Commissioner of Police v Nelson HC Auckland CIV 2010-404-989
[2010] NZHC 1286
•30 July 2010
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2010-404-989
IN THE MATTER OF the Criminal Proceeds (Recovery) Act
2009.
BETWEEN THE COMMISSIONER OF POLICE Applicant
ANDADAM NELSON MAX WILSON HEPA DEER JOSHUA MASTERS
ERIC DEAN DAVIDSON PAKI- EDWARDS
MINH HONG NGUYEN Respondents
AND BETWEEN WAYNE LAWRENCE KING STEVIE GRACE PEARL KING ROCHELLE ROXANNA FLAVELL KENNETH JOHN DEER
Applicants For Reliefs
Hearing: 14 July 2010
Counsel: David G Johnstone for Commissioner of Police
No appearance for Respondents
Peter H H Tomlinson for W L and S G P King
David Reece for K J Deer
Emma Lamont-Messer for R R Flavell
Judgment: 30 July 2010 at 4:45pm
RESERVED JUDGMENT OF HUGH WILLIAMS J.
THE COMMISSIONER OF POLICE V ADAM NELSON AND ORS HC AK CIV-2010-404-989 30 July 2010
This judgment was delivered by The Hon. Justice Hugh Williams on
30 July 2010 at 4:45pm
pursuant to Rule 11.5 of the High Court Rules
……………………………………………..
Registrar/Deputy Registrar
AThe Commissioner’s application for forfeiture of Holden Commodore registration AQT455 is granted under terms appearing in paragraph [80] hereof.
BThe Commissioner’s applications for forfeiture of Holden Commodore registration HSV634 and Harley Davidson motor cycle registration
58YTJ and the 2004 Ford Falcon motor vehicle registration CGZ599 are all dismissed.
TABLE OF CONTENTS
Paragraph
Issue [1] The Act [6] Evidence - General [25] Holden Commodore motor vehicle registration AQT455 [29]
2001 Holden Commodore motor vehicle registration HSV634
and 2006 Harley Davidson motor cycle registration 58YTJ [81]
Ford Falcon motor vehicle registration CGZ599 [110] Result [133] Costs [134]
Evidential Postscript [135]
Issue
[1] On 19 February 2010 the Commissioner of Police applied to this Court under the Criminal Proceeds (Recovery) Act 2009 (“the Act”) for effective control,
restraining, asset forfeiture and profit forfeiture orders in relation to 10 motor cars and motor cycles seized by Police on the termination of “Operation Leo” on 5 May
2008. The respondents were or are all accused of offences under the Misuse of
Drugs Act 1971 arising out of that Operation.
[2] On 19 April 2010 Stevens J made unopposed orders for forfeiture of a 2003
Harley Davidson motor cycle registration 31ZAR (valued at $10,000) and a 2000
Harley Davidson motor cycle registration 17UGZ (valued at $7000) both in relation to the respondent Mr Masters; a 2004 Harley Davidson motor cycle registration
87YAZ (valued at $10,000) in respect of Mr Wilson; a 2002 Harley Davidson motor cycle registration 25YUE (valued at $8000) in relation to Mr Deer; a 2004 Harley Davidson motor cycle registration 83YER (valued at $10,000) in relation to Mr Paki- Edwards; and a 2001 Subaru Impreza motor vehicle registration 7WRX7 in relation to Mr Nguyen. However, on 21 July 2010, Mr Nguyen applied to set aside the forfeiture order in relation to his Subaru Impreza. That application remains outstanding.
[3] On that occasion timetable orders were made in relation to opposed applications for forfeiture in respect of a 2002 Holden Commodore motor vehicle registration AQT455 in relation to Mr Nelson; a 2004 Ford Falcon motor vehicle registration CGZ599 in relation to Mr Wilson; and a 2001 Holden Commodore motor vehicle registration HSV634 and a 2006 Harley Davidson motor cycle registration 58YTJ, both in relation to Mr Deer.
[4] On:
a) 9 March 2010 Mr W L King and his daughter, Ms S G P King, applied for an order that their severable interests in the Holden Commodore registration AQT455 be excluded from any forfeiture order in relation to that vehicle. Ms King was formerly the partner of the respondent, Mr Nelson. Her application did not claim forfeiture would cause her undue hardship but her affidavit said as much.
b)15 April 2010 Mr K J Deer sought an order for relief from any forfeiture in relation to the Commodore registration HSV634 and the Harley Davidson motor cycle registration 58YTJ. Mr Deer is a brother of the respondent, Mr Hepa Deer.
c) 9 March 2010, Ms R R Flavell sought an order for relief from any forfeiture order in relation to the Falcon motor vehicle registration CGZ599. Ms Flavell is a former partner of the respondent, Mr Wilson.
[5] This judgment deals with those applications.
The Act
[6] Because it was suggested this may be the first time since the Act came into force on 1 December 2009 that opposed forfeiture applications have come before the Court for determination, some discussion of the new statutory provisions concerning forfeiture orders may be appropriate.
[7] As a prelude to that exercise, it is helpful to refer to sections of the booklet on the Act prepared for the New Zealand Law Society Seminar delivered in March
2010.[1] The booklet contains an interesting historical treatment of forfeiture[2] which
[1] Johnstone Jones McKenzie & Stanaway: Criminal Proceeds (Recovery) Act Seminar March 2010 (Reproduced with the express permission of the New Zealand Law Society/Continuing Legal Education) – see also Faramarzi: “Criminal Proceeds Recovery” [2010] NZLJ 205.
[2] At pp 51-56.
leads to the authors’ Introduction and Overview[3] which contain the following:
[3] At pp 5-8.
The Criminal Proceeds (Recovery) Act 2009 (“the CP(R)Act”) has introduced to New Zealand a fundamental change in the basis upon which assets representing the proceeds of crime may be forfeited.
Under the new régime, a criminal conviction for offending which is said to have derived proceeds is not a necessary pre-condition to forfeiture. Instead, proof that there has been an offence will be required as one of the issues for determination on the balance of probabilities in the course of civil proceedings brought by the Commissioner of Police. The success, and even the existence, of any criminal proceedings is as a matter of substance irrelevant.
The CP(R)Act took effect on 1 December 2009. But ... it might be said that there are considerable retrospective aspects.
Whether the fundamental shift to forfeiture without conviction, and the various other developments ... herald a real change in the scope and success of asset forfeiture proceedings will only truly be judged in the fullness of time. For the time being, it can be said only that ... the role to be played by the CP(R)Act will be very significant indeed.
...
As stated above, under the new régime a criminal conviction is not a necessary pre-condition to forfeiture of criminal proceeds. This is the fundamental change introduced by the Act. Under the previous régime arising under the POC Act, the confiscation of assets depended upon proof that a ‘serious offence’ (that is one punishable by five or more years’ imprisonment) had occurred. Proof of this nature required the existence of a conviction, or proof beyond reasonable doubt of the offending together with proof that the offender had absconded, in which case there was deemed to have been a conviction.
But the introduction of the CP(R) Act has also seen recognition of the fact that the previous regime dealt not only with property representing the proceeds of crime, but also property that was used in the commission of crime. The latter type of property can be described as an ‘instrument’ of crime. The policy considerations that influence the question whether instruments of crime should be forfeited have for some time been recognised as different to the policy considerations that underpin the forfeiture of criminal proceeds.
For example, in R v Dunsmuir [1996] 2 NZLR 1, McKay J for the Court of
Appeal said (at page 6):
Where a forfeiture order is made in respect of property representing the proceeds of crime, it merely takes from the criminal his ill-gotten gains. There can be no complaint as to that. A forfeiture order in respect of property used in commission of a crime goes further. It is an additional penalty provided by Parliament as a deterrent. The criminal is sentenced for his crime, and in addition any of his property used to commit or facility the crime is liable to forfeiture. If this is Draconian, that appears to be the intention of the legislation
The new regime recognises this distinction between ‘proceeds’ and
‘instruments.’
Subject to residual and express statutory mechanisms for forfeiture[4], forfeiture of assets representing the proceeds of crime is now to be dealt with in the course of civil proceedings commenced in the High Court by the Commissioner of Police. Here is where criminal conviction is not essential.
[4] See eg s 32, Misuse of Drugs Act 1976
On the other hand, and again subject to certain exceptions[5], the forfeiture of property amounting to an instrument of crime is dealt with as part and parcel of sentencing under the Sentencing Act 2002 ...
[5] See eg Fisheries Act
This introduction of distinct procedures for asset forfeiture appears intended to recognise the policy distinctions ... Under the new s10B of the Sentencing Act 2002, sentencing courts are now required to “take into account” any forfeiture of property used to commit, or to facilitate the commission of, qualifying offences. Further, the sentencing court is expressly permitted to adjourn sentencing until the question of such forfeiture is determined. Just what this ‘taking into account’ will mean in practice is considered later in this booklet. For now, it can be seen that the possible need to adjust what would otherwise have been an appropriate penalty, referred to in Dunsmuir, has been confirmed.
What this discussion is intended to lead to is the point that the new régime does not amount to wholesale replacement of conviction-based forfeiture with what is sometimes called non-conviction-based forfeiture. Instead, there are now two, newly partitioned, régimes:
•conviction-based forfeiture – forfeiture of instruments of crime under the Sentencing Act 2002; and
•non-conviction-based forfeiture – forfeiture of assets representing the proceeds of crime under the CP(R) Act.
[8] Whether those last observations foreshadow two-tier sentences for those well-to-do enough to own property which can be forfeited as opposed to all other accused is a matter which will emerge over time. That possibility is outside the scope of the present applications.
[9] The approach to interpretation of the Act is generally to be guided by the statutory Purpose and Overview in ss 3 and 4 which relevantly read:
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—
(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; ...
4 Overview
(1) In general terms, this Act—
(a) provides for the restraint and forfeiture of property derived as a result of significant criminal activity without the need for a conviction; and
(b)sets out certain procedural matters relating to the forfeiture of instruments of crime if a conviction has been or may be entered. ...
...
(3)This overview is by way of explanation only. If any provision of this Act conflicts with this overview, the other provision prevails.
[10] It is immediately to be noted, as the seminar booklet said, that the Act’s reach goes beyond property owned by persons convicted of crime to “persons associated with crime” and is not dependent on conviction.
[11] “Significant criminal activity” is defined by s 6(1) as an “activity engaged in by a person” that could amount to a criminal offence or offences punishable by five years imprisonment or more or “from which property, proceed, or benefits of a value of $30,000 or more have, directly or indirectly, been acquired or derived”. Subsections (2) and (3) relevantly provide:
(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).
[12] “Benefit” is inclusively defined in s 5 as “includes proceeds and property”; “interest” is defined in relation to property as meaning both a “legal or equitable estate or interest in the property” or “right, power or privilege” connected with it; “property” is defined as meaning “real or personal property of any kind”
[13] Each of these applications is for a “civil forfeiture order” which, as defined in s 5(1), is an “asset forfeiture order or a profit forfeiture order”, orders the procedure for which is set out in sub-part 3 of Part 2.
[14] After empowering the Commissioner to apply to this court for a civil forfeiture order,[6] the sub-part sets out the requirements for such an application and specifically says, in s 46:
[6] Criminal Proceeds (Recovery) Act 2009 ss 43 and 44.
46 Who may be heard at hearing for civil forfeiture order
The following persons are entitled to appear and to adduce evidence at the hearing of an application for a civil forfeiture order:
(a) the applicant; and
(b)any person on whom the application is served (including, if applicable, the respondent); and
(c)any other person who claims an interest in the property to which the application relates.
[15] As mentioned, Mr King and his daughter, Mr Deer and Ms Flavell have each applied claiming various interests in the property seized on termination of “Operation Leo”. Their entitlement in terms of s 46 to “appear and adduce evidence” in essence is tantamount to their being a party to the civil forfeiture order application. That is confirmed by ss 61, 62 and 65. The first pair of those sections entitles persons who claim an “interest in the property to which the civil forfeiture order” relates to apply for relief, the two sections differentiating between
applications before and after a civil forfeiture order has been made. Where there is an application for relief, s 65 lists those who are entitled to “appear and to adduce evidence” at the hearing of a civil forfeiture application in terms largely identical to s
46 but including “any former interest holder”.[7]
[7] Section 65(d).
[16] The status of those who are entitled to “appear and to adduce evidence at the hearing” of civil forfeiture order applications is of importance in terms of the onus of proof because, in relation to applications for assets or profit forfeiture orders, ss 50,
53 and 55 relevantly provide:
50 Making assets forfeiture order
(1)If, on an application for an assets forfeiture order, the High Court is satisfied on the balance of probabilities that specific property is tainted property, the Court must make an assets forfeiture order in respect of that specific property.
(2) Subsection (1) is subject to section 51.
(3) The Court must specify in an assets forfeiture order the property to which the order applies and that the property —
(a) vests in the Crown absolutely; and
(b) is in the custody and control of the Official Assignee.
...
53 Value of benefit presumed to be value in application
(1)If the Commissioner proves, on the balance of probabilities, that the respondent has, in the relevant period of criminal activity, unlawfully benefited from significant criminal activity, the value of that benefit is presumed to be the value stated in —
(a) the application under section 52(c); or
(b) if the case requires, the amended application.
(2)The presumption stated in subsection (1) may be rebutted by the respondent on the balance of probabilities.
...
55 Making profit forfeiture order
(1)The High Court must make a profit forfeiture order if it is satisfied on the balance of probabilities that —
(a) the respondent has unlawfully benefited from significant criminal activity within the relevant period of criminal activity; and
(b) the respondent has interests in property. (2) The order must specify —
and
(a) the value of the benefit determined in accordance with section 53;
(b)the maximum recoverable amount determined in accordance with section 54; and
(c) the property that is to be disposed of in accordance with section
83(1), being property in which the respondent has, or is treated as having, interests.
(3) Subsections (1) and (2) are subject to section 56.[8]
[8] See Johnstone et al, p 17.
[17] It is of importance to recognise that whereas asset forfeiture orders can only be made in respect of “tainted property”, profit (and other) forfeiture orders can apply to any “property”, whether or not tainted.
[18] “Tainted property” is defined as:
(a) ... any property that has, wholly or in part, been –
(i) Acquired as a result of significant criminal activity; or
(ii) Directly or indirectly derived from significant criminal activity; and
(b)includes any property that has been acquired as a result of, or directly or indirectly derived from, more than 1 activity if at least
1 of those activities is a significant criminal activity.
[19] Notably, ss 50 and 55 are subject to ss 51 and 56 respectively which, apart from necessary alterations to reflect the two different types of civil forfeiture orders being considered provide:
51Exclusion of respondent's property from assets forfeiture order because of undue hardship
(1)The High Court may, on an application made by the respondent before an assets forfeiture order is made, exclude certain property from an assets forfeiture order if it considers that, having regard to all of the circumstances, undue hardship is reasonably likely to be caused to the respondent if the property is included in the assets forfeiture order.
(2) The circumstances the Court may have regard to under subsection
(1) include, without limitation,—
(a)the use that is ordinarily made, or was intended to be made, of the property that is, or is proposed to be, the subject of the assets forfeiture order; and
(b)the nature and extent of the respondent's interest in the property; and
(c) the circumstances of the significant criminal activity to which the order relates.
[20] Sections 51 and 56 do not prescribe either the onus or standard of proof, but presumably the civil standard applies to applications by respondents or others who are entitled to “appear and adduce evidence” on a consideration of the whole of the evidence.
[21] This is to be contrasted with applications for relief either before or after civil forfeiture orders have been made, for which ss 61 and 62 provide, s 63 which requires applications for relief from civil forfeiture orders under ss 61 and 62 to specify “the property and the interest in that property in respect of which the person seeks relief” and the reasons why relief should be granted in relation to that interest. They lead on to the orders which may be made on ss 61 and 62 applications appearing in ss 66 and 67 which relevantly read:
66Making order for relief from civil forfeiture order where person has interest and was not involved in significant criminal activity
(1)On receipt of an application for an order for relief from a civil forfeiture order under section 61 or 62, the High Court must grant the relief that the Court considers appropriate if the applicant proves on the balance of probabilities that the applicant—
(a)has an interest, or would but for any civil forfeiture order have an interest, in the property to which the application relates; and
(b)has not unlawfully benefited from the significant criminal activity to which the application relates.
67Making order for relief from civil forfeiture order on grounds of undue hardship
(1) On an application for an order for relief from a civil forfeiture order under section 61 or 62, the High Court may grant the application if it considers that, having regard to all of the circumstances, undue hardship is reasonably likely to be caused to the applicant if relief is not granted.
(2) The circumstances the Court may have regard to under subsection (1)
include, without limitation,—
(a)the use that is ordinarily made, or was intended to be made, of the property that is, or is proposed to be, the subject of the civil forfeiture order; and
(b) the nature and extent of any person's interest in the property; and
(c)the degree, if any, to which the person had knowledge of the significant criminal activity to which the property relates; and
(d) the circumstances of the significant criminal activity to which the property or order relates.
[22] The presence and absence of provisions as to the standard of proof are notable.
[23] Not only is the previously summarised definition of “significant criminal activity” relevant in relation to relief applications, it is to be noted that the phrase “unlawfully benefited from significant criminal activity” is defined in s 7 in the following terms:
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).
[24] Finally, it is also to be noted that if relief applications under either ss 66 or 67 succeed, s 68 requires this Court in respect of a severable interest to “direct that the severable interest be not included in any civil forfeiture order”[9] or, with an interest which is not severable from the property forfeited under a civil forfeiture order, to
[9] s 68.
“direct the Crown to pay the applicant an amount equal to the value of that interest”.[10]
Evidence – General
[10] s 69.
[25] The Commissioner relied on an affidavit by Detective Senior Sergeant MacMillan, a long-standing officer attached to the Auckland Asset Recovery Unit, Financial Crime Group. He said “Operation Leo” was undertaken from late 2007, targeting a gang called the “Killer Beez”, a feeder group for “The Tribesmen” motor cycle gang. The respondent, Mr Masters, is leader of both.
[26] Evidence obtained during “Operation Leo” showed the two gangs ran the majority of the Tribesmen drug activities in the Otara area of South Auckland, operations which expanded from cannabis to methamphetamine.
[27] Under interception warrants, over 110,000 communications were intercepted over the period 12 February 2008-May 2008 involving the respondents and others. DSS MacMillan said a “substantial portion of those communications related to criminal activities including drug dealing”.
[28] DSS MacMillan’s affidavit then dealt with each of the respondents and the vehicles seized. The evidence relating to the each application is summarised in the relevant sections of this judgment.
Holden Commodore motor vehicle registration AQT455
[29] This vehicle was associated with the respondent Mr Nelson and, as mentioned, is the subject of applications by Mr King and his daughter for a severable interest – not quantified – to be excluded from any asset forfeiture order in relation to it. The applications say the car was bought by Mr King and Ms King and the only interest Mr Nelson may have in it is as a “beneficial interest arising from his relationship” with Ms King.
[30] DSS MacMillan’s evidence said Mr Nelson is a patched member of the “Killer Beez” and was involved in 522 communications relevant to “Operation Leo” out of the 12,109 communications intercepted on 75 days of the 84 day warrant period, with 1496 identified as drug related. 175 drug dealing offences over that period were identified with Mr Nelson running an enterprise called Colourway Records and arranging sales of methamphetamine through a number of others in order to support that business.
[31] Mr Nelson had previous convictions before those resulting from “Operation Leo”. Following termination of that Operation he pleaded guilty to two charges of dealing in methamphetamine and another of engaging in a money laundering transaction. For sentencing purposes it was agreed from his communications he obtained between 200-250 grams of methamphetamine over the interception period, worth between $200,000-$250,000. He was sentenced to five-and-a-half years imprisonment on 3 February 2010.
[32] DSS MacMillan said the Holden Commodore registration AQT455 was on
16 January 2008 registered to a Mr Eric Nelson of Kaikohe. Its estimated auction value was $12,500. When the previous owner sold it for $25,000 cash on 13 January
2008 at Kerikeri, the seller was told the vehicle was to be registered in the name of the buyer’s grandfather who was present at the sale.
[33] DSS MacMillan said he believed the vehicle was not under the control of the registered owner because it was seized on termination of “Operation Leo” from Mr Nelson’s residence at 8 Israel Avenue, Otara. He said his view was that the vehicle was effectively under the control of members of the “Killer Beez” gang, principally Mr Nelson.
[34] Mr Nelson, Mr King and Ms King all provided affidavits in support of their opposition and their relief applications and were cross-examined on them. Mr Nelson said he was never convicted of money laundering and was never a member, let alone a patched member, of “Killer Beez”. He said his methamphetamine offending was not part of his role with Colourway Records and he was not sentenced on the basis that he obtained between 200-250 grams of
methamphetamine over the interception period: the sentencing was that he had obtained or supplied about 168 grams and had offered to sell about 50 grams of methamphetamine he did not have.
[35] He said he provided none of the purchase price of AQT455 as he did not have
$25,000. He denied the $25,000 came from his drug dealing. He said he borrowed money to finance his dealing and over the interception period “went backwards financially”. He said he did not drive the car very often and Ms King had nothing to do with his offending. He did, however, accept he was involved in negotiating a reduction from $28,000 to $25,000 in the car’s price.
[36] He said the car has never been under the control of the “Killer Beez” and his interest in the vehicle was as Ms King’s partner. He was “willing to forego any such interest as she needs to have what she can to care for the children” of their relationship.
[37] Cross-examined, he said he could not remember whether he made a lot of money from his methamphetamine dealing and denied he regularly gave Ms King cash from his sales, sometimes as much as $10,000. He denied he had been dealing in methamphetamine for at least a year before his arrest.
[38] His version of the trip to purchase AQT455 differed from that of Mr and Ms King as to the persons present at the negotiations themselves, the name he used and who handed the cash to the seller. He said Ms King handed over the cash and they both asked the seller to register the car in the name of his grandfather, Mr Eric Nelson, because “I didn’t want to put it in my name – I had too many fines”.
[39] He acknowledged that at the time of his arrest Ms King was using a different vehicle for her courier business but denied he had been using AQT455. He said Ms King’s brother and father drove the car and “I drove it a couple of times and that’s it”.
[40] Mr King clarified the interest he claimed in AQT455. It was half the
$25,000. He said he provided the whole of that sum to his daughter – half as a gift
and half for her to repay from her income. The funds he sourced from money he received from a former employer when he left in July 2007 plus an investment realised the following month. He said the car was registered in Mr Nelson’s grandfather’s name initially but on 23 June 2009 he transferred it into his name as security for the money his daughter owed him. He said Mr Nelson had no financial interest in the vehicle and he did not buy it for Mr Nelson’s benefit but for that of his daughter and grandchildren.
[41] In cross-examination he said when he received his former employer’s funds “most of it went into the bank and stayed there for quite a while”, but had no explanation as to why the bank documentation exhibited to his affidavits was a record of debits and credits, not a bank statement. He said he transferred sums from his savings account to his current account and supplemented the latter with income from a new job from mid-October 2007 but denied the money he received in July or August 2007 was virtually exhausted by January-February 2008.
[42] Of the purchase of AQT455, he said he gave Ms King $25,000 by instalments over time to enable her to buy a car and meet other expenses.
[43] He denied the transfer of the vehicle into his name over 14 months after
“Operation Leo” was terminated had anything to do with that event.
[44] He had a version of the negotiations and handing over of the purchase price for the car which varied from that given by Mr Nelson and Ms King.
[45] Ms King also supported her father in saying AQT455 was bought with
$25,000 provided by her father and no funds from Mr Nelson, and that she was obliged to repay her father half that sum.
[46] She said it was she who handed the money to the vendor. It was a vehicle which particularly attracted her. It was never under the effective control of Mr Nelson or the “Killer Beez”. The driver was mostly her brother.
[47] She gave details of the courier business she operated with another vehicle and employed drivers from 2007 – she was disqualified – but she ceased working after Mr Nelson was arrested.
[48] She is now in receipt of a Domestic Purposes Benefit, living with the three children of her relationship with Mr Nelson, initially with family but in rented accommodation from April 2010, driving another vehicle provided by her father.
[49] In cross-examination she denied a number of admissions she made when interviewed by Police on 5 May 2008. They included her admission that she had known Mr Nelson was dealing in drugs for more than a year before his arrest and her statement that Mr Nelson regularly gave her large sums of cash, sometimes weekly and sometimes up to $10,000. She specifically denied that she held amounts of about $10,000 in cash on at least five different occasions before her partner’s arrest.
[50] She also denied her earlier statement that she knew Mr Nelson’s associates in the “Killer Beez” were selling drugs because they “all ride round on their bikes and flash cars”.
[51] She was unable to remember her earlier statement that Mr Nelson drove AQT455 “when he goes out with the boys”, though said “the boys” were not the “Killer Beez”.
[52] She denied AQT455 was Mr Nelson’s car and, of the purchase, accepted that she, too, should not become the registered owner because of unpaid fines and her disqualification. Her version of the negotiations and purchase more closely followed that of her father than that of Mr Nelson, but agreed she handed the cash to the vendor, she having had it in her possession the whole time. She denied that cash came from Mr Nelson’s drug dealing.
[53] She was unable to say why she did not put her father’s cash instalments into her bank account other than to say that it was because Mr Nelson used her account at times.
[54] There does not seem to be much doubt that AQT455 was purchased on or about 16 January 2008 for $25,000 cash which Ms King handed the vendor. The critical question is whether the Commissioner has proved on the balance of probabilities that the vehicle is tainted property. That essentially resolves into deciding whether the Commissioner has proved to the required standard that the
$25,000 came from Mr Nelson’s drug dealing or from Mr King’s advances to his daughter which she used to meet the purchase price. It was not suggested Ms King’s business or her financial position generally were sufficient to yield enough for her to obtain $25,000 in January 2008 from that source.
[55] The second question is whether, if the Commissioner has proved the vehicle was tainted property, Mr and Ms King have shown that it ought not to be forfeited because of undue hardship or that their separate interests of $12,500 each should be recognised in the orders made.
[56] There can be little doubt that, despite Mr Nelson’s efforts to minimise his involvement in drug dealing offences, the scale of his participation is shown by DSS MacMillan’s evidence to have been easily capable of yielding the $25,000 purchase price of AQT455. Over the interception warrant period he was involved in over
12,000 drug communications, he was obviously involved in drug dealing before the interception warrants came into force – as Ms King acknowledged in her interview – and he was sentenced on the basis that he was actually or potentially involved in drug dealing over the interception period alone with drugs worth in excess of
$200,000.
[57] It is clear from the bank documentation put in evidence by Mr King that he received $6129.13 on 11 July 2007 as final pay on leaving his long-term job. He sold shares he held in his employer for $12,047 on 26 July 2007 and on 16 August
2007 cashed in an investment in a retirement fund for $14,146.68. The total of
$26,193.68 was initially credited to his current account but $16,000 was credited in two payments to his savings account on 6 and 17 August 2007. Though, as noted, Mr King did not produce his bank statements, the small amount of interest credited to his savings account immediately prior to those payments suggests the previous balance was of no great amount.
[58] From 15 August 2007 to 15 October 2007 there were then 13 withdrawals from Mr King’s savings account totalling $14,500 all of which were credited to his current account.
[59] A further six withdrawals from the savings account followed – though of much smaller amounts than previously – in the period 14 January 2008-7 February
2008. They totalled $1550.00. Four of these withdrawals appear as credits to the current account to 31 January 2008, the date at which that bank documentation ceases.
[60] Over the period 31 October 2007-29 February 2008, the credits to the savings account for interest are again small, which suggests the credit balance left in Mr King’s savings account by 15 October 2007 was again modest.
[61] Over the period from 17 October 2007 to 21 December 2007 Mr King’s current account was credited with sums of about $1,000 per week from his new employment.
[62] The inference from that analysis is that, although Mr King banked
$26,193.68 to add to the credit in his current account in the period up to 16 August
2007 and paid $16,000 of that amount into his savings account, the credit in the latter was steadily eroded by nearly $15,000 – the whole of the $14,500 and about $300 of the $15,500 – by the time AQT455 was purchased. On that analysis, though he might have had enough in his current account in August 2007 from which to pay his daughter $25,000 by January 2008, the documents show he was feeding his current account from his savings account over the three months he was unemployed and again in the January-February 2008 period. Part of the sum credited to his current account would have gone in living expenses. Part may have been utilised by cash withdrawals from his current account which he may have given his daughter, but there was no reasonable explanation why the funds she required to buy a car – she said she had been “looking for a car for quite a while” at about $28,000 – would have been given to her in instalments, as Mr King said he did. If Mr King wished to assist his daughter to buy a car, why did he not retain funds in his savings account,
earning interest, until such time as she had selected a vehicle and knew its price, and then advanced the purchase price to her in one lump sum?
[63] The implication is therefore that, of the two possible sources of the $25,000 cash paid for AQT455 on or about 16 January 2008, there was by that date insufficient money in Mr King’s accounts to make that payment – whether by instalments or otherwise – alongside his personal expenditure. And although Ms King produced no banking or other financial documentation, there was nothing in her evidence to indicate she received the suggested instalments from her father and kept them, unused and aggregated, until AQT455 presented itself.
[64] To that view must be added the facts, first, that Mr Nelson was an unconvincing witness who was plainly endeavouring to help his former partner and the mother of his children. He admitted drug dealing and was sentenced on an agreed basis, but then endeavoured to minimise his involvement to suit the ends of his former partner and her father in this hearing.
[65] Ms King, too, was not a witness whose evidence carried conviction. She admitted having made a false complaint to the Police on an unrelated matter and her endeavours to resile from admissions she made to the Police on termination of “Operation Leo” were unlikely to be correct. That particularly applies to her denial of being regularly given large amounts of cash by Mr Nelson.
[66] Mr King was plainly concerned to try and help his daughter and grandchildren.
[67] That view also applies to the use to which AQT455 was put after it was bought. The period between acquisition and termination of “Operation Leo” was roughly comparable with the period the interception warrants were in operation. During that period Mr Nelson was proved to have been deeply involved in repeated drug offending through his “Killer Beez” associates. To assist in that regard, there is every likelihood he would have used AQT455 for his purposes whenever he chose, irrespective of where it was garaged.
[68] Drawing all of that together, the Court’s view is that it has been demonstrated to the required standard that the $25,000 cash Ms King gave the vendor of AQT455 on or about 16 January 2008 was much more likely to have come from Mr Nelson’s drug dealing than from her father. The vehicle is accordingly “tainted property”.
[69] That being the case, the Court is require to make an asset forfeiture order in relation to the vehicle unless the relief applications by Mr King or his daughter justify severing their interest.
[70] The Court has concluded that the $25,000 is more likely to have come from Mr Nelson’s drug dealing than from any other source. It was handled by Ms King knowing, for at least a year before termination of “Operation Leo”, that her partner was involved in drug dealing and accordingly there is no basis to conclude that her application for relief against forfeiture should be granted. She was a “person associated with crime”. Although she may not have driven AQT455 herself because she was a disqualified driver, it was available for her transport and that of her children when driven by Mr Nelson, her brother, or others. “Benefit” is inclusively defined to cover proceeds and property so it is not limited in that respect and there was clearly a benefit to Ms King in having AQT455 available for her use. The vehicle may not have been in her name but the circumstances in which she handed over the purchase price shows that she would have had an “interest” as defined in it and accordingly she “unlawfully benefited from the significant criminal activity” which resulted in the car being bought. That provides an additional reason why her application for relief against forfeiture should be dismissed.
[71] It has been held that it is more likely than not that Mr King did not give a total of $25,000 in cash to his daughter and accordingly his application for relief should similarly not be granted: it has not been demonstrated to the required standard that he had an “interest” in AQT455.
[72] The remaining question is whether forfeiture of AQT455 will occasion “undue hardship” to Ms King and her children, an assertion made only in her affidavit.
[73] “Undue hardship” is not defined in the Act and should therefore be “construed in a commonsense way”.[11] Guidance can be derived from the decision of the Court of Appeal in Lyall v Solicitor-General[12] under the predecessor of the Act, the Proceeds of Crime Act 1961, where, dealing with suggestion that forfeiture of a house would constitute “undue hardship” to a drug dealer, the Court of Appeal
[11] R v Beatson [1987] 1 NZLR 493 at 496 (CA); Rukat v Rukat [1975] 1 All ER 343 at 351.
[12] Lyall v Solicitor-General [1997] 2 NZLR 641 – see also Solicitor-General v De Bruin (2004) 20 CRNZ 933 para 22(b) p 938.
held:[13]
[13] At 646-647.
There will always be some hardship to an offender and sometimes to a third party when a forfeiture order is made. It stems from the operation of the Act and is disregarded: R v Hadad (1989) 16 NSWLR 476. Section 15(2) refers to undue hardship. Here there can be no undue hardship to anyone other than Black in the making of a forfeiture order because the other interests (those of Lyall and the mortgagee) are able to be addressed under ss 17 and 18. This was not a case, for example, of the use of a family home for drug dealing when special hardship might be suffered by innocent members of the family, having no interest in the property and therefore no ability to apply under s 17, if the home were to be forfeited.
...
The policy of the Act is to strip an offender of his or her interests in the property used to commit the crime. The reason for committing those crimes will ordinarily be immaterial. The property was not bought using tainted money but it was largely dedicated by its owners to drug dealing. Those who establish drug houses and commit serious offences in or from them can normally expect to lose them unless there is gross or severe disproportion between the gravity of offending and the value of the property sought to be forfeited coupled with the other punishment inflicted on the offender. We have obtained some guidance on this question from the decision of the Court of Appeals for the Ninth Circuit in United States v Washer 817 F 2d 1409 (1987) in which it was held that only those forfeitures that in light of all the circumstances are grossly disproportionate to the offence committed are prohibited by the Eighth Amendment's ban on cruel and unusual punishment.
[74] Further, “hardship” is defined as a “condition which presses unusually hard upon one who has to endure it; hardness of fate or circumstances; severe toll or suffering; extreme want or privation”[14] and “undue” is defined as “going beyond
what is appropriate, warranted or natural; excessive”.[15]
[14] Oxford English Dictionary 2nd ed vol.VI, p 1114.
[15] At vol XVIII p 1010.
[75] The statute requires much more than mere inconvenience or difficulty. Ms King needs to show that forfeiture of AQT455 would, for her, go well beyond those concepts and into privation to be regarded as excessive in the circumstances for her and her children. She has to show the hardship to her would be “grossly disproportionate” to the circumstances of acquisition of the vehicle or “extreme want of privation” to which is added the necessity that such privation must be “undue”.
[76] In that regard, three factors stand out.
[77] The first is that she was prepared to utilise funds which she knew had been derived from criminal activity in buying AQT455. The second is that she was not prepared to become the registered owner of the vehicle because to do so would, she knew, have exposed the vehicle to forfeiture or seizure for her unpaid fines. Thirdly, although she and her children have undoubtedly encountered difficulty with transport since the vehicle was seized on 5 May 2008, with the assistance of her father she and the children have had a car for a significant proportion of that period (even though her disqualification extended to February 2010).
[78] When all those factors are combined, it is apparent no basis has been made out to reach the view that forfeiture of AQT455 will occasion Ms King undue hardship.
[79] In those circumstances, the Commissioner’s application for forfeiture of the Holden Commodore AQT455 is granted and the applications by Mr King and Ms King for relief against that forfeiture or for severance of their interest in the vehicle are all dismissed.
[80] As required by s 50(3) of the Act, Holden Commodore AQT455 (technical details of which appear in paragraph 6.1 of DSS MacMillan’s affidavit) is to be the subject of an assets forfeiture order and is accordingly to vest in the Crown absolutely and to be in the custody and control of the Official Assignee.
2001 Holden Commodore motor vehicle registration HSV634 and 2006 Harley
Davidson motor cycle registration 58YTJ.
[81] These vehicles principally affect the respondent, Mr H Deer, and the application for relief by his brother, Mr K J Deer,.
[82] Mr Deer pleaded guilty for offences committed during “Operation Leo” namely dealing and manufacturing methamphetamine. DSS MacMillan’s affidavit said he was to be sentenced on 25 March 2010 but what sentence was imposed was not spelt out at this hearing.
[83] DSS MacMillan said Mr H Deer was a patched “Tribesmen” member who lived at 8 Maytime Place, Otara, South Auckland, and only came within the scope of “Operation Leo” when intercepted conversations indicated his involvement. He is the son of the respondent, Mr Wilson, and during the period he was subject to the interception warrants – 12 March 2008-5 May 2008 – he communicated with other respondents on 350 occasions and more generally on 4900 occasions, 770 of which were drug related. The intercepted conversations implicated him in 33 drug dealing offences.
[84] When the search warrant was executed on 10 Maytime Place on termination, Mr Deer endeavoured to dispose of methamphetamine in his possession worth approximate $9300. He was also found with other drug paraphernalia and $8840 in cash.
[85] HSV634 was registered in the name of Mr K J Deer from about 12 March
2008 and its current auction value estimate is $15,000.
[86] DSS MacMillan said he believed the vehicle was not under the control of the registered owner because it was seized at 10 Maytime Place and on 19 March 2008
Mr H Deer was seen by Police driving the vehicle. Subsequently he used counter- surveillance techniques when driving it to avoid apprehension.
[87] He said the previous owner was the mother of a Ms Rapana whose partner was a Mr Clive Hill. She told Police that in early 2008 Mr Hill decided he wanted to sell HSV634, took it one day to show someone he knew who was interested in buying it – who turned out to be Mr H Deer – and sold the vehicle. Thus
DSS MacMillan said he believed the vehicle was effectively under the control of
Mr H Deer and members of the “Killer Beez”.
[88] 58YTJ was also the subject of a relief application by Mr K J Deer, but little evidence specifically related to that vehicle. DSS MacMillan said the motor cycle was transferred into the name of Mr Rapana on or about 15 October 2007 and is now estimated to be worth $18,000.
[89] He believed the vehicle was not under the control of the registered owner because it, too, was seized from 10 Maytime Place on 5 May 2008 with other vehicles, and Mr Rapana confirmed both HSV634 and 58YTJ were put in his and his wife’s name for their daughter and her husband, Mr Hill. Mr Hill sold the motor cycle to Mr H Deer.
[90] DSS MacMillan said he believed this vehicle was also bought by Mr H Deer from criminal income and was effectively under the control of members of the “Killer Beez” gang, Mr H Deer in particular, who had not recorded a change of ownership when the motor cycle was bought.
[91] Mr K J Deer’s affidavit first made the point that he is the registered proprietor of both vehicles, HSV634 from 12 March 2008 and 58YTJ from 12 May
2008. His opposition to forfeiture was on the ground that it would cause him undue hardship and that he was not involved in any significant criminal offending.
[92] He said he was living at his brother’s home at 10 Maytime Place when the vehicles were seized. The occupants included Mr H Deer’s son, the respondent Mr Wilson. He said that over the years of his employment he bought and sold numerous cars and motor cycles, tending to keep them for two or three years, sell them, and purchase replacements from their proceeds and with funds of his own.
[93] He said Mr H Deer told him he had a mate who wanted to sell HSV634 for
$20,000 and he decided to buy it, using $17,000 from proceeds of a motor cycle sale, with $3000 from his savings. He had no dealings with the previous owner but gave
his brother the money and received the car in return. He said his brother borrowed the car a few times.
[94] As far as 58YTJ is concerned, he said his brother again told him of the Harley Davidson’s availability for sale at $20,000. He gave his brother $9,000 from his savings to use as a deposit. Mr H Deer then brought the motor cycle back on the basis that Mr K J Deer would pay the balance when he sold HSV634, but it was seized before he could pay the $11,000. He said he still owes that money.
[95] He said he used both vehicles and paid for all the petrol and repairs, had, for him, a lot of money tied up in the vehicles, and asserted neither were in the effective control of his brother.
[96] In cross-examination he said the source of the $17,000 was his sale of another motor cycle, the registration details of which were put in evidence by DSS MacMillan. They showed Mr K J Deer being registered as owner of a 2000
Harley Davidson Dyna Wideglide registration 17UGZ from 2 October 2007 until he transferred it to a Maxine Deer who is Mr Max Wilson’s cousin, and daughter of Mr K J Deer on 20 February 2008. He said the transaction was in cash because “I wouldn’t take a cheque – would you?” and he knew the purchaser was a “Tribesmen” member. He claimed he left the cash in a drawer because “I don’t like banks” and he knew he would buy a replacement vehicle shortly.
[97] He acknowledged giving the cash to his brother to buy HSV634 but denied knowing he was engaged in drug dealing before termination of “Operation Leo” because “I never asked him. I don’t ask him what he does when I’m at work, what he does while I’m at work is his own thing”.
[98] He knew $20,000 would be the price and never spoke with the seller but knew “Clive” was also the seller of 58YTJ. He had been unable to pay the balance of $11,000 because both vehicles had been seized on termination. He acknowledged both his purchases and prospective sales would have been through his brother “asking around”. He denied his brother suggested he should buy HSV634 and said:
“I asked him if he knew there was a car for sale or anything and he said yeah, his mate was interested in selling his. I said I could be interested and he showed me some photos of it and I said yeah, I can probably take it and I thought I’d hang onto it for a while ...”
[99] He similarly never saw 58YTJ before his brother brought it back.
[100] He explained transferring the motor cycle into his name a week after termination of a “Operation Leo” by saying:
“Q.You see – this Harley which you say came from Hepa’s associate, Clive, I suggest was registered in your name only AFTER the Police
‘bust’ because you volunteered to Hepa to have it put into your name?
A. Nah.
...
Q. And going back to the Holden, that was put into your name simply as a holding mechanism rather than it being put into Hepa Deer’s name, who actually owned the car?
A. No, I did.
[101] He acknowledged he could have obtained evidence from his brother and from
“Clive”. They were not witnesses.
[102] Despite the lack of available corroborative evidence, there seems to be nothing to contradict Mr K J Deer’s evidence that he paid $20,000 cash for HSV634 mostly derived from the sale of 17UGZ, and paid $9000 cash for 58YTJ on account of the $20,000 purchase price.
[103] The contest is accordingly whether it has been shown that either or both of the vehicles is “tainted property”, whether Mr K J Deer has “unlawfully benefited from significant criminal activity” or whether it amounts to an undue hardship for the vehicles to be forfeited.
[104] There can be no doubt that Mr H Deer was a “person” who was engaged in “significant criminal activity” and was “undertaking” that activity in terms of s 6(2). On this branch of the case, therefore, the question is whether Mr K J Deer has
knowingly derived a benefit from his brother’s significant criminal activity directly or indirectly.
[105] Because “benefit” is inclusively defined, it is not limited by the Act. Dictionary definitions give it as meaning “advantage, profit, good” and “pecuniary advantage, profit, gain”[16] but, even so, it could not be said that there is anything in the facts of this matter which would amount to a “benefit” obtained by Mr K J Deer from his brother or, more particularly, his brother’s drug dealing, still less that he “knowingly” benefited from that significant criminal activity.
[16] Oxford English Dictionary 2nd ed Vol.II p 111.
[106] It must be acknowledged that there is an aura of suspicion about Mr K J Deer’s activities. He was a boarder in his brother’s house during the period when his brother was significantly involved in drug dealing. There is a casualness about his acquisition of the vehicles without seeing them and with his interest only being incidentally aroused. There is his retaining sizeable sums in cash for the purposes of these transactions. There is the fact he apparently never used either of the vehicles. There is the lack of supporting evidence, especially from Mr Hill, who, coincidentally, was the vendor of both vehicles.
[107] But, on the other hand, he had been in full-time employment for a number of years so may be expected to have had savings, he had an aversion to banks, his full- time employment may have meant he had less time to concern himself with his brother’s activities, perhaps some people do involve themselves in significant economic activity without much thought and are slipshod about such matters as registering vehicles in their name.
[108] All in all, whatever suspicions may be aroused by the evidence on this matter, the conclusion must be that the Commissioner has failed to show, on the balance of probabilities, either that the Holden Commodore HSV634 or the Harley Davidson motor cycle 58YTJ were tainted property or that Mr K J Deer unlawfully benefited from his brother’s significant criminal activity. The Commissioner’s applications for forfeiture of both vehicles are accordingly dismissed.
[109] There is, accordingly no need to consider Mr K J Deer’s application for relief but, for completeness, there being insufficient evidence that the cash used to purchase either vehicle was derived from Mr H Deer’s drug dealing and it was more probably derived from Mr K J Deer’s savings, the latter might have had a case for relief.
Ford Falcon registration CGZ599
[110] The Commissioner’s application for forfeiture of the 2004 Ford Falcon motor car registration CGZ599 was resisted by Mr Wilson’s former partner, Ms Flavell, on the grounds that she was entitled to relief because she was the registered owner of the vehicle, had not unlawfully benefited from any significant criminal activity of her former partner, and forfeiture would cause her and her children undue hardship.
[111] DSS MacMillan said Mr Wilson was a patched member of the “Killer Beez” and, though not initially the target of “Operation Leo” became a target when a number of the intercepted conversations indicated his involvement in the supply and manufacture of methamphetamine. He was involved in some 767 communications with the respondents and others, with 16,231 communications being intercepted for Mr Wilson, 6345 of which were drug-related and covered virtually the whole of the interception warrant period. He was involved in selling, conspiring to sell, offering to sell and manufacturing methamphetamine and was said to be involved in 554 drug dealing offences over the interception period.
[112] He is the son of Mr H Deer who is a “Tribesmen” member and was regularly sourcing methamphetamine from him and others and on-selling it for profit. On termination he pleaded guilty to charges of supplying and manufacturing methamphetamine and was sentenced on 30 June 2009 to five years three months imprisonment.
[113] When “Operation Leo” was terminated, a search warrant was executed on
Ms Flavell’s address, 18 Clayton Avenue, Otara, where the vehicle was seized. The
$9300 worth of methamphetamine was located at Maytime Street (Mr Wilson’s address) plus the other drug paraphernalia and $8840 cash.
[114] CGZ599 was registered in Ms Flavell’s name on or about 20 March 2008 and has an estimated value of $10,000-$15,000. DSS MacMillan said he believed the vehicle was not under the control of the registered owner because it was seized on termination at 18 Clayton Avenue, and Ms Flavell told Police that the vehicle used to belong to Mr Wilson’s uncle. He gave it to them for the children without any money passing hands as far as she was aware. She knew Mr Wilson was involved in selling drugs for money.
[115] Mr H Deer was seen driving the vehicle on 17 January 2008. It was parked at
10 Maytime Street on a number of subsequent occasions during the interception period. Mr Wilson was seen driving it on 16 April 2008.
[116] On 16 October 2008 Ms Flavell’s grandmother, Mrs Penelope Flavell, told
Police she bought the vehicle from Mr Wilson’s uncle, Joseph Wilson/Henry, for
$12,000 which she gave Ms Flavell for vehicle purchase purposes in late 2007. Ms Flavell corroborated that story and, to an extent, it was also corroborated on
23 September 2009 when Police spoke to Mr Henry who said he sold the vehicle to Ms Flavell for $12,000 paid in cash by her “Nana, Penny”. A week later Mrs Flavell told Police the money came from her husband’s redundancy or retirement and she had $300,000 in cash at her home at that stage and was using it to buy vehicles for her children, grandchildren and home improvements.
[117] DSS MacMillan said he believed the vehicle was effectively under the control of a “Killer Beez” members, particularly Mr H Deer as the vehicle was frequently seen at his address.
[118] Ms Flavell’s affidavits mentioned she had three children, two to Mr Wilson. She was considering in late 2007 upgrading to a larger vehicle. Her grandmother said she would finance her and keep Ms Flavell’s existing vehicle. Shortly afterwards, when visiting Mr Wilson at 10 Maytime Street, which he was sharing with his uncle, Mr Henry and his parents, Mr Henry said he was going to sell CGZ599. A little later her grandmother said that she would give Ms Flavell the money to buy the car, which Mr Henry said he would sell for $12,000. She said in late January/early February 2008 Mrs Flavell gave her $5000 cash which she gave to
Mr Henry, promising to pay the balance when Mrs Flavell gave it to her. She said Mrs Flavell went to Maytime Street the same week she gave Ms Flavell the $5000 and paid Mr Henry the balance.
[119] Ms Flavell said she uplifted the car around the middle of February 2008 and registered it in her name on 20 March 2008. She therefore drove it for about two months before it was seized. She said she wholly used it for herself and her children and it was never under the effective control of either Mr H Deer on the “Killer Beez” and, because of the family relationship, there was nothing unusual about CGZ599 being at Maytime Street as she drove it there to see Mr Wilson. Though she lent the vehicle to others over the period, she was unable to recall whether Mr H Deer ever used it.
[120] She said she would be very concerned if CGZ599 was forfeited because of her three children and her solo parent status. She needs a vehicle for family and general purposes and was “heavily reliant on other people for arranging my transport”.
[121] It is clear from medical reports she produced that her elder child to Mr Wilson suffers from hemiplegia and needs significant ongoing medical care. Her youngest child also has major health problems requiring ongoing treatment.
[122] In cross-examination, Ms Flavell said she only knew Mr Wilson was dealing drugs a few months before termination, but denied he gave her cash from his operations even though she visited Maytime Street regularly to see him. She denied she was living with him at that address but acknowledged not giving Police the correct information in at least two respects concerning Mr Wilson’s residence when interviewed.
[123] Though she reiterated the money she paid Mr Henry was a gift from her grandmother, she had to admit that, to Police, she told them Mr Henry had given the car to Mr Wilson and herself for their children. That, she said, was untrue. She had been confused.
[124] She admitted, however, that she told the Police that Mr Wilson used the vehicle as he wanted and had no need to ask her permission, but denied his ability to use the car was because both of them were living at Maytime Street.
[125] She acknowledged Mrs Flavell had given her $5000 some time earlier to buy her previous vehicle but said it was in her grandmother’s name on termination. She also said it was in an aunt’s name. She admitted telling the Police on termination that her uncle had given Mr Wilson and her the car with no cash being involved but, in October 2009, she told Police her grandmother gave her $10,000 but Mr Henry wanted $12,000 so she had to give him some more money later. Even so, she denied that Mr Wilson acquired CGZ599 from Mr Henry for them both to use.
[126] Mrs Penelope Flavell generally corroborated her granddaughter’s version and said that, since 5 May 2008, her household including Ms Flavell’s cousin and uncle had been transporting the children to their appointments, medical and otherwise.
[127] In cross-examination she said her husband retired from his long-time employment or became redundant around 2005, receiving something like $300,000 which they put in a range of investments culminating in a credit in Kiwibank. She confirmed Ms Flavell’s earlier vehicle was bought for $5000 but registered in an aunt’s name because Ms Flavell only had a learner’s licence. She bought Ms Flavell a car because she bought other grandchildren vehicles. All her transactions went through banks but she did not produce her bank statements because “nobody asked for anything”. The following exchange then took place:
Q.You didn’t give your granddaughter ANY money to buy that car, did you?
A.I gave Rochelle the money to buy the car. I gave her $5000 for the Honda Prelude which she sold back, I kept the money from the Honda Prelude and re-sold it, and gave her another $7,000. I gave Rochelle $5000 for the Honda Prelude. Then I gave her the other
$7,000 because it was $12,000 for the car. And then I sold the
Prelude again, to get my money back.
Q.Look at your affidavit at para 8, down the bottom, you say “I gave Rochelle $5000 cash from my husband’s retirement fund from his time working at the wharf” and what you’ve just told us is wrong, that you gave her $5000 for the Honda Prelude?
A.Yeah, but the money that I gave for that car – I never had any money until my husband retired from the wharf.
Q. And do you say now that you went and paid $7,000 to Joe, who was
Max’s uncle, for the rest of the car?
A. Yes, that was the first time I actually went to Maytime.
Q. Have you previously said “I gave Rochelle $5000 for her small car”? A. Right.
Q. And “I also gave her $10,000 to buy another car”? A. No, I didn’t give her $10,000.
...
Q. You told Detective Tom Gollan on the 1st of October 2009 that you gave Rochelle $5000 for her small car and “I also gave her $10,000 to buy another car”. That is what you told him, isn’t it?
A. I don’t know. I can’t remember, that’s going back a way. I know I
spoke to him on the phone a few times but I can’t –
Q.So you’ve made up the account of providing $7000 to Joe yourself, haven’t you?
A. Yep. Yes.
Q. You agree that has simply been made up?
A. No. I took $7000 up to Joe to make it up to the 12.
Q.Oh I see. I just need to put to you that that is not true – you did not give Rochelle any money for that Ford?
A.I didn’t give it to Rochelle. I gave her 5, then I went and saw Joe myself and gave him the other. Because at the time of this (the statement) that’s what I thought it was.
[128] That confused picture could have been made much plainer, and the payments Mrs Flavell said she made, simply proved by production of the bank statements but, even without them, it is tolerably clear she gave Ms Flavell $5000 to buy the Honda Prelude which Mrs Flavell later transferred to herself and kept the proceeds in repayment. That vehicle accordingly passes from contention.
[129] It is also reasonably clear that it was Mrs Flavell, not Mr Wilson’s drug dealing, which was the source of the $5000 Ms Flavell gave Mr Henry on account of the purchase price of CGZ599 and that Mrs Flavell paid Mr Henry the balance –
either $5000 or $7000 – shortly afterwards either directly or again via Ms Flavell. This transaction and the registration of CGZ599 in Ms Flavell’s name all occurred in late January/early February 2008. It is therefore more likely than not that the vehicle was not tainted property in the sense of being “acquired as a result of significant criminal activity” directly or indirectly and Ms Flavell, as owner, cannot be said to have “unlawfully benefited from significant criminal activity”. While it would be unrealistic to think Mr Wilson’s drug dealing activity did not antedate the interception warrants, at the relevant time Mrs Flavell had the money necessary to fund Ms Flavell’s vehicle transactions and what she said she did in relation to those was consistent with what she said she did for other grandchildren.
[130] This, again, is a case where there is an aura of suspicion relating to the matter. Why, for instance, with Mrs Flavell’s husband’s money in the bank, did she use significant sums of cash for Ms Flavell’s vehicles? Why were basic documents such as bank statements not produced? Adverse inferences could be drawn from the putting of cars in other persons’ names, significant transactions in cash, use of the vehicle by Mr Wilson and, probably, the “Killer Beez”, coupled with his significant drug dealing, and from Ms Flavell’s untruths to the Police. However, assessing the evidence as a whole, it could not be said that the onus of proof for a forfeiture order has been made out in respect of CGZ599. Despite the unsatisfactory nature of the evidence, it is more probable than not that Mrs Flavell’s funds, not Mr Wilson’s drug dealing, were the source of the purchase money for CGZ599.
[131] It accordingly follows that the Commissioner’s forfeiture application fails in respect of CGZ599.
[132] Again for completeness, it should be recorded that, even if CGZ599 had been “tainted property”, Ms Flavell’s application for relief on the ground of undue hardship to herself and her children would probably have been granted, though possibly on terms. She has a demonstrated need for mobility to care for her disabled children.
Result
[133] In the result:
a) The Commissioner’s application for forfeiture of Holden Commodore registration AQT455 is granted on the terms appearing in paragraph [81] hereof.
b)The Commissioner’s applications for forfeiture of Holden Commodore registration HSV634 and Harley Davidson motor cycle registration 58YTJ and the 2004 Ford Falcon motor vehicle registration CGZ599 are all dismissed.
c) Mr Nguyen’s application to rescind the forfeiture order made in relation to his Subaru Impreza on 19 April 2010 is directed to be listed for mention in the Duty Judge’s list on 23 August 2010. Pursuant to r 7.49(5), the application need not be heard by Stevens J.
Costs
[134] If costs are sought and cannot be agreed between counsel, memoranda may be filed with those from counsel for Mr K J Deer and Ms Flavell being filed and served within 28 days of delivery of this judgment and that from counsel for the Commissioner within 35 days, with all parties certifying, if they consider it appropriate so to do, that all matters of costs can be dealt with on the papers. It must be said, however, that the successful applicants may have made their task much easier had they been more candid and open with Police and more forthcoming in their evidence in this matter.
Evidential Postscript
[135] A word may be said about the evidence on applications such as these.
[136] From the Commissioner’s point of view, it would probably assist matters if rather more detail from the prosecution file were included in the forfeiture papers.
Further, if the Commissioner wishes to rely on inferences that any particular property is tainted property from the notoriousness of those involved in drug dealing involving themselves and others in sizeable transactions in cash or a predilection for high-powered motor vehicles and Harley Davidson motor cycles, evidence to that effect should be put before the Court since these are not matters of which judicial notice can be taken.
[137] Similarly, those who oppose forfeiture orders or seek relief make their cases much more difficult for themselves and others involved if they do not put before the Court documents which are readily available to support their position or are not candid with the Police in their dealings with them.
.................................................................
HUGH WILLIAMS J.
Solicitors:
Crown Solicitor, PO Box 2213 Auckland 1140
Email: david[email protected]
Sinisa Law, P O Box 22 853 Otahuhu, Auckland 1640
Copy for:
Peter Tomlinson, P O Box 194 Shortland Street, Auckland 1140
Email: [email protected]
David G A Reece, P O Box 4208 Shortland Street, Auckland 1140
Email: [email protected]
Emma Lamont-Messer, P O Box 276 134 Manukau 2241
Email: [email protected]
Case Officer: Adele[email protected]
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