulin personally in relation to the significant criminal activity subject to these proceedings (that is, relating to the criminal investigation known as Operation Heracles). That concession is made based on the Commissioner’s understanding that Mr Habulin has no interests in any property of significant value, beyond the property presently restrained in this matter.
(c)Costs as between the Commissioner and Mr Habulin will lie where they fall.
Decision
[15] I am satisfied that the proposed settlement reflects the primary purpose of the Act, which is to provide for the forfeiture of property derived directly or indirectly from significant criminal activity, or property representing the value of a person’s unlawfully derived income.1
[16] The settlement represents a sensible resolution of the claim against Mr Habulin. There will be a saving of time and especially costs. Although the settlement will not obviate the need for the Commissioner to file a formal application for civil forfeiture orders, the removal of Mr Habulin as respondent will reduce the scope of the application and narrow the issues to be determined. Although the Commissioner considers he has a strong case for seeking a profit forfeiture order against Mr Habulin personally as well as assets forfeiture orders over the restrained property that is attributed to him, the Commissioner is prepared to adopt a pragmatic approach to resolving the proceeding. A key consideration for the Commissioner in this regard is that he is not aware of any assets held by Mr Habulin beyond the restrained property, which could be made available to meet a profit forfeiture order against him.
1 Criminal Proceeds (Recovery) Act 2009, s 3(1)(a) and (b).
[17] This Court has previously recognised that the utility of the Commissioner pursuing a profit forfeiture order against a respondent in circumstances where there is no known unrestrained assets of any significant value that might be available to meet the shortfall between the value of such an order and the value of the currently restrained property is a legitimate consideration that can bear on the appropriateness of a proposed settlement.
[18] The Commissioner and Mr Habulin both acknowledge the risk inherent in a contested hearing and wish to have certainty as to outcome.
Result
[19] I approve the proposed settlement under s 95 of the Act and make orders as sought in paragraph 6.1 of the joint memorandum of counsel dated 7 October 2019:
(a)The proposed settlement between the Commissioner and Mr Habulin outlined in the memorandum is approved under s 95(3) of the Act.
(b)Costs are to lie where they fall in relation to all matters as between the Commissioner and Mr Habulin.
[20]I also record the following terms of the agreed settlement:
(a)Mr Habulin undertakes that he will not take any steps in the future to oppose the civil forfeiture of any of the property presently restrained in this proceeding (whether such orders are sought on application made by the Commissioner, by consent, or otherwise).
(b)The settlement is in full and final settlement in respect of Mr Habulin’s civil liability for the criminal offending alleged by the Commissioner in this matter to date. In particular, the Commissioner will not pursue an application for a profit forfeiture order against Mr Habulin in this matter in relation to the significant criminal activity that has been alleged in the evidence filed on behalf of the Commissioner to date, and on the basis that Mr Habulin has no interests in property of any
significant value beyond the property presently restrained in these proceedings.
Woolford J
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