Kiwi v Commissioner of Police
[2023] NZCA 106
•19 April 2023 at 11.00 am
| IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA |
| CA596/2021 [2023] NZCA 106 |
| BETWEEN | JAY TARAHINI KIWI |
| AND | COMMISSIONER OF POLICE |
| Hearing: | 16 November 2022 |
Court: | French, Gilbert and Goddard JJ |
Counsel: | W T Nabney for Appellant |
Judgment: | 19 April 2023 at 11.00 am |
JUDGMENT OF THE COURT
AThe appellant’s application to adduce further evidence is declined.
BThe appeal is dismissed.
CThe cross-appeal is dismissed.
DThe appellant must pay costs to the respondent on the appeal for a standard appeal on a band A basis, with usual disbursements.
EThere is no order for costs on the cross-appeal.
____________________________________________________________________
REASONS OF THE COURT
(Given by Goddard J)
Table of contents
Para no
Introduction[1]
A claim to recover the proceeds of methamphetamine dealing[1]
The appeal and cross-appeal
The property at 135 Kairua Road
Background
The acquisition of the 135 Kairua Road property by Mr Kiwi
High Court findings in relation to purchase of 135 Kairua Road
Application to adduce further evidence on appeal
Submissions in relation to application to adduce further evidence
Discussion
The Commissioner’s cross-appeal in relation to house at 224A Kairua Road
Relevant facts
High Court judgment
Te Ture Whenua Māori Act — relevant provisions
Relevant provisions of the CPRA
Submissions for the Commissioner on cross-appeal
Submissions for the Trust on cross-appeal
The relationship between Te Ture Whenua Māori Act and the CPRA
The order sought in respect of the house at 224A Kairua Road
Result
Introduction
A claim to recover the proceeds of methamphetamine dealing
Mr Jay Kiwi pleaded guilty to a number of charges relating to methamphetamine dealing, and was convicted and sentenced to nine years’ imprisonment.[1]
[1]R v Kiwi [2018] NZDC 22050.
The Commissioner of Police (the Commissioner) then sought to recover the proceeds of Mr Kiwi’s methamphetamine dealing under the Criminal Proceeds (Recovery) Act 2009 (CPRA). He brought proceedings alleging that Mr Kiwi owned or had an interest in a number of assets representing the proceeds of methamphetamine dealing, including a property located at 135 Kairua Road, Welcome Bay and a house (but not the land it is built on) at 224A Kairua Road, Welcome Bay. The Commissioner applied for these assets to be forfeited to the Crown. Mr Kiwi did not oppose the forfeiture of various vehicles and amounts of cash. But he opposed the making of orders in relation to the 135 Kairua Road property and the house at 224A Kairua Road. He denied that either of these was acquired with the proceeds of crime.
The High Court found that the 135 Kairua Road property had been purchased with the proceeds of methamphetamine dealing. Katz J did not accept Mr Kiwi’s account of how the purchase of that property had been funded. An order was made for the forfeiture of that property.[2]
[2]Commissioner of Police v Kiwi [2021] NZHC 2457 [High Court judgment] at [44], [124(b)] and [126(a)].
The house at 224A Kairua Road was built on Māori freehold land owned by Mr Kiwi’s uncle, Graeme Kiwi. The Judge held that the house was a fixture that formed part of the land, so both the land and the house were owned by Graeme Kiwi.[3] Graeme Kiwi had subsequently died intestate, and his children were in the process of establishing their entitlement to the property. The Judge considered that Te Ture Whenua Māori Act 1993 prohibited the making of a forfeiture order under the CPRA in respect of Māori freehold land. It was a specific Act that prevailed over the general criminal proceeds recovery regime in the CPRA. So no order could be made in relation to the house at 224A Kairua Road.[4]
The appeal and cross-appeal
[3]At [87].
[4]At [97]–[103] and [124(c)].
Mr Kiwi appeals from the order made in relation to 135 Kairua Road. He applies to adduce further evidence on appeal from Mr Alex Aitken in relation to the acquisition of that property. That evidence is neither fresh nor cogent. Leave to adduce that evidence on appeal is declined. The appeal by Mr Kiwi is dismissed.
The Commissioner cross-appeals from the refusal to make an assets forfeiture order in respect of the house at 224A Kairua Road. The Commissioner submits that properly interpreted, nothing in Te Ture Whenua Māori Act prevents the making of an assets forfeiture order in respect of Māori freehold land. He says that is confirmed by the legislative history of the CPRA, which was not drawn to the High Court’s attention. When the Bill that became the CPRA was before Parliament, a proposed amendment that would have excluded Māori land from the scope of the forfeiture regime was considered by Parliament and rejected.
We agree that an assets forfeiture order can be made under the CPRA in respect of Māori freehold land. If an assets forfeiture order is made, the safeguards in relation to disposition of that land under Te Ture Whenua Māori Act apply to the land in the hands of the Official Assignee. The two regimes can operate together.
However an assets forfeiture order cannot be made in respect of a house that is a fixture, separate from the land to which it is affixed. And in this case, Mr Kiwi has no interest in the house or the land at 224A Kairua Road that is capable of forfeiture. So no assets forfeiture order can be made. The appeal must be dismissed.
Our reasons are set out in more detail below. We address each property in turn.
The property at 135 Kairua Road
Background
As already mentioned, Mr Kiwi was convicted of methamphetamine offending. At the time he was arrested, he was carrying substantial quantities of methamphetamine and cash. Following his arrest, the Police executed search warrants at several addresses. They found more methamphetamine and cash. The methamphetamine found on Mr Kiwi and at those addresses had a value of between $341,400 and $569,000 if sold by the gram, or between $200,000 and $240,000 if sold by the ounce.
The Judge was satisfied that Mr Kiwi had participated in significant criminal activity. The key issue was whether the proceeds of that activity had been used to purchase the assets claimed by the Commissioner.[5]
The acquisition of the 135 Kairua Road property by Mr Kiwi
[5]At [3] and [15].
The following account of the background to the purchase of 135 Kairua Road is drawn from the High Court judgment.[6]
[6]At [16]–[34].
The land at 135 Kairua Road was formerly Māori freehold land. On 18 June 1968, a status order was made by the Māori Land Court declaring that the status of the land “shall cease to be Māori Freehold Land and shall become General Land”. By 2013, the sole registered proprietor of 135 Kairua Road was Mr Kiwi’s uncle, Warren Kiwi. Warren Kiwi had inherited a half interest in the property and took out a loan from the Southern Building Society (“SBS”) to purchase the other half interest from a family member. Unfortunately, however, Warren Kiwi fell behind with his mortgage payments.
In September 2013 SBS issued a notice of demand. Bank records show that Warren Kiwi deposited $10,000 cash into his bank account in February 2014 and a further $20,000 cash in May 2015. The $20,000 deposit was used to repay a personal loan, loan arrears and council rates arrears. Both cash deposits were in $50 notes. When interviewed by police, Warren Kiwi gave conflicting and at times inconsistent explanations about the source of the deposits. The Commissioner believes that the cash likely came from Mr Kiwi.
By mid-2015 a mortgagee sale was imminent. This was averted when, on or about 9 July 2015, the property was sold to Mr Kiwi. The purchase price was $150,000. Of that sum, $102,000 was paid by way of bank cheque. That was the amount required to pay off the loan from SBS. The balance of the purchase price was gifted from Warren Kiwi to Mr Kiwi, as recorded in a deed of gift. The rateable value of the property at the time it was sold to Mr Kiwi was $227,000.
The source of the $102,000 payment was an ANZ joint bank account in the names of Alex Aitken and his partner Carol Hurst. Alex Aitken is the father of John Aitken, who is a close friend and associate of Mr Kiwi. John Aitken’s former partner is Vanessa Kiwi, with whom he has two adult sons. Vanessa Kiwi and Jay Kiwi are cousins, but were raised by their grandparents as whāngai siblings in the family home at 135 Kairua Road. As an adult, Mr Kiwi lived with John Aitken and Vanessa Kiwi for a time. Although the relationship between Vanessa Kiwi and John Aitken did not last, Jay Kiwi and John Aitken remained good friends. At the time of his arrest, Mr Kiwi was the Vice President of the Greazy Dogs motorcycle gang. John Aitken is a former President of that gang.
ANZ bank records establish that the bank cheque for $102,000 was funded as follows:
(a)A cash deposit of $35,000 (all in $50 notes) was paid into the joint bank account by Alex Aitken on 30 June 2015.
(b)A further $30,000 cash deposit paid into the joint account was made by Ms Hurst, again all in $50 notes. This sum had been withdrawn from a bank account in the name of Michael Aitken, Alex Aitken’s brother.
(c)The balance came from funds already held in the joint account.
John Aitken, Alex Aitken, Michael Aitken, Ms Hurst and Warren Kiwi were all examined by the police, using their compulsory powers of examination under the CPRA. Their interview transcripts were in evidence before the High Court.[7] In addition, John Aitken and Mr Kiwi gave evidence in the High Court.
[7]The interview transcripts were produced as exhibits to a police officer’s affidavit, so were hearsay evidence. The parties had however agreed that the transcripts could be received as evidence before the High Court.
John Aitken claimed that he became involved in the purchase of the property as he did not want to see the Kiwi family homestead sold at a mortgagee sale. He asked his father, Alex Aitken, for help. His father agreed, but Warren Kiwi would only sign the property over to a member of the Kiwi whānau. That is why the property was transferred to Mr Kiwi. John Aitken said he believed that Mr Kiwi would be able to repay the loan from the income he earned as a courier. One difficulty with that explanation, however, is that Mr Kiwi did not start working as a courier until seven months after the purchase of 135 Kairua Road. Mr Kiwi was unemployed at the time 135 Kairua Road was purchased.
Alex Aitken and Ms Hurst both claimed in their examinations that they did not know either Mr Kiwi or Warren Kiwi. Ms Hurst said that the first time she met Warren Kiwi was when he arrived at her property on 7 August 2017 (the day before her police examination) thanking her for her help with the loan two years previously. Alex Aitken said that he knew Warren Kiwi’s parents as he had previously lived down the road from them. He said that he did not know Warren Kiwi or other members of his family.
However Warren Kiwi stated in his examination that Alex Aitken is his uncle, having previously been married to his aunty, and that Ms Hurst is also his whānau. When asked why he had transferred ownership of the property to Mr Kiwi when the funds had come from Alex Aitken, Warren Kiwi said that he wanted to give his nephew (Mr Kiwi) “something back” for organising the repayment of the mortgage.
Alex Aitken’s main source of income at the relevant time came from his employment as a fishing boat captain. He earned approximately $145,000 from that role in both 2014 and 2015. In addition, he and Ms Hurst operated an avocado orchard through a partnership. The partnership ran at a loss, however, prior to 2016.
Alex Aitken’s explanation for agreeing to fund the transaction was that he did not want the Kiwi family property to be sold at mortgagee sale. He said that he hoped the property would ultimately be transferred into the names of his grandchildren (the two adult sons of Vanessa Kiwi and John Aitken).
Ms Hurst acknowledged that prior to lending money to Mr Kiwi, she and Alex Aitken had only ever loaned money to family members. She did not know why her husband had decided to lend funds to Mr Kiwi to enable him to pay off the mortgage on 135 Kairua Road.
Alex Aitken and Ms Hurst provided conflicting explanations regarding the $35,000 cash that Alex Aitken deposited into their joint account. Alex Aitken claimed that the $35,000 came from cash of about $70,000 or so that he had “lying around at home.” He said the cash was from the cash sales of avocados from his avocado orchard and the sale of a couple of old 1947 truck engines and parts. Ms Hurst, on the other hand, believed that the $35,000 cash deposit had come from the sale of Bonus Bonds. When informed that it had not, she was unable to explain where else the cash could have come from.
Ms Hurst said in her examination that she handles the family finances. She said that they never held large sums of cash at home, with $5,000 being the most they ever had in the house. Further, any cash they had was generally in small denominations ($10 and $5 notes, but mostly change) as it came from selling avocados. They never received $50 or $100 notes. Ms Hurst said she did not like having a lot of cash at home, so she would just put it in the bank.
Michael Aitken was questioned by the police about the $30,000 cash that was withdrawn from his bank account and deposited into the joint account. He claimed that some years back he had a brain aneurysm and was unable to work for some time. Alex Aitken had paid all his living expenses. The deposit was repayment of those expenses, at the request of Alex Aitken.
Brian Jones, a Tauranga solicitor, acted on the purchase of the property. He gave evidence by affidavit that in 2015, Warren Kiwi attended his office with a person he introduced as Jay Kiwi. Warren said that he wanted to gift the property to Jay:
… as [Jay] had bailed him out of his financial difficulties with SBS Bank by repaying the mortgage on his property.
…
Warren advised that Jay had repaid nearly $100,000 to SBS to clear the mortgage and that he wanted to gift the outstanding balance to Jay.
Mr Jones further deposed that:
I advised Warren that the transaction was not in his best interests and that he could draw up a loan agreement with Jay rather than transfer title of the property. I could not understand why Warren would give away a property that he had inherited from his father, the entire transaction did not make sense.
Warren was adamant that the property was to be transferred into Jay’s name and became agitated when I questioned his decision.
Mr Kiwi’s arrest on 9 September 2016 was about 14 months after his purchase of the property. After his arrest a deed of debt was drawn up. The deed was executed on 21 October 2016. It recorded a loan of $102,000 between Mr Kiwi (as borrower) and John and Alex Aitken (as lenders).
The Commissioner obtained a restraining order under the CPRA in respect of the property on 8 June 2017. Alex Aitken, Ms Hurst and Warren Kiwi were all examined by Detective Thompson on 8 August 2017. Alex and John Aitken registered a caveat against the title to the property three days later on 10 August 2017.
High Court findings in relation to purchase of 135 Kairua Road
The Judge found that the claim that Alex Aitken funded the purchase of 135 Kairua Road from his own resources (and those of Ms Hurst) was implausible and lacked credibility, for the following reasons:[8]
(a)Alex Aitken was not willing to give evidence. The explanation he gave in his police examination regarding the source of the cash deposits to the joint account, particularly the $35,000 deposit, was implausible and directly contradicted by Ms Hurst’s statement. Further, his explanation does not explain why the deposit was made in $50 notes.
(b)No adequate explanation has been provided as to why Alex Aitken would be willing to loan over $100,000, on an unsecured and undocumented basis, to a person he claimed not to know when he and Ms Hurst had never previously loaned money outside of the family.
(c)Such generosity is implausible, given the level of Alex Aitken’s income. While his income as a fishing captain was comfortable, the avocado orchard ran at a loss and Ms Hurst had no recorded income. Mr Aitken had adult children of his own whom he helped financially, according to his son John. He also had adult grandchildren. At the time of Alex Aitken’s examination, his bank account was approximately $20,000 in overdraft.
(d)If Alex Aitken’s aim was to help retain the property in the Kiwi family, Mr Kiwi was an unlikely recipient of his generosity. Alex Aitken’s two grandsons, or their mother Vanessa Kiwi, would have been much more obvious recipients. Given that a mortgagee sale was imminent, Warren Kiwi was not in a position to dictate which family member the property should be transferred to.
(e)Alternatively, Alex Aitken could have simply loaned the funds directly to Warren Kiwi to discharge the mortgage. This would also have kept the property in the Kiwi whānau.
(f)It is not clear why the cash payments had to be channelled through Alex Aitken’s bank account, particularly given the urgency. If the cash belonged to Alex Aitken (or Michael Aitken) and the source of it was legitimate, it could have simply been deposited directly into the bank account of Mr Kiwi or Warren Kiwi.
(g)No contemporaneous loan agreement was entered into between John and Alex Aitken and Mr Kiwi, despite other aspects of the transaction being formally documented, including a sale and purchase agreement and a Deed of Gift. Further, no interest rate or time frame for repayment was agreed, and no repayments (of either principal or interest) have been made since the funds were advanced in July 2015.
(h)When Warren Kiwi attended his solicitor’s office, he took Jay Kiwi with him. Warren Kiwi was adamant that the property had to be transferred to Mr Kiwi, as Mr Kiwi was the person who had repaid the mortgage on the property. There was no mention of Alex or John Aitken’s alleged involvement.
[8]High Court judgment, above n 2, at [35].
The Judge was satisfied that the financing arrangement asserted by Mr Kiwi, John Aitken and Alex Aitken was not true. The evidence strongly supported the inference that the funds came from Mr Kiwi: there was no logical reason why the property would be transferred to Mr Kiwi if he had contributed nothing towards the purchase price, was not in a position to repay the loan, and was not personally known to the lender.[9]
[9]High Court judgment, above n 2, at [36]–[38].
Warren Kiwi had been adamant in his instructions to his solicitor that the property had to be transferred to Mr Kiwi, as he was the person who had repaid the mortgage on the property. Warren Kiwi had no reason to lie to his solicitor about this.[10]
[10]At [39].
The Judge was satisfied that the cash that Mr Kiwi used to fund the purchase of 135 Kairua Road was the proceeds of his methamphetamine dealing, and that was why he had felt it necessary to “launder” the money through Alex Aitken’s bank account rather than just paying Warren Kiwi directly. 135 Kairua Road was therefore tainted property for the purposes of the CPRA.[11]
Application to adduce further evidence on appeal
[11]At [44].
As already mentioned, Alex Aitken did not give evidence at the High Court trial. Mr Kiwi applies for leave to adduce evidence from Alex Aitken on appeal. He says that he had instructed his trial counsel to obtain evidence from Alex Aitken, but that for reasons unknown to Mr Kiwi that did not happen. He says Alex Aitken’s evidence is relevant, cogent, and reliable and the failure to adduce it at trial was not due to any failure on Mr Kiwi’s part.
Mr Kiwi swore a brief affidavit in support of the application, saying that he had anticipated that Alex Aitken would give evidence but when he arrived at Court from prison for the hearing of the Commissioner’s CPRA application, he discovered that Alex Aitken was not being called as a witness. He says that to this day he does not know why Alex Aitken was not called.
Alex Aitken’s affidavit sets out an account of how the $65,000 that came from him was sourced. That account is consistent with the account he gave in his police interview, and with the account given by Mr Kiwi and John Aitken in their evidence before the High Court. Alex Aitken says he was familiar with Jay Kiwi, as he had lived in Kairua Road for some years. He understood the house was in the Kiwi family, and that if a payment wasn’t made to clear the mortgage within a short period of time the bank was going to undertake a mortgagee sale. His son, John Aitken, told him that a friend of his, Jay Kiwi, needed financial help to avoid a mortgagee sale. His son John assured him that Jay Kiwi would be able to repay any loan that he made. He was willing to help and was advised that $102,000 was required to clear the bank mortgage.
Alex Aitken says he already had money in his bank account of approximately $37,000. An additional $65,000 was required. Of that, $35,000 was cash that he kept hidden under his bed. That cash was sourced from sales of avocados and packets of timber. He liked to have cash on hand at home. From time to time he would take money that he got from avocado sales and other cash sales and go to the bank and have the smaller notes and coins converted to $50 notes for ease of storage.
In his affidavit he also refers to buying a 1947 vintage Ford truck and many parts, and re-selling the truck and the unused parts for $28,000 cash at an all-Ford day held in March 2015.
Alex Aitken said that the additional sum of $30,000 that he deposited came from his brother Michael Aitken’s bank account. He had supported Michael Aitken over the years after he had a blood clot burst in his brain. He and his brother did not have any formal arrangement, but they financially supported each other. When Alex Aitken asked for the $30,000 from him, he had no issue with giving it to him.
After depositing the cash sums over the counter, Alex Aitken got a bank cheque from his bank and gave it to John Aitken.
Alex Aitken said that after paying the money over to John, he had raised it with him from time to time, but not in any serious way. He did not expect repayment to be made urgently. He didn’t expect to be paid interest. But he does expect to be repaid the $102,000. Alex Aitken says that so far as he is concerned, Jay Kiwi owes him $102,000.
Alex Aitken concludes by saying that he does not know why he was not called as a witness at the High Court trial. If he had been asked to give evidence on behalf of Mr Kiwi, he would have been more than happy to do so, and would have given the evidence set out in his affidavit.
Submissions in relation to application to adduce further evidence
Mr Nabney, who appeared for Mr Kiwi, submitted that Alex Aitken’s affidavit was important evidence that should be received by the Court. He accepted that there had been significant delay in filing it. But the reasons why the evidence had not been adduced at trial had been provided by Mr Kiwi.
Mr Nabney submitted that the evidence was cogent. The trial judge only had the transcript of the police interview with Alex Aitken before her as an annexure to a police officer’s affidavit. Alex Aitken’s affidavit provides additional information about the sources of cash available to him, and explains that some money was already in his bank account. The trial judge expressly mentioned that Alex Aitken had not been called: so it was very material to explain why that had occurred, and what he could have said if he had been called.
Mr Jenson, who appeared for the Commissioner, submitted that the evidence was not fresh. Nor was it cogent. It did not differ materially from the account provided by Alex Aitken in his interview with the police, which was before the trial judge. The account given in the affidavit suffers, Mr Jenson submitted, from the same inherent implausibility and inconsistency with the accounts of others that led the Judge to reject the explanation advanced by Mr Kiwi, John Aitken and others at trial. The admission of this affidavit could not provide a basis for disturbing the findings made in the High Court in respect of 135 Kairua Road.
Discussion
The test for admission of further evidence on appeal is well-established. In order for new evidence to be admitted on appeal it must be fresh, credible and cogent.[12]
[12]Rae v International Insurance Brokers (Nelson Marlborough) Ltd [1998] 3 NZLR 190 (CA) at 192–193, referred to with approval in Paper Reclaim Ltdv Aotearoa International Ltd (Further Evidence) (No 1) [2006] NZSC 59, [2007] 2 NZLR 1 at [6].
Alex Aitken’s affidavit is not fresh. It is an expanded version of the account he gave in his interview with Police, which was before the High Court. Much of the same ground was traversed by Alex Aitken’s son, John Aitken, who gave evidence at trial. Alex Aitken could have been called at trial, but was not.
Nor is the affidavit cogent. The explanation by Alex Aitken of the sources of the cash deposited into his account was before the High Court. It was rejected by the Judge for the reasons summarised in the passage set out at [32] above. That account was inherently implausible and contradicted by other material before the Court. Although the Judge referred to the failure of Alex Aitken to give evidence, we do not consider that that was a material factor in the High Court decision.
It follows that the application to adduce Alex Aitken’s affidavit as further evidence on appeal must be dismissed.
The appeal, which was pursued in reliance on the evidence of Alex Aitken, must also therefore be dismissed. The reasons that led the Judge to dismiss the account provided by Mr Kiwi and the Aitkens concerning the purchase of the property at 135 Kairua Road were in our view compelling. And as explained above, receipt of Alex Aitken’s evidence would not have affected the outcome.
The Commissioner seeks costs in respect of this appeal. There is no reason why costs should not follow the event. We award costs for a standard appeal on a band A basis, with usual disbursements.
The Commissioner’s cross-appeal in relation to house at 224A Kairua Road
The Commissioner’s cross-appeal in relation to the house at 224A Kairua Road raises an important issue about the interaction between the CPRA and Te Ture Whenua Māori Act.
The cross-appeal was not opposed by Mr Kiwi, who disclaimed any interest in either the land or the house at 224A Kairua Road.
The second respondent, the Pirihima Whānau Trust (the Trust) appeared as an interested party in the High Court. The Trust owns a number of blocks of land, including a block of general land at 222 Kairua Road, and a block of Māori freehold land at 224B Kairua Road. The Trust made submissions before us on:
(a)the statutory scheme of Te Ture Whenua Māori Act;
(b)determination of the ownership of improvements on Māori freehold land under Te Ture Whenua Māori Act; and
(c)the grant of an asset forfeiture order over tainted property that encroaches on Māori freehold land owned by the Trust.
Relevant facts
Again, we gratefully take the relevant facts from the High Court judgment.[13]
[13]High Court judgment, above n 2, at [54]–[58] and [72].
The property at 224 Kairua Road is Māori freehold land that appears to have been owned by many generations of the Kiwi whānau. In February 1999, the property was partitioned into two lots, 224A and 224B. Mr Kiwi’s uncle, Graeme Kiwi, became the registered owner of 224A Kairua Road, which was at that time an empty site.
On 9 May 2011, Graeme Kiwi was sentenced to imprisonment for a term of 15 years. He died in prison on 16 May 2017, leaving no will.
While Graeme Kiwi was in prison, a building was constructed on the 224A Kairua Road property. The building is a small but modern house, fitted out to a high standard, with two large garages.
No building consent had been sought in respect of the house. Tauranga City Council considered taking action to require removal of the house, but that did not eventuate.
The Commissioner alleged that Mr Kiwi was the person who arranged for the house to be built, paid for the labour and materials with cash, and oversaw its construction. Mr Kiwi allegedly then moved into the house once it was completed. The Commissioner initially argued that this was because Graeme Kiwi had agreed to transfer the property to Mr Kiwi, and Mr Kiwi had, in effect, become the de facto owner of 224A Kairua Road. The Commissioner therefore sought forfeiture of the entire property (both the land and the house).
It became apparent at the initial hearing of the Commissioner’s application that s 50(4) of the CPRA was relevant as Mr Kiwi did not claim any interest in the property. Graeme Kiwi’s six children had a potential interest in the property as his successors, but had not been notified of the application. The hearing was adjourned to enable Graeme Kiwi’s children to be served.
Graeme Kiwi’s children were located and served. They chose not to participate in the proceeding, instead focussing their resources on pursuing a claim to succession to the property in the Māori Land Court. In light of this development the Commissioner decided not to pursue his claim for forfeiture of the land, and filed an amended application seeking forfeiture of the house only.
At trial Mr Kiwi’s evidence was that he did not own the house and had not funded or supervised its construction. However there was extensive evidence before the Court supporting the inference that Mr Kiwi arranged for the construction of the house, had overall responsibility for the project, and funded it.[14] The Judge was satisfied that the construction was funded with the proceeds of Mr Kiwi’s methamphetamine dealing.
High Court judgment
[14]At [72].
The Judge found that the requirements for making an assets forfeiture order in respect of the house under s 50 of the CPRA were met. But because 224A Kairua Road was Māori freehold land, the Judge needed to consider whether she had jurisdiction to order that the house be (in effect) severed from the land and forfeited to the Commissioner.[15]
[15]At [73].
The Judge found that the house was a fixture which formed part of the land, and could only be alienated pursuant to the provisions of Te Ture Whenua Māori Act in relation to dispositions of Māori freehold land.[16]
[16]At [80]–[87] and [88(b)].
The Judge considered that there was a conflict between the CPRA and Te Ture Whenua Māori Act. She identified the issue as follows:[17]
(a)The definition of “property” in the CPRA is extremely broad. The house falls within the CPRA definition of property and, further, is tainted property, because its construction was funded by the proceeds of methamphetamine dealing. Accordingly, pursuant to s 50(1) of the CPRA the High Court must make an assets forfeiture order in respect of the house.
(b)Under Te Ture Whenua Māori Act, however, a different outcome is reached. The house is a fixture and forms part of the realty. The realty is Māori freehold land. It can only be alienated in accordance with the provisions of Te Ture Whenua Māori Act. Every form of disposition of Māori land is an alienation, with seven statutory exceptions. These do not include dispositions effected by order of the High Court. Rather, the Māori Land Court has exclusive jurisdiction over the alienation of Māori freehold land. This Court accordingly does not have jurisdiction to forfeit the house to the Crown.
[17]At [88] (footnote omitted).
The Judge approached the relationship between these two statutes by reference to relevant principles of statutory interpretation. She considered that the principle that general provisions do not derogate from specific ones[18] was of particular assistance. Parts 7 and 8 of Te Ture Whenua Māori Act set out very detailed processes for the alienation of Māori freehold land. The CPRA is a general act, which contains a very broad and general definition of property. If Parliament had intended that Māori land could be forfeited to the Crown under the CPRA, the Judge would have expected that to be made express.[19] The Judge concluded that Parliament must have intended the earlier special statute (Te Ture Whenua Māori Act) to continue to have exclusive application to its own subject matter (the alienation of Māori freehold land). The definition of “property” in the CPRA was not intended to apply to that subject matter, despite being expressed in terms wide enough to do so on a literal interpretation. It followed, the Judge said, that Māori land cannot be forfeited to the Crown under the CPRA. That analysis necessarily extended to fixtures on Māori land as they form part of that land.[20]
[18]Often expressed in Latin as generalia specialibus non derogant.
[19]At [95]–[99].
[20]At [102].
It followed that no assets forfeiture order could be made in relation to the house at 224A Kairua Road.
Te Ture Whenua Māori Act — relevant provisions
As this Court said in Short v Stowers, Te Ture Whenua Māori Act provides a comprehensive scheme for dealing with Māori land. It is intended to address both the dangers of uncontrolled fragmentation and the desirability of making use of Māori land. The retention of Māori land by Māori is the overarching objective.[21]
[21]Short (as trustee of Te Tumu Kaituna 14 Trust) v Stowers (on behalf of the Tukere and Grace Rehu Whanau Trust) [2021] NZCA 697 at [13].
The purpose of Te Ture Whenua Māori Act is set out in the preamble, the English portion of which states:
Whereas the Treaty of Waitangi established the special relationship between the Māori people and the Crown: And whereas it is desirable that the spirit of the exchange of kawanatanga for the protection of rangatiratanga embodied in the Treaty of Waitangi be reaffirmed: And whereas it is desirable to recognise that land is a taonga tuku iho of special significance to Māori people and, for that reason, to promote the retention of that land in the hands of its owners, their whanau, and their hapu, and to protect wahi tapu: and to facilitate the occupation, development, and utilisation of that land for the benefit of its owners, their whanau, and their hapu: And whereas it is desirable to maintain a court and to establish mechanisms to assist the Māori people to achieve the implementation of these principles.
(Emphasis added.)
Section 2(1) provides that it is the intention of Parliament that the provisions of Te Ture Whenua Māori Act must be interpreted in a manner that best furthers the principles set out in the preamble. Section 2(2) records that it is the intention of Parliament that powers, duties, and discretions conferred by Te Ture Whenua Māori Act will be exercised, as far as possible, in a manner that facilitates and promotes the retention, use, development and control of Māori land as a taonga tuku iho by Māori owners, their whānau, their hapū and their descendants, and that protects wāhi tapu.
For the purposes of Te Ture Whenua Māori Act, all land has one of six statuses: Māori customary land, Māori freehold land, general land owned by Māori, general land, Crown land and Crown land reserved for Māori.[22] Land that is held by Māori in accordance with tikanga Māori has the status of Māori customary land.[23] Where the beneficial ownership of land has been determined by the Māori Land Court by freehold order, that land has the status of Māori freehold land.[24]
[22]Te Ture Whenua Māori Act 1993, s 129(1).
[23]Section 129(2)(a).
[24]Section 129(2)(b).
No land may acquire or lose the status of Māori customary land or of Māori freehold land other than in accordance with Te Ture Whenua Māori Act, or as expressly provided by any other Act.[25]
[25]Section 130.
Part 7 of Te Ture Whenua Māori Act restricts the alienation of Māori land. Section 145 is concerned with Māori customary land. Sections 146 to 147A are concerned with alienation of Māori freehold land. These provisions, which are at the heart of the issue for determination by this Court, read as follows:
145 Māori customary land cannot be alienated
(1) Māori customary land or an interest in that land cannot be—
(a) alienated; or
(b) disposed of by will; or
(c) vested or acquired under an Act.
(2) However, this section does not prevent—
(a)any change in the owners who, in accordance with tikanga Māori, hold a parcel of Māori customary land, as long as the change is made in accordance with tikanga Māori:
(b)the reservation of Māori customary land as a Māori reservation, the exclusion of land from the reservation, the cancellation of the reservation, any vesting related to the reservation, exclusion, or cancellation, or the grant or assignment of any lease or occupation licence over the reservation:
(c)the change in status of Māori customary land to Māori freehold land:
(d)the creation, cancellation, or variation of an easement, or laying out of a roadway, over Māori customary land.
146 Alienation of Māori freehold land
No person has the capacity to alienate any interest in Māori freehold land otherwise than in accordance with this Act.
147 Alienation of whole or part of block
(1) Subject to this Act,—
(a)the sole owner of a block of Māori freehold land has the capacity to alienate the whole or any part of the land; and
(b)the joint tenants of a block of Māori freehold land acting together have the capacity to alienate the whole or any part of the land; and
(c)the owners in common of a block of Māori freehold land have the capacity to alienate the whole or any part of the land in accordance with section 150C; and
(d)the trustees of a trust constituted under Part 12 have the capacity to alienate the whole or any part of Māori freehold land vested in them, in accordance with section 150A; and
(e)a Māori incorporation has the capacity to alienate the whole or any part of Māori freehold land vested in it, in accordance with section 150B.
147A Right of first refusal for sale or gift
(1)A person referred to in section 147 who seeks to alienate any Māori freehold land by sale or gift must give the right of first refusal to prospective purchasers or donees who belong to 1 or more of the preferred classes of alienees, ahead of those who do not belong to any of those classes.
(2)A right of first refusal must be given in accordance with the rest of this section, unless the proposed sale or gift is to a member of a preferred class of alienees.
…
The term “alienation” in relation to Māori land is defined in s 4 of Te Ture Whenua Māori Act:
alienation, in relation to Māori land,—
(a)includes, subject to paragraph (c),—
(i)every form of disposition of Māori land or of any legal or equitable interest in Māori land, whether divided or undivided; and
(ii)the making or grant of any lease, licence, easement, profit, mortgage, charge, encumbrance, or trust over or in respect of Māori land; and
(iii)any contract or arrangement to dispose of Māori land or of any interest in Māori land; and
(iv)the transfer or variation of a lease or licence, and the variation of the terms of any other disposition of Māori land or of any interest in Māori land; and
(v)a deed of family arrangement relating to succession to Māori land or any interest in Māori land on the death of an owner; and
(vi)an agreement to the taking under the Public Works Act 1981 of Māori land or any interest in Māori land; and
(vii)the granting, renewal, variation, transfer, assignment, or mortgage of a forestry right over Māori land; and
(b)includes, subject to paragraph (c), any disposition of Māori land or of any interest in Māori land which is effected by the Māori trustee or any other trustee; but
(c)does not include—
(i)a disposition by will of Māori land or of any interest in Māori land; or
(ii)a disposition of a kind described in paragraph (a) that is effected by order of the court; or
(iii)a surrender of a lease or licence over or in respect of Māori land or any interest in Māori land; or
(iv)the granting, for a term of not more than 3 years (including any term or terms of renewal), of a lease or licence over or in respect of Māori land or any interest in Māori land; or
(v)a contract or arrangement for the granting of a lease or licence of a kind described in subparagraph (iv); or
(vi)the transfer or variation of a lease or licence of a kind described in subparagraph (iv) (other than a variation extending the term of such a lease or licence); or
(vii)a disposition by way of sale by a mortgagee pursuant to a power expressed or implied in any instrument of mortgage
Section 342 of Te Ture Whenua Māori Act contains specific provisions in relation to protection of Māori land against execution for debt. Section 343 provides for the circumstances in which Māori land may be available in bankruptcy:
343 Māori land available in bankruptcy
(1)On the application of the Official Assignee acting in respect of the estate of any person adjudged bankrupt after 1 April 1968, the court may make an order vesting in the Official Assignee the beneficial freehold interest of the bankrupt in Māori freehold land owned by the bankrupt whether solely or in severalty or jointly with any other person or persons.
(2) Any application under this section shall be dealt with by the court without notification or appearance of any person, and, subject to the provisions of this section, the court shall make the order sought as a matter of course.
(3) Any order made by the court pursuant to this section shall take effect and may be registered under the Land Transfer Act 2017.
(4) Notwithstanding any provision to the contrary in the Insolvency Act 2006, no beneficial freehold interests in Māori freehold land of a bankrupt shall vest or be deemed to have vested in the Official Assignee otherwise than by an order made pursuant to this section, and the Official Assignee shall have no power to disclaim any interest vested in the Official Assignee by such an order.
(5) Notwithstanding the provisions of the Insolvency Act 2006, the Official Assignee shall not have power to sell any such beneficial freehold interest entered in Māori freehold land to any person other than a person to whom the bankrupt could have alienated it in accordance with the provisions of Part 7 of this Act.
Relevant provisions of the CPRA
The primary purpose of the CPRA is to establish a regime for the forfeiture of property derived directly or indirectly from significant criminal activity, or that represents the value of a person’s unlawfully derived income.[26] The regime established under the CPRA seeks to:[27]
(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
(d)deal with matters associated with foreign restraining orders and foreign forfeiture orders that arise in New Zealand.
[26]Criminal Proceeds (Recovery) Act 2009, s 3(1) [CPRA].
[27]Section 3(2).
There are three ways in which interests in land may be affected by the statutory proceeds of crime regime:
(a)after conviction, if the land is held under the Sentencing Act 2002 to be an instrument of crime (i.e. property used wholly or in part to commit or facilitate the commission of the offence) (an instrument forfeiture order);[28]
(b)under the CPRA, if the land was acquired with the proceeds of qualifying offending (an assets forfeiture order);[29] or
(c)under the CPRA, if the land is available to satisfy a profit forfeiture order.[30]
[28]Sentencing Act 2002, ss 4 and 142A–142Q.
[29]CPRA, ss 49–51.
[30]Sections 52–58.
A civil forfeiture order[31] may be made in respect of any “property”, a term which is broadly defined to mean real or personal property of any kind, whether situated in New Zealand or a foreign country, whether tangible or intangible, and whether movable or immovable. It includes an interest in real or personal property.[32]
[31]A term defined to mean an assets forfeiture order or a profit forfeiture order: s 5(1).
[32]Section 5(1).
An assets forfeiture order may be made in respect of tainted property, which is defined as follows:[33]
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
[33]Section 5(1).
Section 50(1) of the CPRA provides that if 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 property, unless s 51 applies. The Court must specify in an assets forfeiture order the property to which the order applies, and that the property vests in the Crown absolutely, and is in the custody and control of the Official Assignee.[34]
[34]Section 50(3).
Section 51 provides that the High Court may 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.
Section 58 of the CPRA provides that the Court may treat effective control over property as an interest in that property. An order made by the High Court in circumstances where the respondent has effective control over property may be made even if the respondent has no interest in the property, and may specify an interest that differs from the interest that the respondent has in the property. This provision is intended to reach property held through companies or trusts, or pursuant to family, domestic or business relationships.
If the High Court makes a civil forfeiture order in respect of an estate or interest in land, the order must be transmitted by the Registrar to the Registrar-General of Land or the Registrar of Deeds, as the case may be, for the purposes of registration under the Land Transfer Act 2017 or the Deeds Registration Act 1908.[35]
[35]Section 60(2).
The CPRA provides for a person who is interested in property to apply for relief against forfeiture, where that person has not unlawfully benefited from the relevant significant criminal activity, or where undue hardship is reasonably likely to be caused to the applicant if relief is not granted.[36]
[36]Sections 66 and 67.
Sections 68 and 69 of the CPRA provide for the manner in which relief from civil forfeiture is available in two scenarios: where the applicant’s interest is severable (s 68), and where it is not severable (s 69). They provide as follows:
68Matters associated with relief from civil forfeiture order when interest severable
If the High Court grants relief from a civil forfeiture order under section 66 or 67 in respect of a severable interest it must,—
(a)in the case of an application made under section 61, direct that the severable interest not be included in any civil forfeiture order; or
(b)in the case of an application made under section 62, direct the Official Assignee to transfer the severable interest to the applicant.
69Matters associated with relief from civil forfeiture order when interest not severable
A High Court that grants relief from a civil forfeiture order under section 66 or 67 in respect of an interest that is not severable from the property that is, or is to be, the subject of a civil forfeiture order must direct the Crown to pay the applicant an amount equal to the value of that interest.
As already mentioned, if the High Court makes an assets forfeiture order the property vests in the Crown absolutely and is in the custody and control of the Official Assignee.[37] The Official Assignee must, as soon as practicable after the expiry of a specified period, dispose of the property specified in the order and apply the money resulting from the disposal according to the prescribed priority.[38]
Submissions for the Commissioner on cross-appeal
[37]Section 50(3).
[38]Section 82. For the prescribed priority of disposition, see s 82(1). For the specified period, see s 82(2).
The legislative history of the CPRA was at the forefront of the Commissioner’s submissions on the cross-appeal. In 2009, Parliament specifically addressed whether Māori freehold land should be excluded from the CPRA regime and decided against that course. During the second reading of the Criminal Proceeds (Recovery) Bill 2007 the Māori Party had expressed concern about the potential impact of the proposed legislation in relation to Māori customary land and Māori freehold land.[39] A supplementary order paper (SOP) was subsequently tabled that proposed exclusion of Māori freehold land and Māori customary land from the definition of “property”, thus excluding it from the forfeiture regime.[40] The SOP was debated during the Committee of the Whole House stage. The Minister of Justice said, in the course of that debate:[41]
[The Hon Simon Power] I turn to … [SOP] 5, which has been offered up by the Māori Party … It excludes, amongst other things, Māori customary land and Māori freehold land from the definition of “property” in the bill. The National Government is not in a position to support this [SOP], as I indicated to the member earlier.
Officials advise me of a matter that may help to put to rest the Hon Clayton Cosgrove’s mind as well as the mind of the promoter of the [SOP]. The residual rights of innocent parties who are caught up in the forfeiture regime continue to attach to the procedure. This means that if an innocent party who can show an interest in Māori customary land, Māori freehold land … makes an application for that land to not be dealt with under the regime … the court has an option of hearing that application and retaining the land.
…
[39](17 February 2009) 652 NZPD 1380.
[40]Supplementary Order Paper 2009 (5) Criminal Proceeds (Recovery) Bill 2007 (81-2).
[41](10 March 2009) 652 NZPD 1822.
The amendments proposed in the SOP were not adopted.[42]
[42](11 March 2009) 652 NZPD 1906.
Mr Sinclair, who presented the Commissioner’s submissions on this issue, submitted that it was clear from this legislative history that Parliament did intend Māori land to fall within the ambit of the CPRA.
Mr Sinclair submitted that the statutory language gives effect to that intention. The definition of “property” in the CPRA is very broad, and extends to all forms of property. There is no exclusion of Māori freehold land. Nor, properly interpreted, is Te Ture Whenua Māori Act inconsistent with the making of assets forfeiture orders by the High Court in respect of Māori freehold land. Te Ture Whenua Māori Act restricts alienations of Māori freehold land by a “person” but recognises that such land may be vested or acquired under another enactment. Forfeiture ordered by a Court is not an “alienation” by a “person”.
Mr Sinclair noted that s 342(2) of Te Ture Whenua Māori Act specifically provides that the operation of a mortgage in relation to Māori freehold land is not precluded. The exercise of a mortgagee’s power of sale is excluded from the definition of alienation in s 4. And s 343 provides that if a bankrupt person has a beneficial interest in Māori freehold land, that interest may be vested in the Official Assignee. Mr Sinclair submitted that if an owner may lose their interest in Māori freehold land by defaulting on a mortgage or becoming bankrupt, it is hard to see why that outcome should be excluded if their property is tainted by criminal activity.
Mr Sinclair observed that other enactments may authorise the taking of an interest in Māori freehold land. Such takings, Mr Sinclair said, do not amount to alienations. Thus for example the Public Works Act 1981 applies to Māori freehold land.[43] And in Walker v Walker, the High Court held that the power in the Property Law Act 2007 to order the sale of property and division of proceeds extends to Māori freehold land, because a Court order is not an alienation by a person.[44]
[43]See for example, the Public Works Act 1981, ss 23 and 41; and Urlich v Attorney-General [2022] NZCA 38, [2022] 2 NZLR 599.
[44]Walker v Walker (Māori freehold land) [2012] NZHC 543, [2012] NZAR 607 at [36].
Mr Sinclair also emphasised that if Māori freehold land is forfeited as the proceeds of crime, it retains the status of Māori freehold land in the hands of the Official Assignee.[45] When the Official Assignee disposes of the property, the restrictions on alienation in Part 7 of Te Ture Whenua Māori Act will apply.
[45]Te Ture Whenua Māori Act, s 130.
In addition, Mr Sinclair said, any person who is interested in Māori freehold land that is the subject of an application for a civil forfeiture order must be served with the application, and can appear and oppose forfeiture. The relief provisions in the CPRA apply. Relief from forfeiture can be granted in a number of circumstances, including where forfeiture would cause undue hardship to the person seeking relief.[46]
[46]CPRA, ss 61–69.
In summary, Mr Sinclair submitted, Parliament had struck an appropriate balance between the policy objectives of both statutes. Those interests are accommodated and appropriately protected by both Acts, read together.
Ms Moinfar-Yong then addressed the background to the application in this case.
It was common ground before us that the house is a fixture, built on a concrete pad and retaining walls. It is not relocatable. Mr Kiwi had no licence or permission to occupy the land. He had not entered into any agreement with Mr Graeme Kiwi or any member of the family in relation to construction of the house on the section. He was a trespasser.
Ms Moinfar-Yong noted that although the Commissioner had originally sought an assets forfeiture order in respect of the entire property at 224A Kairua Road, that application was amended to apply only to the house. In closing submissions before the High Court the Commissioner had explained that his intention was to remove and dispose of as much of the house as possible, salvaging some components and demolishing the rest.
The Commissioner’s written submissions argued that the classification of a building as a fixture made no difference, because under the CPRA the Court could treat the house as a severable interest to which an owner or non-owner of the underlying land may have an equitable claim.[47] An order under the CPRA could determine ownership of a fixture on Māori land, thus separating ownership of the fixture from the ownership interests that run with the land. The house, once removed from the land, would become a chattel. However in response to questions during oral argument about the estate or interest in land to which a forfeiture order would apply, Ms Moinfar-Yong acknowledged that it would need to be either the whole of the land or some identified legal or equitable interest. She accepted that an order could not be made in respect of the improvements as such, since they do not represent a separate legal or equitable interest in the land.
Submissions for the Trust on cross-appeal
[47]Ratana v Tihi – Ruatoki B Sections 23 and others [2021] Māori Appellate Court MB 290 (2021 APPEAL 290); and Tihi v Nuku – Ruatoki B Sections 23, 25, 26B, 27, 31, 32, 33B2C2, 38, 79 [2019] Māori Appellate Court MB 531 (2019 APPEAL 531).
Mr Koning, who appeared for the Trust, submitted that the Judge was right to find that Parliament intended Te Ture Whenua Māori Act to continue to have exclusive application to its own subject matter, and that the definition of “property” in the CPRA is not intended to apply to Māori land.
Mr Koning also submitted that it was not possible to make a separate assets forfeiture order in respect of the house. The Judge was right to find that the house was a fixture, so forms part of the Māori freehold land. Because it forms part of the Māori freehold land, an assets forfeiture order in respect of it cannot be made.
Mr Koning added that the deck and sealed driveway of the house at 224A Kairua Road appeared to encroach on 224B Kairua Road. If an assets forfeiture order is made, the Trust sought an order requiring removal of any tainted property that is within the legal boundaries of 224B.
The relationship between Te Ture Whenua Māori Act and the CPRA
We consider that Te Ture Whenua Māori Act and the CPRA can operate in tandem in a way that gives effect to the policy goals of both Acts.
On its face, s 146 of Te Ture Whenua Māori Act, which provides that no person has the capacity to alienate any interest in Māori freehold land otherwise than in accordance with that Act, appears very broad. However the precise scope of the restriction in s 146 becomes clearer when that provision is compared with s 145(1) in relation to Māori customary land. Section 145(1) provides not only that Māori customary land cannot be alienated, but also that it cannot be disposed of by will, or vested or acquired under an Act.
Reading these two provisions together, it seems to us reasonably clear that s 146 of Te Ture Whenua Māori Act is concerned with voluntary dispositions of Māori freehold land by a (living) owner. It was not intended to prevent Māori freehold land being vested or acquired under an Act, where that vesting or acquisition does not result from a voluntary disposition by an owner.
That reading of s 146 is consistent with the definition of “alienation” in s 4 of Te Ture Whenua Māori Act, which expressly excludes dispositions effected by order of the court.[48] It is also consistent with the distinction between agreements to the taking of Māori land under the Public Works Act 1981 (which are alienations, by virtue of paragraph (a)(vi) of the definition[49]) and proclamations taking land under the Public Works Act, which it is well-established are not alienations for the purposes of Te Ture Whenua Māori Act precisely because they are not voluntary dispositions by an owner.
[48]See para (c)(ii) of the definition, which is set out at [77] above.
[49]Te Ture Whenua Māori Act, s 4.
We would however sound a note of caution about the view expressed by the High Court in Walker v Walker that Te Ture Whenua Māori Act does not apply to a Court acting under s 339 of the Property Law Act.[50] Although s 146 of Te Ture Whenua Māori Act may not apply to such an order, the Court does not appear to have had its attention drawn to ss 287 and 289 of Te Ture Whenua Māori Act, under which the Māori Land Court has exclusive jurisdiction to partition or subdivide Māori freehold land. The view expressed in Walker v Walker may need to be revisited in a case where that issue squarely arises for decision.
[50]Walker v Walker, above n 44, at [36].
The approach outlined at [108] above is consistent with the purpose of Te Ture Whenua Māori Act. That Act strikes a balance between protection of interests in Māori freehold land, and claims of third parties in respect of that land. As Mr Sinclair submitted, s 146 does not affect a disposition by way of sale by a mortgagee pursuant to a power expressed or implied in any instrument of mortgage. Nor does it prevent the vesting in the Official Assignee of Māori freehold land owned by a bankrupt, and its subsequent sale subject to the Part 6 restrictions on voluntary alienations. We accept the submission that it is difficult to discern a principled reason for permitting recourse to Māori freehold land in those circumstances, but not where that Māori freehold land was purchased with the proceeds of crime, or improved using those proceeds.
We emphasise that the availability of an assets forfeiture order in respect of Māori freehold land does not take that land outside the protective framework of Te Ture Whenua Māori Act. If an assets forfeiture order is made, and the land vests in the Official Assignee under the CPRA, that land remains Māori freehold land. That status can only be lost in accordance with Te Ture Whenua Māori Act, or as expressly provided in any other Act.[51] There is no express provision to that effect in the CPRA. When the Official Assignee disposes of the land, that disposition is an alienation for the purposes of s 146 of Te Ture Whenua Māori Act. A right of first refusal must be given to prospective purchasers who belong to one or more of the preferred classes of alienees as defined in s 4. That includes descendants of any former owner who is or was a member of the hapū associated with the land. The process set out in s 147A for offering the land to the preferred classes of alienees must be followed, and confirmation of the alienation must be obtained from the Māori Land Court in accordance with s 152. These safeguards are the same ones that would apply if the owner decided to sell the land. They ensure that the purpose of Te Ture Whenua Māori Act is not undermined by a forfeiture and subsequent sale.
[51]Te Ture Whenua Māori Act, s 130.
Suppose for example that Mr Kiwi had purchased 224A Kairua Road from Graeme Kiwi with the proceeds of his methamphetamine dealing. We can think of no good reason for Mr Kiwi to be able to retain these fruits of his criminal activities. A civil forfeiture order should be available to strip him of those gains. If that were not possible, Māori freehold land could be used with impunity to shelter gains from serious criminal activity. However the restrictions in Part 7 of Te Ture Whenua Māori Act would then apply to the sale of that property by the Official Assignee: consistent with the purpose of Te Ture Whenua Māori Act, the property would first be offered to the preferred classes of alienees, including descendants of any former owner who is or was a member of the hapū associated with the land.
We agree with the Judge that one might have expected to see a provision in Te Ture Whenua Māori Act expressly dealing with sales by the Official Assignee in the context of recovery of criminal proceeds, in the same way that s 343 deals with sales by the Official Assignee in the context of bankruptcy. But any inference that might otherwise be drawn from the absence of any express provision in Te Ture Whenua Māori Act about the relationship between that Act and the CPRA is in our view outweighed by the clear legislative history of the CPRA, which was not drawn to the Judge’s attention. Parliament expressly turned its attention to the question whether Māori freehold land should be excluded from the broad definition of property to which the CPRA applies, and decided that it should not be. That legislative history provides strong support for the Commissioner’s argument, and for the approach outlined above as to the interplay between the two statutes.
In summary, with the benefit of counsel’s research and more extensive argument addressed to the issue, we have reached a different conclusion from the Judge. We consider that the High Court has jurisdiction to make an assets forfeiture order in relation to Māori freehold land.
The order sought in respect of the house at 224A Kairua Road
However that is not the end of the matter. It is still necessary to consider whether the order sought by the Commissioner could have been made, in circumstances where Mr Kiwi did not have the landowner’s permission to construct the improvements, and does not himself claim any interest in the house or the land. At the hearing of the appeal, we explored with counsel whether it is possible for a court to make an assets forfeiture order in respect of a house that is affixed to land.
The scheme of the CPRA requires that an assets forfeiture order (or any other civil forfeiture order) be made in relation to an interest in property that is recognised by law.[52] The order must specify the property to which it applies.[53] The definition of “property” in s 5(1) is broad, but nothing in that definition suggests that it is intended to refer to anything other than full ownership of real or personal property, or an interest in real or personal property that is known to the law of the country in which the property is situated. The ultimate outcome of an assets forfeiture order is that the property specified in the order vests in the Crown absolutely. So it must be property that the Crown is capable of owning.[54] And the Official Assignee must then dispose of the property specified in the order. That is, the property must be capable of transfer by the Official Assignee to a third party.[55]
[52]See the definition of “interest” at CPRA, s 5(1).
[53]Section 50(3).
[54]Section 50.
[55]Section 82(1).
Section 60, which is concerned with civil forfeiture orders relating to land, proceeds on the basis that the civil forfeiture order in relation to land must be made in respect of an estate or interest in land. Again, that is consistent with a requirement that the order relate to estates or interests in land that are known to the law.
That approach is also consistent with ss 68 and 69 of the CPRA in relation to relief from civil forfeiture. Under s 68, if relief is granted from a civil forfeiture order in respect of a severable interest the Court must either direct that the severable interest not be included in the civil forfeiture order, or direct the Official Assignee to transfer the severable interest to the applicant. Section 68 proceeds on the basis that what the Official Assignee is left with must be a recognised and severable interest in land, which can be dealt with under s 82. Conversely, under s 69 where relief is granted in respect of an interest that is not severable from the property — for example, where the property is a residential dwelling and the interest in respect of which relief is granted is a right to occupy that property protected by a constructive trust — the Court must direct the Crown to pay the applicant an amount equal to the value of that interest. The CPRA does not contemplate that the Official Assignee will be left attempting to dispose of an estate or interest in land that is not recognised by law, and is not severable from any interest in respect of which relief from forfeiture has been granted.
Section 58 of the CPRA, which provides for a court to treat property as though a respondent had an interest in it where the respondent has effective control over that property, might at first blush be thought to contemplate a broader approach. But we consider that s 58 still requires the court to identify the property — that is, a recognised estate or interest in property — that is effectively controlled by the respondent. It is that property, not the respondent’s “control” over it, that is then the subject of a forfeiture order. Any person with an interest in the property — which may include full ownership at law or in equity of that property — must then be given notice of the application, and an opportunity to appear and be heard in relation to the application.[56] So even where s 58 applies, a civil forfeiture order must be sought and made in respect of some estate or interest in property that is recognised by law.
[56]Section 58(5).
Nor is the position different in relation to Māori freehold land. It is well established that s 18 of Te Ture Whenua Māori Act, which provides for the Māori land court to determine claims to rights in Māori freehold land, only permits that Court to make a declaration about rights that already exist at law or in equity. That may include rights under a constructive trust. But s 18 does not enable the Māori Land Court to declare new kinds of rights in land that are not otherwise known to the law.[57]
[57]See Tihi v Nuku, above n 47; Ratana v Tihi, above n 47; and Nicholas v Te Amo (as trustees of the Te Whaiti-Nui-Atoi Trust) [2023] NZCA 22.
If a forfeiture order can only be made in respect of any recognised estate or interest in land that qualifies as tainted property, what does that mean for improvements to land funded by the proceeds of crime?
No difficulty arises where the relevant improvement is not a fixture: for example, a relocatable shed. Such improvements are capable of separate ownership as chattels, and can be the subject of a civil forfeiture order. The Official Assignee can then remove them, and dispose of them.
But an improvement that is a fixture, so is not capable of separate ownership, is not itself an estate or interest in land. It cannot in our view be the subject of a civil forfeiture order. Thus, for example, it is not possible to obtain a civil forfeiture order in respect of a driveway on land, or in respect of a house that is a fixture.
We do not consider that it is open to a Court to make an assets forfeiture order in respect of an improvement that is a fixture on the basis that it will be removed in whole or in part, and such items as are salvageable will be dealt with under s 82. Making an assets forfeiture order under s 50 has automatic consequences prescribed by the CPRA. The Court does not have power to modify those consequences by providing for a fixture to be removed or modified, and thus rendered capable of separate ownership in whole or in part at some point in time following the making of the order.
Where a trespasser constructs improvements on land without permission and those improvements are fixtures, the trespasser does not obtain any estate or interest in the land. There can be no question of any constructive trust in favour of the trespasser in such circumstances. So the trespasser has no recognised interest in the land that is capable of being the subject of a civil forfeiture order. Nor does the trespasser have any interest in the improvements: those are absolutely owned by the owners of the underlying land. Because the improvements are fixtures, and thus part of the land, no civil forfeiture order can be made in respect of the improvements alone.
We leave open the possibility that where improvements that are fixtures are made to land without the owner’s knowledge or consent, and those improvements are paid for with the proceeds of serious criminal activity, the land as a whole may come within the definition of tainted property. If so, an assets forfeiture order could be sought in relation to the land as a whole. However it is difficult to envisage circumstances in which the owner of the land would not be entitled to relief from forfeiture in such circumstances. An owner of tainted property is entitled to relief under s 66 if they have not unlawfully benefited from the significant criminal activity. Section 7 provides that a person has unlawfully benefited from significant criminal activity if the person has knowingly directly or indirectly, derived a benefit from that significant criminal activity (whether or not that person undertook or was involved in the significant criminal activity). In the scenario just outlined, it seems to us that there would be no knowing benefit.
For the reasons set out above, we have concluded that an assets forfeiture order cannot be made in respect of the house at 224A Kairua Road. The cross-appeal must therefore be dismissed. No orders as to costs were sought by any party in connection with the cross-appeal.
Result
The appellant’s application to adduce further evidence is declined.
The appeal is dismissed.
The cross-appeal is dismissed.
The appellant must pay costs to the respondent on the appeal for a standard appeal on a band A basis, with usual disbursements.
There is no order for costs on the cross-appeal.
Solicitors:
Pollett Legal Limited, Tauranga for First Respondent in the appeal.
Crown Law Office, Wellington for First Respondent in the cross-appeal.
Pawson Law, Te Puke for Second Respondent.
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