THE COMMISSIONER OF POLICE v READ & ORS [2015] NZHC 2055

THE COMMISSIONER OF POLICE v READ & ORS [2015] NZHC 2055 [28 August 2015]IN THE HIGH COURT OF NEW ZEALANDTAURANGA REGISTRYCIV-2011-470-001070[2015] NZHC 2055BETWEEN THE COMMISSIONER OF POLICEApplicantAND GARY JOHN READFirst RespondentWILLIAM JAMES READSecond RespondentPHILLIPPA KAREN WILSONThird RespondentKEVIN BARRY PARKINSONFourth RespondentRBA TRUSTEES LTDParty Served (Abiding)Hearing: 16 and 17 March 2015 and 20 May 2015Appearances: Richard Jenson for the ApplicantBill Nabney for the First RespondentNo appearances for the Second RespondentAndrew Speed for the Third RespondentNo appearances for the Fourth RespondentJudgment: 28 August 2015RESERVED JUDGMENT OF MOORE JThis judgment was delivered by me on 28 August 2015 at 10:00ampursuant to Rule 11.5 of the High Court Rules.Registrar/ Deputy RegistrarDate:Contents ParagraphNumberIntroduction .............................................................................................................. [1]Procedural history .................................................................................................... [7]Applications and parties ........................................................................................ [10]The property in question ....................................................................................... [12]Commissioner's application for profit forfeiture order (dated 22 May 2013)Legal principles .................................................................................................... [15](a) Stage 1: Unlawful benefit from significant criminal activity and value of the benefit ............................................................................. [18](b) Stage 2: The maximum recoverable amount ..................................... [29](c) Stage 3: Undue hardship to the first respondent ................................ [30](d) Stage 4: Mr Read's interest in the property ....................................... [31]Does Mr Read have an interest in the GRT? ....................................................... [36]Does Mr Read have effective control over the property?..................................... [56]Howell Place ........................................................................................................ [80]Rocky Cutting Road.............................................................................................. [84]Bank accounts (12-3031-00235869-00 and 50)................................................... [88]Conclusion (on effective control of the GRT) ....................................................... [89]Internet Sales Limited ........................................................................................... [90]The motor bikes .................................................................................................... [101]William Read bank account ................................................................................ [112]Rocky Cutting Road............................................................................................. [113]Asset forfeiture application ................................................................................ [114]Profit forfeiture application ............................................................................... [130]Application for relief – Ms Wilson on behalf of the children ........................... [137]Result ..................................................................................................................... [142]Disposition............................................................................................................. [143]Costs ...................................................................................................................... [146]Introduction[1] Gary John Read ("Mr Read") was sentenced to 11 years' imprisonment after pleading guilty to a large number of drug related charges1 including importation of pseudoephedrine, possession for supply and participating in an organised criminal group.2[2] On 14 December 2011, following Mr Read's arrest six weeks earlier, theCommissioner of Police ("the Commissioner") applied for and was grantedrestraining orders in relation to property which the Commissioner claimed Mr Read has a beneficial interest in.[3] The Commissioner then brought a profit forfeiture application in relation to this property which includes a family trust, property owned by a company of which Mr Read is the sole director and shareholder, motor bikes, bank accounts and miscellaneous other property.[4] The Commissioner has also applied for effective control orders in relation to the trust, the company, the motor bikes and a bank account in Mr Read's father'sname.[5] Mr Read opposes these applications. With limited exceptions3 he says he neither has an interest in them nor does he have effective control of them.[6] In the event forfeiture orders are made against Mr Read, his former partner,Phillippa Wilson ("Ms Wilson") applies for relief on behalf of her children (who arealso Mr Read's children).1 The details of the charges are: importing pseudoephedrine (x 70); possession of pseudoephedrine for supply (x 1); possession of methamphetamine for supply (x 1); unlawful possession of a firearm (x 1); participation in an organised criminal group (x 1). In addition tothe sentence of 11 years' imprisonment imposed by Toogood J on 9 August 2013, an order wasmade that Mr Read serve a minimum period of five years and three months.2 R v Read [2013] NZHC 2005.3 The limited exceptions include bank accounts, paintings and the proceeds of sale of a Toyota Corolla station wagon.Procedural history[7] The charges Mr Read faced arose from a Police operation commenced in February 2009 under the auspices of the Organised Financial Crime Agency of New Zealand ("OFCANZ"). The sentencing Judge, Toogood J, determined thatMr Read was the mastermind behind a large scale and sophisticated importation operation predicated on commercial gain. It involved crushing ephedrine tablets and mixing them into a paste which was then concealed in cosmetic containers which were packaged in Thailand and mailed to various addresses in New Zealand between July 2009 and September 2011. The Judge assessed the total quantity imported in this fashion at 14.5 kilograms, a quantity capable of producing around 8.5 kilograms of 70 to 80 per cent pure methamphetamine with a street value of several million dollars.[8] On 14 December 2011, the Commissioner of Police ("the Commissioner")applied for without notice restraining orders in relation to a number of items of property which, the Commissioner claims, Mr Read has a beneficial interest in and/or effective control of. The restraining orders were granted with the Commissioner filing an on notice application on 22 December 2011. The initial restraining orders were amended on 16 May 2012 and have been renewed to the present date.[9] On 22 May 2013 the Commissioner filed an application for a profit forfeiture order. This was opposed by Mr Read. Ms Wilson applied for relief on behalf of her children.Applications and parties[10] For the purpose of this hearing the following applications are for determination:(a) By the Commissioner:(i) an application for a profit forfeiture order (dated 22 May 2013);(ii) application to amend the civil forfeiture order (dated 5 February 2015); and(iii) applications to have Mr Read's effective control over propertytreated as an interest in property (dated 5 February and 6 March 2015).(b) By Ms Wilson:(i) an application on behalf of her children for relief from forfeiture (dated 9 March 2015).[11] In relation to the other parties named in these proceedings I record the following:(a) William James Read, the second respondent, is Mr Read's father. Hewas served with a profit forfeiture application and was represented by Mr Nabney at the first call on 11 June 2013. At the conference it was ordered that any notice of opposition and affidavits were to be filed and served by 25 June 2013. Mr William Read has taken no further steps in the proceedings although he did make an affidavit and give evidence on behalf of the Commissioner.(b) Kevin Barry Parkinson, the fourth respondent, filed an application for relief from forfeiture on 10 June 2013. The application was opposed by the Commissioner and has since been discontinued. He made no appearance in the present proceedings.(c) RBA Trustees Ltd was formerly the corporate trustee of Mr Read's family trust known as the GRT Trust ("GRT"). It was the legal proprietor of a number of properties which feature in these proceedings. RBA Trustees Ltd sought directions from the Court as to whether they were required to take an active part in the proceedings. There being no opposition to that course RBA Trustees Ltd hasindicated it will abide the decision of the Court. Mr Bixley, a director of RBA Trustees Ltd, made an affidavit in support of theCommissioner's application and gave evidence at the hearing.The property in question[12] The items of property which are the subject of this proceeding fall into five broad categories namely:(a) property forming part of the GRT being:(i) 2 Howell Place;(ii) 363 Rocky Cutting Road;(iii) bank account numbers 12-3031-00235869-00 and 50;(b) property legally owned by Internet Sales Limited ("ISL") being:(i) caravan (registration number B130T);(ii) 2003 Audi RS6 (registration number BGJ357);(iii) 2007 Nissan Tiida (registration number EZF512);(iv) 2008 Nissan Station Wagon (registration number EQD591);(v) bank account numbers 12-3018-0199429-00 and 50;(c) motor bikes registered to Kevin Barry Parkinson being:(i) 1937 Harley Davidson WL (registration number 86ZGM);(ii) 1984 Harley Davidson FLH (registration number 63YMA);(d) bank account number 03-0406-07325353 in the name of William James Read;(e) items of property which are accepted as Mr Read's being:(i) proceeds from the sale of a 2000 Toyota Corolla station wagon (registration number ZB8955);(ii) bank account number 12-3457-0031142-00;(iii) paintings, with the exception of the "One Tree Hill" paintingin which Ms Wilson claims an interest;4(iv) solar powered electricity system associated with the caravan.5[13] Given the legal ownership status of a number of the items of property the Commissioner seeks effective control orders in relation to the GRT (of which Mr Read is a discretionary beneficiary), the ISL property (this is the company of which Mr Read is the sole director and shareholder), the motor bikes and Mr WilliamRead's bank account.[14] Alternatively, the Commissioner applies for an asset forfeiture order in relation to the Rocky Cutting property on the basis it was purchased with the proceeds of significant criminal activity and is therefore tainted property.Commissioner's application for profit forfeiture order (dated 22 May 2013)Legal principles[15] The power of the Court to make a profit forfeiture order is contained in s 55of the Criminal Proceeds (Recovery) Act 2009 ("the Act"). Section 55 of the Actprovides as follows:4 On 16 April 2015 I approved a conditional settlement under s 95 of the Act in relation to the painting. Counsel have advised the condition has been satisfied. Thus no orders are required in relation to this item.5 In the course of the proceedings it became apparent that this item is in fact owned by the GRT and Mr Read was incorrect when he said in his affidavit the item belonged to him."55 Making profit forfeiture order(1) The High Court must make a profit forfeiture order if it is satisfied on the balance of probabilities that—(a) the respondent has unlawfully benefited from significant criminal activity within the relevant period of criminal activity; and(b) the respondent has interests in property.(2) The order must specify—(a) the value of the benefit determined in accordance with section 53; and(b) the maximum recoverable amount determined in accordance with section 54; and(c) the property that is to be disposed of in accordance with section 83(1), being property in which the respondent has, or is treated as having, interests.(3) Subsections (1) and (2) are subject to section 56.(4) A profit forfeiture order is enforceable as an order made as a result of civil proceedings instituted by the Crown against the person to recover a debt due to it, and the maximum recoverable amount is recoverable from the respondent by the Official Assignee on behalf of the Crown as a debt due to the Crown."[16] Lang J, in Pulman v Commissioner of Police6 observed that the making of a profit forfeiture order potentially requires the Court to take four steps.(a) First, it must determine7 whether the Commissioner has proved, on the balance of probabilities, that the respondent has unlawfully benefited from significant criminal activity during the relevant period.8 If the Court is so satisfied, the value of that benefit is presumed to be one of the values prescribed by s 53(1). The respondent may, however, rebut that presumption on the balance of probabilities.96 Pulman v Commissioner of Police HC Auckland CIV-2010-404-5666, 27 May 2011.7 Under s 53(1).8 Section 6 defines "significant criminal activity" as an activity that if proceeded against a person as a criminal offence would be punishable by a maximum of five years' imprisonment or more;or from which there is $30,000 or more of the resulting profits, proceeds or benefits.9 Under s 53(2).(b) Secondly, the Court is required to determine10 the maximum recoverable amount. It does that by taking the value of the benefit11and deducting from that figure the value of any property already forfeited to the Crown by virtue of any assets forfeiture order made in relation to the same criminal activity as that to which the profit forfeiture application relates.12(c) Thirdly, the Court must determine13 the circumstances relevant to thatenquiry as set out in s 56(2); whether any property should be excludedfrom the operation of the profit forfeiture order because unduehardship is likely to be caused to the respondent if such property wererealised.(d) Once the Court has undertaken such of these exercises as may be relevant, it must make a profit forfeiture order under s 55(1) if it is satisfied on the balance of probabilities that the respondent has interests in property. Any such order must specify the value of the benefit,14 the maximum recoverable amount,15 and the property that is to be disposed of.16[17] In their submissions before me both counsel adopted Lang J's helpful fourstage enquiry. I shall do the same.(a) Stage 1: Unlawful benefit from significant criminal activity and value of the benefit[18] Mr Jenson, for the Commissioner, relies on the pleas, convictions and sentencing notes regarding Mr Read's criminal offending to satisfy the first limb ofthe Stage 1 analysis; proof of an unlawful benefit. He submits that such evidence is admissible in terms of s 47 of the Evidence Act 2006 which provides that when the10 Under s 53(2)(b).11 As already determined in accordance with s 53.12 By s 54(1).13 Under s 51(1).14 As determined in accordance with s 53.15 As determined under s 54.16 Being property in which the respondent has, or is treated as having, interests: s 55(2)(c).fact a person has committed an offence is relevant to an issue in a civil proceeding, proof the person has been convicted of that offence is conclusive proof the person committed the offence.[19] Mr Jenson also submits that while the factual findings of Toogood J at Mr Read's sentencing are not binding on the parties in this proceeding they arenonetheless admissible as proof of the unlawful benefit.17 I accept that submission.[20] Next I must be satisfied the benefit has been derived from significant criminal activity. I am so satisfied for the reasons Mr Jenson submits, namely:(a) pseudoephedrine is an important pre-cursor and/or base product in the manufacture of methamphetamine;(b) the summary of facts which described Mr Read's offending recorded:"The first respondent was at the top; he financed theoperation and received the majority of the money obtained as a result of the pseudoephedrine being sold on thedomestic market."(c) Mr Read's role was discussed by Toogood J when he observed:18"It is clear, Mr Read, that you headed this importation distribution enterprise. You controlled the distribution of pseudoephedrine through methamphetamine cooks and you received at least some of the finished product at the end. You then used people like Ms Brady to distribute it. That is the basis of the charge of participating in an organisedcriminal group."[21] From this evidence it is plain that Mr Read derived an unlawful benefit from significant criminal activity.[22] Next I must consider the value of that benefit.1917 Commissioner of Police v Filer [2013] NZHC 3111 at [25]-[31].18 R v Read, above n 2,2013 at [8].19 Section 53.[23] Section 53 of the Act deals with the value of the benefit. It states:"53 Value of benefit presumed to be value in application(1) If the Commissioner proves, on the balance of probabilities, that the respondent has, in the relevant period of criminal activity, unlawfully benefited from significant criminal activity, the value of that benefit is presumed to be the value stated in—(a) the application under section 52(c); or(b) if the case requires, the amended application.(2) The presumption stated in subsection (1) may be rebutted by the respondent on the balance of probabilities."[24] For the reasons set out above I am satisfied Mr Read has, in the relevant period of criminal activity,20 unlawfully benefitted from significant criminal activity.[25] By virtue of s 53(1) the value of that benefit is presumed to be the value stated in the application.[26] The application for a profit forfeiture order dated 22 May 2013 states that the value of the unlawful benefit is $1,714,889. This figure is based on the Commissioner's belief the 70 packages of pseudoephedrine imported by Mr Read contained 19.2 kilograms of the drug. This figure does not take into account benefits derived from the sale and supply of methamphetamine and thus may be taken as conservative.[27] To rebut the presumption Mr Read must provide evidence which establishes, on the balance of probabilities, that the value of the benefit is different to that stated by the Commissioner and what that difference in value is.[28] No such evidence has been adduced. In his affidavit, Mr Read simply commented he did not accept this was the value of any benefit obtained by him. He20 "Relevant period of criminal activity" is defined in s 51 as the period which ends on the date theapplication is made and starts seven years before (a) the date of the application for the relevant restraining order, if the application for the profit forfeiture order relates, wholly or in part, to restrained parties; or (b) the date of the application for the profit forfeiture order, if the application for the profit forfeiture order does not relate to estranged property. In the present case the relevant restraining order was filed on 22 December 2011. The offending for which Mr Read was charged covered the period between July 2009 and September 2011.claimed that the value of any benefit would be the difference in the price he paid when importing the pseudoephedrine and the price paid to him by those to whom he on-sold it. This approach was expressly rejected by this Court in Commissioner of Police v Tang.21 In the absence of evidence to the contrary I thus find the value of the unlawful benefit to be $1,714,889.(b) Stage 2: The maximum recoverable amount[29] In determining the maximum recoverable amount the Court must take the value of the unlawful benefit, as already discussed, and deduct from that figure the value of any property already forfeited to the Crown by virtue of any assets forfeiture order made in relation to the same criminal activity as that to which the profit forfeiture order relates. The only deduction to the maximum recoverable amount in the present case relates to the Rocky Cutting Road property if this Court grants the asset forfeiture application in relation to that property. However, such an order would also remove this property from the remaining property to be forfeited, rendering this exercise moot.(c) Stage 3: Undue hardship to the first respondent[30] No undue hardship has been advanced by Mr Read.(d) Stage 4: Mr Read's interest in the property[31] Having determined that the first three stages under Pulman have been satisfied the Court is then required to make a profit forfeiture order under s 55(1) if it is satisfied on the balance of probabilities that the respondent has interests in property. Any such order must specify the value of the benefit, the maximum recoverable amount and the property that is to be disposed of. This is the area of contest in the present case.21 Commissioner of Police v Tang [2013] NZHC 1750 at [21]-[25].[32] The key issues in this proceeding are whether Mr Read has an interest in, or effective control over:(a) the GRT property;(b) the ISL property;(c) the William Read bank account;22 and(d) the motor bikes.[33] Interest is defined in s 5 of the Act as follows:23interest, in relation to property of any kind (including, without limitation, restrained property or forfeited property), means—(a) a legal or equitable estate or interest in the property; or(b) a right, power, or privilege in connection with the property[34] This definition is deliberately broad, and can include an inchoate right, such as the right to bring proceedings under the Property (Relationships) Act 197624 or an interest by way of constructive trust.25 However, a mere expectation on the part of a discretionary beneficiary that cannot be legally enforced will not be sufficient.26Whether such an expectation may form part of effective control is, of course, a different question.[35] I shall now deal with the position of the GRT first; examining the question of whether Mr Read has an interest in the trust and then, alternatively, whether he has effective control over the trust and its property.22 In the course of the hearing the Commissioner abandoned his claim in respect of this item.23 Criminal Proceeds (Recovery) Act 2009, s 5, definition of "interest".24 See Hayward v Commissioner of Police [2014] NZCA 625 at [25].25 Lankow v Rose [1995] 1 NZLR 277 (CA) at 294.26 R v Corless [2013] NZHC 2735 at [82]-[83]; Commissioner of Police v Winsor [2014] NZHC 161 at [40]-[43].Does Mr Read have an interest in the GRT?[36] Mr Nabney submits Mr Read does not have an interest in the GRT. It is the Commissioner's case that he does. The property of the GRT comprises thefollowing:(a) the real estate and chattels situated at 2 Howell Place, Tauranga;(b) the real estate and chattels situated at 363 Rocky Cutting Road; and(c) the GRT bank accounts.[37] In considering each of these property items it is necessary to examine theformation of the GRT, the trust deed's terms and conditions and its operation inpractice.[38] The GRT was established under a deed of trust dated 26 March 2007. It was settled following the separation of Mr Read and Ms Wilson which occurred in November 2006. It was accepted for the Commissioner that the trust was settled before any of the relevant offending.[39] The settler of the GRT was Georgina Ann Read, Mr Read's mother. Thetrustee, during the relevant period, was first RBA Trustees Limited and later Mr Mark Asher. The final beneficiaries are Mr Read's four children. Thediscretionary beneficiaries include the final beneficiaries and Mr Read.[40] The power of the trustees to make distributions is broad and empowers the trustees to make distributions:" towards the personal support, maintenance, comfort, education,advancement in life or otherwise how so ever of the benefit of such of the discretionary beneficiaries as may from time to time be living during thetrust period also such one or more them to the exclusion of others in suchshares and proportions as to trustees in their absolute and uncontrolleddiscretion shall think proper."[41] The deed also provides that the number of trustees should be no less than one and not more than four. Despite this, over the more than decade long existence ofthe GRT only one trustee has been appointed at any time. Mr Read has the sole right to appoint and remove Trustees at any time and in his sole and absolute discretion.[42] Unusually, the deed contains a special clause requiring the trustee to treat, asa "first responsibility", Mr Read's circumstances. The clause refers to thepurchasing or refurbishing of a home or homes, new cars and the costs of holidays.The clause requires the trustee to exercise this power in a "liberal way" and thatMr Read's "comfort and welfare is the primary consideration of the Trustees".[43] Clause 15 of Schedule A of the deed is reproduced in full below:"15 TRUSTEES FIRST RESPONSIBILITY15.01 The first responsibility of the trustee shall be to consider on a regular basis the circumstances of [Mr Read] while he is living and to pay orapply so much of the income or of the capital of the trust fund as theTrustee thinks fit to or for the maintenance and benefit of themincluding the provision of sufficient funds to provide suchfinancial assistance as may be necessary for the purposes ofpurchasing or refurnishing a home or homes, purchasing a new caror cars, meeting expenses of holiday tours whether they are inNew Zealand or abroad, or other purposes of a capital nature suchpower to be exercised by the Trustees in a liberal way (but havingregard to any other sources of income or capital known by theTrustees to be available to them) to enable them to maintain areasonable standard of living throughout their lives having regard tothe standard of living to which they have been accustomed so thatthe comfort and welfare of [Mr Read] is the primary consideration ofthe Trustees. (sic)"[44] Mr Jenson submits that the combined effect of this clause and the clause giving Mr Read the sole discretion to appoint and remove trustees is to confer rights, powers and privileges to Mr Read in connection with the trust property. He thus submits that Mr Read has an interest in the property.[45] In response, Mr Nabney submits that the trust deed is not unusual and contains the usual rights and responsibilities that devolve on the trustee. More particularly, he submits that the trust deed makes it clear that the legal ownership of trust property vests with the trustee and any benefits derived from trust property are at the sole discretion of the trustee.[46] He submits that the fact that the trustee's first responsibility is to consider thecircumstances of Mr Read while he is living, does not alter the fact that thediscretion to make a distribution remains solely with the trustee. That Mr Read maybe the subject of the trustee's first responsibility is a provision directed at assistingthe trustee in the trustee's exercise of their discretion and nothing more. He submitsit does not create any special interest in the trust property in favour of Mr Read.[47] Notwithstanding the expansive definition of "interest" under the Act theCourts have found that the expectation by a beneficiary of a discretionary trust, does not amount to an interest under the Act. In particular, Ellis J noted in R v Corless:27"[82] But the difficulty that exists for both Luke and Casey is that the Courts have declined to recognise the mere "expectation" possessed by beneficiaries under a trust as coming within even the wide definition of "interest" that I have set out above. That would be so whether or not the matter were to be pursued on their behalf by the trustees or not. As Venning J said in Solicitor-General v Monk at [31]:28'[31] Even given the extended definition of "interest" under theAct, the individual discretionary beneficiaries do not have individual interests in the property. As discretionary beneficiaries they may have certain expectations but in Hunt v Muollo the Court of Appeal confirmed that a discretion my beneficiary has no interest, legal or equitable, in the assets of the trust.29 The discretionary beneficiary only acquires an interest in the property on the making of the distribution andthen only to the extent of the distribution.'[83] Even if, as was urged upon me by Mr Leabourn (for Casey) and Mr Dickinson (for Luke) I were prepared to reject Venning J's analysis and regard their clients' respective beneficial interests as falling within the wide statutory definition, the reality would be that those interests are incapable of valuation for the purposes of granting relief. While both counsel rather optimistically suggested that between 25 and 30 per cent of the value of the property was appropriate that is simply not correct. The only expectation that either of Mr Corless' sons had as beneficiaries under the trust is that they might receive some unspecified sum at some point in the next 70 years. This expectation is all that they will lose in the event that the property is forfeited. A contingency of this kind (effectively a loss of chance) cannot in my view be valued for the purposes of s 142L; it would, in any event, be de minimis at best."27 R v Corless [2013] NZHC 2735.28 Solicitor-General v Monk HC Whangarei CIV-2011-488-10, 11 October 2011. Although that case arose under the Proceeds of Crime Act 1991, the relevant definition of "interest" is materially identical.29 Hunt v Muolla [2003] 2 NZLR 322 (CA) was not a forfeiture case.[48] The same analysis was upheld in relation to civil forfeiture orders inCommissioner of Police v Winsor30 where Courtney J said:"[42] Even under the wider definition of 'interest' being a right, power or privilege in connection with the prope1ty, the rights, powers and privileges which Mr Wimsett has correctly identified that Ms Wark and Ms Lyttle have as discretionary beneficiaries are rights in connection with the trust as an entity, not with the trust property. For example, they could apply to have the trustee removed and another trustee appointed, but this right does not alter the fact that the discretionary beneficiaries only have a mere expectation in relation to the trust property.[43] This does not deprive the second limb of the 'interest' definition of effect. It applies to rights, powers and privileges that a person has in connection with property such as in Solicitor-General v Hammond, where the Solicitor-General sought a restraining order under the Proceeds of Crime Act 1991 in relation to property owned by the respondent which had been used in drug offending. The ASB Bank, having a registered mortgage over the property, sought to have its interest excluded from the restraining order. Justice Laurenson considered that the mortgagee's interest amounted to a legal interest in the property, and the power of sale contained in the mortgage amounted to a right in connection with the land for the second limb of the meaning of 'interest'".[49] These authorities make it plain that discretionary beneficiaries, even under the breadth of the definition of interest in s 5(1) have, at best, only an expectation in relation to the trust property. Even the requirement on the trustees to consider Mr Read as a first responsibility does not alter that premise. I agree with Mr Nabney that this clause is directed at assisting the trustee in his exercise of its discretion. Whether or not a distribution is made remains at the discretion of the trustee eventhough the "first responsibility" clause makes it abundantly plain how that discretionis expected to be exercised. I shall return to this issue in the context of effective control.[50] Another feature of the operation of the trust which Mr Jenson submits supports the conclusion Mr Read has an interest in the GRT property is not only his ability to remove trustees but also the manner in which he, in fact, has exercised that power.[51] In 2007, following his separation from Ms Wilson, Mr Read contacted a chartered accountant, Mr Bixley, who had acted for him in the past. Mr Read asked30 Commissioner of Police v Winsor [2014] NZHC 161.Mr Bixley if he would agree to be a trustee of the GRT. Mr Bixley agreed. RBA Trsutees Limited was appointed trustee. Mr Bixley is a director and shareholder of that company which provides trustee services to trusts. Mr Bixley was the person who dealt with Mr Read in the context of the GRT. At that time the trust's assetsincluded the property at 2 Howell Place. In early 2009 this was followed by the acquisition of 363 Rocky Cutting Road.[52] Shortly after the Commissioner restrained Mr Read's assets Mr Bixleyadvised Mr Read he no longer wished to be the trustee and indicated his desire to resign. According to Mr Bixley, Mr Read did not respond to this request. Mr Bixley then indicated he intended to put the trust in the care of the Public Trustee. This, apparently, lead Mr Read to remove RBA Trustees Ltd and appoint Mr Asher in its place. Mr Asher was described in the evidence as a friend and trusted associate of Mr Read's.[53] Mr Jenson submits that Mr Asher's engagement as the replacement trusteecemented Mr Read's control of the trust and, by implication, effectively means that Mr Read has an interest in the trust property because he can dictate the operation of the trust to his benefit.[54] I do not accept that submission. While the evidence of the appointment of Mr Asher and the surrounding circumstances are relevant to an assessment ofwhether Mr Read has effective control, it does not assist in determining whether hehas an interest in the trust property. This is because, as a discretionary beneficiary,Mr Read is still dependant on the exercise of the trustee's discretion. I do notconsider that the effect of the trust deed is such as to grant Mr Read an interest in thetrust or its property. At no point did he have a legal right to the property that couldhave been enforced in Court. It follows I do not accept Mr Read has an interest inthe GRT.[55] However, as noted above, the evidence concerning the operation of the GRT is relevant to the question of whether Mr Read has effective control of the trust when assessed with the evidence of how, in fact, Mr Read has dealt with the trust. This is the issue I now turn to.Does Mr Read have effective control over the property?[56] In the alternative, the Commissioner applies to have Mr Read's effectivecontrol over the property treated as an interest in property. There are two such applications dated 5 February 2015 and 6 March 2015 respectively.[57] The application dated 5 February 2015 relates to the Howell Place and Rocky Cutting Road properties, the ASB and Westpac bank accounts and the three vehicles being the Audi and the two Nissans, although I note that those vehicles are the property of Internet Sales Ltd. I will discuss the disposition of that company and its property later in the judgment.[58] The application dated 6 March 2015 relates to the two Harley Davidson motorcycles which are registered to Mr Parkinson.[59] Section 58 of the Act relevantly provides as follows:"58 Court may treat effective control over property as interest in property(1) If the High Court is satisfied that a respondent has effective control over property, the Court may, on an application made by the Commissioner, order that the property is to be treated as though the respondent had an interest in the property specified by the Court.[]"[60] This section enables the Court to go behind any corporate structure or trust which disguises the true and effective control of property and determine the actual factual position of the respondent in relation to that property.31 It allows the Court to consider the practical reality of ownership, rather than being limited by legal forms. In particular, it has been used to set aside corporate structures32 and trusts33 to identify the person exercising control over the property. The fundamental question is31 Solicitor-General v Bartlett [2008] 1 NZLR 87 (HC).32 Commissioner of Police v Li [2014] NZHC 479.33 Commissioner of Police v Ranga [2013] NZHC 745 at [30]; Commissioner of Police v Clifford[2014] NZHC 181.whether, in fact, the respondent has the capacity to control, use, dispose of, or otherwise treat the property as their own.34[61] Mr Nabney submits that the manner in which the GRT has been operated since its inception demonstrates that Mr Read does not have effective control over the trust or its assets. He refers to the evidence of Mr Bixley who described the contact he had with Mr Read while the former was trustee, noting that the decisions he made in relation to distributions were in accordance with his obligations as a trustee under the trust deed and that he did not accede to every request Mr Read made for a distribution.[62] Mr Nabney submits that in order to find Mr Read has effective control overthe trust's assets there needs to be evidence he dealt with the trust's assets as if they were his own. Mr Nabney submits there is no such evidence and, indeed, he says the evidence points to the contrary.[63] Mr Nabney submits that there is no evidence that Mr Asher, as the replacement trustee, is being controlled by Mr Read. Mr Asher remains bound by the provisions of the trust deed.[64] Effective control is to be assessed as at the date of the hearing.35 However, the background as to how the trust has been operated is informative on the issue of effective control.[65] Although I have found that Mr Read, as a discretionary beneficiary, does not have an interest in the GRT, his influence and involvement in the operation of the trust and its property is relevant in considering whether he has effective control. There are several aspects of Mr Read's relationship to the trust and his involvementin its assets which require examination. The first is the trust deed itself.34 Bartlett above n 31 at [27]; Solicitor-General v Huang HC Auckland CIV-2005-404-1538, 18 December 2007 at [70].35 Huang above n 34.[66] Mr Bixley, who obviously has professional experience as a trustee, said thatclause 15 of Schedule A to the deed, titled, "Trustees First Responsibility" was notsomething he had ever come across before.[67] I have already discussed this clause. The wording of clause 15 plainly directs the trustee that the primary and preferred beneficiary is Mr Read. Furthermore, the trustee is required to exercise the power to make distributions "in a liberal way".That the primary consideration of the trustees is the comfort and welfare of Mr Read is also noteworthy as is the listing of the purposes for which financial assistance may be given including purchasing homes, new cars, meeting the expenses of holidays, etc.[68] This provision, when considered alongside Mr Read's sole right to appointand remove trustees at any time in his sole and absolute discretion,36 emphasises Mr Read's ability to influence the manner in which the trust is operated and, in particular, the distribution of benefits to him personally.[69] Under clause 15 virtually any request for a distribution by Mr Read would, subject to the availability of funds, require the trustee to comply. If the trustee did not comply Mr Read would be at liberty to remove the trustee and appoint a more compliant successor. In that way Mr Read has effective control of the GRT. In my view, on its own, this would be sufficient to meet the statutory test.[70] However, the evidence demonstrates that not only did Mr Read possess the powers to effectively control the trust through the wording and construction of the deed, but he also ensured that, in fact, he exercised effective control.[71] For example, Mr Bixley through RBA Trustees Ltd, remained trustee until December 2013. Following the making of restraining orders Mr Bixley advised Mr Read he no longer wished to remain a trustee. Having received no response from Mr Read, Mr Bixley indicated he would put the trust's affairs in the care of thePublic Trust. It was only then that Mr Read appointed Mr Asher was appointed to replace RBA Trustees Ltd.36 Clause 7 of the trust deed.[72] In my view it is significant that instead of utilising the services of a professional trustee who would be expected to ensure Mr Read was maintained atarm's length from the affairs of the trust, Mr Read appointed Mr Asher. Mr Read, in answer to a question that when Mr Bixley sought to have the Public Trust appointed, Mr Read knew his level of control would be diminished, replied that that was not the"sole" reason for appointing Mr Asher. Thus on Mr Read's own evidence it musthave been at least part of his reason to appoint Mr Asher.[73] Mr Read accepted that Mr Asher was a friend and trusted associate of his. He is godfather to Mr Read's children and is managing Mr Read's affairs while he is inprison.[74] I also regard as relevant the fact that despite the deed providing for the appointment of up to four trustees, Mr Read has only ever appointed one at any time. This ensures Mr Read needs only deal with only a single individual rather than four; the latter circumstance inevitably complicating and restraining his ability toinfluence the manner in which distributions in his favour are made. In this context itis also noteworthy he has chosen to appoint a friend and trusted associate.[75] Also of relevance is Mr Bixley's evidence that Mr Read would frequentlycontact him in relation to the trust's affairs to follow up on payments of rent, ratesand insurance. Mr Read claimed he did this in order to keep tabs on Mr Bixley because he felt he was remiss in his discharge of his duties. Mr Bixley said he left many of Mr Read's calls unanswered because he was getting queries from him allthe time about what he had done or what he had not done. Mr Bixley indicated it was time wasting and trivial. Plainly, from this evidence, Mr Read exercised a high degree of sustained interest in how the trust assets were being managed. Mr Readexplained this by describing himself as the "overseer of things". He accepted hetelephoned Mr Bixley to check on whether Mr Bixley had attended to various administrative tasks and said the exchanges got quite heated.[76] On behalf of the trust Mr Read said he signed agreements but when doing so always added the notation "on behalf of the trust". When it was put to him he ran the day to day management of the trust's assets he tellingly replied:"No. I tried to sometimes but Mr Bixley wouldn't let me."[77] Additionally, Mr Read was the principal provider of funds into the trust. For example, Ms Falkner, Mr Read's sister, deposed that in 2007 Mr Read was looking to buy a house in Waihi. In the course of the negotiations, on three separate occasions in November 2007, he gave her large quantities of cash totalling $63,830 which she deposited into her own account. The sale of the house did not progress and Mr Read asked his sister to transfer $63,000 into the trust. This took place on 19 November 2007. Ms Falkner said Mr Read never told her where the money came from. She said he got her to complete some legal documentation which included a deed of forgiveness of debt for $27,000. She said she had no idea what the document was. She signed it because her brother asked her to.[78] Plainly this arrangement was used by Mr Read as a mechanism to dispose of cash funds into the GRT using the artifice of a gift. According to Mr Bixley these funds sat in the trust account for some time and were used for loan repayments and could have been used for distributions.[79] In addition to the trust itself I am also satisfied Mr Read maintained effectivecontrol over the trust's assets and I shall discuss these now.Howell Place[80] Howell Place was Mr Read's residence. During telephone calls from prisonhe referred to it as his own.[81] Howell Street was originally owned by the Jewell Trust. This was a family trust the beneficiaries of which were Mr Read, Ms Wilson and the children. When Mr Read and Ms Wilson separated in November 2006, as part of their relationship property settlement it was agreed the ownership of Howell Place would pass to Mr Read or a trust nominated by him. The relevant provision in the agreement read:"Gary and Pip agree the ownership of the Howell Place property shall beresettled from the trust to Gary or a trust nominated by Gary."[82] Mr Read, as mortgagee, was responsible for the payment of the mortgage. During the period of his offending ISL was the tenant and covered the rental payments although these were treated in part as an advance to Mr Read for accounting purposes. The rent was paid into the GRT bank account and then transferred into Mr Read's account for payment of the mortgage.[83] Additionally, Mr Bixley said that Mr Read initially arranged for the bank to have the trust transfer the rental payments into his account without Mr Bixley'sauthority. Mr Bixley intervened. However, this evidence is a further indication, not only of Mr Read's degree of control over the trust's assets, but also his willingness to deal directly with the trust's affairs including its banking. Additionally Mr Read was living in the property, paying the mortgage and for intents and purposes exerting control over the property as if it was his own.Rocky Cutting Road[84] This property is subject to an asset forfeiture application on the grounds that the property was acquired or derived using funds from significant criminal activity. The Commissioner claims the property is tainted. I shall return to the asset forfeiture application later in this judgment.[85] However, Mr Read's use and treatment of the property provides further evidence of his effective control of property owned by the GRT.[86] Although the property was acquired in late 2008 and thus pre-dates the relevant period of criminal activity, Mr Read's treatment and use of the property is relevant. Mr Read arranged the tenants. He signed them up. He undertookextensive work on the property. His company's caravan was placed on the property.In response, Mr Nabney submits that nothing should be taken from this conduct. It was logical and cost effective for a local person to manage this asset for the trust.[87] While there is some force in that submission if this evidence was to be considered in isolation, Mr Read's conduct in relation to Rocky Cutting Road isconsistent with the evidence of his engagement and effective control of the trustitself and Howell Place. It is inconsistent with a trust operating at arm's length fromthe beneficiaries with the trustee being left to manage the affairs of the property. It is further evidence of Mr Read treating the asset as if it was his own.Bank accounts (12-3031-00235869-00 and 50)[88] I have not been referred to any evidence indicating Mr Read's direct involvement in operating either of the trust's bank accounts. However, as alreadydiscussed, Mr Read directed Ms Falkner to transfer cash into the trust's account.Furthermore, until Mr Bixley stopped the practice, Mr Read arranged for the bank to have the trust transfer the rental payments into his bank account.Conclusion (on effective control of the GRT)[89] For the reasons set out above I am satisfied on the evidence that Mr Read has effective control over the trust.Internet Sales Limited[90] ISL was incorporated on 24 November 2006. Mr Read was the sole shareholder and director.[91] In his affidavit, Mr Read said that the company was engaged in the business of manufacturing, marketing and distributing herbal products through the internet and in excess of 300 retail stores. In his oral evidence Mr Read said that the sales were from party pills, sex pills and gym pill supplements. Mr Read said the business of the company was lucrative and that he could take over $100,000 in cash on a Saturday afternoon, an explanation which he had not given in his affidavit. On that point Mr Nabney submitted that Mr Read giving this explanation for the first time in Court is readily explicable by the fact that the asset forfeiture application for Rocky Cutting Road was made after Mr Read had provided his affidavit. The relevance of Mr Read's ready access to large amounts of cash is because Mr Read paid $112,500 in cash for Rocky Cutting Road.[92] Further evidence of the merging and intermingling of funds between the various entities associated with Mr Read emerged in his evidence when he was cross-examined about the large quantities of cash he claimed could be earned. Whenit was put to him that it was the company's cash not his, Mr Read responded that it was the same thing, noting he was a shareholder and director of the company. The motor bikes, which I discuss later in this judgment, were also owned by the company and yet when they were transferred to the ownership of Mr Parkinson the agreement was signed by Mr Read. No mention was made of ISL. Invoices for work done on the motor bikes were also made out to Mr Read. There are further examples of how Mr Read intermingled his own affairs with those of the trust and the company. Despite his attempts to suggest otherwise it is plain Mr Read paid only lip service to the need to segregate himself from the affairs of the various business and property entities he was involved with.[93] Of course, as the sole director and shareholder of ISL, Mr Read had both an interest in and effective control of ISL. In this regard the case is identical toCommissioner of Police v Li where Katz J held that the two directors and shareholders of a group of companies had an interest in the property of those companies and had effective control over them.37[94] However, Mr Nabney's submission that Mr Read does not have an interest in or control over ISL is based on the fact that now the company has been struck off, Mr Read has no interest or effective control.[95] ISL was struck off the companies register on 18 November 2014. It seemsthat the reason for this was the company's failure to file its 2014 annual return.[96] Mr Jenson submits that as a consequence, under s 234 of the Companies Act 1993, the ISL property vests in the Crown. Pursuant to s 239 Mr Read is entitled to apply to the Court to restore the company to the register. If this was to occur the property would re-vest in the company and Mr Read's interests would be restored.37 Commissioner of Police v Li [2014] NZHC 479 at [50]-[55].[97] Mr Jenson submits that the appropriate course is for the Court to orderforfeiture to preserve the Commissioner's position and to prevent Mr Read from regaining an interest in or effective control of the company.[98] Mr Nabney submits that the effect of ISL vesting in the Crown necessarily means that Mr Read cannot be said to be in effective control of any assets owned by ISL. He could only do so if he was to apply to the Registrar of Companies or the High Court which has not occurred.38 Mr Nabney submits that because neither the Commissioner nor any other person who has standing to apply to restore ISL to the register has done so, Mr Read cannot be said to have effective control of the assets owned by ISL. This is because the treatment of assets is at the sole discretion of the Secretary to Treasury and there has been no notice of disclaimer by the Crown.39[99] I consider that the right which Mr Read retains to apply for the reinstatement of the company is an interest in property for the purposes of the Act. In this way, I adopt the reasoning of the Court of Appeal in Clayton v Clayton where it held thatMr Clayton's power to appoint and remove discretionary beneficiaries was property for the purposes of the Property (Relationships) Act 1976.40 In that case, Mr Clayton had a power to make himself the sole beneficiary in the trust. Here, Mr Read has the power to make himself sole director and shareholder of the company by applying for its reinstatement. As a result, I am persuaded that he has an interest in the property.[100] Therefore, I am prepared to order forfeiture as requested by the Crown.The motor bikes[101] The registered owners of the motor bikes was ISL. However, invoices for work undertaken on the bikes were made out to Mr Read personally.[102] On 27 September 2011, Mr Read was arrested. A week later, on 5 October 2011, the registration of both motor bikes was transferred from ISL to Mr Parkinson.38 Companies Act 1993, ss 328 and 329.39 Companies Act 1993, s 325.40 Clayton v Clayton [2015] NZCA 30, [2015] NZFLR 233 at [99]-[110].[103] Mr Read said he transferred the ownership to Mr Parkinson because he had either done, or had arranged to have done, a significant amount of work on the motor bikes which Mr Read said he was unable to pay for. What is particularly significant is that the agreement between Mr Read and Mr Parkinson purports to record the transfer date as 15 September 2011, approximately two weeks before Mr Read'sarrest. And yet the agreement is dated 12 May 2012 eight months later.[104] I accept Mr Jenson's submission that limited weight should be put on thestatements made by Mr Parkinson given that he was not produced for cross- examination41 and does not appear to be unavailable as a witness.42[105] Mr Nabney made no submissions in relation to the motor bikes observing that because Mr Read's position is they are not his property and Mr Parkinson has elected not to continue with his application for relief, there is little more which can be said from Mr Read's perspective.[106] I am satisfied the claim by Mr Read that he owed money to Mr Parkinson for work completed on the motor bikes to explain why their ownership was transferred deserves sceptical consideration. Mr Parkinson was on a sickness benefit and had not declared any income or ability to work for the relevant period. Furthermore, given the income streams available to Mr Read at the time, his claim the motor bikeswere transferred to Mr Parkinson's ownership because he was unable to meet hisfinancial obligations, cannot be correct.[107] Furthermore, as Mr Jenson submits, a personal debt does not create an interest in property for the purpose of the Act.43[108] But of greatest significance is the timeline which plainly exposes the so- called transfer for the sham it is:(a) 15 September 2011 – the transfer is alleged to have been made but not contemporaneously recorded;41 High Court Rules, rr 9.74 and 19.14.42 Evidence Act 2006, s 18.43 Solicitor-General v Sanders (1994) 2 HRNZ 24, pp 12-13.(b) 27 September 2011 - Mr Read is arrested;(c) 5 October 2011 – motor bikes registered in Mr Parkinson's name;(d) 12 May 2012 – the agreement recording the transfer is created.[109] I am satisfied that Mr Read retains effective control over the motor bikes and that the purported agreement was a clumsy pre-emptive attempt to avoid theconsequences of the Commissioner's application. The evidence shows the motorbikes are, by some margin, the most valuable assets of ISL. The motive to avoid them being forfeited is obvious. In particular, the timing of the transfer makes such an inference irresistible.[110] Even if I am wrong, I am satisfied that s 167 of the Act has application in the present circumstances. Section 167 provides as follows:"167 Arrangements to avoid operation of this Act or Sentencing Act 2002(1) In this section, arrangement means—(a) any agreement, arrangement, understanding, promise of undertaking whether express or implied and whether or not enforceable or intended to be enforceable at law; and(b) any scheme, plan, proposal, action, course of action, or course of conduct.(2) If the High Court (or if the matter relates to an instrument of crime in relation to which proceedings were commenced in the District Court, the District Court) is satisfied that a person has an arrangement for the purposes of directly or indirectly defeating, avoiding, preventing, or impeding the operation of this Act or sections 142A to 142Q of the Sentencing Act 2002 in any way, the Court may—(a) make an order declaring the arrangement to be void wholly or in part; or(b) make an order varying the arrangement in whole or in part.(3) The High Court or District Court may also make other orders that it considers necessary in the circumstances togive effect to an order made under subsection (2), including, without limitation, an order to do all or any of the following:(a) dispose of property (including selling property):(b) pay money to any person:(c) dispose of the proceeds of any disposal of the property:(d) create a charge on property in favour of a person and enforce that charge.(4) The High Court or District Court may rescind or vary any order made under this section."[111] For the reasons set out above I am satisfied that the purported agreement between Mr Read and Mr Parkinson is an arrangement within the meaning of s 167(1). I am also satisfied that the agreement amounts to an arrangement for the purposes of directly or indirectly defeating, avoiding, preventing or impeding the operation of the Act. In the circumstances I make an order under s 167(3)(a)declaring the arrangement to be wholly void and I further order that the motor bikesare to be included in the Commissioner's profit forfeiture order as property of ISL. Ialso note that if s 167 had not applied, I would nonetheless have considered that themotorbikes remained in Mr Read's effective control.William Read bank account[112] No orders are required in respect of this property. The Commissioner doesnot dispute Mr William Read's claim that the bank account which has beenrestrained does, in fact, contain monies belonging to him. While this was the account via which Mr Read transferred significant amounts of money to Thailand the applicant submits that as at the date of the hearing the Commissioner accepts this is no longer the case.Rocky Cutting Road[113] I deal with this property separately at this point because it is subject to alternative applications; an asset forfeiture order and a profit forfeiture order. However, this property is owned by the GRT and, as such, is subject to the forfeitureorders which apply to the trust. Despite this fact I intend to discuss the separate grounds for forfeiture raised by the Commissioner below for completeness.Asset forfeiture application[114] The Commissioner applies for an asset forfeiture order on the grounds that the Rocky Cutting Road property was purchased with the proceeds of significant criminal activity and is thus tainted property. "Tainted property" is defined in s 5(1)of the Act as follows:"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"[115] Section 50(1) of the Act provides that if the Court is satisfied on the balance of probabilities that the property is tainted property the Court must make an asset forfeiture order in respect of the property."50 Making assets forfeiture order(1) If, on an application for an assets forfeiture order, 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 specific property.(2) Subsection (1) is subject to section 51.(3) The Court must specify in an assets forfeiture order the property to which the order applies and that the property—(a) vests in the Crown absolutely; and(b) is in the custody and control of the Official Assignee.(4) Despite subsection (1), the Court may not make an assets forfeiture order in relation to property that no person has claimed an interest in, unless the Court is satisfied, on the balance of probabilities, of the following additional matters:(a) that a restraining order was earlier made in relation to the same property; and(b) that the restraining order has been in place for a period of at least 1 year; and(c) that the Commissioner has contacted or made all reasonable efforts to contact any person the Commissioner believes may have an interest in the property.(5) If any property that is land is vested in the Crown absolutely as a consequence of an assets forfeiture order made under subsection (3), an interest recorded on the title to the land that is not affected by the assets forfeiture order is not extinguished."[116] The acquisition of Rocky Cutting Road property was described Mr Pidduck who had previously owned the block. The defendant approached him in 2008 expressing an interest in purchasing the 3.3 hectare property known as 363 Rocky Cutting Road, Waitao, Tauranga. Mr Pidduck agreed to sell and the parties settled on a sale price of $112,500. Mr Read paid this sum in three payments in October or November 2008. Each payment was in cash. At about this time Mr Read also sponsored, to the tune of $7,000 in cash, a race car which Mr Pidduck owned.[117] In his affidavit, Mr Read said that the GRT purchased the property when the first registered proprietor was RBA Trustees Ltd as the corporate trustee for the GRT. Mr Read said that in order to assist the trust in purchasing the property he loaned $100,000 to the GRT.[118] He said he did not have a copy of the loan document but remembered Mr Bixley was careful to ensure any paper work required for transactions involving the GRT was properly maintained and assumed he would have a copy of the agreement. While the purchase of the property was made outside the relevant period of criminal activity44 no conviction is required in relation to the offending which taints the property.45 Instead, the Court is required to be satisfied on the balance of probabilities that the specified property is tainted.44 Section 51 of the Act.45 Section 6(2)(a) of the Act.[119] Mr Read also said he was not responsible for the various transfers and that Mr Bixley would have taken all the steps necessary on behalf of the trust. His affidavit conveys the impression that Mr Read was not familiar with the history of the property or the various transfers which lead to the GRT acquiring it.[120] However, after Mr Read swore his affidavit on 22 October 2013 the Commissioner undertook further enquiries into the circumstances surrounding thepurchase of Rocky Cutting Road. These revealed that Mr Read had paid Mr Pidduckin cash.[121] Mr Read's next opportunity to describe the circumstances around thepurchase was when he gave evidence at the hearing.[122] The payment of the purchase price was confirmed by Mr Bixley who referred to the GRT minute book which recorded the following:"Trust to purchase property at Rocky Cutting Road for $110,000. Funds to be advanced by Gary Read for purchase."[123] A further minute contains a type written notation dated 27 February 2009 confirming the decision of the GRT to complete a private corporate client authority and instruction for an electronic transaction relating to the purchase of the Rocky Cutting Road property:[124] I agree with Mr Nabney that it is clear from this evidence that the Commissioner must have been aware that the source of funding for the purchase of Rocky Cutting Road came from Mr Read. The advance was treated as a loan from Mr Read to the trust with payments being made, subsequent to that advance, to Mr Read from the trust being treated as loan repayments.[125] Mr Read gave evidence that the source of the cash he paid to Mr Pidduck came from cash sales of party pills through ISL. It was accepted by Detective Jonson, the officer-in-charge of this inquiry, that Mr Read had declared income of $110,000 for the year ending 31 March 2013. Thus it cannot be said the money was a result of tax evasion as suggested by Mr Jenson.[126] ISL declared substantial income, apparently from the sale of party pills which was then a legal activity. Thus access to substantial amounts of cash is not unexplained.[127] Furthermore, for the year ended 31 March 2008, ISL recorded gross sales of $1,371,560 with a profit of $950,668. The following year it earned a profit of $376,988.[128] It would be expected that the transfer of the money to Mr Read should have been reflected in ISL's balance sheet. However, I agree with Mr Nabney that the fact that it was not does not necessarily infer it came from illegal activity. Mr Read has provided an explanation for the source of the funds which is supported by the financial statements of ISL.[129] I am not satisfied on the balance of probabilities that the Rocky Cutting Roadproperty is "tainted property". Nonetheless, as property of the GRT, it remains subject to the orders in relation to that trust.Profit forfeiture application[130] I have earlier discussed the Rocky Cutting Road property in the context of my finding that Mr Read had effective control of the GRT. I conclude that Mr Read's use and treatment of this property provides further evidence of his effective control of the GRT and the property it owned.[131] I have already referred to the fact that Mr Read undertook work on theproperty, arranged tenants and placed ISL's caravan on the property.[132] Mr Nabney submits there is insufficient evidence to support the inference that Mr Read had effective control over Rocky Cutting Road. In support of this submission he points to Mr Read's claim in his affidavit that the source of thefunding for the installation of a solar power unit at Rocky Cutting Road was owned by him when, in fact, the trust's minute book recorded on 30 November 2009 thetrust was to build the solar power unit. Mr Nabney submits this illustrates it was thetrustee who was in control of the trust's assets rather than Mr Read.[133] However, in my view, this error on Mr Read's behalf supports Mr Jenson'ssubmission that Mr Read's intermingling of personal and trust property was to suchan extent that Mr Read believed, albeit erroneously, that the trust property was his.[134] I also note Mr Read's lack of candour in relation to the circumstances aroundthe purchase of Rocky Cutting Road. A reading of his affidavit conveys theimpression this was an arm's length purchase between Mr Pidduck and the GRT withMr Read's involvement being limited to the lending of the $100,000 to the GRTwhen, in fact, it was Mr Read himself who gave Mr Pidduck various sums of cashtotalling $112,500 which Mr Pidduck deposited into his own company's account.These are not matters about which Mr Read is likely to have been mistaken orconfused. I am satisfied Mr Read made these statements in his affidavit for thepurpose of giving a misleading impression that his involvement in this transactionwas remote and hands off when plainly it was not. The fact that it was not and thatMr Read proffered misleading evidence about it further supports the inferenceMr Read had effective control over the Rocky Cutting Road property.[135] It thus follows that I am satisfied that Mr Read was attempting to disguise the true nature of his control over the property. Having regard to the issues that arise in drawing inferences from lies,46 I consider that this lack of candour, in the wider context of the evidence provides some further support for the conclusion that Mr Read did have effective control over this property.[136] Given my earlier conclusions as to the GRT more generally, it is not necessary to make a particular order concerning the Rocky Cutting Road property. Nonetheless, I am satisfied that if I had concluded that Mr Read did not have effective control over the whole of the GRT and its property, I would nonetheless have concluded that he did have effective control over the Rocky Cutting Road property.46 In the criminal context, this would be addressed under s 124 of the Evidence Act 2006.Application for relief – Ms Wilson on behalf of the children[137] Ms Wilson, as litigation guardian for her infant children, applies for an order for relief from a civil forfeiture order/profit forfeiture order that the Court may make. The grounds on which Ms Wilson relies are that she:(a) has an interest as a litigation guardian for the beneficial interests of her infant children and/or the infant children of Gary John Read; and(b) has not unlawfully benefited from the significant criminal offending to which the application for a civil forfeiture order relates.[138] Mr Speed, for Ms Wilson refers to the GRT trust deed and, in particular the inclusion of the four children as discretionary beneficiaries and final beneficiaries.47In particular, he submits that as the final beneficiaries, they are entitled to the residual trust property on the vesting date. This date, he says, would occur on the date when the trust property is forfeited. As such, he argues the children have an interest in the property that is to be forfeited. In making this submission, Mr Speed relies on a decision of the Court of Appeal in Johns v Johns where the Court concluded that the contingent interest of a final beneficiary in the trust property wasa "future interest" that could be recognised in the context of a limitation defence.48He submits that this interest is an interest in the trust property for the purposes of the Act.[139] The difficulty in this argument is that the "interest" which he seeks to claimon behalf of his clients is an interest over non-specific property. There is no piece of property that the children can claim a certain interest in. They can only claim they have an interest in any remainder which exists when the trust vests. Indeed, they would have no remedy if the full assets of the trust were distributed prior to the vesting date. While this may be a future interest in the trust property, such that the trustee owes a duty to the beneficiaries, this does not amount to having a present interest in the particular property of the trust.47 Kasharn Oriini Read is not included in the claim because of her involvement in the criminal offending of her father.48 Johns v Johns [2004] 3 NZLR 202 (CA).[140] This conclusion is consistent with what the Court of Appeal concluded inJohns. Indeed, in that case the Court was careful to point out that the beneficiaries'interest was strictly contingent and did not amount to a present interest in the property, and that the language of interest depended on its statutory context.49 The Court also accepted as settled law the fact that a discretionary beneficiary does not have an interest beyond a mere expectancy.50 It is clear that the interest which the Court of Appeal was prepared to recognise in that case, is not an interest in property such that it will fall within the Act.[141] As the children have no interest in the property, there is no proper basis on which to make an order in their favour, and I decline to make such an order.Result[142] For the reasons set out above I make the following general orders subject to[143] and [144] below:(a) The Commissioner's application for a profit forfeiture order dated 22 May 2013 is granted.(b) The Commissioner's applications to have Mr Read's effective controlover property treated as an interest in property (dated 5 February 2015 and 6 March 2015) are granted.(c) The Commissioner's civil forfeiture application in relation to RockyCutting Road is refused.(d) Ms Wilson's application on behalf of her children for relief fromforfeiture dated 9 March 2015 is refused.Disposition[143] Due to the time which has elapsed since the property was first restrained in December 2011 and various events which have intervened including the conditional49 At [38].50 At [31].orders I made on 16 April 2015 in relation to the "One Tree Hill" painting I am not prepared to make orders in relation to the specific property which was the subject of the applications without the benefit of first receiving submissions from counsel as to what specific property should be included under the various orders made above as well as any other orders which should be made in the circumstances.[144] Accordingly, I direct the parties to consult with a view to filing an agreed memorandum as to disposition, identifying what specific property is to be included pursuant to the orders made. In the event the parties are unable to agree I direct the Crown to file and serve its memorandum in this regard no later than 20 working days from the date of this judgment and I direct Mr Read and Ms Wilson to file and serve their responses within 10 working days of receiving the Crown's memorandum.[145] I reserve leave to the parties to seek such further directions or orders as may be necessary to give effect to this judgment.Costs[146] The Commissioner is entitled to costs.[147] In the event the Commissioner seeks costs I direct the parties to consult with a view to filing a consent memorandum.[148] In the event the parties are unable to agree I direct the Commissioner to file and serve his memorandum no later than 20 working days after the date of this judgment and that Mr Read and Ms Wilson file and serve their memoranda within 10 days of receiving the Commissioner's memorandum.Moore JSolicitors:Crown Solicitor, TaurangaMr Nabney, TaurangaMr Speed, AucklandMs Bruton, Auckland