Asset Forfeiture: R. v. Harris

The Kaitaia backpacker’s business used by Michael Harris to access young males he then drugged and photographed has been seized as ‘an instrument’ used to further crime.  Sold in a mortgagee sale, the High Court ordered $17,700 of the net proceeds be paid to the Crown.

Harris was sentenced to eight years jail after pleading guilty in 2016 to offences against 18 males.  As owner and manager of Mainstreet Lodge he befriended male backpackers, stupefied his victims and then photographed them naked or partly clothed.  The offending came to light when one backpacker went to the local hospital confused and feeling unwell.  Urine tests identified the presence of temazepam and oxazepam.

The Crown obtained a court order under the Criminal Proceeds (Recovery) Act taking control of shares in Harris’ company owning Mainstreet Lodge. Sale proceeds were confiscated using the Sentencing Act.  The Lodge was sold in a mortgagee sale netting a total of $70,860.  Justice Wylie ruled the Lodge was property used to facilitate crime.  Harris selected victims from those staying at the Lodge.  He used offers of free accommodation and food in return for cleaning and caretaking as a means of befriending his victims.  Operation of the Lodge facilitated his offending.  The Lodge was not simply a place where offending took place.

Justice Wylie ordered that twenty-five per cent of the net proceeds from sale of Mainstreet Lodge be forfeit to the Crown.  The balance of some $53,000 is available to Harris when his sentence finishes.  The court was told Harris will then be in his sixties.

R. v. Harris – High Court (28.02.18)

18.045

Financial Services: Financial Services Complaints Ltd v. Ombudsman

The Ombudsman’s Office was ordered to reconsider approval of a further financial services ombudsman with a Court of Appeal ruling the Office was being overly protective of its name.  By administrative fiat, the Ombudsman’s Office was prohibiting wider use of the title ‘ombudsman’, a principle parliament had considered and rejected said the Court of Appeal.

Translated literally, ‘ombudsman’ means people’s representative.  The concept of a parliamentary ombudsman was adopted from Scandinavia in 1962.  Its function is to ensure government observes the law.  Jealous of its independence, the Office has lobbied to prevent others using the name.  Attempts to prohibit industry sectors setting up private dispute resolution services using the name ombudsman in their title failed.  The Ombudsmen Act allows private use of the title, but only with consent of the Chief Ombudsman.  To date only two dispute resolution schemes operating in New Zealand have been approved: The Banking Ombudsman Scheme and the Insurance and Savings Ombudsman Scheme.

All financial service providers are now required to join a dispute resolution scheme approved by government.  Of the four schemes approved so far, the one operated by private company Financial Services Complaints Ltd is by far the biggest.  It has more than 6500 participants.  Learning in 2015 that the Insurance and Savings Ombudsman Scheme had been given approval the replace ‘savings’ with ‘financial services’ in its name, Financial Complaints was stung into action.  It asked permission to also use the name ombudsman.  It feared that without the ombudsman moniker its service would be viewed in the marketplace as inferior.  Approval was refused.  Financial Complaints sued.

The Court of Appeal ruled that administrative guidelines used by the Ombudsman’s Office for name approval were too restrictive.

Financial Services Complaints Ltd v. Chief Ombudsman – Court of Appeal (28.02.18)

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Pero: Pero v. Mike Pero Mortgages Ltd

Mike Pero acted in ‘bad faith’ when frustrating attempts by MPRE Ltd to recover $2.1 million he unlawfully took by trying to force the company’s hand with threats of liquidation unless it declares a dividend to cover the money he owes, the High Court ruled.  

Last year the High Court ruled Mr Pero acted unlawfully when he unilaterally increased his remuneration whilst CEO of MPRE Ltd: jointly owned by Mr Pero and Mike Pero Mortgages Ltd. Repayment of $2.1 million plus interest was ordered.  Mr Pero plans to set off this judgment debt against shareholder dividends from MPRE.  The company operates a nationwide real estate agency.  He wants MPRE to approve a $4.8 million dividend.  No agreement was reached.  Mr Pero said this impasse triggers a mediation clause in MPRE’s shareholder agreement.  If mediation fails, an auction for the business follows.

Associate judge Sargisson ruled there was no dispute as to payment.  Mr Pero had been ordered personally to refund the money unlawfully taken.  He was acting in ‘bad faith’ by trying to invoke the shareholder dispute resolution procedure in MPRE to force payment of a dividend.  He is not entitled to dictate the most convenient method of recompensing MPRE for his illegal action, she said

Pero v. Mike Pero Mortgages Ltd – High Court (28.02.18)

18.044