In the Matter of an application for restraining orders Between Commissioner Of Police Applicant And Oliver James Frederick Sigmund First Respondent And Hayden John Watson Second Respondent And Hollie Diana Brass
[2024] NZHC 2713
•19 September 2024
IN THE HIGH COURT OF NEW ZEALAND
INVERCARGILL REGISTRY
I TE KŌTI MATUA O AOTEAROA
WAIHŌPAI ROHE
CIV-2021-425-111
[2024] NZHC 2713
UNDER the Criminal Proceeds (Recovery) Act 2009 IN THE MATTER of an application for restraining orders BETWEEN COMMISSIONER OF POLICE Applicant AND OLIVER JAMES FREDERICK SIGMUND First Respondent AND HAYDEN JOHN WATSON Second Respondent AND HOLLIE DIANA BRASS Third Respondent (no longer respondent) AND HENRY FREDERICK ALEXANDER SMITH Fourth Respondent AND HOLLIE DIANA BRASS Interested Party
| Hearing: | 12 September 2024 |
| Counsel: | S N McKenzie for Applicant |
| T Clee for First Respondent (by AVL) | |
| A S P Tobeck for Second Respondent | |
| L S Collins for Fourth Respondent (by AVL) | |
| G A Paine for Interested Party |
The restraining orders
On 15 December 2021, this Court (on the without notice application of the
Commissioner of Police) made an order restraining real and personal property
pursuant to provisions of the Criminal Proceeds (Recovery) Act 2009 (the Act). The
Court has subsequently, on applications made on notice, extended the restraining
orders. They are now extended to expire today.
The restraining orders currently in place record, in standard terms, the defined
property is not to be disposed of, or dealt with, other than as provided for in terms of
the order and the property is to be under the Official Assignee’s custody and control.
The defined property is:
(a) All property (whether in New Zealand or overseas) held by or on behalf of the First Respondent, whether directly or indirectly
(including property over which he has effective control). A Without
Notice Restraining Order was made, in respect of the First
Respondent, on this basis (a ‘global restraining order’) by Mander J
on 15 December 2021; excluding:
(i) ANZ bank account [redacted], following the transfer of
$45,000.00 to the Official Assignee. Following this transfer,
the account will have a balance of approximately $11,600.00.
The account is in the name of the First Respondent; and
(b) The real property at 22 Trailview Lane, Weston, Oamaru, registered owners the Second and Third Respondents (Record of Title 754448
Lot 4 DP 502969 ¼ share in Lot 5 DP 502969), excluding the interests
of ANZ bank as mortgagee pursuant to registered mortgage
11947615.3. In respect of this property, a without notice restraining
order was made by Mander J on 15 December 2021.[1]
Application for extension
[1] Amended version as ordered below at [41].
The Commissioner has applied for an order extending the duration of the
restraining orders for a further four months. Eaton J granted an interim extension to
enable the application to be heard.
The first and second respondents oppose the extension application. The fourth
respondent abides the Court’s decision.
Ms Brass, who was the third respondent, initially opposed the application but
is now engaged in resolution discussions, which have led to her ceasing to be a
respondent and being joined instead as an interested party.
Overview of the proceeding
The Commissioner considers, in terms of the Act, the property the subject of
the restraining orders is tainted property and/or the respondents have unlawfully
benefited from significant criminal activity and have interests in the restrained
property. The Commissioner asserts in particular the respondents have unlawfully
benefited from the cultivation, possession and sale of cannabis; money laundering; tax
evasion; and the dishonest use of a documents (a gift statement).
The first and second respondents were prosecuted for alleged drug offences.
They were ultimately, following appeal, acquitted.
In the meantime the respondents were also subject to examination orders
requiring them to attend interviews. The fourth respondent and the interested party
were interviewed. The first respondent has an interlocutory hearing pending in
relation to his examination order. The second respondent is in Australia with no
indication of a date for return to New Zealand, so it is uncertain if and when he will
actually be interviewed.
Extension of restraining orders — the law
Section 41 of the Act provides for the extended duration of restraining orders:
Extending duration of restraining order
(1) If a court has made a restraining order, the applicant for that order may, before the restraining order expires, apply to that court to extend
its duration.
(2) If an application is made under subsection (1), the court may order that the operation of the restraining order be extended for a period not exceeding 1 year. (3) The duration of a restraining order may be extended more than once under this section. (4) If, before a restraining order would otherwise expire under section 37(1), an application is made to a court under this section and the application is granted, the restraining order ceases to be in force on the date specified in the court’s order.
The Court accordingly has a wide discretion in relation to the extension of a
restraining order.[2] The discretion is to be exercised having regard to the purpose of
the Act and the nature and purpose of restraining orders.[3] The nature and purpose of
restraining orders is to preserve property while the Crown gathers evidence to support
an application for forfeiture.[4]
[2] Commissioner of Police v Reed [2013] NZHC 802 at [34].
[3] At [34].
[4] Vincent v Commissioner of Police [2013] NZCA 412 at [45](a).
The primary purpose of the Act, as identified in s 3, is to establish a regime for
the forfeiture of property in defined circumstances. The Act’s forfeiture regime
proposes to:
(a) eliminate the chance for persons to profit from undertaking or being associated with significant criminal activity; and
(b) deter significant criminal activity; and (c) reduce the ability of criminals and persons associated with crime or significant criminal activity to continue or expand criminal enterprise;
and
…
In Commissioner of Police v Jiang, Dunningham J made observations, which
I respectfully adopt, as to the general approach the Court will take when considering
extension applications:[5]
[5] Commissioner of Police v Jiang [2019] NZHC 3318 at [21].
The clear purpose of this section is to ensure that property is not unnecessarily
restrained for undue periods of time. For example, if the applicant chooses not
to pursue profit forfeiture orders, then the requirement to actively renew the
restraining orders would ensure they do not endure beyond a maximum of one
year. However, assuming there is no change to the information which
warranted the grant of the restraining orders in the first place, and the applicant
is pursuing a substantive application for civil forfeiture orders in good faith, it
would be unlikely that a court would decline an extension unless there was
some material prejudice to the respondent or an interested party in maintaining
the restraining order. However, even then, one would expect that if the
restraining order could be varied to avoid or limit such prejudice, that would
be preferable to refusing an extension.
Counsel in this case accept the correct focus for this application is whether
there has been a material change in the information relevant to the restraining order.
The hearing of the application for extension is not intended to serve as some form of
appeal review of the initial justification for imposing restraining orders.
The authors of Adams on Criminal Law identify, by reference to caselaw, a
number of factors relevant to the exercise of the Court’s discretion to extend
restraining orders — the cases indicate how fact-specific the Court’s consideration
must be.[6] In an appropriate case, particularly where the Commissioner has yet to apply
for a forfeiture order, the Court may see fit when granting an extension of a restraining
order to impose conditions as to keeping respondents informed as to progress or,
exceptionally, imposing a time limit for the filing of a forfeiture application.[7]
[6] Mathew Downs (ed) Adams on Criminal Law – Sentencing (online ed, Thomas Reuters) at
[7] See, for instance, Commissioner of Police v Rodriguez [2021] NZHC 2223 at [50], [59].
Under s 29 of the Act, the Court when making or extending a restraining order
may require the applicant to give undertakings in relation to damages and/or costs.
Factors relevant to the exercise of that discretion are identified in Yan v Commissioner
of Police.[8]
The time taken in this case
[8] Yan v Commissioner of Police [2015] NZCA 576 at [41]–[45].
I summarise relevant events in relation to this proceeding:
(a) 18 December 2020 — search warrants executed at affected addresses; (b) 15 December 2021 — Commissioner filed an application for restraining orders supported by an affidavit (50 pages, with 47
exhibits);
(c) 10 June 2022 — examination orders made by Court (under s 107 of the Act), with three respondents refusing to undertake examination during
criminal proceeding;
(d) 22 February 2024 — Court of Appeal ruling of search warrant evidence inadmissible;[9]
[9] Watson v R [2024] NZCA 28.
(e) July–August 2024 — examinations of third and fourth respondents conducted (second respondent in Australia);
(f) 12 July 2024 — first respondent freshly charged with cultivation of cannabis; and
(g) 20 September 2024 — hearing pending of first respondent’s application in relation to his examination order.
Ms McKenzie has explained the Commissioner intends, upon completion of
the examination hearings, to have further financial analysis completed. Thereupon the
Commissioner intends to file an application for forfeiture orders with additional
supporting evidence.
Opposition
The first and second respondents filed parallel grounds of opposition to the
current application. They assert:
(a) the Commissioner has had since the Court of Appeal’s decision on 22 February 2024 to advance matters;
(b) the respondents were not notified until 24 June 2024 the Commissioner intended to proceed with a forfeiture application; and
(c) the Commissioner has not given any undertaking as to damages and/or costs whether satisfactory or otherwise.
Mr Tobeck, for the second respondent, submits the Court in the event the
restraining order is extended should require the Commissioner to give undertakings in
relation to damages and costs.
The only evidence filed in opposition to this application was an affidavit of
Ms Brass sworn on 24 July 2024. The relevance of her evidence has been overtaken
by her entering into discussions with the Commissioner.
The decision in Marwood v Commissioner of Police
In Marwood v Commissioner of Police,[10] the Commissioner’s application for
a profit forfeiture order under the Act rested on evidence found in a search that had
been excluded at a criminal trial. The Supreme Court held unanimously there was
jurisdiction to exclude the evidence in the civil proceedings.[11] The evidence could be
excluded as a remedy for breach of rights under the New Zealand Bill of Rights Act
[10] Marwood v Commissioner of Police [2016] NZSC 139, [2017] 1 NZLR 260.
[11] At [35]–[38], [60]–[61].
1990. A Court is required to consider whether exclusion of such evidence is a
proportionate response to the breach of rights involved.[12]
[12] At [49]–[50], [70]–[71], [73].
Ms McKenzie has indicated it is the Commissioner’s intention in this case to
seek to rely on the evidence obtained as a result of the execution of the warrants.
Submissions
First respondent
Mr Clee, for the first respondent, submits there has been a material change in
circumstances since the restraining orders were granted, by reason of the Court of
Appeal’s rulings. As a consequence of those rulings, and in light of the decision in
Marwood, the highest the Commissioner can put it is that the evidence obtained on the
execution of the warrants “may” become admissible on a forfeiture application.
Mr Clee notes the Court of Appeal’s observation in Marwood that absence of
bad faith does not tell in favour of admission.[13] The Court of Appeal carefully
[13] At [71].
considered the unlawfulness involved in relation to the warrants in the case of these
respondents and found the exclusion of the evidence in the criminal proceedings was appropriate. That flowed from the conduct, not only of the police, but also the officer
who issued the search warrants.
Mr Clee submitted that these circumstances heavily favour exclusion in the
present case.
Second respondent
For the second respondent, Mr Tobeck observed the Commissioner will seek
in any forfeiture proceeding against the second respondent to rely on evidence
obtained during search of a property not owned by the second respondent. As the
second respondent is not in a position to bring an action against the Crown for
breaching his rights through that search, the only available remedy for the second
respondent is the exclusion of the evidence obtained during the search.
Mr Tobeck then refers to the Commissioner’s suggestions that the second
respondent has engaged in mortgage fraud and tax evasion. Mr Tobeck asserts the
Commissioner cannot point to any evidence suggesting Mr Watson “was engaged in
significant criminal activity”.
Mr Tobeck acknowledges the Commissioner has referred to an intention to
complete examinations of the respondents and that the second respondent (at present
in Australia) has not returned to New Zealand, with the consequence that there has
been no examination of him. Mr Tobeck observes it is unclear how long the
Commissioner is prepared to await the second respondent’s return and how long any
civil proceedings will therefore be protracted.
Mr Tobeck states that, while the restraining orders have been in place, the
second respondent has been “subjected to decreasing house prices and increasing
interest rates with respect to his loan commitments”. (Evidence has not been provided
in support of those statements).
Mr Tobeck states, in the event the Commissioner makes an application for a
forfeiture order, the second respondent will require significant discovery.
Mr Tobeck adds, given the co-ownership of the Trailview Lane property, it
would be unjust if the property remained restrained in relation to the second
respondent but not to the third respondent.
Mr Tobeck finally submitted, should the Court extend the restraining order, the
Commissioner ought to be required to provide undertakings as to damages and costs.
Fourth respondent
Mr Collins confirmed the fourth respondent abides the outcome of the
Commissioner’s application.
Discussion
After the not-unsurprising time to progress criminal proceedings arising from
the respondents’ alleged dealings, there have been significant developments this year
through the Court of Appeal ruling the search warrant evidence inadmissible in the
criminal proceedings. The Commissioner has also been able to achieve, under the Act,
examinations of the fourth respondent and of Ms Brass with the remaining prospect of
examinations of the first and second respondents.
Ms McKenzie for the Commissioner appropriately accepts, with the time that
has elapsed to date, the Commissioner should be required to file any application for
forfeiture orders within a further four month period and that the restraining order, if
extended, should be extended for only a further four months.
With the length of extension so limited, I am not persuaded there has been a
material change in the information relevant to the restraining order. A material change
might occur if and when the Court rules against the admissibility of the
Commissioner’s proposed evidence in the context of the civil proceedings. But it
would be inappropriate for this Court to anticipate the likely outcome of any future
challenge to admissibility. I am satisfied it is appropriate to extend the restraining
order to expire on 20 January 2025.
I consider an extension appropriate at this point as the Commissioner is still at
the “evidence gathering” stage, as referred to at [11] above. The Commissioner is still
pursuing an examination of two respondents. To some extent the additional time
needed by the Commissioner is a product of the respondents’ exercise of their rights
in response to those examination orders.
Having regard to the limited duration of the extension, I do not consider it
appropriate to impose the condition sought by Mr Tobeck as to undertakings as to
damages and costs. The Commissioner’s entitlement to seek examination of all
respondents has not yet been effected. It is appropriate that the Commissioner reach
his decision on whether to seek continued restraint and to pursue forfeiture orders in
the light of the fullest information he can reasonably obtain. An undertaking as to
damages in the meantime would be appropriate. An undertaking as to costs is not
called for, given the Commissioner is ultimately exposed to an order for costs in the
usual way should his litigation fail.
Costs of the present application
Counsel accepted that I should appropriately fix the costs of the present
application on a 2B basis and order that they be costs in the cause.
Outcome
I order:
(a) the restraining orders currently in place are extended to expire on 20 January 2025, otherwise in their existing terms save that the words
“1/4sh in Lot 5, DP 502969” are amended to read “1/4 share in Lot 5,
DP 502969”; and
(b) the costs of this application are fixed on a 2B basis and are ordered to be costs in the cause.
Osborne J
Solicitors:
PRLaw Services Limited, Invercargill
Counsel:
T Clee, Barrister, Auckland
A Tobeck, Barrister, Otautau
L S Collins, Barrister, Dunedin
G A Paine, Barrister, Dunedin
| Judgment: | 19 September 2024 |
JUDGMENT OF OSBORNE J
COMMISSIONER OF POLICE v SIGMUND [2024] NZHC 2713 [19 September 2024]
[CP41.02].
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