Commissioner of Police v Zhang

[2018] NZHC 790

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2015-404-2358

[2018] NZHC 790

UNDER

the Criminal Proceeds (Recovery) Act 2009

BETWEEN

COMMISSIONER OF POLICE

Applicant

AND

SEN ZHANG

First Respondent

XUAN CHEN

Second Respondent

Hearing:

(On the papers)

Counsel:

M R Harborow and D M A Wiseman for Applicant T Cooper for First Respondent

B L Sellars for Interested Party (Ling Bai)

Judgment:

24 April 2018

COSTS JUDGMENT OF BREWER J

This judgment was delivered by me on 24 April 2018 at 3:30 pm pursuant to Rule 11.5 High Court Rules.

Registrar/Deputy Registrar

Solicitors/Counsel:

Meredith Connell (Auckland) for Applicant

Tiffany Cooper (Auckland) for First Respondent McVeagh Fleming, Auckland) for Interested Party

COMMISSIONER OF POLICE v ZHANG & CHEN [2018] NZHC 790 [24 April 2018]

Introduction

[1]                 This Judgment determines costs as between the parties to the substantive proceeding.1

Background

[2]                 Mr Zhang pleaded guilty to a charge of possession of methamphetamine for supply. On 19 December 2017, I made a series of assets forfeiture orders in respect of property in which Mr Zhang had an interest. This property was:

(a)A property at 11 Austin Road;

(b)Several items of jewellery; and

(c)Various other items the forfeiture of which was not contested.

[3]                 Mr Zhang’s mother, Mrs Bai, opposed the forfeiture orders in respect of     11 Austin Road and the jewellery. This was because, Mrs Bai argued, Mr Zhang had purchased this property with money she had sent him from China, not with the proceeds of his criminal activity. Mr Zhang supported his mother’s opposition.

[4]                 I found Mrs Bai had contributed $853,271 to the purchase of 11 Austin Road. I ordered she be granted relief equal to this amount as well as 65.14 percent of any capital gain arising from the sale of the property.

[5]                 I found Mrs Bai had not contributed to the purchase of the jewellery and therefore declined to grant her any relief relating to its forfeiture.

Submissions

[6]                 Mr Harborow, for the Commissioner, seeks costs from Mr Zhang and Mrs Bai on a 2B basis. He submits that given the focus of the trial, 30 percent of the costs is attributable to Mr Zhang and 70 percent to Mrs Bai.

1      Commissioner of Police v Zhang [2017] NZHC 3211.

[7]Mr Harborow submits the Commissioner was largely successful at trial:

(a)The assets forfeiture orders were granted;

(b)Profits forfeiture orders were not granted, but only because assets forfeiture orders were granted instead; and

(c)The Commissioner had anticipated the granting of  a  payment  to  Mrs Bai commensurate to her financial contribution to 11 Austin Road, as evidenced by a settlement offer dated 21 September 2016.

[8]                 Mr Zhang now resides in China. His counsel has filed a memorandum noting he opposes the costs sought by the Commissioner but does not wish to be heard on the matter.

[9]                 Counsel for Mrs Bai submits costs should lie where they fall since each party had similar success. Ms Sellars points out that although her opposition of the forfeiture order in respect of 11 Austin Road was not successful, her alternative application for relief was.

[10]              In addition, Ms Sellars submits the granting of 65.14 percent of any capital gain arising from the sale of 11 Austin Road can be considered a victory and was not anticipated in any settlement offers from the Commissioner.

Discussion

[11]I note the following principles:

(a)Costs are at the discretion of the Court;2

(b)Generally, costs go to the successful party;3 and

2      High Court Rules, r 14.1.

3      Rule 14.2(1)(a).

(c)If, broadly speaking, each party has had similar success then costs should be allocated accordingly.4

[12]The modern approach of determining success is as follows:5

Success or failure in this context is better assessed by a realistic appraisal of the end result rather than by focussing on who initiated what step, and the extent to which that step succeeded or failed.

[13]              It is important to identify the main issues in the trial and place appropriate emphasis on them:6

… in some cases it is relatively easy, standing back, to ascribe approximately equal success to both parties. But… it may be necessary, in achieving justice between parties, even in a case where the outcome on issues is evenly split, to award one party a measure of damages having regard to a disproportionate time required on that party’s “winning” issues.

[14]              Having regard to the end result of the proceeding and what were the main issues at trial, I consider the Commissioner was the successful party. This is why:

(a)Mrs Bai’s opposition to the assets forfeiture orders failed in respect of both 11 Austin Road and the jewellery (this is particularly relevant in relation to the forfeiture of 11 Austin Road, which was the primary issue at trial);

(b)Once 11 Austin Road was held to be tainted property, relief for Mrs Bai commensurate to her contribution to the purchase price was a matter of course; and

(c)My refusal to grant profits forfeiture orders did not reflect any success for Mr Zhang and Mrs Bai but was rather a natural consequence of my decision to make the assets forfeiture orders.

4      Packing In Ltd (in liq) formerly known as Bond Cargo Ltd v Chilcott (2003) 16 PRNZ 869 (CA) at [5].

5      Fry v Fry [2015] NZHC 2716, [2016] NZFLR 713 at [16] citing Parking In Ltd (in liq) v Chilcott

at [6].

6      East v Medical Assurance Society New Zealand Ltd [2017] NZHC 2802 at [19].

[15]              The allocation to Mrs Bai of a portion of any capital gains arising from the sale of 11 Austin Road flowed also from the granting of relief to her.

[16]              In light of this, and taking into account the forfeiture of the jewellery, I do not consider this is a case where the parties can be said to have had equal success.

[17]              Neither Mrs Bai nor Mr Zhang has taken issue with the 70/30 split advanced by the Commissioner. It seems to me an accurate reflection of the focus of the trial.

[18]              Similarly, there is no issue with the schedule of costs submitted by the Commissioner. I will make my order accordingly.

Result

[19]Costs are allocated to the Commissioner on a 2B basis.

[20]Mr Zhang must pay the Commissioner costs of $7,894.20.

[21]Mrs Bai must pay the Commissioner costs of $18,419.80.

Brewer J