Commissioner of Police v Singh

[2015] NZHC 860

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2011-404-7200 [2015] NZHC 860

UNDER

the Criminal Proceeds (Recovery) Act

2009

BETWEEN

THE COMMISSIONER OF POLICE Applicant

AND

SHALENDRA SINGH First Respondent

RAJ RADHIKA DEVI Second Respondent

Hearing:	26 February 2015
Appearances:	R McCoubrey for Applicant S Lance for Respondents
Judgment:	29 April 2015

JUDGMENT OF HINTON J

This judgment is delivered by me on 29 April 2015 at 12:00 midday

Pursuant to r 11.5 of the High Court Rules.

Registrar / Deputy Registrar

THE COMMISSIONER OF POLICE v SINGH [2015] NZHC 860 [29 April 2015]

Introduction

[1]      The second respondent, Ms Devi, has applied to vary restraining orders that are in place over bank accounts in her name and over the balance of a term deposit held in the name of her company, Scorpion Liquor (2006) Limited (“Scorpion”). The restraining orders are made under the Criminal Proceeds (Recovery) Act 2009 (“the Act”).

[2]      The Commissioner of Police (“Commissioner”) applied for an extension of

the restraining order made by Priestley J on 6 March 2012, for a period of one year.

[3]      On 26 February 2015 I granted the application for an extension and reserved my decision on the application for variation of the restraining order.

Background

[4]      The first respondent, Mr Singh, is Ms Devi’s son. Both were arrested at the conclusion  of  a  police  drug  squad  operation  code-named  “Operation Ark”. The charges against Mr Singh are set down for  trial commencing 8 February 2016. Money laundering charges were laid against Ms Devi but they have been dropped.

[5]      After a contested hearing on  15  December 2011, Priestley J  granted  the restraining orders sought.1    He considered the key question of whether there were reasonable  grounds  to  believe  that  Ms  Devi  had  unlawfully  benefited  from significant criminal activity.2    The Judge noted that Ms Devi had relinquished the management of Scorpion to her son and that, in her evidence, she was vague about the finances of that business.   There was evidence from a forensic chartered accountant that between March 2008 and March 2011, the company’s bank accounts were recipients of cash deposits exceeding $2.5 million.3

[6]      The Judge concluded that it was a reasonable inference to draw that some of

Ms Devi’s personal cash had been derived from Scorpion. Ms Devi admitted that her

1      Commissioner v Police v Singh [2012] NZHC 344.

2      Criminal Proceeds (Recovery) Act 2009, ss 7, 25.

mortgage payments were met by the business.   The Judge was satisfied that Scorpion’s bank accounts had been used to bank large sums of cash, “some of which undoubtedly would be the proceeds of the alleged sale and supply of drugs by Mr Singh”.4

[7]      The  Judge  noted  the  “elusive”  answers  that  Ms  Devi  gave  in  cross- examination.5

Also noteworthy was Mr Johnstone’s cross-examination about Ms Devi’s bank statements.   He questioned Ms Devi as to the $345,000 that, on Ms Thompson’s evidence, was deposited into Ms Devi’s personal bank accounts during the period January 2008 to April 2011.  Ms Devi’s somewhat elusive answer was that she did not know where this money came from.  However, in response to the Court’s query, Ms Devi confirmed that she received bank statements in the mail and indeed opened them.   It was her evidence that, despite this fact, she simply did not notice the extra money that was flowing into  her  accounts,  and  that  she  would  “have  to  find  out”  about  this occurrence.

[8]      Priestley J concluded that on the balance of probabilities, Ms Devi was aware

of her son’s activities and derived a benefit from those activities.6

[9]      Upon  making  the  restraining  order,  the  Judge  commented  that  all  of

Ms Devi’s assets could be regarded as tainted and that:7

bearing in mind that some unknown proportion of the trading receipts of Scorpion must have been legitimate, the restraining orders I have made must inevitably restrain assets of a value well beyond the value of the property which might eventually be subject to forfeiture orders.  I therefore invite the parties to explore and negotiate the possible release of some of Ms Devi’s assets.

[10]     Since Priestley J’s judgment, as I understand it, approximately $100,000 of the funds restrained has been released by consent.

Discussion

[11]     A  restraining  order  is  not  a  forfeiture  and  property  restrained  will  not necessarily be forfeited.   It is a preliminary mechanism that ensures that property

4 At [34].

5 At [39].

6 At [43].

which may be subject to forfeiture is not put beyond the reach of the Crown or dissipated.

[12]     The  principal  grounds  upon  which  Ms  Devi  has  applied  to  release  the property or some of it from restraint are that:

(a)      there  are  no  reasonable  grounds  to  believe  that  Ms  Devi  has unlawfully benefitted from significant criminal activity, or at least not all of her assets could be regarded as tainted; and

(b)      the charges against Ms Devi have been dismissed.

[13]     She also relies on her affidavit, an affidavit of her son and a memorandum of counsel dated 14 February 2014.

[14]     In her affidavit dated 14 February 2014, Ms Devi deposes that she has not had the financial resources to enable her to employ a forensic accountant to analyse and respond to the applicant’s evidence. This point was recognised by Priestley J:8

She was, during her evidence, rather vague about the takings of that business and its finances generally.   There was no evidence from Ms Devi (and in fairness she had insufficient time to engage or call her accountant) on what the cash flow and profitability of the business was from its legitimate liquor sales.

[15]     She also deposed that:

It is, and never was, suggested that I derived any proceeds personally from significant criminal activity.

[16]     Counsel   for   the   Commissioner,   Mr   McCoubrey,   submits   that   the Commissioner is not opposed in principle to exploring and negotiating the release of more of Ms Devi’s assets.   However, the Commissioner’s position is that in the absence of a clear explanation from Ms Devi as to the source of the unexplained deposits into the accounts that are related to her, the Commissioner is not prepared to release those accounts from restraint.

[17]     Mr McCoubrey submits that a variation of the orders would diminish the pool of restrained funds available to meet any future profit forfeiture order which the Court may make.   He notes that the Commissioner intends to apply for a profit forfeiture order naming Mr Singh, Ms Devi and Scorpion as the respondents.

[18]     Mr McCoubrey proposes for Ms Devi to meet representatives from the Asset Recovery Unit to explain the unidentified amounts in her bank accounts and to explain the financial workings of Scorpion.  He says that if they can be explained then the Commissioner will consider releasing some of the property from restraint.

[19]     Whether Ms Devi derived proceeds personally from criminal activity is not the test under s 25 of the Act, being the section under which the original application was made.  It provides:

25   Making restraining order relating to all or part of respondent’s

property

(1) A court hearing an application for a restraining order relating to all or part of a respondent’s property may, if the court is satisfied it has reasonable grounds to believe that the respondent has unlawfully benefited from significant criminal activity, make an order that the property it specifies in the order (restrained property)—

(a) is not to be disposed of, or dealt with, other than is provided for in the restraining order; and

(b) is to be under the Official Assignee’ custody and control.

…

[20]     Priestley J concluded that:9

The weight of this evidence leads me to the conclusion that, on the balance of probabilities, Ms Devi was aware of her son’s activities, and derived a benefit from these activities.

[21]     Further, the fact that Ms Devi’s charges have been dropped is irrelevant.  This

is clear from ss 14 and 16 of the Act.

[22]     I consider that there is still reasonable grounds to believe that Ms Devi may have unlawfully benefited from significant criminal activity based on the reasons in Priestley J’s judgment.

Result

[23]     The application to vary the restraining orders is declined.

[24]     As proposed by the Commissioner, Ms Devi should engage in conversation with the Asset Recovery Unit as the Commissioner is open to releasing some of her assets  upon  further  explanation  from  her.     It  may  be  appropriate  for  the Commissioner to release a certain amount of funds to enable Ms Devi to engage a

forensic accountant.

Hinton J