R v E HC Gisborne CRI 2009-016-3799

[2010] NZHC 1995

This case has been anonymized

IN THE HIGH COURT OF NEW ZEALAND GISBORNE REGISTRY

CRI 2009-016-03799

THE QUEEN V

E

CIV 2010-416-0065

AND BETWEEN            THE COMMISSIONER OF POLICE Applicant

ANDE

First Respondent

AND  BANK OF NEW ZEALAND Second Respondent

ANDKAY ELIZABETH CHRISTIE Interested Person

Hearing:         27 August 2010

Counsel:         R J Collins for Crown and Commissioner of Police

A J S Snell for R G E 

No appearance by, or on behalf of, Bank of New Zealand and K E Christie

Judgment:      8 November 2010

JUDGMENT (NO. 2) OF HEATH J

This judgment was delivered by me on 8 November 2010 at 4.00pm pursuant to Rule 11.5 of the High

Court Rules

Registrar/Deputy Registrar

Solicitors:

Crown Solicitor, PO Box 609, Napier

Bate Hallett Lawyers, PO Box 749, Hastings (R B Philip) Counsel:

A J S Snell, PO Box 101, Hastings

Copy to:  Bank of New Zealand, 60 Waterloo Quay, Wellington (S L Bartlett)

R V E HC GIS CRI 2009-016-03799  8 November 2010

Introduction

[1]      In a reserved judgment, delivered on 19 August 2010, I indicated an intention to make a forfeiture order in respect of a property situated at 42 Moana Road, north of Gisborne.  That indication was given in the context of an application for forfeiture under the sentencing regime.[1]

[1] Sentencing Act 2002, s 10B(1), 142A-142Q.

[2]      When Mr E   was sentenced on charges of cultivating and selling the Class C controlled drug, cannabis, on 27 August 2010, I imposed a sentence of supervision of one year as the only additional penalty to the forfeiture of the Moana Road property.

[3]      Two issues were left unresolved following the 27 August 2010 hearing.  The first was whether there was jurisdiction to carve out of the property forfeited an amount to meet private legal fees incurred by Mr E  , in relation to the forfeiture application and sentencing.   The second was to finalise the terms of the forfeiture order, after Mr Collins, for the Crown, had consulted with other affected parties.

Legal fees

[4]      Mr  Snell,  for  Mr  E  ,  in  a  memorandum  dated  14  September  2010, submitted  that  s 85  of  the  Criminal  Proceeds  (Recovery)  Act  2006  could  be interpreted sufficiently widely to justify legal costs being paid out of forfeited property.  That submission was made despite the terms of s 28(2) of that Act.  Mr Collins submitted that s 85 could not be used for that purpose as it was expressly limited to reimbursement of legal aid costs.[2]

[2] Criminal Proceeds (Recovery) Act 2009, s 85(b).

[5]      Sections 28(1)  and (2)  and 85 of the Criminal Proceeds (Recovery)  Act provide:

28.   Conditions on restraining order

(1)   A court may make a restraining order subject to any conditions the court thinks fit including, without limitation, conditions that provide for the following to be met out of a respondent's restrained property:

(a)the reasonable living costs of the respondent and any of his or her dependants:

(b)      the reasonable business expenses of the respondent:

(c)the payment of any specified debt incurred by the respondent in good faith:

(d)      any other expenses allowed by the court.

(2)   Despite subsection (1)(d), a court may not allow any legal expenses to be met out of a respondent's restrained property.

....

85.   Discharge of instrument forfeiture order by Official Assignee

If a court makes an instrument forfeiture order, the Official Assignee must, as soon as practicable after the expiry of the relevant appeal period (defined in section 73(3)), dispose of the property specified in the order and apply the money resulting from the disposal as follows:

(a)    first, by paying the costs recoverable by the Official Assignee under section 87:

(b)   secondly, by paying to the Legal Services Agency the amount (if any) payable by way of legal aid granted to the former interest holder (less any contributions paid by the former interest holder):

(c)    thirdly, by paying any outstanding fines and sentences of reparation imposed on the former interest holder:

(d)  fourthly, by paying any remaining money to the Crown.

[6]      I agree with Mr Collins that there is no jurisdiction to make the type of order for which Mr Snell applied.   Section 28(2) is determinative.   Without having researched the issue fully, it seems likely that the policy underlying s 85(b) is to ensure that public funds spent in opposing a forfeiture application are reimbursed, with  the  net  proceeds  being  forfeited  to  the  Crown.    That  policy  explains  the different approach to legal costs that are funded publicly or privately.

Form of order

[7]      Mr Collins has submitted a draft order.  It has been circulated to counsel for Ms Christie (who receives an interest in substitution for relationship property rights) and the Bank of New Zealand (in relation to its mortgage over the Moana Road property).  Counsel for Ms Christie consents to the making of an order in the terms sought, while counsel for the Bank of New Zealand requests a modification to draft order (1)(c)(ii) to make it clear that interest and costs are payable at the time of sale, in accordance with s 72 of the Act.  I am satisfied that modification is appropriate.

[8]      I  record  that  Mr  Snell  was  relieved  of  his  instructions  before  he  could comment on the form of the order, on behalf of Mr E  .  I intend to make the order as sought.   I am aware that Mr E   has filed an appeal against sentence and the forfeiture order.   Any issues in relation to the precise terms of the order can be addressed on that appeal.

Result

[9]      A  forfeiture order  is  made on  the terms  set  out  in  the Schedule  to  this judgment.

P R Heath J

Delivered at 4.00pm on 8 November 2010

Schedule

1.Following a hearing in the High Court at Gisborne on 5 and 6 August 2010, The Honourable Justice Heath made the following instrument forfeiture order under section 142N of the sentencing Act 2002:

(a)the property at 42 Moana Road, Okitu, Gisborne legally described on Certificate of Title GS100/107 as a fee simple estate comprising 1012 square metres more or less with the legal description Lot 54 Block IV Deposited  Plan  2702  and  registered  in  the  name  of  the  first respondent and valued at approximately $485,000.00 (“the property”) is subject to this instrument forfeiture order and therefore, under section 70(1)(a) & (b) of the Criminal Proceeds (Recovery) Act 2009, vests in the Crown absolutely (subject to the interests protected by section 70(2) of that Act in this case including the interests of the second respondent), and is in the Official Assignee’s custody and control;

(b)pursuant to section 142L(2)(a) & (b)(ii) of the Sentencing Act 2002 the interested person is held to have an interest in the property under the Property (Relationships) Act 1976;

(c)the instrument forfeiture order is to be discharged under section 85 of the Criminal Proceeds (Recovery) Act 2009 and the Official Assignee is to apply the money resulting from the disposal as follows:

(i)payment of the costs of sale and costs recoverable by the Official Assignee under section 87 of the Criminal Proceeds (Recovery) Act 2009;

(ii)payment to the second respondent to the full extent of its mortgage debt (including any interest and costs) at the time of sale in accordance with section 72 of the Criminal Proceeds (Recovery) Act 2009;

(iii)payment  of  the  sum  of  $20,000  to  the  interested person;

(iv)      payment  of  any  further  sums  in  accordance  with section 85 of the Criminal Proceeds (Recovery) Act

2009.