Commissioner of Police v Smith
[2023] NZHC 3384
•27 November 2023
IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY
I TE KŌTI MATUA O AOTEAROA WHANGĀREI-TERENGA-PARĀOA ROHE
CIV-2019-488-0065
[2023] NZHC 3384
UNDER Criminal Proceeds (Recovery) Act 2009 BETWEEN
COMMISSIONER OF POLICE
Applicant
AND
KIM BRUCE SMITH
First Respondent
LAWRENCE PHILLIP DE GOEY
Second RespondentNICHOLAS MARTIN PUKEROA
Third Respondent
Hearing: 22 August 2022 Appearances:
M R Harborow and A F Mackenzie for the applicant No appearance for the first respondent
W D McKean and J Riley for the second respondent K Hogan for the third respondent
Judgment:
27 November 2023
JUDGMENT OF ROBINSON J
[Applications for Civil Forfeiture Orders and Relief]
This judgment was delivered by me on 27 November 2023 at 3:00 pm pursuant to Rule 11.5 of the High Court Rules
…………………………………………………………………… Registrar/Deputy Registrar
Solicitors/counsel: MC, Auckland WRMK, Whangārei K Hogan, Auckland
COMMISSIONER OF POLICE v SMITH & ORS [2023] NZHC 3384 [27 November 2023]
INTRODUCTION [1]
Applications against Mr Smith [3]
Applications against Mr Pukeroa [5]
Legal principles [10]
Profit forfeiture orders [12]
Asset forfeiture orders [20]
Relief from forfeiture: respondents [23]
Relief from forfeiture: other persons [26]
MR SMITH [29]
Applications against Mr Smith [29]
Profit Forfeiture Order against Mr Smith [34]
Did Mr Smith unlawfully benefit from significant criminal activity during the
relevant period of criminal activity? [36]
Does Mr Smith have interests in property? [47]
Hellcat proceeds [47]
1926 SH 14 [48]
What is the value of Mr Smith’s unlawful benefit? [52]
What is the maximum recoverable amount? [53] Asset forfeiture order against Mr Smith [54] Tainted property [55]
Mr T De Goey’s application for relief [57]
Analysis [65]
MR PUKEROA [70]
Introduction [70]
Background [75]
The investigation [75]
The alleged conspiracy [78]
Is the Commissioner’s application for a profit forfeiture order time-barred?
[84]
The evidence [89]
Mr Pukeroa’s transcript [90]
Mr De Goey’s transcript [95]
Mr De Goey’s interview [100]
Mr Pukeroa’s evidence [106]
Mr Pukeroa’s interview with the Commissioner – 17 March 2020 [106]
Mr Pukeroa’s affidavit dated 17 June 2022 [110]
Mr and Ms Pukeroa’s dates of travel 2004–2006 [122] Did Mr Pukeroa unlawfully benefit from serious criminal offending? [126] Relief against forfeiture [140]
Result [145]
Costs [148]
INTRODUCTION
[1] The Commissioner of Police (Commissioner) applies for civil forfeiture orders under the Criminal Proceeds (Recovery) Act 2009 (Act) as follows:
(a)a profit forfeiture order against the first respondent, Kim Bruce Smith (Mr Smith) under s 55 of the Act to the sum of $526,062.14, with orders that the property at 1926 State Highway 14, Wheki Valley, Whangārei District (1926 SH 14) and the proceeds of $50,619 (Hellcat sale proceeds) plus any interest accrued from the sale of the 2015 Dodge Challenger Hellcat vehicle, registration KAA30 (Hellcat) be realised to meet that order;
(b)a profit forfeiture order against the third respondent, Nicholas Martin Pukeroa (Mr Pukeroa) under s 55 of the Act to the sum of $200,000 with orders that the property at 1708 [Redacted] be realised to meet that order; and
(c)assets forfeiture orders pursuant to s 50 of the Act in respect of the property restrained in this proceeding, being:
(i)the Hellcat sale proceeds;
(ii)1926 SH 14; and
(iii)1708 [Redacted].
[2] The Commissioner also sought orders against the second respondent, Mr Lawrence De Goey (Mr De Goey). The Commissioner and Mr De Goey reached a settlement prior to hearing. Mr De Goey nevertheless participated in the hearing in circumstances described more fully below.
Applications against Mr Smith
[3] Mr Smith has taken no steps in response to the Commissioner’s proceedings. He did not appear at the hearing. The Commissioner’s claims against Mr Smith essentially proceeded by way of formal proof.
[4]However, Mr Timothy De Goey (Mr T De Goey) – who is Mr De Goey’s son
– applies for relief from any civil forfeiture order made in respect of 1926 SH 14. Mr T De Goey claims an interest in the property valued at $159,934.84 and alleges that he has not unlawfully benefited from Mr Smith’s significant criminal activity. The Commissioner accepts that Mr T De Goey is entitled to relief but disputes the value of his interest in 1926 SH 14. Mr De Goey provided affidavit evidence in support of Mr T De Goey’s application for relief, including as to the value of Mr T De Goey’s interest in 1926 SH 14. The Commissioner gave notice requiring Mr De Goey to attend the hearing and be cross-examined in relation to that evidence, which he was.
Applications against Mr Pukeroa
[5] Mr Pukeroa opposes the Commissioner’s application for civil forfeiture orders in respect of 1708 [Redacted]. Mr Pukeroa and his wife Ms Pukeroa are the registered proprietors of 1708 [Redacted], which they own legally and beneficially as joint tenants. Mr Pukeroa opposes the Commissioner’s profit forfeiture order on the grounds that he did not unlawfully benefit from significant criminal activity, and that he does not have an interest in part of 1708 [Redacted]. He opposes an asset forfeiture order on the basis that the property is not tainted.
[6] In support of his application for civil forfeiture orders against Mr Pukeroa the Commissioner relies, amongst other things, on part of the transcripts of Mr De Goey’s and Mr Pukeroa’s compulsory examinations with Police on 10 February 2021 and 17 March 2020 respectively. These transcripts are exhibits to an affidavit sworn by Mieke Jane Whitford, an authorised officer employed by the New Zealand Police and attached to the Northern Asset Recovery Unit within the Financial Crime Group. Ms Whitford conducted the examinations. Although the Commissioner required Mr De Goey for cross-examination on his evidence in support of Mr T De Goey’s application for relief, the Commissioner did not call Mr De Goey to give evidence
about the contents of his examinations with Ms Whitford. This is discussed further below.
[7] Ms Pukeroa is an interested party. She opposes the Commissioner’s applications against her husband. She opposes the profit forfeiture order on the basis that Mr Pukeroa does not have interests in part of 1708 [Redacted]. She opposes the asset forfeiture order on the basis that the property is not tainted.
[8] Mr Pukeroa and Ms Pukeroa both filed affidavits in support of their opposition. Mr Harborow for the Commissioner cross-examined them both.
[9] Both Mr Pukeroa and Ms Pukeroa also apply for relief from any civil forfeiture order in respect of 1708 [Redacted]. Each relies on the ground that undue hardship is likely to be caused to them if 1708 [Redacted] is made the subject of a forfeiture order. Ms Pukeroa also relies on the ground that she has an interest in the property and has not unlawfully benefited from any significant criminal activity.
Legal principles
[10] The Act establishes a regime for the forfeiture of property that has been acquired or derived, directly or indirectly, from significant criminal activity; or of property that represents the value of a person’s unlawfully derived income.1 The purpose of the regime as recorded at s 3(2)(a) and (b) is to eliminate the chance for persons to profit from undertaking or being associated with significant criminal activity, and to deter significant criminal activity.2 The Supreme Court has described the language of s 3(2)(a) as “aspirational”, giving a “clear and emphatic signal as to the legislative purpose.”3
[11] To achieve its stated purposes, the Act provides for two types of civil forfeiture order: an asset forfeiture order and a profit forfeiture order.4 The legal principles
1 Criminal Proceeds (Recovery) Act 2009, s 3(1) [CP(R)A].
2 Subsections (a) and (b).
3 Marwood v Commissioner of Police [2016] NZSC 139, [2017] 1 NZLR 260 at [12].
4 CP(R)A, s 5(1) definition of “civil forfeiture order”.
relevant to each are set out below. Proceedings relating to either kind of civil forfeiture order are civil in nature.5 The civil standard of proof applies.
Profit forfeiture orders
[12] The Commissioner seeks profit forfeiture orders against Mr Smith and Mr Pukeroa. Subject to any relief granted (as outlined below), this Court must make a profit forfeiture order if it is satisfied that:6
(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.
[13] A person unlawfully benefits from significant criminal activity if he or she has knowingly, directly or indirectly, derived a benefit from significant criminal activity (whether or not that person undertook or was involved in the significant criminal activity).7 Knowledge includes wilful blindness.8
[14] Significant criminal activity is an activity engaged in by a person that would amount to offending:9
(a)that consists of, or includes, one or more offences punishable by a maximum term of imprisonment of five years or more; or
(b)from which property, proceeds or benefit of a value of $30,000 or more have directly or indirectly been acquired or derived.
[15] Proof of any convictions related to the alleged activity is likely the best evidence of that person’s engagement in the activity: s 47 of the Evidence Act 2006 deems proof of those convictions “conclusive proof that the person committed the
5 Section 10(1)(c) and (d).
6 Section 55(1).
7 Section 7.
8 Vincent v Commissioner Police [2013] NZCA 412 at [52].
9 CP(R)A, s 6(1).
offence.” But criminal convictions or charges are not necessary to prove that a respondent has engaged in significant criminal activity.10 While the Court could infer as such from established criminal activity, it can draw similar inferences from a disparity between a respondent’s assets and their declared legitimate income; or from a lack of credible explanation for deposits into their bank account.11 In other words, a respondent’s involvement in criminal activity and their receipt of an unlawful benefit may be proved with circumstantial evidence.12 Possession by the respondent of large sums of unexplained money might be strong circumstantial evidence supporting an inference that the funds were derived from significant criminal activity.13
[16] The ‘relevant period of criminal activity’ starts seven years before either the date of the application for the relevant restraining order (if the profit forfeiture order relates to restrained property); or the date of the application for the profit forfeiture order (if the property is not restrained). The relevant period ends on the date the application is made.14
[17] If the Commissioner proves on the balance of probabilities that the respondent had, in the relevant period of criminal activity, unlawfully benefited from significant criminal activity, it must make a profit forfeiture order. In doing so it must specify three things. First, it must specify the value of the proved unlawful benefit, which is presumed to be the value stated in the Commissioner’s application for the profit forfeiture order.15 The respondent may rebut that presumption on the balance of probabilities.16
[18] The Court is then required to determine the maximum amount recoverable under the profit forfeiture order.17 It does that by taking the value of the benefit determined above (accounting for any successful challenge by the respondent); and deducting from that the value of any property forfeited under an asset forfeiture order
10 Sections 6(2), 15 and 16.
11 Commissioner of Police v Hayward [2012] NZHC 1097 at [22] and [25].
12 Commissioner of Police v de Wys [2016] NZCA 634 at [8] – [12].
13 At [71].
14 CP(R)A, s 5(1) definition of “relevant period of criminal activity”.
15 Section 53(1).
16 Section 53(2).
17 Section 54.
made in relation to the same significant criminal activity to which the profit forfeiture order relates.18
[19] Thirdly, the profit forfeiture order must specify the property in which the respondent has an interest (as defined in s 5(1)). That property is to be disposed of in accordance with s 83(1).
Asset forfeiture orders
[20] The Commissioner also brings applications for asset forfeiture orders against Mr Smith and Mr Pukeroa. The Court must make an asset forfeiture order in respect of specified property if it is satisfied that property is “tainted property”.19 Tainted property:20
(a)means any property that has, wholly or in part, been:
(i)acquired as a result of significant criminal activity; or
(ii)directly or indirectly derived from significant criminal activity; and
(b)includes any property that has been acquired as a result of, or directly or indirectly derived from, more than one activity if at least one of those activities is a significant criminal activity.
[21] The respondent need not be engaged in the significant criminal activity personally, provided the property was wholly or in part derived from significant criminal activity.21
18 Section 54(1).
19 Section 50(1).
20 Section 5(1), definition of “tainted property”.
21 Doorman v Commissioner, New Zealand Police [2013] NZCA 476, [2014] 2 NZLR 173 at [32] – [36].
[22] If the Court is so satisfied, it must make an assets forfeiture order specifying the property to which it applies; that the property vests in the Crown absolutely; and that the property is in the custody and control of the Official Assignee.22
Relief from forfeiture: respondents
[23] A respondent may apply for relief from a civil forfeiture order on the basis of undue hardship. Relief means that property is either excluded from being able to be realised under a profit forfeiture order;23 or is excluded from an asset forfeiture order.24
[24] The Court may grant such relief if satisfied that undue hardship is reasonably likely to be caused to the respondent if the property is included in the asset forfeiture order or realised to satisfy a profit forfeiture order. In making that decision the Court may have regard to, without limitation:25
(a)the use that is ordinarily made, or was intended to be made, of the property that is, or is proposed to be, the subject of the profit forfeiture order or the assets forfeiture order;
(b)the nature and extent of the respondent’s interests in the property; and
(c)the circumstances of the relevant significant criminal activity.
[25]In Nicholas v Commissioner of Police, the Court of Appeal explained:26
[57] To state the obvious, the hardship complained of must be undue. That is, it must be more than ought properly to be due in giving effect to the relevant purposes of the Act. Those purposes include elimination of opportunities to profit from significant criminal activity and deterrence of people from choosing so to benefit in the future. In such a regime, as the cases consistently show, those who have profited from significant criminal activity will expect to lose their major assets including land and home even where these have enormous economic and emotional value for the owner. The level of disproportion required to be “undue” must be greater than that. As the authorities have consistently said in this Court and the High Court, the level of hardship must be so disproportionate as to require the objectives of recovery
22 CP(R)A, s 50(3).
23 Section 56(1).
24 Section 51(1).
25 Sections 51(2) and 56(2).
26 Nicholas v Commissioner of Police [2017] NZCA 473, [2018] NZAR 172 (footnotes omitted).
and deterrence to be subordinated to the particular needs of the wrongdoer (s
56) or other interested parties (ss 61 and 62).
Relief from forfeiture: other persons
[26] Someone other than a respondent may also apply for relief from a civil forfeiture order, but under s 61 of the Act.27 As for respondents seeking relief, the Court may grant relief to the applicant if satisfied that undue hardship is reasonably likely to be caused to the applicant if relief is not granted.28 The considerations relevant to respondents’ relief applications also apply here.29
[27] A person other than a respondent may also seek relief under s 61 on the alternative basis that they have an interest in property and were not involved in any significant criminal activity. Under s 66 the Court must grant the relief it considers appropriate if the applicant proves on the balance of probabilities that they:30
(a)have an interest in the property to which the application relates; and
(b)have not unlawfully benefited from the significant criminal activity to which the application relates.
[28]If the Court grants relief to a non-respondent applicant, either:
(a)in respect of a severable interest in the specific property, it must direct that the severable interest not be included in any civil forfeiture order;31 or
(b)in respect of an interest that is not severable from the property that is to be the subject of a civil forfeiture order, the Court must direct the Crown to pay the applicant an amount equal to the value of their interest.32
27 CP(R)A, s 61.
28 Section 67(1).
29 Section 67(2).
30 Section 66(1).
31 Section 68(a).
32 Section 69.
MR SMITH
Applications against Mr Smith
[29] As noted, the Commissioner’s applications against Mr Smith essentially proceeded by way of formal proof, subject to Mr T De Goey’s application for relief. The Commissioner accepts that Mr T De Goey is entitled to relief, but disputes quantum.
[30] The Commissioner submits that Mr Smith unlawfully benefited from significant criminal activity, namely the supply of the Class A and B drugs methamphetamine, heroin and morphine. The Commissioner says that Mr Smith used the proceeds of that offending to obtain the Hellcat and 1926 SH 14.
[31] The evidence shows that the Police investigated Mr Smith as part of a broader investigation into a syndicate based in Northland. Mr Smith was eventually charged and convicted of various offences including two counts each of supplying or offering to supply methamphetamine and heroin, and a representative charge of supplying morphine.
[32]The Commissioner’s case is that Mr Smith unlawfully benefited to the sum of
$526,062.14 during the relevant period. Mr Harborow for the Commissioner submits that this is the amount of Mr Smith’s unexplained cash and expenditure; his estimated tax liability; and his capital gain in respect of 1926 SH 14. The Commissioner seeks a profit forfeiture order to the value of that benefit, and orders that the Hellcat sale proceeds and 1926 SH 14 be disposed on the basis that Mr Smith had interests in, and effective control over that property.
[33] If profit forfeiture orders are not made, the Commissioner seeks asset forfeiture orders in respect of the property. If profit forfeiture orders are made, the Commissioner seeks asset forfeiture orders in respect of any equity in the relevant property that is not disposed of to meet the profit forfeiture orders.
Profit Forfeiture Order against Mr Smith
[34] The Commissioner’s application for a profit forfeiture order against Mr Smith under s 55 alleges that Mr Smith has unlawfully benefited from significant criminal activity to the value of $526,062.14. The Commissioner seeks orders that:
(a)the maximum recoverable amount is $526,062.14;
(b)the 1926 SH 14 property and Hellcat proceeds (Smith Property) are to be disposed of in accordance with s 83(1) of the Act;
(c)the Smith Property is to be treated as though Mr Smith had interests in it;33
(d)for the purposes of effecting a sale of 1926 SH 14 the Official Assignee has the power to execute any deed or instrument in the name of the registered proprietor(s) of the property, and to do anything necessary to give validity and operation to the deed or instrument; and
(e)the Smith Property that is not to be disposed of in accordance with s 83(1) of the Act vests in the Crown absolutely and is in the Official Assignee’s custody and control.
[35] Mr T De Goey is the registered proprietor of 1926 SH 14. He applies pursuant to s 66 of the Act for relief from any civil forfeiture order that the Court may make against Mr Smith. He values his interest at $159,934.84 and says it is not severable. As such he seeks an order pursuant to s 69 of the Act that the Crown is to pay him
$159,934.84 together with any interest accrued from the date of his application (28 June 2022) until payment is made in full. As noted, the Commissioner does not oppose Mr T De Goey’s entitlement to relief but challenges the value of his interest in 1926 SH 14.
33 Section 17A.
Did Mr Smith unlawfully benefit from significant criminal activity during the relevant period of criminal activity?
[36] The Commissioner applied for restraining orders against Mr Smith’s Hellcat on 30 July 2019. He applied for civil forfeiture orders on 15 December 2021. As such, the relevant period of criminal activity is between 30 July 2012 and 15 December 2021.
[37] For the following reasons, I am satisfied on the balance of probabilities that Mr Smith unlawfully benefited from significant criminal activity during that period.
[38] Mr Smith has 41 criminal convictions in New Zealand. He has four criminal convictions in Australia which resulted in him being deported from Australia to New Zealand in 1992. 14 of his convictions are for firearm-related offences.
[39] Police investigated Mr Smith as part of a broader investigation into the supply of class A drugs in Northland in 2019. As part of that investigation Mr Smith’s cellular communications were intercepted under a surveillance warrant. Amongst other things Police located firearm parts, ammunition, a taser, drug paraphernalia and documents relating to the sale of both the Hellcat and 1926 SH 14 at Mr Smith’s address.
[40] On 18 June 2020 Mr Smith was convicted of the following offences, for which he received a sentence of one year and nine months’ imprisonment:
(a)two counts of supplying methamphetamine;
(b)two counts of supplying heroin; and
(c)one representative charge of supplying morphine.34
[41] Pursuant to s 47 of the Evidence Act, the fact of convictions is conclusive proof for the purposes of these applications that Mr Smith committed those offences.
34 Offences under the Misuse of Drugs Act 1975, s 6(1)(c). Maximum penalties of life imprisonment (supply of methamphetamine/heroin) and 14 years’ imprisonment (supply of morphine).
[42] In February 2020, Police served an examination order on Mr Smith while he was imprisoned. The accompanying letter clearly stated in underlined text that failure to comply could result in prosecution under the Act. When Mr Smith met with Police the following month, he refused to answer any of their questions. He did not respond to their subsequent request for a rescheduling of the examination. As a result, Mr Smith was convicted on 22 December 2020 for failing to comply with an examination order without a reasonable excuse.35
[43] The Commissioner’s evidence shows that Mr Smith declared no taxable income between 2006 and 2019 (inclusive) save for income of $50,057.42 (in total) which he declared in 2011 and 2012. Documents located at Mr De Goey’s home address show that Mr Smith also received an income of $39,664.50 from a company in 2014, which he withdrew in cash and did not declare. There is no record of Mr Smith receiving any other cash or income from a legitimate source since then. Mr Smith has not had a bank account since 2012 and frequently transacts in cash.
[44] Despite this lack of income Mr Smith purchased the Hellcat for $142,000 on 26 June 2016. Mr Smith paid cash, which the vendors advised Police he carried in a backpack.
[45] Between 4 February 2012 and 31 March 2014 Mr Smith also made cash payments of at least $72,000 to Mr De Goey in part repayment of a vendor finance loan from Mr T De Goey.
[46] Taking into account: Mr Smith’s convictions for supplying illegal drugs; text messages and other evidence obtained by Police during the course of its investigation into Mr Smith (and others); Mr Smith’s significant cash purchases made in the absence of legitimate and declared income; and Mr Smith’s significant dealings in cash; I am satisfied on the balance of probabilities that Mr Smith has unlawfully benefited from his significant criminal activity.
35 CP(R)A, s 152(1)(a).
Does Mr Smith have interests in property?
Hellcat proceeds
[47] The evidence establishes that Mr Smith purchased the Hellcat on 23 June 2016. Restraining orders over the Hellcat were made on 24 July (without notice) and 12 September 2019 (on notice). The vehicle was eventually located on 13 November 2020 in a forested area at the rear of a property in Northland, albeit damaged and with key parts missing. A sale and purchase agreement evidencing the purchase was found in a search of the vehicle, as well as a receipt from the vendor. The Hellcat was subsequently sold in accordance with the conditions of the on notice restraining order. Sale proceeds of $51,790 were transferred to the control of the Official Assignee. I am satisfied Mr Smith had an interest in the Hellcat and the proceeds of its sale.
1926 SH 14
[48] While Mr T De Goey is the registered proprietor of 1926 SH 14, there is no dispute that Mr Smith has an interest in it.
[49] Mr T De Goey purchased 1926 SH 14 (together with the adjoining properties) from his father Mr De Goey in 2007 for $900,000, plus repayment of a $300,000 loan. Mr De Goey continued to live on the property and manage it.
[50] There is no dispute that on 4 February 2012, Mr De Goey on his son’s behalf entered into an agreement to sell 1926 SH 14 to Mr Smith and a Mr James Clarke for
$250,000. A handwritten record of that agreement, which the Commissioner accepts is genuine, records that:
The vendor will finance the purchase price for twelve months, at a rate of nil intrest.
After twelve months, 4/02/2013 it will be at the discretion of the vendor to charge intrest on balance owing at current market rates.
Purchaser to be responsible for portion of rates for total land in lot 1. Rates, to be $862-11 per anum.
[Or ¼ share of total rates for 12 months]36
Lot 1 has a freehold title, no mortgage etc against it, and on completion of payements can be transfered into new ownership details.
(Emphasis added)
[51] As set out above, Mr Smith has made cash payments of at least $72,000 in repayment of the purchase price. Notwithstanding that he remains indebted to Mr T De Goey for the balance (plus interest, the quantum of which is disputed), I am satisfied that Mr Smith has an interest in the property for the purposes of the Act (which includes an equitable estate or interest).37
What is the value of Mr Smith’s unlawful benefit?
[52] Pursuant to s 53(1) of the Act, the value of Mr Smith’s unlawful benefit from his significant criminal activity is presumed to be the value stated in the Commissioner’s application, namely $526,062.14. Mr Smith has not rebutted the presumption.
What is the maximum recoverable amount?
[53] In the absence of any asset forfeiture orders having been made, the maximum recoverable amount pursuant to s 54(1) of the Act is $526,062.14.
Asset forfeiture order against Mr Smith
[54] To the extent that profit forfeiture orders are not made in relation to the Hellcat proceeds or 1926 SH 14 (or all of the equity in that property) the Commissioner seeks assets forfeiture orders.
Tainted property
[55] As noted above, Mr Smith declared taxable income of just $50,057.42 between 2006 and 2019. Nevertheless, during this time he purchased the Hellcat for $142,000
36 The text in square brackets was on the copy of the agreement attached to Mr De Goey’s affidavit dated 28 June 2022 but not the copy attached to Ms Whitford’s affidavit dated 29 November 2019.
37 CP(R)A, s 5(1) definition of “interest”.
and paid at least $72,000 towards the purchase of 1926 SH 14. He did not have a bank account and paid cash. In 2019 he was convicted of supplying class A drugs.
[56] In those circumstances I am satisfied on the balance of probabilities that at least a significant amount of the cash Mr Smith used to purchase the Hellcat and paid towards the purchase of 1926 SH 14 was derived from significant criminal activity. Pursuant to s 50(1) I am obliged to make the asset forfeiture orders sought.
Mr T De Goey’s application for relief
[57] The only issue to determine regarding Mr T De Goey’s relief application is the value of his interest in 1926 SH 14.
[58] Mr Smith and Mr Clarke have repaid $195,000 of the $250,000 vendor finance loan from Mr T De Goey. Mr De Goey’s evidence is that he (on behalf of Mr T De Goey) has exercised the discretion under the agreement to charge interest on the balance owing at “current market interest rates”. He considers a 10 per cent per annum rate reasonable. As such he values his son’s interest in the property as at 30 June 2022 at $159,934.84, comprising the unpaid principal ($55,000); interest at 10 per cent per annum ($98,450.68); and unpaid rates ($6,484.16).
[59] The Commissioner accepts that Mr T De Goey is entitled to relief under s 66. The Commissioner accepts that Mr Smith owes $55,000 of principal and $6,484.16 in unpaid rates. The Commissioner also accepts that Mr T De Goey is entitled to interest at “current market rates”. However, the Commissioner submits that a rate of 10 per cent does not reflect “current market rates”; and that the interest of $98,450.68 claimed by Mr T De Goey is inflated.
[60] Mr Houng Lee, a forensic accountant employed by New Zealand Police, gave evidence pointing out that neither Mr De Goey nor Mr T De Goey in fact advanced
$250,000 to Mr Smith. As such, Mr Houng Lee says Mr De Goey has not missed out on the opportunity of earning interest on that amount.
[61]The Commissioner submits that a more appropriate interest rate is either:
(a)the housing lending rates for a floating mortgage; or
(b)term deposit rates, representing the amounts Mr T De Goey could have earned if he had received the unpaid portion of the loan and invested it in a term deposit.
[62] Mr Houng Lee has used information from the Reserve Bank of New Zealand (RBNZ) website to determine the floating first mortgage rates for the period from 4 February 2013 until 30 June 2022. These rates vary between 4.38 per cent and 6.7 per cent. Mr Houng Lee calculates the accrued interest owing by Mr Smith would be
$45,405.89 (rather than $98,450.68) if Mr De Goey had adopted these floating housing rates as the “current market rates”.
[63] Similarly, Mr Houng Lee has used the RBNZ data to determine the six-month term deposit rates during the relevant period. These ranged between 0.82 per cent and
4.03 per cent. Mr Houng Lee calculates that the accrued interest owing by Mr Smith would be $22,071.34 if Mr De Goey had applied these as the “current market rates”.
[64] In response Mr De Goey explains that the purchasers were unable to raise finance through lending institutions, which is why they could not pay the purchase price at the outset. He maintained that 10 per cent is a reasonable rate for an unsecured loan. He produced a printout from the website to suggest that the interest rates charged by 24 different lending institutions offering unsecured loans vary from 8.95 to 29.95 per cent. He points out that 10 per cent is at the very bottom of that range.
Analysis
[65] The competing evidence and submissions show that there is no traditional “market” for the vendor finance loan arrangements in place between Mr Smith and Mr T De Goey. As such, it is difficult if not impossible to determine with any precision the “current market rates” payable in respect of that loan.
[66] As noted, the loan was interest free for 12 months with Mr T De Goey having a discretion to charge interest at “current market rates” after that. There are no
particular repayment dates. Repayment appears to be at the borrowers’ convenience, and while $195,000 has been repaid, there have not been any repayments since 31 March 2014. Mr T De Goey is not obliged to transfer title until the loan is fully repaid, but in the meantime there is no dispute that Mr Smith has acquired an interest in the property. Mr T De Goey has a right to retain title, but he does not have a secured mortgage with powers to sell the property free of Mr Smith’s interest, nor other powers to enforce repayment. With no demonstrable legitimate income and a significant criminal history Mr Smith was clearly a high credit risk.
[67] In those circumstances I accept Mr McKean’s submission for Mr T De Goey that the vendor finance loan to Mr Smith was much riskier than the secured home loan on floating interest rates measured by the RBNZ. I also agree that the “current market rate” for a vendor finance loan on the terms agreed between Messrs Smith and T De Goey would be considerably higher than the rates paid by commercial lenders on six- month term deposits. That current market rate would reflect the risk of non-payment, rather than just Mr T De Goey’s lost opportunity to place funds on a six-month term deposit.
[68] I accept Mr Harborow’s submission that the vendor finance loan has less risk than an entirely unsecured loan. However, in my view it is also relevant that Mr Smith has acquired an interest in the land but has not made any payments since 31 March 2014.
[69] For these reasons I accept Mr McKean’s submissions that it is appropriate to grant Mr T De Goey relief pursuant to s 66 of the Act on the basis that he was entitled to charge Mr Smith interest at a “current market rate” of 10 per cent per annum in accordance with the arrangements between them.
MR PUKEROA
Introduction
[70] Mr De Goey grew pine trees on the property at Lot 3 1998 SH 14. On 31 January 2018 he entered into a contract for the sale of timber to Northern Forests Property Ltd (NFPL) at $58 per tonne of timber. Between 30 January 2018 and
18 May 2018 Mr De Goey issued invoices under the name Wheke Farm and Forestry to NFPL for a total amount of $373,774.40 (including GST). One of these invoices directed the payment of $49,800 to a car dealership in Hamilton. Three of the invoices directed payments in the total amount of $123,624.40 to an account in the name of Mr De Goey’s sister. Three invoices dated 1 February 2018, 29 March 2018 and 24 April 2018 directed payments of $50,000, $100,000 and $50,000 respectively to an account held by Mr Pukeroa.
[71] Mr Pukeroa spent approximately $130,000 of those funds acquiring and beginning to develop the property at 1708 [Redacted] together with his wife. He used approximately $50,000 to pay tax to the Inland Revenue (IRD).
[72] The Commissioner alleges that Mr De Goey paid Mr Pukeroa the $200,000 in accordance with an agreement they made in 2005 to pervert the course of justice. The Commissioner alleges that in this way Mr Pukeroa has unlawfully benefited from significant criminal activity during the relevant period. On 15 December 2021 the Commissioner applied for restraining orders and for civil forfeiture orders.
[73] Mr Pukeroa denies entering into an agreement with Mr De Goey to pervert the course of justice. In the alternative he seeks relief pursuant to ss 51 and 56 of the Act.
[74] As discussed further below, Ms Pukeroa gave evidence in support of Mr Pukeroa’s opposition to the Commissioner’s application. She also seeks relief under ss 61, 66 and 67.
Background
The investigation
[75] The Commissioner’s investigation into matters giving rise to this proceeding was originally into the affairs of Mr Smith. The Commissioner’s investigation into Mr De Goey arose out of the investigation into Mr Smith; and the investigation into Mr Pukeroa’s affairs arose out of the investigation into Mr De Goey.
[76] A broad history of this proceeding demonstrates the way in which the Commissioner’s investigations unfolded. It is relevant to the Court’s assessment of the disputed evidence before it in relation to the Commissioner’s application for civil forfeiture orders against Mr Pukeroa.
[77]The chronology is as follows:
(a)On 12 September 2019, the Commissioner obtained a restraining order and orders for sale of Mr Smith’s Hellcat, together with orders for examination of Mr De Goey concerning the location of the Hellcat. The Commissioner filed affidavits of Ms Whitford dated 19 July 2019 and 30 July 2019 in support of his application for those orders.
(b)On 9 December 2019, the Commissioner applied for orders restraining the properties in Wheki Valley that Mr De Goey had transferred to Mr T De Goey (1926 SH 14, Lot 3 1998 SH 14 and Lot 4 1998 SH 14). Mr De Goey was named as the second respondent in this proceeding. In support of that application the Commissioner filed a third affidavit from Ms Whitford dated 29 November 2019 (Ms Whitford’s third affidavit).
(c)On 18 March 2020, the Court granted the Commissioner’s application for restraining orders against the Wheki Valley property. The Court ordered that 1926 SH 14 was to be treated as though Mr Smith had interests in it; and Lot 3 1998 SH 14 and Lot 4 1998 SH 14 (and other assets) were to be treated as though Mr De Goey had interests in them.
(d)On 15 December 2021, the Commissioner applied for (amongst other things) profit forfeiture orders against each of Messrs Smith, De Goey and Pukeroa and asset forfeiture orders against the Smith property and 1708 [Redacted]. In support of those applications the Commissioner filed an affidavit from Ms Whitford dated 14 December 2021 (Ms Whitford’s fourth affidavit). Ms Whitford’s fourth affidavit attached transcripts of electronically recorded interviews that Detective
Phillip Taylor carried out with Mr Pukeroa on 17 March 2020; and that Ms Whitford carried out with Mr De Goey on 10 February 2021.
The alleged conspiracy
[78] In her third affidavit Ms Whitford explains that on 9 March 2004, Mr De Goey was involved in an incident in which four teenagers attempted to steal cannabis growing on Lot 3 1998 SH 14. They were intercepted by Mr De Goey and others. As a result of the altercation that followed, Mr De Goey was convicted of four charges of kidnapping; two charges of injuring with intent to injure; two charges of assault with attempt to injure; and one charge of cultivating cannabis. Mr De Goey was tried in the Whangārei District Court in October 2005. Ms Whitford explains Police records in relation to that trial are missing, but newspaper reports at the time record that on 20 January 2006 Mr L De Goey was sentenced to three years’ imprisonment of which he served just over one year.
[79] On 17 June 2004, approximately three months after Mr De Goey’s arrest and four months prior to his trial, a restraining order was placed over Lot 3 1998 SH 14, pursuant to s 42 of the Proceeds of Crimes Act 1991. The restraining order was revoked on 3 April 2006 pursuant to s 64 of the 1991 Act due to the decreased size of the plantation evidenced at his trial.
[80] On 1 March 2006 the Crown Law Office had advised the Official Assignee that it had instructed the Whangārei Crown Solicitor’s office not to pursue forfeiture of Lot 3 1998 SH 14. The Crown Law Office advised that:
The initial restraining order was obtained on the basis that the property was tainted, owing to the presence of 500 cannabis plants being grown on the property. The evidence at trial, however, was that there were somewhere between 27 and 60 cannabis plants. De Goey was sentenced to three months imprisonment in relation to the cultivation charge and the sentencing judge was of the opinion that the operation fell far down the scale of commerciality.
[81] The Commissioner’s case in this proceeding, however, is that in order to avoid forfeiture of Lot 3 1998 SH 14, Mr De Goey and Mr Pukeroa agreed that Mr Pukeroa would falsely claim that the cannabis plants located on Lot 3 1998 SH 14 were his. In exchange for his agreement to give false evidence, Mr Pukeroa would receive proceeds
from the sale of the pine trees growing on that property. The Commissioner considers this agreement constituted a conspiracy to pervert the course of justice in New Zealand.38 The Commissioner says further that the $200,000 Mr Pukeroa received from Mr De Goey in 2018 was paid to him in accordance with the unlawful conspiracy they entered into in 2005. The Commissioner says that in this way Mr Pukeroa has unlawfully benefited from significant criminal activity such that a profit forfeiture order should be made under s 55 of the Act. The Commissioner says further that 1708 [Reacted] is tainted property and that an asset forfeiture order should be made under s 50.
[82]Mr Pukeroa opposes the Commissioner’s application. He says that the
$200,000 he received from Mr De Goey was a loan. Alternatively, he applies for relief from any civil forfeiture order on the basis that he is reasonably likely to suffer undue hardship if 1708 [Redacted] is included in an assets forfeiture order or realised to satisfy a profit forfeiture order.39
[83] For her part, Ms Pukeroa seeks relief on the basis that she has an interest in 1708 [Redacted]; she has not unlawfully benefited from the alleged significant criminal activity to which the application relates; and in all of the circumstances she is reasonably likely to suffer undue hardship if relief is not granted.40
Is the Commissioner’s application for a profit forfeiture order time-barred?
[84] As a preliminary point Ms Hogan submitted that the Court lacked jurisdiction to make a profit forfeiture order, essentially because the Commissioner’s application was time-barred.
[85] Section 55 of the Act provides that if the Court is satisfied on the balance of probabilities that a respondent has interests in property, it must make a profit forfeiture order if it is also satisfied that the respondent has unlawfully benefited from significant criminal activity within the relevant period of criminal activity.41 The Act defines
38 Crimes Act 1961, ss 116 and 117(e) (both having a maximum penalty of seven years’ imprisonment).
39 Criminal Proceeds (Recovery) Act 2009, ss 51 and 56.
40 Criminal Proceeds (Recovery) Act 2009, ss 66 and 67.
41 CPRA, s 55(1)(a) (emphasis added).
“relevant period of criminal activity”.42 In the case against Mr Pukeroa, the relevant period was the seven years before the date of the Commissioner’s application for forfeiture orders (that being between 7 December 2014 and 7 December 2021) because the application did not relate to restrained property.
[86] Ms Hogan submits that although Mr De Goey paid Mr Pukeroa in 2018, the Commissioner alleges they entered into their criminal conspiracy in 2005. As such, she submits that the alleged significant criminal activity is not within the relevant period of criminal activity. Ms Hogan submits it is clear that the “relevant period of criminal activity” relates to the criminal activity (the entering of the conspiracy) and not receipt of the unlawful benefit. If Parliament intended the contrary then s 55 and the relevant statutory definitions could easily have been drafted differently.
[87] I do not consider that the Commissioner’s application for a profit forfeiture order was time-barred. The primary purpose of the Act is to establish a regime for the forfeiture of property that has been derived directly or indirectly from significant criminal activity; or that represents the value of a person’s unlawfully derived income.43 In light of this primary purpose, I accept Mr Harborow’s submission that the relevant question is whether a respondent has received a benefit that derived from significant criminal activity within seven years of the application; not whether the significant criminal activity occurred within those seven years. The Act is clear that a person has “unlawfully benefited from significant criminal activity” if the person has knowingly, directly or indirectly, derived a benefit from significant criminal activity (whether or not that person undertook or was involved in the significant criminal activity).44
[88] In any event, it was part of the criminal conspiracy alleged by the Commissioner that Mr De Goey would pay Mr Pukeroa in exchange for his agreement to give false evidence. Although the alleged conspiracy (if made out) would have been complete at the time of the agreement in 2005, the Commissioner’s case was that the
42 Section 5(1).
43 Section 3(1).
44 Section 7.
2018 payment was made in performance of the conspiracy and was part of that continuing offence.45
The evidence
[89] In support of his case against Mr Pukeroa the Commissioner relies on the transcripts of Police interviews with Mr Pukeroa and Mr De Goey exhibited to Ms Whitford’s fourth affidavit. As a preliminary point, Ms Hogan for Mr Pukeroa challenged the admissibility of these statements.
Mr Pukeroa’s transcript
[90] In relation to Mr Pukeroa’s transcript, Ms Hogan submitted that to the extent it was self-incriminatory it was inadmissible pursuant to s 165(1) of the Act, which then provided:
165 Admissibility of self-incriminating statements
A self-incriminating statement made orally by a person (whether or not the statement is recorded in writing) in the course of answering any question, or supplying any information, or producing any document, or providing any explanation, as required under s 105 or 107, may be used in evidence against that person only in a prosecution for an offence under s 108 of the Crimes Act 1961 (which relates to perjury) or under this Act in relation to any evidence given by the person that is inconsistent with the statement.
[91] In Commissioner of Police v Marshall Lang J held that s 165(1) applies only to criminal prosecution.46 Lang J held that:47
The primary purpose of the [Act] is to establish a regime for the forfeiture of property that has been derived directly or indirectly from significant criminal activity or that represents the value of a person’s unlawfully derived income. The ability of the Commissioner to obtain an examination order under s 107 is consistent with that purpose, as is the qualified removal of the right to claim privilege against self-incrimination. It would produce an absurd outcome, and one that is wholly inconsistent with the purpose of the [Act] if the Commissioner could obtain relevant information using an examination under s 107 and then be prevented from using it to obtain forfeiture orders by virtue of s 165.
45 See R v Johnston (1986) 2 CRNZ 289 (CA) at 291.
46 Commissioner of Police v Marshall [2021] NZHC 1819.
47 At [13].
[92] Lang J considered that s 165 mirrored ss 60(2) – (3) and 63 of the Evidence Act 2006, which do not prevent self-incriminatory evidence from being used in civil proceedings but significantly restrict the use that can be made of them in criminal proceedings.
[93] Ms Hogan for Mr Pukeroa submits that Lang J was wrong to hold that the s 165(1) use-restriction only applied in criminal prosecutions. Counsel submits that s 165 provides investigators with a useful investigative tool as well as a prosecutive tool to the extent it precludes the later giving of inconsistent evidence. As such, counsel submits (contrary to Lang J’s reasoning) it is not absurd that s 165 prevents self‑incriminating statements made during an s 107 examination from being used in support of applications for civil forfeiture orders.
[94] I tend to agree with Lang J.48 However, the issue has since been rendered academic by the Criminal Proceedings (Recovery) Amendment Act 2023, which amends s 165 and has retrospective effect.49 Section 165 of the Act as amended provides (amongst other things) that any self-incriminating statement that a person makes in answering any question or providing any explanation in response to a production or examination order may be used in evidence against them in any civil proceeding relating to restraining orders, assets forfeiture orders or profit forfeiture orders.50
Mr De Goey’s transcript
[95] In support of his claim for civil forfeiture orders against Mr Pukeroa the Commissioner relies heavily on part of the 163-page transcript of Mr De Goey’s interview with Ms Whitford.
[96] The Commissioner did not adduce direct evidence from Mr De Goey in support of the claim against Mr Pukeroa. However, on 5 August 2022 the Commissioner served a notice requiring Mr De Goey to be available for cross-examination in relation
48 I acknowledge this Court’s subsequent decision in Commissioner of Police v Franklin [2023] NZHC 727 in which Woolford J indicated he would have taken a different approach to that taken by Lang J in Marshall.
49 Criminal Proceeds (Recovery) Amendment Act 2023, s 7A and sch 1 cl 7(2).
50 CP(R)A, s 165(4).
to his affidavit dated 22 June 2022, filed in support of Mr T De Goey’s application for relief. But for the Commissioner having required Mr De Goey for cross-examination on this separate and largely unrelated point, the transcripts of his interview with Ms Whitford would have been a hearsay statement inadmissible in support of the Commissioner’s claim against Mr Pukeroa. Section 4 of the Evidence Act 2006 provides as follows:
Hearsay statement means a statement that –
(a)Was made by a person other than a witness; and
(b)Is offered in evidence at the proceeding to prove the truth of its contents.
…
Witness means a person who gives evidence and is able to be cross-examined in a proceeding.
[97] Although the Commissioner required Mr De Goey for cross-examination in the context of Mr T De Goey’s relief application, the Commissioner did not call Mr De Goey to give direct evidence in support of the Commissioner’s claim against Mr Pukeroa. In that regard Mr Harborow for the Commissioner confirmed that he was content to rely on the transcript of Mr De Goey’s out-of-court statement. In these circumstances Ms Hogan challenged the admissibility of the transcript of Mr De Goey’s examination. She explained that she did not cross-examine Mr De Goey on the contents of his examination because he had not been called by the Commissioner to give that evidence directly. Ms Hogan pointed out that Mr Pukeroa could not have required Mr De Goey to be available for cross-examination because he has not filed direct evidence in relation to Mr Pukeroa’s case. Ultimately however, Ms Hogan accepted that Mr De Goey was available to her for examination, notwithstanding she may not have had a duty to cross-examine in circumstances where he had not given direct evidence against Mr Pukeroa.
[98] No doubt counsel both had strategies for not eliciting direct evidence from Mr De Goey, despite both having the opportunity to do so. I draw no inferences as to what those strategies might have been. The upshot is that the Commissioner’s claim against Mr Pukeroa rests heavily on Mr De Goey’s untested out-of-court statement which Mr Pukeroa now disputes.
[99]I summarise the relevant evidence below.
Mr De Goey’s interview
[100] During the course of his interview with Ms Whitford, Mr De Goey said that he knew Mr Pukeroa and had helped him do the concrete floor on the section at 1708 [Redacted]. He made the following comments:
DE GOEY And also um me and him, ah that person we entered into an agreement in about 2005 um with the pine trees.
WHITFORD Yeah.
DE GOEYAnd he received $200,000 payment from the pine, from the sale of the pine trees, and that was from an, an agreement that we entered into in 2005.
WHITFORD Mhm.
DE GOEY And that was the um total amount that I had to pay him. WHITFORD Mhm.
DE GOEY O–on it and um yeah and as I say that was part of um, pulling them out at that time was because um he wanted to proceed with um purchasing that property at um [redacted].
WHITFORD Mhm.
DE GOEY Yeah. And um that’s my association with um [redacted].
[101] Mr De Goey explained that he knew Mr Pukeroa through his son. Ms Whitford asked why there was an agreement for $200,000 to go to Mr Pukeroa. Mr De Goey commented:
DE GOEY Um because of a um a business arrangement that we had. WHITFORD Mhm.
DE GOEYUm entered into in um that 2005. Um, um regarding the um sale of the trees at that stage. (Still shuffling through paper, no eye contact).
WHITFORD And so what was the nature of that arrangement?
DE GOEY Um, what happened was in 2004 when I got um, when I got charged with um cultivating cannabis and what have you at the, when we caught those young fellas pinching our pot from out there. (Sniffs) Um, they were going to take the property off me.
WHITFORD Mhm.
DE GOEY(Sniffs) So I entered into an agreement with Mr Pukeroa that um he was going to um say that the cannabis plants were his.
WHITFORD Mhm.
DE GOEY Because I was going to loose the whole prop-property. (Sniffs) and um then after two weeks of trial (Inhales) the Crown did an agreement with us that if we changed our plea to guilty, they would give the property back.
WHITFORD Mhm.
DE GOEY(Inhales) But he was going to um stand up in court and say that the plants were his.
WHITFORD Mhm.
DE GOEY (Sniffs) Cos I couldn’t say they were mine because they were gonna take the property so (Sniffs) hence the agreement.
[102]Ms Whitford then asked how the $200,000 was calculated:
WHITFORD So the, the two hundred thousand was, is essentially a calculation based on the value of the pine trees?
DE GOEY Mm. (Nods).
WHITFORD Okay. Um is it all ehh a portion of the pine trees all the pine trees?
DE GOEY Just, just $200,000 worth.
WHITFORD Okay so maximum two hundred thousand dollars’ worth of pines.
DE GOEY Yeah so, its y-y- yeah. Yeah. WHITFORD Okay. (Nods).
DE GOEYIt, it was e-either half or up to two hundred thousand…. But, but no more than …. Ya know cos at 2005 the value of the pine trees was a lot less than what it is now.
WHITFORD Yeah. Okay. Um ah was there any agreement in writing about, about this.
DE GOEY No, no it was just handshake. (Gestures with hand).
[103] Mr De Goey went on to explain that he had done concreting work for Mr Pukeroa at the property without charge. He said that “over the years” when Mr De
Goey had not had a driver’s licence Mr Pukeroa had driven him around, including to Auckland for medical reasons:
DEGOEY He’d um driven me around and I’ve had a bit of um trouble with my vascular (points to chest). (Sniffs).
WHITFORD Mhm.
DEGOEY And had three big operations for that and he’s like taken me down to um Auckland.
WHITFORD (Nods). Mhm.
DE GOEY And what have you so he’s been quite mm. WHITFORD Mm.
[104]Mr De Goey explained that Mr Pukeroa was:
… not the first person I’ve done that for like help ya know like…… it was his first home … And um it was just giving him a hand to get into it … Yeah. And I’ve done it with a few of Jake’s young, young friends.
[105] Ms Whitford asked Mr De Goey if he considered himself to have any interest in the 1708 [Redacted] property:
DE GOEY No. Not at all. (Sniffs).
WHITFORD So the arrangement, the arrangement between you and Nicholas um eh was there any ongoing.
DE GOEY No.
WHITFORD Interest in the property or what he would do with the money? DE GOEY No.
WHITFORD Okay.
DEGOEY No. (Sniffs) That was um what he do with it (Shrugs) was up to him um.
Mr Pukeroa’s evidence
Mr Pukeroa’s interview with the Commissioner – 17 March 2020
[106] Mr Pukeroa was interviewed by Detective Taylor on 17 March 2020. The interview was in the context of the Commissioner’s investigation into Messrs Smith and De Goey.
[107] Mr Pukeroa explained that he and his wife purchased 1708 [Redacted] in 2018. They paid $329,000 and put down a deposit of $32,900. They arranged finance from ASB Bank, which has a mortgage over the property. Detective Taylor asked Mr Pukeroa whether anybody other than Mr and Ms Pukeroa had an interest in the property. Mr Pukeroa said nobody but ASB Bank.
[108]During the interview he was asked:
PT: Currently do you have any arrangements between yourself and Laurence or have you had any arrangements?
NP: No arrangements between us as of now and no arrangements per say [sic] in the past. That question is coming up later about the pine trees. Other than that I have just worked for him and with him and he has owed me small bits of money.
[109] That part of the interview relied upon by the Commissioner proceeded as follows:
PT: Going through the table now, the pine deal worth $200,000 from Northern Forest, can you clarify the details behind this deposit?
NP: Result of an agreement between me and Laurence many years now and that payment was result of agreement we made about 15 years ago.
PT: what specifically was that agreement?
NP: No comment. I have nothing else to say that’s what I have been advised. It was a verbal agreement between me and Laurence.
10:30
Lawyer requests a minute to chat outside with her client.
10:31
Interview resumes.
PT: In relation to the forestry deposit of $200,000 from Northern Forest, is there anything else you want to say?
NP: Not at this moment.
Mr Pukeroa’s affidavit dated 17 June 2022
[110]In his affidavit, Mr Pukeroa resiles from his previous statement that the
$200,000 payment was made pursuant to a verbal agreement between him and Mr De Goey 15 years ago; and that there are no other arrangements between them.
Mr Pukeroa’s evidence is that the $200,000 was a loan from Mr De Goey, and that “Lou and I agreed that I would pay him back when I could”.
[111] Mr Pukeroa acknowledges a discussion with his friend Jake De Goey (Mr De Goey’s son) at some point during the 2004–2005 Christmas/New Year period during which the subject came up. At the time Mr Pukeroa was 18 years old and living in Australia. He recalls receiving a telephone call from Jake De Goey. Although not the point of the call, Mr Pukeroa’s evidence was that:
… in the course of the conversation Jake mentioned that his Dad was offering half of his pine trees to his Dad’s mates if they put their hand up for a marijuana plantation that had been found on this Dad’s property. I said to Jake
– tell your old man I’ll put my hand up!
[112] Mr Pukeroa’s evidence is that nothing further was said or done and he did not hear from Jacob or Lawrence on the topic any further. He says it was a frivolous comment to his friend Jake that he did not think about again and did not lead to any agreement with Mr De Goey.
[113] In terms of his earlier statement to the Police, Mr Pukeroa explains that from around 2012 he developed a friendship with Mr De Goey, and that:
Because of the amount of respect I held for Lew and my trust of him, I allowed myself to be guided by him in terms of what to tell the Police. Lew advised me to tell Police that the $200,000 payment was made to “honour his word”. That is the reason for my statements to Police.
[114] In terms of the friendship developed between them, Mr Pukeroa’s evidence is that around 2012–2014 he got to know Mr De Goey personally, rather than simply as his friend’s father. At that time Mr and Ms Pukeroa were living in Whangārei. Mr De Goey first visited them there with his son. They got on well and struck up a close friendship. Mr De Goey taught Mr Pukeroa how to restore an old car he had been given. When Mr De Goey’s health deteriorated in 2015–2016 and he lost his driver’s license Mr and Ms Pukeroa helped him out, driving him to the hospital, chemists and grocery stores. Mr Pukeroa says that over the years he has had a lot of deep conversations about life with Mr De Goey, who has limited relationships with his own children.
[115] In her affidavit, Ms Pukeroa confirms that from about 2012–2013 Mr De Goey had become a close family friend and began visiting regularly. She confirms that she and Mr Pukeroa were both active in helping Mr De Goey when he became unwell, driving him to hospital and other appointments and running errands for him.
[116] Ms Pukeroa’s evidence is that in 2017 Mr De Goey started talking about harvesting the pine trees. He told Mr Pukeroa he wanted to help him and Ms Pukeroa purchase a home, and that he could lend them up to $200,000 to assist. Mr Pukeroa himself maintains that he never asked Mr De Goey to harvest the pines, and never asked him for $200,000.
[117] Ms Pukeroa explains that she and Mr Pukeroa together with their children lived in a rental property in Whangārei from 2008 until 2020. Their landlords had offered to sell them the property but then obtained a valuation in May 2018 and increased the price originally discussed. With the assistance of a mortgage broker and the funds advanced by Mr De Goey they obtained finance from ASB Bank. They purchased 1708 [Redacted] in July 2018 with the intention of building a family home on it.
[118] Mr Pukeroa says he understands Mr De Goey lent him $200,000 simply to help and his family out. Mr Pukeroa does not consider the $200,000 loan was made because of his conversation as a teenager with Mr De Goey’s son 13 years earlier. Mr Pukeroa says that although Mr De Goey did make reference in passing to the kindness of his 2005 “offer”, this was not a topic that was discussed in any detail.
[119] Mr and Ms Pukeroa have been together since they were teenagers. They were living together in Australia in 2005. In cross-examination Ms Pukeroa agreed that they tend to tell each other things of significance. However she says Mr Pukeroa never spoke to her about having had a conversation with Jake De Goey about “putting his hand up” in relation to the cannabis growing on Mr De Goey’s property. Ms Pukeroa confirmed her understanding that Mr De Goey lent Mr Pukeroa $200,000, not that it was paid because of any agreement they entered into in 2005.
[120] In their affidavits Mr and Ms Pukeroa explain that since purchasing the property they have started to build a home on it. They cleared a building site and
Mr De Goey has helped them lay a concrete foundation. However, since the Commissioner’s application they have put the build on hold. They live in a small cabin on the property with their three children. Each of their three children’s whenua (placenta) has been buried on the property. Ms Pukeroa and their wider whānau also planted a memorial on the land when Mr Pukeroa’s younger brother died in a motor vehicle accident in 2021.
[121] For a time Mr De Goey was also living in a caravan on the property, but he does not have an interest in it.
Mr and Ms Pukeroa’s dates of travel 2004–2006
[122] In her affidavit in reply to Mr Pukeroa and Ms Pukeroa’s affidavits, Ms Whitford summarises their flight records (and other relevant events) based on information obtained from Immigration New Zealand. Ms Whitford’s evidence is that:
Date
Event
19 January 2004
Mr Pukeroa departs Auckland for Brisbane (aged 17)
6 April 2004
Mr De Goey is remanded in custody on kidnapping charges
9 May 2004
Ms Pukeroa departs Auckland for Brisbane
17 June 2004
Restraining order is placed over Lot 3 1998 SH 14
15 December 2004
Mr Pukeroa and Ms Pukeroa arrive in Auckland from Brisbane
15 January 2005
Mr Pukeroa and Ms Pukeroa depart Auckland for Brisbane
31 May 2005
Mr Pukeroa and Ms Pukeroa arrive in Auckland from Brisbane
6 June 2005
Ms Pukeroa departs Auckland for Brisbane
8 June 2005
Mr Pukeroa departs Auckland for Brisbane
18 October 2005 Mr Pukeroa arrives in Auckland from Brisbane
8 November 2005
Ms Pukeroa arrives in Auckland from Brisbane
25 November 2005
Mr De Goey’s trial is underway.51
20 January 2006
Mr De Goey is sentenced to three years, there months’
imprisonment.
[123] These records demonstrate that Mr Pukeroa and Ms Pukeroa returned to New Zealand from Australia shortly before Mr De Goey’s trial was to commence. They did not return to Brisbane.
[124] Mr Pukeroa did not claim responsibility for the cannabis. As set out above the Commissioner did not pursue forfeiture because fewer plants were proven to have been grown on the land than originally alleged. Ms Whitford’s evidence is that Mr De Goey told her this was part of a plea bargain he entered into with the Crown. However, on the basis of Mr Pukeroa’s travel dates and Ms Whitford’s examination of Mr De Goey she believes that Mr Pukeroa returned to New Zealand in October 2005 in order to take responsibility for the “cannabis plantation” as agreed with Mr De Goey.
[125] Mr and Ms Pukeroa both dispute this. In cross-examination Ms Pukeroa explained that when they returned to Brisbane in June 2005 they intended to remain, but Mr Pukeroa’s work as a boat builder came to an end, so they decided to return to New Zealand indefinitely. Ms Pukeroa left Brisbane three weeks later than Mr Pukeroa because she had to give notice to her employer, and her mother had already planned to visit. Ms Pukeroa denies that Mr Pukeroa came home to falsely take responsibility for the cannabis plants during Mr De Goey’s trial. She denies coming home to support Mr Pukeroa while he gave false evidence.
51 Ms Whitford’s evidence is that due to the lack of Police records it is unclear when the trial began.
Did Mr Pukeroa unlawfully benefit from serious criminal offending?
[126] The Commissioner has the burden of proof to the civil standard (on the balance of probabilities).52 He must prove that his allegations are more likely than not to be true.53 The likelihood must be greater than 50 per cent.54
[127] I am not satisfied on the balance of probabilities that either Mr Pukeroa or Mr De Goey took any positive steps to obstruct, prevent, pervert or defeat the course of justice. For the reasons set out below, I am not satisfied on balance that Mr Pukeroa came home to Whangārei from Brisbane in October 2006 in order to give false evidence at Mr De Goey’s trial. Even if he had, the trip would have been merely preparatory and would have been insufficient to establish an attempt to defeat the course of justice for the purposes of s 117(e) of the Crimes Act 1961.
[128] On the other hand, I accept that it would amount to a conspiracy contrary to s 116 of the Crimes Act 1961 if Mr Pukeroa and Mr De Goey had agreed that Mr Pukeroa would falsely give evidence, as alleged by the Crown.55 The Court must assess whether Mr De Goey’s explanation to Ms Whitford that Mr Pukeroa agreed to give false evidence in exchange for a portion of his pine trees is more likely than not to be true. It is plainly relevant to that assessment that Mr Pukeroa originally told Detective Taylor he had received the $200,000 as a result of an earlier agreement. But he later changed his evidence. Mr Pukeroa acknowledges that he offered to “put his hand up” when Jake told him Mr De Goey was looking for someone to take responsibility for the cannabis plants, but he maintains nothing further was discussed or agreed. He says the only time the topic came up was during his conversation with Jake De Goey and nothing came of it. He was 17 or 18 years old at the time.
[129] Mr Harborow submits it is likely the agreement started with a flippant comment and developed over time. I am not satisfied to the necessary standard that Mr Pukeroa’s flippant comment led to an agreement with Mr De Goey in that way. Nor am I satisfied that the payment to Mr Pukeroa 13 years later was made in
52 CPRA s 10.
53 Z v Dental Complaints Assessment Committee [2008] NZSC 55, [2009] 1 NZLR 1 at [102].
54 Accident Compensation Corporation v Ambros [2007] NZCA 304, [2008] 1 NZLR 340 at [65].
55 R v Buckton [1985] 2 NZLR 257 (CA); R v Gemell [1985] 2 NZLR 740, (1985) 1 CRNZ 496 (CA).
accordance with any such agreement. It is not the Commissioner’s case that Mr Pukeroa ultimately “put his hand up”.
[130] Mr Pukeroa says his statement to Detective Taylor in 2020 was wrong. He says he was following Mr De Goey’s instructions or advice about what to say if asked about the $200,000 when interviewed.
[131] On balance, I prefer Mr and Ms Pukeroa’s evidence (including in cross- examination) over the transcript of Mr De Goey’s interview with Ms Whitford. I also accept Ms Hogan’s submission that there is a “ring of truth” to Mr Pukeroa’s evidence that in his own interview he was following Mr De Goey’s instructions about what to say. In her third affidavit (from November 2019) in support of restraining orders (and subsequently civil forfeiture orders) against Mr De Goey, Ms Whitford referred to documents seized from Mr De Goey’s home suggesting he had committed the following offences:
(a)making false statements to receive benefits pursuant to s 290(1) of the Social Security Act 2018;56
(b)obtaining by deception pursuant to s 240 of the Crimes Act 1961 by knowingly making false declarations to the Ministry of Social Development in order to receive benefit payments;
(c)dishonestly using documents pursuant to s 228 of the Crimes Act 1961 in relation to benefit fraud; and
(d)tax evasion pursuant to s 143B of the Tax Administration Act 1994 by failing to declare income, and to pay both income and goods and services tax, to Inland Revenue (IR).
[132]Similarly, Ms Whitford explains:57
2.7IR records indicate Mr De Goey’s only sources of income since 2006 have been MSD benefits and a single payment from the Accident
56 Which prior to 1 October 2018 was pursuant to s 127 of the Social Security Act 1964.
57 Emphasis added.
Compensation Corporation (ACC). Mr De Goey has received MSD benefits since April 2011 and has consistently declared in applications to MSD that he was earning no income and had no cash assets.
2.8However, documentary evidence indicates that Mr De Goey has been regularly engaged in work as a concreter in the period 2013 to 2019. Financial analysis has determined Mr De Goey’s estimated tax liability to be $243,554.85 and his GST liability to be $57,867.64. He also received $130,978.54 from MSD on the basis of declarations that appear to have been untrue. Mr De Goey paid for several items in cash from unexplained sources, including council rates, mortgage repayments and a Mustang.
2.9Similarly to Mr Smith, Mr De Goey appears to have taken steps to obscure his financial position. He transferred Lot 3 1998 SH 14 and Lot 4 1998 SH 14 to Mr T De Goey, but retained effective control over these properties through a $900,000 vendor loan. A Mustang that Mr De Goey purchased on 1 November 2017 was also registered in his son’s name. He has consistently used associate’s [sic] bank accounts, retaining only one account of his own into which he receives MSD payments.
[133] In terms of Mr Pukeroa’s credibility, Mr Harborow points out that shortly after his interview Mr Pukeroa withdrew the last $20,000 of the $200,000 directed to him by Mr De Goey. In cross-examination Mr Pukeroa said he was advised to do so when his lawyer at the time suggested it could be seized. Counsel submits that this, together with Mr Pukeroa’s convictions for driving whilst disqualified, demonstrates a disposition to favour self-interest over respect for the judicial system and authority.
[134] Mr Harborow also points out that Mr Pukeroa said in cross-examination that he did not know when Mr De Goey’s trial was taking place. Mr Harborow submits this is not credible given Mr Pukeroa’s earlier evidence that Mr De Goey’s offending had been “the talk of the town”, and (according to newspaper reports) Mr Pukeroa’s friend Jake De Goey was a co-defendant in the same trial.
[135] However, the Commissioner’s evidence also demonstrates that at the time of his interview, Mr De Goey had a strong incentive to minimise his income and his assets. The Commissioner’s case against Mr De Goey was that since he was released from prison in 2006 he had been fraudulently obtaining welfare benefits; failing to declare taxable income; and unlawfully charging GST. Although the Commissioner settled its claim against Mr De Goey, I observe for present purposes that there was clearly a strong evidential foundation for it.
[136] On the other hand, I found Ms Pukeroa to be an honest and reliable witness. Her evidence was credible and compelling, including during cross-examination. Ms Pukeroa is heavily involved in the financial and administrative aspects of the maintenance business she runs with Mr Pukeroa and a business partner. She confirmed in cross-examination that they would tell each other about things of significance. I accept Ms Hogan’s submission that if Mr Pukeroa had entered into an unlawful conspiracy with Mr De Goey then it is probable Ms Pukeroa would know about it. And I accept Ms Pukeroa’s evidence that she did not.
[137] I also accept Ms Pukeroa’s evidence that she and Mr Pukeroa decided to return to New Zealand at the end of 2006 after Mr Pukeroa’s employment came to an end and she had given notice and taken a holiday with her mother. Ms Pukeroa was adamant in cross-examination that she did not return to New Zealand in order to support Mr Pukeroa because he may have been giving false testimony in Mr De Goey’s trial.
[138] Having weighed up the evidence, I do not consider it is more likely than not that in 2005 Messrs De Goey and Pukeroa conspired to pervert the course of justice; nor that in 2018 Mr De Goey paid Mr Pukeroa $200,000 in accordance with their conspiracy. In my view it is rather more likely that in 2018 Mr De Goey was endeavouring to hide his income from the sale of timber to NFPL, and in the course of doing so was prepared to make an interest-free loan to Mr and Ms Pukeroa. The evidence is clear that by then there was a strong friendship between them, as part of which Mr and Ms Pukeroa had assisted Mr De Goey through times of significant ill- health. Mr Pukeroa accepts that Mr De Goey made reference to the “kindness of my 2005 ‘offer’”; but I consider it more likely that the $200,000 advance originated out of the subsequent friendship rather than in accordance with a conspiracy entered into 13 years earlier that was never performed.
[139] As noted, I agree with Ms Hogan that there is a ring of truth to Mr Pukeroa’s evidence that Mr De Goey told him to say the payment was made as a result of earlier “agreement”. This is consistent with Mr De Goey’s long standing practice obfuscating his financial position. He had a clear incentive at that time to minimise his assets.
Relief against forfeiture
[140] For completeness, I record that if I had determined it was appropriate to make civil forfeiture orders against Mr Pukeroa I would not have been inclined to grant his application for relief under ss 51 and 56.
[141] The Commissioner’s case was that Mr De Goey sold the timber in 2018 partly at Mr Pukeroa’s request. This was so that Mr Pukeroa could receive what he was “owed” for his part in the criminal conspiracy, thereby enabling him and Ms Pukeroa to purchase 1708 [Redacted]. There is no dispute that Mr and Ms Pukeroa paid approximately $100,000 of the $200,000 towards the $329,000 purchase price. The availability of those funds helped them raise mortgage finance for the balance. Approximately $30,000 has been used to begin building on the property.
[142] In those circumstances, if the Commissioner’s case had been made out, I do not consider it reasonably likely that the orders sought would have caused Mr Pukeroa undue hardship. The threshold for a finding of undue hardship is high.58 It requires hardship going beyond that which would ordinarily be caused from the forfeiture of property. It must be more than is due when taking into account the relevant purposes of the Act, namely to eliminate the opportunities to profit from significant criminal activity and to deter people from choosing to benefit in that way. The level of hardship must be so disproportionate as to require the objectives of recovery and deterrence to be subordinated to the particular needs of the wrongdoer (s 56) or other interested parties (ss 61 and 62).59 That would not be the case if Mr Pukeroa was reaping the rewards of a conspiracy to pervert the course of justice.
[143] On the other hand, I would have been inclined to grant Ms Pukeroa’s application for relief pursuant to ss 61, 66 and 67. As set out above, I accept Ms Pukeroa’s evidence that she had no knowledge of the conspiracy alleged against Mr Pukeroa. The evidence shows that her income has been used in part to service the debt secured against the property. Her children’s whenua are buried on the land.
58 Cheah v Commissioner of Police [2020] NZCA 253 at [64].
59 Nicholas v Commissioner of Police [2017] NZCA 473, [2018] NZAR 172 at [57].
[144] Mr and Ms Pukeroa own the land as joint tenants. There is conflicting evidence as to its current value. Had I determined it was appropriate to make the forfeiture orders I would have called for further evidence in that regard and submissions as to the precise terms upon which relief for Ms Pukeroa could be granted.
Result
[145] The Commissioner’s application for civil forfeiture orders against Mr Smith is granted in terms of paragraphs [1(a), (d), (e) and (f)] of the Commissioner’s application dated 15 December 2021.
[146] Mr T De Goey’s application for relief against the civil forfeiture orders made against Mr Smith is granted.
[147] The Commissioner’s application for civil forfeiture orders against Mr Pukeroa is declined.
Costs
[148] Concerning costs, counsel for the Commissioner should file a memorandum of not more than five pages (excluding attachments) within 15 working days. Counsel the respondents should file any memoranda in reply (of not more than five pages) within a further 10 working days.
Robinson J
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