Commissioner of Police v Zheng

[2025] NZHC 366

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-1070

[2025] NZHC 366

UNDER

the Criminal Proceeds (Recovery) Act 2009

BETWEEN

COMMISSIONER OF POLICE

Applicant

AND

TIANLING ZHENG

First Respondent

ZHAOBIN PENG
Second Respondent

LEZHANG (JUSTIN) TANG
Third Respondent

ZIYANG “RHYS” CHEN
Fourth Respondent

Continued …

Hearing:	On the papers
Judgment:	3 March 2025

JUDGMENT OF MUIR J

Asset Forfeiture Settlement

This judgment was delivered by me on 3 March 2025 at 12.00 pm, Pursuant to Rule 11.5 of the High Court rules.

Registrar/Deputy Registrar Date: ……………………………

Solicitors:

A Wei, Barrister, Auckland

Meredith Connell (M Harborow and G Young), Auckland

COMMISSIONER OF POLICE v ZHENG [2025] NZHC 366 [3 March 2025]

YICHUAN ZHANG

Fifth Respondent

FEI WEI

Sixth Respondent

YUYAN FAN

Interested Party

XIAORUI YE

Interested Party

Introduction

[1]    The Commissioner of Police (the Commissioner) and Ms Fei Wei jointly seek orders of the Court under s 95 of the Criminal Proceeds (Recovery) Act 2009 (the Act) approving a settlement reached between them.

[2]    Ms Wei was one of a number of defendants charged in respect of Operation Worthington, an operation focussed on money laundering and associated drug offending.  Ms Wei  was in a romantic relationship with one of her co-defendants,  Mr Chenyi Wang.1 She pleaded guilty to 49 charges relating to importation, possession for supply, and supply of Class A, Class B and Class C controlled drugs, including methamphetamine, pseudoephedrine and ephedrine; and six charges of money laundering. She is for sentence on 17 April 2025.

[3]    The proposed settlement relates to the proceeds of sale of a property at 22A Simon Ellice Drive, Bayview, Auckland and any interest earned thereon (the restrained property). The property became subject to restraining orders issued by Wylie J on 18 August 2021. Those orders included further orders that Ms Wei maintain repayments of the loans secured against the restrained property and, if the repayments fell into more than two months arrears, authorised the Official Assignee to sell the property. Repayments fell into arrears and the property was sold accordingly. The total net value of the restrained property attributable to Ms Wei is approximately $45,646.73.

[4]    The Commissioner’s case is that the funds used to repay the mortgage on the property were derived from Ms Wei’s criminal activity and so the property is tainted in consequence. The proposed settlement is in the nature of type 1 assets forfeiture order, by consent.2

Relevant principles

[5]Section 95 of the Act governs settlements and provides:

95.High Court must approve settlement between Commissioner and other party

1      Mr Wang pleaded guilty and has been sentenced on related offending.

2      Criminal Proceeds (Recovery) Act 2009, s 50(1).

(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.

[6]    I accept that in empowering the Commissioner to enter into settlement agreements, Parliament had in mind the significant costs associated with civil litigation and the benefits to all parties of such proceedings being resolved by consent. I accept also that there is a strong public interest in litigation of this kind being brought to a prompt conclusion, provided the settlement reflects the likely costs and risks inherent in the determination of a contested application.

[7]    In terms of s 95(3)(a), the primary purpose of the Act is to establish a regime for the forfeiture of property that has been derived directly or indirectly from significant criminal activity or that represents the value of a person’s unlawfully derived income.3

[8]    The statutory language, namely “overall interests of justice”, indicates that a broad inquiry is required.4 Although the Court has a supervisory 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 litigation risk to the parties.”5 The Court has recognised that decisions to settle proceedings may be made on economic and pragmatic grounds that often reflect a “common sense compromise” between the parties.6

3      Section 3(1).

4      Commissioner of Police v Li [2018] NZHC 1566.

5      Commissioner of Police v Zhang [2016] NZHC 930 at [8].

6      Commissioner of Police v Douglas [2015] NZHC 1293 at [6].

Discussion

[9]    In this case I am satisfied that the settlement is consistent with the purposes of the Act and the overall interests of justice. In particular:

(a)There will be a saving of time and cost if the matter can be resolved by consent without the need for a hearing.

(b)The parties acknowledge the risk inherent in a contested hearing and that settlement will allow the parties to have certainty and control as to the outcome.

(c)The Commissioner considers he has a good case to show that Ms Wei has unlawfully benefited from significant criminal activity (so as to support a profit forfeiture order), and that the restrained property is also tainted property (so as to support assets forfeiture orders). That is by reference to the charges to which Ms Wei has pleaded guilty.

(d)In relation to a profit forfeiture order, the totality of the restrained property will be forfeited. While the Commissioner anticipates the likely unlawful benefit to Ms Wei may have been greater than the restrained property, and any application by the Commissioner for a profit forfeiture order would reflect that, no other property with which to satisfy any profit forfeiture order has been identified. Despite the Commissioner’s investigation, the restrained property is the only property available for forfeiture. I accept that pursuing a residual debt under any profit forfeiture order is likely to be futile.

[10]   For completeness, I briefly deal with the question of Mr Wang’s interest in the restrained property. The Commissioner’s proceedings under the Act were not served on Mr Wang. The parties submit that there is nothing in the evidence supporting the possibility that Mr Wang had an interest in the restrained property. Ms Wei explains that she and Mr Wang had a short-term relationship and lived together only for a matter of months, excluding the possibility of a relationship property interest accruing. The Commissioner has raised the question of any claim to interest in the property both

through Mr Wang’s counsel in the  criminal  proceedings  and  directly  with  him. Mr Wang has declined to comment. I accept that Mr Wang does not have an interest in the restrained property.

Orders

[11]I approve settlement between the parties on terms:

(a)The following property vests in the Crown absolutely and is to be in the Official Assignee’s custody and control:

(i)the net proceeds of the property at 22A Simon Ellice Drive, Bayview, Auckland record of title unique identifier NA39A/811, former registered owner Fei Wei, and any interest earned thereon.

(b)Costs to lie where they fall in relation to all matters as between the Commissioner and Ms Wei.

[12]   As requested by the parties, I record the following terms of the agreed settlement:

(a)Ms Wei abandons all claims she may have, under the Act or otherwise, to any of the property forfeited and to any of the other property restrained in this proceeding; and

(b)the Commissioner will not pursue an application for a profit forfeiture order against Ms Wei on the basis of the significant criminal activity evidenced in the affidavits filed in the proceeding to date.

Muir J