Commissioner of New Zealand Police v McMahon
[2022] NZHC 483
•16 March 2022
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2020-485-53
[2022] NZHC 483
UNDER the Criminal Proceeds (Recovery) Act 2009 IN THE MATTER OF
an application under s 21. 24 and 25
BETWEEN
COMMISSIONER OF THE NEW ZEALAND POLICE
Applicant
AND
CRAIG ANTHONY MCMAHON
Respondent
Hearing: On the papers Counsel:
S B McCusker for Applicant C J Tennet for Respondent
Judgment:
16 March 2022
JUDGMENT OF MANDER J
This judgment was delivered by me on 16 March 2022 at 3 pm pursuant to Rule 11.5 of the High Court Rules 2016
Registrar/Deputy Registrar Date: .
COMMISSIONER OF NEW ZEALAND POLICE v MCMAHON [2022] NZHC 483 [16 March 2022]
[1] On 8 July 2021, Craig McMahon was sentenced to 23 months’ imprisonment on charges of cultivating cannabis, possession of cannabis for sale or supply, money laundering, and theft of electricity.1 As part of his sentencing, Mr McMahon consented to the making of an instrument forfeiture order over a residential property owned by him.2 Mr McMahon’s assets have been the subject of a without notice restraining order under the Criminal Proceeds (Recovery) Act 2009 (the Act). With Mr McMahon’s criminal proceedings now having been concluded, the Commissioner of the New Zealand Police (the Commissioner) seeks a profit forfeiture order, with the consent of Mr McMahon, over the remaining assets presently the subject of the restraining order.
Factual background
[2] The facts of Mr McMahon’s offending are agreed. A police search of Mr McMahon’s residential property situated at 156 Fitzherbert Street, Featherston, revealed a large commercial cannabis plant operation. A total of 113 cannabis plants at different states of maturity were located. The sum of $27,214.50 in cash was also discovered. Mr McMahon admitted at the time of the search that this represented profit from the sale of cannabis.
[3] An analysis of Mr McMahon’s bank account showed that between 1 May 2017 to 10 February 2020 he deposited a “minimum” of $470,000 into accounts controlled by him or other businesses. Mr McMahon deposited the funds into other bank accounts controlled by him and invested the money into real estate or goods, including a 2007 Ford Mustang motor vehicle. Further financial analysis found that Mr McMahon had acquired assets in excess of $470,000 as a result of his cannabis operation. During this period he was not in paid employment.
[4] Upon his arrest, Mr McMahon informed police that the Ford Mustang had been acquired with money made from selling cannabis, and that he paid off the mortgage of his Fitzherbert Street property where the cannabis was located with money made from selling that drug.
1 R v McMahon [2021] NZDC 13951.
2 Sentencing Act 2002, s 142N.
Profit forfeiture order
Section 55 of the Act provides:
(1)The High Court must make a profit forfeiture order if it is satisfied on the balance of probabilities that—
(a)the respondent has unlawfully benefited from significant criminal activity within the relevant period of criminal activity; and
(b)the respondent has interests in property.
The order must specify—
(a)the value of the benefit determined in accordance with section 53; and
(b)the maximum recoverable amount determined in accordance with section 54; and
(c)the property that is to be disposed of in accordance with section 83(1), being property in which the respondent has, or is treated as having, interests.
…
[6] In Pulman v Commissioner of Police, Lang J identified four matters which the Court must address in determining whether to make a profit forfeiture order under s 55(1).3 Each is addressed in turn.
Has the respondent unlawfully benefitted from significant criminal activity during the relevant period?
[7] If the Court is satisfied that the Commissioner has proved, on the balance of probabilities, the respondent has unlawfully benefitted from significant criminal activity during the relevant period, the value of the benefit is presumed to be that stated in the Commissioner’s application unless rebutted by the respondent on the balance of probabilities.
[8] There is no dispute that Mr McMahon has unlawfully benefitted from significant criminal activity. He has been convicted of the offences of cultivating cannabis, possession of cannabis for supply, money laundering and diverting
3 Pulman v Commissioner of Police HC Auckland CIV-2010-404-5666, 27 May 2011, at [10]–[13].
electricity, all of which carry a maximum period of imprisonment of five years or more and therefore constitute “significant criminal activity” for the purposes of the Act. Mr McMahon has admitted to laundering a “minimum” of $470,000 into bank accounts controlled by him. The parties are agreed that this figure should constitute the value of Mr McMahon’s benefit for the purpose of s 55(2)(a).
What is the maximum recoverable amount?
[9] The Court must determine the maximum recoverable amount. This is done by taking the value of the benefit, as already determined in accordance with s 53 of the Act, and deducting from that figure the value of any property to be forfeited to the Crown by virtue of any assets forfeiture order made in relation to the same criminal activity as that to which the profit forfeiture application relates.
[10] The parties are agreed the maximum recoverable amount is also $470,000 because no asset forfeiture orders have previously been made in this proceeding. An instrument forfeiture order was made at sentencing in respect of the Fitzherbert Street property, but such orders are not taken into account in assessing the maximum recoverable amount under s 54 of the Act. The effect of the instrument forfeiture order was recognised at sentencing by a one year discount applied to reduce Mr McMahon’s sentence.
Should any property be excluded because of undue hardship?
[11] The Court must consider whether any property should be excluded from the operation of the profit forfeiture order because undue hardship is likely to be caused to the respondent if such property was realised. However, no application for undue hardship has been advanced by Mr McMahon and the parties are agreed that no property should be excluded from the operation of the profit forfeiture order on that ground. Mr McMahon’s mother made an unsuccessful application for relief from instrument forfeiture on the basis of a claimed interest in the Fitzherbert Street property but no other such claim has been advanced, and the parties are unaware of any potential third party interests in the remaining assets that are the subject of restraint.
A profit forfeiture order must be made if the respondent has interests in the property
[12] Finally, the Court, having satisfied itself in relation to the preceding steps, must make a profit forfeiture order if satisfied, on the balance of probabilities, that the respondent has interests in the property. There is no dispute regarding this element. Mr McMahon has interests in the assets sought to be the subject of the profit forfeiture order, namely the Ford Mustang, the $27,214.50 cash located at the property, and the other assets the subject of restraint, being Kiwibank funds in the sum of $62.47, funds held in the name of Mr McMahon in the sum of $11,459.97 with the Westpac Bank, and the sum of $1,235.32 held by him in a bank account with the ANZ Bank. The Fitzherbert Street property is excluded from the operation of the profit forfeiture order because it is already subject to the instrument forfeiture order made at sentencing.
Conclusion
[13] The parties are agreed the requirements for the making of a profit forfeiture order under ss 55(1) and (2) of the Act have been satisfied and that such an order in the terms sought can be made. Being satisfied that this is the case, I make the following orders:
(a)the value of the benefit is $470,000;
(b)the maximum recoverable amount is $470,000;
(c)the following property is to be realised:
(i)a 2007 Ford Mustang Parnelli Jones Boss Saloon including ignition keys, registration plate number FWR375, and registered in the name of the respondent (McMahon);
(ii)a total amount of $27,214.50 seized as cash at 156 Fitzherbert Street, Featherston, South Wairarapa on 11 February 2020 plus accrued interest;
(iii)the funds held by Kiwibank Limited in all the accounts in the name of Craig Anthony McMahon, including bank account numbered 38-9005-0919295-04 with an approximate balance of $62.47 plus accrued interest;
(iv)the funds held by Westpac New Zealand Limited in all the accounts in the name of Craig Anthony McMahon, including bank account numbered 03-0687-0019487-00 with an approximate balance of $11,459.97 plus accrued interest; and
(v)the funds held by ANZ Bank New Zealand Limited in all the accounts in the name of Craig Anthony McMahon, including bank account numbered 01-0504-0132066-01 with an approximate balance of $1,235.32 plus accrued interest.
(d)the proceedings (CIV-2020-485-53) between the Commissioner and the respondent are at an end.
Solicitors:
Crown Solicitor, Welllington
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