Procceds of Crime: Commissioner of Police v. Akavi

 

We might assume that NZ Police has no direct involvement in the illicit drug trade, but its speculative assessment of cash generated by dealers must be accepted by judges when making Criminal Proceeds (Recovery) Act profit forfeiture orders.

The Act presumes the level of profits generated by convicted or suspected dealers as assessed by police is correct, unless offenders prove to the contrary.

Legislative use of the term ‘profit forfeiture’ is misleading.

The Criminal Proceeds (Recovery) Act seeks to recover revenue generated by dealing, with no allowance for expenses incurred; cultivating, manufacturing, or buying finished product prior to sale.  This confiscation of revenue is described in the Act as ‘profit forfeiture.’

One High Court judge got a rap over the knuckles for questioning police calculations.

King Cobra gang member Tereva David Akavi pleaded guilty in 2021 to dealing in methamphetamine; caught in Wellington as part of Police investigation Operation Bonito.

At a subsequent criminal-proceeds hearing, Police sought a profit forfeiture order of $468,000.  This figure was calculated on the assumption Akavi was involved in selling at least one ounce of meth per week for one year at a price of $9000 per ounce.

This unit sale price per ounce was derived from street purchases by undercover police.

The trial judge questioned why an arbitrary assumption had been made that Akavi was dealing regularly in these volumes and for exactly one year.  He slashed the profit forfeiture order to $98,850; the value of meth purchased by undercover police from King Cobra associates over a ten day period in 1991.

The Court of Appeal increased the profit forfeiture order to $468,000 as calculated by Police.  In the absence of evidence to the contrary from Akavi, Police assessment of revenue generated had to be accepted. 

The Criminal Proceeds (Recovery) Act has its parallels in tax law.

Taxpayers failing to file tax returns have a default assessment calculated by Inland Revenue.  This assessment stands, unless the defaulting taxpayer provides evidence to the contrary.

Inland Revenue has decades of data across every trade and occupation as a basis for estimating what should be likely taxable income for a particular taxpayer.

Police has no such historical record to support its proceeds-of-crime profit forfeiture assessments.

Commissioner of Police v. Akavi – Court of Appeal (5.08.24)

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Relationship Property: Ku v.Lang

 

An ongoing dispute between Lam Lo’s former spouse and his de facto partner of over twenty years standing has seen his de facto partner register a relationship property claim against title to his former spouse’s Auckland Half Moon Bay property valued at some $2.66 million.

Mr Lo and his de facto partner Yuanhong Lang lived for the last two decades at the Sutherlands Road property in Auckland’s eastern bays; a property registered in the name of his former spouse, Janice Ku.

Mr Lo now lives in a care facility at a retirement village.  Ms Ku wants Ms Lang out of her property.  She refuses to budge, claiming Sutherlands Road is relationship property and she is entitled to half of Mr Lo’s interest in the property.

Their dispute is clouded by multiple relationship property agreements signed between Mr Lo and his then spouse Ms Ku, and a ‘contracting out’ agreement signed between Mr Lo and Ms Lang when they were living together in which she supposedly agreed to give up all Property (Relationship) Act rights she might have against Mr Lo’s assets.     

The High Court was told Ms Ku and Mr Lo divorced in 2006.  He had commenced living with Ms Lang three years previously.

Associate Judge Taylor ruled that should Ms Lang succeed in overturning her earlier ‘contracting out’ agreement, she was entitled to no more than a potential share of whatever might amount to Mr Lo’s share of relationship assets flowing from his earlier marriage to Ms Ku.

Online valuations estimate the Sutherlands Road property is currently worth $2.66 million.

The status of Mr Lo’s relationship property rights against Ms Ku’s assets is confused.  The two signed successive relationship property agreements intended to set out their agreed entitlements.

Their final agreement required Mr Lo to take over responsibility for all outgoings and mortgage payments for Sutherlands Road.  The High Court was told this agreement was not honoured.

Ms Ku says she remains the absolute owner of Sutherlands Road.  Their relationship property agreement was repudiated and cancelled, she says.

Judge Taylor said evidence is required from Mr Lo.

He is not a party to the current court dispute between the two women.

In the interim, Ms Lang can continue living at Sutherlands Road and her notice of claim remains on the title, Judge Taylor ruled.

Relationship property notices of claim registered against title to land operate much like caveats, having the effect of freezing any further dealings with the property until a dispute is resolved.

Ku v. Lang – High Court (1.08.24)

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Charity: Estate Arthur Whatman v. Masterton District

 

Arthur Whatman was very generous bequeathing his Masterton property for use as a convalescent home, but like many charitable gifts, lack of funding to cover ongoing costs has caused financial headaches.   Application for High Court approval to sell the land met with strong local opposition.

Beneficiaries do sometimes decline non-cash bequests.  Immediate repair costs and ongoing maintenance coupled with onerous terms of a bequest means a bequeathed asset can have a negative economic value.

On his 1938 death, Arthur Whatman bequeathed to the local hospital board land he owned on Ngaumutawa Road in Masterton.  He specified the land and homestead on it were to be used as a ‘convalescent or rest home’ for the ‘sick, aged or needy.’  His will specified that no part of the land was to be ‘sold, let or leased.’

The homestead came to be used primarily as a rest home for permanent residents, rather than providing short-term stay for convalescents.  By 1965, the hospital board was finding increasing costs made use of the homestead uneconomic.  Financial losses were incurred for each of the previous five years.

High Court application under the Charitable Trusts Act saw control pass to the local council.  It built pensioner units on part of the land, leaving the rest vacant.

Nearly sixty years later, Masterton Council was again back before the High Court seeking to vary terms of Mr Whatman’s bequest.

Council said there is a desperate shortage of social housing in the Wairarapa.

It was seeking to build further housing, but did not have sufficient cash to subdivide the remaining Whatman land without first raising rates; a further burden on ratepayers, it said.

Adding a further 25 units to the site would cost in excess of ten million dollars, Council said.

It sought approval to sell the remaining land, subject to a covenant that it be used solely for ‘public housing.’  Proceeds of sale would be used to build roading and utilities needed to support any proposed devlopment.

Community support for the proposal was divided.

Close neighbours objected.

A wording change from provision of housing for the ‘sick, aged and needy’ to provision of ‘public housing’ was an extravagant departure from the intent of Mr Whatman’s bequest they said.  The new wording did not properly reflect his wishes to help solely the aged and indigent, they claimed.

Justice Radich ruled the phrase ‘public housing’ as proposed by Council merely modernised wording in Mr Whatman’s bequest and was synonymous with the word ‘needy.’

Objectors said Council could instead lease the land, rather than sell outright.  Council said leasing alone would raise insufficient cash to cover infrastructure costs for development of any housing project.

Charitable Trusts Act approval was given to changed wording allowing Masterton Council to sell the bequeathed land, subject to covenants being registered to have the land used only for ‘public housing.’

Estate of Arthur Whatman v. Masterton District Council – High Court (1.08.24)

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