Commissioner of Police v Weir

[2016] NZHC 736

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2015-404-2057 [2016] NZHC 736

UNDER

the Criminal Proceeds (Recovery) Act

2009

BETWEEN

COMMISSIONER OF POLICE Applicant

AND

RYAN WILLIAM WEIR First Respondent

SCOTT ALAN MCROBIE Second Respondent

WAY IN FUTURE HOMES 2015
LIMITED

Third Respondent

Hearing:	On the papers
Counsel:	KE Hogan for applicant RM Mansfield for first respondent BJ Boylan for second respondent
Judgment:	20 April 2016

JUDGMENT OF FAIRE J

This judgment was delivered by me on 20 April 2016 at 2:30 pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:           Kayes Fletcher Walker, Auckland

To:  R Mansfield, barrister, Auckland

P Boylan, barrister, Auckland

Commissioner of Police v Weir [2016] NZHC 736 [20 April 2016]

[1]      The Commissioner of Police (“the Commissioner”) has filed an application for forfeiture orders.   The Commissioner initially delayed  filing  the  application because the parties commenced  settlement  discussions.   Those discussions  have resulted in the parties reaching settlement.  As a result, the parties invite the court to approve the settlement as required by s 95 of the Criminal Proceeds (Recovery) Act

2009.

[2]      So that the court has jurisdiction to deal with the settlement, the application for forfeiture orders was formally filed on 18 April 2016.

[3]      Counsel have filed a joint memorandum. The factual background is set out in paragraphs 2.2 to 2.5, which I adopt and which I now set out in full.

2.2      In brief, the Commissioner asserts that the respondents engaged in

‘significant criminal activity’ (obtaining by deception) when they

obtained a loan from the Bank of New Zealand to undertake the development at 14 Calcite Avenue.

2.3The first and second respondents were employed at the Bank of New Zealand at the time.   The first respondent incorporated the third respondent  in  order  to  secure  the  loan  and  purchase  14 Calcite Avenue.   The first respondent approved the loan.   The first and second respondents did not declare any conflict of interest to the Bank of New Zealand.

2.4The sole director and shareholder of the third respondent, Michael James Stephens (Mr Stephens), stated he was prepared to present the development for the first and second respondents and accepted that he had no financial interest in 14 Calcite Avenue.   The third respondent has been served but has taken no steps in the proceeding.

2.5      The first and second respondents assert as follows:

(a)      The First  and  second respondents  were employed  by the

Bank of New Zealand as bank officers at all relevant times.

(b)       The first and second respondents wanted to purchase and develop 14 Calcite Avenue as a financial venture for gain. To do so they needed to secure finance, and had not at the relevant time been able to.

(c)       The  first  respondent  incorporated  the  third  respondent  in order to purchase and develop 14 Calcite Avenue.  The sole director   and   shareholder   of   the   third   respondent   was Mr Stephens.   The first and second respondents were not shareholders and held o office in the company.

(d)       The first and second respondents introduced the  required capital  to  the  purchase  and  development  of  14 Calcite Avenue.   It is accepted that Mr Stephens had no financial interest  in  the  purchase  and  development  of  14 Calcite Avenue.   Only the first and second respondents were to benefit financially from the development given their investment in it. They managed the development.

(e)       The  third  respondent  was  used  as  the  entity  to  secure  a mortgage  from  the  Bank  of  New  Zealand  to  purchase

14 Calcite Avenue.  The property was used as security.  The first respondent, as the usual bank officer for Mr Stephens and   his   developments,  approved   the  loan.     The  first

respondent failed to declare a financial and personal involvement  in  the  transaction,  an  accepted  conflict  of

interest, to the Bank of New Zealand.

(f)       The Bank of New Zealand was not financially exposed as a result  of  the  granting  of  the  mortgage.    The  security  of

14 Calcite Avenue was sufficient at all times to meet any liability to the Bank.   Further, Mr Stephens had otherwise

accepted that he was responsible for any shortfall, although there was no risk of such a shortfall.

(g)       The   first   and   second   respondents   do   not   deny   their involvement in the transactions.  Further, the first respondent accepts a conflict of interest to the Bank of New Zealand. However, the first and second respondents have denied that there was significant criminal activity.

(h)       The first and second respondents have opposed forfeiture to date,   but   now,   as  advised   above,   want   to   settle   the proceeding.  The third respondent has been served with the proceedings but has taken no steps in the proceeding and is unlikely to do so.

[4]      A without  notice  restraining  order  was  made  on  the  application  of  the

Commissioner on 4 September 2015 in respect of the following property:

all interests in the property at Lot 44, 263 Ormiston Road, Flat Bush, Manukau, which is also 14 Calcite Avenue, Flat Bush, Auckland, registered owner Way in Future Home 2015, being Lot 44 Deposited Plan 480139, having 1/9SH in Lot 111, Deposited Plan 480139, comprised in certificate of title 670526, other than the interest of Bank of New Zealand as mortgagee under the registered mortgage 10003527.3 (Property).

[5]      On 27 July 2015 the mortgagee, Bank of New Zealand, had issued a Property Law Act notice requiring the mortgagor to remedy a default in its mortgage obligations. The default was not remedied so the Bank of New Zealand proceeded to exercise its right to sell the Property.

(a)      Prior to the without notice restraining orders being made the first and second respondents had been marketing the Property for sale.  They assert they would have settled the mortgage in full upon on the settlement of such sale.

(b)Once the Property was restrained the first and second respondents elected to accept the mortgagee sale process.

[6]      The agreed sale price was $891,594.53.   On  5 November 2015 the sale settled.

[7]      After payment of the mortgage, GST, rates, marketing and conveyancing fees, an amount of $271,553.06, being surplus from the development and sale, was transferred to the Official Assignee, and is being held in an interest-bearing account pending the outcome of these proceedings.

[8]      On 3 December 2015 on notice restraining orders were made, by consent.

[9]      The  proposed  settlement,  counsel’s  joint  memorandum  summarised  as

follows:

(a)       A sum of $20,000 will be released from the Property and returned jointly to the respondent;

(b)      The respondents consent to an asset forfeiture order being made in respect of the remainder of the Property in the following terms:

Asset forfeiture order under s 50 of the Act

The  Property  (defined  below)  less  $20,000  vests  in  the Crown absolutely and is to be in the Official Assignee’s custody and control.

Property: the currently restrained proceeds of the sale of all interests in the property at Lot 44, 263 Ormiston Road, Flat Bush, Manukau, which is also 14 Calcite Avenue, Flat Bush, Auckland,  registered  owner  Way  in  Future  Home  2015, being Lot 44 Deposited Plan 480139, having 1/9SH in Lot

111, Deposited Plan 480139, comprised in certificate of title

670526, other than the interest of Bank of New Zealand as mortgagee under the registered mortgage 10003527.3.

(c)       The  Commissioner  will  not  apply  for  profit  forfeiture  orders  in respect   of   the   significant   criminal   activity   underlying   the proceedings.

(d)      Costs lie where they fall.

[10]     Section 95 of the Act provides:

95High Court must approve settlement between Commissioner and other party

(1)       The Commissioner may enter into a settlement with any person as to the property or any sum of money to be forfeited to the Crown.

(2)       A  settlement  does  not  bind  the  parties  unless  the  High  Court approves it.

(3)       The High Court must approve the settlement if it is satisfied that it is consistent with—

(a)      the purposes of this Act; and

(b)      the overall interests of justice.

[11]     I  accept  counsel’s  submission  that  the  settlement  is  consistent  with  the purposes of the Act and the overall interests of justice.  That is because a significant amount of property has been forfeited and there is an agreed amount being returned to the respondents following all parties having been informed of the proceeding and having received legal advice.  A settlement obviously effects a considerable saving of time and cost and achieves an appropriate outcome.  Settlement does require the making of an order of forfeiture which is appropriate.  All of that leads me to the conclusion that the purposes of the Act and the overall interests of justice are met by the proposed settlement.

Orders

[12]     Accordingly, I make the following orders:

(a)       The proposed settlement is approved;

(b)An  asset  forfeiture  order  is  made  under  s 50  of  the  Act  in  the following form:

The currently restrained proceeds of the sale of all interests in the property at Lot 44, 263 Ormiston Road, Flat Bush, Manukau, which is also 14 Calcite Avenue, Flat Bush, Auckland, registered owner Way in Future Home 2015, being Lot 44 Deposited Plan 480139, having 1/9SH in Lot 111, Deposited Plan 480139, comprised in certificate of title 670526, other than the interest of Bank of New Zealand as mortgagee under the registered mortgage 10003527.3, less the sum of

$20,000 shall vest in the Crown absolutely and shall be in the Official Assignee’s custody and control.   The sum of $20,000 shall be released and returned to the respondents jointly.

(c)       No order for costs is made.

JA Faire J