Proceeds from criminal activities allegedly funded the property’s renovations
The Court of Appeal has rejected an appeal against the forfeiture of a Christchurch property utilised as a “gang pad” by the Head Hunters motorcycle club located in Wigram.
The property. which previously belonged to the Epitaph Riders motorcycle club, transitioned to Head Hunters' ownership around late 2015 without any exchange of funds. The property was in a state of disrepair upon acquisition, and Head Hunters initiated extensive renovations. The work, if charged at commercial rates, was estimated to have cost around $182,000.
The Commissioner of Police initiated forfeiture proceedings under the Criminal Proceeds (Recovery) Act 2009 in May 2021, labelling the property as "tainted" because the proceeds from significant criminal activities partially funded the renovations. These activities included the sale of methamphetamine, "taxings" or "standovers" of gang members or others, and profits from operating three illegal "pokie" machines, in direct violation of the Gambling Act 2003.
Terrance McFarland, Lyndon Richardson and Simon Turner challenged the commissioner's application. They contended that the renovation costs were substantially lower, around $10,000, due to the utilisation of free labour and donated or recycled materials. They argued that the funds for these renovations were derived from legitimate sources, such as club fundraising efforts, membership subscriptions, and the sale of items left by the Epitaph Riders.
Furthermore, McFarland, Richardson and Turner sought to have the property excluded from forfeiture based on "undue hardship," suggesting that the portion of unlawful expenditure was minuscule compared to the property's overall value.
The High Court granted the commissioner's application, determining that the property was tainted by the proceeds of significant criminal activity. It found no merit in the respondents' undue hardship claim, a decision now affirmed by the Court of Appeal. The appellate court meticulously reviewed McFarland's appeal, which challenged the admission of hearsay evidence, the property's classification as tainted, and the claim of undue hardship should forfeiture proceed.
The appellate court ultimately dismissed the appeal, finding no undue hardship in the gang members' loss of the benefit of access to the property, which was only made available to them as a result of their predecessors’ efforts. Further, the court pointed out that the gang paid nothing to acquire the property, and on the respondents’ own evidence in the High Court, the gang expended far less than commercial rates in carrying out its improvement.
Ultimately, the court upheld the forfeiture, emphasising the legislative intent to deter criminal activities by stripping criminals and their associates of assets derived from or utilized in significant criminal activities.
