Commissioner of Police v Marwood

[2019] NZHC 743

IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY

I TE KŌTI MATUA O AOTEAROA

TE ROTORUA-NUI-A-KAHUMATAMOMOE ROHE

CIV-2012-463-79

[2019] NZHC 743

BETWEEN

THE COMMISSIONER OF POLICE

Applicant

AND

KARL LESLIE RAYMOND MARWOOD

First Respondent

ERANA KING
Second Respondent

THE PERRIN TRUST
Third Respondent

ANZ BANK

Fourth Respondent

Hearing:

9 April 2019

Appearances:

C H Macklin for Applicant

M W Ryan for First and Third Respondents A Speed for Second Respondent

No appearance for Fourth Respondent

Judgment:

10 April 2019

JUDGMENT OF LANG J

[on application by first to third respondents for strike out]

This judgment was delivered by me on 10 April 2019 at 11.30 am, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date……………

COMMISSIONER OF POLICE v MARWOOD [2019] NZHC 743 [9 April 2019]

[1]    In this proceeding the Commissioner of Police (the Commissioner) seeks a profit forfeiture order against the first to third respondents under s 55 of the Criminal Proceeds (Recovery) Act 2009 (the CPRA). The proceeding is set down for a trial of two weeks duration commencing in the High Court at Hamilton on 6 May 2019.

[2]    The respondents have now applied for an order striking out the proceeding on the basis that it is statute-barred for limitation reasons. The application needs to be determined prior to the commencement of the trial because, if it succeeds, there will be no need for the trial to proceed.

Background

[3]    On 6 July 2010, the police executed a search warrant at a residential address in Taupo. When they searched the address, the police found a substantial cannabis growing operation being undertaken within it. Mr Marwood and Ms King were the occupants of the address. Mr Marwood was arrested and charged with cultivating cannabis.

[4]    Mr Marwood challenged the admissibility of the items found during the search of the address. In a judgment delivered on 14 April 2011, Judge A-M Bouchier held that the search warrant should not have been issued because the police did not have reasonable grounds to believe there would be evidence of the commission of an offence at the address named in the application for a search warrant.1 She also found that the subsequent police entry and search, based as it was on a flawed search warrant application, breached Mr Marwood’s right under s 21 of the New Zealand Bill of Rights Act 1990 to be free from unreasonable search and seizure.

[5]    Judge Bouchier therefore held that the evidence obtained using the search warrant was improperly obtained in terms of s 30 (2) of the Evidence Act 2006. After undertaking the balancing exercise required under s 30(3) of that Act, the Judge held that the exclusion of the evidence was a proportionate response to the impropriety that had occurred. This left the Crown without sufficient evidence to prove its case and Mr Marwood was subsequently discharged under s 347 of the Crimes Act 1961.

1      R v Marwood DC Rotorua CRI 2010-69-1318.

[6]    The Commissioner filed this proceeding on 17 February 2012. On 21 February 2012 he obtained restraining orders on a without notice basis in relation to the residential address owned by the first to third respondents as well as motor vehicles and  bank  accounts  owned  by  the  respondents.  Those  orders  were  sealed  on   22 February 2012 and amended on 24 April 2012. On notice restraining orders were then made by consent on 21 December 2012, and subsequently extended by consent on an annual basis.

[7]    The Commissioner subsequently filed an application seeking a profit forfeiture order on 31 July 2013. The Commissioner alleges the respondents have derived undeclared income through the cannabis growing operation Mr Marwood conducted at their property prior to the point at which the police searched it on 6 July 2010.

[8]    The proceeding has followed a protracted procedural path arising out of the fact that the Commissioner relies on alleged criminal activity in relation to which  Mr Marwood has been charged but ultimately acquitted. This resulted in interlocutory decisions being subject to appeals to the Court of Appeal and Supreme Court.2 The present application represents the final procedural hurdle for the Commissioner to overcome before being permitted to bring his claim to trial.

The limitation legislation

[9] Up until January 2011 limitation periods for civil proceedings were governed by the Limitation Act 1950 (the 1950 Act). They are now governed principally by the Limitation Act 2010 (the 2010 Act), which came into force on 1 January 2011.3 Unlike the 1950 Act, the 2010 Act contains an express provision excluding proceedings seeking orders under the CPRA from being subject to the 2010 Act.4

[10] The 2010 Act repealed the 1950 Act.5 The repeal of the 1950 Act was subject to the savings provisions set out in s 59 of the 2010 Act. Section 59 provides as follows:

2      Commissioner of Police v Marwood [2015] NZCA 608, [2016] 2 NZLR 733; Marwood v Commissioner of Police [2016] NZSC 139, [2017] 1 NZLR 260.

3      Limitation Act 2010, s 2.

4      Limitation Act 2010, s 12(3)(e).

55     Limitation Act 2010, s 57.

59     Actions based on acts or omissions before 1 January 2011

(1)This section applies to an action, cause of action, or right of action—

(a)     based on an act or omission before 1 January 2011; and

(b)     to which the Limitation Act 1950 applied immediately before its repeal.

(2)The action, cause of action, or right of action must, despite the repeal of the Limitation Act 1950 and unless the parties agree otherwise, be dealt with or continue to be dealt with in accordance with the Limitation Act 1950 as in force at the time of its repeal.

(3)Nothing in this section prevents any provision of the Limitation Act 1950 as in force at the time of its repeal from being applied, after 31 December 2010, and by analogy, to any claim for equitable relief—

(a)     based on an act or omission before 1 January 2011; and

(b)     to which the Limitation Act 1950 immediately before its repeal did not apply directly.

[11]   In addition, s 61 of the 2010 Act amended the 1950 Act by inserting a new s 2A into that Act. It is in identical terms to s 59 of the 2010 Act. The enactment of ss 59 and 2A is obviously to ensure that limitation periods for claims based on acts or omissions that occurred prior to the commencement of the 2010 Act would continue to be governed by the 1950 Act. It is common ground that the Commissioner’s claim in the present proceeding is based on acts that occurred prior to that date.

[12]Importantly, s 33 of the 1950 Act provides:

33       Savings for other limitation enactments

(1)This Act shall not apply to any action or arbitration for which a period of limitation is prescribed by any other enactment, or to any action or arbitration to which the Crown is a party and for which, if it were between subjects, a period of limitation would be prescribed by any other enactment.

(2)Any reference in any enactment to any of the enactments specified in Schedule 1 to this Act or to any provision of any such enactment shall be construed as a reference to the corresponding provision of this Act.

The effect of s 33(1) is that the 1950 Act does not apply to proceedings brought under enactments that contain their own limitation periods.

The arguments

[13]   The applicants contend that the Commissioner’s claim constitutes a claim for money. As a result, it is governed by s 4(5) of the 1950 Act, which provides as follows:

4Limitation of actions of contract and tort, and certain other actions

…

(5)An action to recover any penalty or forfeiture, or sum by way  of penalty or forfeiture, recoverable by virtue of any enactment shall not be brought after the expiration of 2 years from the date on which the cause of action accrued:

Provided that for the purposes of this subsection the expression penalty shall not include a fine to which any person is liable on conviction of a criminal offence.

…

[14]   The applicants argue that the cause of action in the present case accrued at the latest on 6 July 2010, being the date on which the police executed the search warrant on the applicants’ address. Any claim for a penalty or forfeiture therefore needed to be filed no later than 6 July 2012. The respondents point out that the Commissioner did not file the application for a profit forfeiture order until 31 July 2013. As a result, they say the present proceeding is statute-barred for limitation reasons.

[15]   Mr Macklin for the Commissioner submits that the CPRA contains its own limitation provision in s 55(1)(a). He contends that s 55(1)(a) of the CPRA therefore overrides s 4(5) of the 1950 Act by virtue of s 33 of the 1950 Act. In addition, he submits that the proceeding commenced in February 2012 when the Commissioner applied for a restraining order. He therefore contends that, even if the argument for the respondents is correct, the proceeding was commenced within the two year period required by s 4(5) of the 1950 Act.

Decision

Does s 55(1)(a) of the CPRA override s 4(5) of the 1950 Act?

[16]   The Commissioner’s substantive claim relies on s 55 of the CPRA, which relevantly provides as follows:

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.

…

[17]   The CPRA applies to significant criminal activity engaged in both before and after the Act came into force. on 1 December 2009.6 Section 5 of the CPRA, the interpretations section of the Act, defines the term “relevant period of criminal activity” as follows:

relevant period of criminal activity, in relation to an application for a profit forfeiture order, means the period that ends on the date the application is made and starts 7 years before—

(a)the date of the application for the relevant restraining order, if the application for the profit forfeiture order relates, wholly or in part, to restrained property; or

(b)the date of the application for the profit forfeiture order, if the application for the profit forfeiture order does not relate to restrained property.

[18]   Section 55(1)(a) is not expressly worded as a limitation clause. I consider, however, that it is clearly intended to stipulate the period within which an application for a profit forfeiture order must be made. An application is generally made when it is filed. Where an application for a profit forfeiture order relates wholly or in part to restrained property, it must be based on significant criminal activity that occurs within seven years prior to the date on which the application for a restraining order is filed.7 Where it does not relate to restrained property, it must be based on significant criminal activity that occurs within seven years prior to the date on which the application for a profit forfeiture order is filed.8

6      Criminal Proceeds (Recovery) Act 2009, s 9(b).

7      Section 55(1)(a).

8      Section 55(1)(b).

[19]   I do not see any means of reconciling s 55(1) with s 4(5) of the 1950 Act. In particular, I do not accept Mr Speed’s submission for the respondents that s 55(1) only permits the Commissioner to rely on activity going back seven years if he complies with s 5(5) of the 1950 Act by filing a proceeding within two years of the last of such activity occurring. In many cases the activity in question may take place over a single day or a short period of time. An interpretation that requires the Commissioner to file proceedings within two years of the activity occurring would effectively defeat Parliament’s clear intention to permit profit forfeiture orders to extend to significant criminal activity occurring during the seven year period prior to the filing of the relevant application.

[20]   Mr Speed for the respondents relies on decisions of this Court and the Court of Appeal in Securities Commission v Midavia Rail Investments BVBA.9 In that case the plaintiff had sought a declaration that the defendants were liable to pay compensation and pecuniary penalties under the Securities Markets Act 1988 for alleged insider trading. The proceeding was struck out because the plaintiff had filed the proceeding outside the two year time limit permitted by s 4(5) of the 1950 Act. I do not consider Midavia provides any assistance in the present case, however, because the Securities Markets Act 1988 did not contain an equivalent section to s 55(1).

[21]   It follows that I consider s 55(1) is a limitation section that applies to an application for a profit forfeiture order under the CPRA. For that reason, and by virtue of s 33 of the 1950 Act, s 4(5) of the 1950 Act does not apply to such proceedings.

[22]   The profit forfeiture order in the present case relates to property that has been restrained since February 2012. The significant criminal activity on which the Commissioner relies is alleged to have occurred within seven years prior to the date on which the Commissioner first applied for a restraining order. The proceeding is therefore not statute-barred for limitation reasons.

9      Securities Commission v Midavia Rail Investments BVBA High Court Auckland CIV 2004-404- 2174, 13 January 2006; Securities Commission v Midavia Rail Investments BVBA CA 252/05 and CA 19/06, 29 November 2006.

Did the application for a profit forfeiture order commence with the filing of the application for a restraining order?

[23]   In case I am wrong on the first issue I will briefly consider the second argument for the Commissioner. This relates to the issue of whether the application for a profit forfeiture order commenced with the filing of an application for a restraining order.

[24]    As Mr Macklin points out, an application for a profit forfeiture order is generally preceded by an application for a restraining order. As the present case demonstrates, the Commissioner will usually seek a restraining order on a without notice basis to ensure that those who have control of the property do not dispose of it before the restraining order can be made.10 The Commissioner is then required to apply on notice within seven days for an order that the restraining order is to continue in force for up to twelve months.11

[25]   As I have already pointed out at [18], the significant criminal activity on which the Commissioner relies to seek a profit forfeiture order in relation to restrained property must occur within seven years prior to the application for a restraining order being filed. I take this to be a legislative acknowledgement that an application for a restraining order is the first step in the process that culminates in the making of a profit forfeiture order. For that reason, had it been necessary to do so, I would therefore have held that the present proceeding was not statute-barred for limitation reasons even if s 4(5) of the 1950 Act applied to it.

Result

[26]The application for strike out is dismissed.

Costs

[27]    The Commissioner has succeeded and is entitled to costs on a category 2B basis together with disbursements as fixed by the Registrar.

Lang J

10     Criminal Proceeds (Recovery) Act 2009, s 22(1).

11     Criminal proceeds (Recovery) Act 2009, ss 39 and 41.

Solicitors:

Crown Solicitor, Rotorua Nicholls Law Ltd, Auckland

Jennifer G Connell & Associates, Newmarket Counsel:

M Ryan, Barrister, Auckland A Speed, Auckland