Commissioner of Police v De Wys

[2019] NZHC 1300

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2010-419-990

[2019] NZHC 1300

BETWEEN

THE COMMISSIONER OF POLICE

Applicant

AND

RONNIE JOSEPH DE WYS

First Respondent

PENELOPE HELEN LOUISA DE WYS

Second Respondent

Hearing:	On the papers
Counsel:	R G Douch for Applicant D J Taylor for Respondents
Judgment:	11 June 2019

JUDGMENT OF WHATA J

This judgment was delivered by me on 11 June 2019 at 4.00 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date: ………………………….

Solicitors:           Almao Douch, Hamilton

Gavin Boot Law, Hamilton

THE COMMISSIONER OF POLICE v DE WYS [2019] NZHC 1300 [11 June 2019]

Introduction

[1]    This judgment concludes a long-running claim by the Commissioner to assets derived from Mr and Mrs De Wys’ cannabis operation. Having proven the assets were so derived, the Commissioner now requests that asset forfeiture orders, together with profit forfeiture orders, be made.

Background

[2]    In 2014, the Commissioner sought asset and profit forfeiture orders under the Criminal Proceeds (Recovery) Act 2009 (the Act) on the basis that the Commissioner could present evidence proving on the balance of probabilities that the first and second respondents were involved in significant criminal activity in the form of cultivating cannabis and had profited therefrom. Orders restraining specified assets were obtained in 2014.

[3]    Faire J dismissed the claim at first instance1 but in 2016 the Court of Appeal set his judgment aside and entered a judgment that the respondents had unlawfully benefitted from significant criminal activity.2 The Court of Appeal was confident about the quantum of the benefit, so remitted the matter back to the High Court where it came before me.

[4]    I delivered a judgment on 6 April 2018 stating that I was not satisfied on the balance of probabilities that the respondents’ evidence rebutted the presumption in favour of the Commissioner’s assessment (that is, the amount specified in the claim).3 Consequently, the value of the benefit determined in accordance with the Act is

$729,558.62 (“benefit value”). I recorded in my judgment the concession made by Mr Taylor that there was no proper basis to a claim to undue hardship and that I would likely make the orders sought by the Commissioner. However, I directed that independent evidence as to the value of the restrained assets be obtained at the respondents’ expense.

1      Commissioner of Police v De Wys [2015] NZHC 540.

2      Commissioner of Police v De Wys [2016] NZCA 634.

3      Commissioner of Police v De Wys [2018] NZHC 609.

[5]    On 30 April 2019, the Commissioner returned to this Court with submissions as to the value of the restrained assets. The restrained property is recorded at paragraph 4 of the restraining order which was first issued in 2014. Representatives of the Commissioner in the Asset Recovery Unit at Hamilton have obtained valuations from Turners. Turners found that the total value of the restrained assets is $648,300.00.

Position of the parties

[6]    Initially the Commissioner sought both an asset forfeiture order and a profit forfeiture order. However, the Commissioner concedes that a profit forfeiture order could only be made in respect of assets not already subject to an asset forfeiture order. In the present case, if an asset forfeiture order is made, there is no scope for a profit forfeiture order, as no other assets have been identified for that purpose. The Commissioner therefore seeks an asset forfeiture order in respect of the restrained assets.

[7]    It appears that the De Wys accept that an order must be made, but Mr Taylor submits it should be a profit forfeiture order as this will then mean that any amount realised over the benefit value will be returned to the De Wys. By contrast, an asset forfeiture order will yield a profit to the Commissioner in terms of any excess obtained over the benefit value.

Assessment

[8]    The submission by Mr Taylor misinterprets the Court’s powers under the Act. Section 50 deals with asset forfeiture orders. It states:

50       Making assets forfeiture order

(1)If, on an application for an assets forfeiture order, the High Court is satisfied on the balance of probabilities that specific property is tainted property, the Court must make an assets forfeiture order in respect of that specific property.

1. Subsection (1) is subject to section 51.

(3)The Court must specify in an assets forfeiture order the property to which the order applies and that the property—

(a)vests in the Crown absolutely; and

(b)is in the custody and control of the Official Assignee.

(4)Despite subsection (1), the Court may not make an assets forfeiture order in relation to property that no person has claimed an interest in, unless the Court is satisfied, on the balance of probabilities, of the following additional matters:

(a)that a restraining order was earlier made in relation to the same property; and

(b)that the restraining order has been in place for a period of at least 1 year; and

(c)that the Commissioner has contacted or made all reasonable efforts to contact any person the Commissioner believes may have an interest in the property.

(5)If any property that is land is vested in the Crown absolutely as a consequence of an assets forfeiture order made under subsection (3), an interest recorded on the title to the land that is not affected by the assets forfeiture order is not extinguished.

[9]“Tainted property” is defined in the Act as follows:

tainted property—

(1)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

(2)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.

[10]Section 55 then deals with profit forfeiture orders. It states:

55       Making profit forfeiture order

(1)The High Court must make a profit forfeiture order if it is satisfied on the balance of probabilities that—

(a)the respondent has unlawfully benefited from significant criminal activity within the relevant period of criminal activity; and

(b)the respondent has interests in property.

(2)The order must specify—

(a)the value of the benefit determined in accordance with section 53; and

(b)the maximum recoverable amount determined in accordance with section 54; and

(c)the property that is to be disposed of in accordance with section 83(1), being property in which the respondent has, or is treated as having, interests.

(d)Subsections (1) and (2) are subject to section 56.

(3)A profit forfeiture order is enforceable as an order made as a result of civil proceedings instituted by the Crown against the person to recover a debt due to it, and the maximum recoverable amount is recoverable from the respondent by the Official Assignee on behalf of the Crown as a debt due to the Crown.

[11]   It can be seen that the language of both ss 50 and 55 is mandatory. On satisfaction of specified criteria, as here, the Court must make an asset forfeiture order in respect of “tainted” property. Similarly, on satisfaction of specified criteria, the Court must make a profit forfeiture order in respect of the respondent’s property. Taken together, it is clear that Parliament put tainted property into a special category. It is to be forfeited to the Crown, while profit forfeiture orders relate to other property interests of the respondent.

[12]   In the present case, it is not disputed that the restrained property is “tainted property”. A corollary of this is that, in the absence of undue hardship, the Court “must” make an asset forfeiture order in respect of the tainted property. There is therefore no scope to make a profit forfeiture order in lieu of an asset forfeiture order.

[13]   Furthermore, I do not accept that any excess realised on the sale of the forfeited assets is a “profit” in this case. Any excess in value of the forfeited assets is likely to be small on the available evidence. Furthermore, any claim by the De Wys to that excess is weak, the property being tainted property. Finally, the argument and evidence supporting a claim by the De Wys to the excess was sparse. Given the clear purpose and scheme of the Act to require forfeiture of tainted assets, the burden lay with the De Wys to show why any claimed excess should be paid to them, assuming for that purpose the Court has a discretion to require profit forfeiture instead of assets forfeiture. They have not discharged that burden to my satisfaction.

Outcome

[14]   An assets forfeiture order is therefore made in relation to the property recorded at paragraph 4 of the June 2014 Restraining Order. The profit forfeiture application is dismissed, there being no property of the respondents’ identified by the Commissioner that might be suitable for such an order.