Commissioner of Police v Bicycle Brothers Limited
[2023] NZHC 3013
•27 October 2023
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2023-409-572
[2023] NZHC 3013
UNDER The Criminal Proceeds (Recovery) Act 2009 IN THE MATTER OF
An application pursuant to ss 22, 24 and 25 of the Act
BETWEEN
COMMISSIONER OF POLICE
Applicant
AND
BICYCLE BROTHERS LIMITED
First Respondent
AND
MICHAEL GREVILLE WHEELER
Second Respondent
AND
CHARLES ROGER WHEELER
Third Respondent
Hearing: On the papers Judgment:
27 October 2023
JUDGMENT OF HARLAND J
(without notice application for a restraining order)
Introduction
[1] The Commissioner of Police (Commissioner) applies without notice for a restraining order in relation to a property situated at 18 Tanner Street, Woolston, Christchurch, owned by the first respondent in respect of which the second respondent is and the third respondent was a director.
[2] The application is made relying on ss 22, 24 and 25 of the Criminal Proceeds (Recovery) Act 2009 (the Act) and the affidavits of Duncan Bull, Greer Glentworth,
COMMISSIONER OF POLICE v WHEELER [2023] NZHC 3013 [27 October 2023]
Jennifer McCone and Rhys Wilson filed in support of it. In reaching my decision, I have read the affidavits filed in support of the application and considered the memorandum of counsel for the Commissioner filed in support of the application.
Legal principles
[3] Section 22 of the Act enables the Court to consider an application for a restraining order without notice if it is satisfied that there is a risk of the proposed restrained property being destroyed, disposed of, altered or concealed if notice was given to the respondents or an interested party. The application is made on a without notice basis for interim relief.
[4] As Fogarty J outlined in Crown Solicitor at Invercargill v Lang, an application such as this is a precautionary step to preserve any property prior to the Court hearing whether it should be acquired by the Crown.1 If granted, a restraining order made without notice ceases to be in force seven days after the date upon which it was made.2
[5] I am satisfied, having read the application and affidavits filed in support, that it is appropriate for this application to proceed on a without notice basis at this time. This is because of the nature of the allegations which I address shortly.
[6] Before I can make a restraining order, I must be satisfied that there are reasonable grounds to believe that the respondents have unlawfully benefitted from significant criminal activity. Section 24 of the Act enables a restraining order to be made relating to specific property that is potentially tainted. Section 5 defines tainted property as any property that has been wholly or in part acquired as a result of significant criminal activity, or directly or indirectly derived from significant criminal activity. The definition of tainted property also includes any property that has been acquired as a result of or directly or indirectly derived from more than one activity if at least one of those activities is a significant criminal activity.
1 Crown Solicitor at Invercargill v Lang [2012] NZHC 2584.
2 Criminal Proceeds (Recovery) Act 2009, s 39(1).
Discussion
[7] The property sought to be restrained is real estate at 18 Tanner Street, Woolston, Christchurch (title number CB 676/88) owned by the first respondent, Bicycle Brothers Ltd, with a rateable value as of 1 July 2020 of $540,000.00, excluding any mortgage interest of the ASB Bank Ltd, under registered mortgage 6565841.3.
[8] The property comprises two buildings erected on one title, being the original house built at the front of the property and a large Totalspan shed built at the rear of the property (referred to as 18 and 18A Tanner Street respectively). The shed at the back of the property is known to Police to be used as the gang headquarters or clubrooms of the Christchurch arm of the Tribesmen Motorcycle Club (TMC). It has been used by the TMC in this way since about April 2021.
[9] Having read the affidavit evidence and memorandum of counsel summarising the relevant parts of it, I am satisfied there are reasonable grounds to believe that rental payments made to all or some of the respondents have funded the mortgage over the property and that these payments are tainted.
[10]The first respondent has receipted lump sum payments of rent in cash totalling
$70,200 which the second and/or third respondents have promptly banked into bank accounts that ultimately serviced the mortgage over 18 Tanner Street.
[11] There is a reasonable inference available, from the material included in the affidavits, that these funds have been provided by the TMC in relation to its occupation of the shed which is used as its headquarters/clubrooms and accommodation for its members. There is no rental or tenancy agreement or bond agreement lodged in relation to the shed and no known legitimate source for the large rental payments that have been made in cash by TMC to the respondents.
[12] The affidavits filed also outline activities associated with the TMC which provide reasonable cause to suspect that its members are associated with the possession and supply of methamphetamine. Large sums of cash have been found and/or seized by the Police between 20 April and 13 October 2023, all associated with
members or associates of the TMC. There is also evidence provided in the affidavit of Detective Bull revealing the involvement of members of the TMC in drug dealing and being in possession of large amounts of cash prior to these dates and, in particular, from March 2021 onwards.
[13] Various improvements have been made to the shed on the property, but the Police have not been able to identify any payments being made by the respondents to fund these improvements. There is therefore reasonable cause to suspect that these improvements have been funded by the TMC through either payments made by members from tainted funds or through unidentified cash payments to trades people and/or to buy materials used for the improvements.
[14] In conclusion, there is reasonable cause to suspect, on the affidavit evidence before me, that rental payments which were banked by the second and third respondents and which funded the first respondent’s mortgage are tainted. As well, there is reasonable cause to suspect the improvements to the building at 18A Tanner Street have been funded by significant criminal activity and have therefore tainted the property.
Result
[15] I am satisfied that there are reasonable grounds to believe that the respondents have unlawfully benefitted from significant criminal activity, namely:
(a) by receiving into their possession and banking the proceeds of drug sales (in particular methamphetamine and/or cocaine sales), being property obtained by a crime (in the form of bulk rental payments), in fact tainting the property;3
(b) either knowing the funds were derived from that activity or being reckless as to that fact;4
3 Misuse of Drugs Act 1975, s 6.
4 Receiving – Crimes Act 1961, s 246.
(c) by receiving a direct benefit in the form of building upgrades to the Totalspan shed at 18A Tanner Street, in fact tainting the property;5 and
(d) knowing those improvements were being funded by the TMC’s significant criminal activity or being reckless as to that fact.6
[16] To be clear, I am satisfied that there are reasonable grounds to believe that the real estate property at 18 Tanner Street is tainted property.7
[17] I am satisfied that there is a risk of the proposed restrained property being disposed of if notice were to be given to any or all of the persons who, to the applicant’s knowledge, have an interest in the proposed restrained property (including the respondents).
[18]I make the orders sought in the draft order submitted to the Court as follows:
(a) The property to which this order applies:
(i)is not to be disposed of, or dealt with, other than as is provided for in the restraining order; and
(ii)is to be in the Official Assignee’s custody and control.
(b) The property to which this order applies is 18 Tanner Street, Woolston, Christchurch, owned by the first respondent, Bicycle Brothers Ltd, Title number CB 676/88, with a rateable value as of 1 July 2020 of $540,000, excluding any mortgage interest of the ASB Bank Ltd, under registered mortgage 6565841.3.
[19] The memorandum of counsel did not address the position of the ASB Bank Ltd and the fact that it is likely to be required to be an interested party. Counsel is to file a further memorandum addressing this issue and service on the ASB no later than 5.00 pm on 30 October 2023.
5 Misuse of Drugs Act, s 6.
6 Crimes Act, s 246.
7 Criminal Proceeds (Recovery) Act, s 24.
[20] I note that the service copies of Ms McCone’s affidavit that refer to a suspicious activity report are to be redacted to meet the requirements of ss 46 and 47 of the Anti- Money Laundering and Countering Financing of Terrorism Act 2009.
Harland J