Commissioner of Police v Yang
[2023] NZHC 2765
•3 October 2023
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2020-404-1914
[2023] NZHC 2765
UNDER Criminal Proceeds (Recovery) Act 2009 BETWEEN
COMMISSIONER OF POLICE
Applicant
AND
SHEN YANG
Respondent
AND
KANA NODA
Second Respondent
Hearing: On the papers Counsel:
S M Earl & F Wu for Applicant
R M Mansfield KC & B M Gloyn for Respondents
Judgment:
3 October 2023
JUDGMENT OF JOHNSTONE J
This judgment was delivered by me on 3 October 2023 at 4.30 pm pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Solicitors: MC, Auckland
CoP v YANG & ANOR [2023] NZHC 2765 [3 October 2023]
[1]On 20 October 2020, Powell J made orders in this proceeding, restraining:
(a)all interests in a property at McLeod Road, Te Atatu, Auckland, registered to the first respondent (Mr Yang), other than those of Westpac New Zealand Ltd as mortgagee; and
(b)a 2016 BMW 3 Series motor vehicle, registration MPD450, registered in the name of the second respondent, (Ms Noda).
[2]These items of property have remained under restraint.
[3] The Commissioner and Mr Yang and Ms Yoda have now agreed between themselves to settle the proceeding. They jointly invite the Court to approve their settlement under s 95 of the Criminal Proceeds (Recovery) Act 2009 (Act).
Background
[4] In September 2020, Mr Yang came to the attention of Police as a result of his involvement with Xiaoyu Lu, who was investigated by police in Operation Brookings.
[5] Pursuant to a surveillance device warrant relating to Mr Lu, Police observed suspicious interactions between Mr Lu and Mr Yang. A second surveillance device warrant was obtained which authorised the interception of Mr Yang’s personal communications.
Cannabis offending
[6] Operations Brookings terminated on 14 October 2020. A search warrant was executed at Mr Yang and Ms Noda’s home address, where 352 grams of cannabis plant material was found. Mr Yang was arrested and charged with possession of cannabis plant for supply, and with offering to supply cannabis. He pleaded guilty to the charge of possessing cannabis plant for supply, and was discharged without conviction on 16 December 2022. The charge of offering to supply cannabis was withdrawn.
[7] The Commissioner says that intercepted communications demonstrate that Mr Yang has been linked to the supply of cannabis from as early as October 2016,
when he attempted to source a kilogram of cannabis. These communications also reveal his involvement in a sophisticated, commercial-sized operation, including through sourcing suitable residential properties for the purpose of cultivating cannabis. The Commissioner says there is also evidence that Mr Yang has offered to sell up to 16 ounces of cannabis at one time, and that he had divided cannabis into ounce-sized bags for the purpose of sale.
[8] Mr Yang denied selling or making money from cannabis in 2016. However, the Commissioner points to the instance where Mr Yang offered 16 ounces at $350 per ounce.
Ephedrine offending
[9] The Commissioner’s case is that Mr Yang has been involved in at least two successful importations of ephedrine (a 6.75 kilogram importation on or around 29 May 2019 and a 3.25 kilogram importation on or around 7 July 2020). When the search warrant was executed at Mr Yang and Ms Noda’s address on 14 October 2020, 63 grams of ephedrine was found.
[10]The total value of the imported ephedrine has a potential wholesale value of
$825,000.
[11] Mr Yang also denied any involvement in or unlawful benefit derived from ephedrine importation.
Money laundering
[12] The Commissioner obtained further evidence gathered from additional enquiries and financial analysis, and examination interviews conducted with Mr Yang.
[13] Based on this additional evidence, the Commissioner’s case is that Mr Yang was engaged in money laundering and/or receiving, the predicate offending being the cultivation and sale of cannabis and importation of ephedrine.
[14]The Commissioner alleges that Mr Yang employed a variety of means to
launder criminally derived funds through importing and trading motor vehicles,
without being a registered vehicle trader. Forensic accounting evidence indicates that Mr Yang made $442,166.38 from this activity.
[15]The Commissioner draws attention to:
(a)the absence of significant spending in Mr Yang or Ms Noda’s financial records on vehicle purchases, repairs or maintenance, which the Commissioner says is indicative of an avenue to launder the profits of other significant criminal activity (cash applied to vehicle purchases, which are then sold);
(b)his allegation that cash was paid to individuals to be ‘repaid’ to Mr Yang in the form of ‘salaries or wages’, with the result that misrepresentations were made to Inland Revenue ($70,445.61);
(c)cash deposits made into bank accounts ($98,198.83);
(d)the introduction of unexplained funds into Mr Yang’s bank accounts from various individuals, sometimes labelled as ‘loans’, and his assertion that such ‘loans’ were not genuine (total $133,543.30); and
(e)cash remittances made for others, including Mr Yang’s discussion with Mr Lu about a remittance of $500,000 in cash.
[16] When the intercepted communications relating to these transactions were put to Mr Lu in the course of examination pursuant to examination orders made under the Act, he could not recall the reason for the conversations or declined to comment.
Ms Noda
[17] The Commissioner asserts that Ms Noda was aware of and/or was involved in Mr Yang’s significant criminal activity, pointing to:
(a)an intercepted communication on 3 October 2020 between Ms Noda
and Mr Yang in which the Commissioner says they are talking about a
person referred to as ‘Evan’ arriving at their family home, and Mr Yang instructing her to retrieve cannabis from their home for him;
(b)financial analysis of Ms Noda’s individual bank accounts and her joint bank accounts with Mr Yang, revealing the receipt of significant funds from unexplained sources;
(c)Ms Noda’s failure to explain the source of upon her own examination under the Act; and
(d)both Mr Yang and Ms Noda declaring to Inland Revenue that they received income from the same company, Auckland First Construction Limited, and Ms Noda’s acceptance during her examination that she never worked for them.
Overall allegation
[18] Overall, the Commissioner contends that Mr Yang and Ms Yoda have accrued an unlawful benefit from significant criminal activity of $958,589.18.
Settlement for approval
[19] The settlement, which will bind the parties in the event this Court approves it,1 is that:
(a)an assets forfeiture order be made under s 50(1) of the Act, by consent, over all of the restrained property;
(b)the settlement is in full and final settlement of this proceeding; and
(c)costs will lie where they fall.
[20]The approximate value of the property to be forfeited is $395,390.
1 Criminal Proceeds (Recovery) Act, s 95(2).
Approval of settlements under the Act
[21]Section 95 of the Act provides as follows:
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.
[22] As can be seen, Parliament has expressly empowered the Commissioner to enter into settlements as to the forfeiture of property under the Act, and it has entrusted the High Court with a supervisory jurisdiction to approve settlements when satisfied they are consistent with the purposes of the Act and the overall interests of justice.2
[23] 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.3 Further purposes include those of eliminating opportunities to profit from undertaking or being associated with significant criminal activity, and deterring significant criminal activity.4
[24] The requirement expressed in s 95 that the Court have regard to the overall interests of justice reflects the strong public interest in litigation under the Act being brought to a prompt conclusion, reflecting the likely costs and risks inherent in the determination of a contested application,5 and the desirability of proceedings under
2 Commissioner of Police v Know-All Group Ltd HC Auckland CIV-2010-404-403, 7 November 2011 at [11].
3 Criminal Proceeds (Recovery) Act, s 3(1).
4 Section 3(2).
5 Commissioner of Police v Cotton [2017] NZHC 21 at [7].
the Act being made on economic and pragmatic grounds reflective of common sense compromise.6
Decision
[25] The Commissioner considers he has a good case to show that the restrained property is tainted property (so as to support an assets forfeiture order), and that the quantum of Mr Yang and Ms Noda’s unlawful benefit from significant criminal activity exceeds the value of that property. However, regarding the prospect of a profit forfeiture order that might attach to any non-restrained property, the Commissioner acknowledges the practical difficulties of pursuing a civil debt under ss 55(4) and 83(4) of the Act.
[26] Both Mr Yang and Ms Noda received deposits into their bank accounts, which were recorded as employment or contractor income, but which were undeclared and inconsistent with employment and contractual agreements; received other unexplained cash deposits and purported “loans”; sold vehicles, vehicle parts and tools while not licensed from which benefits were derived; and derived a benefit from capital gains on the McLeod Road property which is tainted property.
[27] The Commissioner says each of these means is a separate source of unlawful benefit. Mr Yang and Ms Noda are unlikely to acquire property in the near future which could be used to meet any residual debt they would owe to the Crown.
[28] Approval of the settlement so that it becomes binding is, in my view, consistent with the purposes of the Act and the overall interests of justice. The entire value of the restrained property will be realised for the benefit of the Crown. That is appropriate in this case given the apparent scale of the underlying criminal offending of Mr Yang and Ms Noda. Further, there will be a saving of time and expense if the proceeding can be resolved by consent without the need for a hearing. And an agreed settlement will allow the parties to have certainty and control as to the outcome.
[29]The settlement is approved accordingly.
6 Commissioner of Police v Douglas [2015] NZHC 1293 at [6].
Result
[30]I make the following orders, so as to give effect to the settlement:
(a)Assets forfeiture orders under s 50(1) of the Act: the following property vests in the Crown absolutely and is in the Official Assignee’s custody and control:
(i)all interests in the property at 209/172 McLeod Road, Te Atatu, Auckland, registered owner Shen Yang, record of title unique identifier 425833, excluding the interests of Westpac New Zealand Ltd as mortgagee; and
(ii)2016 BMW 3 Series, registration MPD450, registered in the name of Kana Noda.
(b)Costs: costs are to lie where they fall in relation to all matters between the Commissioner, Mr Yang and Ms Noda.
[31]I note the further terms of the settlement as follows:
(a)Mr Yang and Ms Noda abandon all claims they may have, under the Act or otherwise, to any of the property to be forfeited.
(b)The Commissioner will not pursue his application for a profit forfeiture order against Mr Yang and Ms Noda, based on the significant criminal activity alleged in the evidence filed in the proceeding to date.
(c)The settlement is in full and final settlement of this proceeding brought by the Commissioner against Mr Yang and Ms Noda under the Act.
(d)The settlement is entered into by Mr Yang and Ms Noda expressly on the basis that it does not entail any admission of liability or wrongdoing by them.
(e)The fixture scheduled for 24 October 2023 is vacated.
Johnstone J
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