THE SOLICITOR-GENERAL OF NEW ZEALAND V JOHN RAYMOND LA HOOD AND ANOR HC DUN CIV 2008-412-000868

THE SOLICITOR-GENERAL OF NEW ZEALAND V JOHN RAYMOND LA HOOD AND ANOR HC DUN CIV 2008-412-000868 17 December 2008IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY CIV 2008-412-000868IN THE MATTER OF an Application pursuant to the Proceeds of Crime Act 1991 BETWEEN THE SOLICITOR-GENERAL OF NEW ZEALAND Applicant AND JOHN RAYMOND LA HOOD JOANNE LEE EDIE Respondents Hearing: 17 December 2008 Counsel: M J Grills for Applicant No Appearance by or on behalf of Respondents Judgment: 17 December 2008ORAL JUDGMENT OF PANCKHURST J[1] This proceeding concerns a restraining order in relation to house properties and a vehicle, which order was made ex parte on 31 October last. Today was scheduled for an inter partes hearing. To that end service of the proceeding upon the two respondents, John La Hood and Joanne Edie, was effected on 7 November 2008. [2] The inter partes notice of application served on that day identified today, 17 December 2008 at 2.15 pm, as the hearing date for the application. However, there is no appearance on behalf of either respondent. That said, Mrs Grills has been in contact with Mr Withnall QC who indicated that he was in receipt of instructions from Mr La Hood but not apparently from Ms Edie. However, Mr Withnall was, until a short time ago, unaware of the hearing date. Moreover, he is presently engaged in Wellington and not due to return until Friday at the earliest.[3] In these circumstances Mrs Grills considered it inappropriate to seek to press on with an inter partes hearing effectively by default. However, she has sought a variation to the existing ex parte order, namely to provide that the properties and vehicle, presently the subject of restraint, be within the custody and control of the Official Assignee pursuant to s42(1)(b) of the Proceeds of Crime Act 1991. This section provides that if the Court is satisfied of the need it may make such a direction. In this instance the ex parte application did seek a direction relevant to the Official Assignee but Chisholm J issued a minute on 31 August in which he said:I have not been persuaded that an order for the Official Assignee to take custody and control of those assets should be granted on an ex parte basis, and that part of the application is declined.As can be seen, the reasons for that ruling are not given. [4] In any event the thrust of Mrs Grills' submissions is that a changed situation has emerged since the ex parte order was made some time ago. That order relates to two properties, one at 217 Pine Hill Road, Dunedin and the other at 13 Mull Street, Palmerston. Pinehill Road is apparently the home of the respondents and certain children. Mull Street, Palmerston, it is alleged by the Crown, was a growing house for a cannabis cultivation enterprise. [5] A second house in Dunedin at 74 Helensburgh Road was similarly adapted for cannabis growing. However, the Crown did not seek a restraint order in relation to it. The thinking at the time, a month or so ago, was that no useful purpose would be served by such an order because there appeared to be no equity in the property. It is now known, however, that the mortgage is one under which the mortgagee has security over both Pinehill Road and Helensburgh Road. The possibility exists that if Pinehill Road is sold all of the indebtedness in respect of both properties could be repaid, leaving Helensburgh Road unencumbered, or perhaps more likely the subject of a significant equity. In that event, of course, there would be no restraint in place in relation to that property. It had been the intention to address this deficiency at an inter partes hearing, but this cannot now occur. That aspect is therefore reserved until an application is filed and the matter can be determined.[6] A further development is that there are indications of a desire to sell one or more of the three properties. This is not greatly surprising. The respondents have been welfare beneficiaries for a period of some time. Nonetheless, their total mortgage liabilities in relation to these three properties are substantial indeed. Counsel for Mr La Hood has signalled that a mortgagee sale of one or more of the properties is on the cards. I must say that present situation seems to me to have all the appearances of one where cannabis cultivators, denied a cashflow, now find themselves in a liquidity crisis. In short, that without access to the controlled drug, they are bereft of the income required to meet the mortgage liability. [7] In these circumstances Mrs Grills submits that there is demonstrated reason for the Official Assignee to be in custody and control of the two properties which are presently restrained. Likewise with reference to the motor vehicle, this is presently at the Dunedin Police Station and this is regarded as an undesirable situation. [8] I am satisfied that it is appropriate to vary the existing restraining order and make a direction for the Official Assignee to take custody and control of the two properties and vehicle which are presently restrained. I do so because I am not aware of what prompted the view formed by Chisholm J, but more importantly because there are now demonstrated circumstances which indicate the need for such an order. However, I am concerned that this step has been taken without input from the respondents or on their behalf. Accordingly leave is reserved to revert to the Court in relation to both the variation to the order and the orders more generally. [9] Ordinarily it would be necessary for me to make directions with reference to the future conduct of the proceeding. However, Mrs Grills has indicated that the Crown intends to bring a further application with reference to 74 Helensburgh Road. This, it seems to me will bring matters to a head, not only in relation to that property, but in relation to the properties and vehicle which are already the subject of an order. [10] I therefore make no further directions at this point._________________________________________________________________________________ Solicitors: Crown Solicitor, Dunedin cc: Mr Colin Withnall QC, Dunedin for Respondent, Mr La Hood