Commissioner of Police v Bartlett
[2019] NZHC 1449
•25 June 2019
IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY
I TE KŌTI MATUA O AOTEAROA WHANGĀREI-TERENGA-PARĀOA ROHE
CIV 2015-488-000076
[2019] NZHC 1449
UNDER Criminal Proceeds (Recovery) Act 2009 BETWEEN
THE COMMISSIONER OF POLICE
Applicant
AND
GUY WILLIAM BARTLETT
First Respondent
AND
DONNA MARIE OSBORNE
Second Respondent
Hearing: 8-10 October and 16 November 2018 Appearances:
K Eastwood & H Savage for Crown W D McKean for Respondents
Judgment:
25 June 2019
JUDGMENT OF VAN BOHEMEN J
This judgment was delivered by me on 25 June 2019 at 3.00pm Pursuant to Rule 11.5 of the High Court Rules
…………………………
Registrar/Deputy Registrar
Counsel:
B H Dickey, Auckland Solicitors:
Meredith Connell, Auckland WRMK Lawyers, Whangarei
THE COMMISSIONER OF POLICE v BARTLETT & ANOR [2019] NZHC 1449 [25 June 2019]
Introduction
[1] The Commissioner of Police has applied under the Criminal Proceeds (Recovery) Act 2009 (the Act) for forfeiture orders against Guy William Bartlett, and Mr Bartlett’s partner, Donna Marie Osborne. The Commissioner says that, in the period 30 June 2008 to 1 December 2014, Mr Bartlett and Ms Osborne benefited unlawfully from Mr Bartlett’s cultivation and sale of cannabis in the area of the Pouto Peninsular in Northland. The Commissioner says that certain assets were acquired or derived, at least in part, from the proceeds of sale and should be forfeited or, in the alternative, that the proceeds of the cultivation should be forfeited.
[2] Mr Bartlett is a long-term resident of Pouto Road, which runs down the eastern side of the Pouto Peninsular bordering the northern arm of the Kaipara Harbour. Mr Bartlett’s address at the time of the events giving rise to this application was 5811 Pouto Road. The land is Māori land but Mr Bartlett has a licence to occupy the site. He built a new house on the site over the period 2009-2010.
[3] Ms Osborne has been in an “on and off” relationship with Mr Bartlett for around 25 years. They have a 15 year old daughter. Ms Osborne has not always resided with Mr Bartlett. When working in Dargaville, she lived with her grandmother but took their daughter to the Pouto Road house on weekends.
[4] The Commissioner’s application was in respect of the period 30 June 2008 to 1 December 2014 (the analysis period). During the analysis period, Mr Bartlett undertook occasional employment with various logging contractors and received a benefit from the Ministry of Social Development. For a three-month period in 2009, Mr Bartlett was employed as a contractor by Boffa Miskell. He is also said to have undertaken a variety of other jobs for cash or barter during that period. Ms Osborne was a knife handler at a meat works in Dargaville.
The Commissioner’s application
[5]By application dated 9 October 2015, the Commissioner seeks:
(a)An assets forfeiture order in respect of the following property:1
(i)A 1999 Chevrolet K2500 Suburban motor vehicle, registered number GW5616, registered to Ms Osborne;
(ii)An aluminium McLay 775 boat with 250 horse power outboard motor;
(iii)A boat trailer, registered number U892Z, registered to Ms Osborne;
(iv)An unregistered Polaris RZR XP all-terrain vehicle.
(b)In the alternative, a profit forfeiture order for the sum of $185,000 which the Commissioner says was the value of the benefit which Mr Bartlett derived from cannabis cultivation in the analysis period.
[6] The Commissioner also seeks an order under s 58 of the Act that Mr Bartlett has a beneficial interest in the property.
[7] In accordance with the definition of “relevant period of criminal activity” in s 5(1) of the Act, the relevant period is 9 October 2007 to 9 October 2015, being a seven-year period ending on the date of the Commissioner’s application. That period includes the analysis period used for the purposes of the Commissioner’s application.
[8] After initially filing a notice of opposition to the Commissioner’s application, Mr Bartlett took no part in the proceeding and indicated he would abide the Court’s decision. However, Ms Osborne opposes the Commissioner’s application. She says she is the owner of the assets and the Court cannot be satisfied that the assets or the money which the Commissioner seeks to be made forfeit were derived from cannabis cultivation by Mr Bartlett.
1 The assets are currently in the custody and control of the Official Assignee under a restraining order made on 30 June 2015 and varied on 6 August 2015.
The case for the Commissioner
[9] The Commissioner’s case is that Mr Bartlett has been involved for over two decades in commercial-scale cultivation and supply of cannabis, which is a significant criminal activity, and that this activity has provided Mr Bartlett and Ms Osborne with significant unlawful benefit. The Commissioner says the property was acquired at least in part with proceeds derived from that significant criminal activity and that Mr Bartlett and Ms Osborne both have interests in the property.
[10] Ms Eastwood for the Commissioner says that the evidence called by the Commissioner, combined with the absence of a credible alternative explanation from Ms Osborne, is sufficient to establish on the balance of probabilities that the property is tainted property that was acquired or derived wholly or in part from drug offending. Ms Eastwood also says that between 2008 and 2014 Mr Bartlett and Ms Osborne incurred living and building costs far in excess of their legitimate incomes, acquired interests in various assets and received substantial sums of cash into their bank accounts.
[11] Ms Eastwood says that Mr Bartlett’s involvement in the cultivation and sale of cannabis over a long-standing period can be inferred from the following circumstances:
(a)In 1999 Mr Bartlett was convicted of possessing cannabis plant for the purposes of supply and of possessing equipment for the sale of cannabis.
(b)In 2002 Mr Bartlett was arrested and charged with the cultivation of cannabis at two plots located in a remote area on the southern part of the Pouto Peninsula. The Commissioner says that although Mr Bartlett was acquitted of those charges, the police evidence proves it is more likely than not that Mr Bartlett cultivated the two plots.
(c)In 2011 Mr Bartlett was observed by his neighbour, Christine Findley, driving a vehicle along an access rack running past her property. On
the back of Mr Bartlett’s vehicle was a wool bale from which large plants protruded. Ms Findley says the plants were cannabis plants.
(d)In February 2014 a police search found 37 cannabis plants at a plot located off a cleared track that ran from Mr Bartlett’s home to a nearby beach. Although Mr Bartlett was not charged following the search, the Commissioner says there is sufficient evidence to support a finding on the civil standard of proof that the plot belonged to Mr Bartlett.
(e)In 2017, Mr Bartlett was convicted of cultivating, in January 2016, 13 large plots of cannabis containing over 1,000 plants on Department of Conservation land on the western Pouto peninsula. Police surveillance identified Mr Bartlett entering and leaving the plots and tending the plants in an operation that had a sophisticated system of irrigation, netting and traps.
[12] Ms Eastwood says that the Court can be satisfied that Mr Bartlett and Ms Osborne benefited from this cannabis cultivation based on the following circumstances:
(a)The Commissioner adduced evidence to show that in the analysis period the combined income of Mr Bartlett and Ms Osborne was almost equal to their total combined expenditure as shown from their bank statements, yet they also spent significant sums outside the banking system during that period.
(b)The Commissioner says Mr Bartlett must have incurred costs in the order of $200,000 in the construction of Mr Bartlett’s home at 5811 Pouto Road during the period November 2008 to April 2010, yet Mr Bartlett’s bank accounts show construction related expenses of less than $30,000.
(c)The Commissioner’s financial analysis of bank accounts held by Mr Bartlett and Ms Osborne identified cash deposits totalling over
$110,000 in the analysis period and Ms Osborne has not provided an adequate explanation for these amounts.
(d)In addition, the evidence established that Mr Bartlett and Ms Osborne spent the sum of $45,513.80 in cash payments outside the banking system, which included:
(i)$13,000 cash paid towards the purchase of the McLay boat and trailer;
(ii)$11,000 cash paid towards the purchase of the Chevrolet;
(iii)$9,000 cash paid towards the purchase of the Polaris.
[13] Ms Eastwood also says the Court is entitled to draw adverse inferences from the fact Mr Bartlett provided no direct evidence regarding his dealings in cannabis, his finances, including the source of a cash deposit of $18,890 into his bank account, his employment history or the construction of the house at 5811 Pouto Road, and that as a consequence, greater weight should be given to the Commissioner’s evidence on these issues, including the evidence linking Mr Bartlett to the cannabis plots found in 2002 and 2014.
[14] Ms Eastwood also submits that the Court should give no weight to the various explanations that Ms Osborne gave as to the source of the funds spent by Mr Bartlett and herself, both generally and in the purchase of the property.
The case for Ms Osborne
[15] Mr McKean for Ms Osborne acknowledges that the cultivation and sale of cannabis is significant criminal offending and that Mr Bartlett was engaged in such offending in 2016. However, Mr McKean says the evidence adduced by the Commissioner of proven and alleged cannabis offending is insufficient for the Court to draw an inference that Mr Bartlett was involved in cannabis offending outside the occasions when cannabis was found. He also says that:
(a)The evidence of cannabis offending in 1999 is too remote because it took place 19 years before the analysis period and that there is no evidence that Mr Bartlett derived any benefit from that offending.
(b)Mr Bartlett was acquitted of cannabis offending charges in 2002 and there is insufficient evidence to establish, even to the civil standard, that Mr Bartlett was involved in that offending. Further, even if it could be shown that Mr Bartlett had been involved in cannabis offending in 2002, it is too remote because it took place six years before the start of the analysis period and there is no evidence that Mr Bartlett derived any benefit from that offending.
(c)Ms Findley had little expertise in identifying cannabis and accepted that her observation about the identity of the plants on the back of Mr Bartlett’s vehicle was an assumption or an educated guess.
(d)Mr Bartlett was not charged with the 2014 cultivation, others had access to the property before the 2014 growing period, and the cannabis plants were destroyed by the police after the plot was found so Mr Bartlett could not have derived any benefit from it.
(e)The 2016 cultivation for which Mr Bartlett was convicted was found after the analysis period and logically cannot be taken as showing involvement in cannabis cultivation in the eight years before 2016, and there is no evidence of benefit being derived from that offending.
[16] Mr McKean says the Commissioner has failed to prove with “clear and convincing” evidence that money received by Mr Bartlett and Ms Osborne came from significant criminal activity and that it is not sufficient to show that the income was from unexplained sources or to argue that Ms Osborne has not sufficiently explained where the income came from.
[17] Mr McKean says that a correct analysis of the evidence of the income and expenditure of Mr Bartlett and Ms Osborne shows total income of approximately
$605,000 and total expenditure of $545,000, resulting in a balance of approximately
$60,000. Mr McKean says this sum was available to pay for the costs of building the Pouto Road house, as was cash withdrawn from Mr Bartlett’s and Ms Osborne’s bank accounts.
[18] Mr McKean says that the Commissioner has failed to prove to the required standard that the $111,000 in cash deposits in Ms Osborne’s bank account (as distinct from the cash deposits in Mr Bartlett’s account) was a benefit derived from cannabis cultivation. He says Ms Osborne has provided credible information to explain the sources of this cash, namely the sale of pig dog puppies and pine cones, and “under the table” work performed by Mr Bartlett.
[19] Mr McKean also says the Commissioner has failed to prove that any of the property was tainted property; that is, that it was either acquired as a result of cannabis cultivation or was directly or indirectly derived from cannabis cultivation.
The Criminal Proceeds (Recovery) Act
[20] The purpose of the Act as set out in s 3 is, in summary, to establish a regime for the forfeiture of property or income derived from significant criminal activity, to reduce the opportunity for persons to profit from such activity and thereby to deter such activity. As is made clear in s 4(1) of the Act, property derived from significant criminal activity may be forfeited under the Act without the need for a conviction.
[21] Under s 5, tainted property is any property that has, wholly or in part, been acquired as a result of significant criminal activity or directly or indirectly derived from significant criminal activity.
[22] Under s 6, significant criminal activity means an activity engaged in by a person that, if proceeded against as a criminal offence, would amount to offending punishable by a maximum term of imprisonment of 5 years or more, or from which property or proceeds worth $30,000 or more have been acquired or derived. Section 6 also makes it clear that a person undertakes significant criminal activity regardless of whether he or she has been charged with or convicted or acquitted of an offence in connection with the activity.
[23] Under s 7, a person has unlawfully benefited from significant criminal activity if the person has knowingly, directly or indirectly, derived a benefit from significant criminal activity, whether or not he or she undertook or was involved in the activity.
[24] Under s 13, there is no need to identify the owner of the property in respect of which an assets forfeiture order is sought.
[25] Part 2 of the Act sets out the criminal proceeds forfeiture regime. Under sub- part 3, the Court may, on the application of the Commissioner, grant civil forfeiture orders, which include assets forfeiture orders and profit forfeiture orders.
[26] Section 50 provides that the Court must make an assets forfeiture order if satisfied on the balance of probabilities that the property specified in the Commissioner’s application is tainted property. The only exception to that requirement is where, under s 51, the Court may exclude certain property if it considers that undue hardship is reasonably likely to be caused to a respondent if that property were included in the order.
[27] Section 55 provides that the Court must make a profit forfeiture order if satisfied on the balance of probabilities that the respondent has unlawfully benefited from significant criminal activity within the relevant period of criminal activity and the respondent has interests in property. Under s 5(1) of the Act, “interest” is defined as meaning a legal or equitable interest in the property, or a right, power, or privilege in connection with the property.
[28] In making a profit forfeiture order, the Court must specify the value of the benefit as determined in accordance with s 53 and determine the maximum recoverable amount in accordance with s 54 by deducting from that value the value of any property forfeited as a result of an assets forfeiture order made in relation to the same significant criminal activity. Again, the only exception to the requirement to make a profit forfeiture order is where, under s 56, the Court may exclude certain property if it considers that undue hardship is reasonably likely to be caused to a respondent if that property were included in the order.
[29] Under s 53(1), the value of the benefit from significant criminal activity is presumed to be the value stated in the Commissioner’s application or any amendment to the application. Section 53(2), however, provides that the presumption of value may be rebutted by the respondent on the balance of probabilities.
[30] Section 58 provides that the Court may order that specified property be treated as though a respondent had an interest in the property if satisfied that the respondent has effective control over the property.
Analysis
[31] There is no dispute that the cultivation and sale of cannabis is significant criminal activity in terms of s 6 of the Act. The threshold question for the Court, therefore is whether the Commissioner has established that Mr Bartlett engaged in the cultivation and sale of cannabis during the analysis period.
[32] If the Court is persuaded that the answer to that question is “yes”, the following further questions arise:
(a)In relation to the application for an assets forfeiture order, has the Commissioner established that the property is tainted property?
(b)In relation to the application for a profit forfeiture order:
(i)Has the Commissioner established that Mr Bartlett and Ms Osborne derived a benefit from the cultivation and sale of cannabis during the analysis period?
(ii)If so, has Ms Osborne rebutted the presumption that the value of that benefit is the value stated in the Commissioner’s application, namely $185,000?
Did Mr Bartlett have an interest in the property?
[33] The Commissioner’s case combined aspects of the above questions. Part of the Commissioner’s case is that, in addition to the direct and circumstantial evidence of Mr Bartlett’s involvement in the cultivation of cannabis, the Court can infer that Mr Bartlett must have been involved in the commercial cultivation and sale of cannabis and must have derived a benefit from that activity because there is no other credible explanation for the expenses that Mr Bartlett and Ms Osborne must have incurred, including on the construction of Mr Bartlett’s new house, over and above their legitimate income and no other credible explanation for the amounts of cash that flowed through the accounts of Mr Bartlett and Ms Osborne.
[34] It is relevant to note that the Act does not establish any presumption in relation to whether a respondent has engaged in significant criminal activity, or has unlawfully benefited from significant criminal activity, or whether property is tainted property. It is for the Commissioner to prove each of those matters on the balance of probabilities. It follows that if the Court is satisfied that Mr Bartlett engaged in the cultivation and sale of cannabis during the analysis period, for an assets forfeiture to be made it is for the Commissioner to prove that it is more likely than not that the Chevrolet, the McLay boat and trailer, and the Polaris ATV were wholly or in part acquired, or directly or indirectly derived as a result of that cultivation and sale. It is not for Ms Osborne to rebut any presumption that they were so acquired or derived. The rebuttable presumption in s 53(1) relates only to the value of the benefit that Mr Bartlett and Ms Osborne derived from the sale and cultivation of cannabis for the purposes of a profit forfeiture order. However, the Court is entitled to draw an adverse inference from the absence of evidence to explain the source of funds used to acquire the assets.2
Did Mr Bartlett engage in the cultivation and sale of cannabis during the analysis period?
[35] The Commissioner says that the evidence of Mr Bartlett’s convictions for cannabis offending in 1999 and 2016, the evidence adduced by the police when Mr Bartlett was charged with, but was acquitted of, cannabis cultivation in 2002, the discovery of cannabis plants in close proximity to Mr Bartlett’s house in 2014, and the evidence of Ms Findley, taken together, demonstrate a propensity by Mr Bartlett to
2 Yan v Commissioner of Police [2015] NZCA 576, 2 NZLR 593 at [101].
cultivate cannabis on a commercial scale in a particular area, namely the Pouto Peninsula, on land outside his area of exclusive occupation. The Commissioner says, principally for the purposes of the profit forfeiture application, that Mr Bartlett received a benefit from the crop that was discovered by the police in 2014. The Commissioner also says, principally for the purposes of establishing the source of the cash that passed through Mr Bartlett and Ms Osborne’s bank accounts, that it is reasonable to infer that Mr Bartlett also cultivated and sold cannabis during the analysis period, and received a benefit from that activity, other than on the occasions identified by police in 1999, 2002, 2014 and 2016.
[36] As Mr McKean says, the offending in 1999 and the activities for which Mr Bartlett was charged in 2002 were remote from the analysis period and the conviction for cannabis cultivation in 2016 occurred after the analysis period. I agree that, taken in isolation, the convictions in 1999 and 2016 and the activities that took place in 2002 would not be sufficient to sustain an inference that Mr Bartlett had engaged in the cultivation and sale of cannabis over the two-decade period as alleged by the Commissioner or even in the analysis period. However, their probative value is greater when taken together and in connection with the other evidence submitted by the Commissioner.
[37]As Katz J said in Commissioner of Police v De Wys:3
[9] Circumstantial evidence allows a fact-finder to infer that a particular fact exists, even if there is no direct evidence of it. A single piece of circumstantial evidence will generally allow for more than one explanation. However, a number of separate items of circumstantial evidence, when considered together, may strongly support the drawing of a particular inference. Circumstantial evidence derives its force from the involvement of a number of factors that independently point to a particular factual conclusion.
[38] In the present case, Mr Bartlett’s convictions for cannabis offending establish that he engaged in the cultivation and sale of cannabis both before and after the analysis period. So too does the evidence of Detective Nicholas Davenport and Detective Andrew Glendinning with regard to the 2002 charges. The Job Sheet dated 20 March 2002 provided by Detective Glendinning records the observation and arrest of Mr Bartlett at a known cannabis plantation on that date. Even more significantly,
3 Police v De Wys [2016] NZCA 634.
with his fifth affidavit sworn on 28 June 2018, Detective Davenport provided an agreed statement of facts regarding the events of March 2002 that was signed by Mr Bartlett and admitted in evidence in accordance with s 9 of the Evidence Act 2006 in Mr Bartlett’s prosecution in 2017.
[39] The agreed statement of facts records that on 20 March 2002, Mr Bartlett was observed by police driving into and then parking his motor cycle in a remote area in the lower Pouto peninsular and then wading across a lake to a small island on which a large cannabis plot had been constructed. The plot was surrounded by nylon fishing net, had an intricate irrigation system, and contained 390 mature and well-tended cannabis plants, as well as freshly laid cyanide. A number of dead possums were located in the area. The statement also records that upon Mr Bartlett’s arrest at the scene, the backpack he had been wearing contained a tube of cyanide paste that was later identified as having been purchased by Ms Osborne.
[40] Notwithstanding Mr Bartlett’s acquittal on the 2002 charges, I am satisfied that the above evidence establishes, on the balance of probabilities, that Mr Bartlett at least tended the plants on the site, including by the poisoning of possums, and so was involved in the commercial cultivation of cannabis in 2002.
[41] As to Mr Bartlett’s activities during the analysis period, Detective Shawn House provides with his affidavit sworn on 21 January 2016 a sworn statement by Detective House describing the aerial surveillance in February 2014 that led to the identification of a cannabis plantation located in scrub land to the east of Mr Bartlett’s house at 5811 Pouto Road. The statement says the plantation had 37 mature cannabis plants and was irrigated by a water pump connected to a black alcathene pipe that attached to a water bore located between the plantation and Mr Bartlett’s house. The statement also says that the bore also fed another, larger alcathene pipe that led directly towards Mr Bartlett’s property. While that larger pipe went underground at a certain point, it matched a pipe that connected to a water tank at the rear of Mr Bartlett’s property.
[42] Detective House’s statement says that access to the cannabis plantation was possible only from a track leading directly from Mr Bartlett’s house to a secluded
beach – as was also apparent from a photograph produced at the hearing. In his affidavit, Detective House states that anyone accessing the plantation by vehicle would need to open a locked gate at the Pouto Road end of a shared accessway and then a second locked gate on Mr Bartlett’s driveway.
[43] Detective House’s evidence points very strongly towards Mr Bartlett being associated with the plantation by reason of its proximity to his house and because Mr Bartlett effectively controlled the land access to the plantation. That evidence is corroborated by the evidence of Mr Bartlett’s neighbour, Ms Findley, who said Mr Bartlett effectively controlled access to the shared drive way and was unwilling to allow access other than to people whom he had personally invited. Ms Findley also described the steps Mr Bartlett took to discourage others from landing on the beach.
[44] Mr McKean sought to cast doubt on the accuracy of Detective House’s evidence, for example by challenging his estimate of the distance between Mr Bartlett’s house and the water bore, and to question the veracity of Ms Findley because of her strained relations with Mr Bartlett. He also submitted that the plantation could have been accessed by Mr Bartlett’s brother and/or the brother’s partner who had lived in the house Ms Findley had occupied after she had left, or by a squatter or by others accessing the Māori land from other entry points. Notwithstanding those submissions I am satisfied that Mr Bartlett had effective control of access to the site and of the plantation itself. I find, therefore, that on the balance of probabilities, Mr Bartlett was responsible for the cultivation of the 37 plants found at the plantation discovered by the police in February 2014.
[45]It follows that:
(a)Mr Bartlett’s conviction of possession of cannabis for the purposes of supply in 1999 did not deter Mr Bartlett from involvement in the large scale cultivation of cannabis in 2002;
(b)The discovery of the cannabis plantation and the filing of charges for the cultivation in 2002 did not deter Mr Bartlett from involvement in further cultivation of cannabis in 2014;
(c)The discovery and destruction of the plantation found in 2014 did not deter Mr Bartlett from the large-scale cultivation that he undertook in 2016 and for which he was convicted in 2017 and has been serving a term of imprisonment.
[46] Given this sequence of events, I consider it reasonable to infer that, on the balance of probabilities, Mr Bartlett did engage in the commercial cultivation and sale of cannabis in the analysis period beyond that which occurred in the plantation found by the police in February 2014. Ms Findley’s observation of what she believed to be cannabis plants in the back of Mr Bartlett’s vehicle in late 2011 supports that inference.
Did Mr Bartlett benefit from the commercial cultivation and sale of cannabis in the analysis period?
[47] Ms Eastwood says that the financial evidence adduced by the Commissioner shows that, during the analysis period, Mr Bartlett and Ms Osborne incurred significant expenditure that exceeded their income and received significant amounts of unexplained cash which, in the absence of an adequate explanation, support the inference that they financed their expenditure and obtained the cash from significant criminal activity, namely the cultivation and sale of cannabis. Because, as recorded in Detective House’s statement of 27 May 2015, the plants discovered by police in February 2014 were removed and were subsequently destroyed, that inference can apply only to cannabis cultivation during the analysis period that was not discovered by police.
Total income of Mr Bartlett and Ms Osborne during analysis period
[48] Ms Eastwood says the evidence showed that the combined legitimate income of Mr Bartlett and Ms Osborne for the analysis period was $442,096.36, based on Detective Davenport’s evidence, drawing on Inland Revenue and Ministry of Social Development records. Mr McKean puts the figure at $605,982.25 based on a higher figure for declared income and by bringing into account categories of income not included Ms Eastwood’s figure. It is necessary to go into some detail to understand the reasons for this significant difference.
Declared income:
[49] Ms Eastwood’s figure is limited only to this component of the income of Mr Bartlett and Ms Osborne. It is based on Detective Davenport’s analysis which did not take into account two Working for Families payments to Ms Osborne of $7,131.58 and $2,019.95 on 9 August 2012 and 24 July 2014. Ms Eastwood’s figure also contained a minor error in carrying over a figure from Detective Davenport’s evidence. I accept Mr McKean’s figure of $451,238.26 for this component of income.
Term deposits:
[50] Detective Davenport excluded from his calculations money which Ms Osborne said she and Mr Bartlett received from selling a Harley Davidson motorcycle for
$20,000 and from selling a boat for approximately $20,000 to one Marcel Grand on the grounds the Detective was not able to identify deposits relating to those transactions and because New Zealand Transport Authority records indicated Ms Osborne had disposed of the motorcycle before the commencement of the analysis period. Ms Eastwood also questioned whether Marcel Grand was a real person.
[51]Ms Osborne says the proceeds of these sales were put into term deposits for
$20,000 and $60,000 respectively which matured during the analysis period in September and October 2008. Ms Osborne says that approximately $40,000 of the
$60,000 deposit was made up of savings of Mr Bartlett and Ms Osborne.
[52] There was no dispute that Ms Osborne sold the motorcycle in November 2005. Ms Osborne says the sale price was $20,000 but cannot recall the name of the purchaser. Ms Osborne says she put the proceeds into a term deposit which matured in September 2008 during the analysis period. Ms Eastwood challenges the veracity of that assertion because the interest paid on maturity was only $1,744.76. However, since interest is usually paid periodically over the period of a term deposit I do not consider that the value of the interest paid to be of much assistance. On the information before the Court, which includes proof that the deposit matured within the analysis period, I consider that Ms Osborne’s evidence that the proceeds of the sale of the Harley Davidson became available to her during the analysis period must be given due consideration.
[53] I am also satisfied from the evidence of Detective Davenport and Ms Osborne that Ms Osborne had a trailer registered to her in 1999. I accept Ms Osborne’s evidence that that trailer was a boat trailer and that Marcel Grand is a real person. On that basis, I am prepared to accept Ms Osborne’s account that Ms Osborne sold someone called Marcel Grand a boat for approximately $20,000 cash as she said and that this figure formed part of $60,000 term deposit that matured in October 2008.
[54] Ms Eastwood says the term deposits are irrelevant in any event because the sales and the consequential deposits were made before the analysis period. She also says Ms Osborne has failed to provide documents and details of the boat sale and questions how Mr Bartlett and Ms Osborne could have accumulated savings of approximately $40,000 when they were both beneficiaries between 2002 and 2007. Ms Eastwood invites the Court not to accept Ms Osborne’s evidence on these matters by reference to the reverse onus in s 53 of the Act. However, I agree with Mr McKean that term deposits that mature within the analysis period, as was the case with the deposits in question, should be considered as income. For these reasons. I consider that it is appropriate to add $40,000 to the combined income of Mr Bartlett and Ms Osborne to take account of the maturity of term deposits made upon the sale of Harley Davidson motorcycle and the boat.
[55] The evidence regarding the savings of approximately $40,000 is more difficult. I share Ms Eastwood’s doubts that Mr Bartlett and Ms Osborne could have saved approximately $40,000 in savings while they were both beneficiaries. Ms Osborne herself acknowledged the improbability of that and said that the money came from other sources such as the sale of vehicles. However, Ms Osborne’s evidence on this point was far from clear. I consider that there is a real question about the source of these funds which needs to be considered in conjunction with the source of the cash deposits made into the bank accounts of Mr Bartlett and Ms Osborne that is discussed later in this judgment.
[56] However, whatever the source of the funds that made up the balance of the term deposit, since the deposit matured during the analysis period, I consider the whole of the deposit should be added to the combined income of Mr Bartlett and Ms Osborne.
Sale of vehicles:
[57] Mr Kean says a further $22,000 should be added to the combined income of Mr Bartlett and Ms Osborne from the sale by Ms Osborne of a Toyota Surf ($9,000), a Toyota Hilux ($9,000) and a Ford Futura ($4,000).
[58] Ms Osborne says that she acquired the Surf in 2002 but that she put it in her father’s name for insurance purposes and that he later gifted it to her. Her father, Bruce Osborne, swore an affidavit saying he had never owned a Surf or given a car to his daughter. However, in cross-examination Mr Osborne effectively confirmed Ms Osborne’s account that she had registered the car in his name for insurance purposes, even though doubt remained about the provenance and reliability of a piece of paper signed by Mr Osborne confirming the gift. In any event, I was satisfied that Ms Osborne had put forward sufficient evidence to support her claim that she had sold the Surf for $9,000 during the analysis period.
[59] Ms Osborne said in her evidence that she also sold a Toyota Hilux with the registration OD38 for $9,000 during the analysis period. Mr McKean says it is the sale of that vehicle that should be credited to the combined income of Mr Bartlett and Ms Osborne. However, in cross examination Ms Osborne accepted that that vehicle was still at the Pouto Road property and had not been sold. It follows that the sale of that vehicle cannot be added to the combined income of Mr Bartlett and Ms Osborne.
[60] In his evidence, Detective Davenport records that the Ford Futura was registered to Ms Osborne until 9 November 2015, well after the analysis period. That evidence was not disputed. It follows that the proceeds of the sale of that vehicle cannot be added to the combined income of Mr Bartlett and Ms Osborne for the analysis period.
Miscellaneous:
[61] Mr McKean says a further $9,299 should be added to the combined income of Mr Bartlett and Ms Osborne made up of a loan from Ms Osborne’s grandmother, Joyce Osborne ($5,000), the sale of scrap metal ($1,299) and a loan from Colin Taurua ($2,000).
[62] Mr McKean refers to an entry in Mrs Joyce Osborne’s cheque book, dated October 2013, which records “Cash. D” as evidence of the loan from the grandmother. In her evidence, Ms Osborne said her grandmother gave her a loan of $6,000 made up of the money recorded in the cheque book entry and a further $1,000 in cash.
[63] The entry in Mrs Osborne’s cheque book supports Ms Osborne’s assertion she received a loan of at least $5,000 from her mother so that amount can be added to the combined income of Mr Bartlett and Ms Osborne for the analysis period. Whether it supports Ms Osborne’s claim that the loan was put towards the purchase of the McLay boat is another matter, as I discuss below.
[64] Mr McKean has also referred to an entry in Ms Osborne’s ASB bank records that shows a deposit of $1,299.00 paid into Ms Osborne’s account on 15 April 2013 by Waipapa Metal Industries which Ms Osborne says was for scrap metal. I accept that amount can be added to the combined income for Mr Bartlett and Ms Osborne during the analysis period.
[65] In an affidavit sworn on 27 January 2016, Mr Taurua said he loaned Mr Bartlett and Ms Osborne the sum of $2,000 when they purchased the McLay boat. In cross- examination, however, Mr Taurua said it was his wife who gave the loan to Mr Bartlett and Ms Osborne and he held to that account despite Ms Eastwood’s effort to get Mr Taurua to admit he was giving evidence to support his friends, Mr Bartlett and Ms Osborne. Whether or not Mr Taurua’s evidence was intended to bolster the position of Ms Osborne, I found Mr Taurua’s account of how he and Mr Bartlett assisted each other, usually on the basis of an informal barter arrangement under which each helped out the other as the need arose, to be generally credible and consistent with life in a remote rural community. I accept, therefore, that Mr Taurua or Mrs Taurua lent Mr Bartlett $2,000.
Loans:
[66] Mr McKean says a further $43,444.99 should be added to the combined income of Mr Bartlett and Ms Osborne for loans extended to Ms Osborne for $14,750 on 28 June 2013, $18,972.61 on 12 June 2014, and $9,722.38 on 11 November 2014. These loans are all recorded in Ms Osborne’s ASB Bank records. Ms Osborne says they
were taken out to help with the purchase of the Chevrolet, the Polaris and the vehicle Ms Osborne currently drives. Regardless of their purpose, I accept that the loans should be added to the combined income.
[67] As a consequence of the above analysis, I accept that the combined income of Mr Bartlett and Ms Osborne during the analysis period was:
Declared income: $451,238.26 Term Deposits:
$ 80,000.00
Sale of vehicles:
$ 9,000.00
Miscellaneous:
$ 9,299.00
Loans: $ 43,444.99
Total combined income: $592,982.25
Total expenditure of Mr Bartlett and Ms Osborne during analysis period
[68] Ms Eastwood and Mr McKean agree that the starting figure for the combined expenditure of Mr Bartlett and Ms Osborne during the analysis period is $441,956.23, based on Detective Davenport’s analysis of Mr Bartlett’s and Ms Osborne’s bank accounts. Mr McKean says the sum of $19,885.00 for the purchase of the Polaris should be deleted because it is considered separately under his calculation. That results in a starting figure of $422,071.23.
[69] Mr McKean says the following sums should be added: $75,000.00 for the McLay boat and trailer, $26,000 for the Chevrolet, $27,995.00 for the Polaris,
$6,022.61 for fees paid to Dargaville Vets and $5,257.00 for airfares. This brings the total combined expenditure for the analysis period to $562,345.84. Mr McKean then says the sum of $16,892.99, being the total amount of expenses that Detective Davenport identified as relating to the construction of the new home at Pouto Road, should be deducted because they were dealt with separately by Detective Davenport in his analysis.
[70] I accept that Detective Davenport’s analysis, which was used to establish the starting point for the combined expenditure of Mr Bartlett and Ms Osborne, included entries for building expenses of $12,069.32 in Mr Bartlett’s ASB bank records and
$4,823.67 in Ms Osborne’s ASB Bank records and that these figures were then subsumed in a separate analysis of the construction costs of the house.4 Accordingly, I make the deduction proposed by Mr McKean. This brings total combined expenditure for the analysis period to $545,452.85.
[71] Based on the above analysis, therefore, the total combined income of Mr Bartlett and Ms Osborne during the analysis period was $592,982.25, while the total combined expenditure was $545,452.85 – a surplus of income over expenditure of $47,529.40 before consideration of the construction costs of the new house and Ms Osborne’s claim to have raised significant cash through the sale of puppies and pine cones. The surplus of income over expenditure is somewhat less than that calculated by Mr McKean - $60,529.40. However, there remains a serious question about the source of the $40,000 savings that went towards the term deposit of $60,000. If the source was the cultivation and sale of cannabis, it cannot be included as legitimate income, which reduces the effective surplus to $7,529.40. In that case, the combined income and expenditure of Mr Bartlett and Ms Osborne would be roughly in balance, as Ms Eastwood says, even without taking into consideration the costs of building Mr Bartlett’s house at Pouto Road.
Construction costs
[72] The Commissioner argues that if income and expenditure were roughly in balance without any regard to the costs that Mr Bartlett must have incurred in building a sizeable house at 5811 Pouto Road, that gives rise to an inference that Mr Bartlett must have met those costs from some other source, namely the cultivation and sale of cannabis. That issue arises even if there was a surplus of income over expenditure. There was a significant difference between the Commissioner and Ms Osborne, however, on the approach to calculating the construction costs.
4 In her closing submissions, Ms Eastwood notes that the figure of $12,069.32 was increased to
$12,189.32 to take account of withdrawals from Mr Bartlett’s ASB Bank account in the separate calculation of building costs but that does not affect the deduction proposed by Mr McKean.
[73] The Commissioner’s approach as set out in the third affidavit of Detective Davenport is to take the alternative valuation contained in a report prepared by Ian Sweeney, a quantity surveyor, at the request of Mr Bartlett. The alternative valuation was based on an estimate of construction costs for a house of the dimensions of that built by Mr Bartlett at Pouto Road. That estimate was $225,588.30 exclusive of GST, so Mr Davenport adopted a GST inclusive cost of $259,426.54.
[74] Ms Eastwood uses this estimate in her closing submissions and says that the labour costs inherent in the estimate should not be deducted because there was no direct evidence that Mr Bartlett undertook most of the construction himself. Ms Eastwood says, however, that even if labour costs of $59,168.72 – as estimated in Mr Sweeney’s primary valuation method – are deducted, that still leaves a cost of
$200,257.82.
[75]There are a number of difficulties with the Commissioner’s approach:
(a)Detective Davenport’s reasons for preferring the alternative approach, are open to question. For example:
(i)The Detective says the primary valuation method used 2009 values when work was not substantially complete until March 2010 and substantial work was done after that time. However, the alternative valuation also used 2009 values.
(ii)The Detective says no allowance was made under the primary valuation for significant work outside the building footprint. No such allowance was made under the alternative valuation either.
(iii)The Detective was reluctant to accept Mr Bartlett’s instruction that all building works, including plumbing and electrical work not required by law to be completed by a tradesperson was undertaken by Mr Bartlett himself yet offered no evidence to indicate why that instruction should not be accepted as truthful. Nor does it take into account that Mr Sweeney’s primary
valuation method included an estimate of cost to construct the dwelling, notwithstanding Mr Bartlett’s instruction that he did most of the construction work himself.
(b)To add GST to the notional value may be technically correct if Mr Bartlett should have paid GST. However, in the absence of evidence that Mr Bartlett actually did pay GST, a legal obligation to pay GST is not relevant to whether Mr Bartlett paid for expenses actually incurred from funds derived from the cultivation of cannabis.
[76] It is difficult to avoid the conclusion that the Commissioner has sought to maximise the costs of construction based on notional considerations rather than actual evidence in order to buttress the argument that Mr Bartlett must have used the proceeds of cannabis cultivation to pay for his expenses as well as the costs of construction of the house. I consider the Commissioner has erred in taking this approach which is not consistent with the purposes of the legislation or consistent with the significant and coercive powers that the Commissioner exercises under it.
[77] For these reasons, I consider that the best evidence of the costs of construction of the house is that contained in Mr Sweeney’s primary valuation which estimated the costs of materials at $90,268.50, the plant required to construct the dwelling at
$3,855.30 and sub-contractors at $7,477.64, resulting in a total cost of $101,601.44.
[78] I make no allowance for the cost of labour given Mr Sweeney’s response to the question from the Court that all labour costs should be deducted if Mr Bartlett undertook the construction of the house himself. I am satisfied from the evidence of Mr Taurua, who says he assisted Mr Bartlett in preparing the site, the concreting, putting in poles and helping with the construction itself, and who says he loaned Mr Bartlett his tractors, a digger and a saw, that Mr Bartlett did indeed undertake most of the construction himself.
[79] However, I consider the figure of $101,601.44 to be a minimum figure. I accept that the total costs of construction and fitting out the house would have been significantly higher. Mr Sweeney’s report specifically recorded that he valued the
house on the basis that it had no floor coverings or furnishings, the exterior was unpainted, no finishing coats had been applied to interior surfaces, no whiteware had been installed and he made no allowance for matters such as work outside the footprint of the house or interior linings to the exterior walls of the house.
[80] Notwithstanding Ms Osborne’s evidence that she and Mr Bartlett used furnishings and materials from the previous house and materials Mr Bartlett’s father obtained for them at auctions, I accept that the costs for completing the house would have been significantly greater than $101,601.44. In his affidavit sworn on 21 January 2016, Detective House stated that the exterior of the house had been painted as had all interior surfaces, and whiteware had been installed. He also stated that a driveway and paving had been installed and landscaping undertaken. Even if Mr Bartlett had done the labour himself, there would have been significant additional costs. There was insufficient evidence before me to decide the scale of those additional costs but for the purpose of this judgment I will assume that the costs of construction were at least of the order of $110,000. Having regard to the surplus of $47,529.40 of income over expenditure discussed above, this means Mr Bartlett and Ms Osborne would have had to find at least $62,000 to meet the costs of building the house. That figure increases to $102,000 if the source of the $40,000 in the $60,000 October 2008 term deposit was from the cultivation and sale of cannabis.
Sources of income to meet construction costs
[81] Mr McKean says it is apparent from the bank accounts of Mr Bartlett and Ms Osborne that Mr Bartlett had sufficient cash to meet the costs of building materials used in constructing the house. He refers to Detective Davenport’s analysis of income and expenditure which has expenditure entries for cash withdrawals of $108,296.80 from Mr Bartlett’s ASB account and $15,074.96 and $6,000 from Ms Osborne’s ASB account, producing a total of $129,371.76. Mr McKean acknowledges that a deduction should be made to reflect the amount which Ms Osborne re-banked from Mr Bartlett’s account into her own account. Mr McKean put that amount at $50,510, the figure that Jing Chen, the financial analyst called by the Commissioner, said was the total of the re-banking transactions made by Ms Osborne.
[82] In her evidence, however, Ms Chen said that, following a line by line comparison of cash withdrawals from Mr Bartlett’s account against cash deposits into Ms Osborne’s account, the total amount that may be attributed to re-banking was
$46,500. If that sum is deducted from the cash withdrawals recorded as expenses in Detective Davenport’s analysis, that leaves a sum of $82,871.76 which, on Mr McKean’s submission, could have been put towards the cost of the house.
[83] If Mr McKean is correct, that sum would still fall short of the minimum costs of construction as calculated above if Mr Bartlett had to meet $102,000 from legitimate sources of income because the need to exclude the $40,000 in the October 2008 $60,000 term deposit if the source of that deposit was the cultivation and sale of cannabis. More importantly, that explanation does not explain the source of the cash that passed through the bank accounts of Mr Bartlett and Ms Osborne.
Source of cash deposits
[84] Mr McKean does not challenge the analysis of Ms Chen who says that during the analysis period cash deposits totalling $111,698.41 were made into the bank accounts of Mr Bartlett and Ms Osborne, after deducting the amount re-banked by Ms Osborne.
[85] Mr McKean says the Commissioner has not proved to the required standard that this cash was the benefit derived from cannabis cultivation and that Mr Bartlett and Ms Osborne bear no onus of proof to show that the cash was derived from sources other than cannabis cultivation. Mr McKean also notes that even if the Court accepts that Mr Bartlett was responsible for cultivating the cannabis that was found by the police in 2014, that crop was destroyed by the police and could not have resulted in any proceeds to Mr Bartlett. In addition, Mr McKean says Ms Osborne has provided credible information to explain other sources of income that she received over the analysis period and which explain the cash deposits.
Sale of dogs / puppies
[86] Ms Osborne says she and Mr Bartlett bred, trained and sold pig dogs, that they could get between $100 and $500 for a puppy and between $1,000 and $2,000 for a
trained animal, and would sell up to 9 dogs a year and would make approximately
$5,000 per year. She produced advertisements for the sale of 8 puppies in June 2009 and 2 puppies in July 2009 and said she put similar advertisements in the papers most years. Mr McKean says this means Mr Bartlett and Ms Osborne would have made
$35,000 from this activity over the analysis period, if credit is given for all of 2008.
[87] I accept that Mr Bartlett and Ms Osborne bred and sold puppies and dogs. I accept that some of the entries in the Dargaville dog register, on which Ms Eastwood challenged Ms Osborne, may not have been accurate. I accept that Mr Bartlett and Ms Osborne did not maintain any records or register the dogs they bred and sold. But I consider that Ms Osborne exaggerated the extent and value of the sales they achieved. I do not accept that they would have cleared $5,000 in cash consistently over a seven- year period. That would have required them to sell 10 puppies each year for the top dollar price of $500, or a smaller number combined with the sale of one or two trained dogs, without taking into consideration the costs of the enterprise. For these reasons, I do not accept that they would have earned $35,000 over seven years from this activity.
Sale of pinecones
[88] Ms Osborne said that from 2007 Mr Bartlett and their daughter collected and bagged pinecones from a large pine forest on Māori land near their property during the school holidays and would sell the dried pinecones for cash at $15 a bag, or $25 for two bags, if sold in Northland, or $20 a bag if sold in Auckland. She estimated that they would make approximately $6,000 a year from this activity. Ms Osborne produced a copy of an advertisement for the sale of pinecones at Northland prices that she says she placed in the Dargaville and District News in 2015 and says she placed similar advertisements in earlier years.
[89] Mr McKean says this evidence is credible and means Mr Bartlett and Ms Osborne would have made $42,000 from this activity over the analysis period, if credit is given for all of 2008.
[90] To achieve $6,000 a year from this activity would mean filling and selling at least 300 bags of pinecones if sold for $20 a bag, or 350 bags if sold for $15 a bag.
The total would be ever larger if many people took up the $25 for two bags option. That would be a significant operation and would have to have been visible to others in the area. Yet Ms Findley said she never saw Mr Bartlett with firewood or bags of pinecones.
[91] I accept that Mr Bartlett and his daughter collected and sold pinecones but I do not accept that the operation was on the scale alleged by Ms Osborne. For these reasons, I do not accept that Mr Bartlett and Ms Osborne would have earned $42,000 over seven years from this activity.
Under the table work
[92] Ms Osborne said Mr Bartlett would undertake occasional cash work for others such as fixing cars and doing work on their properties and estimated that Mr Bartlett would do up to ten such jobs over the course of a year and would have been paid between $150 and $200 per day. Ms Osborne’s evidence on these matters was far from convincing and I accept in that regard Ms Eastwood’s submission that Ms Osborne’s responses to Ms Eastwood’s questions about how Mr Bartlett was able to do such work when he was sick and on a sickness benefit were evasive.
[93] Even so, Mr McKean says that on the basis of Ms Osborne’s evidence it is conceivable that Mr Bartlett would have made between $5,000 and $6,000 per year or
$35,000 to $42,000 for occasional cash work over the analysis period, if credit is given for all of 2008.
[94] Mr Taurua confirmed that Mr Bartlett was a hard worker and had an extensive knowledge of machinery and that Mr Taurua employed Mr Bartlett to service his farm equipment. Mr Taurua said he would pay Mr Bartlett in cash – from $200 to $1,500 per year or by barter arrangement such as providing Mr Bartlett meat or fuel for his vehicle. In cross examination, Mr Taurua said that he and Mr Bartlett mainly used the barter arrangement because there were few options for spending cash in Pouto. This suggests the cash component of any work from Mr Taurua would not have been significant.
[95] James Forrest, whose farm is on Pouto Road, said he also employed Mr Bartlett from time to time to service his machinery and drive trucks and had paid him up to
$1,000 per year as well as giving him meat and fuel. Mr Forest acknowledged that a payment of $1,000 was a rare exception. There was no direct evidence of any other work that Mr Bartlett undertook for others in the district.
[96] I accept from the evidence of Ms Osborne, Mr Taurua and Mr Forrest that Mr Bartlett undertook occasional work for others in the district during the analysis period and was sometimes paid in cash for this work. However, the evidence provides no basis for concluding that Mr Bartlett would have earned anything like the $35,000
- $42,000 which Mr McKean argued he earned from this work, particularly when much of the work was paid for by barter arrangement and particularly when, as I have found, Ms Osborne was evasive in her responses to questions concerning Mr Bartlett’s ability to take on such work while sick.
[97] It follows that I do not accept Mr McKean’s submission that Ms Osborne has put forward a credible explanation for the cash deposits totalling $111,698.41 which were made into the bank accounts of Mr Bartlett and Ms Osborne during the analysis period. While some of the cash may be attributable to selling puppies and pinecones and to Mr Bartlett’s occasional cash work, I do consider it unlikely that those activities could have generated anything like $100,000, particularly in view of the barter arrangements Mr Bartlett made with respect to the under the table work. Because I have found that Ms Osborne’s evidence with respect to the alleged sales of puppies and pinecones was not credible and because Ms Osborne has not put forward another credible explanation for the sources of the cash that passed through her bank accounts, I conclude that she was concealing the real source of the cash which I infer to be the cultivation and sale of cannabis.
[98] Having regard to Mr Bartlett’s proven involvement in cannabis cultivation in 1999 and the evidence of his cultivation of cannabis in 2002, as well as the inference I have drawn regarding Mr Bartlett’s involvement in cannabis cultivation during the analysis period, I also consider it more likely than not that the source of the $40,000 in savings that made up the term deposit of $60,000 that matured during the analysis period was cannabis cultivation prior to the analysis period.
Conclusions from financial evidence
[99] Taking all of the financial evidence into account, I conclude that the combined income of Mr Bartlett and Ms Osborne over the analysis period was not sufficient to have met all of their combined expenditure as analysed by Detective Davenport as well as the costs of the construction of the house at Pouto Road. I also conclude that there is no credible explanation to account for over $100,000 in cash deposits which were made into the bank accounts of Mr Bartlett and Ms Osborne and which were not re-banked by Ms Osborne.
[100] I accept Mr McKean’s submission that Ms Osborne does not bear an onus to prove that the gap between income and expenditure was not met by, and the cash did not come from, the cultivation and sale of cannabis. However, having regard to all the circumstances, including my earlier finding that Mr Bartlett engaged in the commercial cultivation and sale of cannabis in the analysis period beyond that which occurred in February 2014 and my finding that Ms Osborne has concealed the real source of the cash, I consider it reasonable to infer that it is more likely than not that the gap between income and expenditure was met by, and the unexplained cash came from, the cultivation and sale of cannabis during the analysis period.
[101] For these reasons, I am satisfied that Mr Bartlett derived a benefit from the cultivation and sale of cannabis during the analysis period. As stated at [47], that benefit must have been derived from the cultivation of cannabis other than the cultivation discovered by the police in February 2014.
Is the property tainted?
[102] The question with respect to the assets forfeiture application is whether the Commissioner has established on the balance of probabilities that the property was, wholly or in part, acquired as a result of significant criminal activity, or directly or indirectly derived from significant criminal activity.
The Chevrolet (purchased in June 2013 for $26,000)
[103] The Commissioner and Ms Osborne agree that the acquisition of the Chevrolet in June was funded by:
(a)Loan of $15,000;
(b)Sale of Toyota Surf for $9,000;
(c)$2,000 from Mr Bartlett and Ms Osborne.
[104] Ms Osborne confirmed in response to Ms Eastwood’s questions that there had been a series of repayments of that loan where the repayments had been accompanied by the deposit into Ms Osborne’s bank account of cash of the same or greater amounts than the payments that were due. Ms Eastwood identified 16 such occurrences totalling $6,900 over a period of about a year. Ms Osborne accepted that this cash could not all have come from the sale of pinecones but offered no explanation other than this was “extra money” that she and Mr Bartlett had.
[105] I consider it more likely than not that at least some of the cash that was used to repay the loan came from the proceeds of the cultivation and sale of cannabis. I also consider it more likely than not that at least some of the $2,000 that Mr Bartlett and Ms Osborne contributed towards the purchase of the Chevrolet also came from the proceeds of the cultivation and sale of cannabis. Accordingly, I am satisfied that the Chevrolet was in part, acquired or directly or indirectly derived as a result of significant criminal activity and is tainted property.
McLay boat and trailer (purchased in April 2013 for $75,000)
[106] Ms Osborne says that the acquisition of the McLay boat and trailer was funded by:
(a)$62,000 from Ms Osborne’s ANZ account;
(b)$6,000 loan or gift from grandmother;
(c)$5,000 cash held by Mr Bartlett and Ms Osborne from sales of puppies and pinecones;
(d)$2,000 loan from Mr Taurua.
[107] Ms Osborne was able to withdraw $62,000 from her account because it had a positive balance following the maturity of the two term deposits of $20,000 and
$60,000 in September and October 2008. I have already held that it was more likely than not that the source of the $40,000 in the $60,000 term deposit was the cultivation and sale of cannabis. To that extent, therefore, the acquisition of the boat and trailer derived indirectly from the cultivation and sale of cannabis.
[108] I do not accept Ms Osborne’s evidence that the loan was partly financed by a loan from her grandmother. The evidence of the loan was the entry in her grandmother’s cheque book for a loan made in October 2013. However, the boat was purchased in April 2013, some six months before the date of the loan. It follows that the loan cannot have been put towards the purchase of the boat and trailer. Given the amounts of cash that came into Ms Osborne’s account during the analysis period and my finding that that cultivation and sale of cannabis was the likely source of that cash, I consider that it is more likely than not that the cultivation and sale of cannabis was also the source of the funds said to have been borrowed from Ms Osborne’s grandmother.
[109] Accordingly, I am satisfied that the McLay boat and trailer were in part, acquired or directly or indirectly derived as a result of significant criminal activity and are tainted property.
Polaris (purchased in June 2014 for $27,995)
[110] According to the evidence of Shane Rouse, the vendor of the Polaris, and Ms Osborne the Polaris was paid for by:
(a)Draw down of $18,995 from a of $22,187 from the ASB Bank
(b)Cash of $9,000.
[111] Ms Osborne says the cash came from her grandmother and various other sources, including the sales of puppies and pinecones. I do not find that evidence credible. For the reasons already discussed, I consider it more likely than not that at least some of the cash used to purchase the Polaris came from the proceeds of the cultivation and sale of cannabis. Accordingly, I am satisfied that the Polaris was in part, acquired or directly or indirectly derived as a result of significant criminal activity and is tainted property.
Conclusions with respect to assets forfeiture order
[112] I am satisfied that the property is tainted property and, in accordance with s 50 of the Act, I am required to make an assets forfeiture order in respect of the property.
Application for profit forfeiture order
[113] In her closing submissions, Ms Eastwood said the Commissioner’s application is first for an assets forfeiture order pursuant to s 50 of the Act and secondly, and in the alternative, for a profit forfeiture order under s 55 against Mr Bartlett and Ms Osborne jointly and severally in the sum of $185,000 and, if required, orders under s 58 of the Act that Mr Bartlett had effective control over the property.
[114] Since that is the Commissioner’s position, there is no need to consider the application for a profit forfeiture order or orders under s 58 now that I have decided that I must grant the application for an assets forfeiture order. For that reason, there is no need to decide whether the Commissioner’s value of the benefit is consistent with s 53 of the Act. I consider it appropriate to record, however, that I have significant doubts about the Commissioner’s approach to valuing the benefit said to have been received by Mr Bartlett from the cultivation and sale of cannabis during the analysis period.
[115] The Commissioner has nominated the value of the benefit at $185,000, being the upper end of the range estimated by Detective Sergeant Sowter for the value of the 37 cannabis plants found in the plot near to the Pouto Road property in February 2014. However, as also already noted, those plants were removed and were subsequently destroyed.
[116] Notwithstanding the destruction of the 2014 crop, Ms Eastwood says it is open to the Commissioner to value the benefit Mr Bartlett derived from the cultivation and sale of cannabis on the basis of the destroyed crop because the term “benefit” as used in the Act should be interpreted to include the value of controlled drugs that Mr Bartlett had in his possession or under his control. Ms Eastwood says this interpretation accords with the language of the Act and its purposes and principles.
[117] Ms Eastwood says because “benefit” is defined in s 5 of the Act to include “property”, and because “property” is defined broadly in s 5 to mean real or personal property of any kind, and because controlled drugs are tangible property of value, it follows that controlled drugs such as a cannabis crop are property and can therefore be a benefit for the purposes of s 53. Ms Eastwood says that interpretation is consistent with the purpose and principles of the Act and she refers to Pulman v Commissioner of Police where Lang J emphasised that the forfeiture regime established under the Act proposes to eliminate not only the ability of persons to profit from undertaking significant criminal activity but also the “chance” that they may be able to do so.5
[118] I do not accept that the definitions of “proceeds” and “property” in s 5 of the Act can be interpreted and applied in s 53 as Ms Eastwood has submitted, particularly having regard to the basis on which the Commissioner’s case has been advanced. Nor do I consider that interpretation to be consistent with the purpose of the Act or with Lang J’s decision in Pulman.
[119]The purpose of the Act as stated in s 3 is:
3 Purpose
(1)The primary purpose of this Act is to establish a regime for the forfeiture of property—
(a)that has been derived directly or indirectly from significant criminal activity; or
(b)that represents the value of a person’s unlawfully derived income.
(2)The criminal proceeds and instruments forfeiture regime established under this Act proposes to—
5 Pulman v Commissioner of Police HC Auckland CIV-2010-404-5666, 27 May 2011 at [25].
(a)eliminate the chance for persons to profit from undertaking or being associated with significant criminal activity; and
(b)deter significant criminal activity; and
(c)reduce the ability of criminals and persons associated with crime or significant criminal activity to continue or expand criminal enterprise; and
(d)deal with matters associated with foreign restraining orders and foreign forfeiture orders that arise in New Zealand.
[120]Section 7 of the Act provides:
7Meaning of unlawfully benefited from significant criminal activity
In this Act, unless the context otherwise requires, a person has unlawfully benefited from significant criminal activity if the person has knowingly, directly or indirectly, derived a benefit from significant criminal activity (whether or not that person undertook or was involved in the significant criminal activity).
[121] It is apparent from the above provisions, that the focus of the Act is on property derived from significant criminal activity or the value of the unlawfully derived benefit or income. It is not on the criminal activity itself. To say that the property derived from the criminal activity – in this case, growing a cannabis crop of the proportions that make that activity significant criminal activity - is the criminal activity itself is a tautology. The crop has a value in a commercial sense only if and when it is sold. In Pulman, where the issue was whether the pharmacy employee had received a benefit from the sale of pseudoephedrine where the proceeds of sale had been handed directly to his employer, Lang J held that the employee had received a benefit because the drugs had been sold. Lang J stated that:6
The receipt of cash in those circumstances must, in my view, amount to the derivation of a benefit from criminal activity.
(Emphases added.)
[122] There has been no cash received by Mr Bartlett or anyone else from the cultivation of the crop in 2014. Futhermore, if Ms Eastwood is correct and the crop is the property for the purpose of the Act, that property has already been forfeited through
6 At [25].
its destruction by police. It must follow that there is nothing to which this Act can now attach, bearing in mind that s 3 addresses forfeiture of property “or” income.
[123] The other difficulty with the Commissioner’s approach to the valuation of benefit is that a substantial part of the Commissioner’s case was put on the basis that Mr Bartlett cultivated and sold cannabis on occasions that have not been identified by police, in addition to the cannabis plots that were identified in in 2002, 2014 and 2016. As recorded at [46], I have found that Mr Bartlett did indeed engage in the commercial cultivation and sale of cannabis in the analysis period beyond that which occurred in the plantation found by the police in February 2014. As recorded at [101] I have found that Mr Bartlett derived a benefit from the cultivation and sale of cannabis during the analysis period and that that benefit must have been derived from the cultivation of cannabis other than the cultivation discovered by the police in February 2014.
[124] For these reasons, I do not consider I could properly have made a profit forfeiture order based on a valuation of a crop that was destroyed by police before sale and which was not the crop that formed the basis of the finding that Mr Bartlett had received a benefit from significant criminal offending. While s 53 establishes a presumption that the value of the benefit of significant criminal activity is that sated in the application, that valuation must established in accordance with the purpose of the Act and must be consistent with the benefit found to have been received.
Result
[125]The Commissioner’s application for an assets forfeiture order is granted.
[126]In accordance with s 50 of the Criminal Proceeds (Recovery) Act 2009:
(a)I make an assets forfeiture order in respect of the following property, which is currently in the custody and control of the Official Assignee under a restraining order made on 30 June 2015 and varied on 6 August 2015:
(i)A 1999 Chevrolet K2500 Suburban motor vehicle, registered number GW5616, registered to Ms Osborne;
(ii)An aluminium McLay 775 boat with 250 horse power outboard motor;
(iii)A boat trailer, registered number U892Z, registered to Ms Osborne;
(iv)An unregistered Polaris RZR XP all-terrain vehicle; and
(b)I specify that the property vests in the Crown absolutely and shall remain in the custody and control of the Official Assignee.
[127]Because Ms Osborne was legally aided, I make no order as to costs.
G J van Bohemen J
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