The Solicitor–General of New Zealand v Bujak Hc Chch
| Jurisdiction | New Zealand |
| Judge | Fogartyj |
| Judgment Date | 24 November 2011 |
| Court | High Court |
| Docket Number | CIV 2008-409-001901 |
| Date | 24 November 2011 |
In The Matter Of An Application Under The Proceeds Of Crime Act 1991 S 59 And S 66B And The Mutual Assistance In Criminal Matters Act 1992 S 56
CIV 2008-409-001901
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
Application under s59 Proceeds of Crime Act 1991 (“PCA”) to set aside disposition of property, namely proceeds paid to respondent's solicitors and counsel — respondent was subject of criminal charges in Poland (NZ equivalent of obtaining money and property by false pretences and theft by conversion of commercial vehicles) — Polish order registered under Mutual Assistance in Criminal Matters Act 1992 freezing property belonging to respondent — Crown Law not aware of one of respondent's properties that Court had ruled could be sold to provide respondent with funds — part of proceeds paid to solicitors and counsel — whether disposition could be set aside as not being made in favour of a person who acted in good faith under s59 PCA(1)(c) (disposition or dealing may be set aside).
M F Laracy and N P Chisnall for Crown
A J Forbes QC for Respondent
E Orlov (In Person)
JUDGMENT OF Fogartyj
The Respondent, Mr Bujak, Is In Poland, Where He Is The Subject Of Criminal Charges. The Charges Include What In New Zealand Would Constitute Obtaining Money And Property By False Pretences And Theft By Conversion Of A Number Of Large Commercial Vehicles. 1 In 2006 Mr Bujak Was In New Zealand. The Central Authority Of The Republic Of Poland Requested The Attorney–general Of New Zealand To Assist With The Enforcement Of An Order Issued By A Regional Court In Poland To Seek Security Over Property Of Mr Bujak.
On 12 March 2007 the Solicitor–General applied to the High Court in New Zealand for registration of the Polish restraining order of 26 June. Cousins and Associates, effectively the second respondents in these proceedings were retained by Mr Bujak to challenge the registration of this order. Litigation then ensued in the Court of Appeal, the High Court, and back to the Court of Appeal who on 1 September 2008 ordered the registration of the Polish order as a foreign restraining order. This is an order registered under the Mutual Assistance in Criminal Matters Act 1992 (the MACMA). Under MACMA a foreign restraining order can be registered so it takes effect in the same manner as if it were a domestic restraining order made under the Proceeds of Crime Act 1991 (the PCOA). 2
On 2 December, the next day, Chisholm J heard an entirely independent application for domestic freezing orders applied for by Mr Monasterio and his wife, Ms Moya. The applicants had purchased a residence from Mr Bujak's wife in Christchurch, Originally the property had been owned by Mr Bujak himself. While the property was in the ownership of these defendants it was extensively altered and modified. Following purchase the applicants said they discovered numerous defects, many of which they allege were deliberately concealed. They commenced proceedings in deceit and negligence against Mr Bujak and in other causes of action against his wife.
Mr Monasterio and Ms Moya applied for Mareva orders under the High Court Rules (domestic freezing orders). On the morning of the hearing, counsel advised Chisholm J of the Court of Appeal decision of the previous day. This was an application ex parte. The Judge made the orders, noting:
However, now that the Polish government is in a position to register a foreign restraining order against the first defendant's assets in New Zealand it may well be that the charging orders under paragraph 1 of the draft order will be of limited value, it being acknowledged by counsel that the Polish government's restraining order will have priority. 3
The Judge also granted charging orders over titles to three properties: 4 Arahura Place and 63B and E Huxley Street. 4
On 11 September an order was sealed in the High Court in Wellington registering the Polish restraint order. The order was also registered against 4 Arahura Place, but not registered against the Huxley Street properties. It would appear the Crown did not know of the existence of these two properties.
On 11 November 2008 the Supreme Court granted leave to hear an appeal against a decision of the Court of Appeal.
On 3 March 2009 the High Court heard an inter parte review of the Mareva orders that had been made ex parte by Chisholm J. The review was conducted by myself. The parties to these proceedings remained the parties to the deceit and negligence actions briefly described. Mr Bujak was moving to set aside the ex parte orders. That application failed. But I did change the terms of the Mareva orders, which were also renamed as freezing orders. I applied a principle that freezing orders should impose only as much restraint on the right of property owners as is necessary to secure justice in the civil proceedings. I had been satisfied that it made sense for Mr Bujak to be able to sell at least one property in order to obtain some funds after discharge of the bank debt. The plaintiffs in these negligence proceedings were agreeable to that. I further found that where possible Mr Bujak was entitled to living expenses in addition to a small amount he received per week from the Accident Compensation Commission for a back injury and funding to enable to defend this litigation and current litigation for extradition to Poland. I left it to the parties to agree what I called “light handed freezing orders”.
On 15 May 2009 the Supreme Court dismissed the appeal against the Polish freezing order. In those proceedings Cousins and Associates remained solicitors and Messrs Orlov and Deliu appeared as counsel for the appellant.
On 3 August the question of varying the light handed domestic freezing orders was heard in the Christchurch Registry of the High Court by French J. Part of this hearing was to discuss relevant terms that had been agreed by counsel and presented to the Court. These terms included selling both of the properties at 63 Huxley Street (which would implicitly require the discharge of the mortgage to the bank) and certain other terms enabling Mr Bujak to draw weekly payments of $500 from the funds left after settlement including settlement of the legal costs of the sale, and to apply the funds:
… to meet his reasonable costs in this proceeding …, and any proceeding relating to the application for his extradition to Poland or the foreign restraining order registered against the land at 4 Arahura Place… 5
On 17 August these freezing orders were formally made in the Christchurch High Court.
On 25 November 63E Huxley Street was sold for $285,000. On the same day the Crown Law office heard for the first time of the existence of this property and that it had been sold. The sale had been entrusted to an independent solicitor, Mr Palliser.
As part of the proceeds of sale Mr Palliser forwarded a sum of $50,221 to Cousins and Associates. This disbursement represented the sum of $50,000 plus Cousins and Associates' agency account for release of certain covenants together with registration disbursements.
By letter of 3 December Cousins and Associates advised Mr Palliser as to how that sum had been dealt with as follows:
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1. $ 18,000 is held in our trust account on account of Mr Orlov's fees. In
the event that his fees are assessed at below this sum any balance will be allocated against our outstanding costs and if there is any surplus after that it will be returned to you.
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2. $221 paid on account of our costs and disbursements for registration of withdrawal of caveats.
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3. The balance, being $32,000 has been dispersed on account of our outstanding costs, which includes a contribution to barrister's fees. We note there is still an amount outstanding to us.
In these proceedings the Solicitor–General applies to this Court for an order pursuant to s 59 of POCA setting aside the disposition of property; namely the payment of $50,221. The application contends that the payment was made to Cousins and Associates by Mr Palliscr's law firm out of funds restrained by the Polish restraining order in contravention of that order.
Sections 56 and 59 of POCA provide:
56 Registration of charge created by restraining order
(1) Where a charge is created by section 55 of this Act on property of a particular kind, and the provisions of any New Zealand enactment provide for the registration of title to, or charges over, property of that kind, the applicant for the pecuniary penalty order secured by that charge may cause the charge to be registered under the provisions of that enactment.
(2) If the charge is registered under subsection (1) of this section, a person who purchases or acquires an interest in the property after the registration of the charge shall, for the purposes of section 55(2)(f) of this Act, be deemed to have notice of the charge at the time of the purchase or acquisition.
And:
59 Disposition or dealing may be set aside
(1) Where –
(a) A restraining order is made in respect of property; and
(b) The property is disposed of, or otherwise dealt with, in contravention of the order; and
(c) The disposition or dealing was either not for sufficient consideration or not in favour of a person who acted in good faith, –
the Solicitor–General may apply to the High Court for an order that the disposition or dealing be set aside.
(2) On any application made under subsection (1) of this section in relation to a disposition or dealing, the Court may make an order –
(a) Setting the disposition or dealing aside as from the day on which the disposition or dealing took place; or
(b) Setting the disposition or dealing aside as from the day of the order, and declaring the respective rights of...
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