Commissioner of Police v Burgess
[2014] NZHC 3183
•11 December 2014
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2010-404-2893 [2014] NZHC 3183
UNDER Criminal Proceeds (Recovery) Act 2009 BETWEEN
THE COMMISSIONER OF POLICE Applicant
AND
ROBIN BURGESS First Respondent
AND
LLANYS BURGESS Second Respondent
Hearing: 8 December 2014 Appearances:
K Hogan/F Culliney for the Applicant
F C Deliu/Miss Finau for the Second RespondentJudgment:
11 December 2014
JUDGMENT OF THOMAS J
This judgment was delivered by me on 11 December 2014 at 4.30 pm pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date:………………………….
Solicitors:
Meredith Connell, Auckland. Richard Zhao, Auckland.
THE COMMISSIONER OF POLICE v BURGESS [2014] NZHC 3183 [11 December 2014]
Introduction
[1] On 9 June 2010 Heath J made restraining orders under the Criminal Proceeds (Recovery) Act 2009 (the Act). The restraining orders have been extended annually by consent. The assets currently restrained are:
(a) 1923 Ford, registration BDE234; (b) 1996 Harley Davidson;
(c) 2005 boat and trailer;
(d) 2008 John Deere tractor and loader (in possession of the respondents); (e) 34 x woodworking tools;
(f) 43 x antique pipes;
(g) 1994 Yamaha motorcycle, registration 66TYJ; (h) petrol generator;
(i) 32 Henwood Road; (j) NZ$45,320 cash; (k) AU$101 cash;
(l) US$2,942 cash;
(m) various items of jewellery.
[2] The parties agreed to delay the Commissioner's application for forfeiture orders until resolution of the related criminal proceedings.
[3] Mr Burgess was sentenced to three years and six months’ imprisonment in March 2014 on one representative charge of receiving stolen property. Mrs Burgess was sentenced to pay a fine on 26 May 2014 on one charge under the Secondhand Dealers and Pawnbrokers Act 2004. The Court of Appeal dismissed Mr Burgess’s appeal against sentence on 31 July 2014.
[4] Mr Burgess is scheduled to be examined on 17 December 2014. Mrs Burgess has been examined.
[5] Mrs Burgess has applied pursuant to s 33 of the Act: (a) for discharge of the restraining orders; and
(b) for the release of restrained funds for living and business expenses. [6] Mrs Burgess makes the application for two reasons:
(a) Mr Burgess, having been sentenced to imprisonment in mid 2014 with the resulting adverse impact on the business, means that Mrs Burgess is in need of the funds; and
(b)Mrs Burgess has now been diagnosed with breast cancer and requires surgery.
[7] In light of Mrs Burgess’s health problems, the application in respect of
releasing some funds was heard with some urgency.
[8] Mrs Burgess says she has no ability to meet her reasonable living expenses, business and/or other expenses except from the property subject to the restraining orders.
[9] Mrs Burgess filed affidavits in support of her application dated 4, 19 and 26
November 2014.
[10] The Commissioner opposes the application on the grounds that:
(a) Mrs Burgess has not sufficiently proven the expenses sought;
(b)the Court cannot be satisfied that Mrs Burgess does not have interests in assets beyond those held by the Official Assignee; and
(c) a number of the expenses sought are unreasonable and/or are not appropriate expenses to be met out of restrained property.
The Act
[11] The purpose of the Act is set out in s 3 of the Act which states:
3 Purpose
(1) The primary purpose of this Act is to establish a regime for the forfeiture of property—
(a) that has been derived directly or indirectly from significant criminal activity; or
(b) that represents the value of a person’s unlawfully derived
income.
(2) The criminal proceeds and instruments forfeiture regime established under this Act proposes to—
(a) eliminate the chance for persons to profit from undertaking or being associated with significant criminal activity; and
(b) deter significant criminal activity; and
(c) reduce the ability of criminals and persons associated with crime or significant criminal activity to continue or expand criminal enterprise; and
(d) deal with matters associated with foreign restraining orders and foreign forfeiture orders that arise in New Zealand.
[12] The ability of the Court to make provision for a respondent’s costs is
governed by s 28 of the Act. It relevantly provides:
28 Conditions on restraining order
(1) A court may make a restraining order subject to any conditions the court thinks fit including, without limitation, conditions that provide for the following to be met out of a respondent’s restrained property:
(a) the reasonable living costs of the respondent and any of his or her dependants:
(b) the reasonable business expenses of the respondent:
(c) the payment of any specified debt incurred by the respondent in good faith:
(d) any other expenses allowed by the court.
…
(3) In determining whether or not to make a restraining order subject to a condition, the court must have regard to the ability of a respondent to meet the reasonable living costs, expenses, or debt concerned out of property that is not restrained property.
(4) In this section a dependant is a person who is dependent on the respondent and who is either or both—
(a) a child of the respondent:
(b) a member of the household of the respondent.
[13] The requirement to have regard to a respondent’s ability to meet costs out of
property which is not restrained property is discussed in Adams on Criminal Law:1
Where there are unrestrained and unencumbered assets efficient to meet expenses, the Court will usually expect evidence that the application has explored all avenues to liquidate those assets before making provision to meet expenses out of property included in the ‘restraining order’. To the extent that the respondent has access to assets or funds that are not restrained, they must be utilised first and he or she will only have recourse to restrained funds to meet any remaining balance.
[14] Section 33(1)(b) of the Act allows an application for a further order to be made by a person within an interest in the restrained property.
[15] It is not disputed that Mrs Burgess has an interest in the restrained property either in her personal capacity as the owner of it, as co-owner of the business to which some of the property belongs, or as the wife of Mr Burgess to whom some of
the restrained property belongs.
1 Bruce Robertson (ed) Adams on Criminal Law (looseleaf ed, Brookers) at [CP28.01]. The first sentence is cited with approval in Commissioner of Police v Venkatnaidu [2013] NZHC 3424 at [29].
Assets allegedly not disclosed
[16] Mrs Burgess says her current unrestrained assets are some general household items worth approximately $50,000 and a 2007 Nissan Navara 4WD worth approximately $15,000.
[17] The Commissioner believes that, as set out in the affidavit of Detective Stephen Peat dated 4 December 2014, Mrs Burgess has not disclosed all unrestrained assets in her possession.
[18] Detective Peat’s affidavit refers to the following unrestrained assets which he believes remain at Mrs Burgess’s disposal:
(a) Jewellery:
(i) emerald pendant valued at $20,000; and
(ii) rolex watch valued at $50,000;
(b) 1980 Chevrolet Corvette, registration ECQ814; (c) Harley Davidson motorcycle.
[19] The Commissioner considers that insufficient evidence has been provided by Mrs Burgess as to how she has continued legitimately to meet her living and legal expenses since 2010 and asks the Court to infer that she must have access to other assets. In her evidence she deposes that she has:
(a) business expenses of more than $12,630.29 per month; (b) business income insufficient to meet those expenses;
(c) personal expenses of more than $4,434.04 per month; and
(d) no other legitimate income.
[20] The Commissioner submits that, if the Court were to provide for Mrs Burgess's living expenses to be met out of property that is presently under the custody and control of the Official Assignee, there is a risk that the respondents will retain some of the profits of criminal activity, while reducing the pool of resources which are available to meet any assets or profit forfeiture order which may be granted. That would be plainly contrary to the Act in the Commissioner’s submission.
[21] Mr Deliu pointed out that the notice of opposition to the application makes no reference to additional property interests of Mrs Burgess as alleged by the Commissioner. He said that knowledge of the alleged interests in the jewellery and motor vehicles was available to the Commissioner at the time of the notice of opposition but no reference was made to them. It was only in the affidavit filed one working day prior to the hearing that Mrs Burgess had notice of the Commissioner’s allegations. In those circumstances, Mr Deliu said, it would be a breach of natural justice to allow the Commissioner to rely on that evidence to oppose the application.
[22] Mr Deliu pointed out that the information must have been known to the Commissioner at the time Mrs Burgess was examined but the allegations were not put to her.
[23] I note that the affidavit was filed in accordance with the timetable set by the Judge so that Mrs Burgess’s application could be dealt with as a matter of urgency. I agree with the Commissioner that there was nothing to stop Mrs Burgess filing an affidavit in reply or making herself available for giving evidence orally at the hearing.
Medical expenses
[24] Mrs Burgess has been recently diagnosed with breast cancer and requires surgery and possibly further post-operative treatment.
[25] The Commissioner submits that Mrs Burgess has not filed sufficient material to support her application.
[26] The Commissioner is concerned that the following evidence has not been provided to the Court:
(a) the nature of Mrs Burgess's illness; (b) the timing of any surgery required;
(c) the differences in timing and cost between the public and the private health system;
(d) a written quote from an oncology specialist; and
(e) any evidence from a specialist.
[27] The Commissioner requested access to her medical advisors. The request was declined. I do not criticise Mrs Burgess for that.
[28] In Solicitor-General v Darwish, Allan J approved payment of dental expenses from restrained funds:2
I think that the detailed quotation provided by the dental surgeon serves itself as evidence for the need for wide ranging work, and that an allowance for expenses of this type does not undermine the policy and spirit of the Proceeds of Crime Act as was submitted…
[29] I accept that breast cancer is a more serious and life threatening illness than dental repair.
[30] The estimated cost of surgery is around $40,000 to $45,000, which does not include any costs of any treatment post-operatively.
Living expenses
[31] Mrs Burgess’s living costs includes mortgage payments, council rates,
electricity, Sky television, vehicle registration and maintenance costs, insurance
payments, dental and other medical fees, food, petrol, pets’ food, clothing, gas and
2 Solicitor-General v Darwish HC Auckland CIV-2004-404-1603, 28 July 2005 at [16].
other expenses. Mrs Burgess's monthly living expenses average $4,400. Mrs
Burgess seeks a weekly payment of about $1,100 for her living costs.
[32] In her affidavit of 26 November Mrs Burgess said she has been able to support herself with money she has received from selling a few assets such as sideboards and ivory tusks to the value of $25,000.
[33] The Act allows the Court, at its discretion, to provide for reasonable living expenses to be met out of restrained property.
[34] The Commissioner submits that some of the expenses itemised in the affidavit of Mrs Burgess are not reasonable and/or are not substantiated by supporting evidence. For example, her application includes what the Commissioner describes as “luxurious” items such as:
(a) Sky television of $160/month;
(b) house cleaner wages of $160/month; (c) piano lessons of $80/month;
(d) clothes and shoes of $200/month;
(e) hair and beauty expenses of $160/month.
[35] In Solicitor-General v Darwish the tables of household expenditure compiled by Statistics New Zealand was used as a reference point in relation to the lifestyle of the family concerned:3
[10] Dealing with the first issue, Mr Johnstone has helpfully put before me some tables of household expenses compiled by Statistics New Zealand arising out of a survey for 2000 and 2001. Recognising that there is likely to have been some increase in expenditure since that time, I note that for those in the income bracket between $76,000 to $101,099 per annum, average weekly expenses are shown as $1136.10, equating approximately to $4,500
3 Solicitor-General v Darwish HC Auckland CIV-2004-404-1603, 24 November 2004.
per month. For the income bracket of $101,000 per annum and above, the average is $1,512.60 per week, or approximately $6000 per month.
[11] Given these assets seized and the lifestyle expectations of this family, I think it is appropriate to place the average weekly expenditure somewhere between those figures. Accordingly, I allow monthly expenses out of restrained property from now on, payable in advance, at the rate of $5000 per month. The first payment shall be made on 29 November 2004 and thereafter on a monthly basis pending further order of the Court."
[36] It was submitted that Mrs Burgess’s living costs are reasonable and nothing extraordinary. In Mr Deliu’s submission it is not for the Court to decide how Mrs Burgess should be permitted to spend her money subject to an overall award of a reasonable sum for living costs. I accept that as a general proposition.
Business expenses
[37] Mr and Mrs Burgess own a second hand jewellery retailing business.
[38] The business expenses include rent, stock, employee wages, phone, electricity, internet bills, petrol costs, vehicle service and maintenance costs, GST payments and business credit card and average approximately $15,700 per month. It is claimed that these are reasonable business expenses which any other business would have.
[39] The business seems to make profits in some months and losses in some months. From 17 March to 1 August 2014, the business made a loss of $3,323.26. Given the financial situation of the business, there are not enough funds to keep the business running.
[40] The absence of Mr Burgess (who is currently serving his term of imprisonment) from running the business could be one reason why the business is deteriorating. Since Mr Burgess's incarceration, Mrs Burgess has been in charge of managing the business.
[41] Mrs Burgess seeks $3,323.26 to cover existing losses.
Consideration
[42] The Commissioner criticised the lack of detail surrounding Mrs Burgess’s
medical needs. What is before the Court is the following information:
(a) In the week of 3 November 2014 Mrs Burgess was diagnosed with breast cancer. A bilateral mastectomy followed by reconstructive surgery is recommended. Mrs Burgess’ general practitioner describes it as a serious and potentially life threatening condition.
(b)Mrs Burgess has been under considerably stress over the past five years and it is possible this stress has had negative effect on her health.
(c) The surgery will constitute a major operation requiring care at home following surgery for several weeks. Depending upon the pathological results, it is possible she may require further treatment post operatively.
(d)Mrs Burgess would like the option of expediting her treatment by using treatment providers available privately as opposed to the public system. As at 6 November 2014 she will not “be dealt with in the public hospital for several weeks”.
(e) Her operation needs to be done as soon as possible.
(f) The availability of surgery is usually much quicker in the private sector.
(g)Her General Practitioner has obtained a rough estimate of the cost of the surgery from St Marks Breast Clinic, the cost being $40 - $45,000.
(h)Mrs Burgess is extremely worried and stressed and the sooner she gets treatment the better it will be for her physical and mental well-being.
[43] Whether the cost of medical expenses is considered a living cost or simply another expense makes little difference. While living costs are limited to those considered “reasonable”,4 there is no such qualification in respect of other expenses. But, as any other expenses are those allowed by the Court, reasonableness is a relevant consideration.
[44] Mr Deliu made the point that it is not for the Court to say whether Mrs Burgess should or should not be treated privately. The starting point, he said, is that it is her money and, if she elects to use it in having private surgery, she should be allowed to do so. It is an appropriate medical option and reasonable for anybody in her circumstances to require it.
[45] Clearly, it is in Mrs Burgess’s interest to have the operation as soon as possible, not only for her physical but also her mental health. I accept that she needs to know as a matter of urgency whether she can be treated in accordance with her wishes or whether she needs to request urgency in the public sector.
[46] I agree there are some deficiencies in the information provided with respect to when the various costs will likely be incurred. The sum quoted covers both the mastectomy and reconstructive surgery, the latter unlikely to be required for quite some time.
[47] Added to those concerns are the issues identified by the Commissioner as to whether full disclosure of assets has been made. Mr Deliu submitted that a decision made on the basis of unanswered allegations from the Commissioner would breach natural justice, whereas the Commissioner submitted that its affidavit evidence is unchallenged. The application was set down for hearing as a matter of urgency. The Commissioner complied with the Court’s directions by filing its affidavit by 4
December 2014. There was no direction providing for affidavits in response. However, the Court must be concerned at the information revealed in the affidavit on behalf of the Commissioner. It is mandated pursuant to s 28(3) to have regard to the ability of a respondent to meet any costs or expenses out of property which is not
restrained property. The Commissioner’s allegations, therefore, require answers.
4 Criminal Proceeds (Recovery) Act 2009, s 28(1)(a).
[48] That said, the Commissioner describes himself as loathe to oppose an application in situations of medical need.
[49] In all the circumstances and particularly given the need to put Mrs Burgess’s mind at rest and to enable her to make arrangements for surgery as a matter of urgency, I am satisfied that it is appropriate for the costs of the first stage of her treatment, that is, the bilateral mastectomy and associated costs, to be met out of the restrained property subject to two qualifications:
(a) Mrs Burgess is to answer the allegations in the affidavit of Mr Peat;
and
(b)as the estimated costs will likely be spread over some months, payment is to be made on the basis of invoices presented to the Court for approval.
[50] The application in respect of living and business expenses requires further consideration in light of the affidavit evidence of Mr Peat.
[51] In any event, there is insufficient information before the Court to enable the application in respect of business expenses to be properly dealt with. Further analysis of the business is required to address its viability. That is, if it is losing money on an ongoing basis, the continued funding of the business might not be a reasonable business expense.
[52] The obvious difficulty in this case is that Mrs Burgess requires surgery as soon as possible and there will be a recovery period. In the circumstances, I am satisfied it is just and will not undermine the Act to make an award of living expenses to her to alleviate the stress on her at present.
[53] I make an interim award of $800 per week to cover the period to 28 February
2015. I have arrived at this figure through consideration of Mrs Burgess’s basic living costs as well as the strength of the evidence of other undisclosed assets at her disposal and the fact those allegations have not been answered.
[54] The matter is to be called in the list on Thursday 5 March 2015. The
applicant is to file and serve an affidavit in reply to Mr Peat’s affidavit by Friday 20
February 2015. The affidavit should also provide an update on Mrs Burgess’s medical condition and her financial situation and that of the business. Memoranda are required by 27 March with proposals for progressing the issue of ongoing
support.
Thomas J
2