Commissioner of Police v Hunt
[2021] NZHC 2211
•27 August 2021
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2017-485-959
[2021] NZHC 2211
BETWEEN COMMISSIONER OF POLICE
Applicant
AND
MACK CHARLES HUNT
First Respondent
FERN HINE PUHITAI TAWHAI
Second RespondentKURT ADAM THOMAS
Third RespondentPAUL CHAPPIE TITO
First Interested Party
PEGGY JO ANNE NAPIA
Second Interested Party
Hearing: 9 August 2012 Counsel:
V Rea for Applicant
E Hall for First Respondent
Judgment:
27 August 2021
JUDGMENT OF CHURCHMAN J
Introduction
[1] On 2 April 2020, the Commissioner of Police applied for assets and profit forfeiture orders against Mr Hunt, Ms Tawhai, and Mr Thomas (the respondents) under the Criminal Proceeds (Recovery) Act 2009 (the Act), and to have Ms Tawhai’s effective control over property treated as an interest in property. Mr Tito and Ms Napia were listed as interested parties due to their relationship with the restrained property.
COMMISSIONER OF POLICE v HUNT & ORS [2021] NZHC 2211 [27 August 2021]
[2] Although Ms Hall appeared at the hearing of this matter on 9 August 2021 on behalf of Mr Stevenson and expressed the view that Ms Tawhai may wish to challenge aspects of the application, neither Ms Tawhai nor either of the other respondents have filed any notices of opposition, applications for relief, or supporting evidence in relation to the forfeiture application. Mr Tito applied for relief from forfeiture on 4 June 2021 but filed a notice of discontinuance in respect to his application for relief on 16 July 2021.
[3] The Commissioner of Police seeks an asset forfeiture order over specific property tainted by the respondents’ significant criminal activity, and a profit forfeiture order over the value of the benefit from the respondents’ criminal activity, amounting to $727.461.60 less the value of the items of property listed in the asset forfeiture order.
[4] Counsel for the Commissioner identified an error as to the calculation of its unlawful benefit. The original total figure put forward was $759,934.01, but this included the value of methamphetamine seized by police which could not in fact be realised. The sum of $727,461.60 was instead the correct number.
[5] By minute of 30 July 2021, Cooke J granted leave to amend the forfeiture application under s 47(1) of the Act to correct this error in calculation. The effect of that amendment is to reduce the amount claimed. It therefore does not have any adverse effect on any of the respondents.
Background
Factual background
[6] The application for assets and profit forfeiture orders arises from criminal offending relating to possession of methamphetamine for supply, methamphetamine utensils, firearms, and cash. These were found in a series of three searches in 2017.
[7] On 21 March 2017, search warrants were executed at an address in Porirua at which Mr Hunt or Ms Tawhai both resided, with 94.6 grams of methamphetamine and
$40,594 in cash being located in Ms Tawhai’s handbag.
[8] On 7 September 2017, Ms Tawhai was stopped by police while driving a Subaru vehicle. A search of the vehicle was conducted, and $249,950 in cash was found.
[9] On 2 November 2017, search warrants were executed in Titahi Bay, Whitby, and Tawa, where 1 gram of methamphetamine, $130 in cash, a Holden Commodore, and a Mitsubishi Lancer were located.
[10] As a result of these searches, the respondents were charged and convicted. Mr Hunt faced charges of possession for supply of a Class A drug, unlawful possession of a restricted weapon, possession of a firearm, and possession of utensils for the consumption of methamphetamine. Mr Hunt was eventually sentenced to four months’ community detention, and nine months’ supervision.
[11] Ms Tawhai was charged with two charges of possession for supply of a Class A drug, possession of a firearm, two charges of possession of utensils for the consumption of methamphetamine, money laundering, attempting to pervert the course of justice, and possession of methamphetamine. On 1 April 2021, Ms Tawhai was sentenced to four months’ community detention and nine months’ supervision for the money laundering and attempting to pervert the course of justice charges.
[12] Mr Thomas faced charges of attempting to pervert the course of justice, offering to supply a Class A drug, and offering to supply a Class C drug. On 25 May 2021, Mr Thomas was sentenced to five months’ community detention and 80 hours’ community work for the attempting to pervert the course of justice charge.
Procedural background
[13] On 21 November 2017, the Commissioner of Police filed an on-notice application for restraining and effective control orders. Mr Tito originally filed a notice of opposition to this application, but this was discontinued prior to the hearing. No other opposition to the hearing was received. On 30 August 2018, Collins J made the on-notice restraining orders over the restrained assets.
[14] On 2 April 2020, the Commissioner of Police filed a forfeiture application in relation to the restrained assets.
The orders
[15] The Commissioner of Police seeks three orders. The first is an asset forfeiture order in respect of the following property:
(a)cash to the total value of $40,594 located and seized on 21 March 2017 from the former home address of Mr Hunt and Ms Tawhai;
(b)cash to the total value of $249,950 located and seized on 7 September 2017 from a vehicle being driven by Ms Tawhai;
(c)cash to the total value of $130 located and seized on 2 November 2017 from the current home address of Mr Hunt and Ms Tawhai;
(d)the contents of a bank account personalised in the name of Mr Hunt, with an approximate balance of $1,007.59 when restrained on 15 November 2017;
(e)a 2007 green Holden Commodore SS Sedan, registered in the name of Mr Tito, but according to the Commissioner, under the effective control of Ms Tawhai, seized on 2 November 2017; and
(f)a 2003 silver Mitsubishi Lancer Evolution, registered in the name of Ms Napia, but according to the commissioner, under the effective control of Ms Tawhai.
[16] The Commissioner seeks this order on the grounds that this property is tainted because it has been acquired wholly in part as a result of significant criminal activity.
[17] Secondly, the Commissioner also seeks a profit forfeiture order of the value of the benefit from the respondents’ criminal activity, amounting to $727,461.60 less the value of the items of property listed in the asset forfeiture order above in which
Mr Hunt and Ms Tawhai have interests. The Commissioner seeks this order on the grounds that Mr Hunt and Ms Tawhai had, in the relevant period of criminal activity (between 14 November 2010 and 14 November 2017) unlawfully benefitted to the value of $727,461.60.
[18] Finally, the Commissioner seeks an order directing that the two vehicles included in the asset forfeiture order be treated as though Ms Tawhai had a legal or equitable interest in the property, and therefore effective control over the vehicles.
The position of the police
[19] Counsel for the Commissioner of Police firstly accepted that the two vehicles were not tainted by the respondents’ criminal activity but were instead available to be realised to satisfy in part the judgment debt generated by a profit forfeiture order.
[20] After setting out the relevant factual and procedural background, counsel acknowledged that under s 50 of the Act, a Court must make an asset forfeiture order in respect of specific property if it is satisfied that, on the balance of probabilities, the property is tainted, meaning that it has been wholly or in party acquired (or directly/indirectly derived) from significant criminal activity.1
[21] The Commissioner’s position is that the respondents acquired the assets, namely the cash amounts and the money in the ANZ freedom account by way of significant criminal activity, resulting in that property being tainted.
[22] Significant criminal activity is defined as an activity engaged in by a person that if proceeded against as a criminal offence would amount to offending that consists of one or more offences punishable by a maximum term of imprisonment of five or more years, or from which property, proceeds, or benefits of a value of $30,000 or of a value of $30,000 or more have, directly or indirectly, been acquired or derived.2
[23] A person is deemed to be undertaking significant criminal activity whether or not they have been charged with or convicted of an offence in connection with the
1 See Criminal Proceeds (Recovery) Act 2009, s 5.
2 See Criminal Proceeds (Recovery) Act 2009, s 6.
activity, they have been acquitted of an offence in connection with the activity, or their conviction for an offence in connection with the activity had been quashed or set aside.
[24] Counsel submitted that the evidence gathered through the three searches discussed above, proved on the balance of probabilities that Mr Hunt and Ms Tawhai were engaged in the significant criminal activity of possessing for supply and selling methamphetamine contrary to the Misuse of Drugs Act 1975. This was also evidenced by their guilty pleas.
[25] Counsel also noted that Mr Thomas was also involved in attempting to pervert the course of justice, as the police sourced evidence of phone conversations between Mr Thomas and Ms Tawhai in order to provide a cover story for the $249,950 in cash found in the Subaru vehicle on 7 September 2017.
[26] Other evidence which indicated that the respondents had been involved in significant criminal activity included:
(a)the fact that significant amounts of cash and methamphetamine were found in the control of Mr Hunt and Ms Tawhai;
(b)that a significant amount of cash was located in the Subaru vehicle while in the control of Ms Tawhai, and that Mr Hunt’s fingerprints were identified on the plastic bags which contained the cash; and
(c)that in the March and November searches, other equipment such as unused re-sealable plastic bags, scales, and a money counter were located.
[27] Counsel then submitted that the restrained assets were derived from the respondents’ significant criminal activity, noting Commissioner of Police v De Wys, where the Court of Appeal held that if large cash sums could not be adequately explained, this could tend to support an inference that the relevant cash had been sourced from illegitimate or criminal activity.3
3 Commissioner of Police v De Wys [2016] NZCA 634 at [71].
[28] Ms Rea submitted that the evidence proved on the balance of probabilities that the cash amounts and the contents of the ANZ Freedom Account of the restrained assets were derived from the respondents’ significant criminal activity, namely because each of them had access to an unattributed source of income resulting in significant yet unexplained cash deposits into the bank account:
(a)in the case of Mr Hunt, he was not claiming any benefit from the Ministry of Social Development in 2020 but had been claiming a sole parent benefit from 2005 to 2020, and a fortnightly salary from a construction company (with his taxable income in the year ending March 2017 being $40,000). Between 2010 and 2017, the primary source of Mr Hunt’s income came from cash deposit;
(b)in the case of Ms Tawhai, she was not currently claiming any benefits, but had previously claimed a sole parent benefit between 2010 and 2017. She had no current lawful occupation and had claimed that her father had given her the money found in the March search, and that a significant amount of money flowing out of her account was due to a gambling issue and borrowing for that issue. Like Mr Hunt, Ms Tawhai’s primary source of income was cash deposits;
(c)in the case of Mr Thomas, he was receiving the Jobseeker’s benefit in 2017, and claimed that the cash found in the Subaru vehicle was part of
$330,000 gift from his now deceased father, who he alleged hoarded large amounts of cash. According to police investigations, Mr Thomas was believed to have received the inheritance in May 2017 but applied for a significant hardship benefit several weeks later. Mr Thomas had provided a breakdown for how he used these funds but provided no corroborating evidence. Furthermore, an analysis of the cash indicated that $113,670 were series seven bank notes, issued in or after May 2016, meaning it was highly unlikely that Mr Thomas’ father had gathered that much cash in the period of a year, given that his income was around $50,000.
[29] Counsel then submitted that each of the respondents had an interest in the restrained assets. While Mr Hunt had not accepted any interest, a number of the assets were located at his and Ms Tawhai’s property, his fingerprints were found on the plastic bags containing cash in the Subaru vehicle, and various paraphernalia relating to drug-dealing were located at his property.
[30] Ms Tawhai had accepted an interest in the money found in her handbag but did not claim an interest in the remaining assets. Despite this, as detailed above, a number of the assets and drug-dealing items were found at her and Mr Hunt’s property, and she was driving the Subaru vehicle when it was searched.
[31] Mr Thomas initially sought to claim an interest in the cash found in the Subaru vehicle, but counsel submitted that he did not in fact have an interest in that cash, for the reasons discussed above.
[32] Under s 55(1) of the Act, the Court must make a profit forfeiture order if it is satisfied on the balance of probabilities that the respondent has unlawfully benefitted from significant criminal activity within the relevant period, and they have interests in the property.
[33] The four steps required for determining whether a profit forfeiture order should be made, articulated by Lang J in Pulman v Commissioner of Police, are:4
(a)whether on the balance of probabilities, the respondent has unlawfully benefitted from the significant criminal activity during the relevant period;
(b)to determine the maximum recoverable amount, by taking the value of the benefit, as assessed in the first step, and deducting from it the value of any property already forfeited by virtue of an assets forfeiture order in relation to the same criminal activity;
4 Pulman v Commissioner of Police HC Auckland CIV-2010-404-5666, 27 May 2011. This test was recently re-affirmed by Cooke J in Commissioner of Police v Irwin [2020] NZHC 1370 at [9] and [10].
(c)to determine whether any property should be excluded from the operation of the profit forfeiture order because undue hardship is likely to be caused to the respondent if such property were realised; and
(d)if satisfied on the balance of probabilities that the Commissioner has met the requirements of (a)-(c), and that the respondent has interests in property, the Court must make a profit forfeiture order.
[34] Counsel submitted that the respondents had unlawfully benefitted from significant criminal activity and emphasised the fact that they did not have legitimate sources from which to acquire the assets found. Counsel concluded that the only possible explanation was that they had generated significant income from supply of methamphetamine, to an estimated unlawful benefit of $727,461.60.
[35] Counsel also submitted that certain restrained assets (namely the two vehicles) were under the effective control of the respondents. In relation to the Mitsubishi vehicle, the evidence of this was that:
(a)the vehicle was located at the home address of Ms Tawhai and Mr Hunt during the November search;
(b)the keys to the vehicle were found in Ms Tawhai’s handbag during the November search;
(c)Ms Tawhai became the registered owner of the vehicle on 14 January 2017, although she said that it belonged to Ms Napia – despite the fact that Ms Napia lives in Gisborne, was disqualified from driving including during the period she claimed to have owned the vehicle;
(d)that when the vehicle had been stopped in May and November 2017, Ms Tawhai was the driver;
(e)that documents from the vehicle evidenced payment for goods and services made by Ms Tawhai and that she had paid for a $2,000 sound system for the vehicle; and
(f)that Ms Tawhai had advised that around two weeks prior to the November search, she had received the car back from Ms Napia.
[36]In relation to the Holden vehicle, the evidence was that:
(a)the vehicle was located at the home address of Ms Tawhai and Mr Hunt during the November search;
(b)that the vehicle was registered to Mr Thomas on 18 September 2017, and then registered with Mr Tito on 24 September 2017;
(c)that despite Mr Tito telling police he had received the Commodore in exchange for construction work done for Mr Thomas, there was no evidence that the particular construction business Mr Tito claimed to work for was a going concern or generating sales and that there was no evidence that Mr Tito completed work to the value of the vehicle;
(d)that the keys to the vehicle were found on Ms Tawhai’s keyring which also included her housekey;
(e)that expenditure receipts were located in the car showing purchases by Mr Hunt and Ms Tawhai between September and October 2017; and
(f)since an accident with the car in October 2017, Ms Tawhai had not attempted to make any vehicle repairs and Mr Tito had not sought to ascertain the whereabouts of the vehicle.
[37] Finally, counsel made an observation on a pending Court of Appeal judgment (Commissioner of Police v Harrison), heard in the Court of Appeal in March 2021 and awaiting release of the judgment. According to counsel, this decision would provide clarity on the enforceability of a profit forfeiture order over assets not specified in the application for that order (in essence, the ability of a profit forfeiture order to generate an enforceable judgment debt for the outstanding sum not recovered once the specified assets had been realised through the discharge of the forfeit estate).
[38] It was the Commissioner and Official Assignee’s position that there was scope in the law to enforce a profit forfeiture order against property that was not specifically included in the application order, when the balance of the maximum recoverable amount remained due to the Crown.
[39] Counsel submitted that this Court would likely be assisted by the pending decision in these circumstances, given that the unlawful benefit sought through the profit forfeiture order exceeds the value of the restrained and specified assets, and that this Court may wish to reserve its judgment until the decision was released.
[40] However, counsel submitted that it was nevertheless appropriate to make the profit forfeiture order on the basis that:
(a)the respondents had unlawfully benefitted from a total minimum of
$727.461.60;
(b)that the respondents had no legitimate source of income;
(c)that Ms Tawhai had effective control and a deemed interest in the two vehicles; and
(d)there were no applications seeking relief from forfeiture.
Relevant law and analysis
Assets forfeiture order
[41] As noted above, under s 50 of the Act, if a Court is satisfied on the balance of probabilities that identifiable property that is specified in the application is “tainted property” as defined in s 5, the Court must make an assets forfeiture order in respect of that property. For this Court to be satisfied on the balance of probabilities, it must be satisfied that it is “more probable than not” that the property is tainted property.5
5 Z v Dental Complaints Assessment Committee [2008] NZSC 55 at [102].
[42] Here, I am satisfied that on the evidence relied on by the Commissioner, it is more probable than not that the restrained property is “tainted” as defined in s 5.
[43] This is because on the balance of probabilities it appears that the cash seized by the police in their three searches was property derived from significant criminal activity, namely the supply of methamphetamine. The evidence regarding the income of the respondents means that it was impossible that they derived such a significant amount of cash from their declared employment or from state support, and as noted by counsel, the Court of Appeal has indicated that possession of large sums of unidentified income is “potentially very significant”, and supports an inference that the relevant cash had been sourced from illegitimate or criminal activity.6
[44] The Court of Appeal also said that reference to other circumstantial evidence (such as is available in the case) would then assist in determining the likely nature of the activity. Given that paraphernalia associated with drug dealing was found in the same property as some of the cash, and that the significant amount of cash was found in a car driven by Ms Tawhai, who pleaded guilty to possession of methamphetamine for supply, it can be concluded that the cash assets and the money in Mr Hunt’s bank account was tainted property. An assets forfeiture order can therefore be made.
[45] The evidence such as Mr Hunt’s fingerprints being found on the plastic bags containing the cash also supports the conclusion that he and Ms Tawhai were jointly involved in the drug dealing enterprise.
Profit forfeiture order
[46] The elements that this Court must consider when determining whether to make a profit forfeiture order are set out at [33] above. The first element requires the Court to consider whether the respondent has rebutted the presumption that the value of the benefit is as stated in the application; and if so, what the actual value is. In this case, because no opposition to the application has been received, there is no evidence suggesting that the value of the benefit put forward by the Commissioner is incorrect.
6 Commissioner of Police v De Wys, above n 3, at [71].
[47] There is clear evidence that the respondents benefitted from significant criminal activity, in the form of possession of methamphetamine for supply. This is apparent from the significant amount of cash assets that they held, despite there being no realistic prospect that they obtained these cash assets legitimately, and the fact that they pleaded guilty to the charges laid by police in relation to methamphetamine and other offences. Therefore, the first element has been made out.
[48] In terms of the second element, the figure of $727,461.60 was derived from the Commissioner’s amended application for a profit forfeiture order and was based on a table which set out the approximate value of the methamphetamine seized during the police searches, the cash seized during the searches, and the value of the two vehicles. Because the methamphetamine value (as conceded by counsel) can no longer be realised, and because the cash assets are included in the assets forfeiture order, the remaining ‘profits’ are the two vehicles (which counsel acknowledged were not tainted by the respondents’ criminal activity, but were instead available to be realised to satisfy in part the judgment debt generated by a profit forfeiture order) and the cash deposits and expenditure of $392,288.22 and $8,491.79. These remaining sums would therefore be the maximum recoverable amount.
[49] In terms of the third element, there is no evidence that the respondents would suffer undue hardship if the property was realised.
[50]As a result, I allow the profit forfeiture order.
Effective control
[51] The only other aspect to consider is whether the vehicles were under the effective control of Ms Tawhai. The fundamental question is whether, in fact, the respondent had the capacity to control, use, dispose of, or otherwise treat the property as his or her own.7 This is clearly the case, for the reasons set out at [35] and [36] above.
7 Commissioner of Police v Jiang [2020] NZHC 695 at [43].
[52] However, there is still a question as to whether, in line with the Commissioner and Official Assignee’s position, there was scope in the law to enforce a profit forfeiture order against property that was not specifically included in the application order (specifically the vehicles).
[53] As a result of the “effective control” order, the vehicles can be regarded as assets of the respondents. They are therefore available to the Commissioner in the same way as any other assets of a debtor are to satisfy a judgment debt.
[54] Section 55(4) of the Criminal Proceeds (Recovery) Act specifically provides that a profit forfeiture order is recoverable at the suit of the Official Assignee on behalf of the Crown as a debt due to the Crown. In this case, had there been opposition to either the forfeiture or effective control orders, the Official Assignee would have had available to option of utilising the procedures in Part 32 of the HCR in respect of the two vehicles. However, in the absence of any opposition, the Official Assignee can dispose the vehicles and use the proceeds in reduction of the debt due to the Crown.
Result
[55] The orders sought by the Commissioner of Police are granted in terms of the draft order that has now been filed.
Churchman J
Solicitors:
Crown Solicitor, Wellington for Applicant
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