Commissioner of Police v Irwin

[2020] NZHC 1370

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

I TE KŌTI MATUA O AOTEAROA AHURIRI ROHE

CIV-2014-441-115

[2020] NZHC 1370

UNDER

the Criminal Proceeds (Recovery) Act 2009

IN THE MATTER OF

an application under sections 43-44, 49-50,

52, 55 and 58 of the Criminal Proceeds
(Recovery) Act 2009

BETWEEN

THE COMMISSIONER OF POLICE

Applicant

AND

DERRICK WAYNE IRWIN

Respondent

AND

PRISCILLA ANNE DRUMMOND

Interested Party

Hearing:

10 June 2020

Appearances:

F E Cleary for the Applicant

E R Fairbrother QC for the Respondent P Ross for the Interested Party

Judgment:

17 June 2020

JUDGMENT OF COOKE J

Table of Contents

Unopposed applications  [8]

Application for relief: Thomas Irwin[13]

Did Thomas Irwin have an interest in the ANZ Funds?[17]

What relief should be granted?[31]

Application for relief: Priscilla Drummond[36]

Alleged social welfare fraud[39]

The drug offending[46]

Conclusion and orders[55]

THE COMMISSIONER OF POLICE v IRWIN [2020] NZHC 1370 [17 June 2020]

[1]                 By applications dated 9 September 2019 the Commissioner of Police applies for related asset and profit forfeiture orders against Mr Irwin pursuant to the Criminal Proceeds (Recovery) Act 2009 (the Act).

[2]                 The Commissioner seeks asset forfeiture orders under s 50 of the Act in respect of the following property:

(a)$310,060 cash found by police at a property in Te Haroto at Matariki Forest in October 2014.

(b)That property itself — 5594 State Highway 5, Te Haroto, Hastings, identifier HBB4/1204, section 1 Block XI, Tarawera Survey District (the Te Haroto property).

(c)A 1970 Ford Mustang saloon registration RD1365 valued at approximately $20,000.

[3]                 An effective control order is also sought under s 58 of the Act in relation to the cash located at the property.

[4]                 In addition the Commissioner seeks profit forfeiture orders under s 55 of the Act representing $793,067.33 in unlawful benefits. The following property is to be realised in satisfaction of that order:

(a)An amount of $97,373 in Derrick Irwin’s ANZ bank account (the ANZ Funds).

(b)The Te Haroto property, if an asset forfeiture order is not granted over that property.

[5]                 The application is supported by affidavits from Gordon Beattie, a financial investigator attached to the Central Asset Recovery Unit of the Police, Cameron McIver, an investigator for Fraud Intervention Services with the Ministry of Social Development and Phillip Sayers, a detective with the New Zealand Police who was involved in the investigation of the relevant drug offending.

[6]The orders are unopposed except in two respects. In particular:

(a)Derrick Irwin’s son, Thomas Irwin, seeks relief against forfeiture under s 66 of the Act in relation to part of the ANZ Funds which represent a particular fund which he contends was held on trust for him; and

(b)Derrick Irwin’s de facto partner, Ms Priscilla Drummond, also seeks relief under s 66 in relation to her share of the relationship property. The relief is only sought in relation to her half share in the Te Haroto property and the Ford Mustang vehicle.

[7]                 The opposition to the orders is supported by affidavits from Thomas Irwin and Priscilla Drummond in relation to the opposition advanced by them. Derrick Irwin also supplied an affidavit in support of his son’s opposition. All of the deponents were called to give evidence and cross-examined before me. Mr Derrick Irwin did so by video link from prison.

Unopposed applications

[8]                 I first consider whether the applications to the extent that they are unopposed should be granted.

[9]                 I am satisfied that Derrick Irwin was engaged in significant criminal activity leading to his conviction for offences relating to the supply and sale of methamphetamine in 2018 for which he was sentenced to 13 and a half years’ imprisonment.1 I also accept that there may be grounds to say the property in paragraph [2] is tainted property within the meaning of s 5 of the Act allowing for an assets forfeiture order under s 50. But that issue is not necessarily straightforward as both the Te Haroto property and the Mustang were owned by Derrick Irwin before he engaged in the offending. It seems to me that the profit forfeiture order under s 55 is a more straightforward path for the Commissioner, and I make the orders under that

1      R v Irwin [2018] NZDC 7741.

application.2 In doing so I adopt the approach adopted in Pulman v Commissioner of Police.3 Applying the four steps outlined in that case:

(a)I accept the Commissioner’s argument, on the balance of probabilities that Derrick Irwin benefited from significant criminal activity, and that the value of that activity under s 53(1) was $793,067.33.

(b)From that amount should be deducted the value of any property already forfeited to the Crown by any assets forfeiture order already made. Given that there might be arguments as to whether the property subject to an asset forfeiture order was tainted property I have made no such orders. It follows that there should be no amount deducted as a consequence of such orders.

(c)I am satisfied that there is no property that should be excluded from the order with the exception of the property that I identify in paragraph [35] below.

[10]             I accordingly make a profit forfeiture order under s 55(1) on the basis that I am satisfied that Derrick Irwin had interests in the property identified in [2] and [4] above. My conclusion that he had an interest in the cash located around the property makes the effective control order under s 58 unnecessary. The value of the benefit to be obtained is $793,067.33. The property referred to in [2](b) and [2](c) above is to be disposed of for that purpose.

[11]             I am also satisfied that the property that is to be disposed of, and the cash that is available, has less value than the amount subject to the profit forfeiture order, particularly given the relief against forfeiture that I order in paragraph [35] below.

[12]             For these reasons I make the orders as profit forfeiture orders. Given that this is a different form of orders proposed by the applicant, I reserve leave to the applicant

2      Criminal Proceeds (Recovery) Act 2009, s 47(1)(a).

3      Pulman v Commissioner of Police HC Auckland, CIV-2010-404-5666, 27 May 2011.

to apply to any implications of making the orders in this form that I have not considered.

Application for relief: Thomas Irwin

[13]             Derrick Irwin’s son, Thomas Irwin makes an application for relief from forfeiture in the form of a notice of opposition to the orders sought by the Commissioner. As filed that application was advanced on the basis that the forfeiture in question would cause undue hardship. Following a discussion with counsel at the commencement of the hearing an amendment was made to that application so that it is an application under s 66 of the Act. The application relates to an amount that Derrick Irwin received from his late wife’s estate, being an amount of $84,269.73. These proceeds came from a life insurance policy that paid out on the death of Derrick Irwin’s wife, Thomas Irwin’s mother.

[14]Section 66 of the Act provides:

66 Making order for relief from civil forfeiture order where person has interest and was not involved in significant criminal activity

(1)On receipt of an application for an order for relief from a civil forfeiture order under section 61 or 62, the High Court must grant the relief that the Court considers appropriate if the applicant proves on the balance of probabilities that the applicant—

(a)      has an interest, or would but for any civil forfeiture order have an interest, in the property to which the application relates; and

(b)      has not unlawfully benefited from the significant criminal activity to which the application relates.

(2)The High Court may make an order for relief under this section at or after the time the associated civil forfeiture order is made.

[15]             There is no suggestion that Thomas unlawfully benefited from the significant criminal activity under s 66(1)(b). The written submissions by the Commissioner addressed the question of whether there was undue hardship, but given the amendment to the application to focus on s 66 there is no requirement to show this.

[16]             There are two relevant considerations in assessing the application for relief. The first is whether Thomas has established on the balance of probabilities that he has

an interest in the property to which the application relates. The second is what relief should be ordered if that interest is established.

Did Thomas Irwin have an interest in the ANZ Funds?

[17]Section 5 of the Act defines what an interest in property is:

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

[18]             The evidence provided by Derrick and Thomas Irwin is largely undisputed. There was an insurance policy insuring the life of Thomas’ mother, Ms Anna Hawkins. Thomas indicates that he had some chronic health problems and that his mother was his primary caregiver. When Thomas was nearly 10 she had a brain aneurysm and died before medical assistance was available. Derrick Irwin was serving a prison sentence at the time. These were obviously difficult circumstances for Thomas.

[19]             Derrick Irwin made the decision that the life insurance proceeds should pass to Thomas. He said in his affidavit “I have always regarded Anna’s life insurance proceeds as belonging to Thomas and nobody else, including me”. He explained this to Thomas as he was growing up. Under cross-examination Derrick indicated that he was always firm in his intention that that should happen, and I accept that this was his intention.

[20]             Derrick did not pay the proceeds into a separate bank account. Rather he paid it into his normal ANZ bank account. They comprise the majority of the ANZ Funds. He gave evidence, which I accept, that he was not commercially experienced and needed assistance in understanding any paperwork, but always kept the balance of that account higher than the amount of the insurance monies that had been paid in. He had also received an inheritance from his parents, and that the total amount he had paid into the account from that inheritance and the insurance proceeds was approximately

$150,000. He gave evidence that he also wanted to give Thomas what was left from the money he had received from his parents, but that he nevertheless treated that

amount (the difference between the $84,269.73 and the $150,000) as his own money. The life insurance proceeds were different, however, as he treated them as belonging to Thomas.

[21]             He provided details of how the insurance proceeds were made up. The original figure payable for premature death under the policy with Asteron Life was $66,508. At the time of her death it had increased in value $76,444.13. Interest accrued on that amount until the date of settlement of the insurance claim. An amount of $86,441.74 was paid into the lawyer’s trust account, and with deductions resulting in a net balance of $84,269.73 that was paid into the ANZ account.

[22]             In opposing the application for relief Ms Cleary relied on previous decisions of this Court that have found that discretionary beneficiaries of a trust do not have an interest in property meeting the definition in s 5.4 That is because such beneficiaries do not have an interest in the trust fund itself, they only have what is called an “expectation” that distributions might be made. Ms Cleary argued that approach was consistent with general trust law, and the analysis of the position of discretionary beneficiaries provided by the Court of Appeal in Johns v Johns where the Court confirmed that discretionary beneficiaries have a mere expectancy.5

[23]             I do not think these authorities address the key issue, however. That is because it is not suggested that Thomas is a discretionary beneficiary of any trust fund. If the arrangements referred to above did establish a trust over which Thomas was the beneficiary, he would not have been a discretionary beneficiary.  In  the  authority Ms Cleary relied on, Johns v Johns, the Court of Appeal distinguished between the position of a discretionary beneficiary, and that of a residual beneficiary who was entitled to what was left of the trust fund at the date of distribution. The Court held that a beneficiary’s contingent interest in the residue of the trust fund amounted to a future interest in the trust property.6 Here Thomas’ interest would have been conditional, but otherwise absolute as the only beneficiary of the fund.

4      R v Corless [2013] NZHC 2735 at [82]–[83]; and Commissioner of Police v Winsor [2014] NZHC 161 at [40]–[43].

5      Johns v Johns [2004] 3 NZLR 202 (CA).

6 At [45].

[24]             The real issue is whether a trust was established at all. This is a suggested trust over personal property — funds in a bank account. The requirements for the establishment of such a trust are not technical. They are summarised by the authors of Equity and Trusts New Zealand in the following way:7

In general, inter vivos trusts of personal property do not require any particular formal requirements to be met. This is because equity looks to the intent rather than the form. All that needs to be established is that the settlor intended to create a trust.8 For example, in Belton v CIR B bought and sold sheep in his son’s name.9 The money used was kept in a separate account and the sheep were grazed apart from B’s flocks. Some of the trading profit was used for the son’s benefit. Although B started trading in 1948, it was not until 1957 that there was any written evidence of a trust. The Commissioner of Inland Revenue argued that a trust had not existed until 1957. If the trust had been established in 1948, B obtained certain taxation advantages. The court held that all that was required for the creation of an express inter vivos trust of personal property was the “three certainties”: it was not necessary for anything to be in writing. The court held that on the facts a trust had existed since 1948.

[25]             The three certainties are: the intention to create a trust (noting there is no need for the word “trust” to actually be used — rather it is the intention to create a trust in the equitable sense);10 certainty in relation to the subject matter — namely what property is to be the subject of the trust and the beneficiaries interest in that subject matter;11 and certainly in terms of objects — namely who is to receive the benefit of the trust and on what basis.12

[26]             Applying those requirements I am satisfied that a trust was established in the present case. The case of Belton v Commissioner of Inland Revenue summarised above provides a useful comparison.13 The question needs to be looked at realistically. Mr Derrick Irwin was a member of the Mongrel Mob, and a drug dealer. He was not commercially sophisticated. The fact that he did not open a separate bank account into which to pay funds to be held for the benefit of his son is not particularly relevant in those circumstances. What is truly relevant is his intention, and that is manifested by not only his evidence, but also what happened with the funds. The balance of his bank

7      Andrew Butler Creation of an express trust  in  Andrew  Butler  (ed)  Equity  and  Trusts  in  New Zealand (2nd ed, Thomson Reuters, Wellington, 2009) at 4.4.3(1).

8      See 4.2.

9      Belton v Commissioner of Inland Revenue [1959] NZLR 1372 (HC).

10     Andrew Butler, above n 7, at 4.2.2.

11     At 4.2.3.

12     At 4.2.4.

13     Belton, above n 9.

account did not fall beneath the insurance proceedings received, and therefore intrude into the trust funds over a number of years. The background circumstances, including his wife’s unfortunate premature death at a time when Derrick Irwin was in prison, with his son left without either of his parents, also provides circumstantial evidence explaining why this would have been Derrick Irwin’s intention. Mr Irwin explained that he had intermittent involvement in his son’s upbringing, and that his son had his own family and appeared to be devoted to the welfare of his partner and their children. He indicated that his success to date reflected his “mother’s considerable influence on his upbringing and values”. I found his evidence on the question honest, and straightforward.

[27]             Ms Cleary relied on the fact that monies were intermingled in the account, and monies were paid out of the account for other non-trust related matters. I accept that that is relevant, but it is not decisive in determining whether a trust existed over particular funds. The point is met by the evidence that established that Mr Irwin never let the balance fall beneath the core trust fund. I accept that this factor means that any interest earned on the core fund may not be able to be identified and be treated as trust property. But that core amount of $84,269.73 was still held on trust.

[28]             The other certainties required for the existence of a trust were also satisfied for the above reasons. Thomas was the sole beneficiary, and the fund was to be received by him absolutely. There were two conditions that needed to be satisfied before that occurred. The first was that Thomas needed to attain adulthood. He was approximately 10 when his mother died. He was 17 when the orders were first made in this proceeding restraining the proceeds. He is now 23. I accept that this condition was that he would receive the fund when he attained the age of 21 years.

[29]             Derrick Irwin also indicated that a further condition was that he was “able to demonstrate a constructive, law abiding lifestyle” and that this was also common knowledge between him and his son. When he gave evidence Thomas effectively confirmed this, describing the position in more condensed form was that “I needed to grow up”. He explained to me that it was not easy to be the son of a Mongrel Mob member and not be drawn into that lifestyle, as some of his school friends have. I interpret the condition to be that he not engage in a criminal lifestyle.

[30]For these reasons I accept that a trust was established over the fund of

$84,269.73 held in Mr Derrick Irwin’s account with the ANZ bank, and that Thomas was entitled to be distributed the trust funds once he attained 21 years of age provided that he had not adopted a criminal lifestyle. Thomas has satisfied both conditions, and is now entitled to those funds absolutely. He therefore had an interest in the ANZ Funds to this extent.

What relief should be granted?

[31]             The next question is what relief should be granted in Thomas’ favour under   s 66.

[32]             Once the prerequisites for obtaining relief under s 66 are met, the Court has a wide discretion to make orders that it thinks appropriate in a particular case. It seems to me that the relevant considerations may include:

(a)The nature of the person’s interest in that property. For example an absolute interest would be more compelling than a partial or conditional interest.

(b)The circumstances that give rise to the interest in property. There may be circumstances that make it very unfair for the person not to be entitled to the interest that is held because of the circumstances in which it was established.

(c)The extent to which the criminal activity gave rise to, enhanced, or preserved the value of the property in question. Consideration might be given to limit the relief if the criminal activity has improved or sustained the value of the interest.

(d)The needs of the person seeking to have the interest recognised.

[33]             In saying that, however, I do not think that there should be any prescriptive requirements, and the Court should be guided by doing justice in the individual case.

[34]             I have very little hesitation in concluding that Thomas Irwin should be entitled to the full amount of his interest in the property, being the amount of $84,269.73. He has had challenges in life, and notwithstanding that his father was in the Mongrel Mob and was involved in drug dealing, he has managed to avoid falling into a criminal lifestyle himself. He now has a job and a family. Inter-generational criminality is a feature of matters that come before the Courts. Thomas deserves considerable credit for avoiding the cycle. Some of this appears to be due to Derrick’s encouragement, and also his mother’s values. But he alone has had the strength of character to find a better life, and he deserves to be encouraged in that, including by this Court making orders to avoid his trust fund being confiscated because of his father’s criminal activities.

[35]             The application sought that all of the ANZ Funds be paid out to him, but this is not appropriate given that only part of them represents the funds on trust. I nevertheless order under ss 66 and 68 that the amount of $84,269.73 is severed from the amounts subject to the forfeiture order, and I direct the Official Assignee to transfer the severed interest to Thomas Irwin.

Application for relief: Priscilla Drummond

[36]             For some nine or 10 years Ms Priscilla Drummond was in a de facto relationship with Derrick Irwin and lived with him at the Te Haroto property. She claims an interest in the property to be forfeit as a result of her entitlements under the Property (Relationships) Act 1976. Initially the application included the property also claimed by Thomas. But in the course of the argument before me the application became more confined, and was limited to her half share in the Te Haroto property and the Ford Mustang vehicle.

[37]             The application is again made under s 66 of the Act. Here the central issue is not so much whether she had an interest in the relevant property. It is clear that she had such an interest in the Te Haroto property under the Property (Relationships) Act 1976.14 There is doubt whether she has an interest in the Ford Mustang vehicle, which

14     See Hayward v Commissioner of Police [2014] NZCA 625 at [26].

may have been Derrick Irwin’s separate property, but given the conclusions I reach below I do not formally determine that question.

[38]             The real issue is whether Ms Drummond is able to establish, on the balance of probabilities that she “has not unlawfully benefited from the significant criminal activity to which the application relates” under s 66(1)(b).

Alleged social welfare fraud

[39]             I deal first with a discrete allegation made by the Commissioner in relation to suggested social welfare fraud. During her relationship with Derrick Irwin both continued to claim the sole parent benefit. That was not appropriate as they were living together. The Commissioner contends that this was part of the significant criminal activity to which this application relates.

[40]Significant criminal activity is defined in the Act in the following terms:

6        Meaning of significant criminal activity

(1)In this Act, unless the context otherwise requires, significant criminal activity means an activity engaged in by a person that if proceeded against as a criminal offence would amount to offending—

(a)that consists of, or includes, 1 or more offences punishable by a maximum term of imprisonment of 5 years or more; or

(b)from which property, proceeds, or benefits of a value of

$30,000 or more have, directly or indirectly, been acquired or derived.

(2)A person is undertaking an activity of the kind described in subsection

(1) whether or not—

(a)the person has been charged with or convicted of an offence in connection with the activity; or

(b)the person has been acquitted of an offence in connection with the activity; or

(c)the person’s conviction for an offence in connection with the activity has been quashed or set aside.

(3)Any expenses or outgoings used in connection with an activity of the kind described in subsection (1) must be disregarded for the purposes of calculating the value of any property, proceeds, or benefits under subsection (1)(b).

[41]             No charges relating to social welfare offending have been laid against either Ms Drummond or Mr Irwin. The evidence is that there is an ongoing investigation. The fact that no charges have been laid does not mean that there was not significant offending, however.15

[42]             It is possible that social welfare offending can be charged as criminal offending under the Crimes Act 1961, and effectively meet the requirements of s 6(1)(a) as a consequence. Before me the Commissioner did not identify any specific offences of this kind, at least in any direct way. But the evidence from the witness from the Ministry of Social Development, Mr McIver, outlined the level of net overpayment Ms Drummond and Mr Irwin are said to  have received.  In  his  affidavit  he said  Ms Drummond’s net overpayment was $61,228.65 which is higher than the threshold referred to in s 6(1)(b) of the Act. When he came to give evidence, however, he lowered that amount to $53,654.63.

[43]             It  became  apparent  during   cross-examination,   however,   that   whilst   Ms Drummond was not entitled to the sole parent support entitlement, she was entitled to a benefit that she did not claim, namely the Job Seeker entitlement. Mr McIver accepted that he had not made a calculation of what she would have been entitled to for Job Seeker support. When I asked him whether the amount that she would be entitled to might be similar to the amount that she was said to have been overpaid  Mr McIver said that he was not sure. When I put to him that if there was any net benefit it would be substantially less than the $53,654.63 he said that that was quite possible.

[44]             It is the Commissioner that has the burden of proof, on the balance of probabilities, to establish that the relevant significant criminal offending occurred. I am not satisfied that the Commissioner has established that there has been significant criminal offending from which  benefits  of  $30,000  or  more  were  obtained.  If Ms Drummond had gone to Social Welfare and reported the change in her circumstances it may well be that her benefits would have remained similar. It is also not clear to me that Ms Drummond benefitted from any social welfare offending by

15     Criminal Proceeds (Recovery) Act 2009, s 6(2)(a).

Mr Irwin. For the purposes of more serious offending in the nature of fraud, as opposed to the less serious offending such as wilfully omitting information, I am also not satisfied that the relevant elements of the offending have been shown to have been established, even on the balance of probabilities.

[45]             For these reasons I put to one side the alleged social welfare offending. It seems to me that the application of s 66 turns on the drug dealing offending engaged in by Derrick Irwin.

The drug offending

[46]             As I have already found, Mr Derrick Irwin was engaged in significant drug dealing and is now serving a lengthy prison sentence as a consequence. That drug dealing generated significant income that was used by both him and Ms Drummond. The only other income came from their social welfare benefits, and more minor activities conducted by Mr Irwin such as selling firewood, pinecones, and the occasional deer.

[47]             It is not disputed that Ms Drummond benefited from the proceeds of the drug dealing activity. She was responsible for paying their utility bills such as power, telephone and Sky. All the other expenses involved in their life together came from cash generated from the drug dealing activities and the social welfare payments. When Ms Drummond required money he provided her with cash.

[48]             I accept the evidence of both Mr Irwin and Ms Drummond that Ms Drummond was not involved in the drug dealing activities, and that the couple did not talk about it. Moreover both of them gave evidence that Ms Drummond insisted that when people came to visit the house, and particularly Mongrel Mob members, Mr Irwin not bring them inside. I accept that she did not want to be involved in whatever they were doing, and did not want her children to be exposed to this activity.

[49]             It is for this reason that an arguable basis arises that Ms Drummond “has not unlawfully benefited for the significant criminal activity” under s 66(1)(b). She must establish this requirement on the balance of probabilities. Mr Ross relied on the

Commissioner of Police v C as a comparable situation.16 A person unlawfully benefits from the criminal activities when they have knowledge that the offending is producing the benefit. In addition wilful blindness is enough to satisfy the requirement for unlawfulness. In Vincent v Commissioner of Police the Court of Appeal said:17

[52] … It is clear from his discussion of the authorities that Priestley J appreciated that the test is a subjective one. He referred to the decisions of this Court in R v Martin18 and Diver v Locktronic Industries Ltd,19 where the concept of wilful blindness is discussed in criminal and civil contexts. Both cases identify the subjective elements, as the Judge noted: the person must have his or her suspicions aroused (for example, be aware that a particular state of affairs may exist) and must deliberately refrain from making enquiry in order to avoid learning whether the suspicion is justified. On the evidence, there is no doubt that Mrs Ashby did have concerns about the source of the money as she asked Mr Vincent about it. He told her that London Underground’s party pill business was legal. But Priestley J considered that Mrs Ashby’s suspicions remained and that she deliberately refrained from making further enquiry because she was concerned at the nature of the response.

[50]             In the present case I heard evidence from the officer in charge of the investigation, and from the financial investigator attached to the Asset Recovery Unit. Some of that evidence appeared to be opinion evidence in nature, and Mr Ross started cross-examining them to challenge the opinions expressed. It is not unusual for affidavits filed in proceedings under this Act to contain such material, which may be of assistance in connection with the initial applications to restrain proceeds or other property. But when it comes to the questions required to be answered by the Court under s 66, such expressions of opinion have little relevance and are argumentative in nature. The facts that emerge from an investigation are material, and there is no difficulty with evidence of those facts being provided to the Court. But the drawing of conclusions based on the facts, or the provision of other kinds of opinion, are not likely to be. I indicated during the course of the cross-examination that I was not assisted by those opinions, or the cross-examination of the witnesses in relation to those opinions. I base my conclusions primarily on the evidence of Ms Drummond and Mr Derrick Irwin in light of the facts emerging from the investigation.

16     Commissioner of Police v C [2018] NZHC 3334.

17     Vincent v Commissioner of Police [2013] NZCA 412.

18     R v Martin [2007] NZCA 386 especially at [10]–[11].

19     Diver v Locktronic Industries Ltd [2012] NZCA 131, [2012] 2 NZLR 388.

[51]             I am not satisfied that Ms Drummond is able to prove on the balance of probabilities that she has not unlawfully benefited from the criminal activity. The circumstances clearly put Ms Drummond on notice that significant criminal activity was likely occurring, and was the likely source of the funds she benefited from, but she deliberately refrained from asking questions about it. This meets the concept of wilful blindness referred to above. I say that for the following reasons:

(a)Significant drug dealing activity was taking place from the property. That involved Mongrel Mob gang members, and other persons, regularly visiting the property to further the drug dealing activities. She was aware that he was a patched member of the Mongrel Mob gang. At her insistence Mr Irwin was required to deal with these people outside. It would have been clear to Ms Drummond that this was gang- related business, and that it was illegal. As she said in cross- examination, she “didn’t want to know” about it. In of itself this involved a degree of wilful blindness.

(b)She was aware that this activity was drug-related, as Mr Irwin bought drugs into the house as a consequence. She was a methamphetamine user herself. There was a  difference  between  Ms Drummond  and Mr Irwin as to how much she consumed. He gave evidence that she was a daily user, but she said it was more occasional. The extent of the use is not a major point. What is relevant is that she was aware that the business that Mr Irwin was engaged in with the Mongrel Mob members who came regularly to the house was drug-related.

(c)Mr Ross argued that Ms Drummond would only have understood that Mr Irwin was a buyer, and not a seller of the drugs. That strikes me as a rather fine distinction on the issue of wilful blindness. A question also emerges in terms of where Mr Irwin was getting the money supporting their relationship from. Ms Drummond knew that their lifestyle was beyond their means of social welfare beneficiaries. Her explanation was that she knew that he had received a substantial inheritance, and that this was the source of the funds.  Mr Ross argued that for her the

$150,000 inheritance would have seemed like an enormous amount. But it is also apparent that Mr Irwin supplied her the money in cash rather than deposits into a bank account. I do not accept her explanation in cross-examination that he would have been going into town and withdrawing the cash, then returning to the house to deliver it to her in that form. It would have been apparent to her that the cash was likely the product of the activities associated with the gang members and the drugs. I also note Mr Irwin’s evidence that she would have been aware that he had previously been in prison for drug offending.

(d)Ms Drummond accepted that she had warned Mr Irwin when she saw police on the road. The police had text messages that showed this. That would have been because she was aware that he was engaged in illegal activities. I do not accept her explanation that she was warning him because he might otherwise get speeding tickets.

(e)It is also relevant that the property was extensively used for drug dealing activity. Apart from the regular visits to the house by the Mongrel Mob members, the property was also used for the storing of money, drugs, and firearms located in containers concealed in the outdoor areas dotted around the property. That included $310,060 in cash. It is unlikely that Mr Irwin could have successfully been involved in hiding such materials around the property in containers  without  Ms Drummond having any knowledge which would have aroused her suspicions.

(f)Any doubt about the  extent  of  her  knowledge  is  removed  from  Mr Irwin’s evidence, who said that Ms Drummond would have been aware he was engaged in drug dealing activity because of the extent of the drugs and cash around the house. He explained that he kept the cash in their bedroom, and that she sometimes saw the cash, and also occasionally saw him counting it. He accepted, however, that they never directly talked about the drug dealing activities. I do not accept Mr Ross’s argument that this evidence implicating Ms Drummond was

motivated by Mr Irwin’s ill-will towards her, particularly in connection with her application being inconsistent with that made by his son in this proceeding. If he wished to give untrue evidence defeating her claim for relief it would have been very easy for him to say that he fully explained the drug dealing activity to her. But he did not. As I say, I found  his  evidence  truthful.  I  cannot  say  the  same  for  all  of   Ms Drummond’s answers.

[52]             Mr Ross emphasised that Ms Drummond was young, and naive. She is noticeably younger that Mr Irwin. But she was in the relationship with Mr Irwin for some time, and presented as a person not without abilities under cross-examination. It is unrealistic to suggest that she was not put on notice that Mr Irwin was engaged in significant drug offending with other Mongrel Mob members generating the income on which they lived.

[53]             For these reasons I am not  satisfied  on  the  balance  of  probabilities  that Ms Drummond did not unlawfully benefit from significant criminal activity. I have some sympathy for her as she is now alone and without the benefit of relationship property. But on the other hand she has significantly benefited from this drug dealing activity over the nine or 10 years of their relationship, and she must have been aware of the kind of activity Mr Irwin was engaged in, and that it was the source of the money that funded their lifestyle.

[54]             Accordingly for these reasons her opposition to the Commissioner’s application based on s 66 is dismissed.

Conclusion and orders

[55]Accordingly for the reasons outlined above I make the following orders:

(a)Profit forfeiture orders are made under s 55 on the following basis:

(i)the maximum value to be obtained is $793,067.33;

(ii)no property is to be deducted from that value under s 54;

(iii)the property referred to in [2](b) and [2](c) above is to be disposed of to meet the profit forfeiture order, and the other property referred to in [2] and [4] above may be accessed to satisfy the order.

(b)An amount of $84,269.73 is to be severed from the amount to be forfeit to the Crown, and is to be paid to Thomas Irwin under s 66.

(c)The remainder is to be vested in the Crown under the control of the Official Assignee.

[56]             The Commissioner has leave to apply to alter, or otherwise vary the orders by the filing of memoranda.

Cooke J

Solicitors:

Elvidge & Partners, Napier for the Applicant
E R Fairbrother QC, Napier for the Respondent

Cathedral Lane Law, Napier for the Interested Party