FM Custodians Limited v The Queen - [2020] NZCA 285

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA294/2019
[2020] NZCA 285

BETWEEN	FM CUSTODIANS LIMITED Appellant
AND	THE QUEEN First Respondent
AND	LINDSAY BECKETT SMITH Second Respondent

Hearing:	13 May 2020
Court:	Kós P, Venning and Mallon JJ
Counsel:	G P Blanchard QC, B K McLay and E B Moran for Appellant K South and J Mara for First Respondent No appearance for Second Respondent
Judgment:	14 July 2020 at 9.30 am

JUDGMENT OF THE COURT

The appeal is dismissed.

____________________________________________________________________

REASONS OF THE COURT

(Given by Venning J)

Introduction

Lindsay Beckett Smith pleaded guilty to a representative charge of using forged documents to obtain a pecuniary advantage and one charge of failing, without reasonable excuse, to comply with s 149 of the Insolvency Act 2006. He was sentenced in the District Court at Greymouth to two years and two months’ imprisonment on the forgery charge, with a reparations order of $764,000, and convicted and discharged on the insolvency charge.[1]
[1]R v Smith [2017] NZDC 27345 [Sentencing notes].
The offending involved two loans totalling $784,000 which FM Custodians Ltd (FMC) had advanced to entities associated with Mr Smith. The loans were secured against several properties. As part of the sentencing process, the Crown sought forfeiture of the proceeds of sale of the properties. FMC applied for relief against forfeiture.
Judge Neave found that FMC did not have a valid interest in the property as its mortgage was created by fraud. The Judge went on to reason that if he was wrong in that conclusion, FMC was in any event involved in the qualifying instrument forfeiture offence. It could not, therefore, meet the test for relief from forfeiture under s 142L of the Sentencing Act 2002. The Judge made an instrument forfeiture order in relation to the proceeds of sale totalling $647,870.36.[2]
[2]R v Smith [2017] NZDC 19891 [District Court judgment]; and R v Smith DC Greymouth CRI‑2014-018-39, 26 September 2017 [District Court recall judgment].
FMC appealed. Nation J dismissed the appeal.[3] He held:
(a)the properties in issue were an instrument of crime;[4]
(b)the Judge was correct to find FMC did not have a valid interest in the properties as its mortgages were created by fraud;[5]
(c)the Judge was also correct to find that FMC, through Mr Smith as its agent, had been involved in the relevant instrument forfeiture offence;[6] and
(d)the Judge had properly concluded FMC was not entitled to relief from the forfeiture order and consequently the proceeds of sale should be forfeited to the Crown.[7]
[3]FM Custodians Ltd v R [2019] NZHC 1128 [High Court judgment].
[4]At [55].
[5]At [151].
[6]At [178].
[7]At [180].
FMC applied for leave to bring a second appeal. This Court granted leave to FMC to appeal the High Court decision that FMC was not entitled to relief from the instrument forfeiture order.[8]
[8]FM Custodians Ltd v R [2019] NZCA 598.
The appeal raises the following issues:
(a)Were the properties instruments of…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2020] NZCA 285
Decision Date: 14 July 2020 at 9.30 am

CaseChat Overview and Summary

In the Court of Appeal of New Zealand, FM Custodians Limited (FMC) appealed against a decision of the High Court, which had dismissed its appeal against the District Court's order that the proceeds of sale of certain properties be forfeited to the Crown. The appeal presented several issues for the Court of Appeal to decide. First, whether the properties were instruments of crime as defined in the Criminal Proceeds (Recovery) Act 2009 (CPRA) and the Sentencing Act. Second, if so, whether FMC had an interest in the properties. Third, whether FMC was involved in the qualifying instrument forfeiture offence. The Court of Appeal found that the properties were instruments of crime, and that FMC did not have an interest in the properties. The Court also found that FMC was involved in the qualifying instrument forfeiture offence. Accordingly, the appeal was dismissed.

Orders