Hayward v Commissioner of Police

• Jurisdiction: New Zealand
• Judge: White J
• Judgment Date: 18 December 2014
• Neutral Citation: [2014] NZCA 625
• Docket Number: CA464/2013
• Court: Court of Appeal
• Date: 18 December 2014

BETWEEN

Mariana Natalia Cristea Hayward

Appellant

and

Commissioner of Police

Respondent

[2014] NZCA 625

Court:

Randerson, White and Courtney JJ

CA464/2013

IN THE COURT OF APPEAL OF NEW ZEALAND

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.

Counsel:

D R I Gay for Appellant

M R Harborow and R K Thomson for Respondent

• 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.

JUDGMENT OF THE COURT

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 Rose 11 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

• (d) that Mr Hayward should reasonably expect to yield her an interest in the property.

10 Venning J was satisfied that Mrs Hayward had made out her case for an interest in Mr Hayward's equity in the family home. 14 That left the issue of the quantification of her interest.

11 On this issue the Judge said: 15

[112] The issue is the quantification of that interest. Arithmetical precision is unnecessary, and analogy with the Property (Relationships) Act 1976 regime is not appropriate. Nevertheless, the Court must do its best to reflect the value of the contributions.

[113] On the evidence, Mr Hayward's initial contribution of approximately $70,000 was untainted …. The reduction in the mortgage by a further $62,000 by January 2008 was also likely to have been from a legitimate source, given the $56,000 in Mr Hayward's bank account in 2006. Further, I have accepted his explanation for the $62,085 from [Mrs Hayward's home country of Romania] and also that the $63,613 from the sale of the [Cafx00C9; Mr Hayward owned] was legitimate. In round figures, approximately $260,000 of the money applied towards increasing his equity in the [family home] can be seen as coming from legitimate sources. Given that approximately $10,000 remains owing to the bank, that leaves $100,000 (approximately) as unexplained and, I infer, sourced from unlawful activity.

[114] On the evidence before the Court, Mrs Hayward's interest in the [family property], taking the value of her contributions (both direct and indirect) from its purchase in late 2007 could not be put at higher than 20 per cent of Mr Hayward's notional legitimate equity in the property. She cannot claim an interest in the equity which Mr Hayward gained from unlawful means. Mrs Hayward's interest accordingly equates to approximately $52,000. The practical effect of that is addressed below.

12 The Judge then addressed Mrs Hayward's application for relief under s 67(2) of the CPRA on the grounds that undue hardship would be likely to be caused to her if relief were not granted. The Judge said:

[116] As noted, something more than ordinary hardship arising as a consequence of the execution of a forfeiture order is required. Given that Mrs Hayward's interest in the property has been recognised and can be provided for, it cannot be undue hardship if the property is required to be sold to meet Mr Hayward's obligations to the Crown arising from the unlawful benefits he has obtained from his criminal activity.

13 No order was therefore made under s 67.

The Criminal Proceeds (Recovery) Act 2009

14 The CPRA was enacted for the following purpose:

3 Purpose

• (1) The primary purpose of this Act is 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.

• (2) The criminal proceeds and instruments forfeiture regime established under this Act proposes to-

  • (a) eliminate the chance for persons to profit from undertaking or being associated with significant criminal activity; and

  • (b) deter significant criminal activity; and

  • (c) reduce the ability of criminals and persons associated with crime or significant criminal activity to continue or expand criminal enterprise; and

  • (d) deal with matters associated with foreign restraining orders and foreign forfeiture orders that arise in New Zealand.

15 The provisions of the CPRA which are relevant in this case are ss 66 and 67 which provide:

66 Making order for relief from civil forfeiture order where person has interest and was not involved in significant criminal activity

• (1) On receipt of an application for an order for relief from a civil forfeiture order under section 61 or 62, the High Court must grant the relief that the Court considers appropriate if the applicant proves on the balance of probabilities that the applicant-

  • (a) has an interest, or would but for any civil forfeiture order have an interest, in the property to which the application relates; and

  • (b) has not unlawfully benefited from the significant criminal activity to which the application relates.

• (2) The High Court may make an order for relief under this section at or after the time the associated civil forfeiture order is made.

67 Making order for relief from civil forfeiture order on grounds of undue hardship

• (1) On an application for an order for relief from a civil forfeiture order under section 61 or 62, the High Court may grant the application if it considers that, having regard to all of the circumstances, undue hardship is reasonably likely to be caused to the applicant if relief is not granted.

• (2) The circumstances the Court may have regard to under subsection (1) include, without limitation,-

  • (a) the use that is ordinarily made, or was intended to be made, of the property that is, or is proposed to be, the subject of the civil forfeiture order; and

  • (b) the nature and extent of any person's interest in the property; and

  • (c) the degree, if any, to which the person had knowledge of the significant criminal activity to which the property relates; and

  • (d) the...