Solicitor-General of New Zealand v Bujak [2012] NZHC 2453 (21 September 2012)

Last Updated: 19 October 2012

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2007-485-000522 [2012] NZHC 2453

IN THE MATTER OF an application under the Proceeds of Crime Act 1991 and Mutual Assistance in Criminal Matters Act 1992

BETWEEN THE SOLICITOR-GENERAL OF NEW ZEALAND

Applicant

AND SLAWOMIR RYSZARD BUJAK First Respondent

AND DANUTA ALEKSANDRA ZALWOWSKA-SPISAK Second Respondent

CIV-2008-409-001901

AND BETWEEN MARCOS ERIK MONASTERIO AND MARIA JOSE MARCOS MOYA Plaintiffs

AND SLAWOMIR RYSZARD BUJAK First Defendant

AND DANUTA ALEKSANDRA ZALWOWSKA-SPISAK Second Defendant

AND HUGH SHEARER Third Defendant

Hearing: 4 September 2012

Appearances: M F Laracy for Solicitor-General

R Johnstone for Dr Monasterio and Ms Moya

Dr Deliu Appears In Person

_{Judgment: 21 September 2012}

THE SOLICITOR-GENERAL OF NEW ZEALAND V BUJAK HC CHCH CIV-2007-485-000522 [21

September 2012]

_{JUDGMENT OF HON JUSTICE FOGARTY}

Introduction

[1] The applicant Dr Deliu, a barrister, applies for a review of the decision of Associate Judge Matthews, dated 14 May 2012, in which this Court dismissed his application for payment, at this time, of his legal fees incurred in respect of work he carried out for Mr Bujak. Payment of his fees, in the order of $30,000, would have to be made out of Mr Bujak’s assets in New Zealand.

[2] At this point in time, these assets are secured against disposition by two

High Court orders:

(i) A civil freezing order to a maximum sum of $300,000 in favour of Dr Eric Monasterio and his wife, Ms Moya, which does allow certain dispositions including legal fees;

(ii) A foreign restraining order (FRO) obtained by the Solicitor-General under the Mutual Assistance in Criminal Matters Act 1992 (MACMA) and the Proceeds of Crimes Act 1991 (POCA) at the request of the Polish Central Authority for Mutual Assistance.

[3] As a result of the qualification in the freezing order, property was sold, and the Official Assignee is holding sufficient funds to meet Mr Deliu’s fees. Section

66C addresses management of property under registered foreign restraining orders. That is a statutory provision which puts the management under the control of the Official Assignee if the Court is satisfied that is desirable to do so.

[4] In his decision of 14 May 2012, Associate Judge Matthews dismissed Dr Deliu’s application for payment, principally because in his view the terms of the FRO prevented any payment. If the FRO is cancelled or brought to an end, Dr Deliu’s payment could be considered along with those of other people with an interest in the property and other creditors, whether secured or unsecured.

[5] Counsel agree that the main issue in this review is whether or not there is any exception to the FRO.

[6] If the FRO does not bar the process, and if it can be and is amended in New Zealand, then Dr Deliu would apply informally to the Official Assignee for payment of his fees. The merits of that application would be considered by the Official Assignee after considering any submissions made by Dr Monasterio and his wife Ms Moya, and any other creditors, and Mr Bujak. I refused to read an unsolicited memorandum from a solicitor, Mr Palliser, who had sold the property releasing the funds now held by the Official Assignee. Any persons disaffected by the ruling of the Official Assignee would have leave to apply to this Court for resolution of the issue.

[7] The parties agreed that validity and effect of the FRO follow from a consideration of issues of law. There are no material findings of fact required. The approach on review is essentially appellate. But given that it is a pure question of law, I have to form my own judgment as to the correct state of the law. I can and do examine Associate Judge Matthews’ reasoning as it illuminates the question, and as to whether it persuades me that his decision was correct or not.

The context

[8] To give the legal issue some context it is necessary to record material facts. Mr Bujak is a Polish national. He came to New Zealand and bought property here. He was pursued by the Polish authorities, who wanted him for fraudulent dealings in Poland. He was the subject of extradition proceedings.

[9] Dr Deliu appeared as second counsel for Mr Bujak in the litigation surrounding these extradition proceedings, particularly at the Supreme Court. Dr Deliu was also counsel for Mr Bujak in a civil claim brought by Dr Monasterio and his wife Ms Moya. They had purchased a domestic dwelling in Christchurch from Mr Bujak. When they took possession, they found it had defects and sued Mr Bujak for damages.

[10] On 2 September 2008, a Mareva injunction freezing all the assets of Mr Bujak and his wife was made by this Court in Christchurch, by Chisholm J on the application of Dr Monasterio. This Mareva injunction was replaced by a freezing order on 1 February 2009, by myself under the new High Court Rules, the final terms of the order being approved by French J. This order permitted selling of two properties, and from the net funds after settlement, enabled Mr Bujack to apply the funds:

...to meet his reasonable costs in this proceeding CIV-2008-409-001901)..., and any proceeding relating to the application for his extradition to Poland, or the Foreign Restraining Order registered against the land at 4 Arahura Place...

[11] After the properties were sold, and the repayment of the mortgage, conveyancing and conveyancing fees, Cousins and Associates (Mr Palliser) who handled the conveyancing paid Mr Orlov for his work, but did not pay Dr Deliu. The balance of their funds in hand were transferred by them to the Official Assignee, to be held under POCA.

[12] On 24 November 2011, this Court dismissed the Solicitor-General’s application to claw back money paid to Cousins and Associates for their work and work done by Mr Orlov. The Court found the Solicitor-General had not proven that the money was received not in good faith as required by s 59 POCA. The Court did not find it necessary to decide whether or not the FRO prevented the Court from releasing assets of Mr Bujak to pay such things as reasonable legal costs.

The legal issues

[13] The legal issues in this case can be divided between transitional issues and the question of whether or not the High Court has the power to qualify in New Zealand the comprehensive terms of the Polish order.

The transitional issues

[14] Before Associate Judge Matthews, Dr Deliu argued that the FRO had lapsed. That left only the domestic freezing order. Associate Judge Matthews found that the FRO continued.

[15] The registration of the order made in Poland was made in the High Court in Wellington by way of application under s 56 Mutual Assistance in Criminal Matters Act 1992 (MACMA), which is now repealed. At the time of the registration, the Proceeds of Crimes Act 1991 (POCA) was in force. Section 56 of MACMA at that time provided that once registered an FRO may be enforced as if it were a restraining order made by the High Court under POCA.

[16] On 1 December 2009, the Criminal Proceeds (Recovery) Act 2009 (CPRA)

came into force. Section 171 of CPRA repealed POCA.

[17] Dr Deliu argues that the transitional provisions, such as they are in both POCA and MACMA, do not enable this FRO to be enforced as if it were an order made under POCA, before POCA was repealed. There were four relevant transitional provisions. It is appropriate to set them out now.

[18] Section 172 of CPRA 2009 provides:

172 Proceeds of Crime Act 1991 continues in force for certain purposes

Despite section 171, the Proceeds of Crime Act 1991 continues in force for the purposes of—

(a) continuing and completing any proceedings or other matter commenced under that Act before the commencement of this Act (including the making or enforcement of any order arising from those proceedings):

(b) the exercise of any power or function under that Act in relation to any matter referred to in paragraph (a).

[19] Section 12 of MACMA Amendment Act 2009 provides:

12 Savings and transitional provisions

The Mutual Assistance in Criminal Matters Act 1992 continues in force as it did before the commencement of this Act for the purpose of completing any request or any matter relating to or arising from a request made under that Act before the commencement of this Act, including, without limitation,—

(a) taking action in relation to any matter relating to an application under the Mutual Assistance in Criminal Matters Act 1992; and

(b) continuing or completing any proceedings or other matter commenced under that Act; and

(c) enforcing orders made or registered under that Act; and

(d) the exercise of any power or function under the Act in relation to any matter in paragraph (a).

[20] Section 57(3) of MACMA as amended in 2009 provides:

57 Effect of registering foreign orders in New Zealand

...

(3) A foreign forfeiture order registered in New Zealand under section

56 has effect, and may be enforced, as if it is a forfeiture order—

(a) made by the High Court under the Criminal Proceeds

(Recovery) Act 2009; and

(b) entered on the date it is registered.

[21] Section 18 of the Interpretation Act 1999 provides:

18 Effect of repeal on enforcement of existing rights

(1) The repeal of an enactment does not affect the completion of a matter or thing or the bringing or completion of proceedings that relate to an existing right, interest, title, immunity, or duty.

(2) A repealed enactment continues to have effect as if it had not been repealed for the purpose of completing the matter or thing or bringing or completing the proceedings that relate to the existing right, interest, title, immunity, or duty.

[22] Section 57(3) of MACMA prior to its amendment in 2009, at the time the

Polish order was registered, provided:

57 Effect of registration of foreign orders

...

(3) Subject to section 66B of the Proceeds of Crime Act, a foreign restraining order registered in accordance with section 56 of this Act has effect, and may be enforced, as if it were a restraining order made by the High Court under that Act and entered on the date of registration.

[23] Dr Deliu’s argument before Associate Judge Matthews is summarised in that

Judge’s judgment at paras [20] to [23] inclusive:

[20] Dr Deliu argued that s 57(3) in its pre-amendment format can now be of no effect because the enforcement provisions of the Proceeds of Crime Act have been repealed by s 171 of the Criminal Proceeds (Recovery) Act

2009. He submitted that s 172 of the Criminal Proceeds (Recovery) Act

2009, which provides that the Proceeds of Crime Act 1991 continues in force for limited purposes, does not change this position. The limited purposes are

set out in [15] above. It will be observed that these purposes relate to

proceedings commenced under the Proceeds of Crime Act.

[21] Dr Deliu submitted that the registration of the Polish judgment under the Mutual Assistance in Criminal Matters Act was a proceeding commenced under that Act, not a “proceeding or other matter commenced” under the Proceeds of Crime Act 1991. All that s 57 of the Mutual Assistance in Criminal Matters Act 1992, in its original format, did was to provide that a registered restraining order has effect and may be enforced as if it were a restraining order made by the High Court under the Proceeds of Crime Act. For that reason, Dr Deliu submitted, s 171 applies, without modification by s

172, and accordingly the Proceeds of Crime Act no longer applies to the registered Polish order.

[22] The next stage of Dr Deliu’s argument was that the restraining order has lapsed. If s 66B(2) continues to apply to it the order would only cease to be in force when cancelled in accordance with the Mutual Assistance in Criminal Matters Act, which is by order of the High Court upon application of the Solicitor-General: s 58. However, he submitted that as s 66B has been repealed by s 171 of the Criminal Proceeds (Recovery) Act 2009 and s 172 does not apply, it is necessary to turn to the Mutual Assistance in Criminal Matters Act (as amended) to determine the present status of the order. Section 57 of the Mutual Assistance in Criminal Matters Act, as amended, provides that a registered foreign restraining order has effect as though it is an order made under the Criminal Proceeds (Recovery) Act 2009, but subject to ss 136 to 139 of that Act. Section 136 provides that registration lapses on the earliest of certain events, the relevant event here being the expiration of two years from the date of registration. Thus, Dr Deliu submitted, the registration has lapsed.

[23] The conclusion of his argument was that the only potential remaining impediment to payment of his fees is the freezing order, but as varied this would now permit the payment of his legal fees.

[24] Section 172 of CPRA 2009 and s 12 of MACMA Amendment Act 2009 were enacted at the same time, on 1 December 2009. There can be no doubt that it was not the intention of Parliament for existing FROs to lapse by reason of the repeal of POCA, its replacement by CPRA, or by the amendment of MACMA. The critical question in this case is whether, however, the transitional provisions enacted by Parliament are effective. It is not sufficient for the purpose of Parliament to be clear. It is necessary for Parliament to enact language in statutory provisions capable of putting into effect the purpose of Parliament. Parliament makes law by the statutory provisions. They are the prime source of the law. Section 5 Interpretation Act 1999 provides:

5 Ascertaining meaning of legislation

(1) The meaning of an enactment must be ascertained from its text and in the light of its purpose.

(2) The matters that may be considered in ascertaining the meaning of an enactment include the indications provided in the enactment.

(3) Examples of those indications are preambles, the analysis, a table of contents, headings to Parts and sections, marginal notes, diagrams, graphics, examples and explanatory material, and the organisation and format of the enactment.

(Emphasis added)

[25] The words underlined in s 5(1) enact the common law. However, the text must be read in the light of Parliament’s purpose.

[26] Similarly, it is ineffectual to call in aid speeches in the House of Representatives as to the effect of the law change being debated if the words of the statutory provision do not achieve the intended effect.

[27] When the Polish restraining order was registered under MACMA 1992, its connection with POCA was by application of the original text of s 57(3) of MACMA

1992, set out above.

[28] Section 66B of POCA was in force at the time the High Court in

New Zealand registered the FRO to assist the Polish Courts. It provides:

66B Registered foreign restraining orders

(1) Where a foreign restraining order is registered in New Zealand in accordance with section 56 of the Mutual Assistance Act, or a restraining order is registered in accordance with section 112(2) of the International Crimes and International Criminal Court Act 2000, this Part of this Act (other than sections 47 to 55, 64, 65, and 66), so far as applicable, shall apply in relation to the restraining order with all necessary modifications, and with the following specific modifications, namely,—

(a) A reference in this Part of this Act to a restraining order directing the Official Assignee to take custody and control of property shall be read as a reference to an order under section

66C of this Act:

(b) A reference in this Part of this Act to an order under section

51(1) of this Act shall be read as a reference to an order under section 66E of this Act:

(c) The reference in section 63 of this Act to a restraining order shall be read as a reference to an order under section 66C of this Act.

(2) A foreign restraining order registered in New Zealand under the Mutual Assistance Act ceases to be in force when the registration is cancelled in accordance with that Act.

[29] I agree with Associate Judge Matthews that there is no doubt that s 12 of MACMA Amendment Act 2009 preserves MACMA 1992 s 57(3) as it was pre- amendment, for the purpose of enforcing foreign orders made under that Act prior to its amendment.

[30] I also agree with Associate Judge Matthews that that, however, does not resolve the matter, as MACMA in 1992 relied on s 57(3) providing that the FRO have effect and be enforced as if it were a restraining order made under POCA. So with the repeal of POCA, the question critically turns to whether or not the transitional s 172 of CPRA 2009 applies to a foreign restraining order which has been registered.

[31] One available interpretation of s 172 is that it preserves POCA for the purposes of “continuing and completing a proceeding or matter commenced under” POCA but not completed at the date of POCA’s repeal on 1 December 2009. On the other hand, it can be argued that those words in italics do not naturally apply to giving effect to a FRO which has been made by the High Court completing a proceeding in the High Court seeking the order. That order being in place, it is not

naturally described as a proceeding or a matter. However, the boundaries of those two first lines of subparagraph (a) of s 172 are extended by the paragraph in parenthesis:

(Including the making or enforcement of any order arising from those proceedings).

[32] The order of the High Court of New Zealand, (Wellington Registry,

11 September 2008), registering the Polish FRO is an order arising from a proceeding. That proceeding was not commenced under POCA but under MACMA. The question then becomes whether or not that proceeding is, for the purposes of applying s 172, to be treated as though it was an application under POCA by reason of the terms of s 57(3) of MACMA in its original form, set out above. The critical words are

“as if it were a restraining order made by the High Court under that Act

[POCA].”

These words have to be coupled with s 12(c) of MACMA Amendment Act 2009.

[33] Reading the original s 57(3), I think there is no doubt that the purpose of Parliament in MACMA 1992 was for the FROs to have the efficacy of restraining orders made by the High Court under POCA. In my view, the phrase “as if it were a restraining order” in s 57(3) is capable of including in its ambit an assumption that the restraining order made under POCA followed a proceeding for such an order commenced under POCA.

[34] There is a clear purpose in s 12 of the MACMA Amendment Act 2009 to preserve the original legislation in order to enforce orders made under that Act (s 12(c)). One keeps in mind that the order made in the High Court in Wellington was under MACMA but took effect at the time of registration as if it were made under POCA by application of s 57(3) of MACMA and s 66B of POCA. I think the original s 57(3) of MACMA 1992 should be read literally, in light of the purpose both in 1992 and, as not being displaced by the amended s 57(3) in 2009, of giving efficacy to FROs, as if they were made under POCA, and intending them to be durable beyond the 2009 legislation.

[35] This is a different reading of the provisions from Associate Judge Matthews. Associate Judge Matthews did not consider he was able to reach the conclusion I had without calling in aid s 18 Interpretation Act. Before applying that Act, his conclusion was as follows:

[31] For this new statutory regime to apply retrospectively to a foreign restraining order which is already registered it would be necessary for this to be spelt out in clear terms, given that it would be a substantive retrospective alteration of the rights of the holder of the registered order. I have considered whether this intention can be inferred from the fact that the provisions of the Proceeds of Crime Act no longer apply to the registered order, but it cannot in my view. The repeal of the Proceeds of Crime Act is clearly stated, and its ongoing effect is limited to domestic orders, not registered foreign orders. There is no provision that clearly substitutes the Criminal Proceeds (Recovery) Act 2009 into the role formerly held by the Proceeds of Crime Act, nor any provision from which that intention could properly be inferred. This is an apparent gap in the legislative scheme put in place in 2009.

[36] He then went on to apply s 18 Interpretation Act:

[32] However, s 18 of the Interpretation Act 1999 provides:

18 Effect of repeal on enforcement of existing rights

(1) The repeal of an enactment does not affect the completion of a matter or thing or the bringing or completion of proceedings that relate to an existing right, interest, title, immunity, or duty.

(2) A repealed enactment continues to have effect as if it had not been repealed for the purpose of completing the matter or thing or bringing or completing the proceedings that relate to the existing right, interest, title, immunity, or duty.

The effect of this provision is to extend the application of the Proceeds of Crime Act to the registered order, notwithstanding ss 171-172 of the Criminal Proceeds (Recovery) Act.

[37] Embedded in Associate Judge Matthew’s reasoning is the assumption that giving effect to a registered FRO is the completion of a matter or thing. On my analysis, similar reasoning can apply efficaciously to ensure that effect can be given to the similar language in s 172 “completing any proceedings or other matter”. It is not necessary on my approach to rely on s 18. I note, however, that both Associate Judge Matthews and myself come to the same conclusion. The first argument of Dr Deliu therefore fails. The Polish FRO remains in force, past the statutory reforms of 1 December 2009.

Application of the foreign restraining order

[38] The order sealed by the High Court in Wellington in 2008 contains a translation into English of the Polish order sealed by the Regional Court in Wloszczowa in the name of the Republic of Poland on 26 June 2006. It records that Mr Bujak is suspected of committing a number of crimes. It is not necessary to go into the details. I note it does not record that he has been convicted of committing any crimes. Then it records that the Judge grants the enforcement clause:

... to secure the fine which suspect Slawomir Bujak is likely to be sentenced to and claims for repairing property damages by:

1. Seizure of funds on domestic and foreign bank accounts of Slawomir

Bujak;

2. Seizure of property rights, shares in domestic and foreign companies;

3. Seizure of funds on bank accounts of domestic and foreign companies in which Slawomir Bujak is a shareholder;
   
4. Imposing compulsory mortgage on real estate properties located outside the Republic of Poland owned by Slawomir Bujak.
   

[39] There is no provision in the order for any qualification of those orders enabling any of the funds, property or property rights to be sold or realised so that funds thereby released from the order can be used by Mr Bujak for his legal expenses in defending the claims against him, either in Poland or abroad.

[40] The position taken by the Crown is that because there is no such qualification in the Polish order, it is not possible to qualify the New Zealand FRO to make provision for release of funds for legal costs in the same way that it is possible, and frequently done, in New Zealand in respect of POCA orders and domestic freezing orders.

[41] The argument by the Crown in this respect depends upon an interpretation placed by the Crown counsel on s 66B(1) of POCA, set out above.

[42] The critical words the Crown relies upon are from this part of subs (1):

[T]his Part of this Act (other than ss 47 to 55, 64, 65 and 66), so far as applicable, shall apply in relation to the restraining order with all necessary modifications ...

[43] “This Part of this Act” is a reference to Part 4 of POCA, because that is where s 66B is found. Section 42 of POCA is in Part 4. Section 42(2) provides as follows:

(2) A restraining order against a person's property may be made subject to such conditions as the Court thinks fit, which conditions may include, but are not limited to, conditions which make provision for meeting, out of the property included in the order, all or any of the following:

(a) The reasonable living expenses of the person and the person's dependants, if any:

(b) The person's reasonable business expenses:

(c) The person's reasonable expenses in defending any criminal proceedings (including any proceedings under this Act):

(d) Any specified debt incurred by the person in good faith: (e) Any other expense allowed by the Court.

[44] The Crown argues that s 42(2) does not apply to foreign restraining orders. The Crown argument is that although s 42(2)(c) is not one of the expressly excluded provisions in s 66B(1), section 42(2)(c) as a matter of construction is not a relevantly applicable provision in Part 4 POCA. Ms Laracy, in stating that proposition, puts applicable in italics, obviously intending it to be a reference to the standard of applicable appearing in subs (1). There, the standard is the phrase “so far as applicable”.

[45] Associate Judge Matthews agreed. His reasoning was brief.

[34] I agree with the interpretation by Ms Laracy of s 66B of the Proceeds of Crime Act 1991. Section 42, which is within Part 4 of that Act, applies when a New Zealand Court is making a restraining order. I agree with Ms Laracy that this is not a provision which can apply to a registered foreign restraining order, as on a registration application, this Court does not have any discretion to impose conditions. Accordingly, there is no condition on the foreign order allowing payment of fees in terms of s 42(3).

[46] The Crown argument is that FROs are “registered” in New Zealand in accordance with s 56 of the Mutual Assistance Act, s 66B(1) POCA, as distinct from being an order “made” by the High Court. Made in italics is a reference to an

application under Part 4 being made for a restraining order, s 40 POCA, and the

Court making such an order, s 42 POCA. Both these provisions are under Part 4.

[47] Having established the distinction between register and made the Crown argument goes on to its next step. This is that the words in s 66B(1) that this Part [4] of this Act (other than ss 47-55, 64, 65 and 66), so far as applicable, shall apply in relation to the restraining order with all necessary modifications mean that the provisions which are not applicable are those which apply to an application for a domestic restraining order and the Court’s process and considerations in making a restraining order.

[48] The next step of the Crown argument is that s 42 is a section confined to the making of an order and so does not apply to the register of an FRO. Section 42 provides:

42 Court may make restraining order

(1) Where an application is made to the High Court for a restraining order against any property, the Court may, subject to sections 43 and

44 of this Act, by order,—

(a) Direct that the property, or such part of the property as is specified in the order, is not to be disposed of or otherwise dealt with by any person except as provided in the order; and

(b) If the Court is satisfied that it is desirable to do so, direct the Official Assignee to take custody and control of the property, or of such part of the property as is specified in the order.

(2) A restraining order against a person's property may be made subject to such conditions as the Court thinks fit, which conditions may include, but are not limited to, conditions which make provision for meeting, out of the property included in the order, all or any of the following:

(a) The reasonable living expenses of the person and the person's dependants, if any:

(b) The person's reasonable business expenses:

(c) The person's reasonable expenses in defending any criminal proceedings (including any proceedings under this Act):

(d) Any specified debt incurred by the person in good faith: (e) Any other expense allowed by the Court.

(3) In determining whether or not to make provision of the type described in subsection (2) of this section, the Court shall have regard to the ability of the person to meet the expense or debt concerned out of property that is not subject to a restraining order.

The Crown submits that s 42 cannot apply to an FRO because this is the exact subject matter of ss 56 and 57 MACMA. If s 42 POCA applies, the application of ss

56 and 57 MACMA would be redundant, whereas instead, they are a code. Further, it would be extraordinary if s 42(2)(c) applied when s 42(1) could not possibly apply. Section 42 must be treated as a whole.

[49] The whole of the Crown argument depends on maintaining the distinction between registering an FRO under MACMA and making a domestic freezing order under POCA.

[50] The Crown argument can be critiqued on the basis that it does not take into account s 57(3) of MACMA both as originally enacted and as amended in 2009. For in both provisions the distinction between registering and making is not maintained. In its original form:

57 Effect of registration of foreign orders

...

(3) Subject to section 66B of the Proceeds of Crime Act, a foreign restraining order registered in accordance with section 56 of this Act has effect, and may be enforced, as if it were a restraining order made by the High Court under that Act and entered on the date of registration.

(Emphasis added).

[51] In its amended form:

(3) A foreign forfeiture order registered in New Zealand under section

56 has effect, and may be enforced, as if it is a forfeiture order—

(a) made by the High Court under the Criminal Proceeds

(Recovery) Act 2009; and

(b) entered on the date it is registered.

[52] Section 66B falls within a group of statutory provisions addressing FROs which begin with s 66A. Therefore, the opening clause of s 57(3) of MACMA 1992

subject to s 66B of the Proceeds of Crimes Act is registering that to the extent that s 66B provides to the contrary an FRO will have effect and be enforced as if it were a restraining order made by the High Court under POCA. For another example, see sub paragraph (a) of s 66B(1):

(a) A reference in this Part of this Act to a restraining order directing the Official Assignee to take custody and control of property shall be read as a reference to an order under section 66C of this Act:

...

[53] I have critiqued the Crown argument on the basis that under the statutory regime the distinction between register and maintain is not as pronounced as the Crown submissions would have it. I proceed with the analysis, however, on the basis that the Crown argument may be an allowable reading of the relevant provisions.

[54] There is, however, another reading possible from the language of s 66B(1). If one keeps in mind that the Court is directed under the original s 57(3) of MACMA

1992 to treat FROs as if made under POCA then s 66B is capable of being read as allowing for s 42 to apply.

[55] The first step in this argument is to pay attention to the clause in s 66B(1): (other than sections 47 to 55, 64, 65 and 66). In that parenthesis Parliament has turned its mind to which sections under Part 4 of the Act are to be positively excluded from ever being applied to registered FROs. The corollary is that all the other sections in Part 4 “shall apply in relation to the restraining order with all necessary modifications” (emphasis added).

[56] The ordinary meaning of the word shall is that it a direction of a mandatory kind. Yet the Crown argument is that it cannot possibly be right. Section 42 cannot apply, because of what the Crown considers to be a critical distinction between registering an order under MACMA and making an order under POCA.

[57] Is there any reason in principle why s 42 should apply to a foreign restraining order? If s 42(2)(c) does apply then the New Zealand Parliament, when registering an FRO, is empowering the High Court to qualify the terms of the foreign order by making provision for meeting out of the property secured by that order a number of

expenses. And this is so even where the foreign court may have either refused to do so, or not had the power to do so.

[58] The reason for making provision out of property being restrained in New Zealand’s legal system is easily explained. POCA, and the counterpart freezing orders under the civil procedural rules, reflect the underlying principles of our common law legal system. At common law, individuals, be they subjects of the Crown or foreigners, retain their liberties and property until there has been an adjudication of liability. In as much as court proceedings necessarily qualify those liberties, the qualification tolerated by the common law is only as necessary to give efficacy to the proceedings. So, for example, traditionally when a defendant in civil proceedings is summoned to a court, that is an infringement on his or her liberty, so the summons is normally to the court nearest to the residence of the defendant. When a person is prosecuted for a criminal offence the presumption is that that person is entitled to his liberties until he is convicted. Hence the Bail Act provides that prior to conviction incarceration or restraint has to be justified by community welfare concerns. After conviction, however, the onus is reversed. In a common law jurisdiction there is no presumption that because civil or criminal proceedings have been commenced against the defendant, the defendant has done the wrong and should be treated as a wrongdoer from the outset.

[59] Charging orders over assets prior to liability are thus granted cautiously by common law courts and frequently with exceptions providing for the defendant to continue to live with dignity and to engage lawyers to defend the legal proceedings.

[60] This Court has no understanding of the operating premises of the law of

Poland. The Polish law was not proved.

[61] It is frequently the case that Ministers of the Crown, exercising the common law prerogative of the Crown to enter into treaties with other sovereign states, will enter into international agreements. Promises made and solemnly sealed by Ministers of the Crown do not become part of the domestic law of New Zealand until and to the extent that they are adopted by Parliament, being enacted into statutory provisions. It is quite common that during the process of taking an international agreement and making it part of the law of a jurisdiction, that amendments of the

international document are made, leading to significant differences between the international agreement and the text and intended effect of the law enacted by Parliament.

[62] Accordingly, the fact that the Polish order makes no provision for expenses to be funded out of assets otherwise frozen or charged does not resolve the question of whether or not the order, once registered in New Zealand and treated as if it had been made in New Zealand, can be subject to qualification.

[63] This reflection on the underpinning principles of the treatment of defendants in a common law legal system, before liability is established, illuminates the very reason for the text we find in s 66B(1) and why s 42 is not included in the list of provisions excluded.

[64] I am reinforced, for that reason, to favour the alternative construction of s 66B(1). This construction also has the strength of giving effect to the plain language “shall apply”, rather than the construction proffered by the Crown, which depends on implication.

[65] I conclude that s 66B of POCA requires s 42(2)(c) of that Act to apply to this FRO, and it can without modification. It follows that this Court has the power under s 42(2)(c) of POCA to provide for Mr Deliu’s legal expenses.

[66] It is now open to Mr Deliu to make an application to the Court in this regard. That application will have to be served on the parties affected. At present Mr Deliu has been endeavouring to get an outcome where the FRO is simply treated as having no effect on the rights which he says he has under the domestic freezing order. Another reason why there needs to be another hearing is that there are potentially different parties involved. In respect of the FRO, the Polish authorities, directly or by way of the Crown are entitled to be heard, and Mr Monasterio and Ms Moya, and perhaps other persons. Mr Bujak, of course, has a right to be heard.

Proportionality

[67] All that said, this Court keeps in mind that we are talking about a contested sum of approximately $30,000. The interested parties should strive to reach an effective solution by a procedure proportionate to the sum involved.

[68] Therefore, if the parties accept this decision of the High Court, I invite them to see whether or not an agreement cannot be reached, with or without the aid of the Official Assignee, who holds the funds, before the matter is brought back to the High Court to exercise its jurisdiction under s 42 of POCA. Leave is reserved to seek further relief.

Conclusion

[69] This application for review of Associate Judge Matthews’ decision has been partially successful, in that the Court has recognised a jurisdiction to exercise s 42(2)(c) to provide for Mr Bujak’s legal costs. Otherwise, it has come to the same conclusions as Associate Judge Matthews.

[70] Costs are reserved.

Solicitors:

Crown Law, Wellington, [e-mail]

Wynn Williams, Christchurch, [e-mail]

Copy to Mr Deliu