Commissioner of Police v Marwood
[2018] NZHC 458
•19 March 2018
IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY
I TE KŌTI MATUA O AOTEAROA TE ROTORUA-NUI-Ā-KAHU ROHE
CIV-2012-463-79
[2018] NZHC 458
BETWEEN COMMISSIONER OF POLICE
Applicant
AND
KARL LESLIE RAYMOND MARWOOD
First Respondent
ERANA KING
Second RespondentKARL LESLIE RAYMOND MARWOOD
as trustee of THE PERRIN TRUST Third Respondent
Hearing: 19 March 2018 Appearances:
M Jenkins for the Applicant
W M Ryan for the First and Third Respondents Attendance by or for the Second Respondent excused
Judgment:
19 March 2018
ORAL JUDGMENT OF WOODHOUSE J
Solicitors / Counsel:
Mr M Jenkins, Gordon Pilditch, Office of the Crown Solicitor, Rotorua Mr W M Ryan, Barrister, Auckland
Mr A G Speed (for the second respondent), Barrister, Auckland
COMMISSIONER OF POLICE v MARWOOD [2018] NZHC 458 [19 March 2018]
[1] The Commissioner has applied for an order for sale of restrained property in respect of which applications for forfeiture are pending. The advice I have received from both counsel this morning is that the forfeiture application may be heard in December of this year, but there is no firm fixture. The estimate for the length of the hearing is nine days, which is part of the explanation for the uncertainty on the availability of time for the hearing.
[2] The application relates to two motor vehicles, a 2008 Ford Ranger and a 2005 Holden Commodore. The Ford Ranger has a current value, based on the evidence for the Commissioner (not challenged for the defendants), of $22,000. The Holden Commodore has a current value of around $13,000. These vehicles have been subject to restraining orders since 17 February 2012 and have been under the direct control of, and stored by, the Official Assignee.
[3] The application is made under s 35 of the Criminal Proceeds (Recovery) Act 2009. This provision relevantly provides:
35 Types of further order
Without limiting the generality of section 34(1), a court may, on an application under section 33(1), make 1 or more of the following further orders in relation to restrained property:
…
(e) an order relating to the Official Assignee that—
…
(v) directs the Official Assignee to sell restrained property (including, without limitation, a business) in order to preserve the value of the restrained property:
…
[4] The Commissioner submits that the vehicles should be sold, to preserve value, because of ongoing storage costs and depreciation.
[5]In relation to storage costs, the evidence is that the daily cost per car has been
$13.50 from 9 October 2017. The monthly figure at that daily rate is approximately
$821. On my arithmetic that is, therefore, approximately $7,300 through to December 2018.
[6] There is evidence for the Commissioner of depreciation rates obtained from Inland Revenue. On a straight line basis Inland Revenue, it appears, allows 25.2% per annum. There are other rates with a range between 21% and 30%.
[7] I will come to the arguments for the respondents after noting the relevant principles derived from sub-paragraph (v) of s 35. When I talk about principles I mean the sorts of things that the Act covers in relation to preservation of value or, putting it another way, things that may diminish value. It is clearly established by decisions of this Court that both depreciation and storage costs are matters that can be taken into account for the purposes of this provision.1 I agree with the conclusions in those cases as to the applicability of sub-paragraph (v) to the matters at issue in this case – depreciation and storage costs.
[8] The principal opposition to the application comes from Mr Marwood, the first respondent, and the third respondent Trust. It appears that the Trust, or the trustee of the Trust, may be the owner of the vehicles. The second respondent supports the opposition of the first and third respondents, but has taken no active part in the opposition.
[9] One of the grounds of opposition is, in its essence, that the Commissioner has unduly delayed this application and, implicit in that, should bear the consequences of any further loss of value that may occur between the date of this application, which was filed in January of this year, and the hearing which, for present purposes, I will assume to be likely to be around about December of this year.
[10] In respect of delay, to the extent that weight should be given to it, I accept that it is, on the face of it, surprising that this application has been delayed for so long – almost six years. Some of the explanation may be found in applications made by the respondents challenging the admissibility of the evidence the Commissioner wishes to
1 Commissioner of Police v Chen [2016] NZHC 322 at [30]-[31]; and Commissioner of Police v Cavanagh [2017] NZHC 1863 at [7]-[9].
rely on in this proceeding. There was a criminal proceeding against the first respondent, Mr Marwood, involving charges relating to cannabis. As I understand it, the primary evidence the Crown sought to rely on was ruled inadmissible and the charges were subsequently dismissed pursuant to s 147 of the Criminal Proceedings Act. In the present proceeding (which of course is a civil proceeding) the present respondents challenged the Commissioner’s intention to rely on this evidence. In this Court (and again as I understand it, based on advice from counsel which I do not question) Cooper J held that the evidence was inadmissible. That decision was reversed by the Court of Appeal. Mr Marwood obtained leave to appeal to the Supreme Court. I have not looked at the decision. My broad understanding is that the Supreme Court held that in principle there could be a challenge to admissibility in a civil proceeding, but held on the facts of this case that there were no grounds for excluding the evidence. I have mentioned that detail because it has some relevance to the exercise of my ultimate discretion as to whether to make the orders sought. The short point is that the evidence which resulted in the dismissal of the criminal charges will be available in support of the present application.
[11] I regard the length of the delay by the Commissioner in bringing this application as being in broad measure a fairly neutral factor. What the Court needs to look at is the application of s 35(e)(v) to the substance of the application now made.
[12] Addressing those matters, Mr Ryan submitted that any diminution in value through depreciation between now and a hearing in, or hopefully soon after, December 2018, will not be substantial. I am inclined to agree with that submission, applying a degree of judicial knowledge relating to the depreciation in value of motor vehicles. The Inland Revenue rates are tax rates. However, I believe it is generally accepted that the greatest actual depreciation in the value of standard motor vehicles tends to be in the period soon after purchase, and the actual diminution in value as the vehicles get older in itself diminishes as a percentage of value.
[13] Mr Jenkins, for the Commissioner, accepted that that is a reasonable position to take. He submitted that, nevertheless, there is likely to be some diminution in value.
[14] Of greater consequence are the storage costs. In the scheme of things, the further storage costs are reasonably significant in relation to the total value of the vehicles. The total value, based on the evidence I have, is $35,000. The further storage costs represent about (in round figures) one-fifth of that present value.
[15] What the Court is required to do is balance the competing interests of the Commissioner to seek to preserve value against the possibility that the Commissioner will succeed, and the interests of the respondents who are the owners of the vehicles and in the end may be held to have been entitled to them. In this regard, and having put aside the argument for the respondent based on delay by the Commissioner, it is in substantial measure an economic exercise. This is not a case of an application for sale of an asset which has some special value to the owner. There is no suggestion in the affidavit evidence from Mr Marwood that that is the case. Both vehicles are utilitarian. Both vehicles, on the face of it, have been acquired for normal uses. If, at the end of the day, the respondents are successful, but there has been an order for sale, the value currently represented in these vehicles will be available, subject to a further application I will come to. That is to say, the current value will be likely to be available (and subject to any specific statutory provisions of relevance) and with some additional interest arising from investment of the proceeds of sale on an interest bearing account. If the respondents are ultimately successful and the total proceeds of sale plus accrued net interest goes to them, they can buy similar vehicles in the market at market prices. It is simply an exchange of value.
[16] In this regard I note one other submission from Mr Ryan, arising from Mr Marwood’s evidence, relating to the fact that Mr Marwood (or the Trust) borrowed money on mortgage to buy the cars (and perhaps other things). There is no loss to the respondents in that regard if the vehicles are sold now and the proceeds of sale are put on an interest bearing deposit and, at the end of the day, the money goes back to the respondent. That money, if it is not used to buy other cars, can be used to repay part of the mortgage.
[17] For these various reasons I am satisfied that the order sought for sale of the vehicles should be made. The Official Assignee should obviously seek to ensure that the vehicles are sold for the best market price available and bearing in mind the
evidence we have heard on current value. However, that will of course depend on the market.
[18] The remaining issue which I adverted to is whether the storage costs already incurred should be reimbursed to the Official Assignee out of the costs of sale. I can see no justification for that order. There will be no loss to the Official Assignee, or the Commissioner, if the vehicles are sold and the net proceeds are put on an interest bearing deposit and the decision in the end is in favour of the Commissioner. The funds will be there to meet the storage costs. The earlier observations about the economic analysis applies both ways. In consequence, I decline the application for an order that the storage costs be reimbursed. The total proceeds of sale, less any reasonable costs of sale, are to be retained by the Official Assignee.
[19] The Commissioner has also sought costs. Mr Ryan has advised that Mr Marwood is in receipt of legal aid. On that basis there can be no order against him. There is an issue as to whether that can apply to the third respondent, bearing in mind that he is the trustee of a Trust. There is also the position of the second respondent, although costs may not have been sought against the second respondent. In consequence, and with no opposition from Mr Jenkins, the question of costs is reserved pending determination of the substantive proceeding.
Woodhouse J