Commissioner of Police v Shahidan
[2021] NZHC 2502
•22 September 2021
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2020-404-0594
[2021] NZHC 2502
BETWEEN COMMISSIONER OF POLICE
Applicant
AND
SHAHIDRAWADEY BIN SHAHIDAN
Respondent
Hearing: On the papers Counsel:
M Harborow and A Masters for applicant Respondent in person
Judgment:
22 September 2021
JUDGMENT OF KATZ J
[Costs]
This judgment was delivered by me on 22 September 2021 at 3:30 pm Pursuant to Rule 11.5 High Court Rules
Registrar/Deputy Registrar
Solicitors: Meredith Connell, Auckland Copy to: S B Shahidan (respondent)
COMMISSIONER OF POLICE v SHAHIDAN [2021] NZHC 2502 [22 September 2021]
Introduction
[1] Having successfully obtained restraining orders against Shahidrawadey bin Shahidan under the Criminal Proceeds (Recovery) Act 2009 (“the Act”), the Commissioner of Police now seeks increased costs against Mr Shahidan on a 2B scale basis with a 50 per cent uplift (totalling $32,623.50).
[2] The Commissioner submits that it was clear that Mr Shahidan was not telling the truth throughout the hearing of the Commissioner’s application, and that he has acted in a way that contributed unnecessarily to the time and expense of the proceeding.
[3] Mr Shahidan has not filed a memorandum in response to the Commissioner’s costs memorandum. Counsel for the Commissioner attempted to contact Mr Shahidan by email on two occasions but did not receive a response.
Background
[4] The Commissioner alleges that Mr Shahidan has unlawfully benefited from significant criminal activity through involvement in money laundering, receiving and the unlawful provision of financial services through two companies, Venus Financial Markets Ltd (trading as VenusFX) and Igateway Ltd. Funds held in two Bank of New Zealand bank accounts (“Igateway Funds”) are alleged by the Commissioner to be the proceeds of this criminal activity.
[5] Restraining orders under the Act were made over the Igateway Funds on a without notice basis. The Commissioner then applied, on notice to Mr Shahidan, for those orders to be continued. Mr Shahidan opposed the Commissioner’s application.
[6] Restraining orders are interim in nature.1 They have a statutory life of 12 months but may be extended upon application.2 Restraining orders do not in themselves forfeit property rights.3 Their purpose is to maintain the status quo pending
1 Vincent v Commissioner of Police [2013] NZCA 412 at [45].
2 Criminal Proceeds (Recovery) Act 2009, ss 37(1) and 41.
3 Commissioner of Police v Li [2014] NZHC 479 at [5].
determination of an application by the Commissioner for civil forfeiture orders (asset forfeiture orders and/or profit forfeiture orders).4 The threshold for granting restraining orders (reasonable grounds for belief that a person has unlawfully benefitted from significant criminal activity) is lower than that for granting asset or profit forfeiture orders (proof on the balance of probabilities).
[7] Due to their interim nature, and the relatively low threshold for granting them, it is relatively uncommon for applications for restraining orders to be opposed. Most respondents focus their efforts on the substantive forfeiture application. Mr Shahidan, however, elected to oppose the application for restraining orders.
[8] On 8 June 2021, following a contested hearing, I granted the Commissioner’s application.5 I found that there were reasonable grounds to believe that Mr Shahidan had engaged in significant criminal activity, and that he had unlawfully benefitted from that activity.
Should the Commissioner be awarded increased costs?
[9] The Court has a general discretion as to costs.6 The general rule, however, is that a party who fails with respect to a proceeding should pay costs to the party who succeeds.7 That rule applies to applications for restraining orders under the Act.8 The Court’s discretion includes whether to grant an award for increased costs or indemnity costs.9
[10] The Commissioner submits that there would be grounds for an award of indemnity costs in this case as Mr Shahidan acted frivolously and improperly in defending the application. The Commissioner acknowledges that Mr Shahidan was entitled to defend the application but submits that the manner in which he did so was improper. He submits that it was clear that Mr Shahidan was not telling the truth throughout the proceeding, and that such conduct would justify an award of indemnity
4 At [5].
5 Commissioner of Police v Shahidan [2021] NZHC 1328.
6 High Court Rules 2016, r 14.1.
7 Rule 14.2(1)(a).
8 Commissioner of Police v Antolik [2017] NZHC 86 at [2] citing Commissioner of Police v Stepping Stone Finance Ltd [2013] NZHC 1537 at [3]-[6].
9 High Court Rules 2016, r 14.6(1).
costs. Nevertheless, the Commissioner does not seek indemnity costs, but rather seeks increased costs, submitting that doing so is “generous”.
[11] The Court may order a party to pay increased costs if the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or a step in it by, among other things:
(a)taking or pursuing an unnecessary step or an argument that lacks merit;10 or
(b)failing, without reasonable justification, to admit facts, evidence, documents, or accept a legal argument.11
[12] I accept the Commissioner’s submission that Mr Shahidan contributed unnecessarily to the time or expense of the proceeding through the manner in which he advanced his opposition. Mr Shahidan’s evidence at the hearing lacked credibility and he advanced grounds of opposition that were clearly unmeritorious and entirely implausible.
[13] For example, Mr Shahidan claimed that the Igateway Funds were the proceeds of his business providing system software services. It was simply not credible, however, that Mr Shahidan, working on his own, was able to generate a revenue of over $2 million for software programming services over a seven month period when he was also working fulltime as the Chief Operating Officer for VenusFX. Nor did he produce any contemporaneous records to corroborate his claim to have been providing software services, as one would expect where those services were generating revenue exceeding $2 million.
[14] Mr Shahidan claimed to have had only a minor role in VenusFX, primarily as a programmer doing technical work on the “back end of the system”. He said that he was not involved in financial matters. Evidence put to him in cross-examination, however, showed that Mr Shahidan was a much more central figure in VenusFX than
10 Rule 14.6(3)(b)(ii).
11 Rule 14.6(3)(b)(iii).
he was willing to admit. Amongst other things, he is shown in YouTube videos giving speeches promoting the scheme, encouraging investment in the scheme and, later, fronting up to disgruntled investors.
[15] Mr Shahidan also advanced spurious explanations about VenusFX’s Facebook presence. He suggested that a Facebook page titled “VenusFX”, which posted about foreign exchange trading, was not really VenusFX’s Facebook page at all. Further, he claimed to have no knowledge as to why there would be instructions on the VenusFX Facebook page to deposit investment funds into Igateway Ltd’s bank accounts in New Zealand – accounts that were under Mr Shahidan’s sole control. He suggested that some unknown person must have made this request, for unknown reasons. He could not explain, however, why one depositor had referenced their deposit into the Igateway bank account as “VenusFX”.
[16] I am satisfied that Mr Shahidan contributed unnecessarily to the time or expense of the proceeding by advancing grounds of opposition to the application that were entirely without merit, and which were supported by evidence that lacked credibility. This put the Commissioner to considerable additional expense.
[17] I therefore consider that Mr Shahidan’s conduct of the proceeding warrants an award of increased costs.
Result
[18] I order Mr Shahidan to pay the Commissioner increased costs on a 2B scale basis with a 50 per cent uplift, together with reasonable disbursements, in the total sum of $32,623.50.
Katz J
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