THE COMMISSIONER, THE NEW ZEALAND POLICE v WILD &ORS [2013] NZHC 3142

THE COMMISSIONER, THE NEW ZEALAND POLICE v WILD &ORS [2013] NZHC 3142 [27 November 2013]IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYCIV-2013-485-7258[2013] NZHC 3142IN THE MATTER OF an application pursuant to the CriminalProceeds (Recovery) Act 2009BETWEEN THE COMMISSIONER, THENEW ZEALAND POLICEApplicantAND SHAUN ROBERT WILDFirst RespondentKATHERINE JOAN WILDSecond RespondentASB BANK LIMITEDInterested PartyHearing: 26 November 2013Counsel: S K Barr for ApplicantS N Hewson for RespondentsJudgment: 27 November 2013JUDGMENT OF WILLIAMS J[1] The respondents have been charged with, and have pleaded guilty to, a series of cannabis supply related counts arising from the discovery of a cannabis grow on their property in Bulls. The Commissioner of Police has obtained a without notice asset restraining order in relation to three vehicles and funds in a superannuation account, all of which are either registered in the name of, or owned by, Shaun Robert Wild (the first respondent).[2] There is to be a disputed fact hearing about the extent to which the respondents have unlawfully benefited from 'significant criminal activity' in terms of s 6 of the Criminal Proceeds (Recovery) Act 2009. That is to occur early next year.Final asset forfeiture orders will fall to be dealt with at the conclusion of that hearing. There is now an extant on notice application for a restraining order to which the respondents have filed an amended notice of opposition. The amended notice originally sought release of all items the subject of the asset restraining order but at the hearing, Mr Hewson narrowed the focus of his opposition to release of one of the three vehicles: a 2005 Ford Courier vehicle (registration no. CRH730).[3] The respondents say that although they already had the use of one of their vehicles, they need a second vehicle for family and work purposes and request variation of the extant orders so that it can be urgently released into their possession. The Commissioner formally opposes on two grounds:(a) the release of the vehicle would create a risk of damage to, disposal of, or theft of the vehicle that would reduce or eliminate the equity potentially available for the forfeiture; and(b) the ongoing use of the vehicle upon release would increase the rate of depreciation of the value of the vehicle, thereby reducing the equity potentially available for the forfeiture.[4] The Commissioner submits as an alternative that the vehicle be released for sale by the Official Assignee with up to $5,000 of the proceeds being made available to the respondents to purchase a second cheaper vehicle. That vehicle, it is suggested, would be free of any restraint order. The Commissioner originally estimated the value of the vehicle at $20,470. Mr Wild suggested that value was far too high. The Commissioner now has a Turners' car auction valuation set at$10,000. This is in line with Mr Wild's estimate.[5] Sections 33 and 35 of the Criminal Proceeds (Recovery) Act 2009 give this court the power to vary restraining orders.1[6] Mr Wild filed an affidavit in support of his application for variation. He deposed that the Ford Courier is:1 See s 33(1) in relation to applications for further orders and s 35(a) specifically providing for variations.(a) an essential part of the management of his family's domestic life, and the operation of his part-time engineering business and small farmlet in Bulls; and(b) in any event, the Commissioner has restrained sufficient other property to cover the full amount specified in the profit order application.[7] There is, he said, an instrument restraining order over the respondents' Bulls property valued at $585,000, with equity of $503,000. That, he said, was more than the undeclared income alleged (in the affidavit of Nicholas William Brown insupport of the Commissioner's application) to have been earned by the respondents. In any event, Mr Wild deposed that the alleged profit is "very much in dispute" –less than $20,000 on his view.[8] Mr Wild said that outside the hours of his usual employment as an engineer with the Airforce, he runs a "sideline engineering business" operating from a shed onthe Bulls property. It is focused on high performance motor vehicles and specialist engineering. And what was once a hobby, he says, is now a business occupying as much as 40 hours per week. The Ford Courier, he said, is necessary for that business.[9] Domestically, the respondents have two children of school age and they live in a rural area – 8 kilometres from the bus stop and 29 kilometres from school. In addition, Katherine Joan Wild (his wife) and the second respondent, works in a hair salon in Bulls, and Mr Wild works at Ohakea Airforce Base. Although they have been left with free use of a 1996 Toyota motor vehicle, Mr Wild said that is insufficient due to work, family (including school) and sideline business commitments and in light of their rural location.[10] Mr Wild opposes the Commissioner's alternative idea of selling the Ford Courier and then taking $5,000 from the purchase proceeds to buy a cheaper vehicle. He said this was impractical and would take a great deal of time. It was alsounlikely to maximise value. Mr Wild indicated he was prepared to give any appropriate undertaking.[11] The Commissioner is sceptical about Mr Wild's part-time engineering business – both generally as a source of income and specifically in relation to the necessity for the second vehicle. Detective Constable Brown deposes that he has tried to obtain details of the clients and work undertaken by the business, and has received no useful replies.[12] Mr Barr argued further that there was extensive evidence of Mr Wild earning undeclared income whether via his cannabis growing activity or in his sideline engineering business. The potential tax liability from this undeclared income exceeded $140,000 he argued. Assuming some of that income came from the engineering business, Mr Barr submitted that the evidence was of long term tax avoidance in relation to that operation. That made it entirely inappropriate to hand back to Mr Wild a truck that enabled him to continue to earn even more potentially undeclared income.[13] There was, Mr Barr argued, no evidence to suggest that Mr Wild would honestly declare his income now. For example, he argued, Mr Wild had produced no recent invoices or other evidence to court to reflect his more recent (post arrest) engineering activities. Mr Barr submitted that Mr Wild cannot be trusted.[14] In relation to the value of the instrument restraint order assets (the house and a Hyundai SantaFe vehicle) over which the Commissioner now has interim rights,Mr Barr does not dispute the respondents' calculations but says the structure of the Criminal Proceeds (Recovery) Act 2009 separates instrument forfeiture order assets from asset forfeiture order assets.[15] Mr Barr's argument boiled down to the proposition that Mr Hewson'scalculation of the amount of equity available in the Bulls property cannot be treatedas a full value insurance policy for the entire extent of the Crown's expectations inrelation to any asset forfeiture order that may be made. That is for two reasons.First, it is not yet known what the "the value of the benefit" determined inaccordance with s 53 of the Act will be. Second, and perhaps more to the point, Mr Barr argued that there is a real prospect that a portion at least of the Bulls property will be forfeited to the Crown as an instrument of crime. Any such forfeiture can be taken into account in reducing sentence (see s 10B of the Sentencing Act 2002), but it is specifically excluded from direct consideration in respect of asset forfeiture orders in terms of s 54(1)(b).[16] It is unnecessary for me to resolve the argument about the relationship between asset restraining orders and instrument restraining orders on the facts in this case.[17] I am satisfied that it is in order to remove the restraint on the Ford Courier utility for the following reasons:(a) The respondents have a young family and live in a rural location. Both respondents are working. Two vehicles ought, in my view, to be seen as a necessity in that circumstance.(b) The Commissioner adopted the fall back position I have described of selling the Ford Courier and allocating $5,000 to the purchase of a more modest vehicle. That idea may have had some attraction if the utility were valued at more than $10,000. There is just no point in haggling over such a small difference – no more than $5,000 – given the much larger value items the Commissioner has had restrained.(c) It will be in Mr Wild's direct interests now to declare all income from the part-time business, since that will have the potential effect of assisting him in establishing patterns that may reduce theunexplainable proportion of his past income. Mr Wild's evidence wasthat he is working with an accountant to attempt to reconstruct past income from that source. I can well imagine. Mr Barr also argued that Mr Wild had not even bothered to bring any proof his current income earning activities in relation to the home engineering business. That proved, he suggested, that Mr Wild is inherently unreliable. I donot think that is correct. Rather, I expect it was just something that did not occur to him.(d) The evidence given by Mr Wild demonstrated that he was likely to take real care of the utility (he had continued to meet all finance payments and properly maintain all assets that remained within his control despite the existence of the restraining orders). There is no reason to think that he would take any different approach with respect to this asset.[18] The vehicle is to be released accordingly. Conditions for the release of the vehicle will be those set out in paragraph 5.1 of the Crown's memorandum of4 November 2013.___________________________Williams JSolicitors: Crown Solicitor, Wellington Ord Legal, Wellington