Commissioner of Police v Ranga
[2013] NZHC 745
•16 April 2013
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV-2010-485-000964 [2013] NZHC 745
IN THE MATTER OF an application pursuant to the Criminal
Proceeds (Recovery) Act 2009
BETWEEN THE COMMISSIONER OF NEW ZEALAND POLICE
Applicant
AND PAMELA ANN RANGA also known as
PAMELA ANN GREEN Respondent
ANDLINDA MARGARET PELLIKAAN NICOLE MAREE NEWSON RAYMOND BLAIR NEWSON WESTPAC BANK LIMITED KIWIBANK LIMITED
Interested Parties
Hearing: 25-26 March 2013
Counsel: S K Barr for Applicant
N Levy for Respondent
Judgment: 16 April 2013
In accordance with r 11.5 I direct the Registrar to endorse this judgment with the delivery time of 3.00pm on the 16th day of April 2013.
RESERVED JUDGMENT OF COLLINS J
THE COMMISSIONER OF NEW ZEALAND POLICE V RANGA HC WN CIV-2010-485-000964 [16 April
2013]
[1] The principal questions raised in this proceeding are:
(1) Can a property located at 18 Telford Way, Raumati Beach (Telford Way property) and an engagement ring belonging to Mrs Ranga be forfeited to the Crown pursuant to an assets forfeiture order? If so;
(2)Should part of the Telford Way property and the engagement ring be excluded from any assets forfeiture order so as to alleviate undue hardship to Mrs Ranga?
(3)What is the maximum sum the Crown can recover under a profit forfeiture order? and;
(4)Should the engagement ring be excluded from any profit forfeiture order so as to alleviate undue hardship to Mrs Ranga?
Context
[2] These questions arise in the context of applications by the Commissioner of Police (the Commissioner) for assets and profit forfeiture orders under the Criminal Proceeds (Recovery) Act 2009 (the Act).
Assets forfeiture orders
[3] Section 50 of the Act provides that if a High Court Judge is satisfied on the balance of probabilities that specific property is “tainted property” the Court must make an assets forfeiture order in respect of that specific property.
[4] “Tainted property” is defined in s 5 of the Act to include property that has, wholly or in part, been acquired as a result of criminal activities or directly or indirectly derived from “significant criminal activity”.
(1) One or more offences punishable by a maximum term of five years’
imprisonment, or more; or
(2) An offence from which property, proceeds, or benefits of a value of
$30,000 or more have, directly or indirectly, been acquired or derived.
Profit forfeiture orders
[6] Section 55 of the Act provides that if a High Court Judge is satisfied on the balance of probabilities that the respondent:
(1) has unlawfully benefitted from significant criminal activity within the
“relevant period of criminal activity”; and
(2) has interests in property,
then the Court must make a profit forfeiture order.
[7] “Relevant period of criminal activity” is defined in s 5 of the Act to refer to the seven year period preceding the Commissioner applying for a restraining order. In this case the Commissioner applied for restraining orders on 31 May 2010. The “relevant period of criminal activity” is therefore the period from 31 May 2003 to
31 May 2010.
Relief from orders
[8] Section 51 of the Act enables the Court to exclude property from an assets forfeiture order if it considers that, having regard to all the circumstances, undue hardship is likely to be caused to the respondent if the property in question is included in the assets forfeiture order. A similar provision is contained in s 56 of the Act in relation to profit forfeiture orders.
[9] On 8 October 2010 Mrs Ranga, who is also known as Pamela Green, was sentenced to six years’ imprisonment for supplying a Class B controlled drug.[1]
[1] Morphine sulphate; Misuse of Drugs Act 1975, s 6(1)(c).
Mrs Ranga pleaded guilty to the charge brought against her and in doing so accepted she had sold morphine sulphate to customers from October 2007 to May 2010. The date of October 2007 is significant because Mrs Ranga’s husband, Mr Walter Ranga, passed away on 22 October 2007. It is part of the Commissioner’s case that following her husband’s death Mrs Ranga assumed sole responsibility for their drug dealing enterprise.
Assets acquired by Mrs Ranga or her family trust
Cash deposits
[10] From 22 October 2007 until 19 April 2010, $397,110 worth of cash deposits were paid into Mrs Ranga’s bank accounts. This equated to average weekly deposits of $2,920. It is the Commissioner’s case that most of these deposits represented payments for drugs supplied by Mrs Ranga.
[11] It is also part of the Commissioner’s case that from 10 June 2003 until
22 October 2007 Mrs Ranga:
(1) actively participated in the sale of drugs; and/or
(2)allowed her bank accounts to be used to receive payments from the sale of drugs made by her husband.
During this period $268,200 worth of cash deposits were paid into Mrs Ranga’s bank
accounts at an average rate of $1,170.45 per week.
[12] Mrs Ranga vehemently denies selling drugs prior to October 2007. She accepts, however, that in all likelihood, a significant portion of the money deposited
into her accounts prior to the death of her husband came from the sale of drugs by her husband.
Properties owned by Mrs Ranga/Pamela Green Family Trust
[13] Mrs Ranga or her family trust have owned seven properties in the greater Wellington region. It is necessary to trace as best I can the history of Mrs Ranga and her trust’s ownership of properties because her case is based on the proposition that a significant portion of her equity in the Telford Way property was derived from legitimate sources, including capital gains on properties Mrs Ranga had previously owned and sold.
23A Roband Crescent
[14] This property was bought by Mrs Ranga (then Green) in October 1977 and sold in April 1992. There is no evidence as to how much that property was bought for or what equity that property realised when it was sold for $105,000.
1 Marram Way
[15] Mrs Ranga purchased land at 1 Marram Way on 26 October 1989 for $34,000 and built a home on that site in August 1992 for $147,885, part of which was funded from the sale of 23A Roband Crescent. 1 Marram Way was sold on 17 January 2001 for $200,000. Again, the evidence does not enable me to establish precisely what equity Mrs Ranga had in that property when it was sold. It is clear, however, that part of the proceeds of the sale of 1 Marram Way were used to build a house at
133 Paetawa Road.
14A Guthrie Street
[16] In the meantime, Mrs Ranga purchased a property at 14A Guthrie Street on
7 March 1995 for $95,000. The source of the funds used to purchase that property cannot be clearly established. It is possible $13,500 of the purchase price came from money left to Mrs Ranga by her father. This property was sold on 16 May 2000 for
$177,000. Again, it is not possible to determine what equity was realised from the sale of 14A Guthrie Street.
133 Paetawa Road
[17] In all likelihood part of the proceeds of the sale of 14A Guthrie Street were used to purchase a vacant section at 133 Paetawa Road. This property was purchased in the name of the Pamela Green Family Trust on 8 August 2000 for
$150,000. Part of that purchase price was funded by a mortgage of $40,000. The remaining $110,000 was, in all likelihood, funded from the proceeds of the sale of
14A Guthrie Street and other unknown sources.
[18] On 9 August 2001 Mrs Ranga started building a house at 133 Paetawa Road. That house cost $202,291 and appears to have been funded at least in part from the proceeds of sale of 1 Marram Way.
[19] On 6 September 2006 Mrs Ranga started renovating 133 Paetawa Road. Those renovations cost $127,082 and were paid for from cash deposits paid into Mrs Ranga’s Kiwibank and Westpac bank accounts.
[20] On 10 August 2009 133 Paetawa Road was sold for $610,000. The proceeds of sale of that property appear to have been used to fund most of the purchase of the Telford Way property on 7 August 2009.
52 Peka Peka Road
[21] In the meantime, Mrs Ranga purchased a property at 52 Peka Peka Road. This property was purchased on 31 March 2006 for $142,500 and sold on 5 April
2007. The Commissioner does not suggest that the proceeds of sale of 52 Peka Peka Road were applied to the purchase of the Telford Way property. Instead, the proceeds of sale of 52 Peka Peka Road were ultimately used to purchase 1 Manawa Avenue.
1 Manawa Avenue
[22] This property was purchased on 16 October 2009 for $475,000. It appears to have been funded from $270,744 cash that had been deposited into Mrs Ranga’s bank accounts, $110,000 from sums that were probably derived from the sale of
52 Peka Peka Road, a $40,000 mortgage, a $20,000 loan from Mrs Ranga’s son-in- law, and $34,256 from the proceeds of the sale of 133 Paetawa Road.
Telford Way
[23] Telford Way was purchased for $575,000 on 7 August 2009. That purchase price appears to have been paid from $30,000 in cash deposits held in Mrs Ranga’s Westpac account and most of the balance of the sale of 133 Paetawa Road.
The engagement ring
[24] Mrs Ranga explained that the engagement ring seized by the police was in fact a replacement ring purchased from insurance money paid when her original engagement ring and other items of property were stolen. The Commissioner does not challenge Mrs Ranga’s evidence on this point but says that the ring should nevertheless be forfeited to the Crown pursuant to a profit forfeiture order.
Assets forfeiture calculation
[25] For the purposes of the asset forfeiture application the Commissioner has calculated the following assets owned by Mrs Ranga and/or her Family Trust were purchased directly or in part from the proceeds of significant criminal activity:
(1) Telford Way $575,000.00 (2) Manawa Avenue $476,707.93 (3) Proceeds of sale of BMW motor car $ 6,620.00 (4) Engagement ring $ 10,450.00 (5) Rolex watch $ 9,000.00
(6) Cash seized when Mrs Ranga was arrested $ 3,049.90 (7) Funds remaining in a Kiwibank account $ 1,278.96
(8) Funds remaining in a Westpac bank account $ 1,417.85
Total $1,083,524.04
[26] Mrs Ranga does not resist assets forfeiture orders being made in relation to the following assets:
(1) 1 Manawa Avenue, registered in the name of the Pamela Green
Family Trust;
(2)$6,620 being the proceeds of sale of a BMW motor vehicle registered in the name of Mrs Ranga;
(3) $3,049.30 cash seized from Mrs Ranga;
(4) $1,280 in a Kiwibank account in the name of Mrs Ranga;
(5) $1,420 in a Westpac bank account in the name of the Pamela Green
Family Trust; and
(6) the Rolex watch.
Can Telford Way be seized pursuant to an assets forfeiture order?
[27] The answer to this question hinges upon whether I am satisfied on the
balance of probabilities that Telford Way is “tainted property”.
[28] Ms Levy did not attempt to persuade me that Telford Way was not “tainted property”.
[29] I am very satisfied that at the very least, the $127,082.00 worth of renovations done to 133 Paetawa Road came from the proceeds of sales of Class B controlled drugs. These renovations caused an increase in the property’s value, which was realised upon its sale and used to purchase Telford Way. Therefore, at least $127,082 of the purchase price of Telford Way came from money obtained from the sale of Class B controlled drugs.
[30] I am also satisfied that Mrs Ranga had effective control over Telford Way even though it is registered in the name of the Pamela Green Family Trust. Section 58 of the Act provides that if the High Court is satisfied that a respondent has effective control over property the Court can order that the property is to be treated as though the respondent had an interest in the property. In this case Ms Levy accepted Mrs Ranga had effective control over Telford Way. That was a realistic concession in view of the fact that Mrs Ranga formed the Pamela Green Family Trust, and was also a trustee and beneficiary of the Trust. For all intents and purposes Mrs Ranga controlled Telford Way as if it were her property. I accordingly conclude Mrs Ranga had effective control over Telford Way and that she is to be treated as having a 100 per cent interest in that property.
[31] Accordingly, I conclude that Telford Way can be seized pursuant to an assets forfeiture order. I will therefore proceed later in this judgment to rule on whether or not Mrs Ranga has established that seizing all or part of Telford Way would cause her undue hardship.
Can the engagement ring be seized pursuant to an assets forfeiture order?
[32] Before considering issues relating to undue hardship in relation to the asset forfeiture application I will determine whether or not the Crown has established on the balance of probabilities that Mrs Ranga’s engagement ring was tainted property and therefore capable of being subject to an assets forfeiture order.
[33] I understand Mrs Ranga received an engagement ring from Mr Ranga in
1985. At this time Mrs Ranga was living in Hamilton. Apparently that ring was stolen in 2008, along with other items that belonged to Mr and Mrs Ranga.
[34] In her affidavit Mrs Ranga said:
The ring was insured and a replacement ring was purchased with the insurance proceeds being paid directly to the jewellery shop which provided the replacement. It is the replacement ring that the police have seized and seek to forfeit. It is not linked in any way to drug dealing and I want to keep it as a memento of my late husband.
[35] This aspect of Mrs Ranga’s evidence has not been challenged by the
Commissioner.
[36] In these circumstances I conclude that the Commissioner has not proven on the balance of probabilities that the engagement ring is tainted property. On the contrary, I am satisfied that the engagement ring was probably obtained from legitimate means. The engagement ring cannot therefore be subject to an assets forfeiture order.
Can all or part of the Telford Way property be excluded from an assets forfeiture order so as to alleviate undue hardship to Mrs Ranga?
[37] The threshold for relief for a person in Mrs Ranga’s position is set at a high level. It requires Mrs Ranga to show not merely inconvenience or difficulty but that any hardship she will suffer will be disproportionate to the gravity of her offending.[2]
[2] Commissioner of Police v Nelson HC Auckland CIV-2010-404-989, 30 July 2010 at [73]-[75] and Commissioner of Police v Duncan HC Tauranga CIV-2010-470-933, 11 October 2011 at [144].
[38] In Lyall v Solicitor-General the Court of Appeal held that undue hardship should be assessed in light of the legislative policy that wrongdoers should be stripped of proceeds of crime. Therefore any disproportion between a respondent’s offending and the value of the property sought to be forfeited must be gross or severe
before relief can be justified.[3]
[3] Lyall v Solicitor-General [1997] 2 NZLR 641 (CA).
[39] Decisions of this Court recognise that a regime which allows the Crown to seize all the equity in a property, when only a fraction of that has been built up by unlawful means, is harsh, and effectively operates as an additional punishment to
that already imposed through the criminal justice system. However, in cases where
only a fraction of the property is “tainted” by the proceeds of crime, the extent of
legitimate equity may be taken into account when assessing undue hardship.[4]
[4] See Commissioner of Police v Doorman HC Nelson CRI-2010-442-169, 15 December 2011 at [36].
[40] In the United Kingdom, the Proceeds of Crime Act 2002 (UK) has an additional dimension, in that any orders made pursuant to it are prima facie inconsistent with Article 1 of the first protocol to the European Convention of Human Rights, which states:
Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.
The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.
[41] The United Kingdom Supreme Court in R v Waya recently recognised that this article requires proportionality between the deprivation of property as a form of penalty, and the aim which is sought to be realised by the deprivation.[5] It, therefore, used its interpretative direction in s 3 of the Human Rights Act 1998 (UK) to add the following qualification to the provision which empowered courts to order forfeiture:
[5] R v Waya [2012] UKSC 51, [2013] 1 AC 294 at [12].
(a) If the court decides under subsection 4(b) or (c) that the defendant has benefited from the conduct referred to it must –
(a) decide the recoverable amount, and
(b) make an order (a confiscation order) requiring him to pay that amount, except insofar as such an order would be disproportionate and thus a breach of Article 1, Protocol 1.
[42] The United Kingdom’s application of proportionality is different to the use of “disproportionate” to describe the threshold for undue hardship by New Zealand courts. In Lyall v Solicitor General and Commissioner of Police v Nelson, this term was used to describe the hardship suffered by the defendants post-forfeiture being out of proportion to the gravity of their offending. This is going to be more easily
made out where the value of the property in the Commissioner’s application
combined with the punishment already imposed on the offending through the criminal justice system is out of proportion to the gravity of the offending.[6]
[6] Lyall v Solicitor-General, above n 3, at 646-647.
[43] This is different to the requirement of proportionality in the United Kingdom, in interpreting the forfeiture regime consistently with rights contained in the European Convention. In that context, proportionality requires the means used to curtail the right to peaceful enjoyment of one’s possessions be rationally connected to the aims of the legislation, and that the sum forfeited must also be proportionate to those aims. New Zealand judges are of course not constrained by the Convention. However, I believe very helpful guidance can be derived from the United Kingdom Supreme Court’s jurisprudence. I consider it is important to assess whether any proposed forfeiture, when weighed with the punishment that has been imposed is sufficiently connected to and proportionate to the dual aims of the Act of ensuring:
(1) offenders do not benefit from unlawful activity; and
(2) that others are deterred from engaging in such activities.
I have undertaken this exercise in assessing whether or not Mrs Ranga should have any relief from the forfeiture orders sought by the Commissioner.
[44] Mrs Ranga opposes the forfeiture of Telford Way. She claims that the property was purchased from the proceeds of a line of legitimate property and business development ventures. She claims that the property was purchased through legitimate funds and used as a family home. She claims that once she leaves prison, she will have no house to go to if Telford Way is forfeited.
[45] In my assessment, the hardship Mrs Ranga will suffer is not disproportionate to the extent and seriousness of her offending and the ongoing benefit she obtained from it. The loss of a residence or assets, and the subsequent need to rely upon state assistance for housing does not create undue hardship.[7] Mrs Ranga knowingly participated in the supply of Class B controlled drugs. When she chose to maintain
[7] Commissioner of Police v Doorman HC Nelson CRI-2010-442-169, 15 December 2011.
the unlawful enterprise, she ought to have appreciated that she risked losing her
home and the assets that she had acquired. Although she will also lose the equity in the home that was derived from legitimate sources that in itself does not constitute undue hardship.
Conclusion in relation to forfeiture order
[46] I accordingly conclude that Telford Way is to be forfeited to the Crown pursuant to s 51 of the Act and that Mrs Ranga has not established that all or part of the property should not be forfeited pursuant to s 53 of the Act.
Profit forfeiture application
[47] Different considerations apply to the application brought by the
Commissioner for a profit forfeiture order.
[48] Under s 52(c) of the Act the Commissioner is required to specify the value of the benefit he says has been acquired by Mrs Ranga. In this case the Commissioner has specified for the purposes of the profit forfeiture application that Mrs Ranga has derived a benefit of $1,327,781 from significant criminal activity in the relevant period. The Commissioner has calculated this sum in the following way:
(1)$147,773.00 – capital gains from the sale of property during the relevant period of criminal activity which the Commissioner says would not have been available to Mrs Ranga had she not been able to invest so much money derived from significant criminal activity;
(2)$829,155.00 – income derived from significant criminal activity. This sum is calculated on the basis of deposits made into Mrs Ranga’s bank accounts and adjusted to take account of estimated expenditure by Mrs Ranga during the relevant period of criminal activity;
(3)$81,109.00 – Ministry of Social Development benefits paid during the relevant period of criminal activity;
(4) $233,802.51 – unpaid tax;
(5) $36,788.91 – use of money interest (UOMI). This gives a total of $1,327,781.
[49] In explaining the profit forfeiture calculations I have deliberately separated the unpaid tax calculation from the UOMI calculation. The reason for doing so is because Ms Levy challenged the appropriateness of adding unpaid tax to the calculation of the benefit received by Mrs Ranga during the relevant period of criminal activity. I believe there is merit in Ms Levy’s submission. The calculation of unpaid tax must form part of the income benefit derived by Mrs Ranga during the relevant period of criminal activity. If unpaid tax is added to the calculation of benefits received by Mrs Ranga the unpaid tax portion is effectively counted twice. Accordingly, I propose to deduct the unpaid tax calculation from the calculation of benefits derived by Mrs Ranga from significant criminal activity during the relevant period of criminal activity. Accordingly, the most the Commissioner could lawfully claim under the profit forfeiture application is $1,093,978.49.
[50] Having ruled that Telford Way is to be seized pursuant to an assets forfeiture order, it is not appropriate to include Telford Way in the profit forfeiture calculation. This conclusion is reinforced by s 54(1)(b) of the Act which requires me to deduct from the value of the benefit derived when calculating a profit forfeiture order, the value of any property forfeited to the Crown as a result of an assets forfeiture order made in relation to the same significant criminal activity to which the profit forfeiture order relates. Similarly, the other assets set out in paragraph [26] of this judgment which will be the subject of assets forfeiture orders must be excluded from the profit forfeiture order.
[51] This means the maximum recoverable amount under a profit forfeiture order is calculated in the following way:
(1)Sum specified by the Commissioner pursuant to $1,327,781.00 s 52 of the Act
(2) Minus unpaid tax $ 233,802.51
(3)Minus values specified for assets covered by $1,073,074.04 asset forfeiture orders
Maximum recoverable under a profit forfeiture order $ 20,904.45
Can the engagement ring be seized as part of a profit forfeiture order?
[52] The amount the Commissioner is entitled to seek by way of a profit forfeiture order is $20,904.45. Accordingly, Mrs Ranga’s engagement ring could theoretically be the subject of a profit forfeiture order. However, as I will explain in the following paragraphs, I believe undue hardship would be caused to Mrs Ranga if the engagement ring were forfeited to the Crown.
Undue hardship if engagement ring forfeited to the Crown
[53] My reasons for concluding that undue hardship would be caused to Mrs Ranga if her engagement ring were forfeited to the Crown can be succinctly stated:
(1)Unlike Telford Way and Mrs Ranga’s other assets, the entire engagement ring appears to have been acquired from totally legitimate sources. That ring was not tainted in any way and can therefore be viewed in a different light from Mrs Ranga’s other assets and assets held in the name of her family trust.
(2)I accept Mrs Ranga’s evidence that the engagement ring has emotional value to her and that depriving her of a memento of her late husband would cause her undue hardship.
(3)When considered in proportion to the value of the other assets, the ring is of minimal value and the Commissioner’s overall objectives will be more than satisfied by the Crown’s acquisition of all of Mrs Ranga’s other assets and assets held in the name of her family trust.
Conclusion
[54] For the reasons set out above I am satisfied:
(1)that the Commissioner has discharged the obligation upon him under the Act and that Telford Way is forfeited to the Crown pursuant to an assets forfeiture order;
(2) the engagement ring is not subject to an assets forfeiture order;
(3)Mrs Ranga has not satisfied me that undue hardship will be caused through her losing Telford Way;
(4)the engagement ring could theoretically be the subject of a profit forfeiture order;
(5)undue hardship would be caused to Mrs Ranga if the engagement ring were seized pursuant to a profit forfeiture order.
[55] Leave is given to the parties to file any memoranda they may wish to file in relation to any issues that arise as a result of my judgment.
D B Collins J
Solicitors:
Luke Cunningham & Clere, Wellington for Applicant
Ord, Legal, Wellington for Respondent
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