Solicitor-General v Swann HC Dunedin CIV 2009-412-213

[2010] NZHC 1931

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY

CIV-2009-412-000213

IN THE MATTER OF     an application pursuant to the Proceeds of

Crime Act 1991

BETWEEN  THE SOLICITOR GENERAL OF NEW ZEALAND

Applicant

ANDMICHAEL ANDREW SWANN First Respondent

ANDOTAGO DISTRICT HEALTH BOARD Second Respondent

ANDANNA LAURA DEVEREUX Third Respondent

ANDPETER BRUCE IBBOTSON AND CHECKETTS MCKAY TRUSTEES LIMITED AS TRUSTEES OF THE FERNTREE LODGE FAMILY TRUST Fourth Respondent

ANDORGANIC WHITE MEATS LIMITED Fifth Respondent

ANDPETER BRUCE IBBOTSON, IAN GRANT FYFE AND ANNA LAURA DEVEREUX AS TRUSTEES OF THE DEVEREUX FAMILY TRUST

Sixth Respondent

ANDANNA LAURA DEVEREUX, PETER BRUCE IBBOTSON AND CHECKETTS MCKAY TRUSTEES LIMITED AS TRUSTEES OF THE ROWAN COURT FAMILY TRUST

Seventh Respondent

ANDLIBERTY PUBLISHING LIMITED Eighth Respondent

THE SOLICITOR GENERAL OF NEW ZEALAND V MICHAEL ANDREW SWANN AND ORS HC DUN CIV-2009-412-000213  29 October 2010

ANDFRESH FREE RANGE CHICKENS LIMITED

Ninth Respondent

ANDBRUCE MCILROY LIMITED Tenth Respondent

ANDLYNDA AND GRAEME KING, NORTH END PANELBEATERS

Eleventh Respondent

ANDDUANE GEARING Twelfth Respondent

ANDDG ENGINEERING LIMITED Thirteenth Respondent

ANDPETER BRUCE IBBOTSON Fourteenth Respondent

ANDCAREYS BAY MARINE LIMITED Fifteenth Respondent

Hearing:	On the Papers
Counsel:	M J Grills for Applicant
Judgment:	29 October 2010

JUDGMENT OF PANCKHURST J

Introduction

[1]      Consequent upon delivery of the substantive judgment in which forfeiture orders were made in relation to a range of property, the Solicitor General has applied for leave to dispose of the forfeited items prior to expiry of the appeal period.  I am satisfied that grounds exist to grant the order sought.  The reasons for that conclusion follow.

Section 16 Proceeds of Crime Act 1991

[2]      This section governs the present application.   Subsection (1) provides that where a forfeiture order is made against property, it vests absolutely in the Crown to

the  extent  of  the  interest  specified  in  the  order.    However,  ss  (4)  curtails  the operation of the Crown’s absolute interest:

(4)     Where a Court makes a forfeiture order against any property, -

(a)     Except with the leave of the Court that made the forfeiture order, the property that is forfeited to the Crown under the order shall not be disposed of, or otherwise dealt with, by or on behalf of the Crown, until the expiry of the relevant appeal period; and

(b)     On the expiry of the relevant appeal period, if the forfeiture order has not been discharged, the property may be disposed of, or otherwise dealt with, in accordance with any direction of the Minister.

Subsections (5) and (6) define the “appeal period”, being either the time for the filing of an appeal, or if an appeal is filed, its determination or earlier withdrawal.

[3]      In this case an appeal against the forfeiture orders has been filed.  The first respondent, Michael Swann filed a notice of appeal in person on 1 September 2010. No doubt, the determination of that appeal will not occur until sometime in 2011.

Grounds upon which the order was sought

[4]      The  property  in  question  comprises  house  properties,  vessels  and  motor vehicles (including trailers and motor vehicle parts).  There are five properties which have been forfeited to the Crown.  In relation to one of them, at Macandrew Road, Port Chalmers, Liberty Publishing Limited has a one-fifth interest in the property, and the order in favour of the Crown is subject to that interest.  I note that Mr Phillip Hearn  is  the solicitor  for  the company,  which  actively participates  in  decisions concerning disposal of the property.   The company does not oppose the present application.

[5]      The forfeited vessels include two tugs, as well as a range of smaller boats. Many of the motor vehicles are what might be termed classic cars, some being vintage vehicles of considerable antiquity.

[6]      The essential basis upon which leave is sought is set out in a report from Mr Guy Sayers, the Official Assignee, in whose custody or control the property was vested at the time restraining orders were made in 2009.  The report addresses two

aspects.  The first is the holding costs which have been incurred to date, and which continue to accrue in relation to items of property held in storage.  Such costs have totalled more than $250,000 to now, although a large part of that sum was recovered following the sale of the “M V Townsend”.  By way of example the invoice for the most recent quarter storage costs was about $14,500.  In addition there are insurance costs and management costs (in relation to the Official Assignee’s staff) to be met.

[7]      The second and more pressing concern relates to the wasting nature of many of the items.  Mr Sayers’ report includes these observations:

I have concerns that the ongoing storage of the fleet of vintage cars is depreciating their value as many of the cars are very vulnerable to environmental pollution and resultant corrosion.   These types of vehicles need to be constantly groomed and maintained to keep them in good condition.  The costs of maintaining this number of vehicles in that sort of condition will be prohibitive as only experts in the maintenance of vintage cars should be contracted for this type of work.  I suggest that these vehicles should be sold without delay to maintain some value.

Likewise,  with  regard  to  some  of  the  properties  Mr  Sayers  notes  that  they are unoccupied, while the two tug boats are moored in Dunedin Harbour and one at least appears to be slowly taking on water.

[8]      In my view it is imperative that the Official Assignee has the ability to dispose of items of property to best advantage, which includes the ability to sell particularly wasting items as soon as appropriate.  It is evident from the report that items will be assessed on a case by case basis and decisions made concerning prompt disposal, where required.   In other words, the present leave application is not the precursor to a “fire sale”.  Section 54 of the Act provides that the Official Assignee is subject to direction from the Minister of Justice, and Mr Sayers’ report confirms that approvals will be obtained from the Minister’s office in relation to future disposals.

[9]      The amended application contemplates a term that the proceeds of sale be held in interest bearing account pending determination of the appeal.  This, to my mind,  is  a  necessary condition  to  the  order  granting  leave.    Should  the  appeal succeed in relation to an item which has been sold in the meantime, there will remain a fund available if not the item itself.

[10]     Mr Swann indicated in a letter to the Registrar dated 18 October 2010 that he was opposed to the application.  Accordingly, arrangements were made for him to participate in a telephone conference on the morning of 27 October 2010 at which the application was to be considered.   Although a link to the prison was made, Mr Swann ultimately elected not to participate in the telephone conference.   This was  conveyed  to  me  by  a  prison  warden  who  had  spoken  with  Mr  Swann immediately before the conference was due to proceed.  Mr Swann’s letter did not indicate the basis of his opposition to the leave application.   Instead, he protested about  my hearing the  application,  and  contended  that  the  application  itself  was defective because the substantive forfeiture judgment was the subject of a partial recall on 27 September 2010.  I do not understand the import of this point.

Order

[11] Leave is granted pursuant to s16(4)(a) of the Proceeds of Crime Act 1991 for property that is forfeited to the Crown to be disposed of, or otherwise dealt with, by the Official Assignee prior to expiry of the appeal period, but subject to the condition that the proceeds of sale shall be held in an interest bearing account pending final

disposition of the appeal brought by Mr Michael Swann.

Solicitors:

Wilkinson Adams Lawyers, Dunedin for Applicant