Commissioner of Police v Briggs

[2012] NZHC 2324

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2011-404-3424 [2012] NZHC 2324

IN THE MATTER OF     an application under the Criminal Proceeds

(Recovery) Act 2009

BETWEEN  COMMISSIONER OF POLICE Applicant

ANDROBERT ANYTHONY BRIGGS First Respondent

ANDJAN-MARIE BRIGGS Second Respondent

ANDGERARD THOMAS CLIFFORD Defendant

Hearing:         2 July 2012

Counsel:         K L Bannister for Applicant

J P Temm for First Respondent

M N Pecotic for Second Respondent and Janet Briggs (interested party)

M S McKechnie for Anthony Briggs and Maria Briggs (interested parties)

Judgment:      11 September 2012

RESERVED JUDGMENT OF ELLIS J

This judgment was delivered by me on 11 September 2012 at 4 pm, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors:     Crown Solicitors, PO Box 2213, Auckland 1140

H S Edward, P O Box 738,Rotorua

Counsel:       J P Temm, PO Box 1124, Rotorua 3040

M Pecotic, PO Box 6379, Auckland

M McKechnie, PO Box 1227, Rotorua 3040

COMMISSIONER OF POLICE V BRIGGS HC AK CIV-2011-404-3424 [11 September 2012]

[1]      The three respondents were jointly charged with a number of offences arising out of their involvement in the gaming machine industry.  More particularly:

(a)       Robert Briggs was charged with:

(i)six counts of accepting gifts as an agent contrary to s 4 of the Secret Commissions Act 1910 (which offending carries a maximum penalty of two years’ imprisonment);

(ii)one count under s 229A(b) of the Crimes Act 1961 of using documents with intent to defraud;

(iii)one count under s 228(b) of the Crimes Act of dishonestly using documents with intent to obtain a pecuniary advantage;

(iv)one  count  of  conspiring  to  use  documents  with  intent  to defraud (which carries a maximum penalty of seven  years’ imprisonment under s 307 of the Crimes Act);

(v)two counts of conspiring to use documents dishonestly with intent to obtain a pecuniary advantage (which carries a maximum penalty of seven  years’ imprisonment also under s 307).

(b)      Jan-Marie Briggs was charged with:

(i)one  count  of  conspiring  to  use  documents  with  intent  to defraud; and

(ii)one count of conspiring to use documents dishonestly with intent to obtain a pecuniary advantage; and

(c)       Gerard Clifford was charged with:

(i)one  count  of  conspiring  to  use  documents  with  intent  to defraud;

(ii)one count of conspiring to use documents dishonestly with intent to obtain a pecuniary advantage; and

(iii)     one charge of attempting to obstruct the course of justice. [2]  All the alleged offending took place between 2003 and 2006.

[3]      The trial took place in May 2011.  The outcome for each of the respondents was as follows.

[4]      Robert Briggs:

(a)       pleaded guilty at the commencement of the trial to the six Secret

Commissions Act offences;

(b)was discharged on the counts of using a document with intent to defraud and dishonestly using documents with intent to obtain a pecuniary advantage;

(c)      pleaded guilty after the Crown closing to the counts of conspiring to use documents with intent to defraud and of conspiring to use documents dishonestly with intent to obtain a pecuniary advantage;

(d)      was sentenced to four years and ten months imprisonment. [5]          Jan-Marie Briggs was acquitted of the charges faced by her.

[6]      Mr Clifford was:

(a)      found guilty on the counts of conspiring to use documents with intent to defraud and of conspiring to use documents dishonestly with intent to obtain a pecuniary advantage; and

(b)      sentenced to four years’ imprisonment.

[7]      The offending is said by the Commissioner to have yielded considerable financial gain for the respondents.   On 9 June 2011 (after the trial but before the verdict), the Commissioner of Police applied for orders under the Criminal Proceeds (Recovery) Act 2009 (the Act) in the following terms:

(a)       Effective control orders pursuant to s 58 of the... Act, ... in particular

The following properties (Properties) are for the purpose of this application to be treated as though the named respondent has an interest in each property:

(i)        all  interests  in  the  residential  property  at  100  and  100A Ngapuhi Road, Remuera, Auckland comprised in certificate of  title  NA1866/87  (Lot  26  DP 46210),  other  than  the interests  of  the  National  Bank  of  New  Zealand  Limited under  registered  mortgage  number  C926034.3  (Ngapuhi Rd) – respondents having interests: Mr Briggs and Mrs Briggs; and

(ii)       all interests in the residential property at 38 Main Road, Mt Pleasant, Christchurch, comprised in certificate of title CB15A/682 (Lot 1 DP 35327) other than the interests of Westpac New Zealand Limited under registered mortgage number 5456504.3 (Main Road) – respondent having interests: Mr Clifford.

(b)      Restraining  orders  pursuant  to  ss  24  and/or  25  of  the  Act,  in particular:

The properties:

(i)        Are  not  to  be  disposed  of,  or  dealt  with,  other  than  as provided for in the orders; and

(ii)       Are to be under the Official Assignee’s custody and control.

[8]      In relation to the Ngapuhi Rd property, the application identified Mr Briggs’ parents and sister (Anthony Robert Briggs, Marina Katrina Briggs and Janet Briggs) as interested parties.

[9]      In relation to the Main Rd property, the application identified Mr Clifford’s wife, Bronwyn Joan Clifford and Dorset Trustee Services Ltd (Dorset) and “Keegan Arthur James” as interested parties.

[10]     For reasons that are not presently material it was over a year before the effective control and restraining order applications could be heard.

Relevant statutory provisions

[11]     Before turning to the provisions that are directly engaged in the present case it can be noted that:

(a)      Neither a charge nor a conviction is required before a restraining order (or an asset forfeiture order) may be made and nor is the Court precluded from making one where a respondent has been acquitted of the relevant offending.1

(b)A distinction is drawn in the Act between asset forfeiture, which is aimed at recouping that which never rightfully belonged to a respondent in the first place and is therefore civil in nature, and instrument forfeiture (which is punitive in nature and therefore has a direct and express relationship with sentencing).2

[12]     In  terms  of  the  provisions  pertaining  directly  to  restraining  orders,  s  11 provides that prior restraint is not a pre-requisite for forfeiture.  It can therefore be assumed that an application for a restraining order would only be granted when it is considered to be necessary to do so, for reasons other than merely that an application for an assets forfeiture order is contemplated.

[13]     There seem to be two obvious reasons why a restraining order might be applied for and made:

(a)      to protect property from potential dissipation pending the making of an either an assets forfeiture order or an instrument forfeiture order; or

(b)to safeguard the potential interests of third parties in the property concerned.

1 Criminal Proceeds (Recovery) Act 2009, s 6. As in the case of Mrs Briggs here.

2 Criminal Proceeds (Recovery) Act, subparts 3 and 4.

[14]     Support for the latter point can be derived from s 50(4) of the Act which provides that the Commissioner may only apply for an assets forfeiture order in relation to property in which no one has claimed an interest, if there has first been a restraining order in relation to that property in place for one year.  Thus one purpose of a restraining order is to ensure that there is sufficient time provided within which a  third  party may be  made  aware  that  his  property is  in  jeopardy  and  to  take appropriate steps before a final forfeiture order is made.

[15]     Section 19 of the Act requires that a restraining order application identify (inter alia) “the proposed restrained property”.     “Proposed restrained property” is (unsurprisingly) defined in s 5 to mean property in relation to which a restraining order is sought.  Section 5 also provides that “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

[16]     For present purposes, ss 24 and 25 are the key empowering provisions.3

Section 24 provides:

24       Making restraining order relating to specific property

(1)       A court hearing an application for a restraining order relating to specific property may, if the court is satisfied it has reasonable grounds to believe that any property is tainted property, make an order that the property (“restrained property”) -

(a)      is not to be disposed of, or dealt with, other than is provided for in the restraining order; and

(b)      is to be under the Official Assignee's custody and control.

(2)       A restraining order may be made under subsection  (1) whether or not there  is  a  respondent  in  relation  to  whom  the  restraining  order relates.

3 A restraining order may also be made under s 26 of the Act in relation to an “instrument of crime”,

but that section is not engaged in the present case.

[17]     The term “specific property” is defined as “identifiable property in relation to which there may, but need not, be a person who is an identifiable owner”.   That definition is reflected in the terms of s 13, which provides:

In proceedings for a restraining order or an assets forfeiture order relating to specific property, an owner of that specific property need not be identified.

[18]     Section 5 states that the term “tainted property”:

(a)       means any property that has, wholly or in part, been—

(i)       acquired as a result of significant criminal activity; or

(ii)      directly  or  indirectly  derived  from  significant  criminal activity; and

(b)       includes  any  property  that  has  been  acquired  as  a  result  of,  or directly or indirectly derived from, more than 1 activity if at least 1 of those activities is a significant criminal activity

[19]     An order made under s 24 is thus predicated on the (unlawful) source, or derivation,  of  all  or  part  of the property concerned.4      No  particular  connection between the property and a respondent is required.

[20]     The focus  of  s  25  is  different.    It  is  reliant  on  both  the  existence of  a relationship between the relevant property and the respondent, and on the respondent having obtained a benefit from significant criminal activity.   More specifically, it provides:

25Making restraining order relating to all or part of respondent's property

(1)       A court hearing an application for a restraining order relating to all or part of a respondent's property may, if the court is satisfied it has reasonable grounds to believe that the respondent has unlawfully benefited from significant criminal activity, make an order that the property it specifies in the order (“restrained property”) -

(a)      is not to be disposed of, or dealt with, other than is provided for in the restraining order; and

(b)      is to be under the Official Assignee's custody and control.

(2)       A restraining order made under subsection  (1) may relate to any of the following:

4 “Significant criminal activity” under Criminal Proceeds (Recovery) Act, s 6.

(a)       all of a respondent's property (including property acquired after the making of the order):

(b)      specified parts of a respondent's property:

(c)       all of a respondent's property (including property acquired after  the  making  of  the  order)  other  than  specifically excluded property.

[21]     The  phrase  “unlawfully  benefited  from  significant  criminal  activity”  is

defined in s 7, as follows:

In this Act, unless the context otherwise requires, a person has unlawfully benefited from significant criminal activity if the person has knowingly, directly or indirectly, derived a benefit from significant criminal activity (whether or not that person undertook or was involved in the significant criminal activity).

[22]     The knowledge element contained in this definition is necessarily imported into s 25.5

[23]     In terms of the property to which an application under s 25 can relate, the phrase “all or part of a respondent's property” is defined in s 5 to mean “all or part of the property in which an identifiable respondent has an interest”.6

[24]     Also  relevant  to  the  existence  of  the  requisite  relationship  between  the property and the respondent is s 58, which contemplates application to be made to the Court for an order permitting certain property that is owned by third parties to be treated as if a respondent had an interest in that property.  More specifically, s 58 provides:

58Court may treat effective control over property as interest in property

(1)       If the High Court is satisfied that a respondent has effective control over property, the Court may, on an application made by the Commissioner, order that the property is to be treated as though the respondent had an interest in the property specified by the Court.

(2)       An order under subsection (1) may—

(a)       be  made  even  if  the  respondent  has  no  interest  in  the property; and

5 Commissioner of Police v Know-All Group Ltd HC Auckland CIV-2010-404-403, 7 February 2011.

6 The definition of “property” itself has already been noted above.

(b)      specify an interest that differs from the interest that the respondent has in the property.

(3)       Without limiting the generality of subsections  (1) and  (2), the Court may have regard to—

(a)       shareholdings in, debentures over, or directorships of, any company that has an interest (whether direct or indirect) in the property; and

(b)      any trust that has a relationship to the property; and

(c)       family,   domestic,   and   business   relationships   between persons having an interest in the property or in companies of the kind referred to in paragraph  (a) or in trusts of the kind referred to in paragraph (b), and any other persons.

(4)       Property that is subject to an order under subsection  (1) may be included in any profit forfeiture order and in any restraining order that is made against the respondent.

(5)      If the Commissioner applies for an order under subsection  (1),—

(a)       the Commissioner must, so far as it is practicable to do so, serve notice of the application on the respondent and on any person who, to the knowledge of the Commissioner, has an interest in the property; and

(b)       the respondent and any other person who claims an interest in the property are entitled to appear and to adduce evidence at the hearing of the application.

[25]     At the restraining order stage, the interests of third parties are protected by s 30, which provides:7

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 -

7 The limited protection afforded by s 30 can be contrasted with s 66 which requires the Court to grant relief where an innocent third party establishes that he has an interest in the property at issue.

(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

...

(3)       The court may exclude a severable interest from proposed restrained property or restrained property at, or after, the time a restraining order is made if it considers that it is in the public interest to do so, having regard to all the circumstances, including, without limitation,—

(a)       any undue hardship that is reasonably likely to be caused to any person by the severable interest in property being made or having been made restrained property:

(b)       the gravity of the significant criminal activity or qualifying instrument forfeiture offence with which the property in which the person has a severable interest is associated:

(c)       the  likelihood  that  the  interest  will  become  subject  to  a forfeiture order.

[26]     Importantly, at the later forfeiture stage the Court is required to grant relief to a person who can prove that he has an interest in the relevant property and that he has not unlawfully benefitted from the significant criminal activity to which the application relates.8    The relief ordered, however, will depend on whether the third party’s interest in the property is severable or not.  If it is, then that interest must not be included in the forfeiture order.9   If it is not, then the Court must order the Crown to pay to the third party an amount that is equal to the value of the property.10

[27]     It is against this statutory background that the present applications fall to be determined.

Ngapuhi Rd: position of Mr Briggs and interested parties

[28]     The application in relation to the Ngapuhi Rd property identified Robert

Briggs’ parents  and  sister  (Anthony  Robert  Briggs,  Marina  Katrina  Briggs  and

8 Criminal Proceeds (Recovery) Act 2009, s 66.

9 Section 68.

10 Section 69.

Janet Briggs) as interested parties.   Mr and Mrs Briggs senior are the registered proprietors of the property.  They acquired the property in 1991, many years before their son’s offending.  At that time the property had one house on it.  Robert Briggs’ sister, Janet Briggs has, from the outset, lived in that house and she remains there (at

100 Ngapuhi Rd) today.  She pays rent to her parents.

[29]     Over an 18 month period during 2003-2004 another house was built on the property by Robert Briggs.  Although the house is now referred to as 100A Ngapuhi Rd, the land has not been sub-divided and there is no separate title.  The house is now occupied by Robert Briggs’ ex-wife, Jan-Marie.  Robert Briggs himself has not lived there since 2008, when he and Jan-Marie separated.  The Commissioner says that a substantial portion of the funds used to build the house was derived from the

commission of the offending by which Robert and Jan-Marie Briggs’ were charged.11

[30]     All rates and outgoings on the Ngapuhi Rd property continue to be paid by Mr and Mrs Briggs senior.   Although there is no formal arrangement in place, it seems  to  have  been  understood  (at  least  up  until  the  time  of  Robert  Briggs’ offending) that eventually the property might eventually pass to their two children. Whether or not that would first have required a legal subdivision is far from clear.

[31]     Robert Briggs has accepted that $188,000 of the money derived from his offending was applied to building the house at 100A, and that he and his parents have made an open offer to make payment of that amount in reparation.  This offer was acknowledged by Judge Joyce QC when sentencing Mr Briggs.12   He said:

Matters mitigating do, however, justify an allowance of recognisable significance, something of the order in the overall of  10 or so  percent. Should that seem a somewhat generous figure, I should add that in due course, and following High Court proceedings already afoot, the path does seem clear for the Crown to recover of the order of $188,000 on account Mr Briggs [sic].

[32]     By way of affidavit Robert Briggs has also indicated his acceptance that his

half of the house at 100A is “tainted property” and that he does not oppose restraint

11 As I have noted above the fact that Jan-Marie Briggs was acquitted on the charges faced by her does not preclude the Commissioner applying for orders against her property.

12 R v Briggs DC Auckland CRI-2008-004-019028, 26 August 2011.

(nor presumably forfeiture) of his share of the building itself (not the underlying land).

[33]     In  this  last  respect  it  is  also  relevant  to  note  that  in  December  2011

Jan-Marie Briggs filed proceedings under the Property (Relationship) Act 1976 for her share of the house at 100A.  No claim has been made by her in relation to the underlying land.

[34]     Anthony  Briggs,  Marina  Briggs,  Janet  Briggs  and  Jan-Marie  Briggs  all oppose the orders sought. Their grounds of opposition are:

(a)       Neither Robert Briggs nor Jan-Marie Briggs have effective control over the Ngaphui Road property;

(b)      The Ngapuhi Road property is not “tainted property” as defined in the

Act because it was not –

(i)       Acquired as a result of significant criminal activity; or

(ii)Directly   or   indirectly   derived   from   significant   criminal activity.

Ngapuhi Rd: discussion

Section 24

[35]     As I have said, the principal prerequisite for an order under s 24 is that the property in question is “tainted”, as defined.   It is the source, rather than the ownership or control of the property concerned, that is the determining feature.

[36]     There is, of course, no dispute that the Ngapuhi Rd property was “acquired” by Anthony and Marina Briggs from entirely legitimate sources in 1991.  Rather, the issue is whether the (admitted) use by Robert Briggs of criminal proceeds to partially

fund the building of a second house on the land suffices to taint the whole property.13

More specifically, can it be said that the “specific property” referred to in the application  (namely  “all  interests  in  the  residential  property  at  100  and  100A Ngapuhi Road ... comprised in certificate of title NA1866/87 (Lot 26 DP 46210)”) was, in part, “directly or indirectly derived” from, significant criminal activity.

[37]     In Commissioner of Police v Doorman, Miller J was prepared to accept that the use of drug proceeds to meet mortgage payments on a property that had been legitimately acquired was sufficient to taint that property for asset forfeiture purposes.14   In that case, however, the property concerned was Mr Doorman’s family home (although his partner was the registered proprietor) and it was clear that the house constituted relationship property.  Moreover, Mr Doorman’s partner, who had contributed the deposit for the property from legitimate sources, was found by the Judge to  have been  complicit  in the relevant  offending and  to  have  unlawfully

benefitted from it, which meant that relief under s 66 was not available to her.

[38]     Here, it seems to me that the house at 100A is necessarily “part” of the property that is specified in the Commissioner’s application.  And it is not disputed by  Robert  Briggs  that  the  construction  of  the  house  was  partly  funded  by  the proceeds of his offending.   In my view, the house and therefore the property as a whole  were  therefore  (partly)  “derived”  from  Mr  Briggs’  significant  criminal activity.

[39] Once that point is reached, issues of protection for third party interests under s 30 and of the exercise of the Court’s residual discretion arise. I have set out the terms of s 30 at [25] above.

[40]     In the present case I am satisfied on the balance of probabilities that Anthony, Marina and Janet Briggs have an interest in the Ngapuhi Rd property and that they

13 It is also alleged, but denied, that criminal proceeds were used to pay for the installation of a chimney and a kitchen in the original house on the land (the house occupied by Janet Briggs). I do not, however, consider that this question requires separate determination; it stands or falls on the same basis as the issue concerning the tainting effect of the house at 100A.

14 Commissioner of Police v Doorman HC Nelson CIV-2010-442-169. An apparently contrary view seems to have been taken by Lang J in Commissioner of Police v Niu HC Auckland CIV-2010-404-

003899, 21 September 2010, although there is lack of clarity about the relevant facts and no real supporting analysis.

did not unlawfully benefit from Robert Briggs’ significant criminal activity because they did not know about that activity.15  Rather the issue is whether their respective interests are “severable” such that they can easily (and legally) be excluded from any restraining order that is made.

[41]     The principal difficulty here is that legal title to the Ngapuhi Rd property resides in Anthony and Marina Briggs, and that the precise nature and extent of Robert Briggs’ interest (or Jan-Marie Briggs’ interest) in it remains inchoate and unknown.   Nonetheless it seems to me certain that such an (equitable) interest does exist, as a result of their considerable contribution (from both lawful and unlawful sources) to the costs of building the second house.  Thus while the nature of Anthony and Marina Briggs’ interest is both indisputable and capable of clear legal definition, there is presently no other interest in the property from which it can be severed and s 30 cannot, on its face, apply.

[42]     The proposition that the position of innocent third parties with such a strong and clear interest in tainted property cannot be protected at the restraining order stage is intuitively unattractive.  That unattractiveness might be thought to justify the exercise of the Court’s discretion against granting the order sought.

[43]     If, on the other hand, the view I have formed about the property’s tainted status prevails at the asset forfeiture stage (bearing in mind the apparently higher standard of proof) then the Court will have no choice but to order the property forfeit.  Because the third parties interests would still not be severable the only relief that could (and must) be ordered is that the Crown is to pay compensation to those third parties in the sum of the value of their interests in the property. As I understand it, there might be at that point scope for arrangements to be made for those third parties effectively to repurchase the property from the Official Assignee.

[44]     On balance, it seems to me that I am required to make the restraining order sought.  Restraint now does not prevent the issue of whether the property is tainted

being revisited at the asset forfeiture stage and, even if its status is maintained, third

15 The position in relation to Jan-Marie Briggs in relation to the latter issue, and in particular, the issue of her knowledge is necessarily less clear-cut.

party interests will be protected in the fashion allowed by the Act.    The only real benefit to Anthony, Marina and Jan-Marie Briggs of a restraining order not being made at this stage is that there would be no impediment in the interim to the sale of the property.   But, of course in light of my finding that the property is tainted, restraint would certainly be justified if there was any suggestion that a sale was in prospect.

Section 25

[45]     Although not strictly necessary to do so, for completeness, I also address the

Commissioner’s alternative application under s 25.

[46]     In my view the fact that the Ngapuhi Rd property is indisputably owned by Anthony and Marina Briggs would present a prima facie impediment to the s 25 application.   Unless an effective control order is made it is difficult to see how Ngapuhi Rd can be said to constitute part of Robert Briggs’ property.  Indeed that is presumably why the Commissioner has applied for an order under s 58.

[47]     As the argument before me developed, however, Ms Bannister suggested that a restraining order could also be made under s 25 (absent an effective control order) if I were satisfied that the Ngapuhi Rd property is one in which either Robert or Jan-Marie Briggs have some other form of interest.  Such an interest could include whatever equitable interest they might subsequently be found to have in the property as a result of their contributions to the cost of building the house on it.  She said that this submission was supported by the definition of “all or part of a respondent’s property” which I have referred to above.

[48]     That submission does not, however, appear to me to accord with s 25(2) or with the wider context of s 25.  Section 25(2) contemplates that an application under the section will be made either in relation to:

(a)       all of a respondent’s property;

(b)      specified parts of a respondent’s property; or

(c)       all of a respondent’s property other than specified parts

[49]     Applying subsection (2) to the present case (absent an effective control order)

the options under s 25 would be to make a restraining order over

(a)      all of Robert Briggs’ property, which would presumably include his as yet inchoate equitable interest in the property to which his parents otherwise have an indefeasible title; or

(b)a specified part of Robert Briggs’ property, being his as yet inchoate equitable interest in property to which his parents otherwise have an indefeasible title.

[50]     In  my  view  neither  option  is  tenable.  Moreover,  and  in  terms  of  the legislative context, a wider interpretation would potentially render redundant those sections in the Act which specifically provide for the circumstances in which restraining orders can be made in relation to property belonging to another, namely:

(a)      s 24, which stipulates the specific circumstances in which property belonging to another may be restrained (ie when it is “tainted”); and

(b)s 58, which stipulates the circumstances in which property belonging to another can be deemed to belong to a respondent.

[51]     The application of s 25 in the Briggs’ case therefore turns on the application of s 58 and the issue of “effective control”.   The Commissioner submitted that effective   control   was   demonstrated   here   by   the   fact   that   Robert   and Jan-Marie Briggs:

(a)      lived  together  at  100A  Ngapuhi  Rd  and  that  Jan-Marie  Briggs continues to live there;

(b)paid for much of the construction of the house at 100A Ngapuhi Rd from their personal bank accounts; and

(c)       were the primary contact with the builder during construction of the house at 100A.

[52]     I would have little difficulty in rejecting that submission.  In my view there is no  evidence  at  all  that  Robert  Briggs  has  effective  control  over  the  property identified in the application, namely the Ngapuhi Rd property as a whole.   There is no evidence, for example, that he could sell or lease any part of it (including the house at 100A) without his parents’ consent.  Robert and Jan-Marie were permitted to build a house on the property and subsequently to live in it but there is nothing to suggest that they did so other than entirely at Anthony and Marina Briggs’ pleasure. The house at 100A cannot be disposed of separately from the land and any decision about disposing of the property as a whole will necessarily be made by his parents. The broad statutory definition of “property” is of no assistance to the Commissioner in this respect.

[53]     While there may have been an intention that title to the property would eventually be passed (wholly or in part) to Janet and Robert Briggs, there is no evidence  whatsoever  that  that  has  already  occurred  or  even  that  steps  in  that direction have been taken.  Nor is there any evidence that Robert has ever exercised or attempted to exercise any kind of influence over his parents or any decisions that they might make about the property.

[54]     For these reasons I consider that the Commissioner’s alternative application under s 25 would fail.

Main Rd: position of Mr Clifford and interested parties

[55]     As I have said, the application relating to the Main Rd property identifies a number of interested third parties.   Those third parties (Bronwyn Clifford, Dorset Trustee Services Ltd and “Keegan Arthur James”) are named because they, together with Mr Clifford, are the trustees of the Otec Trust.16    The Otec Trust became the

registered proprietor of the Main Rd property in December 2002. A copy of the trust

16 “Keegan Arthur James” is actually Arthur James Keegan.

deed was not provided to the Court, and there is no evidence before me as to the identity of the beneficiaries.

[56]     Prior to transfer, in September 2002, Mr and Mrs Clifford were granted a lifetime occupation (leasehold) interest in the property.

[57]     Shortly before the hearing Mr Clifford advised that he did not oppose the orders sought in relation to the Main Rd property.  No formal steps have been taken by the other trustees, although Mrs Clifford indicated informally that she opposes.  It seems that her application for legal aid had some complexity attached to it (due principally to her absence of formal status in the proceeding) and had not, by the time of the hearing before me, been finally determined.

[58]   Because Mrs Clifford lives in Christchurch under somewhat difficult circumstances, she was unable easily to attend the hearing.17   I am therefore prepared to take into account certain material that she has informally provided to the Court (both before and after the hearing). That information discloses that:

(a)      she and her son continue to live at the Main Rd property but that it has suffered significant damage in the Christchurch earthquake and that an EQC claim in that respect is pending;18 and

(b)the  Christchurch  Council  have  recently  made  it  clear  that  there remains a prospect of a “s 124 notice” being issued in respect of the property if certain repairs are not carried out.19

[59]     Mrs Clifford has understandably indicated that her ability to undertake the remedial work required by the Council notice would be adversely affected by the

imposition of a restraining order.

17 Had the Commissioner’s application been limited to the Main Rd property it would no doubt have

been filed and determined in Christchurch.

18 In this regard, it may be relevant that the valuation of the property provided by the Commissioner is dated 2007.

19 A notice issued under s 124 of the Building Act 2004 commonly requires remediation work to be carried out within a specified time.

[60]     As a result of the information provided by Mrs Clifford I issued a minute on

31 July in which I asked counsel for the Commissioner to advise:

(a)       if a restraining order is made and the Main Road property is thus placed in the custody and control of the Official Assignee:

(i) what steps will be taken by him to ensure that the remedial matters required by the Council to be done in order to avoid the issuing of a notice under s 124 of the Building Act 2004 are attended to; and

(ii)      who will be responsible for meeting the cost of those steps; (b)     whether, in the circumstances, the Commissioner wishes to pursue

the restraining order application in relation to the Main Rd property.

[61]     The response received was in the following terms:

2.        The OA [Official Assignee] is guided by ss80 – 90 of the Criminal Proceeds (Recovery) Act 2009 (the Act) when dealing with property once a restraining order has been granted.

3.        Section 80 of the Act empowers but does not impose a legal duty upon the OA to take any steps reasonably necessary to preserve the value of property that is the subject of a restraining order.

4.        Section 81 provides that the OA is not liable for rates, taxes or other statutory charges in respect of the restrained property unless they are due on or after the date of the restraining order and rents or profits sufficient to cover them have been received.

5. In the present case, the OA will not interfere with any measures the residents wish to take to prevent the property being excluded from occupation under s 124(1)(b) of the Building Act 2004.

6.        However, given that the focus of s80 is one of preserving value, which is distinct from the issue of whether the Property is habitable, the OA’s position at this stage is that he will not be responsible for meeting the cost of any remedial steps taken.

7.        The OA suggests that if the Property is restrained, he will be able to obtain a more authoritative report about any remedial work required on the Property, and will be in a better position to engage with the issue as to what steps are necessary to preserve the value of it.

8.        In the usual course, the OA’s focus is on matters of insurance and periodic inspection.  The OA may face difficulties obtaining insurance for the Property given the damage and/or risk of further damage.  This too will be a matter that the OA will need to assess if a restraining order is granted.

Main Rd: discussion

[62]     As far as the s 24 (“tainted property”) application is concerned, the Main Rd property was transferred to the Otec Trust at the end of 2002, prior to Mr Clifford’s offending.  There was no evidence before me about any contribution to the property being made by Mr Clifford after the date his offending began.  There can thus be no suggestion that the property is “tainted” in terms of s 24 of the Act and I do not need to consider that issue further.

[63]     As far as the application under s 25 is concerned, the Commissioner must satisfy the Court either that Mr Clifford has an interest in the Main Rd property or that he has effective control over it such that an order under s 58 should be made.

[64]     Of central relevance to both issues is the fact that the Main Rd property is owned by the Otec Trust.  Mr Clifford is one of the four trustees of that Trust and is therefore listed as one of the registered proprietors of the property in that capacity. Beyond that, however, there was no evidence before me about the operation of the trust and, for example, I do not know the identity of the settlor or the beneficiaries, the details of any appointment power or the powers of the trustees more generally.

[65]     Also relevant is the fact that Mr Clifford continues to possess (with his wife)

a right of lifetime occupancy in the Main Rd property.

[66]     On the information before me I am not prepared to hold that Mr Clifford’s position as trustee means that he has effective control over the property.  He is only one of the four trustees.  There was no evidence before me that he in fact “controls” any one of the other three or has the ability to control them. To the extent it might be assumed that Mr Clifford and his wife were once ad idem on trust matters that possibility seems likely to have been significantly reduced by her discovery of his offending and subsequent conviction.

[67]     Accordingly any day to day control Mr  Clifford may have had over the property is as a result of his occupancy rights.   But (on the evidence before me), even those rights were shared equally with his wife.  And, even to the extent those

rights do mean that he has a say in matters relating to the property, the reality is that the property is not owned by him; depending on the terms of the trust deed, it is conceivable that the property could be sold without his consent.    On the evidence, therefore, I do not consider that the extent of any “say” possessed by Mr Clifford suffices to meet the “effective control” threshold.

[68]     In terms of any “interest” possessed by Mr Clifford in the property, he is, of course, one of the registered proprietors.  But while registered proprietorship plainly qualifies as a legal interest it seems to me that it is not an interest that is possessed by a trustee personally, it is possessed by virtue only of his trustee status.   If the existence of an interest as trustee could render trust property liable to restraint and forfeiture under the Act, then the consequences for innocent third parties (such as the beneficiaries) could be extraordinarily severe.  If, for example, a solicitor agrees in his professional capacity to act as a trustee of a family trust for one of his clients, but then quite separately engages in significant criminal offending, it cannot be right that property belonging to the trust then becomes liable to forfeiture under the Act on the

grounds that the solicitor has an “interest” in it.20

[69]     The conclusion that a respondent trustee’s “ownership” of trust property does not qualify as an interest possessed by that respondent in that property is in my view supported by the rest of the Act.   As noted at  [50]  above, the Act specifically provides two circumstances in which the fact that property is owned by a trust can be overlooked; when the property is tainted, or when a court declares that a respondent has effective control over it.   The policy underlying the Act does not require an interpretation of “interest” that otherwise, and further, cuts across legitimate trust

structures.21

20 Although the beneficiaries could apply for relief at the forfeiture stage, the property would still be sold because their interest in it would not be severable. Moreover, it is difficult to see how (in many cases) the beneficiaries’ interest would be valued for the purposes of paying them “an amount equal to the value of” their interest in the trust property.

21 It is also relevant to note that if it can be established that ownership of an asset had been transferred to a trust for the purposes of defeating or avoiding the operation of the Act then s 167 empowers the Court to void or vary that arrangement. That is not the case here.

[70]     Finally, I note that in two earlier decisions where the issue of forfeiture of trust property has arisen (ie cases involving a respondent who is a trustee) the Court has adopted the effective control analysis:

(a)      In Crown Solicitor of Auckland v Crawford-Flett, Allan J noted that the respondent’s status as a trustee and registered proprietor of a property sought to be forfeited might suggest that he had the ability to exert control over the property.22    But he said in that case (as in the present) any exercise of that control would necessarily require the assent of the respondent’s fellow trustees.

(b)Similarly,  in  R  v Williams,  the respondent  was  also  a trustee  and registered proprietor of property sought to be forfeited.23     While it seems Woolford J regarded him as having a legal interest in the property as a result, he went on to consider whether the respondent had effective control of the property and deemed such an inquiry “necessary”.24

[71]     These approaches accord with my view that a respondent trustee will not, without  more,  have an  “interest”  in  trust  property for  the purposes  of  the Act. Although, as I have said, the Act contains a range of mechanisms whereby the court can, in certain circumstances, look beyond the trust structure and make orders over trust property, none of those circumstances are engaged here.

[72]     I do not consider Mr Clifford’s role as trustee/registered proprietor, or his occupancy rights, give rise under the Act to a relevant interest in property belonging to the Otec Trust under the Act.

[73]     Even if I had not reached that conclusion, I would exercise my residual discretion to decline to make the restraining order sought.   The matters raised by Mrs Clifford militate strongly against such an order.   While I do not necessarily

quibble with the approach signalled on behalf of the Official Assignee, the reality is

22 Crown Solicitor of Auckland v Crawford-Flett [2012] NZHC 963.

23 R v Williams HC Rotorua CRI-2009-063-5871, 22 July 2011.

24 At [44].

that the Main Rd property needs to be repaired. It is in no-one’s interests that it remains in its present state. And in my view it is wholly unrealistic, if not unjust, to expect the trust (or Mrs Clifford as the occupant) to attend to (and bear the cost of) that in the face of a restraining order. The potential difficulties that would be faced by the Official Assignee in arranging insurance, merely adds to these concerns. That conclusion is fortified by the fact that it does not seem to me that restraint is necessary in this case to meet either of the purposes I have noted at [13] above. The fact that it took over a year for the restraining order application to come to a hearing speaks for itself in terms of any urgency or dissipation risk.

Results

[74]     The application for an effective control order over the Ngapuhi Rd property is declined.

[75]     The application for a restraining order over Ngapuhi Rd is, however, granted on the basis that I am satisfied that there are reasonable grounds to believe that the property is tainted.  The property is to be transferred into the custody and control of the Official Assignee accordingly.

[76]     All the applications in relation to the Main Rd property are declined.

[77]     Lastly I note that the Commissioner sought the costs of these applications. He did so because it was submitted that:

(a)       it is rare for restraining order applications to be declined; (b)  there was a strong case for restraint;

(c)       the  Commissioner  has  been  put  to  the  considerable  expense  of  a defended hearing.

[78]     I  am  not  prepared  to  make  the  order  sought.   As  will  be  apparent,  the

Commissioner’s applications have not been wholly successful.  While restraint may

“only” be an interim measure, the issues raised by the applications here were not in my view straightforward and strong third party interests were involved.   The mechanisms provided in the Act for the protection of such interests are not simply a matter  of  window-dressing.    The  third  parties  here  were  entitled  to  invoke  (or

attempt to invoke) their aid.

Rebecca Ellis J