Duncan v Commissioner of Police
[2013] NZCA 477
•16 October 2013 at 10.30 am
| IN THE COURT OF APPEAL OF NEW ZEALAND |
| CA211/2012 [2013] NZCA 477 |
| BETWEEN | ALISON JUSTINE DUNCAN |
| AND | COMMISSIONER OF POLICE |
| Hearing: | 24 July 2013 |
Court: | Ellen France, Ronald Young and Cooper JJ |
Counsel: | A Shaw and G K Edgeler for Appellant |
Judgment: | 16 October 2013 at 10.30 am |
JUDGMENT OF THE COURT
AThe appeal is dismissed.
BNo order as to costs.
____________________________________________________________________
REASONS OF THE COURT
(Given by Cooper J)
Introduction
The appellant, Alison Duncan, appeals against a judgment of Andrews J delivered under the Criminal Proceeds (Recovery) Act 2009 (the Act) on 11 October 2011.[1]
[1]Commissioner of Police v Duncan HC Tauranga CIV-2010-470-000933, 11 October 2011.
In her judgment the Judge made both assets forfeiture orders under s 50 of the Act and profit forfeiture orders under s 55 of the Act. Mrs Duncan’s appeal relates only to the former.
The respondents in the High Court included the appellant’s partner, Royce Duncan, and a third party, Kennedy Williams. The Commissioner’s application was also served on the National Bank of New Zealand (the Bank). The Bank did not file a notice of opposition on the basis that the Commissioner of Police accepted that its interest as a mortgagee of the relevant land should be preserved.
The judgment of Andrews J made a number of factual findings which principally related to the position of the other parties, and which are not challenged on the appeal. None of the property ordered to be forfeited as either assets or profit was owned in the appellant’s name. Her opposition to forfeiture and an application for relief from forfeiture which she filed in the High Court related only to her and Mr Duncan’s former family home at 5 Bonnieglen Road, Omanawa, near Tauranga. She claims half the equity in that property, subject to the rights of the Bank. She does not seek to disturb the findings in respect of the balance of the property, and the other forfeiture orders are not challenged or the subject of any claim for relief.
Issues
The appeal raises four issues. These are whether:
(a)the Bonnieglen Road home fell within the definition of “tainted property” in s 5 of the Act;
(b)the Judge erred by proceeding with the applications for forfeiture orders prior to the resolution of criminal charges that had been brought against Mrs Duncan;
(c)the Judge erred by relying on the fact that Mrs Duncan was facing criminal charges as part of the reasoning for concluding that she was not “an innocent third party”; and
(d)the Judge misapplied the test for “undue hardship” when assessing Mrs Duncan’s application for relief in respect of the Bonnieglen Road home including by failing to take account of the rights of her young daughter.
Issue (a): is the Bonnieglen Road home “tainted property”?
The appellant contends that the factual findings made by Andrews J were insufficient to sustain her conclusion that the Bonnieglen Road home was “tainted property”.
Section 5 of the Act defines “tainted property” as follows:
tainted property—
(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 1 activity if at least 1 of those activities is a significant criminal activity
Andrews J recorded Mr Duncan’s evidence that the property had been purchased in 1996 for the sum of $170,000.[2] She also noted his evidence that the money had been “gathered from years of work and property purchases and sales”. The house itself was built in 1999, funded by mortgage finance from the Bank. The property was registered in Mr Duncan’s name, but the appellant claims a half share in it as relationship property. Andrews J apparently accepted that the land itself had been bought with money derived from legitimate sources.[3]
[2]At [79].
[3]At [154].
Andrews J also held that it was clear from evidence called by the police analysing Mr and Mrs Duncan’s income and expenditure in the period 1 January 2005 to 15 June 2007 (the financial reconstruction) that:
(a)ACC payments that had been received by Mr Duncan were insufficient to meet the couple’s mortgage payments, but those payments had continued to be made after ACC payments ceased in May 2010.[4] Mr Duncan had been involved in “significant criminal activity”.[5] Further, Mr and Mrs Duncan had used a substantial amount of cash which had come from an unidentified source, including expenditure on gambling activities that they did not have legitimate income sufficient to fund. The money gambled was derived from drugs offending and the gambling activities conducted by them both amounted to money laundering.[6]
(b)In light of these findings the mortgage repayments made since 2005 had been derived from “significant criminal activity”. Further:[7]
But for the significant criminal activity in the form of drugs offending, money laundering, and offending in respect of the ACC payments, the mortgage payments could not have been made.
(c)Later in the judgment, dealing with the profit forfeiture orders (not in dispute here), the Judge held:[8]
By reference to the evidence of Detective Rolley, and Mr Vevers’ financial reconstruction, it was submitted for the police that the unlawful benefit derived from significant criminal activity was $2,437,963.74. This was made up of the unexplained cash sources; cars, motor vehicles, motorcycles and launches purchased; cash recovered or retrieved by Mr Duncan and Mr Williams; and the value of pseudoephedrine and precursor equipment located at the house property. Pursuant to s 53 of the Act, that is presumed to be the value of the benefit, unless rebutted by the respondents, on the balance of probabilities. I am not satisfied that the respondents have rebutted the value stated by Detective Rolley. Accordingly, I specify the value of the unlawful benefit as $2,437,963.74.
[4]At [80].
[5]At [74].
[6]At [76].
[7]At [81].
[8]At [161] (footnotes omitted).
On this basis the Judge was satisfied on the balance of probabilities that the Bonnieglen Road property was “tainted property” under the Act. She concluded that, subject to the appellant’s application for relief, an assets forfeiture order must be made in respect of it.
Mr Edgeler, who advanced this part of the appellant’s argument, submitted that under the Act’s definition of “tainted property”, the “taint” must be related to the “acquiring” or the “deriving” of the property. He argued that the Judge had failed to draw a distinction between Mrs Duncan’s relationship property interest, which subsisted from the date of purchase when Mr and Mrs Duncan were in a relationship in the nature of marriage, and any potentially unlawful increase in equity that might arise from the making of “tainted mortgage payments” since 2005.
In fact, however, the argument advanced did not ultimately depend on Mrs Duncan’s relationship property interest. Mr Edgeler submitted that because the property itself had been acquired legitimately, it could not be said to fall within the definition of tainted property. This was because it was not “acquired” nor “derived” as a result of significant criminal activity. As to the former, it had not been purchased with drug money, or with a combination of such money and money lawfully received. As to the latter it had not been purchased with interest earned on unlawfully derived funds or from a mixed account, including lawful and unlawful sources, nor with money obtained by fraud.
Rather, the property had been lawfully acquired, and then lawfully used as collateral to obtain an increased mortgage which was then lawfully used to finance the construction of a house on the property. Mr Edgeler also pointed out that forfeiture of the property had not been sought on the basis that it was an instrument of crime (it was not alleged for example that the house and property had been used for manufacturing or for storing quantities of methamphetamine). Such an application, were it to be made, would have been under the instrument forfeiture regime contained in subpart 5 of pt 2 of the Sentencing Act 2002.
In summary, the argument was that the fact that profits from serious criminal offending had been used to defray the mortgage debt secured over otherwise lawfully obtained property could not have the effect of tainting the lawfully acquired assets, and could not authorise forfeiture of the property as tainted property.
Mr Edgeler did accept that Mrs Duncan, however, would not be entitled to benefit from the payments made in reduction of the mortgage from unlawfully derived money. She did not claim an entitlement to any benefit from the criminal enterprise that had been established before Andrews J. Thus, money used for the mortgage payments, to the extent that it could be shown to have come from serious criminal activity, was “profit” capable of being forfeited as such under a profit forfeiture order. Mr Edgeler argued this in fact was what had happened since Andrews J had accepted the assessment made by the police witnesses as to the profit arising from the criminal activity.[9]
[9]At [161], quoted above at [9(c)].
For the Crown, Mr Hollister-Jones submitted that the appellant’s argument was untenable, having regard to the various relevant definitions in s 5 of the Act. We accept his submission.
The starting point is the definition of “property”. The definition provides:
property—
(a) means real or personal property of any kind—
(i) whether situated in New Zealand or a foreign country; and
(ii) whether tangible or intangible; and
(iii) whether movable or immovable; and
(b) includes an interest in real or personal property
We have already set out the definition of “tainted property”. We note here that para (a) of that definition refers to property that has “wholly or in part” been acquired or derived as set out in the paragraph.[10] Andrews J found that, since 2005, funds for the mortgage payments were derived from “significant criminal activity”, a finding that is not now challenged. The result of the mortgage reductions increased Mr Duncan’s equity in the property by reducing the principal sum owed. His interest as the registered proprietor was thereby increased. It follows that his interest was in part derived from significant criminal activity, and an interest in the Bonnieglen Road property has in part been acquired as a result of significant criminal activity.
[10]Emphasis added.
We accept Mr Hollister-Jones’ argument that it does not matter that the interest has been acquired in a process of successive payments towards the mortgage; acquisition can clearly occur in stages. With each stage the extent of the interest increases.
We accept that an interest under the Property (Relationships) Act 1976 is capable of falling within the definition of “property” in the Criminal Proceeds (Recovery) Act. Simply put, it is “an interest in real ... property”. However, if the focus is on the appellant’s interest in the property under the Property (Relationships) Act, the same conclusion follows as in relation to Mr Duncan’s interest, but in respect of only half the equity in the property. The fact that the definition refers to a property that has “in part” been acquired as a result of significant criminal activity means that the outcome is the same. We do not consider it is permissible under the relevant statutory provisions to treat Mrs Duncan’s interest under the Property (Relationships) Act as if it were a separate interest unable to be tainted for the purposes of the Criminal Proceeds (Recovery) Act.
Nor do we consider it legitimate for her interest to be defined in a way that would exclude from consideration the extent to which the interest has been tainted by the mortgage payments which have contributed to its value. The argument advanced by Mr Edgeler, that the value can be discounted so as to exclude the part attributable to the mortgage payments, is simply an artifice designed to avoid the implications of the broad definition of “property” in the Act. Mrs Duncan’s “interest” is what it is and cannot legitimately be “deconstructed” into parts that have been lawfully and unlawfully created. The definition of “tainted property” means that the interest is tainted, and since it falls within that definition it is irrelevant that a profit forfeiture order might be made in respect of the value contributed by the mortgage payments.
A similar process of reasoning can be followed with respect to sub-para (ii) of para (a) of the definition of “tainted property”. The consequence of the payments under the mortgage is that the property has been, in part, directly or indirectly derived from significant criminal activity.
We note that in Ontario (Attorney-General) v 1140 Aubin Road (Windsor) the Ontario Court of Appeal had to consider the provisions of the Civil Remedies Act SO 2001 c 28 (the CRA), under which the Attorney-General sought forfeiture of two residences.[11] As with the New Zealand legislation, the CRA made separate provision for forfeiture orders in respect of two kinds of property. Under s 3 a court could order forfeiture of property acquired by unlawful activity, and under s 8 the forfeiture of property used to engage in unlawful activity. The former was referred to as “proceeds of unlawful activity”, and the latter as “instruments of unlawful activity”. As with the New Zealand legislation, the CRA created a civil forfeiture scheme which was apart from the criminal process.[12]
[11]Ontario (Attorney-General) v 1140 Aubin Road (Windsor) 2011 ONCA 363, (2011) 333 DLR (4th) 326.
[12]Two regimes under which forfeiture can be made in New Zealand are described in Doorman v The Commissioner, New Zealand Police [2013] NZCA 476 at [11]–[14] (a judgment issued at the same time as this judgment).
The Ontario Court of Appeal noted that the CRA contained a broad definition of “property”, which did:[13]
… not require that the person acquiring the property interest be involved in or even aware of the unlawful activity tainting that property interest.
[13]At [12] (citation omitted).
Later, the Court of Appeal said:[14]
Clearly, if money acquired through the sale of drugs was used to purchase any of these properties, that property is the “proceeds of unlawful activity”. Counsel also accepts that if drug money is used to pay down a mortgage, the interest acquired in the property is the “proceeds of unlawful activity” under the definition in s. 2 of the CRA.
[14]At [39].
The Court held that payments on the mortgage constituted the acquisition of an interest in the property, noting that under the relevant land tenure legislation a mortgage did not, in contrast to the position that applied at common law, operate as a transfer of the legal estate in the land.[15] The same, of course, applies in New Zealand under the Land Transfer Act 1952. However, the mortgage did give the mortgagee equitable rights in the property that remained in place until the obligation secured by the charge is discharged. Then, the Court observed:[16]
Although the mortgagee maintains an equitable interest until the obligation is discharged, payments on the mortgage affect the respective rights of the mortgagor and mortgagee. If a mortgagor has made significant payments against the mortgage, the defaulting mortgagor may receive relief from forfeiture and be allowed to redeem the property. Payments on the mortgage can be seen as enhancing the mortgagor’s equity and diminishing the mortgagee’s equitable interest. In my view, paying down a mortgage constitutes a direct acquisition of an interest in property for the purposes of the CRA.
[15]At [40].
[16]At [41] (citations omitted).
The legislation construed by the Ontario Court of Appeal is not in precisely the same terms as the New Zealand legislation. However, the observations made about the nature of a mortgage and the consequences of payments under it are equally apt in New Zealand. Their application in the present case means that the periodic reductions in the mortgage held by the Bank over the Bonnieglen Road property amounted to the acquisition of an interest in part of the property. Since the money used for that purpose was the result of significant criminal activity, that was sufficient to taint the property.
There is a further route to the conclusion that the Bonnieglen Road property is tainted. It arises under para (b) of the definition of “tainted property”. As has been seen, that part of the definition refers to property 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. This makes it plain that the definition is intended to catch property that (whether in whole or in part) has been acquired by the application of funds lawfully derived if money produced by a significant criminal activity is also used to acquire the property. Even if the conclusions we have set out in relation to para (a) of the definition were incorrect, the Bonnieglen Road property would still be “tainted” under para (b) of the definition.
These conclusions are consistent with the legislative purpose set out in s 3 of the Act. The primary purpose is stated in s 3(1) which refers to establishing a regime for the forfeiture of property:
(a)that has been derived directly or indirectly from significant criminal activity; or
(b)that represents the value of a person’s unlawfully derived income.
Then s 3(2) provides that the “criminal proceeds and instruments forfeiture regime” established by the Act proposes to:
(a)eliminate the chance for persons to profit from undertaking or being associated with significant criminal activity;
…
Section 50(1) of the Act then provides:
If, on an application for an assets forfeiture order, the High Court is satisfied on the balance of probabilities that specific property is tainted property, the Court must make an assets forfeiture order in respect of that specific property.
The appellant’s argument would have the effect of significantly reducing the ambit of what could be considered “tainted property” pursuant to the Act. It would mean, for example, that money which was acquired as a result of significant criminal activity could be applied to pay off the principal owing under a substantial mortgage whenever the mortgaged property had previously been acquired by the use of legitimately derived funds. The Act’s purpose of eliminating the opportunity for persons to profit from undertaking significant criminal activity would be defeated.
In the circumstances, we are satisfied that the appellant’s argument should not succeed.
Issues (b) and (c): charges faced by Mrs Duncan
Mr Shaw addressed these two issues together. They are based on a passage in the judgment of Andrews J in which she said:[17]
I accept [counsel for the Commissioner’s] submission that Mrs Duncan is not an innocent third party. She has been charged, and is a respondent to the application for forfeiture. I have set out earlier the evidence on which I rejected her assertion that she had no knowledge of Mr Duncan’s significant criminal activity.
[17]At [151] (footnote omitted).
Mr Shaw advanced two submissions. First, he argued that by proceeding with the applications for forfeiture orders prior to the resolution of the criminal charges that had been brought against Mrs Duncan, the Court fell into error. Ultimately, the charge alleging money laundering against her was withdrawn and she was convicted only in respect of a charge of supplying a small amount of methamphetamine that had been intended for her personal use to a third party.
The second issue raised was a contention that Andrews J erred by relying on the fact that Mrs Duncan was facing criminal charges as part of the reasoning for concluding that she was not “an innocent third party”. Mr Shaw submitted that the fact she had been charged established nothing of relevance and Andrews J had wrongly set to one side the presumption of innocence. Mr Shaw was also critical of the fact that Andrews J noted, in the passage quoted above at [34], that Mrs Duncan was a respondent to the application for forfeiture. Again, Mr Shaw submitted that this was an irrelevant consideration.
We do not consider that these points have substance. We observe first that the foundation for Mr Shaw’s argument was an extract only, and did not reflect the real reasons for Andrews J’s rejection of the contention that Mrs Duncan was an innocent third party. That argument was advanced in the context of Mrs Duncan’s application for relief against forfeiture in respect of her half share of the Bonnieglen Road property.
We observe next that the passage from [151] quoted above at [34] was only part of the paragraph. The Judge continued:
The evidence I have referred to, in particular the telephone calls relating to the “tub” in the “centre console” and where she told Mr Duncan to “abandon all … missions for now” and to “swap wakas” indicate that she knew of, and was involved in, Mr Duncan’s alleged offending, and that her involvement was not only on the fringe of Mr Duncan’s offending.
And in the following paragraph she said:[18]
Furthermore, the proceeds of Mr Duncan’s alleged offending (and Mrs Duncan’s as well), must have significantly contributed towards mortgage payments on the house property. As I said at [81], “but for the significant criminal activity in the form of drugs offending, money laundering, and offending in respect of the ACC payments, the mortgage payments could not have been made”.
[18]At [152].
These observations reflect findings that the Judge had made in various paragraphs of the judgment, including:
(a)Her reference to evidence given by Mrs Duncan that the shortfall between her and her husband’s income from ACC payments and household expenses was met by the proceeds of gambling[19] and her rejection of the evidence of both of them as to the source of the unidentified cash referred to by the police witnesses.[20]
(b)Her reference to Mrs Duncan’s evidence that she had never been involved in drug offending, and had not herself used drugs[21] contrasting it with the intercepted telephone conversation between Mr and Mrs Duncan on 26 August 2010 in which Mr Duncan said to Mrs Duncan that he had “left some things” with Mrs Duncan so she could “have a something” for herself “to have a puff of”, but she had sold it to Mr Williams.[22] To this was added the fact that despite initially denying that she had used drugs, she admitted having done so under cross-examination.[23]
(c)Her reference to a conversation between Mr and Mrs Duncan on 29 August 2010 in which he said to her “[y]ou’re the one out … doing all the drugs to people, not me … you … know it”, and she responded “whatever”. Later in that conversation, Mrs Duncan said she was not going to “live my life under surveillance by the police” and said that it was Mr Duncan’s “occupation”.[24]
(d)Her reference to the evidence about telephone calls by Mr Duncan to Mrs Duncan on 13 September 2010, which had again been intercepted. These conversations occurred after Mr Duncan had been pulled over by the police whilst driving to Auckland. In the first call, Mr Duncan said that he had money in a bag in the front of the car and that he had a “tub” in the “centre console”, to which Mrs Duncan responded “oh fuck”. In another call, Mrs Duncan had advised Mr Duncan to “abandon all … missions for now”, “lay … low”, and “swap wakas”.[25]
(e)The overall evidence that satisfied the Judge that since 2005, mortgage repayments had been derived from significant criminal activity.
(f)The Judge’s rejection of Mrs Duncan’s evidence that she did not know from the time that Mr Duncan started receiving ACC payments that those payments were not sufficient to fund mortgage payments let alone any general living expenses.[26]
[19]At [38].
[20]At [59].
[21]At [40].
[22]At [69].
[23]At [90].
[24]At [90(b)].
[25]At [73].
[26]At [89].
It was against the background of this evidence that the Judge expressed a conclusion in the following terms:[27]
I do not accept Mrs Duncan’s evidence that she had no knowledge of Mr Duncan’s involvement in significant criminal activity. Her assertion that she did not learn of his offending at the time of the search in 2007 lacks any credibility.
[27]At [91].
And she also observed:[28]
I am therefore satisfied on the balance of probabilities that Mrs Duncan ... knowingly derived a benefit from significant criminal activity ... .
[28]At [92].
Seen in the context of these factual findings, the issues raised by Mr Shaw lack merit. It was not obligatory to wait until the criminal proceedings had been brought to a close. The Judge was entitled, and indeed there was no reason for her not, to deal with the applications before her especially in the circumstances that, as Mr Hollister-Jones pointed out, the appellant did not seek an adjournment of the civil proceeding pending the outcome of the prosecution.
Further, while we accept the fact that Mrs Duncan was facing criminal charges could not add to the case against her, and the same is true in respect of the fact that she was a respondent to the application for forfeiture, the judgment is not properly characterised as being based on those considerations. As the preceding discussion of the Judge’s reasoning shows, there was ample justification in the evidence for the Judge’s conclusion that Mrs Duncan was not an innocent third party.
We reject the appellant’s argument under issues (b) and (c).
Issue (d): “undue hardship” and mandatory assessment of the rights of the child
In this part of the argument, Mr Shaw contended that Andrews J misapplied the test for “undue hardship” when assessing Mrs Duncan’s application for relief in respect of the Bonnieglen Road home, including by failing to take account of the rights of her daughter (aged four at the time). This argument is based on s 51 of the Act which provides for the exclusion of property from assets forfeiture orders because of “undue hardship”.
Section 51 provides:
51Exclusion of respondent’s property from assets forfeiture order because of undue hardship
(1)The High Court may, on an application made by the respondent before an assets forfeiture order is made, exclude certain property from an assets forfeiture order if it considers that, having regard to all of the circumstances, undue hardship is reasonably likely to be caused to the respondent if the property is included in the assets forfeiture order.
(2)The circumstances the Court may have regard to under subsection (1) include, without limitation,—
(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 assets forfeiture order; and
(b)the nature and extent of the respondent’s interest in the property; and
(c)the circumstances of the significant criminal activity to which the order relates.
In an affidavit sworn on 9 March 2011 for the purposes of the proceeding in the High Court, Mrs Duncan said that she resided at the Bonnieglen Road address and was in receipt of the domestic purposes benefit. She noted that she had one child, aged four, living with her. She also deposed that the property had always been “our family home” and said:
At this point, I wish to be able to continue to reside in the Bonnieglen Property until this matter has been properly resolved and I have been able to properly address the matters raised in the Application.
Later, having referred to items of property which were the subject of the application for the profit forfeiture order she said:
Forfeiture of my share in the Bonnieglen Property would cause me undue hardship. I have neither been involved in, nor charged with any of the serious offences that the First Respondent and others now face.
She made no other references to her daughter or to the issue of hardship.
In the judgment, Andrews J said:[29]
In terms of the undue hardship that Mrs Duncan says that she will suffer, she has said that if the house and car are forfeited, she will have nothing; her only income is a domestic purposes benefit and she has the care of a young child. I am not satisfied that this hardship would be more than most people would suffer if they were to have their home confiscated under the Act. I am also not satisfied that consideration of the above relevant “circumstances” leads to the conclusion that neither her share of the house property, nor the Chevrolet Camaro vehicle, should be excluded from an assets forfeiture order, and profit forfeiture order, respectively.
[29]At [156].
Mr Shaw criticises this passage as misstating the test for undue hardship. In that respect, he complains that the Judge wrongly equated “undue” hardship with hardship that would be “more than usual”. He submitted that it was in fact entirely possible that most people faced with losing their family home would face “undue loss” from losing that property and that the assessment required in respect of a family home was clearly different from what was necessary in the case of other property. He argued that Mrs Duncan should not have to establish more hardship than would be suffered by most if their home was seized and that all she needed to demonstrate was that the hardship was beyond what she should be expected to bear.
The other issue raised by Mr Shaw in this part of the case was his submission that the Judge had failed to take into account the rights of Mrs Duncan’s daughter under arts 3(1) and 27 of the United Nations Convention on the Rights of the Child (UNCROC).[30] He referred to the Supreme Court’s decision in Ye v Minister of Immigration and submitted that Mrs Duncan’s daughter had the right to have her interests considered in judicial decisions affecting her.[31] Counsel contended that while her rights were only one factor, they needed to be taken into account and that had not occurred.
[30]United Nations Convention on the Rights of the Child 1577 UNTS 3 (opened for signature 20 November 1989, entered into force 2 September 1990), arts 3(1) (stating that in all actions concerning children, the best interests of the child shall be a primary consideration) and 27 (relating to adequate standards of living for children).
[31]Ye v Minister of Immigration [2009] NZSC 76, [2010] 1 NZLR 104.
Further, he submitted that taking them into account and granting relief to Mrs Duncan would not interfere with the policy of the Act, given that the property had been purchased with money lawfully derived, and the construction of the home that was built on the land had been funded through a lawfully obtained mortgage. The extent to which mortgage payments had been made with money derived from serious criminal activities was covered by the profit forfeiture order granted by the Judge.
Mr Hollister-Jones noted that the drafting of s 51(1) of the Act showed that the legislature contemplated that hardship would be a result of an assets forfeiture order, and relief was only to be provided where the hardship was “undue”. He referred to this Court’s decision in Lyall v Solicitor-General in which it was held that the expression “undue hardship”, used in s 15(2)(b) of the Proceeds of Crime Act 1991, required consideration of whether forfeiture would result in a “gross or severe disproportion between the gravity of offending and the value of the property sought to be forfeited”.[32] Mr Hollister-Jones submitted that Andrews J had properly considered the relevant considerations set out in s 51(2) of the Act.
[32]Lyall v Solicitor-General [1997] 2 NZLR 641 (CA) at 647.
Noting that Ye was a case decided under the Immigration Act 1987 he submitted that it was of little direct assistance in the context of s 51. He conceded, however, that s 51 itself invites the Court to have regard to “all of the circumstances”, and the matters specifically listed in s 51(2) are to be considered “without limitation”. He accepted that, given this statutory context, where there were special or extenuating circumstances connected to the interests of a child which militate against the making of an order for the forfeiture of property, they could be considered under s 51.
We accept that is so, and there may be cases where the forfeiture of the family home, or even an interest in it, could cause undue hardship for a child which ought to be influential in the disposition of an application under s 51 of the Act. As was observed in Lyall where forfeiture of a family home used for drug dealing purposes is ordered, “special hardship might be suffered by innocent members of the family”.[33] Whether or not undue hardship arises however must be a matter of fact and degree, and an argument that forfeiture of the family home will always result in undue hardship cannot be sustained in the face of the relevant provisions of the Act.
[33]At 646.
These include, pre-eminently, the statutory purpose set out in s 3, discussed above, and s 51 itself, under which the use ordinarily made of the property is but one of the relevant considerations. This means that the fact that undue hardship is “reasonably likely”[34] as a result of a forfeiture order must be addressed by evidence squarely addressing that point.
[34]The language used in ss 51(1) and 56(1) of the Act (the latter relating to relief in respect of profit forfeiture orders).
It is not correct that Andrews J failed to consider the position of Mrs Duncan’s daughter. She referred to her in the passage quoted above at [51]. But the relevant evidence was sparse. We have already summarised what Mrs Duncan said in her affidavit. All she said was that her four year old child was living with her. There was no evidence excluding the possibility of support that might be available for the daughter from members of her immediate or wider family. At one point, Mr Shaw submitted that where the evidence does not properly deal with the issue the Court would be obliged to initiate its own inquiry. While we do not discount the possibility that a situation may arise which could trigger such a requirement, this case is not in that category.
Given the perfunctory nature of the evidence it is not possible for this Court to conclude Andrews J erred in the way she dealt with this issue.
Result
The appeal is dismissed.
We understand Mrs Duncan is legally aided and we make no order as to costs.
Solicitors:
Ord Legal, Wellington for Appellant
Crown Solicitor, Tauranga for Respondent
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