Commissioner of Police v Varga
[2024] NZHC 1700
•26 June 2024
IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTEPOTI ROHE
CIV-2021-412-10
[2024] NZHC 1700
BETWEEN THE COMMISSIONER OF THE NEW ZEALAND POLICE
ApplicantAND
IMRE JAMES VARGA
First Respondent
AND
TRUSTEES OF THE IMRE VARGA FAMILY TRUST
Second Respondent
AND
LEGAL AID SERVICES
Interested Party
Hearing: On the papers Appearances:
R D Smith for Applicant
R M Mansfield KC for Respondents
Judgment:
26 June 2024
JUDGMENT OF DUNNINGHAM J
This judgment was delivered by me on 26 June 2024 at 9.30 am, pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
COMMISSIONER OF THE NEW ZEALAND POLICE v VARGA [2024] NZHC 1700 [26 June 2024]
Introduction
[1] The Court has received a joint memorandum of counsel seeking approval of a settlement reached between the parties. Under s 95 of the Criminal Proceeds (Recovery) Act 2009 (“the Act”), any settlement made in relation to proceedings brought under the provisions of the Act is required to be approved by this Court.
Background
[2] The respondent, Imre James Varga, pleaded guilty in the District Court to charges of cultivating cannabis, possessing cannabis for sale, and a representative charge of selling cannabis.
[3] An investigation undertaken by the Commissioner revealed that some proceeds from cannabis sales were deposited into Mr Varga’s bank account and from there, mixed with other income, to make payments of the mortgage over the property at 13 Castleton Street, Allanton, Otago (the Castleton Street property), thereby tainting the property, including any capital gains on the property. Funds from the sale of cannabis were also used to support general living expenses.
[4] During the course of the investigation, the Commissioner also identified that funds from legitimate sources had been used in the acquisition of the Castleton Street property and repayment of the mortgage, including an inheritance received by the first respondent following the death of his mother.
[5] The Commissioner sought and obtained a restraining order over the Castleton Street property and other property which Mr Varga had an interest in1 and subsequently applied for an asset forfeiture order and a profit forfeiture order.
[6] Mr Varga does not deny receiving limited income from low level supplies of cannabis, but says the Commissioner has simply identified any cash deposit as having come from such offending when it has not. He also has legitimate cash income from his home kill and taxidermy business that he would both bank into his bank account or use to supplement his living costs. However, as a small and unsophisticated
1 Namely a Holden Colorado motor vehicle and a cash sum of $10,000.
business, his record keeping was relaxed and he was unable to present a full set of financial documents recording that legitimate work, sufficient to satisfy the Commissioner. Mr Varga says that defending such a proceeding is entirely uneconomic and he has, for economic reasons, decided to settle the proceedings in the hope of preserving some of his only significant asset, his Castleton Street property.
[7] Counsel for the Commissioner considers the proposed settlement is practical and pragmatic, reflecting the perceived litigation risks of the respective parties and noting there will be a significant saving of time and cost to all parties and the judicial system if the matter is resolved as proposed.
The proposed settlement
[8]Settlement is proposed on the following terms:
(a)The Commissioner and the respondent consent to the making of an asset forfeiture order and a profit forfeiture order.
(b)The maximum recoverable amount under the profit forfeiture order, for the purposes of s 54 of the Act is $160,000.
(c)The parties agree that the following property shall be subject to an asset forfeiture order:
(i)Vehicles: a Holden Colorado motor vehicle registration GBM549, registered to Imre James Varga, valued at $16,750;
(ii)Cash: $10,000 cash located at 13 Castleton Street, Allanton, Otago on 28 February 2020 during the execution of a search warrant by police.
(d)The respondent agrees to pay the sum of $133,250, being the balance of the maximum recoverable amount following forfeiture of the Holden Colorado and $10,000 cash, within 90 days of the making of this order or such further reasonable time as agreed between the parties.
(e)In the event that the respondent does not make payment of $133,250 within 90 days of making this order, or such further reasonable time as agreed between the parties, then the following property is to be realised by the Official Assignee:
Real Estate
(i)13 Castleton Street, Allanton, Otago. Legal description: SECT 17 BLK XVII TN of Allanton, Title OT 27/289.
(f)In the event that the property at 13 Castleton Street, Allanton, Otago is realised, then the proceeds of sale shall be distributed as follows, and in the following order of priority:
(i)repayment of the Official Assignee’s costs and any real estate fees;
(ii)repayment of any outstanding mortgage(s) over 13 Castleton Street, Allanton, Otago;
(iii)payment of $133,250 into a bank account nominated by the Commissioner; and
(iv)payment of any remaining funds to the respondent.
(g)The parties otherwise agree that costs are to lie where they fall.
Principles applying to approving a settlement under s 95 of the Act
[9] Under s 95, where the parties enter into a settlement, it does not bind them until the Court approves it.2 However, the Court must approve the settlement if it is satisfied that it is consistent with the purposes of the Act and the overall interests of justice.3
2 Criminal Proceeds (Recovery) Act 2009, s 95(2).
3 Section 95(3).
[10] In Commissioner of Police v Cherrington, Toogood J summarised the relevant principles in the following terms:4
(a)civil litigation incurs substantial costs for the parties, a significant portion of which would not usually be recoverable under the rules of Court relating to payment of costs;
(b)it is in the public interest to avoid the burden on the Court of complex and lengthy civil litigation;
(c)there is also strong public interest in litigation of this nature being brought to a prompt conclusion, so long as the settlement reflects the likely costs and risks inherent in the determination of a contested application;
(d)approval of any settlement by the Court acting in its supervisory jurisdiction requires consideration of the legislative intent and the overall interests of justice and is not a rubber-stamping exercise; and
(e)a broad enquiry is required, recognising that the decision to settle proceedings under the Act may be made on economic and pragmatic grounds and often reflects a common sense compromise between the parties.
Should the proposed settlement be approved?
[11] The purpose section of the Act explains that the criminal proceeds and instruments forfeiture regime established under the Act is, relevantly, intended to:
(a)eliminate the chance for persons to profit from undertaking or being associated with significant criminal activity; and
(b)deter significant criminal activity; and
4 Commissioner of Police v Cherrington [2022] NZHC 1396 at [20].
(c)reduce the ability of criminals and persons associated with crime or significant criminal activity to continue or expand criminal enterprise.5
[12] Here, Mr Varga is relinquishing a significant sum of money, whether through the assets forfeiture order, or the terms of the profit forfeiture order. The amount involved clearly achieves the deterrence purpose of the Act.
[13] Furthermore, the proposed settlement provides certainty. There is identified litigation risk for both parties and there is also a cost to the State in proceeding with a defended hearing.
[14] I am also satisfied that it is in the interests of justice to approve the settlement. It allows Mr Varga the possibility of retaining his home, while ensuring that profits from his significant criminal activity are disgorged. It also recognises that he has significant equity in the property acquired through legitimate sources.
[15] Accordingly, I am satisfied it is appropriate to approve the settlement pursuant to s 95(3).
[16] I further note that an additional order is sought is to facilitate the sale of the Castleton Street property, in the event Mr Varga does not make payment of the sum of
$133,250 to the Commissioner within 90 days. The order would give the Official Assignee the power to execute any deed or instrument in the name of Mr Varga and do anything necessary to give validity and operation to the deed of settlement. While this provision is sought by the Commissioner alone, the respondent has had the opportunity to comment on it and has not opposed it. I am satisfied that this is simply a procedural order designed to effect the settlement agreed between the parties in the event that any difficulties arise with Mr Varga’s cooperation. I am therefore satisfied that this is an appropriate additional term to the settlement.
Result
[17]Accordingly, I make the following orders:
5 Criminal Proceeds (Recovery) Act, s 3(2)(a)–(c).
Asset forfeiture order
The property to which this order applies:
(a)vests in the Crown absolutely; and
(b)is to be in the Official Assignee’s custody and control.
Vehicle
(c)a Holden Colorado motor vehicle registration GBM549, registered to Imre James Varga, valued at $16,750;
Cash
(d)$10,000 cash located at 13 Castleton Street, Allanton, Otago on 28 February 2020 during the execution of a search warrant by police, and any interest accrued on that sum.
Profit forfeiture order
(e)The value of the unlawful benefit is $160,000.
(f)The maximum recoverable amount is $133,250 following forfeiture of the Holden Colorado motor vehicle and $10,000 cash subject to the asset forfeiture order.
(g)The respondent is to make payment of $133,250 into a bank account nominated by the Commissioner within 90 days of the making of this Order, or such reasonable further time as agreed between the parties.
(h)In the event that the respondent does not make payment of $133,250 into a bank account nominated by the Commissioner within 90 days, or such further reasonable time as agreed between the parties, then the following property is to be realised:
(i)13 Castleton Street, Allanton, Otago. Legal description: SECT 17 BLK XVII TN of Allanton, Title OT 27/289.
(i)In the event that the property at 13 Castleton Street, Allanton, Otago is realised then the proceeds of sale shall be distributed as follows, and in the following order of priority:
(i)repayment of the Official Assignee costs and any real estate fees;
(ii)repayment of any outstanding mortgage(s) over 13 Castleton Street, Allanton, Otago
(iii)payment of $133,250 to the Crown Proceeds of Crime fund; and
(iv)payment of any remaining funds to the respondent.
(j)For the purposes of effecting the sale of 13 Castleton Street, Allanton, Otago, the Official Assignee has the power to execute any deed or instrument in the same of Mr Varga and do anything necessary to give validity and operation to the deed of settlement.
Costs
[18]The legal costs of the parties are to lie where they fall.
Solicitors:
Crown Solicitor, Dunedin Lateral Lawyers, Auckland
Copy to:
R M Mansfield KC, Auckland
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