Commissioner of Police v Sharma
[2023] NZHC 2959
•20 October 2023
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2023-409-201
[2023] NZHC 2959
BETWEEN
COMMISSIONER OF POLICE
Applicant
AND
NEHA SHARMA
First Respondent
AND
AMANDEEP SHARMA
Second Respondent
AND
DIVINE CONNECTION LIMITED
Third Respondent
AND
ANZ BANK NEW ZEALAND LIMITED
Interested Party
AND
OFFICIAL ASSIGNEE
Interested Party
AND
CHRISTOPHER FERNANDO
Interested Party
Hearing: 10 October 2023 Appearances:
K South and K A Courteney for the Applicant
M T Lennard for the First and Second Respondents B M Finn for the Official Assignee
Judgment:
20 October 2023
JUDGMENT OF HARLAND J
(Application for early sale order)
COMMISSIONER OF POLICE v SHARMA [2023] NZHC 2959 [20 October 2023]
Introduction
[1] The Commissioner of Police (the Commissioner) applies for an early sale order under ss 33, 34 and 35 of the Criminal Proceeds (Recovery) Act 2009 (the Act) in respect of bare land at Knowles Crescent, Kaikoura (the section) owned by the first and second respondents (the Sharmas). This property is currently the subject of a restraining order, made initially by the Court on a without notice basis, but subsequently an on notice restraining order was made on 6 June 2023.
[2]The application for an early sale order is opposed by the Sharmas.
Background
[3] Neha Sharma faces two charges of using a forged document,1 and both she and her husband Amandeep Sharma each face two charges of obtaining by deception2 and two charges of money laundering.3 The latter two sets of charges are laid as representative charges. All charges have been laid by the Serious Fraud Office.
[4] In summary, the forgery charges allege that Mrs Sharma provided two forged references to support her application for the position at Oranga Tamariki and that, subsequently, when she was employed by Waka Kotahi, she again submitted a reference which had been forged.
[5] The charges of obtaining by deception relate to Mrs Sharma’s failure to advise Oranga Tamariki about an alleged conflict of interest. It is alleged that Divine Connection Ltd (Divine Connection), a company in which Mr Sharma was the director and shareholder, was assigned by Mrs Sharma in her role as property and facilities manager to undertake work for Oranga Tamariki, without Oranga Tamariki being aware that Divine Connection was linked to Mr Sharma. It is alleged that the goods and services paid by Oranga Tamariki to Divine Connection amounted to
$2,144,615.56
1 Crimes Act 1961, s 257(1)(b)-(c); maximum penalty ten years’ imprisonment.
2 Sections 240(1)(a), (2)(b)(a)-(b) and 66; maximum penalty seven years’ imprisonment.
3 Sections 243(2) and 66; maximum penalty seven years’ imprisonment.243(2).
[6] The charges alleging money laundering follow on from what happened after Mrs Sharma resigned from Oranga Tamariki on 2 November 2022.
[7] On 30 March 2023, search warrants were executed, one at the then residential address of Mr and Mrs Sharma (their family home), the other at the residential address of the then director of Divine Connection.
[8] Following the execution of the search warrant at the Sharmas’ address, a real estate agent was instructed by them to sell their family home.
[9] On 14 April 2023, the Sharmas flew to India on one-way tickets. Four days later, their family home was listed for sale.
[10] Before leaving for India, the Sharmas transferred a total of $795,000 from New Zealand accounts to a Bank of India account held in Mr Sharma’s name. A total of
$791,500 was then transferred into seven other bank accounts associated with Mrs Sharma’s family in India or joint accounts in their names.
[11] The Sharmas’ family home eventually sold. The funds obtained from this sale are restrained. Another property owned by them at 100 Aldwins Road has also been sold with the funds from it also being restrained. The Sharmas consented to these properties being sold.
The application and notice of opposition
[12] The remaining real estate owned by the Sharmas comprises the section in Kaikoura. This section is the subject of the Commissioner’s current application. It was purchased on 6 October 2021 for $220,000, using what the Commissioner contends were tainted funds.
[13] Although the section is subject to the restraining order and the Court has ordered that the rates and any insurance costs for it be funded from the restrained funds held by the Official Assignee, the Commissioner submits that the Court should grant the application for early sale because (and I summarise):
(a) the Sharmas had actively marketed the section for sale from 10 October 2022 and it remained on the market after they left New Zealand for India on 14 April 2023. Given that they had previously agreed it should be sold, there is no reason why it should not be sold now;
(b) although recognising there is little risk of the section deteriorating in value, without regular mowing and/or weed control, it may fall into a deteriorated state or create a fire risk;
(c) it is in the interests of all parties to liquidate the section so that all parties are aware of the value of funds in the restrained assets pool held on interest bearing deposit by the Official Assignee; and
(d) there is no detriment to any party given that the funds realised (as with the two other properties already sold) would be held on interest bearing deposit by the Official Assignee until all matters are resolved.
[14]The Sharmas oppose the application. They submit that:
(a) there is no evidence that the section is depreciating in value and, in any event, it is subject to the restraining order;
(b) the assertion that the section may fall into a deteriorated or fire risk state is speculative but, in any event, the Official Assignee is authorised under s 80 of the Act to expend funds to mow the grass once a month; and
(c) they are entitled to the presumption of innocence. They have pleaded not guilty to the charges and elected trial by jury. The trial management process is in its infancy and a trial date has not been allocated. Counsel agree that the trial is unlikely to proceed until the end of 2024 at the earliest or more likely in 2025.
Discussion
[15]Section 35 of the Act provides:
35 Types of further order
Without limiting the generality of section 34(1), a court may, on an application under section 33(1), make 1 or more of the following further orders in relation to restrained property:
…
(e) an order relating to the Official Assignee that—
…
(v) directs the Official Assignee to sell restrained property (including, without limitation, a business) in order to preserve the value of the restrained property:
(emphasis added)
[16] I agree that, although the making of an early sale order is discretionary, s 35(e)(v) appears to require such an order to be for the purpose of preserving the value of the restrained property.
[17] I agree with the following observations of Cull J in Commissioner of Police v Siloata:4
[25] Dealing with early sale orders in general, the Court in Commissioner of Police v Chen observed:5
The underlying purpose of the restraining order is to preserve the subject property because it represents a monetary value of the parties concerned. The legislature can be taken to have appreciated that property may be subject to a restraining order for a considerable time and that circumstances may change over the life of the order so as to put the property at risk. Some risks may be of a kind that action including disposition of the property itself, may be needed to preserve the value that the property represents. If there were no mechanism for responding to such risks the rational for the scheme would be significantly undermined.
Section 35(e)(v) specifically recognises the need to preserve the value of the restrained property through the sale of it. There are many foreseeable circumstances that might justify such an order. These include a significant drop in the property market, the risk of a mortgagee sale and the reduction in value cause by a lack of funds to maintain the property.
[26] However, sale orders will not automatically be made where restrained assets are depreciating in value. This Court must consider the nature and value of the asset(s), the length of time before the substantive proceeding will be determined, the extent to which the asset(s) may depreciate during that period
4 Commissioner of Police v Siloata [2022] NZHC 1830 at [25]-[26].
5 Commissioner of Police v Chen [2013] NZHC 2259 at [30]-[31].
and the wishes of the owner of the asset(s) and any other person who may have an interest in it.6
[18] I also refer to the observations of Venning J in Commissioner of Police v Cavanagh where he noted that sale orders are typically pursued where the restrained assets are likely to have a high depreciation rate combined with costs of storage and insurance, which ultimately decrease the potential return to the Commissioner and/or the parties who claim an interest in the asset.7 That is not the situation here.
[19]The property in this case is bare land. It was purchased on 6 October 2021 for
$220,000. On 10 October 2022, it was placed on the market through the Sharmas’ real estate agent with a listing price of $329,000. On 29 March 2023, the asking price was reduced to $290,000. On 20 April 2023, a week after having left New Zealand for India, Mr Sharma contacted the real estate agent saying that they wished to sell the property in the next three to four weeks. The property has not sold but is restrained. There is currently no mortgage over the property. Although the value of the section is unable to be clearly ascertained at this time, there is no evidence that it is worth less than the price it was purchased for in October 2021. As it comprises bare land, no issues of depreciation arise.
[20] There is simply no evidence that an early order for sale is required to preserve the value of this section. In addition, I am not at all persuaded by the argument that the property may fall into a deteriorated or fire risk state, or the fact that Kaikoura has been subject to earthquakes might be a powerful or even relevant consideration.
[21] The fact that the Sharmas previously agreed to placing the property on the market for sale and now do not is, in my view, persuasive. The views of the Sharmas need to be considered. They do not agree to the property being sold at this time, but they did agree to the family home and the Aldwins Road property being sold. Absent some evidence establishing that the value of the section needs to be preserved, the Sharmas’ views should be respected.
6 Commissioner of Police v Drummond [2018] NZHC 1730. See also Commissioner of Police v Farrell [2022] NZHC 310.
7 Commissioner of Police v Cavanagh [2014] NZHC 2978 at [7].
[22] The criminal trial is some time away. Should the Sharmas be acquitted, there would be no basis to find that the section was purchased using tainted funds. If the Sharmas are convicted, there would then need to be an application for civil forfeiture orders. Given the length of time involved, some circumstances might support an application for early sale. This is not such a case. I am not satisfied that an order for early sale of the section is required to preserve the value of it. Neither am I satisfied that it is appropriate for any other of the reasons advanced by the Commissioner.
Result
[23]The application is dismissed with costs reserved.
Harland J
Counsel:
Crown Solicitor’s Office, Christchurch Stout Street Chambers, Wellington Luke Cunningham Clere, Wellington.
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