THE COMMISSIONER OF POLICE AND JOHN RICHARD BRACKEN BRACKEN ENTERPRISES LIMITED THE BRACKEN FAMILY TRUST
[2023] NZHC 1790
•10 July 2023
IN THE HIGH COURT OF NEW ZEALAND GISBORNE REGISTRY
I TE KŌTI MATUA O AOTEAROA TŪRANGANUI-A-KIWA ROHE
CIV-2018-416-00044
[2023] NZHC 1790
UNDER the Criminal Proceeds (Recovery) Act 2009 IN THE MATTER
of an application under s 41
BETWEEN
THE COMMISSIONER OF POLICE
Applicant
AND
JOHN RICHARD BRACKEN
First Respondent
BRACKEN ENTERPRISES LIMITED
Second RespondentTHE BRACKEN FAMILY TRUST
Third Respondent
AND
ANZ BANK NEW ZEALAND LIMITED
First Interested Party
RICHARD THOMAS BRACKEN
Second Interested PartySHIRLEY LESLEY BRACKEN
Third Interested PartyROBERT RICHARD BRACKEN
Fourth Interested PartyKATRINA LEIGH MARTIN
Fifth Interested PartyA (by her litigation guardian ROBERT RICHARD BRACKEN)
Sixth Interested PartyMARGARET ALEXANDRIA BRACKEN
Seventh Interested Party
(continued over page)
COMMISSIONER OF POLICE v BRACKEN [2023] NZHC 1790 [8 September 2023]
B (by his litigation guardian KATRINA LEIGH MARTIN)
Eighth Interested Party
Hearing: On the papers Counsel:
M J M Mitchell for Applicant First Respondent in person
J M Matheson for Second Respondent and Fourth, Fifth, Sixth and Eighth Interested Parties
R E Harrison KC for Third Respondent P J Davey for Seventh Interested Party G Young for Official Assignee
Judgment:
10 July 2023
Recalled and reissued:
8 September 2023
JUDGMENT OF RADICH J
[1] On 14 December 2018, the applicant (the Commissioner) obtained without notice restraining orders under ss 22, 24 and 25 of the Criminal Proceeds (Recovery) Act 2009 (the Act). The Commissioner then applied for on-notice orders under ss 21 and 25 of the Act.
[2] On 30 October 2019, Simon France J determined the on-notice application and made the restraining orders sought.
[3] The restraining orders have been extended now on three occasions. The Commissioner has applied for a further extension under s 41 of the Act. In my minute of 7 June 2023, I directed by consent that, following receipt of a memorandum from the Commissioner identifying each item of property that is currently subject to the restraining orders, I would determine the application on the papers.
[4] On 26 June 2023, the Commissioner filed a memorandum identifying the restrained property and so I go on now to consider the application for the restraint to remain in place for a further year.
Background
[5] John Richard Bracken (Mr Bracken) was prosecuted for GST fraud, resulting in $17,311,262.29 being obtained unlawfully to his benefit and that of the co- respondents.1
[6] The restraining order referred to in [2] above was made over real estate,2 10 registered vehicles, farm vehicles, equipment and plant, marine craft and a trailer on 30 October 2019 and was confirmed on 9 July 2020. 3 The restrained property was added to on 9 December 2020 to include financial assets.4 The effect of the restraining order was to put the restrained property in the custody and control of the Official Assignee so that it would not be disposed of, nor dealt with, other than as provided for in the order.
[7] On applications from the Commissioner, the restraining orders were extended for one-year periods by the Court on 27 October 2020 and on 21 October 2021. As I come on to explain below, it was extended again on 26 October 2022 “until further order of the Court”.
[8]In March 2021, Mr Bracken was found guilty on 39 charges, as described in
[5] above.5
[9] On 26 May 2022, the Commissioner applied for a profit forfeiture order under s 50 of the Act. Evidence and notices of opposition have been filed by the parties to that application and, on 7 June 2023, I made timetabling orders to accommodate the filing of revised notices of opposition (or applications for relief under s 61 of the Act) and affidavits on the application. A case management conference is scheduled on or soon after 1 November 2023.
1 The charges were of dishonesty and, without claim of right, using goods and services tax returns with the intention of obtaining a pecuniary advantage: Crimes Act 1961, s 228(1)(b).
2 Properties at 3 Coldstream Road, Kaiti, Gisborne; 16 Coldstream Road, Kaiti, Gisborne; 385 Ormond Road, Riverdale, Gisborne; Matawai, being 156 Te Wera Road, 6998 Matawai Road, 7274 Matawai Road and 7303 Matawai Road; and 122 Ohiwa Loop Road, Waiotahi.
3 Commissioner of Police v B & Ors [2020] NZHC 1623.
4 Being the balance of funds in ANZ accounts, a Westpac account, an ASB account, AFFCO, an accountancy firm, a livestock company and shares. See Commissioner of Police v Bracken [2020] NZHC 3246.
5 R v Bracken [2021] NZHC 609.
[10] On 7 October 2022, the Commissioner applied for orders extending the restraining orders for a period of one year. On 26 October 2022, Isac J granted the Commissioner’s application but on the basis that it was made until further order of the Court in order to accommodate the filing of notices of opposition to the extension application and affidavits in support of, or opposing, the application.6
[11] Subsequently, notices of opposition and affidavit evidence have been filed in opposition to the extension application by the second and third respondents and by the fourth, fifth and sixth interested parties. Accordingly, and with the parties’ consent, this decision considers the extension application on the papers. No submissions were filed on behalf of the respondents and interested parties.
[12] The property that is subject to restraint, following additions and adjustments since 2018, is set out comprehensively in the memorandum from the Commissioner of 26 June 2023. I do not set out the list again in this decision but refer to the property described in that memorandum generally as “the restrained property”. The extension sought by the Commissioner relates to all of the restrained property.
Relevant principles
[13] The application to extend the duration of the restraining orders is made under s 41 of the Criminal Proceeds (Recovery) Act. That section provides:
(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.
6 The Commissioner of Police v Bracken HC Gisborne CIV-2018-416-00044, 26 October 2022.
[14] The Court is given a wide discretion to extend the duration of a restraining order and it may be extended more than once. A restraining order is an interim order of limited duration to preserve property while the Crown is gathering evidence to support an application for profit forfeiture.7 Where the circumstances that justified the making an order in the first place have not changed and the Commissioner has not delayed pursuing an application for a profit forfeiture order, it is unlikely that a court will decline an extension unless there is some material prejudice to the respondent or to an interested party in maintaining the restraining order.8
[15] However, even then, if a restraining order is able to be varied in such a way as to avoid or limit prejudice, that tends to be the preferred approach.
The application
[16] The extension application of 7 October 2022 is supported by a memorandum of counsel of 29 May 2023 and an affidavit of Detective Senior Sergeant Keith Kay of 30 May 2023.
[17] The extension is sought in order to preserve the current position pending determination of the Commissioner’s application for a profit forfeiture order. It is said that the grounds for restraint have been made out previously and remain valid.
[18] It is opposed by the fourth, fifth and sixth interested parties (Robert Bracken, Katrina Martin and A (the interested parties), the second respondent (Bracken Enterprises Limited) and the third respondent (the Bracken Family Trust) (the respondents). The interested parties say:
(a)it is not in the interests of justice to extend the restraining orders given the Commissioner’s three-and-a-half-year delay between the making of the original restraining order (in December 2018) and the date on which the profit forfeiture application was made (in May 2022);
7 Vincent v Commissioner of Police [2013] NZCA 412 at [45(a)]; and Commissioner of Police v Reed [2013] NZHC 802 at [34].
8 Commissioner of Police v Jiang [2019] NZHC 3318 at [21].
(b)they are unfairly prejudiced and suffering undue hardship as a result of the continuing orders and the conditions of restraint;
(c)the application to extend the restraining orders is a breach of s 9 of the New Zealand Bill of Rights Act 1990 (NZBORA) (a disproportionately and severe punishment on them as innocent parties); and
(d)the application is not in the best interests of A (who is 5 years old) and constitutes a breach of the United Nations Convention of the Rights of the Child.
[19] The grounds of opposition for the respondents are similar, in the sense that they object to the Commissioner’s delay in bringing the profit forfeiture application, and include grounds to the effect that:
(a)the respondents are the lawful owners of much of the property subject to the forfeiture application,9 such that Mr Bracken does not, as is alleged, have a “full ownership interest in” the property – or, moreover, that he does not have any sufficient interest in the property;
(b)the trustees and/or the beneficiaries of the fourth respondent and the third respondent have been and are prejudiced and/or are suffering undue financial and other hardship (including reputational damage on the part of the third respondent) by reason of the restraining orders; and
(c)the restraining orders should be removed and amended so that the proceeds of sale from a boat and trailer specified in 2(xlix) and/or the financial asset of $114,615.56 specified in 2(liii) of the Commissioner’s memorandum of 26 June 2023 identifying the restrained property are made available to the fourth respondent for the essential maintenance of the trust’s properties.
9 For the Trust, the property specified at 2(i)–(v), (xlix) and (xlii) of the Commissioner’s memorandum dated 26 June 2023 setting out the restrained property.
[20] Affidavits in opposition have been filed by Robert Bracken, Margaret Bracken, A (through her litigation guardian) and Katrina Martin. The affidavits are concerned primarily with the forfeiture application but, insofar as they relate to the Commissioner’s application to extend the restraining orders, their focus is upon the effect the restraint is having on their farming operation and on the way in which it is depriving them of income and causing hardship and financial stress.
Analysis
[21] The first ground upon which the respondents and the interested parties challenge the extension of the restraining orders is that restrained property is held, not by Mr Bracken, but by the second or third respondents. It is said that the trustees of the third respondent hold certain restrained property on behalf of beneficiaries of the trust.
[22] Restraining orders may relate to all or a part of a respondent’s property, including property over which a person has “effective control” or a sufficient interest.10 In an affidavit of 2018 in support of the original restraining order, Detective Camplin has explained the way in which, “as trustee and beneficiaries of BFT, Mr and Mrs Bracken enjoy effective control and beneficial ownership of the properties and general property” restrained under that order. In a further affidavit of 21 February 2019, Detective Camplin has referred to property that was, for example, restrained at Te Wera Road and at Ōhiwa Loop Road and that “[t]he respondents have an interest in each of the above-named addresses from which the various items of property were restrained”. The same was so, for example, of a Game King boat over which Dobson J found that Mr Bracken had effective control in his decision of 9 December 2020.
[23] The interested parties have given evidence of the beneficial interests they have in trust property that is subject to the restraining orders. For example, Katrina Martin has referred to the Coldstream Road property as being described in an insurance policy as “owner occupied” and has described her beneficial ownership in the property.
Commissioner of Police v Li [2014] NZHC 479 at [5]; Commissioner of Police v De Lautour
[2021] NZHC 2962 at [12]; and ss 5 and 58 of the Criminal Proceeds (Recovery) Act 2009.
Margaret Bracken has referred to the purpose of the trust being to ensure beneficiaries and future whānau are provided for. Robert Bracken refers to the way in which certain trust property was to benefit certain beneficiaries and to the way in which certain trust property was intended for his benefit and use. That may well be the case but, in the context of an application for an extension of a restraining order, the Court is not in a position to resolve in any conclusive way the nature and extent of respective interests in the property of the respondents. Orders are made under the Act in relation to any interest in specified property where there are reasonable grounds to believe that it is tainted property. “Interest” in property, in terms of the definition in s 5, can include that of a beneficiary of a trust.11 or the equitable interest of a beneficiary under a constructive trust.12
[24] In addition, a respondent may be regarded as having an interest in a property if he or she has effective control over it, even if no legal or equitable interest is involved. In Commissioner of Police v Read, a respondent who had no interest in a trust as a discretionary beneficiary was held to have effective control over the trust nonetheless.13
[25] I am satisfied that Mr Bracken’s interests in the restrained property are, on the Commissioner’s evidence, sufficient for the purposes of the orders that are sought.
[26] Moreover, in circumstances in which the respondents have challenged previously the validity of the restraining order without success, I do not see it as appropriate to intervene on this ground and at this point in time, particularly when, although further time has passed, circumstances have not changed in any material way and arrangements are in place for the hearing of the substantive forfeiture application.14
[27] The respondents and interested parties have described the prejudice they face from their restraining orders. One aspect of the prejudice is financial hardship.
11 Commissioner of Police v Irwin [2020] NZHC 1370.
12 For example, Commissioner of Police v Winsor [2014] NZHC 161 at [51].
13 Commissioner of Police v Read [2015] NZHC 2055.
14 The Commissioner of Police v Bracken and Ors HC Gisborne CIV-2018-414-44, 27 October 2020 (Minute of Mallon J) at [7].
Robert Bracken has said in affidavit evidence that, before the proceedings were commenced, he was earning a salary of approximately $40,000 per year, after tax, as a farming assistant. Subsequently, he has said, his income has been irregular and that it is considerably less.
[28] Robert Bracken has spoken also of the financial hardship the third respondent has faced as a result of the impact of the restraint on the farming operation. Prior to the restraining orders being put in place, he has said, the farm had 6,000 ewes and 350 to 400 Red Devon cattle. However, it is said that “[d]ue to financial hardship from lack of income and of access to funds because of the restraining order conditions, the farm had to destock”. As a result, it now has approximately 4,500 ewes and 400 cattle. It is said that the land is deteriorating quickly and there are not sufficient funds for fertiliser.
[29] Margaret Bracken has said that the health of the farming operation and of the farmland is considerably worse than was the case before the restraining orders were put in place and that it has been necessary to sell stock.
[30] On this topic, I do observe that, in 2020, the Commissioner applied for and obtained a variation to the restraining orders to enable the farming enterprise to continue.15
[31] Robert Bracken has said in evidence that the company has been subject to “complete destruction” due to reputational damage and that, as a result, he has needed to start his own farming partnership with his partner. The respondents and interested parties refer also to the stress associated with the proceedings and to the general financial pressure they have brought. For A, it is said that, because of the proceedings, she has needed to witness the stresses experienced by family members through money
15 The variation orders were sealed on 30 May 2019. Included in the conditions of the variation were conditions that $80,000 be released to the respondents to enable payments to be met; all current and future livestock and primary livestock were excluded from the order; John and Margaret Bracken were permitted to access and operate the BEL account to receive farming income and service debts and reasonable business and living costs; and John and Margaret Bracken were permitted access to operate the TBFT account for the purpose stated in the order, including to meet existing loan repayments to ANZ and legitimate operating expenses of TBFT.
troubles and through the court proceedings and that she has, for example, needed to see animals being put down.
[32] Katrina Martin has given evidence of concerns with her pregnancy due to the stress of the proceeding, particularly over her insecure housing situation.
[33] Affidavits for the respondents and interested parties speak also of police visits to their properties for the purposes of the investigation and of the way in which they have been “treated like gang members”. While searches of the properties conducted pursuant to the orders will undoubtedly have been stressful, Detective Senior Sergeant Kay has said in evidence that the searches were conducted professionally and calmly.
[34] It is said for the respondents and interested parties that the application to extend the restraining orders amounts to a breach of s 9 of NZBORA, on the basis that it amounts to disproportionate and severe punishment for them. NZBORA arguments have been raised in other extension proceedings with reference to s 21 (to be free from unreasonable search and seizure).16 I observe that s 9 has been raised in, and is likely more relevant to, profit forfeiture applications.17 It could in some cases be that a restraining order, or its extension, is disproportionate and severe punishment having regard to the value of the property sought to be restrained. However, in this case, while there is inevitable prejudice under the statutory scheme of which restraining orders form a part, I do not consider that the prejudice is so excessive as to make a further extension order disproportionately severe in terms of s 9 of NZBORA.
[35] In a similar vein, I accept that the rights of A should be taken into account under arts 3(1) and 27 of the United Nations Convention on the Rights of the Child (UNCROC).18 I can see the way in which, under the undue hardship provision in s 51 of the Act, it could be argued that the forfeiture of a family home, or an interest in it, could give rise to undue hardship for a child.19 However, the parties have not, under
16 See for example Commissioner of Police v Burgess [2011] 2 NZLR 703; Commissioner of Police v Dotcom [2014] NZCA 408; and Commissioner of Police v Cheng [2020] NZHC 1861.
17 See for example Monk v R [2013] NZCA 564.
18 United Nations Convention on the Rights of the Child 1577 UNTS 3 (opened for signature 20 November 1989, entered into force 2 September 1990), arts 3(1) (stating that in all actions concerning children, the best interests of the child shall be a primary consideration) and 27 (relating to adequate standards of living for children).
19 See for example Duncan v Commissioner of Police [2013] NZCA 477 at [57].
the restraining orders, been prevented from living in the family home and so this is a point is properly focused on the profit forfeiture application.
[36] While I acknowledge the points made by and on behalf of the respondents and interested parties on the prejudice they face, I do not believe, in the context of a s 41 extension application, that the circumstances are such that the restraint – which is necessary to enable the proper consideration of the profit forfeiture application – should be removed at this point in time. That is particularly the case where firm arrangements are in place for the forfeiture application to be considered. I accept that the Commissioner has made an effort to preserve the parties’ financial position and do not see in the evidence a sufficient basis for the restraint to be released or lessened.
[37] Finally, I turn to the issue of delay. An extension should not be granted if delay is unreasonable.20 I am satisfied that there has been no unreasonable delay on the Commissioner’s part in bringing the profit forfeiture application. The proceedings are complex – they involve a significant list of property.21 Interested parties have been included in the proceedings, assets have been added and removed and interested parties have made interlocutory applications.22 And there have been issues with compliance. Detective Camplin has explained in evidence the ways in which respondents and interested parties have failed to comply with sale, income and reporting conditions in the restraining orders. Circumstances such as these distinguish this case from the likes of Commissioner of Police v Malcolm, to which the respondents have referred.23
[38] It is recognised that restraining orders give rise to significant issues for the respondents and interested parties. However, the Court at this juncture is concerned with their extension pending the determination of the underlying forfeiture
20 Commissioner of Police v Eddy [2018] NZHC 736 at [61]; and Commissioner of Police v Burgess, above at 16, at [38].
21 The memorandum listing the property that is subject to restraint is eight pages in length.
22 For example, ANZ as first interested party applied to have its severable interests in restrained property excluded from restraining orders under s 30 of the Criminal Proceeds (Recovery) Act: Commissioner of Police v Bracken and Ors [2022] NZHC 1357.
23 Commissioner of Police v Malcolm [2013] NZHC 132 in which, following three extensions, Ronald Young J was only prepared to grant a limited extension of restraining orders.
application. Circumstances have not changed to such an extent that the restraint needs to be released.
[39] For these reasons, I am satisfied that it is appropriate to extend the restraining orders. As indicated in [10] above, Isac J extended the restraining orders “until further order of the Court” so as to enable documents in opposition to be filed. Accordingly, as the Court is considering the application for extension afresh, the one-year extension will take effect from the date of this decision.
Result
[40] The restraining orders under ss 21 and 25 of the Criminal Proceeds (Recovery) Act over the property described in the Commissioner’s memorandum of 26 June 2023 are extended under s 41 of the Act for a period of one year from the date of this decision.
[41] Any issue as to costs is reserved pending determination of the Commissioner’s profit forfeiture application.
Radich J
Solicitors:
Elvidge & Partners, Napier for Applicant
Douglas Burgess, Auckland for Second and Third Respondents and Fourth, Fifth, Sixth and Eighth Interested Parties
Meredith Connell, Auckland for Official Assignee
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