Commissioner of Police v McFarlane

[2023] NZHC 2175

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTEPOTI ROHE

CIV-2023-412-77

[2023] NZHC 2175

BETWEEN

COMMISSIONER OF POLICE

Applicant

AND

MELANIE JUNE AFATO

First Respondent

AND

GARRY DOUGLAS MCFARLANE

Second Respondent

AND

AVANTI FINANCE LIMITED

Interested Party

Hearing:	On the papers
Appearances:	R D Smith for Applicant
Judgment:	14 August 2023

JUDGMENT OF DUNNINGHAM J

This judgment was delivered by me on 14 August 2023 at 3 pm, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

COMMISSIONER OF POLICE v AFATO [2023] NZHC 2175 [14 August 2023]

Introduction

[1]                 The Commissioner of Police had applied, without notice, for a restraining order under ss 22 and 25 of the Criminal Proceeds (Recovery) Act 2009 (CPRA).

[2]                 The respondents, Melanie Afato and Garry McFarlane, are alleged to have been cultivating and selling cannabis on a commercial scale. The application is made in respect of a property at 6 Mill Street, Clinton, which is registered in Ms Afato’s name, and which the two respondents reside in (the Mill Street property).

Grounds for application

[3]                 A restraining order may be made in relation to specific property if the Court is satisfied that it has reasonable grounds to believe that the property is tainted property.1 Property is tainted property if it has wholly or partly been acquired as a result of significant criminal activity or has been directly or indirectly derived from significant criminal activity.2 “Significant criminal activity” is criminal activity engaged in by a person that, if proceeded against as a criminal offence, would amount to offending that consists of or includes offences punishable by a maximum of five years’ imprisonment or more or from which property proceeds or benefits of a value of $30,000 or more have been acquired or derived either directly or indirectly.3

[4]                 A Court may make a restraining order relating to all or part of a respondent’s property if it is satisfied it has reasonable grounds to believe the respondent has unlawfully benefited from significant criminal activity. A person has unlawfully benefited from significant criminal activity if he or she has knowingly, directly or indirectly derived a benefit from significant criminal activity, whether or not they were involved.4

[5]                 The grounds for the application are set out in the affidavit of Kelsey Morgan, a police constable, attached to the Southern Asset Recovery Unit of the Financial

1      Criminal Proceeds (Recovery) Act 2009, s 24.

2      Section 5(1) definition of “tainted property”.

3      Section 6(1).

4      Section 7.

Crime  Group  within  the  New Zealand Police.    She explains that Ms Afato and Mr McFarlane both reside at the Mill Street property and have a teenage child together.

Evidence of significant criminal activty

[6]                 The significant criminal activity relied on by the Commissioner for the purposes of this application is:

(a)cultivation of a prohibited plant, namely cannabis, under s 9(1) of the Misuse of Drugs Act 1975, which is punishable by imprisonment for a term not exceeding seven years;

(b)selling a class C controlled drug, namely cannabis, under s 6(1)(f) of the Misuse of Drugs Act, which is punishable by imprisonment for a term not exceeding eight years; and

(c)importing into New Zealand a class C controlled drug namely cannabis seed under s 6(1)(a) of the Misuse of Drugs Act, which is punishable by imprisonment for a term not exceeding eight years.

[7]                 The affidavit sets out in detail the evidence which has been gathered in relation to the alleged criminal activity. I need only refer to key aspects of it. First, pursuant to a search warrant undertaken on 23 September 2022 at the respondents’ home address, police located a sophisticated, commercial-level cannabis grow using two of the three bedrooms at that address, including locating 221 potted cannabis plants at different stages of growth, 38 ounces of cannabis head, and 275 g of cannabis seed.

[8]                 Cellphones were seized in the course of that search and subsequently analysed. As explained in the affidavit, a number of the text messages found on the respondents’ phones relate to the cultivation and sale of cannabis.

[9]                 An analysis of Mr McFarlane’s cellphone shows, further, that he conducted internet searches on websites relating to cannabis seeds, cannabis strains and grow equipment.

[10]              An analysis of the emails extracted from Mr McFarlane’s cellphone reveals he has been communicating with overseas growers of cannabis seed and has arranged importations of those seeds.

Evidence of tainting

[11]              The same affidavit confirms that the Mill Street property has a current rating valuation of $160,000 and is subject to a mortgage with Avanti Finance Ltd with approximately $91,000 owing on the mortgage as at February 2023.

[12]              Ms Morgan has also made enquiries of the Inland Revenue Department regarding Ms Afato’s and Mr McFarlane’s income. That income is modest, comprised largely of receipt of the Job Seeker Benefit. However, analysis of bank records shows both Mr McFarlane and Ms Afato receiving unexplained cash deposits over the period 1 April 2017 to 23 November 2022. Furthermore, withdrawals from Ms Afato’s bank accounts over the same period show withdrawals from the account into which deposits have been received to make mortgage  repayments  and  rates  payments  on  the  Mill Street property.

[13]              I accept that Ms Morgan’s evidence suggests the respondents have engaged in significant criminal activity, and that the bank account records indicate the parties may have benefited from this activity in the form of receiving cash payments.

[14]              I also accept that there is evidence suggesting that the unlawful payments received into Ms Afato’s bank accounts have been used, at least in part, to meet payments in respect of the Mill Street property.

[15]              I am satisfied from the totality of the evidence that there are reasonable grounds to believe the Mill Street property is tainted property.

Application made without notice

[16]              Under s 22(1) CPRA a Court may determine an application for a restraining order without notice given to affected persons if satisfied that there is a risk of the

restrained property being destroyed, disposed of, altered or concealed if notice were given.

[17]              The application has been made without notice on the basis of risk that the respondents may take steps to deal with the property by transferring it or seeking to extend borrowing against the property if notice were given. I am satisfied that in these circumstances, there is a risk of the proposed property being dealt with if the application proceeds on notice to the respondents and it is appropriate to make the order without notice.

Orders

[18]              A without notice restraining order is made on the terms set out in the application.

Solicitors:
Crown Solicitor, Dunedin

Copy To Ms Afato

Mr McFarlane