COMMISSIONER OF NEW ZEALAND POLICE v MCMAHON [2022] NZHC 483

COMMISSIONER OF NEW ZEALAND POLICE v MCMAHON [2022] NZHC 483 [16 March 2022]IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYI TE KŌTI MATUA O AOTEAROATE WHANGANUI-A-TARA ROHECIV-2020-485-53[2022] NZHC 483UNDER the Criminal Proceeds (Recovery) Act 2009IN THE MATTER OF an application under s 21. 24 and 25BETWEEN COMMISSIONER OF THENEW ZEALAND POLICEApplicantAND CRAIG ANTHONY MCMAHONRespondentHearing: On the papersCounsel: S B McCusker for ApplicantC J Tennet for RespondentJudgment: 16 March 2022JUDGMENT OF MANDER JThis judgment was delivered by me on 16 March 2022 at 3 pmpursuant to Rule 11.5 of the High Court Rules 2016Registrar/Deputy RegistrarDate: .[1] On 8 July 2021, Craig McMahon was sentenced to 23 months' imprisonmenton charges of cultivating cannabis, possession of cannabis for sale or supply, moneylaundering, and theft of electricity.1 As part of his sentencing, Mr McMahonconsented to the making of an instrument forfeiture order over a residential propertyowned by him.2 Mr McMahon's assets have been the subject of a without noticerestraining order under the Criminal Proceeds (Recovery) Act 2009 (the Act). WithMr McMahon's criminal proceedings now having been concluded, the Commissionerof the New Zealand Police (the Commissioner) seeks a profit forfeiture order, with theconsent of Mr McMahon, over the remaining assets presently the subject of therestraining order.Factual background[2] The facts of Mr McMahon's offending are agreed. A police search ofMr McMahon's residential property situated at 156 Fitzherbert Street, Featherston,revealed a large commercial cannabis plant operation. A total of 113 cannabis plantsat different states of maturity were located. The sum of $27,214.50 in cash was alsodiscovered. Mr McMahon admitted at the time of the search that this representedprofit from the sale of cannabis.[3] An analysis of Mr McMahon's bank account showed that between 1 May 2017to 10 February 2020 he deposited a "minimum" of $470,000 into accounts controlledby him or other businesses. Mr McMahon deposited the funds into other bankaccounts controlled by him and invested the money into real estate or goods, includinga 2007 Ford Mustang motor vehicle. Further financial analysis found thatMr McMahon had acquired assets in excess of $470,000 as a result of his cannabisoperation. During this period he was not in paid employment.[4] Upon his arrest, Mr McMahon informed police that the Ford Mustang had beenacquired with money made from selling cannabis, and that he paid off the mortgageof his Fitzherbert Street property where the cannabis was located with money madefrom selling that drug.1 R v McMahon [2021] NZDC 13951.2 Sentencing Act 2002, s 142N.Profit forfeiture order[5] Section 55 of the Act provides:(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 significantcriminal activity within the relevant period of criminalactivity; and(b) the respondent has interests in property.(2) The order must specify—(a) the value of the benefit determined in accordance with section53; and(b) the maximum recoverable amount determined in accordancewith section 54; and(c) the property that is to be disposed of in accordance withsection 83(1), being property in which the respondent has, oris treated as having, interests.[6] In Pulman v Commissioner of Police, Lang J identified four matters which theCourt must address in determining whether to make a profit forfeiture order unders 55(1).3 Each is addressed in turn.Has the respondent unlawfully benefitted from significant criminal activity during therelevant period?[7] If the Court is satisfied that the Commissioner has proved, on the balance ofprobabilities, the respondent has unlawfully benefitted from significant criminalactivity during the relevant period, the value of the benefit is presumed to be that statedin the Commissioner's application unless rebutted by the respondent on the balance ofprobabilities.[8] There is no dispute that Mr McMahon has unlawfully benefitted fromsignificant criminal activity. He has been convicted of the offences of cultivatingcannabis, possession of cannabis for supply, money laundering and diverting3 Pulman v Commissioner of Police HC Auckland CIV-2010-404-5666, 27 May 2011, at [10]–[13].electricity, all of which carry a maximum period of imprisonment of five years or moreand therefore constitute "significant criminal activity" for the purposes of the Act.Mr McMahon has admitted to laundering a "minimum" of $470,000 into bankaccounts controlled by him. The parties are agreed that this figure should constitutethe value of Mr McMahon's benefit for the purpose of s 55(2)(a).What is the maximum recoverable amount?[9] The Court must determine the maximum recoverable amount. This is done bytaking the value of the benefit, as already determined in accordance with s 53 of theAct, and deducting from that figure the value of any property to be forfeited to theCrown by virtue of any assets forfeiture order made in relation to the same criminalactivity as that to which the profit forfeiture application relates.[10] The parties are agreed the maximum recoverable amount is also $470,000because no asset forfeiture orders have previously been made in this proceeding. Aninstrument forfeiture order was made at sentencing in respect of the Fitzherbert Streetproperty, but such orders are not taken into account in assessing the maximumrecoverable amount under s 54 of the Act. The effect of the instrument forfeiture orderwas recognised at sentencing by a one year discount applied to reduce Mr McMahon'ssentence.Should any property be excluded because of undue hardship?[11] The Court must consider whether any property should be excluded from theoperation of the profit forfeiture order because undue hardship is likely to be causedto the respondent if such property was realised. However, no application for unduehardship has been advanced by Mr McMahon and the parties are agreed that noproperty should be excluded from the operation of the profit forfeiture order on thatground. Mr McMahon's mother made an unsuccessful application for relief frominstrument forfeiture on the basis of a claimed interest in the Fitzherbert Streetproperty but no other such claim has been advanced, and the parties are unaware ofany potential third party interests in the remaining assets that are the subject ofrestraint.A profit forfeiture order must be made if the respondent has interests in the property[12] Finally, the Court, having satisfied itself in relation to the preceding steps, mustmake a profit forfeiture order if satisfied, on the balance of probabilities, that therespondent has interests in the property. There is no dispute regarding this element.Mr McMahon has interests in the assets sought to be the subject of the profit forfeitureorder, namely the Ford Mustang, the $27,214.50 cash located at the property, and theother assets the subject of restraint, being Kiwibank funds in the sum of $62.47, fundsheld in the name of Mr McMahon in the sum of $11,459.97 with the Westpac Bank,and the sum of $1,235.32 held by him in a bank account with the ANZ Bank. TheFitzherbert Street property is excluded from the operation of the profit forfeiture orderbecause it is already subject to the instrument forfeiture order made at sentencing.Conclusion[13] The parties are agreed the requirements for the making of a profit forfeitureorder under ss 55(1) and (2) of the Act have been satisfied and that such an order inthe terms sought can be made. Being satisfied that this is the case, I make thefollowing orders:(a) the value of the benefit is $470,000;(b) the maximum recoverable amount is $470,000;(c) the following property is to be realised:(i) a 2007 Ford Mustang Parnelli Jones Boss Saloon includingignition keys, registration plate number FWR375, andregistered in the name of the respondent (McMahon);(ii) a total amount of $27,214.50 seized as cash at 156 FitzherbertStreet, Featherston, South Wairarapa on 11 February 2020 plusaccrued interest;(iii) the funds held by Kiwibank Limited in all the accounts in thename of Craig Anthony McMahon, including bank accountnumbered 38-9005-0919295-04 with an approximate balanceof $62.47 plus accrued interest;(iv) the funds held by Westpac New Zealand Limited in all theaccounts in the name of Craig Anthony McMahon, includingbank account numbered 03-0687-0019487-00 with anapproximate balance of $11,459.97 plus accrued interest; and(v) the funds held by ANZ Bank New Zealand Limited in all theaccounts in the name of Craig Anthony McMahon, includingbank account numbered 01-0504-0132066-01 with anapproximate balance of $1,235.32 plus accrued interest.(d) the proceedings (CIV-2020-485-53) between the Commissioner andthe respondent are at an end.Solicitors:Crown Solicitor, Welllington