Commissioner of Police v Carson

[2015] NZHC 2442

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2015-409-392 [2015] NZHC 2442

IN THE MATTER

of an Application pursuant to ss 22 and 25

of the Criminal Proceeds (Recovery) Act
2009

BETWEEN

THE COMMISSIONER OF THE NEW ZEALAND POLICE

Applicant

AND

PAUL WILLIAM CARSON First Respondent

LAUREN REBECCA FRENCH Second Respondent

(proceedings discontinued by this

Judgment)

Hearing:

On the Papers and Teleconference with Counsel H McKenzie

6 October 2015

Counsel:

H McKenzie and BM Stanaway for the Applicant
PC Maciaszek for the Second Respondent
No appearance for first Respondent

Judgment:

6 October 2015

JUDGMENT OF DAVIDSON J

Introduction

[1]      The plaintiff Commissioner began these proceedings by a without notice application for a restraining order that certain property not be disposed of or dealt with other than as provided for in the restraining order, and that such property be

under the Official Assignee’s custody and control.

THE COMMISSIONER OF THE NEW ZEALAND POLICE v CARSON & ANOR [2015] NZHC 2442 [6 October 2015]

[2]      Her Honour Justice Dunningham granted an interim order on 19 June 2015, and the Commissioner then sought a restraining order in respect of the same property by application on notice.

[3]      A restraining order does  not  require a finding  that  the respondents  have unlawfully benefitted from significant criminal activity because that determination is a function of s 5 of the Act. Instead, a restraining order is based on the existence of reasonable grounds to believe the respondents have unlawfully benefited from significant criminal activity.

[4]      When an order is obtained on an application made without notice it expires seven days after the date on which it was made,1  but if an application on notice is filed in that time the without notice order remains in force until formal disposition of the on notice application.

[5]      Forfeiture  may  not  marry  with  the  property  which  is  the  subject  of  a restraining order. Further, forfeiture may be ordered on grounds other than those on which the property was restrained.2     The restraint may go beyond that which is ultimately forfeited.

[6]      The Court was provided with evidence of service of these proceedings on the first respondent. No steps were taken in opposition.

The application

[7]      The application is based on the first respondent (Mr Carson) having pleaded guilty to cultivation of cannabis and possession of cannabis for supply, thus “significant  criminal  activity”  for  the  purposes  of  s 6  of  the  Criminal  Proceeds (Recovery) Act 2009. The Commissioner’s investigations were ongoing but as of

24 June  2015  the  unlawful  benefit  allegedly  obtained  by Mr  Carson  from  such criminal activity was $153,646.00.

[8]      The   Commissioner   originally   contended   that   the   second   respondent, Ms French, had unlawfully benefitted from the same criminal activity, and may with Mr Carson have been involved in tax evasion and money laundering.   The Commissioner’s position has changed based on his present knowledge. The proceedings against Ms French are discontinued by this Judgment.3

[9]      The formal grounds remain (modified to reflect Ms French’s position) that:

a.That the Court can be satisfied that it has reasonable grounds to believe that:

i.         The   respondent   Paul   William   Carson   has   unlawfully benefited from significant criminal activity;

ii.        The first respondent has an interest in or effective control over   the   property   identified   in   paragraph   2   of   the submissions.

[10]     The application is made in reliance on ss 21 and 25 of the Criminal Proceeds

(Recovery) Act 2009.

[11]     Counsel for the Commissioner made a written submission reminding the Court that a restraining order is a “holding device” of limited duration.4  It does not constitute forfeiture and it does not make a final determination.

[12]     To  do  justice  to  the  submission  on  behalf  of  the  Commissioner,  and  to warrant the orders made in this Judgment, I refer to further statutory provisions before considering the evidence.

6    Meaning of significant criminal activity

(1)       In  this  Act,  unless  the  context  otherwise  requires,  significant criminal activity means an activity engaged in by a person that if proceeded   against   as   a   criminal   offence   would   amount   to offending—

(a)       that consists of, or includes, 1 or more offences punishable by a maximum term of imprisonment of 5 years or more; or

(b)       from which property, proceeds, or benefits of a value of

$30,000 or more have, directly or indirectly, been acquired or derived.

(2)       A  person  is  undertaking  an  activity  of  the  kind  described  in subsection (1) whether or not—

(a)       the person has been charged with or convicted of an offence in connection with the activity; or

(b)       the person has been acquitted of an offence in connection with the activity; or

(c)       the person’s conviction for an offence in connection with the

activity has been quashed or set aside.

(3)       Any expenses or outgoings used in connection with an activity of the kind  described  in  subsection  (1)  must  be  disregarded  for  the purposes of calculating the value of any property, proceeds, or benefits under subsection (1)(b).

[13]     Section 7 of the Act provides:

7        Meaning 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).

[14]     The basis for alleging there are reasonable grounds to believe the respondent has unlawfully benefited from significant criminal activity is derived from the following information, supported by the affidavit of Detective Howe:

a.The first respondent pleaded guilty on 26 May 2015 to the following charges which carry maximum penalties that constitute “significant criminal activity” for the purposes of s 6 of the Act:

i.         Cultivation of cannabis, ss 9(1) and 9(2) of the Misuse of Drugs  Act  1975,  maximum  penalty  of  7  years’ imprisonment; and

ii.        Possession of cannabis for supply, ss 6(1)(f) and 6(2)(c) of the Misuse of Drugs Act 1975, maximum penalty of 8 years’ imprisonment.

b.as is further detailed in Detective Howe’s affidavit and the attached Police summary of Facts, a search warrant was executed at the first respondent’s residential address on 9 April 2015. An indoor cannabis cultivation site was found in the garage containing 3 separate rooms. As Detective Howe deposes, the first respondent had designed and

maintained a complex cultivating system to ensure optimal growing conditions including heat pads, heating lights, thermostats, timers, power boxes, control boxes, fans, air pumps, and ducting.5 A total of

38 plants were found growing. The first room contained 12 cannabis plants  between  150cm and  160cm in  height,  the  second  had  17 cannabis plants approximately 40cm tall, and the third had 9 plants between 100cm and 120cm in height. A further 151 cuttings from harvested cannabis plants were found drying as well as 60 grams of dried cannabis head.

c.A search revealed a manhole in the floor of a wardrobe in one of the bedrooms. Concealed under the house but accessible through the manhole  were  bags  of  dried  cannabis  head  weighing  a  total  of

1,370.7 grams.

d.From 25 March 2008 to 1 May 2015 the first respondent was the power  account  holder  at  25  Landy  Street,  Christchurch.6    As Detective Howe deposes with reference to the relevant power record as  annexed  to  her  affidavit,  power  consumption  was  “unusually high” which “further suggests that cannabis has been cultivated during this time.”7

e.the  first  respondent  may  also  have  engaged  in  tax  evasion  and money laundering by virtue of the large amount of cash deposits into his bank accounts and payment of power bills in cash as is detailed in Detective Howe’s affidavit.

[15]     The Commissioner refers to tax evasion being an offence pursuant to s 143B of the Tax Administration Act 1994 with a maximum penalty of 5 years’ imprisonment, and money laundering as an offence pursuant to s 243 of the Crimes Act 1961, with maximum penalties of 5 and 7 years imprisonment.

The second respondent

[16]     The application first alleged the second respondent may have engaged in tax evasion by virtue of undeclared income received in a different bank account, and may have engaged  in  money laundering,  and  benefited from  registration  of the Holden Commodore registration number GHJ393 being transferred into her name after the search warrant was executed a later memorandum indicated that the Commissioner had received further information from counsel, he had then decided without prejudice to discontinue to proceedings against the second respondent, and

sought leave to discontinue, which by this Judgment is granted.

5      Affidavit of Detective Howe dated 17 June 2015, at paragraph 35.

6      Affidavit of Detective Howe dated 17 June 2015, at paragraph 44.

7      Affidavit of Detective Howe dated 17 June 2015, at paragraph 49.

Disposition

[17]     I consider there is ample evidence to make the on notice restraining order as sought and order as follows.

Orders

(1)       This order relates to the property being:

(i)The funds attributed to Westpac New Zealand Limited account number 03-1599-00010033-081 in the name of Paul William Carson, which as at 9 June 2015 were $101,764.04;

(ii)The funds attributed to Westpac New Zealand Limited account number 03-1599-0001003-25 in the name of Paul William Carson, which as at 9 June 2015 were $6,013.10; and

(iii)A white 2012 Holden Commodore SV6 Utility vehicle registration number GHJ493 currently valued at $30,000.00 and registered to Lauren Rebecca French. There are no further known interests in this vehicle;

(2)The property in Order (1) above is not to be disposed of or dealt with other than as provided for in the restraining order or any further order of this Court and is to be held in the Official Assignee’s custody and control.

For completeness, as the orders sought seem to comprehend terms attaching  to  the  restraining  order  sought,  with  reference  to  the wording “other than as is provided for in the restraining order”, I have added “or any further Order of this Court”.

(3)       These orders are otherwise to subsist until further Order of the Court.

(4)       The  proceedings  against  the  second  respondent  are  discontinued without prejudice to the Commissioner’s position.

(5)       Costs (if any) are reserved.

………………….……………

Davidson J

Solicitors:

Raymond Donnelly & Co (Christchurch Crown Solicitor’s Office) for the Applicant

Paul William Carson (Balcairn) Self Represented First Respondent

Geddes & Maciaszek (Christchurch) for the Second Respondent