Commissioner of Police v Townshend
[2022] NZHC 3598
•22 December 2022
REDACTED VERSION OF JUDGMENT
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2022-409-597
[2022] NZHC 3598
UNDER the Criminal Proceeds (Recovery) Act 2009 IN THE MATTER OF
an application pursuant to ss 22, 24 and 25
BETWEEN
COMMISSIONER OF POLICE
Applicant
AND
JOSHUA FRANCIS TOWNSHEND
First Respondent
CASTLE TRUSTEES LIMITED
Second RespondentRAYMOND MORETON
Third Respondent
R M & J S LIMITED
Fourth RespondentR & M TRAILERS LIMITED
Fifth Respondent(continued over)
Hearing: On the papers Appearances:
K South and C C White for Applicant
Date:
22 December 2022
JUDGMENT OF OSBORNE J
(Without notice application for restraining orders)
COMMISSIONER OF POLICE v TOWNSHEND [2022] NZHC 3598 [22 December 2022]
STUART MAURICE CHADWICK
Sixth Respondent
FOLIO NO. 45 LIMITED AND CASTLE TRUSTEES LIMITED
Seventh Respondents
COMMERCIAL PROJECT MANAGEMENT LIMITED
Eighth Respondent
CPM HEALTH LIMITED
Ninth Respondent
AND KIWIBANK LIMITED
First Interested Party
ASB BANK LIMITED
Second Interested Party
AVANTI FINANCE LIMITED
Third Interested Party
BRANDED FINANCIAL SERVICES (NZ) LIMITED
Fourth Interested Party
NISSAN FINANCIAL SERVICES NEW ZEALAND PTY LIMITED
Fifth Interested Party
UDC FINANCE LIMITED
Sixth Interested Party
Introduction
[1] The Commissioner of Police (the Commissioner) applies without notice for restraining orders under ss 22, 24 and 25 Criminal Proceeds (Recovery) Act 2009.
[2] The respondents have been the subject of a police investigation codenamed Operation Spruik /Jeffrey relating to illegal drug importation, manufacture, supply and subsequent money laundering. The Police view the first respondent, Joshua Townshend, as the main driver of significant criminal activity relating to the derivation of illegitimate funds from drug manufacture and dealing. The Police view the third respondent, Raymond Moreton, as responsible for the importation of large quantities of precursor substances and other laboratory equipment enabling the manufacture of Class C controlled drugs. The Police view the sixth respondent, Stuart Chadwick, as having knowingly assisted Messrs Townshend and Moreton in the laundering of money resulting from the illegal drug activities.
[3] The remaining respondents are entities associated with Messrs Townshend, Moreton and Chadwick. In particular:
(a)Castle Trustees Ltd, the second respondent, is the registered owner of a Cass Bay property associated with Mr Townshend;
(b)R M & J S Ltd, the fourth respondent, and R & M Trailers Ltd, the fifth respondent, are companies owned by Mr Moreton;
(c)Commercial Project Management Ltd, the eighth respondent, and Folio No.45 Ltd, the seventh respondent, are companies owned by Mr Chadwick; and
(d)CPM Health Ltd, the ninth respondent, is a company previously owned by Mr Chadwick, but with its shares now owned by Castle Trustees Ltd and Folio No.45 Ltd.
The application for restraining orders
[4]The Commissioner seeks restraining orders in relation to:
(a)the proceeds of sale of a Cass Bay property at 92C Governors Bay Road registered in the name of Castle Trustees Ltd;
(b)a Phillipstown property at 382 St Asaph Street registered in the name of R M & J S Ltd;
(c)a Scarborough property at 22 Peninsula View registered in the name of Castle Trustees Ltd and Folio No.45 Ltd;
(d)seven motor vehicles registered in the sole name of Mr Moreton or (in one case) RPM Classic Cars Ltd;
(e)two motor vehicles registered in the name of Commercial Project Management Ltd;
(f)funds held in 13 bank accounts in the sole name of Mr Townshend or (in one case) in his joint name;
(g)funds held in seven bank accounts held in the name of Mr Moreton or (in three cases) in the name of R & M Trailers Ltd or Sunflower Orphanage Cambodia or (in two cases) in the name of R M & J S Ltd;
(h)funds held in seven bank accounts in the sole name of Mr Chadwick or (in two cases) in the names of Commercial Project Management Ltd or CPM Health Ltd; and
(i)all other property related to Messrs Townshend and Moreton wherever located save for any personal items valued at $2,000 or less not otherwise seized as exhibits.
Grounds for application
[5] A restraining order may be made in relation to specific property if the court is satisfied that it has reasonable grounds to believe the property is tainted property.1 Property is “tainted property” if it has, wholly or in part, been acquired as a result of significant criminal activity or directly or indirectly derived from significant criminal activity.2 “Significant criminal activity” is an activity engaged in by a person that, if proceeded against as a criminal offence, would amount to offending that consists of or includes offences punishable by a maximum of five years’ imprisonment or more, or from which property, proceeds or benefits of a value of $30,000 or more have been directly or indirectly acquired or derived.3
[6] A court may make a restraining order relating to all or part of a respondent’s property if satisfied it has reasonable grounds to believe the respondent has unlawfully benefited from significant criminal activity.4 A person has unlawfully benefited from significant criminal activity if they have knowingly, directly or indirectly, derived a benefit from significant criminal activity, whether or not they were involved in that activity.5
[7] The present application is supported by two extensive affidavits. First, an affidavit of Detective Christopher Gardner. Secondly, an affidavit of Jennifer McCone, a forensic accountant.
[8] Detective Gardner is attached to the Southern Asset Recovery Unit (SARU) based in Christchurch. He identifies all the items of property referred to at [4] above and provides evidence as to ownership by the respondents. He identifies the interests held by the interested parties, including by security arrangements over those items of property.
[9] Detective Gardner refers to a police investigation that commenced in August 2022 with the interception by New Zealand Customs of a consignment containing
1 Criminal Proceeds (Recovery) Act 2009, s 24.
2 Section 5 definition of “tainted property”.
3 Section 6.
4 Section 25(1).
5 Section 7.
25 kg of the precursor 4-Methylpropiophenone, addressed to the business address of Mr Moreton at the Phillipstown property referred to at [4](b) above. An identical consignment was also intercepted on 11 September 2022.
[10] Mr Townshend has criminal convictions for the importation of controlled drugs and the supply of illicit steroids. Following a term of imprisonment, Mr Townshend was released from Rolleston Prison on 9 May 2018.
[11] Mr Townshend has been associated with two companies, Enfuse Ltd (Enfuse) (incorporated in April 2020 but since removed from the Companies Register) and Eukora Health Ltd (incorporated in November 2018).
[12] The Commissioner’s case, based on Detective Gardner’s and Ms McCone’s evidence, is that equipment purchased by Mr Moreton and Mr Townshend shortly after Mr Townshend’s release from prison was suspicious. Any legitimate business activity, such as the sale of health-based drink products through Enfuse did not lead to significant revenue, with the modest assets of the business subsequently sold for little, and not capable of explaining large cash deposits controlled by Messrs Townshend, Moreton and Chadwick. Detective Gardner also refers to evidence of Mr Moreton’s involvement between May 2018 and August 2022 in importations of what is believed to be the precursor 4-Methylpropiophenone, all addressed to Mr Moreton’s Phillipstown address.
[13] The combined weight of alleged importations, all postdating Mr Townshend’s release from prison, equates to approximately one tonne.
[14] Detective Gardner refers also to suspicious conversations involving the respondents following the issuing of a surveillance device warrant on 25 November 2022, including the use of apparently coded language where the words “paint” and “painting” appear to relate to drug-dealing. Parties have also been captured via intercepted communications discussing the capital gains from Mr Townshend’s house being “nicely laundered” and “clean”.
[15] The Commissioner relies also on the financial analysis of Ms McCone, as a forensic accountant attached to the SARU. Her evidence points to the level of cash deposits made into the bank accounts of the respondents and related entities well exceeding their legitimate income streams and to Mr Moreton’s purchase of a string of high-value classic motor vehicles in the last two years as unlikely to have been possible through reliance on legitimate income sources.
[16] Ms McCone provides the detail of her calculation of the total value of unlawful benefit obtained by each of Mr Townshend, Mr Moreton and Mr Chadwick (and their associated entities) from significant criminal activity. Ms McCone’s calculations are:
(a)Mr Townshend — $259,174.60;
(b)Mr Moreton — $458,403.54; and
(c) Mr Chadwick — $169,610.00.
[17] As the evidence stands, these are the figures the Commissioner would state in a profit forfeiture application made under s 52 of the Act, with the value of the unlawful benefit presumed in terms of s 53 of the Act to be that stated value.
[18] After the initial documents in this proceeding were filed, the Police terminated Operation Spruik/Jeffrey on 20 December 2022. Detective Gardner provided a supplementary affidavit dealing with events that occurred on 20 December 2022.
[19]Detective Gardner refers to the execution of search warrants at three addresses:
(a)2/44 Curries Road, Christchurch, to which Mr Chadwick provided the police access;
(b)the Phillipstown property at which Mr Moreton was located; and
(c)the Cass Bay property at which Mr Townshend was located.
[20] Detective Gardner refers to the location of multiple items at the Curries Road property suspected to be illicit drug manufacturing equipment and materials, including a drum Detective Gardner believes to contain the precursor substance 4-Methylpropiophenone. The police also seized an electronic money counter, a Walther 9 mm blank firing pistol, 98 blank (9 mm) rounds and an empty .223 magazine.
[21] At the Phillipstown address, police located cash (approximately $11,000 NZD and $1,230 USD), a Ziploc containing approximately one gram of MDMA, a similar bag containing approximately one gram of Mephedrone, a 2000 ml glass flask containing remnants of an unknown white crystal substance, and shotgun cartridges (75 Fiocchi and 15 Fasteel). At the same time, police identified at the address four of the vehicles that are the subject of this application.
[22] At the Cass Bay property, police located approximately $2,000 NZD cash, 16 LSD tablets, four MDMA tablets, approximately 50 vials of suspected steroids, a large box containing approximately 200 glass vials, a vial capping tool and an undetermined quantity of a white powder. Police also located at the address one of the vehicles the subject of this application.
[23] Mr Townshend and Mr Moreton have since been charged with numerous drug offences (with Mr Moreton also charged with possession of ammunition). They have denied all allegations against them. They were due to appear in the District Court yesterday.
[24] The Police case is that the extent of unlawful benefit obtained by Messrs Townshend, Moreton and Chadwick has provided the funds by which their identified properties and vehicles have been acquired and/or maintained. In short, it is alleged the three properties and the identified vehicles represent tainted property under the Act.
[25] I am satisfied upon the evidence filed that there are reasonable grounds to believe the respondents have unlawfully benefited from significant criminal activity and that the property the subject of the application is tainted property.
Application made without notice
[26] Under s 22(1) of the Act, a court may determine an application for a restraining order without notice given to affected persons if satisfied there is a risk of the proposed restrained property being destroyed, disposed of, altered or concealed if notice were given.
[27] The application has been made without notice. At the time the application was filed the Police operation was an ongoing covert investigation, albeit expected to terminate shortly. Detective Gardner deposed as to his experience in relation to notified forfeiture proceedings, where other respondents have previously attempted to dispose of, conceal, or otherwise deal with restrained property with the intent that forfeiture be avoided. Mr Gardner noted here the previous involvement of Mr Townshend in criminal proceeds recovery proceedings, whereby Mr Townshend will know of the procedures involved, posing a greater risk of the disposal or concealment of assets.
[28] I am satisfied in these circumstances that there is a risk that the property that is the subject of the application may be disposed of or concealed if notice of the application were given to the respondents or any of them.
Service
[29] Evidence has been provided that Mr Townshend’s Cass Bay property is the subject of an unconditional sale and purchase agreement due to settle in mid-January 2023. It is understood that the Christchurch law firm Kannangara Thomson acts as the vendor’s solicitors on that sale.
[30] It is appropriate that a copy of the orders to be made be served on a principal of that firm and I will so direct.
Access to motor vehicles
[31] Detective Gardner believed that many of Mr Moreton’s classic cars were stored at the Phillipstown property, but the whereabouts of all vehicles is not necessarily known.
[32] The Commissioner accordingly seeks additional powers for police officers and members of the Official Assignee’s office to enter property for the purpose of taking custody and control of the identified cars if there are reasonable grounds to believe one or more of them (and any keys) will be located on or in that property.
[33]Such an order falls within the Court’s powers under s 25(2) of the Act.
[34]I am satisfied that such an order is appropriate and it will be made.
Notice as to period order in force
[35] I direct that the order to be sealed contain a note at its foot in the terms recorded in the draft form of order submitted by the applicant (reflecting the provision of s 39 of the Act).
Order
[36]I order:
(a)The property to which this order applies —
(i)is not to be disposed of, or dealt with, other than as is provided for in the restraining order; and
(ii)is to be in the Official Assignee’s custody and control.
(b)Members of the Police and of the Official Assignee’s office may go onto and into property to take custody and control of the motor vehicles that are the subject of this application (and their keys) if there are reasonable grounds to believe one or more of them (and any keys) will be located on or in that property.
[37]The property to which this order applies is as follows:
Property of the first respondent - Joshua Francis Townshend
(a)all proceeds of sale (excluding any real estate agent fees, legal fees associated with the sale and conveyancing of 92C Governors Bay Road and funds required to discharge Mortgage 12182843.3 to Kiwibank Ltd) arising from the agreement for sale and purchase in relation to 92C Governors Bay Road, Cass Bay, Christchurch being a property registered in the name of Castle Trustees Limited as at the date of this application with a record of title 394870 and a legal description of Lot 3 Deposited Plan 398971 and which is subject to a current sale and purchase agreement and existing mortgage to Kiwibank Limited;
(b)all credit balances held in the bank accounts listed below related to Mr Townshend, save for accounts holding a balance of $2,000.00 or less:
(i)[Redacted] –TOWNSHEND, JOSHUA FRANCIS
(ii)[Redacted] –TOWNSHEND, JOSHUA FRANCIS
(iii)[Redacted] – TOWNSHEND, JOSHUA FRANCIS
(iv)[Redacted] – TOWNSHEND, JOSHUA FRANCIS
(v)[Redacted] – Joshua Francis TOWNSHEND
(vi)[Redacted] – Joshua Francis TOWNSHEND
(vii)[Redacted] – Joshua Francis TOWNSHEND
(viii)[Redacted] – Joshua Francis TOWNSHEND
(ix)[Redacted] – Joshua Francis TOWNSHEND
(x)[Redacted] – A CAMPBELL & J TOWNSHEND
(xi)[Redacted] – J F TOWNSHEND
(xii)[Redacted] – MR Joshua Francis Townshend
(xiii)[Redacted] – MR Joshua Francis Townshend
(c)all other property (including any other unidentified bank accounts or funds held on trust) related to Mr Townshend wherever located, save for any personal items valued at $2,000.00 or less not otherwise seized by police as exhibits;
Property of the third respondent – Raymond Moreton
(d)382 St Asaph Street, Philipstown, Christchurch registered in the name of RM and JS Limited with a record of title CB10F/1067 and a legal description of Lot 2 Deposited Plan 28115, excluding any mortgage interest held by ASB Bank;
(e)1989 Nissan Fairlady 300zx, registration KJT985, and in the name of Raymond Moreton;
(f)2016 Nissan Fairlady 300zx, registration MSM923, and in the name of Raymond Moreton;
(g)2009 Nissan GTR, registration XGTRX and in the name of Raymond Moreton;
(h)1972 Datsun 240z, registration KZJ819, and in the name of RPM Classic Cars Limited;
(i)2010 Audi Q5, registration JSM524, and in the name of Raymond Moreton;
(j)1991 Mitsubishi GTO, registration AHP371, and in the name of Raymond Moreton;
(k)1991 Mitsubishi GTO, registration NYG850, and in the name of Raymond Moreton;
(l)all credit balances held in the bank accounts listed below related to Mr Moreton, save for accounts holding a balance of $2,000.00 or less:
(i)[Redacted] – MORETON, RAYMOND
(ii)[Redacted] – MORETON, RAYMOND
(iii)[Redacted] – SUNFLOWER ORPHANAGE CAMBODIA
(iv)[Redacted] – R&M TRAILERS LIMITED
(v)[Redacted] – R&M TRAILERS LIMITED
(vi)[Redacted] – R M & J S LIMITED
(vii)[Redacted] – R M & J S LIMITED
(m)all other property related to Mr Moreton wherever located (including any other unidentified bank accounts or funds held on trust), save for any personal items valued at $2,000.00 or less not otherwise seized by police as exhibits;
Property of the sixth respondent – Stuart Chadwick
(n)22 Peninsula View, Scarborough, Christchurch registered in the name of Castle Trustees Limited and Folio No. 45 Limited with a record of title 15084 and a legal description of Lot 18 Deposited Plan 303768;
(o)2019 Ford Endura, registration LZD759, and in the name of Commercial Project Management Limited;
(p)2019 Hyundai Tucson, registration MDT675, and in the name of Commercial Project Management Limited. This motor vehicle is restrained but is to be left in the possession of the sixth respondent to enable his continued use of it; and
(q)all credit balances held in the below listed bank accounts related to Mr Chadwick, save for accounts holding a balance of $2,000.00 or less :
(i)[Redacted] – Commercial Project Management
(ii)[Redacted] – CPM Health Limited
(iii)[Redacted] – Chadwick, Stuart Maurice
(iv)[Redacted] – Chadwick, Stuart Maurice
(v)[Redacted] – Chadwick, Stuart Maurice
(vi)[Redacted] – Chadwick, Stuart Maurice
(vii)[Redacted] – Chadwick, Stuart Maurice.
Osborne J
Solicitor:
Crown Solicitor, Christchurch
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