COMMISSIONER OF POLICE AND MICHAEL JOHN BENJAMIN CLARK NATASHA NENA OMBLER-WILSON
[2024] NZHC 3550
•25 November 2024
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2023-485-159
[2024] NZHC 3550
UNDER the Criminal Proceeds (Recovery) Act 2009 IN THE MATTER OF
an application under ss 21, 24 and 25
BETWEEN
COMMISSIONER OF POLICE
Applicant
AND
MICHAEL JOHN BENJAMIN CLARK
First Respondent
NATASHA NENA OMBLER-WILSON
Second RespondentAND
HEARTLAND BANK LIMITED
First Interested Party
FINANCE NOW LIMITED
Second Interested PartyContinued…
Hearing (by VMR): 18 November 2024 Counsel:
H Savage for the Applicant
Judgment:
25 November 2024
JUDGMENT OF GWYN J
(Application for early sale orders)
COMMISSIONER OF POLICE v CLARK [2024] NZHC 3550 [25 November 2024]
Continued…
AND MICHAEL JOHN WILLIAM CLARK
Third Interested Party
DAWN LOUISE JOHNSON
Fourth Interested PartySHARIA LEE GRIFFIN
Seventh Interested Party
Introduction
[1] The Commissioner of Police (Commissioner) applies for an early sale order under ss 33, 34 and 35 of the Criminal Proceeds (Recovery) Act 2009 (Act) in respect of two motor vehicles:
(a)A silver 2006 Holden Commodore Clubsport motor vehicle including ignition keys, registration GLH161, registered in the name of the fifth interested party, Lauren Vanessa Elena Rogers, but under the effective control of the first respondent, Michael John Benjamin Clark (the Holden); and
(b)A silver 2013 Mercedes-Benz CLA 250, registration PCT45, registered in the name of the sixth interested party, Anita McMeeking, but under the effective control of the first respondent, Michael John Benjamin Clark, other than the interests of Finance Now Limited under its security agreement (the Mercedes).
(the property)
[2] The property is currently the subject of a restraining order, made initially by the Court on a without notice basis,1 but subsequently an on-notice restraining order was made on 7 September 2023.2
[3] A notice of opposition was filed by the first respondent on 22 July 2024 but, despite timetabling orders made by Churchman J on 29 July 2024, the first respondent has not filed any affidavits in support of his opposition.
[4] In those circumstances, the Commissioner asks that the application for early sale orders in respect of the property be determined on the papers.
[5]As recorded in my minute of 18 November 2024:
1 Commissioner of Police v Clark [2023] NZHC 691.
2 Commissioner of Police v Clark HC Wellington CIV-2023-485-159, 7 September 2023 (Minute of Gwyn J).
(a)The fifth interested party has confirmed to Police that she has no interest in the Holden.
(b)The sixth interested party has confirmed that she sold the Mercedes, she has no financial interest in it, and requests that she be removed as an interested party.
[6] On 18 November 2024, I made orders removing the fifth and sixth interested parties as interested parties in the proceeding.
Background
[7] The Commissioner’s application for restraining and further orders arises out of the Police investigation codenamed “Operation Maple”, concerning the sale and supply of the Class A controlled drug methamphetamine in the Wellington region.
[8] On 21 March 2023, Masterton Police executed search warrants at two Carterton addresses, one of which was the address where the first respondent lives with his partner, Natasha Ombler-Wilson (the second respondent).
[9] At that address, Police located items believed to be associated with methamphetamine dealing, including electronic scales, two ledgers (suspected to be tick lists), three bags containing a white crystalline powder (indicatively tested as methamphetamine) with a combined weight of 666 grams, cash totalling approximately $37,110, and high value assets, including motor vehicles, jewellery, trail bikes and a garden tractor.
[10] The first respondent, Michael Clark, faces charges for possession for supply of methamphetamine. Mr Clark has previous convictions, including for supply of methamphetamine.
[11] The Police evidence indicates that preliminary investigation with Inland Revenue disclosed that the first and second respondent have had limited or restricted gross income over the previous seven tax years.
Application for early sale orders
[12] The Commissioner’s application of 16 April 2024 seeks an order for early sale of the vehicles referred to at [1] above to preserve the value of the property. An affidavit was filed in support of the application from Arna Williams, a Police Specialist Investigator. Ms Williams’ affidavit explains that motor vehicles naturally depreciate over time, no matter how well they are maintained and how much they are used. The value of the vehicles here is likely to depreciate pending final determination of the current criminal proceedings and the Commissioner’s ultimate forfeiture application.
[13] At the time the application was made, the Mercedes motor vehicle had been restrained but the Holden had not yet been located by the Commissioner.
[14] On 17 July 2024, the first respondent filed a notice of opposition to the application for early sale orders in respect of the two motor vehicles. However, that opposition did not set out the basis on which the orders were opposed and, as noted above, no affidavit evidence in support has subsequently been filed.
The law
[15] The vehicles are currently restrained property under the Official Assignee’s custody and control. The effect of a restraining order is to preserve the property itself and not its value.3 The Act permits the Official Assignee to do anything reasonably necessary to preserve the vehicles’ value.4
[16] Section 33 of the Act allows the Commissioner to apply for sale orders in respect of property subject to a restraining order. Section 34 enables the Court to make further orders in respect of restrained property at any time before the expiry of the restraining order. The Court may make any such order if it considers it appropriate.
This requires the Court to be satisfied that such an order should be made.5
[17]Section 35 of the Act provides:
3 Commissioner of Police v Skiffington [2017] NZHC 1687 at [38].
4 Criminal Proceeds (Recovery) Act 2009, s 80.
5 Commissioner of Police v Taaka-Te Kaute [2024] NZHC 280 at [10].
35 Types of further order
Without limiting the generality of section 34(1), a court may, on an application under section 33(1), make 1 or more of the following further orders in relation to restrained property:
…
(e) an order relating to the Official Assignee that—
…
(v) directs the Official Assignee to sell restrained property (including, without limitation, a business) in order to preserve the value of the restrained property:
(emphasis added)
[18] Under s 35(e)(v) the Court may make an order directing the Official Assignee to “sell restrained property (including, without limitation, a business) in order to preserve the value of the restrained property”.
[19] The Commissioner is not required to prove on the balance of probabilities that a sale is required,6 but must persuade the Court that a sale order is appropriate, and, when an order of the type set out in s 35(e)(v) is sought that the order is necessary to preserve the value of the restrained property.7
[20]As Cull J observed in Commissioner of Police v Siloata:8
[25] Dealing with early sale orders in general, the Court in Commissioner of Police v Chen observed:9
The underlying purpose of the restraining order is to preserve the subject property because it represents a monetary value of the parties concerned. The legislature can be taken to have appreciated that property may be subject to a restraining order for a considerable time and that circumstances may change over the life of the order so as to put the property at risk. Some risks may be of a kind that action including disposition of the property itself, may be needed to preserve the value that the property represents. If there were no mechanism for responding to such risks the rational for the scheme would be significantly undermined.
Section 35(e)(v) specifically recognises the need to preserve the value of the restrained property through the sale of it. There are many
6 Commissioner of Police v Parker [2019] NZHC 1506 at [31].
7 McQuade v Commissioner of Police [2024] NZCA 46 at [24].
8 Commissioner of Police v Siloata [2022] NZHC 1830 at [25]-[26].
9 Commissioner of Police v Chen [2013] NZHC 2259 at [30]-[31].
foreseeable circumstances that might justify such an order. These include a significant drop in the property market, the risk of a mortgagee sale and the reduction in value cause by a lack of funds to maintain the property.
[26] However, sale orders will not automatically be made where restrained assets are depreciating in value. This Court must consider the nature and value of the asset(s), the length of time before the substantive proceeding will be determined, the extent to which the asset(s) may depreciate during that period and the wishes of the owner of the asset(s) and any other person who may have an interest in it.10
[21] Justice Lang in Commissioner of Police v Drummond outlined a variety of factors relevant to the proposed sale of a restrained motor vehicle:11
… Factors that will need to be taken into account include the nature and value of the asset, the length of time before the substantive proceeding will be determined, the extent to which the asset may depreciate during that period and the wishes of the owner of the assets and/or those who may have an interest in it.
[22] I also refer to the observations of Venning J in Commissioner of Police v Cavanagh where he noted that sale orders are typically pursued where the restrained assets are likely to have a high depreciation rate combined with costs of storage and insurance, which ultimately decrease the potential return to the Commissioner and/or the parties who claim an interest in the asset.12
[23] Where restrained property is depreciating in value, a sale order may be necessary to preserve its value. Depreciation ultimately decreases the potential return to the Commissioner and/or the parties who claim an interest in the assets. There are differences of judicial view in relation to the relevance of holding costs (associated with keeping the properties restrained, such as storage and insurance).13 In McQuade v Commissioner of Police, Wylie J considered that a reduction in the eventual return caused by holding costs is a factor which can be considered in the exercise of the discretion, provided a sale order is otherwise appropriate in order to preserve the value of the restrained property.14
10 Commissioner of Police v Drummond [2018] NZHC 1730; see also Commissioner of Police v Farrell [2022] NZHC 310.
11 Commissioner of Police v Drummond [2018] NZHC 1730 at [15]; see also Commissioner of Police v Milosevic [2019] NZHC 202 at [95(c)].
12 Commissioner of Police v Cavanagh [2014] NZHC 2978 at [7].
13 McQuade v Commissioner of Police, above n 7, at [27].
14 At [27].
Discussion
[24] The issue for the Court is therefore whether the value of the vehicles in this case are likely to be sufficiently eroded as a result of depreciation and/or holding costs such that their sale is appropriate to preserve value. If sale orders are made, once sold the proceeds of the vehicles will be held by the Official Assignee in an interest-bearing account.
[25] Here, Ms Williams’ evidence annexes valuations for the vehicles that were completed in April 2024:
(a)The Mercedes, registration PCT45, is valued at approximately $23,950.
(b)The Holden, registration GLH161, is valued at approximately $40,900.
[26] The evidence utilises a depreciation calculation published by the Inland Revenue for individual assets. On the basis of the Inland Revenue schedule, the future annual depreciation is calculated at 21 per cent, that is $5,029.50 per annum for the Mercedes and $8,589 for the Holden.
[27] The total projected yearly cost to the Official Assignee to store the Mercedes is $4,927.50 ($13.50 per day). If and when the Holden is located the total yearly cost will also be $4,927.50.
[28] Based on those calculations, Ms Williams concludes that the combined cost of storage and depreciation of the Mercedes after one year is $9,957. Given its April 2024 valuation of $23,950, the value of the Mercedes would significantly reduce should it remain unsold. Based on its 2024 value, the combined cost of storage and depreciation of the Holden after one year would be $13,516.50.
[29] Ms Williams deposes that if the order is granted the Holden would be sold shortly after it is located in order to minimise storage costs and preserve its value.
[30] In light of the rate of depreciation, taken together with the costs of storage of the vehicles, I am satisfied that they will be eroding in value, by a substantial amount
if held for a long period. As recorded, no reasons for opposition have been filed by the first respondent despite a considerable period in which to do so.
[31]In those circumstances I am satisfied that a sale order should be made.
Result
[32] I grant the Commissioner’s application for an order for sale of the two currently restrained vehicles described above at [1], in the terms set out in the draft order filed by the Commissioner on 16 April 2024.
Gwyn J
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