COMMISSIONER OF POLICE v MARWOOD [2019] NZHC 743

COMMISSIONER OF POLICE v MARWOOD [2019] NZHC 743 [9 April 2019]IN THE HIGH COURT OF NEW ZEALANDROTORUA REGISTRYI TE KŌTI MATUA O AOTEAROATE ROTORUA-NUI-A-KAHUMATAMOMOE ROHECIV-2012-463-79[2019] NZHC 743BETWEEN THE COMMISSIONER OF POLICEApplicantAND KARL LESLIE RAYMOND MARWOODFirst RespondentERANA KINGSecond RespondentTHE PERRIN TRUSTThird RespondentANZ BANKFourth RespondentHearing: 9 April 2019Appearances: C H Macklin for ApplicantM W Ryan for First and Third RespondentsA Speed for Second RespondentNo appearance for Fourth RespondentJudgment: 10 April 2019JUDGMENT OF LANG J[on application by first to third respondents for strike out]This judgment was delivered by me on 10 April 2019 at 11.30 am,pursuant to Rule 11.5 of the High Court Rules.Registrar/Deputy RegistrarDate[1] In this proceeding the Commissioner of Police (the Commissioner) seeks aprofit forfeiture order against the first to third respondents under s 55 of the CriminalProceeds (Recovery) Act 2009 (the CPRA). The proceeding is set down for a trial oftwo weeks duration commencing in the High Court at Hamilton on 6 May 2019.[2] The respondents have now applied for an order striking out the proceeding onthe basis that it is statute-barred for limitation reasons. The application needs to bedetermined prior to the commencement of the trial because, if it succeeds, there willbe no need for the trial to proceed.Background[3] On 6 July 2010, the police executed a search warrant at a residential address inTaupo. When they searched the address, the police found a substantial cannabisgrowing operation being undertaken within it. Mr Marwood and Ms King were theoccupants of the address. Mr Marwood was arrested and charged with cultivatingcannabis.[4] Mr Marwood challenged the admissibility of the items found during the searchof the address. In a judgment delivered on 14 April 2011, Judge A-M Bouchier heldthat the search warrant should not have been issued because the police did not havereasonable grounds to believe there would be evidence of the commission of anoffence at the address named in the application for a search warrant.1 She also foundthat the subsequent police entry and search, based as it was on a flawed search warrantapplication, breached Mr Marwood's right under s 21 of the New Zealand Bill ofRights Act 1990 to be free from unreasonable search and seizure.[5] Judge Bouchier therefore held that the evidence obtained using the searchwarrant was improperly obtained in terms of s 30 (2) of the Evidence Act 2006. Afterundertaking the balancing exercise required under s 30(3) of that Act, the Judge heldthat the exclusion of the evidence was a proportionate response to the impropriety thathad occurred. This left the Crown without sufficient evidence to prove its case andMr Marwood was subsequently discharged under s 347 of the Crimes Act 1961.1 R v Marwood DC Rotorua CRI 2010-69-1318.[6] The Commissioner filed this proceeding on 17 February 2012. On 21 February2012 he obtained restraining orders on a without notice basis in relation to theresidential address owned by the first to third respondents as well as motor vehiclesand bank accounts owned by the respondents. Those orders were sealed on22 February 2012 and amended on 24 April 2012. On notice restraining orders werethen made by consent on 21 December 2012, and subsequently extended by consenton an annual basis.[7] The Commissioner subsequently filed an application seeking a profit forfeitureorder on 31 July 2013. The Commissioner alleges the respondents have derivedundeclared income through the cannabis growing operation Mr Marwood conductedat their property prior to the point at which the police searched it on 6 July 2010.[8] The proceeding has followed a protracted procedural path arising out of thefact that the Commissioner relies on alleged criminal activity in relation to whichMr Marwood has been charged but ultimately acquitted. This resulted in interlocutorydecisions being subject to appeals to the Court of Appeal and Supreme Court.2 Thepresent application represents the final procedural hurdle for the Commissioner toovercome before being permitted to bring his claim to trial.The limitation legislation[9] Up until January 2011 limitation periods for civil proceedings were governedby the Limitation Act 1950 (the 1950 Act). They are now governed principally by theLimitation Act 2010 (the 2010 Act), which came into force on 1 January 2011.3 Unlikethe 1950 Act, the 2010 Act contains an express provision excluding proceedingsseeking orders under the CPRA from being subject to the 2010 Act.4[10] The 2010 Act repealed the 1950 Act.5 The repeal of the 1950 Act was subjectto the savings provisions set out in s 59 of the 2010 Act. Section 59 provides asfollows:2 Commissioner of Police v Marwood [2015] NZCA 608, [2016] 2 NZLR 733; Marwood vCommissioner of Police [2016] NZSC 139, [2017] 1 NZLR 260.3 Limitation Act 2010, s 2.4 Limitation Act 2010, s 12(3)(e).55 Limitation Act 2010, s 57.59 Actions based on acts or omissions before 1 January 2011(1) This section applies to an action, cause of action, or right of action—(a) based on an act or omission before 1 January 2011; and(b) to which the Limitation Act 1950 applied immediately before itsrepeal.(2) The action, cause of action, or right of action must, despite the repealof the Limitation Act 1950 and unless the parties agree otherwise, bedealt with or continue to be dealt with in accordance with the LimitationAct 1950 as in force at the time of its repeal.(3) Nothing in this section prevents any provision of the Limitation Act1950 as in force at the time of its repeal from being applied, after 31December 2010, and by analogy, to any claim for equitable relief—(a) based on an act or omission before 1 January 2011; and(b) to which the Limitation Act 1950 immediately before its repealdid not apply directly.[11] In addition, s 61 of the 2010 Act amended the 1950 Act by inserting a new s 2Ainto that Act. It is in identical terms to s 59 of the 2010 Act. The enactment of ss 59and 2A is obviously to ensure that limitation periods for claims based on acts oromissions that occurred prior to the commencement of the 2010 Act would continueto be governed by the 1950 Act. It is common ground that the Commissioner's claimin the present proceeding is based on acts that occurred prior to that date.[12] Importantly, s 33 of the 1950 Act provides:33 Savings for other limitation enactments(1) This Act shall not apply to any action or arbitration for which a periodof limitation is prescribed by any other enactment, or to any action orarbitration to which the Crown is a party and for which, if it werebetween subjects, a period of limitation would be prescribed by anyother enactment.(2) Any reference in any enactment to any of the enactments specified inSchedule 1 to this Act or to any provision of any such enactment shallbe construed as a reference to the corresponding provision of this Act.The effect of s 33(1) is that the 1950 Act does not apply to proceedings brought underenactments that contain their own limitation periods.The arguments[13] The applicants contend that the Commissioner's claim constitutes a claim formoney. As a result, it is governed by s 4(5) of the 1950 Act, which provides as follows:4 Limitation of actions of contract and tort, and certain otheractions(5) An action to recover any penalty or forfeiture, or sum by wayof penalty or forfeiture, recoverable by virtue of any enactmentshall not be brought after the expiration of 2 years from the dateon which the cause of action accrued:Provided that for the purposes of this subsection the expressionpenalty shall not include a fine to which any person is liable onconviction of a criminal offence.[14] The applicants argue that the cause of action in the present case accrued at thelatest on 6 July 2010, being the date on which the police executed the search warranton the applicants' address. Any claim for a penalty or forfeiture therefore needed tobe filed no later than 6 July 2012. The respondents point out that the Commissionerdid not file the application for a profit forfeiture order until 31 July 2013. As a result,they say the present proceeding is statute-barred for limitation reasons.[15] Mr Macklin for the Commissioner submits that the CPRA contains its ownlimitation provision in s 55(1)(a). He contends that s 55(1)(a) of the CPRA thereforeoverrides s 4(5) of the 1950 Act by virtue of s 33 of the 1950 Act. In addition, hesubmits that the proceeding commenced in February 2012 when the Commissionerapplied for a restraining order. He therefore contends that, even if the argument forthe respondents is correct, the proceeding was commenced within the two year periodrequired by s 4(5) of the 1950 Act.DecisionDoes s 55(1)(a) of the CPRA override s 4(5) of the 1950 Act?[16] The Commissioner's substantive claim relies on s 55 of the CPRA, whichrelevantly provides as follows:55 Making profit forfeiture order(1) The High Court must make a profit forfeiture order if it is satisfied onthe balance of probabilities that—(a) the respondent has unlawfully benefited from significant criminalactivity within the relevant period of criminal activity; and(b) the respondent has interests in property.[17] The CPRA applies to significant criminal activity engaged in both before andafter the Act came into force. on 1 December 2009.6 Section 5 of the CPRA, theinterpretations section of the Act, defines the term "relevant period of criminalactivity" as follows:relevant period of criminal activity, in relation to an application for a profitforfeiture order, means the period that ends on the date the application is madeand starts 7 years before—(a) the date of the application for the relevant restraining order, if theapplication for the profit forfeiture order relates, wholly or in part, torestrained property; or(b) the date of the application for the profit forfeiture order, if theapplication for the profit forfeiture order does not relate to restrainedproperty.[18] Section 55(1)(a) is not expressly worded as a limitation clause. I consider,however, that it is clearly intended to stipulate the period within which an applicationfor a profit forfeiture order must be made. An application is generally made when itis filed. Where an application for a profit forfeiture order relates wholly or in part torestrained property, it must be based on significant criminal activity that occurs withinseven years prior to the date on which the application for a restraining order is filed.7Where it does not relate to restrained property, it must be based on significant criminalactivity that occurs within seven years prior to the date on which the application for aprofit forfeiture order is filed.86 Criminal Proceeds (Recovery) Act 2009, s 9(b).7 Section 55(1)(a).8 Section 55(1)(b).[19] I do not see any means of reconciling s 55(1) with s 4(5) of the 1950 Act. Inparticular, I do not accept Mr Speed's submission for the respondents that s 55(1) onlypermits the Commissioner to rely on activity going back seven years if he complieswith s 5(5) of the 1950 Act by filing a proceeding within two years of the last of suchactivity occurring. In many cases the activity in question may take place over a singleday or a short period of time. An interpretation that requires the Commissioner to fileproceedings within two years of the activity occurring would effectively defeatParliament's clear intention to permit profit forfeiture orders to extend to significantcriminal activity occurring during the seven year period prior to the filing of therelevant application.[20] Mr Speed for the respondents relies on decisions of this Court and the Court ofAppeal in Securities Commission v Midavia Rail Investments BVBA.9 In that case theplaintiff had sought a declaration that the defendants were liable to pay compensationand pecuniary penalties under the Securities Markets Act 1988 for alleged insidertrading. The proceeding was struck out because the plaintiff had filed the proceedingoutside the two year time limit permitted by s 4(5) of the 1950 Act. I do not considerMidavia provides any assistance in the present case, however, because the SecuritiesMarkets Act 1988 did not contain an equivalent section to s 55(1).[21] It follows that I consider s 55(1) is a limitation section that applies to anapplication for a profit forfeiture order under the CPRA. For that reason, and by virtueof s 33 of the 1950 Act, s 4(5) of the 1950 Act does not apply to such proceedings.[22] The profit forfeiture order in the present case relates to property that has beenrestrained since February 2012. The significant criminal activity on which theCommissioner relies is alleged to have occurred within seven years prior to the dateon which the Commissioner first applied for a restraining order. The proceeding istherefore not statute-barred for limitation reasons.9 Securities Commission v Midavia Rail Investments BVBA High Court Auckland CIV 2004-404-2174, 13 January 2006; Securities Commission v Midavia Rail Investments BVBA CA 252/05 andCA 19/06, 29 November 2006.Did the application for a profit forfeiture order commence with the filing of theapplication for a restraining order?[23] In case I am wrong on the first issue I will briefly consider the second argumentfor the Commissioner. This relates to the issue of whether the application for a profitforfeiture order commenced with the filing of an application for a restraining order.[24] As Mr Macklin points out, an application for a profit forfeiture order isgenerally preceded by an application for a restraining order. As the present casedemonstrates, the Commissioner will usually seek a restraining order on a withoutnotice basis to ensure that those who have control of the property do not dispose of itbefore the restraining order can be made.10 The Commissioner is then required toapply on notice within seven days for an order that the restraining order is to continuein force for up to twelve months.11[25] As I have already pointed out at [18], the significant criminal activity on whichthe Commissioner relies to seek a profit forfeiture order in relation to restrainedproperty must occur within seven years prior to the application for a restraining orderbeing filed. I take this to be a legislative acknowledgement that an application for arestraining order is the first step in the process that culminates in the making of a profitforfeiture order. For that reason, had it been necessary to do so, I would therefore haveheld that the present proceeding was not statute-barred for limitation reasons even ifs 4(5) of the 1950 Act applied to it.Result[26] The application for strike out is dismissed.Costs[27] The Commissioner has succeeded and is entitled to costs on a category 2Bbasis together with disbursements as fixed by the Registrar.Lang J10 Criminal Proceeds (Recovery) Act 2009, s 22(1).11 Criminal proceeds (Recovery) Act 2009, ss 39 and 41.Solicitors:Crown Solicitor, RotoruaNicholls Law Ltd, AucklandJennifer G Connell & Associates, NewmarketCounsel:M Ryan, Barrister, AucklandA Speed, Auckland