Hayward v Commissioner of Police

JurisdictionNew Zealand
CourtCourt of Appeal
JudgeWhite J
Judgment Date18 December 2014
Neutral Citation[2014] NZCA 625
Docket NumberCA464/2013
Date18 December 2014

[2014] NZCA 625

IN THE COURT OF APPEAL OF NEW ZEALAND

Court:

Randerson, White and Courtney JJ

CA464/2013

BETWEEN
Mariana Natalia Cristea Hayward
Appellant
and
Commissioner of Police
Respondent
Counsel:

D R I Gay for Appellant

M R Harborow and R K Thomson for Respondent

Appeal against a High Court decision under the Criminal Proceeds (Recovery) Act 2009 (CPRA) in which the High Court made asset and profit forfeiture orders in respect the family home, owned solely by the appellant's husband but which the appellant directly contributed to by paying part of the mortgage payments — whether the relief granted to the appellant under s66 CPRA should be limited to 20 per cent of the husband's notional legitimate equity in the family home as the High Court held or whether it should be 50 per cent on the basis of the appellant's entitlement under the Property (Relationships) Act 1976.

The issue was: whether the relief granted to Mrs H under s66 CPRA should be limited to 20 per cent of Mr H's notional legitimate equity in the family home (equating to approximately $52,000), as the High Court held or whether it should be 50 per cent on the basis of Mrs H's entitlement under the PRA.

Held: The starting point was s66(1) CPRA which made it clear that the Court “must grant the relief [it] considers appropriate” if the applicant proves on the balance of probabilities that he or she:

  • (a) has an interest in the relevant property (or would but for any civil forfeiture order); and

  • (b) has not unlawfully benefited from the relevant significant criminal activity.

If the two prerequisites in (a) and (b) were met, the Court was then under a mandatory obligation to grant the relief it “considers appropriate”.

There was no dispute that Mrs H's case met both prerequisites. The questions in Mrs H's case related to the nature of her interest in the family home and its quantification.

The expression “interest” was defined widely in s5(1) CPRA and meant not only “a legal or equitable estate or interest in the property” but also extended to “a right, power or privilege in connection with the property”. The second limb of the definition was significant because it meant that the interest of an applicant for relief under s66(1) was not limited to an equitable interest of the nature referred to in Lankow v Rose, relied on by the High Court in this case.

One “right … in connection with the property” would be the ability to make a claim under s25(1) or (3) PRA for a division of property or a declaration as to the status or ownership of property. As s25(3) made clear, an order or declaration of that nature may be made whether or not the parties were separated and did not require a division of the property. The right to bring the claim was sufficient; it was not necessary actually to have brought a claim, thus if an applicant for relief under s66 CPRA had a right to claim under the PRA they would have an “interest” of that nature in relevant property under s66(1)(a).

The next question was whether the Court, when making an order under s66(1) in respect of an interest of that nature, was bound to apply the provisions of the PRA when assessing the value of the interest. This question arose because of the apparent inconsistency between ss4(4) and 4A PRA, which gave paramountcy to the PRA, and s66(1) CPRA, which imposed a mandatory obligation on the Court to grant the relief that it “considers appropriate”.

The PRA did not override s66 CPRA and require the discretion to be exercised as if the claim were brought under the PRA:

  • (a) In terms of s4A PRA, s66 by imposing a mandatory obligation on the Court “expressly provides to the contrary”.

  • (b) The mandatory obligation under s66(1) required the Court to grant the relief it “considers appropriate” without necessarily being constrained by the approach required by the PRA.

  • (c) The CPRA was a subsequent enactment with a strongly expressed statutory purpose.

  • (d) There were a range of relevant considerations which the Court might consider appropriate to take into account when making an order under s66(1), including:

    • (i) the nature and extent of any legal or equitable interest in the property, whether held by the applicant under a constructive trust or otherwise;

    • (ii) the probable outcome of a claim under the PRA;

    • (iii) the hardship considerations under s67 CPRA which overlapped with those under s66; and

    • (iv) the statutory purpose of the CPRA.

Application of the PRA was a relevant but not necessarily a determinative consideration under s66(1). Equal sharing would not necessarily be the result and was dependent on what was “appropriate” in all the circumstances of the particular case.

In Mrs H's case, the nature of her “interest” in the family home therefore extended to her “right” to make a claim under the PRA. Her “interest” was not limited to her equitable interest as the High Court held but extended to her right to obtain an order or declaration under s25(3) PRA in respect of her interest in the family home under s11(1)(a) PRA.

Once the nature of Mrs H's “interest” was clarified in this way, the High Court ought to have quantified the interest by taking into account her entitlement to a 50 per cent share of the family home. This should have been a relevant, but not determinative, factor in her case.

When all the relevant considerations were taken into account, there was no reason why the Court ought not to have made an order under s 66 granting Mrs H relief in respect of 50 per cent of the untainted share of the family home. It was not suggested for the Commissioner that, if the PRA was to be taken into account, there was any reason why Mrs Hayward should receive less than 50 per cent. Once an order of this nature was made under s66, it was not necessary in this case for an order based on undue hardship to be made under s67.

Appeal against the order requiring the Crown to pay Mrs H $52,000 was allowed and the order was set aside. The amount payable by the Crown to Mrs H under s66 CPRA was to be 50 per cent of the net equity of the untainted share of the family home.

JUDGMENT OF THE COURT
  • A The appeal against the order requiring the Crown to pay the appellant the sum of $52,000 is allowed and the order is set aside.

  • B The amount payable by the Crown to the appellant under s 66 of the Criminal Proceeds (Recovery) Act 2009 is to be 50 per cent of the net equity of the untainted share of the family home. If the parties are unable to reach agreement on the calculation, the amount is to be determined by the High Court in accordance with this judgment.

  • C In all other respects the appeal is dismissed.

  • D The respondent is to pay the appellant's costs for a standard appeal on a band A basis together with usual disbursements.

REASONS OF THE COURT

(Given by White J)

Introduction
1

The appellant, Mrs Hayward, appeals against the judgment of Venning J in the High Court at Auckland under the Criminal Proceeds (Recovery) Act 2009 (the CPRA) in which the Judge:

  • (a) made asset and profit forfeiture orders in respect of property owned by her husband, Mr Hayward;

  • (b) fixed the Crown's maximum recoverable amount at $382,259;

  • (c) ordered the sale of Mr and Mrs Hayward's family home to meet the maximum recoverable amount;

  • (d) ordered the Crown to pay Mrs Hayward by way of relief from the net proceeds of the sale of the family home the sum of $52,000 before applying the balance to recovery of the maximum recoverable amount; and

  • (e) declined to order relief for undue hardship. 1

2

For the reasons given in our judgment on the appeal by Mr Hayward, Mrs Hayward's appeal in respect of (a), (b) and (c) above is dismissed. 2

3

This judgment is concerned only with the propriety of the orders made in (d) and declined in (e) above.

4

The principal issue is whether the relief granted to Mrs Hayward under s 66 of the CPRA should be limited to 20 per cent of Mr Hayward's notional legitimate

equity in the family home (equating to approximately $52,000), as the Judge held, 3 or whether it should be 50 per cent on the basis of her entitlement under the Property (Relationships) Act 1976 (PRA), as Mr Gay submitted for her.
Factual background
5

As the factual background is set out in our judgment in Mr Hayward's appeal, it is unnecessary for us to repeat it here.

6

For the purposes of Mrs Hayward's appeal, the essential facts, which are undisputed, may be summarised as follows:

  • (a) Mr and Mrs Hayward were married in May 2004.

  • (b) The property which became the family home was purchased for $375,000 in 2007. 4 It was bought in Mr Hayward's sole name and remains in his sole name. 5

  • (c) The property ultimately became the family home for Mr and Mrs Hayward and their daughter. 6

  • (d) Mrs Hayward directly contributed to the family home by paying part of the mortgage payments. 7 By making those payments she assisted in maintaining the property.

  • (e) Mrs Hayward was unaware of her husband's criminal activity and did not knowingly derive any benefit from it. 8

7

There is also no dispute that Mrs Hayward would be entitled to share equally with Mr Hayward in the net equity in the family home if the property was divided as

relationship property under the PRA. 9
The High Court judgment
8

In the High Court it appears that Mr Gay may have accepted that the PRA was not applicable. 10 On that basis, Venning J decided that, in the absence of any order or matrimonial agreement under the PRA, it was necessary for Mrs Hayward to rely on the general equitable principles established in Lankow v Rose11 to make out her interest in the property. 12

9

The Judge pointed out that in accordance with those principles it was necessary for Mrs Hayward to show: 13

  • (a) contributions, direct or indirect to the property;

  • (b) the expectation of an interest in the property;

  • (c) that her expectation of an interest is a reasonable one; and

    ...

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1 cases
  • Rodriguez v Commissioner of Police
    • New Zealand
    • Court of Appeal
    • 26 November 2020
    ...Act, s 3(2)(a) and (b). 23 Marwood v Commissioner of Police [2016] NZSC 139, [2017] 1 NZLR 260 at [12]. Similarly see Hayward v Commissioner of Police [2014] NZCA 625 at 24 While not conceding the point the Trustee company advanced its argument on the assumption that the Commissioner coul......

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