Commissioner of Police v Parker
[2019] NZHC 1506
•28 June 2019
IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY
I TE KŌTI MATUA O AOTEAROA
TE ROTORUA-NUI-A-KAHUMATAMOMOE ROHECIV-2018-463-000029 [2019] NZHC 1506
UNDER the Criminal Proceeds (Recovery) Act 2009 BETWEEN
THE COMMISSIONER OF POLICE
Applicant
AND
TREVOR ALBERT PARKER
First Respondent
JACQUELINE DONNA PARKER
Second RespondentWESTPAC NEW ZEALAND LIMITED
Interested Party
CATHERINE IRENE JEAN PARKER
Interested Party
Hearing: 29 and 30 April 2019 Appearances:
R W Jenson for the Applicant
M Harborow for the Official Assignee
P Hamlin for Trevor Parker, First Respondent and Catherine Parker, Interested Party
A Rickard-Simms for Jacqueline Parker, as a witnessJudgment:
28 June 2019
JUDGMENT OF HINTON J
[on application for order for sale of restrained assets]
COMMISSIONER OF POLICE v PARKER [2019] NZHC 1506 [28 June 2019]
This judgment was delivered by me on 28 June 2018 at 4.30 pm pursuant to Rule 11.5 of the High Court Rules
…………………………………………………………………… Registrar/Deputy Registrar
Counsel/Solicitors in CIV-2018-463-000029 (the Parkers):
Philip Hamlin, Barrister, Auckland Pollett Legal Ltd, Tauranga
Meredith Connell, Auckland Pacific Coast Law, Tauranga
Counsel/Solicitors in CIV-2018-463-000027 (Milosevic and Raki):
William Nabney, Barrister, Tauranga Pollett Legal Ltd, Tauranga
Meredith Connell, Auckland Robinson Law Ltd, Whakatane
[1] This is an application made on 25 May 2018 by the Commissioner of Police for an order for sale of restrained assets under ss 33 and 35(e)(v) of the Criminal Proceeds (Recovery) Act 2009 (the Act).
[2] The assets were restrained following Operation Notus, which was an investigation into criminal activity, predominantly drug dealing, on the part of members of the Kawerau Mongrel Mob.
[3] Ex parte restraining orders were made on 26 March 2018 over a number of assets, including real estate, vehicles and bank accounts. The Commissioner also filed an on-notice application for restraining orders dated 29 March 2018. I was advised by counsel at the end of this hearing that orders could be made in terms of that application.
[4] The current application for sale was originally made in respect of four of the restrained chattels, being a 2012 Ford Ranger 3.2 TD Utility vehicle; a 2017 Harley Davidson Breakout motorcycle; a Senator 8 metre Pontoon Hard-top boat and 2012 boat trailer; and a Toyota Hilux Utility vehicle.
[5] On 20 June 2018, the second respondent applied for release of the Toyota Hilux on hardship grounds. On 30 July 2018, orders were made varying the existing restraining order on the basis the vehicle was released to the “custody and control” of Mrs Parker for the use of the parties’ paraplegic daughter.
[6] There is a second application for orders for sale, dated 15 April 2019, regarding two of the other restrained vehicles, a 2016 Holden Commodore and a 2006 Chrysler Saloon. By consent, that application was adjourned to attend to service and other matters. The Registry has now allocated a telephone conference for that application on Tuesday, 23 July 2019 at 9.30 am.
[7] This judgment deals with the remainder of the first sale application, relating to the Ford Ranger, Harley Davidson and Senator boat and trailer.
Joint hearing with Commissioner v Milosevic - CIV-2018-463-000027
[8] By agreement between the parties and order of Gordon J, this case was heard together with the case of the Commissioner of Police v Frank Amadeus Milosevic & Anor because of commonality of issues and evidence, particularly with regard to matters concerning the Official Assignee.
[9] This matter was heard first, with all counsel present. By agreement, common evidence was called from the Official Assignee, Mr Sayers. The balance of this case followed. After this case had closed, Mr Hamlin, for the first respondent, was excused. The balance of the Milosevic hearing then followed.
[10] The parties seek that separate judgments be issued. In both judgments, I have recorded the names of all counsel. I deal with the common issues in full in this judgment.
Summary of the parties’ positions and the issues
[11] The Commissioner seeks the order for sale because he says that the substantive application for forfeiture will not be determined until sometime in 2021 at the earliest, and he is concerned that the costs of storing the assets, and the depreciation in their value while being stored, will be considerable. This will significantly reduce the net value that will be received if the assets are ultimately the subject of forfeiture orders in the Commissioner’s favour.1 (The value that the respondents would receive back will also be reduced if no forfeiture order were made, insofar as the assets have depreciated in the interim.)
[12] The respondents oppose the sale of all three assets. The arguments raised do not differentiate between the assets. Mr Hamlin contends:
(a)That there is no evidence of likely depreciation. The IRD schedules do not apply as the assets are not used, and the Commissioner must therefore provide proof of actual depreciation of the particular assets.
1 Note the net proceeds of sale following forfeiture orders are not paid to the Commissioner. They are paid into a Hypothecated Fund and used for specific community purposes.
(b)The only costs being incurred therefore are storage costs. Those costs are not relevant or are insufficient on their own to order a sale. A sale can only be ordered under s 35(e)(v) of the Act, where necessary “to preserve value of the restrained property”. Storage or holding costs do not affect the value of the property.
(c)The storage costs are unnecessary because the goods can be stored at the respondents’ residence at no cost.
The role of the Official Assignee
[13] The Act provides that restrained property is to be under the Official Assignee’s “custody and control”.2 Subpart 5 of the Act comprehensively provides the Official Assignee with rights and powers to enable them to exercise and perform duties and functions in respect of restrained property.
[14] Section 80 of the Act also sets out the Official Assignee’s statutory obligations to preserve the value of property under their custody and control.
[15] As the custodian of restrained property, the Official Assignee has a right to be heard on any application under the Act,3 although that right is not normally exercised. In this instance, particularly because in both cases the respondents have raised the prospect of goods being returned to them for storage, a matter which is of direct concern to the Official Assignee, the Official Assignee has provided lengthy evidence through Mr Guy Sayers, the manager of the Official Assignee’s criminal proceeds management unit, and full submissions from Mr Harborow.
[16] Mr Sayers is the Official Assignee of Napier. He manages the Criminal Proceeds Management Unit at the Ministry of Business, Innovation and Employment and has been involved in proceeds of crime matters on behalf of the Official Assignee since mid-1992, when the Proceeds of Crime Act 1991 came into force.
2 Criminal Proceeds (Recovery) Act 2009, ss 24(1), 25(1) and 26(1).
3 At s 80(2)(a).
[17] Mr Sayers explains the Official Assignee’s role in terms of taking custody and control of restrained or forfeited property and refers to the Official Assignee’s statutory obligation to preserve that property under s 80. Mr Sayers says that he takes his obligations seriously and points out that his office is responsible to the Court for preserving value, but also required to account to the Commissioner of Police, the Crown, innocent third parties and respondents. He says that he instils in his staff a strong sense of obligation and duty to preserve and maximise the value of restrained property.
[18] Mr Sayers explains the very detailed process involved in storing restrained property. The Official Assignee has a secure storage unit which is based in an undisclosed location in New Zealand where all restrained property is securely stored pending disposition under the Act. The storage unit is entirely secure, alarmed and patrolled 24 hours a day, seven days a week. It is surrounded by electric fencing and access to it is restricted only to authorised personnel.
[19] Mr Sayers gives an overview of the storage process for a vehicle, which begins with the vehicle being transported to the storage unit. A member of staff then clears all personal items and creates an inventory. Photographs are taken of the vehicle. A running sheet is created for the vehicle to record the state of the vehicle on arrival plus all inspections and maintenance undertaken while in the Official Assignee’s care. The vehicle is thoroughly screened for possible unsafe and hidden items, including cash and drugs (which, on occasion, are discovered). A scientific drug test is carried out and a contamination report obtained. The staff member dealing with the vehicle requests a desk-top valuation from an expert vehicle auctioneer for various purposes, including to confirm value upon arrival and for purposes of the Official Assignee’s insurance policy.
[20] The Official Assignee insures every vehicle that is restrained. Due to the nature of the work and the associated risk of insurance, the Official Assignee’s insurance cover is only available under the current policy for assets that are physically stored by the Official Assignee at the storage unit. If the vehicle is not contaminated, it is inspected by an approved AA mechanic, groomed and cleaned before being stored securely. If it is contaminated, a separate de-contamination process applies.
[21] Maintenance checks (monthly for vehicles) are then carried out during the period of restraint by an independent asset maintenance officer. Typically this includes checking the battery and turning over the engine as issues can arise if petrol is left stagnant for any extended period of time. A qualified AA mechanic is on-site to check any issues. Tyre pressure is checked. Vehicles are also regularly checked for mould.
[22] Mr Sayers summarises his evidence by saying that they carry out their role in terms of storage and maintenance in such a way as to preserve the highest possible value both in the event of any sale and in the event of return.
The relevant law
[23] There is no question that the Court has jurisdiction to order a sale of restrained property, either at the time of restraint or subsequently. The question is: on what basis?
[24] Under s 33 of the Act, an application for a “further order” associated with a restraining order may be made by any interested party.
[25] Under s 34, the Court can make further orders in relation to the restrained property if it considers it appropriate.
[26] The further orders can be made either at the same time as the restraining order or afterwards.
[27] Section 34(1) expressly says that the further orders may, but need not be an order of any one or more of the types referred to in s 35.
[28] Under s 35, the Court may, without limiting the generality of s 34(1), make one or more of a number of “further orders” in relation to restrained property, including for example an order varying the property to which a restraining order relates, an order varying any condition to which a restraining order is subject, and various orders relating to the way in which the Official Assignee conducts their role.
[29] Materially, amongst the range of orders that are listed in s 35 is an order that “directs the Official Assignee to sell restrained property (including, without limitation,
a business) in order to preserve the value of the restrained property”.4 This is the only direct reference to an order for sale.
[30] Although the Court has the power to order a sale, such orders are not lightly made. The Court has to be satisfied that an order is appropriate. It obviously requires something more than the mere fact of restraint or the Commissioner would be armed with the right of sale for any restrained asset. It needs to be remembered that until an order for forfeiture is made, the goods remain the property of the registered owner, or those laying claim to ownership.
[31] As Mr Harborow submits, the Commissioner does not, however, have to prove that the sale is required on the balance of probabilities. The Court simply has to be satisfied that such an order should be made.
[32] Lang J said in Commissioner of Police v Drummond, the factors that will need to be taken into account include:5
… the nature and value of the asset, the length of time before the substantive proceeding will be determined, the extent to which the asset may depreciate during that period and the wishes of the owner of the assets and/or those who may have an interest in them.
Depreciation
[33] Detective Shallcrass, who is attached to the Waikato/Bay of Plenty Asset Recovery Unit and is officer-in-charge of criminal proceeds recovery, has provided e-valuations for the three assets. The Ford Ranger has an e-valuation as at 2 May 2018 of $15,000. The Harley Davidson has an e-valuation at that same date of $22,000. The boat has been appraised by Mr Carlson of Family Boats as having an indicative auction sale price of $55,000-$65,000 as at 16 May 2018.
[34] Detective Shallcrass has also provided IRD depreciation schedules which show a diminishing value rate for motor vehicles and motorcycles at 30% per annum and a straight line rate at 21% per annum. For boats, the diminishing value rate is 13% and
4 Criminal Proceeds (Recovery) Act 2009, s 35(e)(v).
5 Commissioner of Police v Drummond [2018] NZHC 1730 at [15].
straight line is 8.5%. The total annual depreciation based on the straight line rates that the Commissioner uses, is approximately $13,000 per annum for the three assets.
[35] E-valuations are only indicative. In this case, Turners, who provide the vehicle e-valuations at no cost, did inspect the vehicles but generally they do not. The e-valuations are used often for purposes of setting a reserve in the event of an auction. Mr Sayers says they are generally treated as being a minimum.
[36] In the absence of evidence to the contrary, e-valuations are accepted as a rough guide of value for purposes of applications for sale. The precise value is not important anyway, as long as it is in the ballpark. The point is rather the likely extent of depreciation.
[37] Mr Hamlin makes the point that mileage was not referred to in these particular e-valuations, but given that the vehicles were inspected beforehand, and in any event, I would be prepared to assume that mileage was taken into account.
[38] With regard to the boat, the appraisal is very approximate, because the appraiser has not checked the workings or construction of the vessel. To do so would require a full survey. Again, in the absence of evidence to the contrary, I accept the appraisal as an indicative value.
[39] Mr Hamlin then submits that in the absence of further valuations demonstrating an actual reduction in value, I cannot find any such reduction. He says I cannot rely on the depreciation schedules produced by Detective Shallcrass because these are schedules for IRD purposes which apply to business use of vehicles. The vehicles in question are not being used at all and are in fact being stored in temperature-controlled conditions.
[40] I consider that for purposes of an application such as this, depreciation can be demonstrated, in the absence of evidence to the contrary, by the relevant IRD depreciation schedules. While I agree that the schedules may not be proof of actual quantum, inter alia for the reasons Mr Hamlin submits, they are indicative of likely
depreciation. It is true that depreciation would likely be greater with use, but it does flow also from aging.6
[41] While occasional doubt has been cast on the use of the IRD schedules in this context, the approach I adopt is the approach generally taken by the Court. As Venning J said in Commissioner of Police v Cavanagh:7
Mr Harborow accepted that those are the maximum rates of depreciation for accounting purposes but I accept his submission they give an indication of and support the instinctive view one might take that cars and boats are depreciating assets. That is particularly so where the cars, motor cycles and boats are of recent vintage and have no particular value in terms of speciality or uniqueness. The Official Assignee has obtained estimates valuations of a number of the vehicles which reflects and supports the view that they are wasting assets.
[42] I therefore am satisfied that the three assets will be subject to depreciation of something up to $13,000 per annum. While it may well not be as much as $13,000 per annum, I accept it will likely be material, especially over two years or more.
Storage/holding costs
[43] I consider storage costs are relevant to an application for sale and that in some cases, although it would be unusual, an order could be made on the basis of storage costs where there is no likely depreciation. The latter point is not relevant here as I am satisfied that depreciation is likely, but it is relevant for purposes of Milocevic, heard together with this case, but the subject of a separate judgment.
[44] I should add here that what is commonly referred to as storage costs includes not just storage, but also insurance, maintenance, registration and other costs. The term “holding costs” is probably more appropriate. I use the two interchangeably.
[45] On the face of it, as Mr Hamlin submits, an order for sale can only be made under s 35(e)(v) of the Act, namely, where an order is necessary “to preserve the value
6 I would add by way of observation only that the Commissioner might want to consider formulating a schedule based on expert advice as to likely depreciation rates for chattels held in storage.
7 Commissioner of Police v Cavanagh [2014] NZHC 2978 at [9].
of the restrained property”. The argument, as I have noted above, is that storage or holding costs do not affect the “value of the restrained property”.
[46] In Commissioner of Police v Evans,8 Brown J said, for the same reason Mr Hamlin argues, that it was not appropriate to take expenditure on “storage and insurance” into account on an application for sale under s 35(e)(v). The relevant paragraph reads as follows:
[33] I am not persuaded that an order for immediate sale is warranted in the case of the Holden car. Whilst I recognise that there will be costs associated with storage, and insurance, such costs are the inevitable by-product of asset seizures. I do not consider that it is appropriate to take such expenditure into account in addressing the question posed by s 35(e)(v). Were it otherwise, then in order to defeat an application for sale an owner would need to demonstrate that the vehicle was likely to appreciate in value at a rate at least equal to the annual cost of storage, maintenance and insurance. I do not consider that the section imposes that obligation.
[47] Brown J was not considering whether a sale order could be made other than under s 35(e)(v).
[48] In Commissioner of Police v Blance,9 Dobson J said, after citing the above paragraph:
[52] With respect, I would not go so far as to disregard the relevance of holding costs in all cases. However, in the case of vehicles that are appropriately treated as investments, or at least where the rate of depreciation has bottomed out, nor can the reduction in the eventual return caused by the holding costs be sufficient of itself to warrant an order for sale.
[49] On the other hand, in Drummond, Lang J seems to have taken the view that costs of storage were both relevant, and in the case of low-value items could be sufficient to justify an order on that ground alone.10 I note that Lang J made no reference to storage/holding costs in the passage from the judgment that I cited much earlier, but these costs are impliedly included when considering the “length of time required for determination”.11
8 Commissioner of Police v Evans [2015] NZHC 1240.
9 Commissioner of Police v Blance [2018] NZHC 108.
10 Commissioner of Police v Drummond [2018] NZHC 1730 at [6].
11 At [15].
[50] I did suggest to the Official Assignee and the Commissioner that it is arguable that incurring of storage costs might still mean the “value” of the restrained property is not preserved in terms of s 35(e)(v), treating value in a net or realisation sense. Mr Harborow said the Official Assignee preferred not to advance the argument in that way.
[51] In any event, I agree with the Commissioner that a sale order is not limited to a sale under s 35(e)(v) of the Act. Section 35 only sets out examples of orders that the Court can make. It expressly does not limit the orders that can be made. That is equally clear from s 34.
[52] I consider a Court can order a sale under s 34 where it is necessary to preserve the potential net realisation value (as opposed to the value per se) of the restrained asset, providing a sale is otherwise considered appropriate. A sale may also be appropriate in other circumstances, for example, where it is impracticable for the Commissioner to manage the goods in the interim. Both of these may be circumstances where there is no likely depreciation. Examples are where the Commissioner restrains a herd of cattle, or a large boat of low value. Cattle may be unlikely to “depreciate” in value over the period of a year or two, but may be expensive and/or logistically difficult for the Official Assignee to continue to farm. A large boat of low value may not be subject to much at all in the way of depreciation, but may take up a lot of space and therefore entail high storage costs.
[53] Providing the assets are also not of non-monetary value to the respondent, or there are no other special circumstances, they, or another claimant, will likely in fact be better off in the event no forfeiture order is made, with the sale proceeds having been held on an interest-bearing basis in the meantime.
[54] In my view, this approach gives effect to the purpose of a restraining order which is, as Priestley J said in Commissioner of Police v Singh, a preliminary mechanism designed to ensure “that property which may be subject to forfeiture is not put beyond the reach of the Crown or dissipated”.12
12 Commissioner of Police v Singh [2012] NZHC 344 at [17].
[55] I therefore conclude that as a matter of law, the Court is not limited to ordering a sale only under s 35(e)(v) and is therefore not precluded from making an order under s 34 where there is no or little proven depreciation of the asset.
Storage of restrained goods other than at the Official Assignee’s premises
[56] The respondents contend, and they have provided evidence in support, that the restrained assets could be stored back at their own property. They say, or assume, this would then be cost-free to the Commissioner. They say therefore the Official Assignee’s storage costs should not be taken into account.
[57] The Official Assignee has made lengthy submissions and provided comprehensive evidence on this point, it seems to a significant degree driven out of concern at a decision of this Court in Commissioner of Police v Smith.13 In that case, a restraining order was made, and at the same time an order was made that some assets be kept at the respondent’s mother’s house. The orders were made without notice to the Official Assignee and therefore without any opportunity for the Official Assignee to be heard.14
[58] The Official Assignee says that the Court has no jurisdiction to make an order that restrained goods be stored at the respondents’ premises and in any event, no application has been made by the respondents to that effect. The Official Assignee says further that, if there were an application, it would not be viable, and finally, the assumption that such storage would be free is wrong – it would be more costly than storage at the Official Assignee’s secure premises.
[59] I consider the Court does have jurisdiction to make an order that restrained goods be stored other than at the Official Assignee’s premises, but that would require either a consent position or an actual application, under which the respondents would have to satisfy the Court that the goods would still be under the Official Assignee’s “custody and control”. (Alternatively, the application would have to be for removal
13 Commissioner of Police v Smith [2017] NZHC 10.
14 Interestingly, the relevant assets apparently remain in the Official Assignee’s secure storage unit.
from restraint, which as Mr Hamlin acknowledges is most unlikely to succeed, the Court having been satisfied that a restraining order should be made.)
[60] The respondents here are not making a formal application for storage at their premises, nor is there any question of their having overlooked making such an application. Rather, the respondents argue that the Official Assignee’s costs are too high, or they are unnecessary, which they illustrate by the fact that, for example, the restrained assets could be stored back at their property. Mr Hamlin says that, on that basis, an order for sale should be refused.
[61] If I were to accept this argument, it would not result in the assets being delivered back to the Parkers (as concerns Mr Harborow), but rather, in refusal of an order for sale. That is as I understand the respondents’ case and, in any event, that would be as far as I could take it.
[62] In my view, an argument that restrained goods can be stored elsewhere cannot be advanced on an application for sale without an actual application to vary the restraining orders to enable storage at alternative premises. The Court can then consider the merits of an application, rather than be faced with a shifting and hypothetical scenario.
[63] Otherwise, the Commissioner’s application for sale has to be considered on the basis of the status quo.
[64] Furthermore, an application to vary a restraining order such that goods be stored at a respondent’s premises or other than at the Official Assignee’s premises, would be highly unlikely to succeed, for obvious reasons.
[65] First, the onus would be on the respondent to satisfy the Court the application should be granted.
[66] Second, a detailed and binding proposal would have to be submitted with supporting documentation, as opposed to the shifting concept put before the Court here.
[67] Third, an application to vary a restraining order in terms of storage, would still have to be consistent with the fundamental terms of the existing order, namely that the goods are under the custody and control of the Official Assignee. It goes without saying this test would seldom, if ever, be met by storage at a respondent’s home.
[68] There may be occasions where such an application for alternative storage might succeed. For example, a car dealer who has had 60 cars seized that are held in premises owned by it, might submit that those premises could be used at no rental cost to the Official Assignee, and that arrangements could be made such that the Official Assignee had full control and care of the premises and therefore of the restrained goods.
[69] I do not need to consider the alternative storage proffered here because I have no actual application for the goods to be stored elsewhere and as a consequence, no clear terms, let alone terms that would be binding on the Parkers. But suffice to say, it could not remotely be suggested that the alternative storage proffered would still entail the goods being under the care and control of the Official Assignee. The proposal seems to be that the boat be stored outside at the respondent’s residence which itself is in a rural location some kilometres outside Whakatane. The other two vehicles could possibly be locked in a separate shed or garage on the premises but this would require some construction work even to fit them in and they would be far from secure. No insurance would be available, nor is any proposed and there is no evidence of fire alarms and the like. Even at a high level, the “proposal” could not succeed. This is reinforced when contrasted with the meticulous arrangements put in place at the Official Assignee’s secure storage unit, set out above.
[70]Fourth, and perhaps most importantly, the key part of Mr Hamlin’s submission
– that storage at the respondents’ home premises would be free – is clearly incorrect, and in any event, has in no way been demonstrated.
[71] As the Official Assignee stated in evidence, even if the assets were moved to the respondents’ home, there would be additional costs of transportation involved in the removal process and then (in the event of forfeiture) in transporting and re-
processing them back to the storage unit; additional costs of a clamp or other immobilising device at the alternative location; additional cost of travel by the Official Assignee’s staff and third parties such as AA mechanics to ensure vehicles are appropriately inspected and maintained; potential additional costs for insurance given the vehicles would require a separate policy instead of being covered by the one existing policy; potential additional cost of re-keying a garage or other facility, and additional cost regarding risk assessment for attendance to inspect the vehicles (including possible Police resources).
[72]None of the above factors has been addressed by the respondents.
[73] Overall, the respondents have not put up any case that the holding costs being incurred by the Official Assignee are inappropriate.
[74] In the absence of any application, or even viable proposal to the contrary, I accept that the storage/holding costs should be taken at face value.
[75] I should add in this regard that Mr Sayers gave oral evidence of the extent to which the Official Assignee goes to minimise the holding costs incurred.
[76] I note finally that Mr Nabney, counsel for Mr Milosevic in the proceeding heard along with this one, suggested that the Official Assignee’s storage costs were not real, as another branch of government may be the lessor of the relevant premises. I do not know who is the lessor of the secure storage unit, but I consider it irrelevant whether it is another branch of government. The Official Assignee is meeting the costs and charging accordingly.
Should these assets be sold?
[77] As noted already, the three assets at issue are not assets of high value, particularly not the two vehicles. The indicative values of the Ford Ranger, Harley Davidson and boat are $15,000, $22,000 and $55-65,000 respectively.
[78] The total depreciation based on the IRD schedules could be $13,000 per annum. While I accept that the actual depreciation is unlikely to be that high given
the goods are in storage, I nonetheless accept there will be material depreciation associated with these assets being held in storage for two further years or more.
[79] In terms of storage costs, there is evidence from Mr Sayers that the total storage costs for one car, one motor bike and one boat amount to approximately $12,500 per annum. Of that cost, nearly half relates to the boat and trailer. The $12,500 annual sum does not include additional maintenance costs, so the actual storage/holding costs are likely to exceed that amount.
[80]The combined cost of storage and depreciation is up to $25,500 per annum, or
$51,000 for two years.
[81] The evidence is that, while the criminal trial date is not yet known, it is unlikely to be until mid-way through 2020 and the forfeiture proceeding will not take place until sometime in 2021 at the earliest, so that the timeframe involved is likely close to two years or more.
[82] I then have to consider points that may counter-balance the appropriateness of a sale. The sort of factors that Dobson J referred to in Blance do not apply here. These assets do not have any sentimental or other form of non-monetary value to the respondents, and there are no hardship circumstances. In fact, Mrs Parker already has the use of the Hilux because the Commissioner was satisfied that it was justified for hardship reasons.
[83] I note that Mrs Parker claims an interest in the vehicles, but any interest she has is aligned with Mr Parker’s, and does not introduce any further relevant factor in this case.
[84] In circumstances where none of the vehicles is in any special category, the value of the assets is not high in the first place, material depreciation will be incurred, and holding costs are disproportionally high compared to value, I am satisfied that it is appropriate that each of these assets be sold.
Conclusion
[85]I summarise my findings as follows:
(a)There is evidence of likely depreciation. It is acceptable to rely on the IRD depreciation schedules as indicative.
(b)Storage or holding costs can be taken into account on an application for sale.
(c)A sale can be ordered even in the absence of likely depreciation, but that would be uncommon.
(d)An application for sale is considered on the basis of the status quo, which in this case is on the basis of the existing restraining orders and the assets being in the custody of the Official Assignee. If a respondent seeks to argue that assets could be stored elsewhere on more favourable terms, they would have to make an application to vary the restraining orders. Further, any such application would need to demonstrate that the goods would still be in the Official Assignee’s custody and control. It would be highly unlikely on any such application that a proposal to store goods away from the secure unit would meet the test of remaining in the Official Assignee’s “custody or control”, or that the costs would be lower than those involved in the Official Assignee’s storage unit.
[86] An order is made in terms of the Commissioner’s application for sale dated 25 May 2018. I note that this excludes the Toyota Hilux, which was released to Mrs Parker.
[87] In addition, on-notice restraining orders are made on an unopposed basis in terms of the Commissioner’s application dated 29 March 2018.
Addendum
[88] Some thought may have to be given to the wording of orders such as were made regarding the Toyota Hilux vehicle which was left in Mrs Parker’s care. Presumably, given my understanding that a restraining order was made, the Official Assignee is taken to have accepted that in such circumstances the asset is under its custody and control, although legally it is not. There may be an internal inconsistency between that approach and the argument successfully advanced here.
Hinton J
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