Commissioner of Police v Bracken

[2022] NZHC 1357

IN THE HIGH COURT OF NEW ZEALAND GISBORNE REGISTRY

I TE KŌTI MATUA O AOTEAROA TŪRANGANUI-A-KIWA ROHE

CIV-2018-416-00044

[2022] NZHC 1357

UNDER

The Criminal Proceeds (Recovery) Act 2009

IN THE MATTER OF

An application under sections 22, 24 and 25 of the Criminal Proceeds (Recovery) Act 2009

BETWEEN

THE COMMISSIONER OF POLICE

Applicant

AND

JOHN RICHARD BRACKEN

First Respondent

AND

MARGARET ALEXANDRIA BRACKEN

Second Respondent

AND

BRACKEN ENTERPRISES LIMITED

Third Respondent

AND

THE BRACKEN FAMILY TRUST

Fourth Respondent

AND

ANZ BANK NEW ZEALAND LIMITED

First Interested Party

Hearing:

15 March 2022 via VMR and AVL

Appearances:

I Rosic and A Bradley for ANZ as First Interested Party J Bracken, First Respondent in Person

M Bracken, Second Respondent in Person
C Walker and M Mitchell for Commissioner of Police

Judgment:

9 June 2022

JUDGMENT OF CULL J

COMMISSIONER OF POLICE v BRACKEN and ORS [2022] NZHC 1357 [9 June 2022]

[1]                 ANZ Bank New Zealand Ltd (ANZ) applies to have its severable interests in restrained property excluded from restraining orders under s 30 of the Criminal Proceeds (Recovery) Act 2009 (the Act). This is opposed by the second respondent, Mrs Bracken, who is self-represented in these proceedings.

Background

[2]                 In March 2021, Mr Bracken was found guilty on 39 charges of dishonesty and without claim of right, using goods and services tax returns with the intention of obtaining a pecuniary advantage.1 Mr Bracken had set up a “crude but effective” scheme that permitted the third respondent to obtain a total of $17.3 million in tax refunds from August 2014 until July 2018. He was sentenced on 11 May 2021 to eight years and six months’ imprisonment.

[3]                 The Commissioner of Police obtained restraining orders in this proceeding over property owned by the respondents on 30 October 2019, 9 July 2020 and 9 December 2020. The property to which the orders apply includes real estate, registered vehicles, farm vehicles, equipment and plant, marine craft and trailer and financial assets. The effect of the restraining orders is that the restrained property is to be in the Official Assignee’s custody and control, and is not to be disposed of, or dealt with, other than as is provided for in the restraining orders.

The Application

[4]                 ANZ is a first charged registered mortgagee and first ranked security creditor in respect of the retained property, in real estate, registered vehicles, farm vehicles, equipment and plant, and financial assets. As ANZ did not have its interests excluded at the time the restraining orders were made, it now applies to have its security interests excluded from the restraining orders.

1      R v Bracken [2021] NZHC 609. The charges were laid under s 228(1)(b) of the Crimes Act 1961.

[5]                 ANZ have provided the respondents with credit and a substantial loan in return for securities by way of cross-guarantees, first charge registered mortgages and general security and loan agreements as follows:

(i)On 5 December 2006, ANZ provided the respondents with a Farm Equity Credit Line in the sum of $100,000 and obtained cross-guarantees from all four respondents.

(ii)On 18 September 2014, ANZ entered into a General Security Agreement with Mr Bracken on behalf of Bracken Enterprises Limited, the third respondent, granting ANZ a security interest in and over all collateral, which was defined to be “all present and after acquired property”.

(iii)On 25 September 2014, ANZ registered a financing statement on the Personal Property Securities Register with the third respondent as debtor.2

(iv)On 24 June 2015, ANZ entered into a loan agreement with the trustees of the Bracken Family Trust, the fourth respondent, under which ANZ agreed to advance one million dollars to the trust and took securities by way of registered mortgages over the Bracken Family Trust properties.

[6]ANZ hold securities over much of the restrained property, namely:

(a)    First charge registered mortgage from the Bracken Family Trust over the property in Matawai, Gisborne Region, encompassed by the addresses at 156 Te Wera Road, 6998 Matawai Road, 7274 Matawai Road and 7303 Matawai Road, identified at paragraph 1(a) of its application.

2      The registered interests were enumerated in the affidavit of Mr Cohr, Manager (Lending Services) of ANZ Bank.

(b)    First ranking registered security interests in the registered vehicles owned by Bracken Enterprises Ltd and listed at paragraph 1(b) of its application.

(c)    A first ranking registered security interest in the farm vehicles, equipment and plant owned by Bracken Enterprises Ltd and listed at paragraph 1(c) of its application.

(d)    A first ranking registered security interest in the financial assets specifically attributed to Bracken Enterprises Ltd and listed at paragraph 1(d) of its application.

[7]                 As ANZ had no involvement in Mr Bracken’s criminal offending and has not unlawfully benefitted from criminal activity, it says the criteria as set out in s 30(2) is established and the application should be granted.

The opposition

[8]Mrs Bracken claims that ANZ have no entitlement to security and:

(a)ANZ cannot show that they loaned anything to the Bracken Family Trust, Bracken Enterprises Ltd or Mr or Mrs Bracken.

(b)The Bank has been paid interest and has received $2 million, which has not been declared by Mr Cohr in his affidavit.

(c)ANZ and the Commissioner of the Police are colluding to the disadvantage of the Bracken family.

(d)The Police acted wrongfully in charging Mr Bracken. The correct procedures were not followed for the Search Warrant by Police dated 18 December 2018 and charges were not laid within 48 hours of the without notice restraining order obtained by the Police on 14 December 2018 over the property.

(e)The Maori Incorporation, consisting of four members of the Bracken whanau, is an interested party that should be included in all matters involving this whanau.

Relevant legal principles

[9]ANZ’s application is made under s 30(1) and (2) of the Act, which provides:

30   Excluding severable interest from restrained property

(1)A person (other than the respondent) who has a severable interest in proposed restrained property or restrained property may apply to the court that is to consider, or has considered, the application for a restraining order to have that person’s severable interest excluded from—

(a)   a restraining order that the court may make; or

(b)     a restraining order the court has made.

(2)The court must exclude a severable interest from proposed restrained property or restrained property at, or after, the time a restraining order is made if the applicant proves on the balance of probabilities—

(a)   that the applicant has an interest in the property to which the restraining order relates; and

(b)     if the order was or is to be made under section 24 or 25, that the applicant has not unlawfully benefited from the significant criminal activity to which the restraining order relates; and

(c)   if the order was or is to be made under section 26, that the applicant was not involved in the qualifying instrument forfeiture offence to which the restraining order relates.

[10]“Interest” and “property” are defined in s 5 of the Act as follows:

interest, in relation to property of any kind (including, without limitation, restrained property or forfeited property), means—

(a)   a legal or equitable estate or interest in the property; or

(b)   a right, power, or privilege in connection with the property.

property —

(a)   means real or personal property of any kind—

(i)whether situated in New Zealand or a foreign country; and

(ii)whether tangible or intangible; and

(iii)whether movable or immovable; and

(b)   includes an interest in real or personal property.

[11]            “Severable” in the context of the Act has its ordinary meaning, which is “able to be severed”.3 A “severable interest” is one that can “easily (and legally) be excluded” from a restraining order.4 Security interests are routinely excluded from restraining orders.5

Discussion

[12]            ANZ has provided details of the loans and securities by way of an affidavit from its Bank Manager, Mr Cohr. It has established that it is a mortgagee and a first ranked security creditor in respect of the restrained property, which is summarised and set out in [6](a) to (d) above.

[13]            Thus, ANZ has both legal and equitable interest in the restrained property, being both a mortgagee and first ranked security creditor in respect of that property. Its interests fall within the definition of “interest” in s 4 of the Act.

[14]            The Commissioner of Police does not oppose ANZ’s application to sever its interests from the restraining orders and, as noted above at [11], a mortgagee’s interest has been recognised as a severable interest capable of exclusion from restrained property both in s 31 of the Act and in other High Court decisions. Further, ANZ had no involvement in Mr Bracken’s criminal offending, is an innocent party, and has not unlawfully benefited from significant criminal activity, as Mr Cohr affirms in his affidavit. Thus the requirements of s 30(2)(a) and 30(2)(b) of the Act are met.

3      Commissioner of Police v Johnson [2020] NZHC 1317 at [50].

4      Commissioner of Police v Briggs [2012] NZHC 2324 at [40].

5      For example, see Commissioner of Police v Briggs, above n 4; and Commissioner of Police v Johnson, above n 3. That a mortgagee’s interest is a severable interest capable of exclusion from restrained property is also implicitly recognised in s 31 of the Act.

[15]            I deal then with Mrs Bracken’s opposition. Mrs Bracken claims that ANZ have no entitlement to security. She offers no evidence in support of this contention. Nor could Mrs Bracken take issue with the affidavit evidence of Mr Cohr, who detailed the registered mortgages, ANZ security interests under General Security Agreements, the registered financing statements and the guarantees (and cross-guarantees) in respect of the restrained properties. The table of ANZ’s severable security interests were summarised in both ANZ’s submissions and Mr Cohr’s affidavit. For completeness, it is appended to this judgment as Appendix A.

[16]            The principal argument advanced by Mrs Bracken at the hearing was that she believed that the loan agreement must be known to two persons and the Bank did not sign the loan agreement. Further, she claimed that no liquid funds were advanced by ANZ and that money has been taken by the ANZ from the respondents’ accounts. No consent was given by the respondents for this to happen.

[17]            As Ms Rosic submits, ANZ had a general security which covered unpaid indebtedness. She concedes that the loan agreement did not have a bank signature on page 66 but it is plain that the bank entered into the agreement and advanced a million dollars credit to the trustees of the Bracken Family, as well as the credit facilities advanced to the other respondents. By reason of the credit facility and bank arrangements, no further consent is required from the respondents.

[18]            I am satisfied that despite the absence of the bank signature on the page of the loan agreement, the agreement has been fully performed by ANZ for the benefit of the respondents. Although Mrs Bracken criticised Mr Cohr’s lack of detail of any payments made to ANZ by the respondents, that is not required to satisfy s 30(2) of the Act. Mrs Bracken’s first and second grounds of opposition are therefore ill- founded, as ANZ has demonstrated that they have its entitlement to security and that the loans were advanced by ANZ to the respondents. Although the Bank has been paid interest by the respondents, ANZ has a legal and equitable interest in the restrained properties for the respondents’ unpaid indebtedness.

[19]            I deal briefly with Mrs Bracken’s three further grounds of opposition. Mrs Bracken alleges there has been collusion between ANZ and the Commissioner of

Police to the disadvantage of the Bracken family. By this, it appears Mrs Bracken takes issue with the Police prosecution against Mr Bracken. Aside from the fact that Mr Bracken was tried on these charges and found guilty, none of the details of his offending are relevant to the test under s 30 of the Act. ANZ is still entitled to have its interest in the restrained property excluded from the restraining order. Those grounds of opposition also fail.

[20]            Lastly, Mrs Bracken submits that “the Maori Incorporation” are interested parties and has included other members of the Bracken family on the intituling of her notice of opposition and submits. None of those named are parties to this proceeding and nor were they named in relation to the securities taken by the ANZ over the restrained properties.

[21]            I am satisfied that the requirements of s 30(1) and (2) of the Act has been met and ANZ’s interests in the identified restrained property is severable from the restraining orders the Court has made.

Result

[22]ANZ’s application is granted.

[23]            This Court orders that ANZ’s interests are severable and are to be excluded from this Court’s restraining orders in respect of the property described in paragraph 1 (a), (b), (c) and (d) of its application.

Cull J

Solicitors:

Gilbert Walker, Auckland for First Interested Party Crown Solicitor, Napier for Commissioner of Police

Appendix A

Table of ANZ’s severable security interests

Loan / credit facility agreement	Parties to agreement	ANZ’s security interest	Security agreement / deed	Parties to security  agreement / deed	Property secured
Farm Equity Credit Line agreement dated 5 December 2006 for $100,000. Referred to at BD 047	ANZ Bracken Enterprises Limited The trustees of the Bracken Family Trust*	All obligations guarantee	Deed of guarantee dated 13 December 2006 BD 033-046	Bracken Enterprises Limited The trustees of the Bracken Family Trust*	N/A
John Richard Bracken
John Richard Bracken
Margaret Alexandria Bracken	Margaret Alexandria Bracken
(executed as a deed)
General security interest	General security agreement dated 18 September 2014.	Bracken Enterprises Limited	All present and after acquired property.
BD 055-072	(executed as a deed)
This interest is registered generally on the PPSR as well as in relation to each registered motor vehicle listed at paragraph 1(b) of ANZ’s application.
BD 073-075
Loan agreement dated 24 June 2015 for $1,000.000 BD 076-084	ANZ The trustees of the Bracken Family Trust*	First charge registered mortgages	Registered mortgage instrument dated 21 July 2015, as recorded in the certificates of title for the secured property.	ANZ The trustees of the Bracken Family Trust*	The properties listed at paragraph 1(a) of ANZ’s application.
BD 085-098

* The trustees of the Bracken Family Trust are John Richard Bracken, Margaret Alexandria Bracken and independent trustee Richard Mark Harding.