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High Court of New Zealand Decisions |
Last Updated: 8 December 2014
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2014-404-1067 [2014] NZHC 2978
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UNDER
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the Criminal Proceeds (Recovery) Act
2009
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BETWEEN
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COMMISSIONER OF POLICE Applicant
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AND
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MICHAEL JOSEPH CAVANAGH First Respondent
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AND
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VICTORIA LOUISE CAVANAGH Second Respondent
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AND
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LISA MARIE RYAN Third Respondent
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AND
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SHANNON KAY STEVENS Fourth Respondent
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AND
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DAVID GERALD O'CARROLL Fifth Respondent
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AND
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NIGEL JOHN BOWKER Sixth Respondent
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Hearing:
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26 November 2014
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Appearances:
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M R Harborow for Applicant
No appearance by G C Gotlieb for Sixth Respondent
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Judgment:
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26 November 2014
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ORAL JUDGMENT OF VENNING J
Solicitors: Crown Solicitor, Auckland
Neilsons Lawyers Ltd, Auckland
Copy to: G Gotlieb, Auckland
M Ryan, Auckland
I Koya, Auckland
E Leary, Auckland
COMMISSIONER OF POLICE v CAVANAGH [2014] NZHC 2978 [26 November 2014]
[1] By way of applications, dated 15 May 2014 and 30 May
2014, the Commissioner of Police applied in respect
of various
property, particularly for present purposes a number of motor vehicles and a
motor launch, for restraining orders
and related orders, including orders
directing the sale at fair market value with the Official Assignee to hold the
proceeds of sale
in accordance with the restraining orders.
[2] On 12 June and 24 May 2014 restraining orders were made over the property and on 3 July 2014 Lang J made sale orders in respect of eight vehicles comprising part of the property. On 3 July 2014 the Judge also set the matter down for all remaining issues to be determined at a single half day fixture to be held on 26
November 2014 at 11.45 am. The matter comes before the Court to resolve
outstanding issues on that basis.
[3] There have been a number of affidavits filed in support of the Commissioner’s position, some directly relevant to the issue of restraint and some touching on the issue of sale. In considering the determination of the applications before the Court, particularly the application for sale of the identified property, I have taken into account the previous affidavits of Detective Latimer sworn on 5, 9,
12 and 29 May 2014, an affidavit of Detective Sergeant Sowter, an affidavit
of Detective Latimer of 12 September 2014 in reply, and
affidavits of Detective
Lee and Detective Sergeant Sowter in reply sworn on 12 and 17 September 2014.
In addition, for the purposes
of the hearing this morning, Detective Latimer has
filed a further affidavit in support of the application for sale
orders.
[4] The application for sale orders follows the process of seizure of the vehicles and launch in question after the termination of a large scale police investigation known as Operation Genoa. During the course of the operation the police conducted covert surveillance and obtained mobile phone data for the respondents pursuant to production orders and search and surveillance device warrants. Following termination of the operation the police located an active clan lab in an enclosed trailer and one kilogram of methamphetamine and six kilograms of ephedrine. The police also located and seized substantial property assets including numerous
vehicles which are scheduled to the various applications before the Court, a
money counting machine, engineering equipment and approximately
$260,000 in
cash.
[5] Eight defendants were arrested. They collectively face a large
number of charges including the manufacture of the class
A drug methamphetamine,
possession of equipment, money laundering, forgery, receiving property and
participating in an organised
criminal group.
[6] The Commissioner accepts that, although the property
is restrained, application for forfeiture will follow
the conclusion of the
criminal proceedings. That may be one year – 18 months away. For those
reasons the Commissioner seeks
sale orders in relation to the wasting assets,
namely motor vehicles and the launch.
[7] A sale order may be made at any time. Typically sale orders are
pursued by the Commissioner where the restrained assets
in relation to which the
sale orders are sought have high depreciation rates combined with additional
costs of storage and insurance
which ultimately decrease the potential return to
the Commissioner and/or be parties who claim an interest in the assets. There
is a further additional benefit in the sale in that, once the assets are sold,
the Official Assignee is able to hold the funds in
an interest bearing
account.
[8] Section 35(e)(v) provides for the Court to direct the Official
Assignee to sell the restrained property in order to preserve
the value of the
restrained property. In Commissioner of Police v Chen & Ors Courtney
J observed:1
[30] The underlying purpose of the restraining order is to preserve the
subject property because it represents a monetary value
to the parties
concerned. The legislature can be taken to have appreciated that property may be
subject to a restraining order for
a considerable time and that circumstances
may change over the life of the order that so as put the property at risk.
Some
risks may be of a kind that action, including disposition of the
property itself, may be needed to preserve the value that
the property
represents. If there were no mechanism for responding to such risks the
rationale for the scheme would be significantly
undermined.
[31] Section 35(e)(v) specifically recognises the need to
preserve the value of the restrained property through the sale
of it. There
are many foreseeable circumstances that might justify such an order. These
include a
1 Commissioner of Police v Chen & Ors [2013] NZHC 2259 at [30]–[31].
significant drop in the property market, the risk of a mortgagee sale and the
reduction in value caused by lack of funds to maintain
the property. For these
reasons I consider that the ancillary orders can properly be made in the terms
sought.
Similar reasoning applies to the position before the Court in relation to the
vehicles for which the sale orders are sought.
[9] Detective Latimer’s most recent evidence discloses that the
Inland Revenue Department applies depreciation rates to
motor cycles at 30 per
cent per year, motor vehicles at 30 per cent per year and for pleasure vessels
13 per cent per year. Mr Harborow
accepted that those are maximum rates of
depreciation for accounting purposes but I accept his submission they give an
indication
of and support the instinctive view one might take that cars and
boats are depreciating assets. That is particularly so where the
cars, motor
cycles and boats are of recent vintage and have no particular value in terms of
speciality or uniqueness. The Official
Assignee has obtained estimates
valuations of a number of the vehicles which reflects and supports the
view that they
are wasting assets.
[10] The application before the Court this morning has effectively proceeded as a formal proof. There is no opposition to the orders sought save for one matter I should clarify and that is in relation to Mr Bowker, whom Mr Gotlieb represents. It appears that Mr Gotlieb intended to appear this morning. There was an email exchange between the Registrar and Mr Gotlieb about this morning’s hearing. Mr Gotlieb was advised by the Registrar the hearing was at 10 am. Mr Gotlieb then emailed the Registrar to advise that, when he discovered this was on the list at
11.45 am, he was unable to attend at 11.45 am as he had arranged his day
around it proceeding at 10 am. He has said ‘I would
be obliged if the
matter relating to the Harley motor bike can be dealt with at a later
stage’.
[11] I am not prepared to adjourn the matter relating to the Harley motor bike which Mr Bowker claims an interest in to be dealt with at a later date. The minute of Lang J, dated 3 July 2014, recorded that Mr Gotlieb was present that day when the Judge allocated the fixture on today’s date, 26 November 2014, commencing at
11.45 am. The minute would have been distributed to all counsel, including
Mr
Gotlieb. There was no reason or need for Mr Gotlieb to seek further clarification
from the Court when the matter would be heard given that clear direction of
the
Judge.
[12] Further, if Mr Gotlieb expected the matter to be dealt with in the
Duty Judge List at 10 am, the Duty Judge List often runs
past the 11.30 am
adjournment, so he may well have been required to be here after 11.30 am or at
11.45 am in any event, even if the
matter were listed at 10 am.
[13] Also, if Mr Gotlieb was seeking to have matter adjourned, at the
very least the courtesy of arranging an appearance in support
of such
application was required.
[14] Further, I note that in a memorandum filed for the Court on 19
November
2014, Mr Gotlieb, instead of filing submissions, filed a memorandum
noting:
The remaining vehicles the Crown seeks to have sold [which his client was
interested in] are:
a. Isuzu Truck;
b. MTE Trailer; and
c. 2014 Harley Davidson Motorbike.
He concluded his memorandum with the following advice:
9. Due to the realistic approach by Mr Bowker the three
vehicles sought to be sold can be consented to by Mr Bowker,
but on the basis
that they are not tainted and needed to be considered in the overall
determination of the Criminal Court matters.
[15] In the circumstances I decline the informal request for an
adjournment which Mr Gotlieb advanced by way of email to the Registrar.
It
appears in further communication, which Mr Harborow properly provided to the
Court, between Mr Gotlieb, the Registrar and counsel
for the Commissioner, that
Mr Gotlieb wished to advance the proposition that:
The motor bike has only done about 200 km. It appears from advice I have received that Harleys in mint condition hold their value and depreciation is of very limited effect.
[16] There is, of course, no evidence to support that hearsay advice Mr
Gotlieb has obtained. By contrast, there is the evidence
of Detective Latimer
as to the depreciation.
[17] For all the above reasons I decline to put the matter off in
relation to that vehicle and am satisfied that, like the other
vehicles sought
to be the subject of an order for sale this morning, that the order for sale is
appropriate in order to preserve
the value of the restrained property through
sale.
[18] For the above reasons I make orders for the sale of the following
items:
12 2013 Harley Davidson, Sportster motorbike registration A7PDA
registered to Victoria Cavanagh.
13 2013 Ford Ranger motor vehicle registration HEY654 registered to
Marlene Turner.
15 2013 Harley Davidson motorbike registration A1RAS registered to
Nicholas Ussher.
17 2000 Ferrari 360 Modena motor vehicle registration BGKHNA
registered to Jason Cavanagh.
18 2005 Ford Explorer motor vehicle registration CUL539 registered to
Deborah Henry, trading as Nitro Juice Limited.
19 1941 Indian 741 motorbike registration A6AJZ registered to Jason
Cavanagh
21 2004 LVVTA, OCC Chopper motorbike registration A1NMS
registered to Victoria Cavanagh.
24 The motor vessel, being built in approximately 1954, 10m launch
‘Navahoe’ registered to Maria Hilton.
25 2001 Harley Davidson Softail motorbike registration A3HHP
registered to Jason Cavanagh.
27 2014 Harley Davidson V-Rod Night Rod motorbike registration
A6TJH registered to Nigel Bowker.
[19] I record that an order is not sought in relation to the 2014 Audi Q3
noted at item 20 on the schedule because counsel’s
advice is that
it already been sold. Inquiries are being made as to how or why that vehicle
was sold when it was subject to
a restraint order.
[20] I also record, for the avoidance of doubt, that the issues of any entitlement to the proceeds of sale will be determined on any application for forfeiture, which I understand is to follow at the conclusion of the criminal proceedings. To the extent it is necessary, I also direct that the Official Assignee may deal with the proceeds of
sale by investing the same through a commercial bank
account.
Venning J
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