This was the question pondered by a judge after the Christchurch couple called police to report that five sealed plastic bags of cash had been discovered under the insulation in their ceiling.
The police say the money is probably “tainted” as the proceeds of criminal activity – most likely drug dealing – so it is liable to be seized and handed over to the Crown.
The couple said that even if it is tainted, they aren’t the criminals.
They maintain the link between any criminal act and the cash was broken when, as innocent parties, they bought the property.
For now, High Court Justice Rachel Dunningham has sided with the police and issued a restraining order over the money.
However, the couple will get another chance to make their case when the police take the next step in the proceedings and apply to have the money forfeited to the Crown.
Action taken under asset-seizing legislation
The couple and the cash – $232,440 of it, to be precise – are at the centre of a civil court case taken by police under the Criminal Proceeds (Recovery) Act 2009.
The legislation is used by police to separate criminals from their ill-gotten gains, fighting crime by confiscating the profits that make it worthwhile.
One recent example of its use is the seizure of $15 million in assets from Head Hunters gang president Wayne Doyle, including the gang’s headquarters on Marua Rd, Auckland.
Those involved in the couple’s case agree the money most likely came from drug dealing, but although investigators have worked out it was hidden in the roof space about five or six years ago, who put it there remains a mystery.
The couple are identified only as X and Y in the published court decision. Their names and all other identifying details have been suppressed, as has the address of the house.
The couple wanted to remain anonymous because they “fear that someone may pursue the money if the circumstances of this case … are publicised”, Justice Dunningham said in her written decision on the police application.
They bought the house in late 2021.
Five months later, they needed some electrical work done and the electrician climbed into the roof space.
When he lifted the ceiling insulation, in the furthest part of the roof from the manhole he used to gain access, he found the five sealed plastic bags.
Judging by the dust on them, they had been there some time.
Cash mainly in $50 notes
The cash was mainly in $50 notes, but there was also about $20,000 in $20 notes and a handful of $10 and $100 notes.
The electrician passed the cash to the couple, and they decided to call the police.
Inquiries with the Reserve Bank established the notes were issued between May 2016 and October 2018 and there were 63 different issue codes on them.
This meant the cash was collected from a wide range of sources but in a relatively short space of time, and the way it was bundled up suggested it had been gained from drug dealing.
Police believe the money was placed in the roof space “shortly after 2018″.
Police made inquiries with the previous owner of the house, a family trust, and found out who the tenants were before the couple bought the property.
None of the tenants said they had any knowledge of the money, nor did any of them have a criminal history which suggested they may have acquired it illicitly.
One person who was the beneficiary of the family trust did have a conviction for possession of cannabis, in 2019, and known connections to the Mongrel Mob.
However, this person has since died and his brother said it was unlikely he visited the house. He may not even have been aware it was owned by the family trust.
The police applied to the High Court for a restraining order against the money on February 19 this year.
The order was sought on the grounds the cash was “tainted property” as defined by the Criminal Proceeds (Recovery) Act – gained by “significant” criminal activity.
Any assets – cash, property, vehicles, jewellery – deemed “tainted” are liable to be confiscated and handed over to the Crown.
The police cited the fact the couple themselves believed the money was probably sourced from illegal activity as a reason why it should be considered tainted.
The couple filed a notice opposing the police application and sought an order excluding all of the money from any restraining order, on the grounds they did not unlawfully benefit from any criminal activity themselves.
The couple’s lawyer said the couple was in a state of “innocence”. He contended once the money passed to an “unrelated innocent party” it loses its taint from the criminal activity.
“By way of example, he says when a drug dealer sells a car to an innocent third party or pays for clothing from a tailor, the car, or the payment to the tailor, can no longer be tainted,” Justice Dunningham said.
“Similarly, if the Commissioner of Inland Revenue receives tax from money earned from a drug deal, that money is not tainted in the hands of that commissioner.”
But Justice Dunningham said these examples related to transactions where the recipient of the property had no reason to be suspicious of where the money came from.
She said they could not be compared to the couple’s case, “where the real possibility that the funds were the result of significant criminal activity was recognised at the point of discovery”.
Justice Dunningham ordered the cash be restrained and placed under the control of the Official Assignee, a government official who deals with assets under the criminal proceeds legislation.
However, the final forfeiture of the money requires another High Court order, which is often decided some months after the initial restraining order has been issued.
The couple will have another chance to make their case to keep the money when the forfeiture order is considered by the court.
By Ric Stevens
Open Justice reporter
