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High Court of New Zealand Decisions |
Last Updated: 13 April 2012
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV 2012-404-925 [2012] NZHC 562
BETWEEN COMMISSIONER OF POLICE Applicant
AND LEE VINCENT First Respondent
AND DIANNE ERLENE ASHBY Second Respondent
Hearing: 12 March 2012
Appearances: M Harborow for applicant
No appearance for first respondent
T J Rainey for second respondent
Judgment: 28 March 2012
JUDGMENT OF ALLAN J
In accordance with r 11.5 I direct that the Registrar endorse this judgment with the delivery time of 4 pm on Wednesday 28 March 2012
Solicitors:
Crown Solicitor Auckland mark.harborow@meredithconnell.co.nz
Rainey Law, info@raineylaw.co.nz
COMMISSIONER OF POLICE V VINCENT HC AK CIV 2012-404-925 [28 March 2012]
Introduction
[1] On 23 February 2012, the Commissioner of Police applied by way of without notice application for restraining orders against the respondents under the Criminal Proceeds (Recovery) Act 2009 (the Act). The affidavit evidence in support of that application disclosed alleged significant criminal activity as defined in s 6 of the Act. The police case is that apparently legitimate activities have been used as a facade for the manufacture and distribution of “Ecstasy type pills” containing Class B and C controlled drugs. The applicant adduced evidence of significant items of property and substantial movements of cash, all claimed to be associated with these illegal activities.
[2] The respondents to the application were Mr Lee Vincent (also known as Kemp Warwick Ashby), as first respondent, and Dianne Erlene Ashby, as second respondent. Ms Ashby is the mother of the first respondent.
[3] On 23 February 2012, MacKenzie J made an order in chambers on the
applicant’s without notice application, in the following terms:
(a) The following property shall be treated for the purpose of these orders as though the first respondent, Lee Vincent, has an interest in it, and shall not be disposed of or otherwise dealt with by any person other than as provided for in this order, and is to be under the Official Assignee’s custody and control:
(i) the proceeds of the sale (Sale) of 1/288 Lake Road, Hauraki, North Shore (certificate of title NA28D/215) in February
2012 (after repayment of Pepper New Zealand (Custodians) Ltd as mortgage under mortgage 7540284.2);
(ii) If the Sale does not proceed, all interests in the property at
1/288 Lake Road, Hauraki, North Shore (certificate of title NA28D/215) excluding the interest of Pepper New Zealand (Custodians) Ltd as mortgagee under mortgage 7540284.2;
(iii) The sum of $149,925.00 held on behalf of Mr Vincent by
Stepping Stone Finance Limited;
(iv) The following Bangkok Bank bank accounts in Thailand:
5527026834 and 096 0 27905 7 in the name of Lee Vincent;
(v) The property at room 69, 5th floor, 700/69 Naklua Soi 18/1, Pattaya, Thon Buri 20150, Thailand.
(b) The following property shall be treated for the purpose of these orders as though the second respondent, Dianne Ashby, has an interest in it, and shall not be disposed of or otherwise dealt with by any person other than as provided for in this order, and is to be under the Official Assignee’s custody and control.
(i) All interests in the property at 2/288 Lake Road, Hauraki, North Shore (certificate of title NA28D/216) excluding the interest of Pepper New Zealand (Custodians) Ltd as mortgagee under mortgage 7570162.2.
[4] On 29 February 2012, the applicant made an application on notice for the same orders which had earlier been granted without notice.
[5] The on-notice application was served on the second respondent’s solicitors on
2 March 2012. No service has been effected on the first respondent, who is believed to be in Thailand. The applicant intends to make an application for substituted service on him.
[6] The on-notice application was set down for mention in the Duty Judge List on Monday 12 March 2012. Mr Rainey, counsel for the second respondent, filed a notice of opposition, together with a notice of application to rescind the earlier without notice restraining order. This present judgment is concerned with the second respondent’s contention, appearing in the application to rescind, that the order made by MacKenzie J on 23 February 2012 has lapsed by reason of the applicant’s failure to serve the subsequent on-notice application within the prescribed time limit.
[7] In passing, it is appropriate to note Mr Rainey’s advice to the Court that the second respondent will oppose the on-notice application on the merits, insofar as it concerns her property at 2/288 Lake Road, Hauraki, North Shore. She says that she has no knowledge of any significant criminal activity. Nor, she argues, are there reasonable grounds to believe that she has unlawfully benefited from any such activity. Nevertheless, the second respondent has, through Mr Rainey, undertaken to the Court, that she will take no step to dispose of that property without giving
14 days prior notice to the applicant’s solicitors.
[8] For present purposes those matters are of secondary significance only. The current question is whether, in order to preserve the order made on 23 February
2012, the applicant was obliged both to file and serve a subsequent on-notice application within the statutory time limit. The second respondent argues that he has failed to do so with the result that the order of 23 February has lapsed. Mr Harborow mounts a contrary argument.
The statutory scheme
[9] An applicant for a restraining order may apply on notice or without notice. Provision for these alternative modes of application is made in ss 21 and 22 of the Act, which respectively provide:
21 Application for restraining order on notice
(1) An applicant for a restraining order must,—
(a) so far as is practicable, serve a copy of the application on any person who, to the knowledge of the applicant, has an interest in the proposed restrained property (including, if applicable, the respondent); and
(b) serve a copy of the application on the Official Assignee.
(2) The court hearing an application for a restraining order may, at any time before the application is finally determined, direct the applicant to serve a copy of the application on a specified person or class of persons, in the manner and within the time that the court thinks fit.
22 Application for restraining order without notice
(1) A court that receives an application for a restraining order may, on the request of the applicant, consider the application without notice being given to any or all of the persons mentioned in section 21(1)(a) if the court is satisfied that there is a risk of the proposed restrained property being destroyed, disposed of, altered, or concealed if notice were given to the person or those persons.
(2) If an application is made for a restraining order without notice, the court must, so far as it is practicable and consistent with the interests of justice, ensure that the application is dealt with speedily.
(3) Any provisions of this subpart that relate to restraining orders applied for on notice apply, with any necessary modifications, to restraining orders applied for without notice.
[10] In the present case, the applicant resorted to s 22. Accordingly, MacKenzie J made the order without hearing from either of the respondents, and indeed before any step was taken to serve notice of the application on them.
[11] By virtue of s 39(1) of the Act, a restraining order made without notice under s 22 ceases to be in force on the date that is the end of the period of seven days commencing on the date on which the restraining order is made. But if an applicant takes the steps laid down in s 39(2) within the prescribed time, then the initial restraining order continues in force beyond the end of the seven day period.
[12] Section 39(2) provides:
(2) However, if, before restraining order A expires, an application is made with notice for a restraining order on notice (“restraining order B”) in relation to the same property to which restraining order A relates (whether or not the application also relates to any other property), restraining order A continues in force until the application for restraining order B is finally disposed of.
[13] An applicant for a second restraining order must prosecute the application with all due diligence, failing which the Court is empowered to strike the proceedings out.1 Further, the Court is enjoined to ensure that the application is dealt with speedily, so far as it is practical and consistent with the interests of justice to do so.2
[14] Section 37 provides:
37 Duration of restraining orders and further orders
(1) A restraining order expires on the earlier of the following:
(a) the date that is the end of the period that is 1 year after the date on which the restraining order is made:
(b) the date of the making or declining of a forfeiture order associated with the same property.
(2) Despite subsection (1),—
1 Criminal Proceeds (Recovery) Act 2009, s 39(3).
2 Criminal Proceeds (Recovery) Act 2009, s 39(4).
(a) if a court declines to make a forfeiture order, but the applicant indicates that the applicant will appeal that decision, a restraining order expires on the date specified in section 38; and
(b) if a restraining order is applied for without notice, it expires on the date specified in section 39; and
(c) if a restraining order relates to an instrument of crime and the circumstances in section 40 apply to it, the restraining order expires on the date specified in that section; and
(d) if the duration of a restraining order is extended by a court, the restraining order expires on the date specified by the court under section 41; and
(e) if a restraining order relates to property in which no person has claimed an interest, the restraining order expires on the date that the relevant application for a forfeiture order is determined, which must not be determined earlier than 1 year after the making of the restraining order.
(3) On the expiry of a restraining order, any further order associated with that restraining order also expires.
[15] Section 37(2)(b) confirms that the duration of the without notice restraining order is to be determined by reference to s 39(2).
[16] Also of relevance is s 41 of the Act which provides:
41 Extending duration of restraining order
(1) If a court has made a restraining order, the applicant for that order may, before the restraining order expires, apply to that court to extend its duration.
(2) If an application is made under subsection (1), the court may order that the operation of the restraining order be extended for a period not exceeding 1 year.
(3) The duration of a restraining order may be extended more than once under this section.
(4) If, before a restraining order would otherwise expire under section
37(1), an application is made to a court under this section and the application is granted, the restraining order ceases to be in force on the date specified in
the court's order.
[17] Mr Rainey’s argument for the second respondent is that the applicant has not met the requirements of s 39(2) in that, within the seven day period prescribed by s 39(1), he was obliged not only to file the on-notice application for a restraining
order, but also to serve it. It is common ground that the on-notice application was not served on the second respondent until 2 March 2012, outside the seven day period. It has not been served on the first respondent at all.
[18] If Mr Rainey is correct, then the without notice order made on 23 February
2012 has lapsed, and there is currently no extant restraining order affecting either respondent. It is worthwhile noting that if the argument for the second respondent is right, then it must apply equally to the first respondent, who is believed to be in Thailand but whose precise whereabouts are unknown. There would have been no practical possibility of the applicant obtaining an order for substituted service and effecting service in accordance with any such order within the seven day period prescribed by s 39.
Discussion
[19] The focus of Mr Rainey’s argument is the expression “with notice” where it appears in s 39(2). He argues that both the statutory text and the underlying legislative purpose require the applicant both to file his s 39 application and serve it on the respondents within the stipulated seven day period. If he does not do both, then the earlier order made without notice lapses.
[20] Mr Rainey refers to the relevant dictionary definitions of the expressions “with” and “notice” and distinguishes the phrase from the alternative expression “on notice”, which he accepts would have amounted to no more than a direction to the applicant to serve the respondents in the usual way, but without reference to the seven day time limit. He argues further that any other interpretation of the expression “with notice” would result in the phrase being read out of s 39(2). He points out that the expression “with notice” cannot simply be regarded as part and parcel of the description of the type of application to be made under s 39(2) because it is plain elsewhere in the Act that the expression “on notice” is used to describe the application itself, and that indeed, the term “on notice” actually appears as part of the description of the type of order applied for in s 39(2) itself.
[21] Mr Rainey supports his argument by reference to the decision of Asher J in Commissioner of Police v Burgess,3 which includes a discussion of the inter- relationship between the Act and the New Zealand Bill of Rights Act 1990 (NZBORA). He notes that the Act impinges upon certain rights enshrined in the NZBORA. They include:
(a) The presumption of innocence;4
(b) The right to be free from unreasonable search and seizure of property;5 and
(c) The right to justice, and specifically the right to be heard.6
[22] Mr Rainey argues that there would be little point in imposing a strict seven day time limit at all if the applicant was required simply to file an application without serving it within that time.
[23] I accept that the intention of the Legislature has not been as clearly expressed in s 39(2) as it might have been. The former equivalent provision was s 41(3) of the Proceeds of Crime Act 1991 which provided:
If, before a restraining order granted by virtue of subsection (1) of this section in respect of any property would otherwise expire under subsection (2) of this section, an application is made for a restraining order against that property (whether or not the application also relates to any other property), being an application that is to be heard on notice, the first-mentioned restraining order shall continue in force until the application is finally disposed of.
[24] The expression (with notice), or its equivalent, did not appear in s 41(3), which had the effect of extending the earlier without notice restraining order from the time of filing of the on notice application. In other words, there was no requirement for service within the stipulated period. If Mr Rainey is right, then the
legislative intention has changed.
3 Commissioner of Police v Burgess [2011] 2 NZLR 703.
4 NZBORA s 25.
5 NZBORA s 21.
6 NZBORA s 27.
[25] Mr Harborow submits that s 39(2) must be read alongside s 39(1). The earlier subsection deals with an “application made without notice”. Section 39(2) deals with an “application ... made with notice”. He also submits that the expression “an application ... made with notice for a restraining order on notice” is definitional, in the sense that it simply describes the type of order which is to be defined by the expression “restraining order B”.
[26] I accept that submission. I consider that the intention of the drafter of the legislation was to distinguish between applications made without notice (and therefore not to be served), and those to be made on notice (which were intended to be served). I do not consider the expression “with notice” in s 39(2) to denote the applicant’s service obligations, much less to impose upon him an obligation to effect service within the stipulated seven day period.
[27] Where the Act makes specific provision for service, it is explicit. For example, in s 42(2), there is a requirement that an application for extension order under s 41 “ ... must serve a copy of the application ...”. Similarly, in s 21(1) there is an obligation “... so far as practicable, [to] serve a copy of the application”. The applicant must, of course, prosecute the application with due diligence,7 but in my opinion he is not obliged to effect service within the seven day period.
[28] I accept Mr Harborow’s submission that Parliament’s intention was to require the applicant to act with all due speed in making and prosecuting an on notice application, following the making of an earlier order without notice, but that the key provision in achieving the statutory purpose is to require the applicant to file his application within the stipulated seven day period. There is no obligation to serve within that period. Once the application has been filed, then of course service
obligations arise under the High Court Rules,8 and the provisions of s 39 require the
Court to process the application “speedily”, so far as it is practicable and consistent with the interests of justice to do so.9
7 Criminal Proceeds (Recovery) Act 2009 s 39(3).
8 High Court Rule 7.22 requires a party promptly to serve a copy of any application and suppor ting affidavit on every party.
9 Criminal Proceeds (Recovery) Act 2009 s 39(3).s39(4).
[29] The interpretation of s 39(2) for which Mr Rainey contends would, in my view, give rise to serious practical difficulties which Parliament could never have intended. At the time of the filing of an application under s 39, the applicant may well be uncertain as to the identity of all of the parties to be served. In a great many cases numerous persons may have an interest in the property sought to be restrained. They include co-owners and security holders. Sometimes there is a question as to ownership and it is impossible to identify at the outset all persons who might have a claim to the property concerned. Mr Rainey does not address that difficulty. If he is right, then any person subsequently identified as having an interest in the restrained property, and served outside the seven day period, would be entitled to argue that the earlier without notice order had lapsed because service was not effected on that person within the seven day period.
[30] Moreover, the task of effecting service is often fraught with difficulty in cases under the Act. For the most part, the respondents to such applications are members of the criminal fraternity. Sometimes the applicant does not know where to find them; sometimes they evade service. The present case provides a good example. The first respondent is believed to be in Thailand but the applicant has no address for him and the solicitors acting for him in New Zealand in respect of criminal matters have no instructions to accept service. The provisions of s 39 would become unworkable if the applicant was obliged not only to file the application, but also to obtain an order for substituted service and effect service in accordance with that order, or within seven days of the making of the initial order.
[31] Mr Rainey says that the answer would have been for the applicant to apply under s 41 for an order extending the term of the first without notice order. He accepts that an application under s 41 could be made at least in the first instance without notice.
[32] That may well be so, but if Mr Rainey is correct, the entitlement to make a s 41 application sits awkwardly alongside Mr Rainey’s interpretation of s 39(2). Given the applicant’s entitlement to resort to s 41 (which would permit an extension without notice provided that application was made within seven days), there seems little justification for an approach which would impose on the applicant service
obligations within the same seven day period, where application is made under s 39(2).
[33] Finally, it is appropriate to refer to the judgment of the Court of Appeal in R v Pedersen,10 where, in the context of a discussion of the legislative purpose underpinning the Proceeds of Crime Act 1991, the Court noted that the legislation was designed to deter serious crime by demonstrating emphatically that it did not pay, and that the Courts ought to construe and apply the Act “as effectively as reasonably possible”.11 Mr Rainey’s argument, if upheld, would tend, in my view, to limit the practical effectiveness of the legislation.
Result
[34] For these reasons I dismiss the second respondent’s application for an order
declaring that the without notice restraining order made by McKenzie J on
23 February 2012 ceased to have effect on 29 February 2012.
[35] Costs are reserved. Counsel may file memoranda if they are unable to agree. [36] The proceeding is to be listed for further mention in the Duty Judge List on
Thursday 26 April 2012 at 10 am, in order that the Court might monitor progress in respect of the with notice application, and give such further directions as may be appropriate at that time.
C J Allan J
10 R v Pedersen [1995] 2 NZLR 386.
11 Ibid, at 391.
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