Yan v Commissioner of Police
[2015] NZHC 141
•4 February 2015
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2015-404-181 [2015] NZHC 141
UNDER the Judicature Amendment Act 1972 BETWEEN
WILLIAM YAN First Applicant
WEI YOU
Second ApplicantAND
COMMISSIONER OF POLICE First Respondent
HAMILTON DISTRICT COURT Second Respondent
Hearing: 4 February 2015 Appearances:
D Jones QC for the Applicants
M R Harborow and K Eastwood for First RespondentJudgment:
4 February 2015
Reasons:
11 February 2015
REASONS JUDGMENT OF ELLIS J
This reasons judgment was delivered by me on Wednesday 11 February 2015 at 2.30 pm pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date:………………………….
Counsel/Solicitors:
D Jones QC, Barrister, Auckland
M R Harborow, Meredith Connell, Auckland
K Eastwood, Meredith Connell, Auckland
YAN & YOU v COMMISSIONER OF POLICE [2015] NZHC 141 [4 February 2015]
[1] This judgment gives my reasons for declining an application by Mr Yan and Ms You for interim orders preventing the Commissioner of Police (the Commissioner) from conducting an examination of them pursuant to an order made by the Hamilton District Court under s 106 of the Criminal Proceeds (Recovery) Act
2009 (the CPRA).
Background
[2] Mr Yan is presently under investigation for alleged money laundering on a significant scale. But no charges have yet been laid and the criminal investigation is continuing. As I understand it, there are related investigations in both China and Australia.
[3] The CPRA authorises the Court, on application by the Commissioner, to make restraining and/or asset forfeiture orders over property that is owned or controlled by persons engaged in “significant criminal activity”. As is tolerably well known, the making of such an order is not contingent on a conviction or even the laying of criminal charges in relation to such activity. In the case of Mr Yan and his wife, Ms You, in August 2014 the Commissioner was granted (inter alia) a global restraining order under the CPRA over all property held directly or indirectly by them or on their behalf. Identification of the nature and extent of such property, both in New Zealand and overseas, is a necessary corollary of that order and is also the subject of an ongoing investigation.
[4] Under the CPRA the Commissioner is able to apply to the Court for an examination order for the purposes of such an investigation.1 Such an order (if made) can require the subject:2
(a) to attend before the Commissioner:
(b) to answer questions with respect to any matter that the Commissioner has reason to believe may be relevant to the investigation or to any proceedings under this Act:
1 Criminal Proceeds (Recovery) Act 2009 (CPRA) s 106. Under s 100 applications may be made to either the District Court or the High Court.
2 Section 107(3).
(c) to supply any information specified in the order with respect to any matter that the Commissioner has reason to believe may be relevant to the investigation or to any proceedings under this Act:
(d) to produce for inspection any documents that are specified in the order and that the Commissioner has reason to believe are in the person's possession or control and may be relevant to the investigation or to any proceedings under this Act.
[5] As I understand it, examination orders relating to the identity, nature and extent of Mr Yan’s assets in New Zealand have previously been made by the Auckland High Court. I am advised that Mr Yan has complied with those orders.
[6] On 19 December 2014 further examination orders were made in relation to overseas assets owned or controlled by Mr Yan and Ms You.3 The original orders required Mr Yan and Ms You to attend at the Auckland Central Police Station on 29
January 2015 to answer questions. They are not all together happily worded but are nonetheless tolerably clear in their scope. The order addressed to Mr Yan required him to:
(a) answer questions, supply information and produce for inspection documents which will identify property interests held by, or on behalf of him, and the second respondent, Wei You, also known as Vienna You (Ms You) and the identification of property regardless of their value (or perceived value) relevant to the Commissioner’s ongoing investigation into Mr Yan and Ms You with respect to matters that may be relevant to an investigation or to any proceedings under the Criminal Proceeds (Recovery) Act 2009, namely:
(b) answer questions aimed at identifying the nature and extent of all interests he (or the second respondent Ms You) have in property, whether real, personal or intangible property, and whether those interests are held by him or her, or on his or her behalf, whether directly or indirectly in any jurisdiction outside of New Zealand;
(c) answer questions aimed at identifying the nature and extent of all interests he (or the second respondent Ms You) have in property, whether real, personal or intangible property, in respect of which he or Ms You have the capacity to control, use, dispose of, or otherwise treat as their own, whether directly or indirectly in any jurisdiction outside of New Zealand;
(d) answer any questions aimed at identifying any dealing with any property, whether real, personal or intangible property after 21
3 The order sought in relation to Ms You also concerned assets in New Zealand.
August 2014 within New Zealand or any jurisdiction outside of New
Zealand;
(e) for the purposes of paragraphs (b), (c) and (d) above provide, in relation to each item of property:
(i) a description of the property, including the nature of his or Ms You’s interest in it, and where possible, the estimated value, or in the case of bank accounts or deposits, the bank and account number and the estimated balance of that interest;
(ii) the location of that property;
(iii) the name of the person or institution in whose custody title documents in respect of the property are believed to be;
(iv) the approximate date of acquisition of the property; and
(v) income earned from the property and the current location of that income;
(f) produce and explain documents to the Commissioner which identify property captured by paragraphs (b), (c) and (d) above. By way of example only, these documents will include trust deeds, shareholding documents, deeds associated to limited partnerships, company records and bank account records;
[7] The last paragraph of the order contained the following clarification:
(g) for the avoidance of doubt, Mr Yan is not required to answer questions or supply documents relating to his alleged fraudulent activities in China, or his or Ms Yan’s alleged money laundering activities in New Zealand.
[8] It may be noted in passing that the orders read better if (b) through (f) are regarded as sub-paragraphs of (a).
[9] As is commonly the case, the Commissioner’s application for the orders was made on a without notice basis.4 The orders were subsequently served on Mr Yan and Ms You. After it became clear that they wished to apply to the Court for orders preventing the examination from taking place, the Commissioner agreed to adjourn the examination until the morning of 5 February 2015. An urgent hearing of that
interim orders application took place before me on the afternoon of 4 February and,
4 In Commissioner of Police v Green HC Wellington CIV-2010-485-964, 1 August 2011
Williams J confirmed that such applications could be made ex parte.
that evening, I gave a results judgment declining the application, with reasons to follow.
The relevant legislation
[10] The critical statutory provisions are contained in Part 2, sub-parts 6 and 7 of the Act. Sub-part 7 is entitled “Investigative Powers” and ss 106 and 107 are concerned with applications for, and the grant of, examination orders. More specifically, s 106 provides that the Commissioner may apply to a Judge for such an order if he Commissioner has reason to believe that a person is able—
(a) to answer questions with respect to any matter that the Commissioner has reason to believe may be relevant to the investigation or to any proceedings under this Act:
(b) to supply any information with respect to any matter that the Commissioner has reason to believe may be relevant to the investigation or to any proceedings under this Act:
(c) to produce for inspection any documents that the Commissioner has reason to believe are in the person's possession or control or may be relevant to the investigation or to any proceedings under this Act.
[11] Subsection (2) stipulates the manner and form in which applications are to be made, including the requirement that they must contain the following particulars:
(a) the grounds on which the application is made: (b) a description of the information that is sought:
(c) a description of the document or documents production of which is sought.
[12] Section 107 provides that where an application is made under s 106, the
Court:
… may, if satisfied that the Commissioner has reasonable grounds to apply for the examination order, make an order that the person do 1 or more of the things specified in subsection (3) at the time and place specified in the order.
[13] The “things specified in subs (3)” are those matters I have set out in [4] above. And s 107(2) says that an order made under subs (1) is to contain the same particulars set out at [10] above (ie the same particulars that s 106(2) requires to be contained in the application).
[14] In terms of the protections afforded to those who become subject to an examination order, s 107(7) provides that any person who is required to attend before the Commissioner under that section must be given a reasonable opportunity to arrange for a lawyer to accompany him or her. And although s 163 provides that a person who is required to supply information under ss 105 – 107 is not excused from doing so on the ground that the information would or might incriminate him or her, s 165 limits the use to which such incriminating information may be put. It provides:
165 Admissibility of self-incriminating statements
(1) A self-incriminating statement made orally by a person (whether or not the statement is recorded in writing) in the course of answering any question, or supplying any information, or producing any document, or providing any explanation, as required under section
105 or 107, may be used in evidence against that person only in a prosecution for an offence under section 108 of the Crimes Act 1961
(which relates to perjury) or under this Act in relation to any evidence given by the person that is inconsistent with the statement.
(2) Despite subsection (1), any statement made in relation to—
(a) a refusal or failure to answer any question, supply any information, produce any document, provide any explanation, or comply with any other requirement may be used in evidence against that person in any prosecution for any offence under section 152 arising from that refusal or failure:
(b) the answering of any question in a way that is false or misleading in a material particular, or the supply of any information, or the production of any document, or the providing of any explanation that is false or misleading in a material particular, may be used in evidence against that person in any prosecution for any offence under section 152 arising from that act.
[15] Other provisions that are of importance in the present case are ss 93 and 94, which provide:
93 Effect of proceedings relating to Commissioner's powers and duties -
(1) This section applies if any person makes any challenge in any proceeding in any court in respect of -
(a) the exercise by the Commissioner of any power conferred by this Act:
(b) the discharge of any duty imposed on the Commissioner by this Act.
(2) If this section applies, until a final decision (as described in subsection (4)) in relation to those proceedings is given, the power or duty may be, or may continue to be, exercised or discharged as if no such proceedings of that kind had been commenced, and no person is excused from fulfilling any obligation under this Act by reason of those proceedings.
(3) This section applies despite any other provision of any enactment or rule of law or equity.
(4) A “final decision” does not include a decision in proceedings for an
interim order under section 8 of the Judicature Amendment Act
1972.
94 Effect of final decision that exercise of powers unlawful
(1) This section applies in any case where it is declared, in a final decision given in any proceedings in respect of the exercise of any powers conferred on the Commissioner by this Act, that the exercise of any powers conferred on the Commissioner by this Act is unlawful.
(2) If this section applies, to the extent to which the exercise of those powers is declared unlawful the Commissioner must ensure that immediately after the decision of the court is given -
(a) any information obtained as a consequence of the exercise of powers declared to be unlawful, and any record of that information, is destroyed:
(b) any documents, or extracts from documents, or other things removed as a consequence of the exercise of powers declared to be unlawful are returned to the person previously having possession of them, or previously having them under his or her control, and any copies of those documents or extracts are destroyed:
(c) any information derived from or based on such information, documents, extracts, or things is destroyed.
(3) Despite subsection (2), the court may, in the court's discretion, order that any information, record, or copy of any document or extract from a document may, instead of being destroyed, -
(a) be returned to the person from whom it was obtained; or
(b) be retained by the police subject to any terms and conditions that the court imposes.
(4) No information obtained, and no documents or extracts from documents or other things removed, as a consequence of the exercise
of any powers declared to be unlawful, and no record of any such information or documents, -
(a) is admissible as evidence in any proceedings unless the court hearing the proceedings in which the evidence is sought to be adduced is satisfied that there was no unfairness in obtaining the evidence:
(b) may be used in connection with the exercise of any power conferred by this Act unless the court that declared the exercise of the powers to be unlawful is satisfied that there was no unfairness in obtaining the evidence.
[16] I shall return to consider the significance of these provisions, and to say something about their history, in due course.
The applications for judicial review and for interim orders
[17] The application for judicial review contains three causes of action. The first is entitled “substantive invalidity” and pleads that on the face of the examination orders there has been a breach of s 107 because there is nothing to show that the authorising judge:
(a) was satisfied that the Commissioner had reasonable grounds to apply for the order; and
(b) exercised the discretion conferred upon him by s 107(1) (“the Judge
may, if satisfied …”); or
(c) if that discretion was exercised, what matters were taken into account. [18] The second cause of action appears to suggest that the legal breadth of any
examination order should have been limited by the fact that, previously, the Commissioner has confined his examinations to the applicants’ assets in New Zealand. It is pleaded that requiring them to answer questions about overseas’ assets is accordingly “ultra vires”.
[19] The third cause of action takes issue with the fact that the examination orders permit questions to be asked (and require answers to be given) relating to the
applicants’ dealings with assets after 21 August 2014, which is the date of the global restraining order.
[20] The application for interim orders necessarily focuses on the implementation of those orders by the Commissioner. In short, the applicants seek to restrain the Commissioner from conducting the examination until after the hearing of the application for review.
Discussion
[21] I accept that, at the time the application for interim orders was made, Mr Yan and Ms You had positions to preserve in terms of s 8 of the Judicature Amendment Act 1972. In short, they had not been required to comply with the examination order and thus their “position” was that they had not yet answered the questions that the Commissioner wished to ask them. I also accept that, the interim orders sought (namely that they not be required to attend and be examined pending resolution of
the substantive review proceedings) are of a kind contemplated by s 8.5
[22] The central issue in this case is, however, whether s 93 of the CPRA would effectively render the ordering of such interim relief futile. That section (the text of which I have set out in full at [15] above) provides that where a person challenges in Court the exercise of power by the Commissioner under the Act, the Commissioner may continue to exercise that power unless and until a final decision of the Court rules that it is unlawful.
[23] Mr Jones contended that s 93 did not, however, apply because the applicants were challenging the making of the examination order by the District Court, not “the exercise by the Commissioner of any power under” the CPRA.6
[24] But on a relatively straightforward reading of s 93 I am unable to agree. Although the substantive review proceedings focus on the making of the orders by
the District Court, what the applicants seek to stop in the interim is the examination
5 Namely, a declaration that the Commissioner ought not take any action consequent on the exercise of the statutory power to grant the orders.
6 These are the words used in s 93(1)(a) of the CPRA.
of them undertaken pursuant to those orders by the Commissioner. The application for the order involved the exercise by the Commissioner of his powers under the CPRA and, likewise, the order merely facilitates and authorises the exercise by the Commissioner of further powers under the Act.
[25] To the extent I might be prepared to accept that there is any opacity or ambiguity in the wording of s 93, however, the interpretation I favour is also supported by both the legislative history and what seems to me to be the clear policy underlying the section.
[26] As far as the history is concerned, the starting point is that ss 106, 93 and 94 of the CPRA appear to have their origins in (and therefore bear considerable resemblance to) ss 9, 21 and 22 of the Serious Fraud Office Act 1990 (the SFOA). The provenance of these sections is even clearer when one considers the Criminal Proceeds (Recovery) Bill 2007 (the Bill), before it was amended at Select
Committee.7 An examination of the Bill as originally drafted gives rise to the
following points:
(a) the Bill provided that the investigatory and recovery functions, and powers under it, were to be exercised by a new statutory “recovery body” which (although the Bill was silent on the matter) was proposed to be located within the Serious Fraud Office;8
(b)the chief executive of that new recovery body was to be named the Director of Criminal Proceeds Confiscation, who was to be statutorily independent and free from Ministerial control or direction;
(c) clause 114 (the original version of s 106) was materially identical to s 9 of the SFOA and would have authorised the Director to issue
examination notices, without the need for recourse to the Courts;
7 Criminal Proceeds (Recovery) Bill 2007 (81-1).
8 This is made clear in the Select Committee’s report on the Bill. Criminal Proceeds (Recovery)
Bill 2007 (81-2) (select committee report) at 2.
(d)clause 94 of the Bill was very similar to s 20 of the SFOA and provided that a decision by the Director to investigate or to bring proceedings under the Act could not be challenged, questioned or quashed in any court; and
(e) clauses 95 and 96 of the Bill (now ss 93 and 94) were materially identical to ss 21 and 22 of the SFOA and shielded the Director from any challenge to the exercise of power or discharge of duty under the Bill on an interim basis.
[27] As other judges have observed, however, decisions were made at the Select
Committee stage of the Bill to:
(a) make the Police (and the Commissioner) rather than an independent recovery body (and the Director) responsible for recovery action and for initiating forfeiture proceedings under the legislation; and
(b)require an application to be made to the Court for an examination order rather than permitting the Commissioner simply to issue examination notices.
[28] In addition, clause 94 (see [26](d) above) was dropped from the Bill in its entirety.
[29] The difficulty that has arisen in other cases and in the present case, is that the need for further minor amendments consequent upon these changes does not appear to have been fully considered by the legislators.9 For example, it appears that no
thought was given to whether applications to the Court for examination orders could
9 In Commissioner of Police v Burgess [2012] NZCA 436 at [33], the Court of Appeal noted that it seems likely that ss 93 and 94 were drafted at a time when the Bill provided that the Commissioner could himself issue examination notices (ie before the Select Committee changed the final legislation to provide that the Commissioner had to seek examination orders from a Judge). The Court expressed the view that the last minute amendment to this aspect of subpart 7 occurred without completely thinking through the consequential changes required, “particularly to s 10 and ss 93 and 94”, and that “legislative clarification is needed”. It is a matter for regret that there has been no such clarification.
be made ex parte.10 Nor was it made clear whether such an application was civil or criminal in nature and nor (as a result) whether there was any right of appeal.11 And in the present case, it seems that no consideration was given to whether the protection afforded by s 93 to the continued exercise of powers by the Commissioner
in the face of orders for interim relief applied when the powers that the Commissioner proposed to exercise were conferred by examination orders made under the Act by the District Court.
[30] In my view, however, the history I have briefly canvassed above supports the conclusion that the protection afforded by s 93 should extend this far. It is quite clear that under the Bill as originally drafted, cl 95 (now s 93) would have permitted the Commissioner to continue to require a person to comply with an examination notice notwithstanding that interim orders had been granted by the High Court. That cl 95 was intended to cover the exercise of powers by the Commissioner under the Bill other than the power to commence proceedings was even clearer in the context
of cl 94, which was wholly privative in relation to the initiation of recovery action.12
[31] Conversely, there is nothing in the legislative history to suggest that, in determining that examination orders should be authorised by a judge, Parliament also intended to permit the conduct of any examination so authorised to be stymied by orders for interim relief. Such an intention would involve a complete reversal of the position under the Bill as originally drafted and might accordingly be expected to have been the subject of comment either by the Select Committee or the House.
[32] In light of my conclusion that the Commissioner would be entitled to continue with an examination in the face of any interim orders made by this Court, the question of futility necessarily arises. The same issue has been considered by
this court in relation to s 20 of the SFOA. In Hawkins v Sturt, Thomas J declined to
10 Green, above n 4..
11 Burgess, above n 9 at [33].
12 Clause 94 was dropped from the Bill as a result of the decision to give the Police responsibility for recovery action. The Select Committee was of the view that the provision was no longer needed because “It is very rare for the courts to allow a judicial review of the Police’s decision to initiate a case.” See select committee report, above n 8, at 2.
make interim orders directed at the proposed examination of Mr Hawkins by the
Director.13 In doing so, His Honour said:14
Although not in the usual form of the family of privative clauses which the Legislature has conceived over the ages, it is a clever cousin. While not excluding the Court's jurisdiction to make an interlocutory injunction or interim order, it appears at first glance to provide that the officer concerned may nevertheless continue to exercise the power or duty as if no proceedings had been commenced and as if, therefore, no interlocutory or interim order had been made. The Courts have historically been unwilling to grant injunctive relief which would have no force or effect. However, whether or not the words “power or duty” extend to a power or duty which is a nullity is a question which can be left to another day. For present purposes, what is pertinent is that the section provides a clear indication of the intention of the Legislature to avoid the situation where an investigation for serious or complex fraud is frustrated by legal proceedings. The investigation is not put beyond the bounds of the law for it may be ruled upon in a final decision. But it is clearly intended that in the interim the Serious Fraud Office is to be free to continue any investigation it has chosen to undertake notwithstanding what this Court might think, say, or do. I am prepared to recognise the clear legislative intention manifest in the section.
[33] In adopting the same approach in the present case I am fortified by the reservations I have about the merits of the underlying claim for review. That is because the threshold for the grant of an examination order has been set deliberately low; all the Court is required to be satisfied of is that the Commissioner has reasonable grounds to apply for the order. Given that restraining orders have already been made and examination orders granted, there can be little room to contest the reasonableness of the Commissioner’s belief as to the matters specified in s 106(1).
[34] I acknowledge that the decisions in Burgess make it clear that in cases where the subject of an order also faces criminal charges, the authorising Court should turn its mind to the relationship between the proposed examination and the trial and to potential concerns in terms of the New Zealand Bill of Rights Act.15 But the present applicants have not yet been charged, no trial is pending and such concerns do not appear to form part of their claim as pleaded. Moreover, the terms of the
examination orders themselves make it clear that the applicants will not be asked
(and will not be required to answer) questions or to supply documents relating to
13 Hawkins v Sturt (1990) 5 NZCLC 66,606.
14 At 66,610.
15 See in particular Burgess above n 9, at [41] and [42].
alleged fraudulent activities in China or alleged money-laundering activity in New
Zealand.
[35] For all of the above reasons the application for interim orders was dismissed. I can see no reason why the Commissioner should not be entitled to 2B costs in the usual way. Memoranda may be submitted if the parties cannot agree.
[36] The substantive judicial review proceedings are to be called in the next available Judicial Review List.
Rebecca Ellis J
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