Commissioner of Police v Zheng
[2025] NZHC 245
•21 February 2025
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2021-404-1070
[2025] NZHC 245
UNDER the Criminal Proceeds (Recovery) Act 2009 BETWEEN
COMMISSIONER OF POLICE
Applicant
AND
TIANLING ZHENG
First Respondent
ZHAOBIN PENG
Second RespondentContd/2
Hearing: On the papers Appearances:
M Harborow and G Young for the Applicant
D Jones KC for the Second Respondent and Interested Party Yiting Liu
Judgment:
21 February 2025
JUDGMENT OF GORDON J
This judgment was delivered by me on Friday, 21 February 2025 at 11.30 am pursuant to r 11.5 of the High Court Rules 2016.
Registrar/Deputy Registrar
Solicitors/Counsel:
D Jones KC, Auckland
Meredith Connell (M Harborow and G Young), Auckland
COMMISSIONER OF POLICE v ZHENG [2025] NZHC 245 [21 February 2025]
Contd.
LEZHANG (JUSTIN) TANG
Third RespondentZIYANG “RHYS” CHEN
Fourth RespondentYICHUAN ZHANG
Fifth RespondentFEI WEI
Sixth Respondent
YUYAN FAN
Interested PartyXIAORUI YE
Interested Party
[1] In this proceeding the Commissioner of Police (Commissioner) has obtained restraining orders in relation to property associated with the second respondent, Zhaobin Peng, under the Criminal Proceeds (Recovery) Act 2009 (the Act). The interested party, Yiting Liu, has an interest in some of that property.
[2] I have received a joint memorandum dated 17 February 2025 filed by counsel for the Commissioner and counsel for Mr Peng and Ms Liu. The memorandum requests the Court to approve a proposed settlement under s 95 of the Act.
[3] Under that provision, any settlement between the parties made in relation to proceedings brought under the Act is required to be approved by this Court.
Background
[4] In October 2020 Police commenced an investigation, Operation Worthington, which focused on the laundering of money originating from drug offending. Police identified that persons involved in the importation and supply of controlled drugs were in contact with a syndicate associated with Mr Peng and other named individuals. There were “money drop” meetings that occurred in which cash was supplied to the syndicate by those who were importing and dealing in controlled drugs.
[5] Mr Peng communicated directly with those seeking to launder the cash and was involved in arranging for others to collect the cash. Then, together with the named individuals, Mr Peng deposited the cash into the financial system through others using a large number of bank accounts controlled by those other persons.
[6] Mr Peng was also involved in messaging others in the syndicate about the supply, availability, and price of controlled drugs, including commercial quantities of cocaine, MDMA, ephedrine and ketamine. On one occasion, he was in possession of methamphetamine for supply.
[7] The Operation Worthington investigation terminated on 23 June 2021. Police executed a number of search warrants that day, including at Mr Peng’s apartments in Central Auckland where he lived with his partner, Ms Liu. Cash referred to below was found in the apartments.
[8] As a result of the Police investigation, Mr Peng was arrested and charged with offences in relation to money laundering and the possession and supply of controlled drugs.
[9]On 8 March 2024, Mr Peng pleaded guilty to:
(a)four charges of possession for supply and supply of class A and class B controlled drugs, including methamphetamine, cocaine and MDMA; and
(b)78 charges of money laundering.
[10] Mr Peng was sentenced by Judge Sellars KC on 15 October 2024 to three years, eight months’ imprisonment.1
Proceedings under the Act
[11] In 2021, the Commissioner obtained restraining orders for property connected to Mr Peng. That property included three motor vehicles. Pursuant to further orders, those three vehicles were sold. The following property associated with Mr Peng is currently restrained:
(a)Proceeds of sale of the 2013 Mercedes Benz registration HBK635, registered person Zhaobin Peng (Mercedes), and all interest earned thereon;
(b)Proceeds of sale of the 2013 Mazda CX-5 registration NAE6, registered person Zhaobin Peng (Mazda), and all interest earned thereon;
(c)Proceeds of sale of the 2018 Audi A8 Saloon registration MNQ240, registered person [name redacted] (Audi), and all interest earned thereon;
1 R v Zhaobin Peng [2024] NZDC 25169.
(d)$21,020 cash located and seized by Police on 23 June 2021 at two apartments in Central Auckland (Cash), and all interest earned thereon;
(e)All credit funds held in the following bank accounts (together, Bank Funds), and all interest earned thereon:
(i)ANZ Bank New Zealand Ltd account [account number redacted] (in the name of Mr Peng);
(ii)ASB Bank Ltd account [account number redacted] (in the name of Mr Peng);
(collectively, Restrained Property).
(f)The total value of the Restrained Property attributed to Mr Peng is approximately $192,898.
[12] Mr Peng has admitted money laundering from August 2019. Accordingly, all of the cars were purchased after his offending commenced. There is no record of payment for the Mercedes and Mazda, which indicates that funds to purchase these two vehicles came from outside the banking system. In relation to the Audi, although the registered person was a third party, in intercepted communications in June 2021 Mr Peng advised he had purchased an Audi A8 for $57,000 and the Audi was observed by Police in one of Mr Peng’s allocated car parks outside Mr Peng’s apartment. The registered person has confirmed to Police he has no interest in the Audi.
[13] Further, Mr Peng has been able to purchase three valuable cars and accumulate bank funds of nearly $80,000 despite a modest declared income.
[14] The financial analysis shows unexplained cash deposits and transfers from third parties to Mr Peng’s bank accounts. The Commissioner’s case is that, together with the clear evidence of Mr Peng’s involvement in extensive money laundering and drug offending, there is an irresistible inference that the Restrained Property was at least partly funded, directly or indirectly, from proceeds of his involvement in significant criminal activity. The Restrained Property is, accordingly, tainted.
Settlement – Court approval
[15]Section 95 of the Act governs settlements. It provides as follows:
95High 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.
[16] In enacting s 95(1), Parliament expressly empowered the Commissioner to enter into settlement discussions with respondents and interested parties regarding the forfeiture of assets. This provision recognises that there are significant costs associated with civil litigation and that there can be benefits to all parties if such litigation can be resolved by consent. A settlement can take into account the likely costs and risks inherent in the determination of a contested application.2
[17] As regards the purposes of the Act referred to in s 95(3)(a), the primary purpose in s 3(1) 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. The ancillary purposes in s 3(2) include to eliminate the chance of persons to profit from undertaking or being associated with significant criminal activity and to deter significant criminal activity.
[18] The words “overall interests of justice” in s 95(3) require a broad inquiry.3 Relevant factors include the saving of time and cost and the litigation risk of a hearing to the Commissioner and a respondent.4 The Courts have recognised that a decision to settle proceedings under the Act will often reflect a “pragmatic” arrangement or
2 Commissioner of Police v Cotton [2017] NZHC 21 at [7].
3 Commissioner of Police v Li [2018] NZHC 1566 at [32].
4 Commissioner of Police v Kree [2013] NZHC 2972 at [11]; Commissioner of Police v Zhang
[2016] NZHC 930 at [8].
solution, a “common sense compromise” or a “sensible resolution” that will meet the purposes of the Act and the overall interests of justice.5
[19] If the Court is satisfied of the two matters in s 95(3), the settlement reached between the parties must be approved.
The present case
[20] For the reasons advanced by the parties, I am satisfied that the settlement proposed 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 proceeding is resolved by consent without the need for a hearing.
(b)The agreed settlement recognises the risks inherent in the litigation to both parties and allows them to control the outcome.
(c)The Commissioner appears to have a strong case to show that the Restrained Property is tainted property (so as to support a type 1 assets forfeiture order). That is by reference to the charges to which Mr Peng 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 Mr Peng may have been greater than the Restrained Property, and any application by the Commissioner for a property forfeiture order would reflect that, the reality is 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 a residual debt under any profit forfeiture order is likely to be futile.
Commissioner of Police v Marsh [2022] NZHC 1032 at [5], Commissioner of Police v Douglas
[2015] NZHC 1293 at [6], and Commissioner of Police v Cherrington [2022] NZHC 1396 at [20].
Result
[21] Given that I am satisfied that the settlement proposed is consistent with the purposes of the Act and the overall interests of justice under s 95(3), I make the following orders as sought so as to give effect to the settlement:
(a)Type 1 assets forfeiture order 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)proceeds of sale of 2013 Mercedes Benz registration HBK635, registered person Zhaobin Peng, and all interest earned thereon;
(ii)proceeds of sale of 2013 Mazda CX-5 registration NAE6, registered person Zhaobin Peng, and all interest earned thereon;
(iii)proceeds of sale of 2018 Audi A8 Saloon registration MNQ240, registered person [name redacted], and all interest earned thereon;
(iv)$21,020 cash located and seized by Police on 23 June 2021 at two apartments in Central Auckland, and all interest earned thereon;
(v)all credit funds held in the following bank accounts, and all interest earned thereon;
1. ANZ Bank New Zealand [account number redacted] (in the name of Mr Peng);
2. ASB Bank Ltd [account number redacted] (in the name of Mr Peng),
(b)Costs: costs lie where they fall in relation to all matters between the Commissioner, Mr Peng and Ms Liu.
[22]As requested by the parties, I note the further terms of the agreed settlement:
(a)Mr Peng and Ms Liu abandon all claims they may have under the Act or otherwise, to the property to be 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 Mr Peng in respect of the significant criminal activity evidenced in the affidavits filed in the proceeding to date.
[23] For the sake of completeness, I confirm that once the orders are sealed the proceeding will be at an end as between the Commissioner and Mr Peng.
Gordon J
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