Commissioner, New Zealand Police v Stevenson

[2024] NZHC 824

IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY

I TE KŌTI MATUA O AOTEAROA WHAKATŪ ROHE

CIV-2023-442-039

[2024] NZHC 824

IN THE MATTER OF

Of an on-notice application under the Criminal Proceeds (Recovery) Act

BETWEEN

THE COMMISSIONER, THE NEW ZEALAND POLICE

Applicant

AND

PAUL JAMES STEVENSON

Respondent

Hearing:	16 April 2024
Appearances:	J M Webber (via VMR) for Applicant S Grey for Respondent
Judgment:	17 April 2024

JUDGMENT OF CHURCHMAN J

[1]                 The Commissioner of Police has applied for on-notice restraining orders under the Criminal Proceeds (Recovery) Act 2009 (the Act) in respect of three categories of property;

(a)The sum of $73,425 cash found in the possession of the respondent on 1 February 2022 and seized by Police.

(b)The following shares held by the respondent and recorded with an Australian share registry.

THE COMMISSIONER, THE NEW ZEALAND POLICE v STEVENSON [2024] NZHC 824 [17 April 2024]

AU Shares	Value (AUD)
GSR	$5,015.00
RSH	$5,303.62
SMN	$20,575.55
Total	$30,894.17

(c)The funds held in the following accounts:

Financial Institution

Balance

ASB Bank Ltd

$1,026.71

ASB Bank Ltd

$5,332.06

(AUD 4,972.90)

Westpac Bank NZ Ltd

$2,285.94

[2]                 The application is supported by two affidavits from Detective Gardner. The on-notice application is a sequel to a without notice application in respect of the same property that was granted by the Court on 26 September 2023.

[3]                 The respondent opposes the application. He has filed two affidavits together with an affidavit of Cyree Anne Clark dated 5 February 2024 and the affidavit of Lorenz Kahl dated 12 April 2024.

[4]                 The respondent also relies on unsworn and/or unsigned documentation including an 8 August 2017 report from Dr David Porter. Dr Porter confirms that the respondent suffers from a condition called Ankolysing Spondolitis and states that he is aware that the respondent self-medicates with cannabis to help relieve the symptoms of his medical condition. An unsigned letter from Dr Tom Currie of the Stoke Medical Centre Ltd says that the respondent has severe Osteoarthritis in his neck in respect of which he uses cannabis products to assist in pain relief.

Objection by applicant

[5]                 The applicant took issue with the fact that some of the material filed by the respondent was late and in breach of the timetable order. I overruled the applicant’s objection on the basis that the material did not cause any particular prejudice to the applicant. In many cases it replicated assertions found elsewhere in material before the Court. The applicant will also have time between now and the hearing of any forfeiture application to respond to any new information.

[6]                 The respondent had also filed a document that was described as being an “Application to join second respondent.” The document itself was undated and unsigned. It sought orders joining Lorenz Kahl as a second respondent.

[7]                 That application was not pursued at the hearing with Ms Grey acknowledging that, if Mr Kahl claimed an interest in the restrained funds, he would not be a respondent to these proceedings but would be an interested party and would need to file an application in the proper form.

The applicant’s case

[8]The applicant relies on the following facts:

(a)That during a search of the respondent’s address on 1 February 2022, the Police found:

(i)A plastic bag containing one pound (464.6 grams) of cannabis buds on a chair in the living room;

(ii)Seventy three thousand four hundred and twenty five dollars in cash, $655 of which was found in the respondent’s wallet, the remainder in a wooden box concealed in a cabinet in the lounge area.

(iii)A hunting trail camera in the lounge overlooking the area in which the cash was located.

(iv)Four mature cannabis plants, each approximately one metre tall, in the garden area at the rear of the respondent’s property.

(v)Two rooms in an external garage at the rear of the property that had been converted for the purpose of cultivating cannabis. One of the rooms was empty but the other contained items commonly used to cultivate cannabis, including a carbon filter, ventilation fan, LED grow lights and a power distributor.

[9]                 Initially the applicant also referred to 94.2 grams of cannabis and associated material found in a blue supermarket chiller bag. However, the applicant now accepts that this was the property of Cyree Clark and does not rely on it in support of the application.

[10]             Other factors said to be relevant by the applicant are the power records which show that the electricity use at the respondent’s property dropped away at the end of 2018 and remained consistently low after that, with no electricity use at all being recorded from June 2021 onwards. The respondent is said to have refused the replacement of the old electricity meter with a modern version.

[11]             A significant aspect of the applicant’s case was information relating to the respondent’s financial records. The respondent is a sickness beneficiary. His total declared income over the review period (2016 – 2022) was $113,521.66 or an average annual income of $16,217.38. The applicant notes that the $73,425 in cash found during the search equates to over 4.5 times the respondent’s average annual income.

[12]             The applicant referred to an analysis of the respondent’s financial records which showed that the respondent had deposited a total of $326,765 in cash into bank accounts associated with him over the preceding seven years but had withdrawn only a total of $55,712 in cash during that period.

[13]             Detective Gardner’s affidavit also referred to the applicant having purchased approximately $270,000 worth of shares during the preceding seven years, although it is acknowledged that a portion of the share purchases had been funded by the sale and re-investment of shares. The applicant noted that $130,000 in cash deposits had been deposited by the respondent into his credit card account.

[14]             The applicant referred to the respondent’s prior drug related convictions including convictions in 1987 for possession of cannabis plants for supply; 1991 importing cocaine and 1991 possessing cocaine for supply as well as cannabis related convictions in 2014, 2016, 2017 and 2022. The applicant acknowledges the historical nature of many of the convictions. The 2022 convictions related to pleas of guilty that the respondent had entered to charges relating to the cultivation of the four mature

cannabis plants located in the 2022 search of the property and possession of the one pound of cannabis bud.

The respondent’s case

[15]             In written submissions, the respondent’s counsel, Ms Grey, argued that the respondent had not been warned before he entered pleas of guilty to the cultivation and possession of cannabis charges that there could be an application for a restraining order. It was submitted that the affidavit which had been filed by the applicant in support of the original without notice application wrongly referred to cannabis which had been found at the respondent’s property which Cyree Clark had confirmed belonged to her. The respondent asserted that the cash located by police at his house could be traced to a lawful source including an inheritance from his mother in 2007, funds given to him by his brother for the purposes of investment on behalf of his brother and various investments which the respondent said that he made on behalf of third parties. Although the respondent declined to name a number of those third parties, counsel relied on the affidavit filed by Mr Kahl asserting that some of the funds seized by the applicant in fact belonged to him.

[16]             The respondent said that the cash found at his property was the product of various entrepreneurial activities he had undertaken in relation to the selling of whitebait, selling furniture he had made, growing garlic, selling four cows, selling some lambs and selling firewood.

[17]             In relation to the evidence of share trading, the respondent’s evidence was that it was his hobby and one of the ways he earned a living until his accounts were frozen.

[18]             In her written submissions it appeared that Ms Grey was contesting whether the cultivation of cannabis could amount to “significant criminal activity” to trigger the making of an order under s 24 of the Act. However, in oral argument Ms Grey conceded that cultivating cannabis could amount to significant criminal activity. Nonetheless she made the submission that where, as is asserted here, the respondent only grows cannabis for his personal use to mitigate the symptoms of his medical issues, this was not the sort of activity that the legislation was designed to capture.

She also submitted that the Court had a discretion in these circumstances as to whether or not to grant a restraining order.

Legal requirements

[19]Section 24 of the Act provides;

24 Making restraining order relating to specific property

(1)  A court hearing an application for a restraining order relating to specific property may, if the court is satisfied it has reasonable grounds to believe that any property is tainted property, make an order that the property (restrained property) –

(a)   is not to be disposed of, or dealt with, other than is provided for in the restraining order;

(b)  is to be under the Official Assignee’s custody and control.

[20]             Tainted property is defined in s 5 of the Act so as to mean property derived from “significant criminal activity”. Offending punishable by a maximum term of imprisonment of five years or more, or from which property or proceeds worth more than $30,000 is directly or indirectly acquired amounts to “significant criminal activity”.1

Restraining orders

[21]             The law in relation to restraining orders is clear. The  leading  case  is  Vincent v Commissioner of Police2 where the Court confirmed that restraining orders are effectively interim orders of limited duration.3 Their purpose is to preserve property while the Crown is gathering evidence to support an application for forfeiture.4

[22]             A judge hearing a restraining order application is not required to make a finding that the relevant property is tainted property or that a particular person did, in fact, unlawfully benefit from significant criminal activity.5 The task for the Court is to be

1      Criminal Proceeds (Recovery) Act 2009, s 5 and 6(1).

2      Vincent v Commissioner of Police [2013] NZCA 412.

3      At [45(a)].

4      At [45(a)] citing Criminal Proceeds (Recovery) Bill 2007 (81-1) (explanatory note) at 2.

5      At [45(b)].

satisfied that there are reasonable grounds to believe that the property is tainted property.

[23]             As the Court made clear in the case of the Commissioner of Police v Needham6 the belief that the Court is required to form may be based on a wide range of evidence that would not be admissible at the stage where forfeiture orders are considered, let alone at a criminal trial.7 Such evidence includes the prior criminal record of the person whose assets have been restrained. The only limitation is that the grounds for the belief must be reasonable.

Analysis

[24]             In determining whether reasonable grounds for the required belief exist it is not appropriate for the Court to attempt to resolve conflicting evidential contentions. If there is an application for a forfeiture order it is the Court which has to determine that application which will consider all the evidence and make findings of credibility and reliability. At such a hearing the respondent will be able to call witnesses to give evidence in support of his contentions and to cross examine the witnesses called by the applicant.

[25]             Between now and the date of any forfeiture hearing the applicant will have the opportunity of investigating the explanations put forward by the respondent and filing rebuttal evidence.

[26]             Whether or not the respondent was aware, at the time he entered guilty pleas in 2022 that the applicant might apply for a restraining order is irrelevant to whether the applicant had reasonable grounds to believe the property was tainted property.

[27]             The applicant is able to point to evidence which provides reasonable grounds for believing that some or all of the property sought to be restrained is tainted property. This evidence includes: the finding of the cash of $73,425; the evidence that the respondent had deposited a total of $326,765 in cash into bank accounts over a seven year period but withdrawn a total of only $55,712 in cash; that the respondent had

6      Commissioner of Police v Needham [2022] NZHC 470.

7 At [17].

engaged in extensive share trading with a turnover of $270,000; that $130,000 in cash had been deposited by the applicant into his credit card account which had been used to pay his credit card bills; that the applicant had historical convictions for drug dealing offences and that the applicant had pleaded guilty to and had been convicted of offences of cultivating and possessing cannabis in relation to cannabis found at his home in 2022.

[28]             The fact that the respondent may grow and use cannabis for the purpose of self-medication does not provide a complete answer to the facts referred to above. In particular it does not explain the quantity of cash found at his property, the large sum of cash deposited into his bank account and relatively modest withdrawals or the pound of cannabis bud found at the respondent’s address.

[29]             There are also obvious inconsistencies in some of the respondent’s assertions. An explanation for the holding of a large amount of cash was said to be the respondent’s dislike/distrust of banks, however the applicant’s evidence pointed to extensive use of banks by the respondent. The respondent’s claims to have earned significant income from various entrepreneurial activities is also inconsistent with him having continued to receive his sickness benefit and not having declared any such income for tax purposes. The resolution of these inconsistencies will have to wait until the forfeiture hearing is held.

[30]             I am satisfied that there are reasonable grounds to believe that some or all of the restrained property is tainted property or the product of significant criminal activity.

Outcome

[31]The application for a restraining order is granted in the terms sought.

Churchman J

Solicitors:

O’Donoghue Webber, Nelson for Applicant Sue Grey Lawyer, Nelson for Respondent