Commissioner of Police v Uele
[2017] NZHC 574
•28 March 2017
ORDER PROHIBITING PUBLICATION OF THE BANK ACCOUNT NUMBERS IN E(V) – (IX) INCLUSIVE OF THE SCHEDULE ATTACHED TO THIS JUDGMENT IN NEWS MEDIA OR ON THE INTERNET OR OTHER PUBLICLY AVAILABLE DATABASE.
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2013-404-5038 [2017] NZHC 574
BETWEEN COMMISSIONER OF POLICE
Applicant
AND
MOSESE LAUMANU UELE First Respondent
AND
ELISAPETA UELE Second Respondent
Hearing: On the papers Counsel:
M R Harborow & H G Clark for Applicant
P J Kaye for First Respondent
D J Dufty for Second RespondentJudgment:
28 March 2017
JUDGMENT OF PAUL DAVISON J [REDACTED VERSION]
This judgment was delivered by me on 28 March 2017at 3.30pm pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar
COMMISSIONER OF POLICE v UELE [2017] NZHC 574 [28 March 2017]
[1] This is a joint application by the parties for approval of the proposed terms of settlement of the Commissioner’s proceeding against the first and second respondents under the Criminal Proceeds (Recovery) Act 2009 (the Act). The proceeding arose from a police operation known as “Operation Ghost” which resulted in the prosecution of the first respondent in relation to alleged importing of pseudoephedrine.
[2] On 8 July 2014 the first respondent pleaded guilty to one charge of importing pseudoephedrine. That offending related to his management of his shipping company, Ezi World Cargo Limited (Ezi World). The first respondent arranged to receive Contac NT concealed in a shipment of foodstuffs on route from China to Tonga. Ezi World had an approved New Zealand Customs clearance area the effect of which was that shipments on route to Tonga would not be subject to Customs inspections. While the shipment was in the Ezi World Customs clearance area, the first respondent removed the packages containing Contact NT and replaced them with packages containing a substance such as potato starch.
[3] On 20 May 2016, the Commissioner commenced proceedings seeking civil forfeiture orders in respect of the following property, which had previously been made the subject of restraining orders:
(a) The residential property situated at 47 Lagoon Way, West Harbour in respect of which the first respondent was the registered proprietor and which was subject to the interest of the Bank of New Zealand as mortgagee.
(b) A 2012 Toyota Highlander station wagon, registration GGM589. (c) The shareholdings of the first and second respondent in Ezi World.
(d) $7,420 cash seized by Police from 47 Lagoon Way, West Harbour on
4 December 2013.
(e) $40,000 cash seized by Police from the business premises of Ezi
World on 4 December 2013.
(f) The funds in three bank accounts in the name of the first respondent and two bank accounts held by Ezi World totalling $54,000.
[4] The Commissioner estimates the current total value of the restrained assets to be approximately $580,000.
The proposed settlement
[5] The proposed settlement is as follows:
(a) The 47 Lagoon Way property is to be sold and upon receipt of the sale proceeds by the Official Assignee, the sum of $150,000, less all legal aid debt owed by the first and second respondents to the Legal Services Commissioner, will be returned to the first and second
respondents.1
(b)Assets forfeiture orders are to be made by consent over the net proceeds of sale of 47 Lagoon Way and over all other property presently restrained by the Court orders, with the exception of the shareholdings of the first and second respondents in Ezi World.
(c) The first and second respondents both agree to vacate 47 Lagoon Way, including clearing and removing all their personal possessions from the property, within two weeks after the date on which they are served with the sealed order approving settlement.
(d)The Commissioner will not further pursue a profit forfeiture order against either the first or second respondent.
1 The equity in the 47 Lagoon Way property is assessed by the Commissioner as being $449,830.
The present CV is $820,000 less the sum secured by mortgage to the BNZ, the balance of which as at 3 November 2016 was approximately $370,170. For clarity the terms of settlement stipulate that all legal aid debt owing to the Legal Services Commissioner secured against the 47
Lagoon Way property must be first paid from the sum of $150,000 which is to be returned to the first and second respondents before any balance of that sum is paid to them.
(e) Neither the first or second respondent will pursue any application for relief from the civil forfeiture.
(f) All costs arising from and related to the proceeding are to lie where they fall.
Approval pursuant to s 95 of the Act
[6] Section 95 of the Act provides:
High Court must approve settlement between Commissioner and other party
(1) The Commissioner may enter into a settlement with any person as to the property or any sum of money to be forfeited to the Crown.
(2) A settlement does not bind the parties unless the High Court approves it.
(3) The High Court must approve the settlement if it is satisfied that it is consistent with—
(a) the purposes of this Act; and
(b) the overall interests of justice.
[7] The Court’s approval pursuant to the section is not a cursory rubber stamping exercise. As explained in Commissioner of Police v Know-All Group Ltd, Parliament has entrusted the High Court with a supervisory jurisdiction to approve settlements when satisfied that they are consistent with the purposes of the Act and consistent with the overall interests of justice.2 In considering whether a proposed settlement does meet the prerequisite criteria of s 95(3)(a) and (b) the Court will have regard to the strength of the Commissioner’s case, and the strength of the respondent’s defence;3 the quantum of the sum or value of assets to be forfeited and
the relativity of such sum to the total value of assets restrained as tainted property;4
the litigation risk of a hearing to the Commissioner and the respondent;5 and such
2 Commissioner of Police v Know-All Group Ltd HC Auckland CIV-2010-404-403, 7 November
2011 at [11].
3 Commissioner of Police v Kree [2013] NZHC 2972 at [11].
4 Commissioner of Police v Venn [2014] NZHC 361 at [5] – [6].
5 Commissioner of Police v Kree at [11].
other matters as inform a common sense compromise to litigation that serves the purposes of the Act.6
[8] The primary purpose of the Act as set out in s 3 is to establish a regime for the forfeiture of property that has been derived directly or indirectly from significant criminal activity or which represents the value of a person’s unlawfully derived income. A further purpose of the Act is to eliminate the opportunity for persons to profit from undertaking or being associated with significant criminal activity and to deter significant criminal activity. In Hayward v Commissioner of Police the Court
of Appeal described the Act as having a “strongly expressed statutory purpose”.7
More recently the Supreme Court in Marwood v Commissioner of Police has described the language of s 3(2)(a) as being “aspirational” and providing a “clear and emphatic signal as to the legislative purpose”.8
[9] While the Court has a supervisory jurisdiction and function under ss 93 to 95, in exercising that jurisdiction it is “equally important that the Court carry out a broad inquiry and acknowledge, where appropriate, that settlements can be in the interests of justice, bearing in mind the savings of time and cost and the litigation risk to the parties”.9
Grounds advanced in support of approval of terms of settlement
[10] Here the parties submit that the proposed settlement is consistent with the purposes of the Act and the overall interests of justice by reason of the following:
(a) The first and second respondents have derived substantial financial benefit from significant criminal activity, namely the importation of pseudoephedrine. The first respondent informed the Police that he had been paid $60,000 in cash for his assistance with the single importation in respect of which he was convicted. On the Commissioner’s evidence in this proceeding, the first respondent’s
total offending significantly exceeds the offending for which he was
6 Commissioner of Police v Douglas [2015] NZHC 1293 at [6].
7 Hayward v Commissioner of Police [2014] NZCA 625 at [29].
8 Marwood v Commissioner of Police [2016] NZSC 139 at [12].
9 Commissioner of Police v Zhang and Xu [2016] NZHC 930 at [8].
convicted. As appears from the affidavit of Nicholas Gordon Pirihi, sworn in support of the Commissioner’s application for forfeiture orders, 12 separate shipments organised by the first respondent’s co- offender, Yixin Gan, passed through Ezi World as a trans-shipper during the period August 2009 to October 2013. The first and second respondents’ bank accounts demonstrated that at around the date of each such importation, there was a significant spike of cash deposits lodged into their bank accounts.
(b)The Commissioner contends that there is good and cogent proof to show that all of the presently restrained property is tainted property which would support an assets forfeiture order. In particular the purchase of the 47 Lagoon Way residence was completed following cash deposits of over $250,000 lodged into the bank accounts held and operated by the first and second respondents.
(c) The Commissioner nevertheless recognises that there remains a litigation risk that the Court might conclude that the second respondent was an innocent party and that she is consequently entitled to relief from forfeiture. Furthermore, the Commissioner accepts that the first and second respondents’ eight children (six of whom are under the age of 18 years) are presently living in the Lagoon Way property together with a number of further extended family members. The repayment of the legal aid debt of the first and second respondents from the sum of $150,000 to be otherwise returned to the respondents, will likely result in a net sum of $115,000 being returned to the first and second respondents, the legal aid debt being approximately $35,000. On those figures the sum to be returned represents approximately 20 per cent of the value of the restrained property. The parties consider that such a percentage is likely to be close to the amount of any relief that may be ordered by the Court should the matter proceed to trial.
(d)Having regard to the circumstances, the Commissioner proposes to take what is described as a “pragmatic stance” to the profit forfeiture application on the basis that approximately 80 per cent of the restrained property will be forwarded to the Crown pursuant to the proposed settlement.
[11] While the first and second respondents dispute the strength of the Commissioner’s case, they nevertheless acknowledge that from their perspective a contested hearing carries risk and that the process of proceeding to trial and the potential for appeals will involve time and further delay before the matter is finally resolved. The first and second respondents also acknowledge the first respondent’s guilty plea and the likelihood of the Commissioner establishing further and more extensive offending beyond the single instance of importation related to the first respondent’s conviction. They further recognise the mandatory nature of civil forfeiture orders and the statutory presumption in favour of the Commissioner’s nominated profit forfeiture sum pursuant to s 53 of the Act and the civil standard of proof.
[12] Both parties recognise that the proposed settlement, if approved, would represent a significant saving of time, resource and cost. Both parties wish to proceed with the certainty and finality that the proposed settlement would achieve.
Decision as to approval of settlement
[13] Apart from any personal belongings the assets of the first and second respondents which are presently the subject of restraining orders represent all of the assets that they own. The Commissioner is not aware of any other significant assets which could be applied towards or made the subject of a profit forfeiture order against either the first or second respondent. The proposed settlement represents forfeiture in the order of 80 per cent of the value of the restrained property, being property in respect of which the Commissioner maintains he has a strong case to establish it to be tainted property under the Act. Although the first and second respondents will have the sum of $150,000 returned to them, from that sum they are required to repay the legal aid debt presently estimated to be in the vicinity of
$35,000. Thus the sum returned to the first and second respondents will be
approximately $115,000 from the total estimated value of forfeited property of
$580,000 and being in the order of 20 per cent of the total value of the restrained and seized assets.
[14] Whilst it is not possible to do other than undertake a broad assessment of the relative strength of the Commissioner’s case and the defence advanced by the first and second respondents, I consider it reasonable and realistic for the parties to recognise the litigation risk attendant upon the matter proceeding to trial and to also recognise the significant legal costs and resources that would necessarily be incurred by both parties in conducting a defended hearing. In addition it is reasonable to recognise that the Court may order relief based upon the assertion that the second respondent was not involved in the criminal activity and having regard to her responsibility for family members, in particular the children of the family who reside at the property.
[15] Taken together I consider that the circumstances lead me to conclude that a settlement on terms that will result in 80 per cent of the seized and restrained property being forfeited is a settlement that meets the purposes of the Act by reason of the first and second respondents’ forfeiture of assets directly or indirectly derived from significant criminal activity and which will operate to deter significant criminal activity generally. Pursuant to s 95 of the Act I am satisfied that the settlement is consistent with the purposes of the Act and the overall interests of justice and I accordingly approve the settlement as proposed.
Terms of settlement
[16] In order to give effect to the terms of settlement between the parties, they jointly seek orders of the Court on the terms set out in the schedule annexed hereto.
Conclusions
[17] The proposed settlement is approved pursuant to s 95 of the Act. I make orders for implementation of the settlement in terms of the Schedule attached. The
parties are agreed that costs will lie where they fall.
Paul Davison J
COMMISSIONER OF POLICE V UELE SCHEDULE
(a) A direction to the Official Assignee, under ss 33 – 35 of the Act, that she is to sell the restrained property 47 Lagoon Way, West Harbour, Auckland as described in certificate of title NA83D/903, as soon as practicable for fair market value. Following the sale, the Official Assignee is to deal with the proceeds of sale in the following order of priority:
(i) first, deduct her reasonable costs in effecting the sale;
(ii)second, repay Bank of New Zealand the loan secured by the mortgage registered against the property;
(iii) third, repay all legal aid debt owed by Mr and Mrs Uele to the Legal
Services Commissioner;
(iv) fourth, pay to Mr and Mrs Uele the result of the following calculation:
$150,000 minus the total legal aid debt owed by Mr and Mrs Uele and repaid to the Legal Services Commissioner in accordance with paragraph (a)(iii) above;10
(v)fifth, forfeit all of the remaining sale proceeds in accordance with the assets forfeiture order in paragraph (e)(i) below;
(b)for the purposes of effecting the sale of 47 Lagoon Way, West Harbour, Auckland, Guy Frances Sayers of Napier, Official Assignee, has the power to execute any deed or instrument in the name of Mosese Uele, and to do anything necessary to give validity and operation to the deed or instrument;
(c) a further direction, under ss 33 – 35 of the Act, that Mr and Mrs Uele must vacate the property at 47 Lagoon Way, West Harbour, Auckland (and clear it of all personal possessions) within two weeks of being served with the sealed settlement orders;
(d)after Mr and Mrs Uele vacate the property at 47 Lagoon Way in accordance with paragraph (c) above, they may, if they wish, cease making mortgage and insurance payments in relation to 47 Lagoon Way (although this order has no effect on the contractual obligations between Mr and Mrs Uele and the mortgagee);
(e) assets forfeiture orders under s 50 of the Act, in particular, that the following property vests in the Crown absolutely and is to be under the Official Assignee’s custody and control:
10 For example, for the avoidance of doubt, if the total legal aid debt is $35,000, Mr and Mrs Uele would be paid $115,000 (being $150,000 less $35,000).
(i)all remaining sale proceeds of the property at 47 Lagoon Way, West Harbour, Auckland, following the payments in paragraph (a)(i) to (a)(iv) above;
(ii) the 2012 Toyota Highlander station wagon, registration GGM589;
(iii) $7,420 cash seized from 47 Lagoon Way, West Harbour, Auckland on
4 December 2013, plus all interest earned thereon;
(iv) $40,000.00 cash seized from Ezi World Cargo Limited on 4
December 2013, plus all interest earned thereon;
(v)the funds formerly held in bank account [redacted], held in the name of Mosese Uele, plus all interest earned thereon;
(vi)the funds formerly held in bank account [redacted], held in the name of Mosese Uele, plus all interest earned thereon;
(vii)the funds formerly held in bank account [redacted], held in the name of Mosese Uele, plus all interest earned thereon;
(viii)the funds formerly held in bank account [redacted], held in the name of Ezi World Cargo Limited, plus all interest earned thereon;
(ix) the funds formerly held in bank account [redacted], held in the name of Ezi World Cargo Limited, plus all interest earned thereon;
(f) the profit forfeiture order application brought by the Commissioner in his 20
May 2016 application is dismissed; and
(g) costs will lie where they fall in relation to all matters.
Commissioner of Police v Uele [2017] NZHC 574
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