Commissioner, New Zealand Police v Snook [2018] NZHC 2537 (27 September 2018)

Last Updated: 3 October 2018

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-Ā-TARA ROHE

CIV 2015-485-736 CIV 2015-485-772 [2018] NZHC 2537

BETWEEN	THE COMMISSIONER, THE NEW ZEALAND POLICE Applicant
AND	TRACEY MELANIE SNOOK First Respondent
AND	JAYDE THOMAS PAUL SNOOK Second Respondent
AND	SARAH LOUISE COLLEDGE Third Respondent
AND	ANZ BANK NEW ZEALAND LIMITED First Interested Party
AND	WESTPAC NEW ZEALAND LIMITED Second Interested Party

Hearing:	13 March 2018, 31 August and 10 September 2018
Counsel:	E M Light for Applicant S J Fraser for First Respondent C J Tennet for Second and Third Respondents
Judgment:	27 September 2018

JUDGMENT OF ELLIS J

[1] Jayde Snook (Jayde) and Sarah Colledge (Sarah) are in a relationship. Tracey Snook is Jayde’s mother. The Commissioner of Police (the Commissioner) has applied for civil forfeiture orders under the Criminal Proceeds (Recovery) Act 2009 (the Act) against all three of them. The application is made on both assets and profits bases.

POLICE v SNOOK [2018] NZHC 2537 [27 September 2018]

[2] As regards the former, the Commissioner seeks forfeiture of:

(a) the contents of a Westpac account numbered 03 0547 0002034 25, in Ms Snook’s name, with an approximate balance of $25,080;

(b) the contents of an ANZ bank account numbered 06 0549 0399506 00, in Ms Snook’s name, with an approximate balance of $84,074.87;

(c) the contents of an ANZ bank account numbered 010373 0112339 46, in Mr Snook’s name, with an approximate balance of $24,951.51; and

(d) all interests in the property at 61 Jillett Street, Titahi Bay, Porirua, registered in the names of Ms Colledge and Mr Snook, and described in certificate of title WN36CJ788, legal description Lot 5 DP 24876, other than the interests of the ANZ Bank New Zealand Limited under the registered mortgage instrument number 10159100.3 (Jillett Street).

[3] As regards profit forfeiture the Commissioner seeks orders that:

(a) the value of the unlawful benefit determined in accordance with s 53 of the Act is $534,000;

(b) the maximum recoverable amount is $534,000, less the value of any items of property which have been forfeit by way of an assets forfeiture order; and

(c) the property to be realised is any of the property listed in the application which have not been forfeit by way of an assets forfeiture order.

[4] All the identified assets are already the subject of restraining orders made under the Act.

Background

[5] Through her former partner, Mr Kiritiana Hames, Ms Snook became acquainted with Mr William Berkland and, later, Mr Steven Blance. Messrs Berkland and Blance are members of the Mongrel Mob who have more recently pleaded guilty to a raft of serious methamphetamine charges. In June this year they were sentenced to 13 years and three months’ and 14 years and six months’ imprisonment respectively.¹

[6] Ms Snook says that in 2015 she decided to sell her house at 12 Roberts Street, Tawa. She says she got an appraisal from a real estate agent as to its value. She says that at some point Mr Blance approached her and proposed to buy it from her. She agreed and Mr Blance paid her in cash which was, quite literally, “dirty”.²

[7] There is a minor dispute about what the purchase price was; Ms Snook says that Mr Blance paid her in lump sums of $30,000 until he reached $250,000. Based on intercepted communications obtained during the investigation into Messrs Blance and Berkland the Commissioner puts the figure at $270,000. In light of my conclusions later in this judgment, however, the difference is irrelevant.

[8] The Commissioner says, and I accept, that that cash paid to Ms Snook represents the proceeds from the sale and supply of methamphetamine by Messrs Blance and Berkland. The evidence also satisfies me that Ms Snook knew of their drug dealing activities and, indeed, purchased drugs from them herself.³

[9] No written sale and purchase agreement for the Roberts St property was ever executed. Ms Snook continued to live at the property and to make the mortgage

¹ R v Berkland [2018] NZHC 1520 and R v Blance [2018] NZHC 1518.

2. The Commissioner says that the dirt on the banknotes and their unusual odour is indicative of the money having previously been buried by Mr Blance.
3. For example, there are intercepted communications in which Ms Snook warned Messrs Blance and Mr Berkland that she had just seen police cars in Roberts St and others which indicate that she was involved in purchasing methamphetamine from them for herself and a friend.

payments, because the house was still in her name.⁴ That said, however, Mr Blance apparently treated the house as his own, and funded renovation work at the property.⁵

[10] Ms Snook says that a mortgage broker advised her to take the money she had received from Mr Blance to the bank. And so it was that, on 23 June 2015, she attempted to make a large cash deposit at Westpac’s Porirua branch. She told the bank staff that the cash was from the sale of the Roberts Street property. She said she had about $170,000 in cash in a supermarket bag, but had not counted it.

[11] When Ms Snook was unable to produce a copy of any sale and purchase agreement, the staff at Westpac refused to accept the deposit. As I understand it, it was at this point that the police were alerted.

[12] Ms Snook then started making smaller cash deposits into bank (ANZ and Westpac) accounts operated by herself, Jayde and Sarah. Each of these deposits were just under $10,000, which is the maximum cash deposit that can be made without activating reporting requirements.

[13] A police forensic accountant, Mr Jatin Mistry has subsequently carried out a financial analysis of all the respondents’ bank accounts. His analysis established that between 8 June 2015 and 18 September 2015, $200,180 in cash was deposited into these accounts. $45,920 of this amount was deposited into Jayde’s accounts and
$45,340 into Sarah’s.

[14] On 29 June 2015, Jayde and Sarah applied for a home loan from ANZ to support an offer on the Jillett Street property. They said the deposit would be funded by each of them contributing $45,000 in cash each which they said was a gift from Ms Snook’s father (and Jayde’s grandfather) Maurice Snook. The bank advised that if Mr Snook was intended to give them those amounts there would need to be supporting letter. The home loan application was declined in the meantime.

4. Ms Snook continued to live at Roberts Street for another two months, at which point the house was raided by police.
5. Indeed, as I note below, in related proceedings the Commissioner has successfully contended that Mr Blance assumed “effective control” of the property.

[15] On 30 July 2015 Jayde and Sarah executed a sale and purchase agreement for the Jillett St property. The purchase price was $330,000. Shortly afterwards they made a second application for an ANZ home loan through a mortgage broker. The loan application was accompanied by a gifting letter stating that Mr Maurice Snook had gifted them $45,000 each. This was, of course, not true; Jayde has since admitted assisting in its fabrication.⁶ The loan was approved.

[16] Ultimately the purchase price was made up of the following amounts:

(a) approximately $21,500 withdrawn from Jayde’s KiwiSaver account;⁷

(b) $44,500 of the funds deposited in Jayde’s and Sarah’s accounts by Ms Snook; and

(c) an ANZ loan of $264,000.

[17] Subsequently, more of the money deposited in their accounts by Ms Snook were used by Sarah and Jayde to by a DVR system, a dishwasher and furniture for their house.

[18] When Ms Snook was first spoken to by police about the deposits she did not mention that she had sold her house, and over time she gave a number of different explanations for being in possession of large amounts of cash. She later deposed that “Steven Blance wasn't happy that I should say that. It didn't look good for them. They were friends and I didn't want to get anyone in trouble”.

[19] No charges have been laid against any of the respondents, but the Commissioner says that their actions amount to money laundering,⁸ and (in relation to the ANZ mortgage) obtaining by deception.

6. Prior to Mr Snook’s death in November 2016, he made a statement to police confirming that he had not gifted any money and that he had signed the gifting certificate at the request of the respondents.

⁷ Jayde puts the KiwiSaver figure at $23,000.

8. An affidavit was filed in which Detective Sergeant Gray gave expert evidence about what money laundering is and how it is undertaken. In essence, it is “the process of converting cash or other property derived from criminal activity to give it the appearance of having been obtained from a legitimate source.”

[20] In parallel forfeiture proceedings relating to Mr Blance, the Commissioner obtained a restraining order over the Roberts Street property on the basis that Mr Blance had “effective control over it”.⁹ Although the forfeiture applications in those proceedings have yet to be determined, on 31 August 2017, Collins J granted an application by the Commissioner for the sale of the property, on the basis that Mr Blance’s effective control over the property was to be treated as an interest in property. He noted that:

(a) Mr Blance had confirmed that he had no interests in the property and so did not oppose the sale orders being made; and

(b) Ms Snook (who had been named as an interested party) had confirmed that she did not oppose the sale orders being made.

[21] As I understand it, the property has, in fact, since been sold for $325,000 and the proceeds remain restrained, and are sought to be forfeit to the Crown.

[22] Before turning to identify and consider the merits of the forfeiture applications, it is useful to set out the relevant parts of the statutory forfeiture regime.

The Criminal Proceeds (Recovery) Act 2009

[23] The Act permits the Court to make a number of different kinds of forfeiture orders, including orders of the kind sought here by the Commissioner.

Asset forfeiture orders

[24] Section 50(1) of the Act provides:¹⁰

If, on an application for an assets forfeiture order, the High Court is satisfied on the balance of probabilities that specific property is tainted property, the Court must make an assets forfeiture order in respect of that specific property.

⁹ Commissioner of Police v Blance CIV-2017-485-197.

¹⁰ Section 50(1) is subject to s 51, which provides the Court with the discretion to exclude certain property from an assets forfeiture order if the Court considers that “having regard to all of the circumstances, undue hardship is reasonably likely to be caused to the respondent if the property is included in the assets forfeiture order”.

[25] The phrase “tainted property” is defined in s 5(1) of the Act as meaning any property that has, wholly or in part, been either:

(a) acquired as a result of significant criminal activity; or

(b) directly or indirectly derived from, more than one activity if at least one of those activities is a significant criminal activity.

[26] Section 51(1) empowers the Court to exclude certain property from an assets forfeiture if, having regard to all the circumstances, it considers that undue hardship is likely to be caused to the respondent by the inclusion of that property in the order. Subsection (2) lists (inclusively and without limitation) the circumstances which may be taken into account:

(a) the use that is ordinarily made or was intended to be made of the relevant property;

(b) the nature and extent of the respondent’s interest in the property; and

(c) the circumstances of the significant criminal activity to which the order relates.

Profit forfeiture orders

[15] Section 55(1) requires the High Court to make a profit forfeiture order:

... if it is satisfied on the balance of probabilities that—

(a) the respondent has unlawfully benefited from significant criminal activity within the relevant period of criminal activity; and

(b) the respondent has interests in property.

[27] Section 55(1) needs to be read in conjunction with the statutory definitions of “significant criminal activity” and “relevant period of criminal activity”. The former
term is defined in s 6 of the Act as activity engaged in by a person which, if charges were laid, would amount to offending:¹¹

(a) that consists of, or includes, one or more offences punishable by a maximum term of imprisonment of 5 years or more; or

(b) from which property, proceeds or benefits of a value of $30,000 or more have directly or indirectly, been acquired or derived.

[28] Subsection (2) of the definition provides that:

A person is undertaking an activity of the kind described in subsection whether or not -

(a) the person has been charged with or convicted of an offence in connection with the activity; ...

[29] And the latter term (“relevant period of criminal activity”) is relevantly defined in s (1) to mean:

... the period that ends on the date the application is made and starts 7 years before ...

(a) the date of the application for the relevant restraining order, if the application for the profit forfeiture order relates, wholly or in part, to restrained property;

[30] As well, s 7 provides that, in terms of the Act, a person has “unlawfully benefited from significant criminal activity”:

... if the person has knowingly, directly or indirectly, derived a benefit from significant criminal activity (whether or not that person undertook or was involved in the significant criminal activity).

[31] Section 52 requires that an application for a profit forfeiture order must:

(a) name the respondent; and

(b) describe the significant criminal activity within the relevant period of criminal activity from which the respondent is alleged to have unlawfully benefited; and

11. The fact that it is not a prerequisite to the making of an order that the criminal activity concerned has resulted in criminal proceedings is confirmed by ss 15 and 16.
    • (c) state the value of that benefit; and

(d) identify the property in which the respondent holds interests and the nature of those interests.

[32] Once the Commissioner proves on the balance of probabilities that a respondent has unlawfully benefitted from significant criminal activity, s 53 places the onus on the respondent to disprove the level of that benefit. This reverse onus is said to be consistent with the Act’s focus on unexplained wealth, rather than on the underlying criminal acts (from which the offender may have been able to distance himself where the criminal standard of proof applies).

[33] Section 54 requires that, before making a profit forfeiture order, the Court must determine the maximum recoverable amount by -

(a) taking the value of the benefit determined in accordance with section 53; and

(b) deducting from that the value of any property forfeited to the Crown as a result of an assets forfeiture order made in relation to the same significant criminal activity to which the profit forfeiture order relates.

[34] And s 55(2) provides that the order must specify -

(a) the value of the benefit determined in accordance with section 53; and

(b) the maximum recoverable amount determined in accordance with section 54; and

(c) the property that is to be disposed of in accordance with section 83(1), being property in which the respondent has, or is treated as having, interests.

[35] Section 55(3) provides that subs (1) and (2) are subject to s 56 which, like s 51, empowers the Court, on application, to exclude certain property from the reach of a profit forfeiture order on the grounds of undue hardship.

The grounds of opposition

[36] The orders sought by the Commissioner have been set out at the beginning of this judgment.
[37] The orders are opposed by Ms Snook on the grounds that:

(a) no criminal charges have been laid against her; and

(b) she received no benefit from the alleged criminal activity (because any money she received constituted the purchase price for her house).

[38] It can immediately be recorded that the first of these grounds cannot succeed. While I accept Mr Fraser’s advice that he has been unable to find any other case in which forfeiture orders have been made in the absence of pending or resolved charges against the relevant respondent, the Act is very clear in that regard. Section 15 specifically states that the existence of criminal proceedings in relation to the relevant significant criminal activity is not a prerequisite to the operation of the forfeiture regime under the Act.

[39] As to the second ground of opposition, the review of the statutory provisions above also makes it clear that proof of some kind of benefit is not a precondition for the making of an asset forfeiture order; all that needs to be shown is that the relevant property is “tainted”. That said, however, the second ground may potentially be relevant in relation to the profit forfeiture application. That is because the onus is on the Commissioner to establish that a respondent has unlawfully benefitted from significant criminal activity. And even though the Commissioner’s assessment of the value of any such unlawful benefit is presumed correct, it may be rebutted by a respondent. So I address those matters later in this judgment.

[40] Putting the issue of defences to one side, however, all three respondents have also applied under ss 51 and/or 56 for orders ameliorating the harshness of any forfeiture orders on the grounds of undue hardship. That, too, is a matter which will need to be explored further, after I set out my assessment of the prima facie merits of the Commissioner’s forfeiture applications. It is to that assessment I now turn.

Assets forfeiture

[41] The question is whether I am satisfied, on the balance of probabilities, that each asset sought to be forfeit is tainted. This requires me to determine whether it is property that has, wholly or in part, been either:

(a) acquired as a result of significant criminal activity; or

(b) directly or indirectly derived from, more than one activity if at least one of those activities is a significant criminal activity.

[42] Here, the Commissioner says that the relevant significant criminal activity as a result of which the property has been acquired is:

(a) in relation to all the property, money laundering; and (as well)

(b) in relation to the Jillett Street property, obtaining by deception.

[43] It is not entirely clear to me why the application was not also advanced on the basis that the relevant significant criminal activity was (Mr Blance’s) methamphetamine offending.

[44] In any event, it is clear to me that the cash paid by Mr Blance to Ms Snook ostensibly for the purchase of her house is tainted, as is any asset that was (wholly or in part) subsequently acquired with it. Putting to one side my view that (on the balance of probabilities) the cash was the proceeds of drug dealing, I accept that the house transaction constituted a form of money laundering in terms of s 243 of the Crimes Act 1961 (the CA), which relevantly provides:

(1) For the purposes of this section and sections 243A, 244 and 245,—

...

conceal, in relation to property, means to conceal or disguise the property; and includes, without limitation,—

(a) to convert the property from one form to another:
(b) to conceal or disguise the nature, source, location, disposition, or ownership of the property or of any interest in the property

deal with, in relation to property, means to deal with the property in any manner and by any means; and includes, without limitation, -

(a) to dispose of the property, whether by way of sale, purchase, gift, or otherwise:

(b) to transfer possession of the property:

(c) to bring the property into New Zealand:

(d) to remove the property from New Zealand

...

offence means an offence (or any offence described as a crime) that is punishable under New Zealand law, including any act, wherever committed, that would be an offence in New Zealand if committed in New Zealand

proceeds, in relation to an offence, means any property that is derived or realised, directly or indirectly, by any person from the commission of the offence

property means real or personal property of any description, whether situated in New Zealand or elsewhere and whether tangible or intangible; and includes an interest in any such real or personal property

(2) Subject to sections 244 and 245, every one is liable to imprisonment for a term not exceeding 7 years who, in respect of any property that is the proceeds of an offence, engages in a money laundering transaction, knowing or believing that all or part of the property is the proceeds of an offence, or being reckless as to whether or not the property is the proceeds of an offence.

...

(4) For the purposes of this section, a person engages in a money laundering transaction if, in concealing any property or by enabling any person to conceal any property, that person—

(a) deals with that property; or

(b) assists any other person, whether directly or indirectly, to deal with that property.

(4A) Despite anything in subsection (4), the prosecution is not required to prove that the defendant had an intent to—

(a) conceal any property; or

(b) enable any person to conceal any property.
(5) In any prosecution for an offence against subsection (2) or subsection (3),—

(a) it is not necessary for the prosecution to prove that the defendant knew or believed that the property was the proceeds of a particular ... offence or a particular class of ... offence:

(b) it is no defence that the defendant believed any property to be the proceeds of a particular ... offence when in fact the property was the proceeds of another ... offence.

...

[45] It must be said that s 243 is not a model of clarity. Nonetheless after receiving further submissions from the Commissioner on the issue I am satisfied that that the evidence establishes that:

(a) the cash Ms Snook received from Mr Blance was property that was the proceeds of a serious [drug dealing] offence;

(b) by taking and depositing the money in accounts operated by her and her son and daughter in law Ms Snook engaged in a “money laundering transaction”, because she:

(i) “concealed” the cash in that she concealed or disguised its source (ie Mr Blance and his drug dealing activities); and

(ii) assisted Mr Blance to “deal” with the cash, ie to dispose of it by transferring possession to her (purportedly in return for her house).

(c) Ms Snook knew, or was reckless as to whether, the cash was the proceeds of a serious offence.

[46] These conclusions suffice to establish that the cash and Jillett Street are tainted property. For completeness and the avoidance of doubt, however, I also record my view that asset forfeiture orders could be made in relation to Jillett Street on the alternative grounds that the relevant “significant criminal activity” is obtaining by
deception. The relevant offence is found in s 240 of the CA, which relevantly provides:¹²

(1) Every one is guilty of obtaining by deception ... who, by any deception and without claim of right,—

(a) obtains ownership or possession of, or control over, any property, or any privilege, service, pecuniary advantage, benefit, or valuable consideration, directly or indirectly; ...

...

(2) In this section, deception means—

(a) a false representation, whether oral, documentary, or by conduct, where the person making the representation intends to deceive any other person and—

(i) knows that it is false in a material particular; ...

...

[47] Here, the Commissioner’s contention is that Jayde and Sarah obtained ownership of Jillett Street by making a knowingly false representation to the mortgagee (ANZ) as to the source of the cash they were using to fund the deposit. It is not disputed that such a false representation was knowingly made or that, without that representation, the mortgage would not have been forthcoming and the property could not have been purchased. It also seems clear that the property obtained need not be limited to what was actually obtained from ANZ as a result of the deception, namely the mortgage. That is not only because of the words “directly or indirectly” in the Act but also because the courts have held that the requirement that the defendant obtain a benefit does not require proof of any corresponding detriment to another person.¹³

[48] Accordingly, I consider that the fourth assets forfeiture order sought by the Commissioner (see [1(d)] above) could also be made on the ground that the Jillett Street property is tainted because it was acquired as a result of significant criminal activity, namely obtaining by deception. Again, for reasons that will become obvious, I record at this point that the Commissioner’s application in this regard

¹² The penalties for obtaining by deception are contained in s 241. Where the value obtained is over

$1,000 the maximum sentence is seven years’ imprisonment.

¹³ Li v R [2016] NZCA 237 at [28].

expressly excludes the interests of the ANZ Bank New Zealand Limited under the registered mortgage.

[49] In any event, and subject to any application under s 51 of the Act based on undue hardship (discussed later below), the Court is therefore required to make an order forfeiting all the assets identified in the Commissioner’s application. The effect of such an order would be that the remaining cash and Jayde and Sarah’s interests in Jillett Street (effectively their net equity in the property) vest in the Crown absolutely.

Profit forfeiture order

[50] As noted above, s 55(2) provides that a profit forfeiture order must specify

(a) the value of the benefit determined in accordance with section 53; and

(b) the maximum recoverable amount determined in accordance with section 54; and

(c) the property that is to be disposed of in accordance with section 83(1), being property in which the respondent has, or is treated as having, interests.

[51] There is no property of the kind referred to in (c) here and so I put that to one side. Rather:

(a) the value of the benefit under s 53 is said by the Commissioner to be
$534,000, which comprises:

(i) $270,000 in funds received by Ms Snook for the “sale” of her house; and

(ii) $264,000 in “unlawfully obtained mortgage funds from the ANZ bank”; and

(b) the s 54 “maximum recoverable amount” is to be derived by taking that amount less the value of any property forfeited to the Crown as a result
of the assets forfeiture order made in relation to the same significant criminal activity to which the profit forfeiture order relates.¹⁴

[52] As noted earlier, the s 53 value of the unlawful benefit, the Commissioner’s asserted value is presumed to be correct. But as I have also said, that presumption is predicated on the Commissioner first establishing (the onus being on him) that the respondent has unlawfully benefitted from significant criminal activity. Moreover, the s 53 presumption can be rebutted by the respondent(s) on the balance of probabilities. Both matters are at issue here, because the respondents (between them) contend that:

(a) the Commissioner has not proved that Ms Snook unlawfully benefitted from significant criminal activity; and

(b) the mortgage funds received by Mr Snook and Ms Colledge cannot properly (in law) be regarded as a “benefit”.

[53] I interpolate that, notwithstanding my conclusion that the grounds for asset forfeiture orders have been made out, these questions are not academic. That is because the amount of the asserted unlawful benefit exceeds the value of the tainted assets.¹⁵ The difference between the two amounts (which by my calculation is around
$250,000) would, if the profit forfeiture orders sought by the Commissioner are granted, then constitute a debt owed to the Crown by the respondents. It therefore remains in the respondents’ interests to seek to rebut the s 53 presumption that the value of the unlawful benefit received by them is $534,000.

Did Ms Snook unlawfully benefit from significant criminal activity?

[54] I have set out the s 7 definition of the term “unlawfully benefit from significant criminal activity” above. To reiterate, however, a person does so, if he or she:

¹⁴ The significant criminal activity relied on by the Commissioner is, again, both the money laundering and the obtaining by deception.

¹⁵ In broad terms, the value of the forfeited property would be approximately $134,000 (the combined total of the three cash amounts) together with the value of the second and third respondents’ net equity in Jillett Street, which (based on information received at the hearing that the current capital value of the property is $410,000) is likely to be around $150,000.

... has knowingly, directly or indirectly, derived a benefit from significant criminal activity (whether or not that person undertook or was involved in the significant criminal activity).

[55] Although the Commissioner relies on both the money laundering and the obtaining by deception as the relevant “significant criminal activity” for the purposes of the profits forfeiture application, the latter can be put to one side in the case of Ms Snook. It was not contended by the Commissioner that she derived a benefit from the acquisition of Jillett Street (which was the object of the obtaining by deception); she is not a registered owner of that property and does not, as I understand it, live there.

[56] So the question is: has Ms Snook knowingly, directly or indirectly, derived a benefit from the money laundering activity which (I have found) has been established here. She says that she has not because she received the money from Mr Blance in exchange for her house in Roberts Street. Although there was no formal transfer of ownership the Commissioner accepts that the property came under Mr Blance’s effective control and, indeed, it is on that basis that he now seeks an assets forfeiture order in relation to the proceeds of the sale of the Roberts Street property in separate proceedings under the Act involving Mr Blance.¹⁶

[57] Proceeding on the assumption that the $270,000 she received from Mr Blance equated in broad terms to the value of the house (although there is a suggestion that this may have been a little less than its market value) can an exchange of assets of like worth constitute a “benefit”? The answer must be: “it depends”.

[58] In the present case, there was clearly a benefit (or advantage) to Mr Blance in the exchange. Indeed, his obtaining that advantage was the whole point of the money laundering transaction; obtaining a “clean” asset in exchange for “dirty” money and thereby concealing both the proceeds and the evidence of his serious drug offending.¹⁷

[59] Any advantage to Ms Snook is much less clear. On the most obvious analysis all she obtained by the transaction was a world of grief. In short:

¹⁶ Above, n 9.

¹⁷ Valuing such a benefit may, however, be more problematic.

(a) she “sold” (or yielded effective control over) a valuable and legitimately acquired asset to Mr Blance;

(b) while Mr Blance’s payment of cash to Ms Snook in return may have constituted a money laundering transaction, there is no evidence that she received any payment (over and above the payment for the Roberts Street property) for participating in that transaction;¹⁸

(c) for the reasons already given the Court is required to make an assets forfeiture order in relation to the money she received for her the property; and

(d) the Commissioner has now obtained a sale order for the Roberts Street property and continues to seek forfeiture of the proceeds in the Blance proceedings.

[60] As I understand it, the Commissioner’s position is that Ms Snook did, nonetheless, receive a “benefit” because the $270,000 cash is both “proceeds” and “property”, in terms of the inclusive s 5 definition. Essentially he says that receipt of that money must, by definition, constitute a benefit. But this latter proposition seems to me to ignore the existence and reciprocal nature of the underlying transaction. It most certainly ignores the consequences. And the former proposition appears to me to invite the Court rigidly to apply the statutory definition of “benefit” with no regard either for common usage or for the purposes of the Act. The following points can usefully be made.

[61] First, it seems to me that the point of the statutory definition is simply to make it clear that a “benefit” can take the form of either cash or tangible property. The definition can and, in my view, must also be read consistently with the ordinary meaning of that term which (as the relevant dictionary definition makes clear) means “pecuniary advantage, profit or gain”.¹⁹

¹⁸ My own sense of the matter (having seen Ms Snook give evidence and read a psychiatric report filed on her behalf) is that she is a naïve and highly susceptible woman who had the great misfortune to come under the thrall of Messrs Blance and Berkland.

¹⁹ Oxford English Dictionary (online ed, Oxford University Press, 2018).

[62] That the use of the word “benefit” in the Act should, in fact, import that ordinary meaning is clear from Act’s primary purpose is set out in s 3(1), as follows:

... to establish a regime for the forfeiture of property—

(a) that has been derived directly or indirectly from significant criminal activity; or

(b) that represents the value of a person’s unlawfully derived income.

Those twin objects are made manifest, of course, in the provisions relating to the making of assets forfeiture orders (limb (a)) and profit forfeiture orders (limb (b)). Interestingly, although the second object expressly refers to unlawfully derived “income”, the words “profit” and “benefit” appear to have been substituted for elsewhere in the Act and in the forfeiture provisions themselves.²⁰ But the interchangeability of those words appears to me to have some significance here.

[63] The signal point is that the assets forfeiture provisions contemplate and, indeed, require the forfeiture of tainted property regardless of whether they represent any benefit or profit to the relevant respondent. The conclusion I have already reached in the present case reflects that. But as the term suggests, profit forfeiture orders are concerned with “profit” which, like “benefit”, connotes a gain or surplus. The purpose of such an order is to ensure that a respondent is not better off as a result of the relevant offending than he or she was before. It seems to me that the word “benefit” must also be interpreted in that context and in that light.

[64] Given that the Roberts Street property has been sold by the Official Assignee and the proceeds are now liable to forfeiture Ms Snook is, plainly, no better off as a result of her money laundering activity, even prior to the forfeiture of the cash in these proceedings. In my view, therefore, the Commissioner has not discharged the onus of establishing that Ms Snook has derived a benefit as a result of her money laundering activity.

²⁰ Section 3(2) emphasises (inter alia) the legislative aim of eliminating “the chance for persons to profit from undertaking or being associated with significant criminal activity”. The word “income” only appears in one other place in the Act: see s 160, which deals with legal professional privilege.

[65] By way of post-script I record that because the Commissioner’s position was that the value of all of the cash received by Ms Snook from Mr Blance should be included in the calculation of the benefit under s 52, there was no alternative focus on whether (if it was not so included) the transfer of some of that cash by Ms Snook to the Jayde and Sarah meant that they had, to that extent, unlawfully benefitted from the significant criminal (money laundering) activity. Given that receipt of those funds was plainly of benefit to them, the question would be whether they knew that the funds were derived from significant criminal activity, or were wilfully blind to that possibility. Jayde’s evidence was that he believed that the money was the result of his mother selling her house and that he “never suspected drugs or anything”. It was not put to him that this was untrue, and neither Jayde nor Sarah were asked whether they knew about Mr Blance or his involvement with Ms Snook. I can take that issue no further.

Are the mortgage funds a “benefit” to the Jayde and Sarah?

[66] The Commissioner’s position is that Jayde and Sarah unlawfully benefitted from significant criminal activity (ie the obtaining by deception) and that the value of the benefit equates to the $264,000 in mortgage funds they received from ANZ. He says that his quantification of the “unlawful benefit” in this way is presumed by s 53 to be correct and has not been rebutted by any evidence called by the respondents.

[67] I am, however, unable to agree with that submission. The question is not evidentiary; it is a question of statutory interpretation. The issue is whether the word “benefit” can possibly be interpreted as including such funds. That is the issue I discuss below.

[68] It cannot, I think, be disputed that the “mortgage funds” here constitute money that was loaned by the ANZ bank to Jayde and Sarah. The loan was secured over the Jillett Street property and there can be no doubt that the bank would take steps to realise the security in the event of default.
[69] In Federal Commissioner of Taxation v Rawson Finances Pty Ltd the Federal Court of Australia said:²¹

The essence of a loan of money from A to B is a corresponding contemporaneous obligation on the part of B to repay the money transferred from A to B ... Absent that obligation, the transfer of the money from A to B is something else - a gift, a payment by direction, a payment or repayment of an anterior obligation - but it is not a loan.

[70] In other words, by definition, a loan gives rise to a debt in the same (or a greater) amount; the former does not exist without the latter. To the extent that loan advances could be said to constitute an asset, their value is offset by a corresponding liability. It is for these reasons that a loan is not, in general, regarded as “income”²² or a “profit”. And similarly, without more, I think it cannot properly be regarded as a “benefit” in the context of the Act.

[71] In terms of what that “more” might be, I accept that there might be some, ancillary, financial benefit that could be said to be derived from obtaining a home loan. Capital gain is one such but the Commissioner has not sought to place a value on that. In any event, any capital gain forms part of the respondents’ equity in the Jillett Street property which is already subject to the assets forfeiture order. Another possible, additional, benefit might arise where a mortgagor’s weekly or monthly mortgage payments go to paying off principal as well as interest and are in the same amount as (or less than) the rent that the mortgagor would otherwise have been paying. But even aside from any issue of remoteness (in terms of the connection between such a benefit and the relevant criminal activity) no such benefit has been calculated or claimed here and I can take that point no further.

[72] My conclusions in this regard are underscored by what would be the statutory consequences of the Commissioner’s position here. As noted earlier, the “maximum recoverable amount” (ie the amount arrived at after deducting the value of tainted assets that have been forfeit from the value of the unlawful benefit stated in the Commissioner’s application) constitutes a debt due to the Crown and may be

21. Federal Commissioner of Taxation v Rawson Finances Pty Ltd [2012] FCA 753, (2012) 89 ATR 357 at [20].

²² See the recent discussion in (inter alia) a home loan context in F v Ministry of Social Development

[2018] NZHC 1607.

recovered as such from a respondent. So if the unlawful benefit includes the “mortgage funds”, the respondents would effectively be liable to pay to the Crown the amount of their debt to the ANZ bank, notwithstanding that they continue to owe that amount to the bank as well.²³ Equally, if the property were to be sold, the bank would be repaid out of the proceeds but (on the Commissioner’s analysis) Jayde and Sarah would not only forfeit their equity but would continue to owe the Crown the amount of the mortgage. While I accept that the operation of the Act is intended to be deterrent and therefore punitive, that outcome seems to me to be beyond the pale.

[73] I am therefore unable to accept that the mortgage funds can legitimately constitute a “benefit” for the purposes of ss 52 and 53.

Conclusions

[74] For the reasons I have given I decline to make a profit forfeiture order either in the terms sought or at all. In light of my conclusions and the point made at [66] above, the only order I could make is that the value of the benefit determined in accordance with s 53 is zero. The maximum recoverable amount under s 54 would therefore be negative.

Undue hardship?

[75] Despite that finding, the prospect of asset forfeiture orders remain. I have concluded that I am required to make those orders, subject only to the question of undue hardship under s 51.

[76] The term “undue hardship” is not defined in the Act. The courts have, however, made it clear that it requires something out of the ordinary and more than the hardship that arises inevitably out of a forfeiture order.²⁴ As Collins J said in Commissioner of Police v Ranga:²⁵

23. Jayde and Sarah have continued to meet the mortgage payments while the restraining orders remain in place.

²⁴ Solicitor-General v de Bruin [2004] 3 NZLR 540, (2004) 20 CRNZ 933 at [22(b)].

²⁵ Commissioner of Police v Ranga [2013] NZHC 745 (citations omitted).

[37] The threshold for relief for a person in Mrs Ranga’s position is set at a high level. It requires Mrs Ranga to show not merely inconvenience or difficulty but that any hardship she will suffer will be disproportionate to the gravity of her offending.

[38] In Lyall v Solicitor-General the Court of Appeal held that undue hardship should be assessed in light of the legislative policy that wrongdoers should be stripped of proceeds of crime. Therefore any disproportion between a respondent’s offending and the value of the property sought to be forfeited must be gross or severe before relief can be justified.

Ms Snook’s application

[77] The circumstances that appear most relevant to Ms Snook’s application are that:

(a) notwithstanding that it has been tainted by money laundering activity, the cash that is liable to be forfeited represents a payment she received in return for an asset that she owned and had acquired legitimately;

(b) while the Roberts Street property (effectively her family home) was legally owned by her, the Commissioner has sold it and now seeks its forfeiture on the grounds that it was under Mr Blance’s effective control; and

(c) despite any conclusion that she engaged in serious criminal activity (as defined in the Act) she has never been charged with any such offending.

[78] In my view, however, the question of undue hardship to Ms Snook is more appropriately addressed in the Blance proceedings rather than in these present. That is because it is the nature and extent of Ms Snook’s interest in the Roberts Street property that seems more naturally the proper focus of a s 51 inquiry in her case. While, on the basis of the information before me, I would be inclined to the view that undue hardship would be caused to Ms Snook in the event that the cash she received from Mr Blance and the proceeds from the sale of the Roberts Street property are all entirely forfeit, I am reluctant to come to a firm conclusion about that in the absence of a complete evidentiary picture.

Jayde and Sarah’s application

[79] The circumstances that appear most relevant to Jayde and Sarah’s application are that:

(a) if their equity in Jillett Street is forfeit to the Crown, that will lose:

(i) Mr Snook’s legitimate KiwiSaver funds which totalled around
$22,000;

(ii) their own contributions to the mortgage payments, rates and other outgoings on the house and continue to do so; and

(iii) the likely capital gain made since the date of purchase; and

(b) they have never been charged with any criminal offending.

[80] Mr Tennet also stressed that given their age (mid to late 20s) and economic circumstances they are unlikely to be able ever to afford another house in the current property market, if they are deprived of all their equity in the Jillett Street property.

[81] In order to determine whether the forfeiture of their equity would cause undue hardship to Jayde and Sarah the gravity of the relevant criminal activity must be weighed against the effect of the forfeiture on them, including the value of the property of which forfeiture would otherwise be ordered.

[82] As regards the gravity of the offending, the offence of obtaining by deception (where the thing obtained is worth more than $1000) carries a maximum penalty of seven years’ imprisonment. So while that qualifies as “serious criminal activity” in terms of the Act it is hardly activity at the gravest end of the spectrum. Given that Jayde and Sarah have not, in fact, been charged with any offence, it is not possible to know what actual sentence their activity might have attracted. It can, however, reasonably be assumed that it would be relevant to that inquiry that their deception caused no material harm to any other person. While the false certificate induced the ANZ bank to advance them funds, the terms of the resulting loan have been honoured,
interest has been paid and there is no prospect that (in the event the house is sold) the mortgage debt will not be repaid.

[83] As regards the effects of forfeiture, I am not persuaded by Mr Tennet’s argument that Jayde and Sarah’s ongoing contributions to the mortgage, rates and outgoings should be recognised as giving rise to undue hardship in the event of forfeiture. The mortgage was, of course, the object and the result of the deception. In any event, no evidence was provided (for example) as to the amount of principal paid off. Clearly, Sarah and Jayde would have been paying rent in any event. And it seems clear that the items purchased for the house (DVR, dishwasher etc) were purchased with the tainted funds.

[84] Rather, the issue that gives me most cause for concern relates to Jayde’s KiwiSaver savings. There can be no doubt that these were acquired legitimately. More broadly, the KiwiSaver regime has important social objects which militate against the forfeiture of such savings. Although both Jayde and Sarah are employed, neither has significant earning power and there can be little doubt it would take some considerable time to accumulate funds in that amount again.

[85] In my view, therefore, forfeiture of the KiwiSaver funds would be grossly disproportionate to the gravity of the criminal activity here and such forfeiture would, therefore, constitute undue hardship to Jayde and Sarah. An order excluding the sum of $25,000 (which is intended to represent the amount of those funds with a small amount added for the lost opportunity to benefit from any growth in those funds) from the assets forfeiture orders is appropriate here.

Formal Orders

[86] For the reasons I have given:

(a) the application for profit forfeiture orders is declined.

(b) the application for asset forfeiture orders is granted, in relation to the following property:

• (i) the contents of a Westpac account numbered 03 0547 0002034 25, in Ms Snook’s name, with an approximate balance of

$25,080;

(ii) the contents of an ANZ bank account numbered 06 0549 0399506 00, in Ms Snook’s name, with an approximate balance of $84,074.87;

(iii) the contents of an ANZ bank account numbered 010373 0112339 46, in Mr Snook’s name, with an approximate balance of $24,951.51; and

[87] Ms Snook’s undue hardship application in relation to these assets forfeiture orders is denied on the basis that the question of such hardship is more properly determined in the context of the Blance forfeiture proceedings. As Mr Fraser said, Ms Snook will need to make an application in those proceedings under s 67 of the Act for relief in relation to the proposed forfeiture of the (proceeds of) the Roberts Street property.

[88] I also make an assets forfeiture order in relation to all interests in the property at 61 Jillett Street, Titahi Bay, Porirua, registered in the names of Ms Colledge and Mr Snook, and described in certificate of title WN36CJ788, legal description Lot 5 DP 24876, other than:

(a) the interests of the ANZ Bank New Zealand Limited under the registered mortgage instrument number 10159100.3; and

(b) $25,000, being an amount approximating Mr Snook’s legitimately earned and saved KiwiSaver funds which he applied to the purchase of that property.
[89] Counsel are to advise any further terms that may be necessary in relation to this last order. My clear view is that the order should be framed in a way which ensures that, on receipt of those funds, they are only to be put towards the purchase of another property or to be reinvested by Mr Snook in his KiwiSaver account.

Concluding comment

[90] In my experience, applications under the Act are often time consuming and complex. This decision is proof of that. I merely record my view, for the benefit of future applications, that the complexity here was largely caused by the Commissioner’s additional and (as it transpired) pointless application for profit forfeiture orders. Even if that application had succeeded, the prospect of recovering a further $250,000 from the respondents in the present case would be negligible, at best. So while I appreciate the desire to ensure that all bases are covered, the reality of the matter is that in a case such as this, the Commissioner is very unlikely to obtain anything more than the realisation of the assets he has already restrained and in respect of which forfeiture is likely to be much more straightforward.







Rebecca Ellis J