Commissioner of Police v Slaimankhel
[2014] NZHC 2011
•22 August 2014
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2012-404-7021 [2014] NZHC 2011
UNDER the Criminal Proceeds (Recovery) Act 2009 BETWEEN
COMMISSIONER OF POLICE
Applicant
AND
KHALID NASER SLAIMANKHEL
Respondent
Hearing: 30 June 2014 Counsel:
M Harborow for Applicant
I Koya for RespondentJudgment:
22 August 2014
JUDGMENT OF KATZ J
This judgment was delivered by me on 22 August 2014 at 4:00 pm
Pursuant to Rule 11.5 High Court Rules
Registrar/Deputy Registrar
Solicitors: Meredith Connell, Auckland
Counsel: I Koya, Auckland
COMMISSIONER OF POLICE v SLAIMANKHEL [2014] NZHC 2011 [22 August 2014]
Introduction
[1] Khalid Slaimankhel operated a business selling health supplements and bodybuilding products. The Commissioner of Police alleges that some of the products Mr Slaimankhel sold were controlled drugs, including human growth hormones. It is a criminal offence to sell controlled drugs without a prescription from a registered medical practitioner.
[2] In these proceedings, the Commissioner seeks to forfeit, under the Criminal
Proceeds (Recovery) Act 2009 (“Act”), property with an estimated value of
$91,434.71 that Mr Slaimankhel is said to own or have an interest in. The Commissioner says that such property has either been acquired from the proceeds of significant criminal activity (the sale of controlled drugs)1 or should be forfeited to the Crown to offset the profits or benefits that Mr Slaimankhel has received from his alleged criminal activities.2
[3] The sole focus of Mr Slaimankhel’s opposition to the Commissioner’s
forfeiture application was an Audi car seized by the police from his property on
24 October 2012 (“Audi”). Mr Slaimankhel says that his brother, Omar Slaimankhel, owns the Audi. Omar Slaimankhel has filed an application for relief from forfeiture on that basis.
[4] The key issues raised by the Commissioner’s application, and Omar
Slaimankhel’s cross-application for relief from forfeiture, are as follows:
(a) Has the Commissioner established, on the balance of probabilities, that Mr Slaimankhel has unlawfully benefited from significant criminal activity?
(b)If so, has the Commissioner established, on the balance of probabilities, that Mr Slaimankhel owns or has an interest in the
various items of property (including the Audi) sought to be forfeited?
1 If so, this would justify an assets forfeiture order pursuant to Criminal Proceeds (Recovery) Act
2009, s 50.
2 If so, this would justify a profit forfeiture order pursuant to Criminal Proceeds (Recovery) Act
2009, s 55.
(c) If so, has Omar Slaimankhel established, on the balance of probabilities, that he also has an interest in the Audi (and has not benefited from any significant criminal activity)?
(d) If so, what relief from forfeiture (if any) should be granted?
[5] If the answers to questions (a) and (b) are “yes” then the necessary grounds to make a profit forfeiture order have been established. If the answer to (c) is also “yes” then I will need to consider whether it is appropriate for the Audi to be forfeited, given the nature and scope of any interest Omar Slaimankhel may have in that vehicle.
[6] If the grounds for making a profit forfeiture order are not established, it will be necessary to consider the Commissioner’s alternative, asset forfeiture, application.
Has Mr Slaimankhel unlawfully benefited from significant criminal activity?
[7] Mr Slaimankhel did not formally dispute that he had unlawfully benefited from significant criminal activity. The Commissioner must nevertheless formally prove, on the balance of probabilities, that he has done so.
[8] Significant criminal activity includes criminal activity that is punishable by imprisonment of five years or more.3 The Commissioner has filed two affidavits from Detective Constable Ngahiraka Latimer in support of his application. Detective Latimer’s evidence sets out details of Mr Slaimankhel’s unlawful dealings in controlled drugs during the period January to May 2012. If proceeded against criminally, that activity would amount to offending under the s 6 of Misuse of Drugs
Act 1975, punishable by imprisonment of five years or more. In the absence of any evidence in opposition, I am satisfied on the balance of probabilities that Mr Slaimankhel has engaged in significant criminal activity.
[9] Mr Slaimankhel must also have “unlawfully benefited” from this significant criminal activity. This requires that he has knowingly, directly or indirectly, derived
3 Criminal Proceeds (Recovery) Act 2009, s 6(1).
a benefit from it.4 The Commissioner has specified the value of the unlawful benefit Mr Slaimankhel received from dealing in controlled drugs to be at least $1,158,740, which is the value of 52,670 pills at $22 per pill. The value of the benefit is presumed to be the amount set out in the Commissioner’s application, unless Mr Slaimankhel proves otherwise, on the balance of probabilities.5 Mr Slaimankhel has not attempted to rebut the statutory presumption.
[10] I am accordingly satisfied, on the balance of probabilities, that Mr Slaimankhel has unlawfully benefited from significant criminal activity. The quantum of the benefit received exceeds, by a significant margin, the value of the property sought to be forfeited.
Does Mr Slaimankhel own or have an interest in the property that the
Commissioner seeks to forfeit?
[11] The Commissioner seeks to forfeit various property seized during the course of the police investigation, to offset the unlawful benefit Mr Slaimankhel received from his criminal activities.
[12] “Property” is defined in the Act as meaning real or personal property of any kind, and also includes an interest in real or personal property.6 The Court can treat effective control over property as an interest in property.7
Assets other than the Audi car
[13] Mr Slaimankhel did not file any evidence disputing his ownership of three of the four items of property. Nor did he oppose their forfeiture. The relevant assets are:
(a) $1,800 cash located in and seized by police from a Jeep Grand
Cherokee during a search on 22 May 2012;
4 Section 7. The “relevant period of criminal activity” is defined in s 5(1). In this case the relevant period is 20 November 2005 to 20 November 2012.
5 Section 53(1).
6 Section 2.
7 Section 58.
(b)$28,134.71 located in an ANZ account operated by Mr Slaimankhel and another person, seized by police on 24 October 2012;
(c) a Regal Raptor Spyder motorcycle seized by police on 24 October
2012.
[14] No third party has filed an application for relief against forfeiture in relation to those items. I am satisfied, based on Detective Latimer’s affidavits (including their extensive exhibits) that Mr Slaimankhel owns or has an interest in those assets and that the grounds for making a profit forfeiture order in relation to them have been made out.
The Audi car
[15] The position in relation to the Audi car is somewhat more complex. For the Audi to be realised to meet a profit forfeiture order against Mr Slaimankhel, the Commissioner must satisfy the Court, on the balance of probabilities, that Mr Slaimankhel owns or has an interest in the Audi.
[16] Omar Slaimankhel’s evidence was that he owns the Audi, although it is registered in the name of his cousin, Sabir Slaimankhel. He filed an affirmation asserting his ownership, on which he was cross-examined at some length. Detective Latimer also gave evidence as to the ownership of the Audi. Her affidavits included extensive exhibits. She was also cross-examined. From the totality of the evidence before the Court, I find the relevant facts to be as follows.
[17] Omar Slaimankhel has a particular interest in cars and regularly buys and sells them. Due to his interest in cars, Omar Slaimankhel also plays an active role in helping other family members buy or maintain cars for their own personal use.
[18] The funds to purchase the Audi came from the sale of another vehicle, a Jeep Grand Cherokee registered in the name of Mr Slaimankhel. It is therefore necessary to first consider the nature and extent of Mr Slaimankhel’s interest (if any) in the Jeep.
[19] The Jeep was purchased off TradeMe from JinBin Zhang on 17 April 2012. It was immediately registered in the name of Mr Slaimankhel. Prior to the purchase taking place, Mr Slaimankhel negotiated with Mr Zhang for about 10 days via text messages in relation to the purchase. There is no evidence that Omar Slaimankhel was involved in any way in those negotiations. Mr Slaimankhel initially offered to swap a Chrysler vehicle he owned, together with an additional cash payment, in exchange for the Jeep. Mr Zhang was not interested. Mr Slaimankhel then offered to swap an Audi S4, together with a cash top up, for the Jeep. Mr Zhang was interested in that exchange.
[20] Mr Slaimankhel, Omar Slaimankhel and another brother, Yayah Slaimankhel, met Mr Zhang in a car park to finalise the deal. Mr Zhang agreed to exchange the Jeep for the Audi S4 and a cash payment of $15,000. The Audi S4 was registered in the name of another brother, Jamal Slaimankhel. Omar Slaimankhel’s evidence in Court was, however, that the Audi S4 was in fact his. Jamal was with him when he purchased it at auction and subsequently used the car, at least some of the time. Omar Slaimankhel said, however, that he had funded the purchase of the Audi S4. There was no documentary evidence before me to support that claim, as the purchase price was paid in cash. No explanation was provided as to why the car was registered in Jamal’s name rather than Omar’s.
[21] During the negotiations in the car park for the sale of the Jeep, Mr Zhang was told by one of the three men that that the $15,000 cash payment (much of it apparently in $20 notes) came from “the family dairy”. Omar Slaimankhel’s evidence, at least initially, was that the $15,000 cash had come from him personally. The ground shifted somewhat during the course of his cross-examination, however. Ultimately, Omar Slaimankhel’s evidence was that the $15,000 cash had come from his family’s (then) business, Moshim’s Discount House. Omar Slaimankhel acknowledged that he was neither a shareholder nor a director of that business. He accordingly had no entitlement to drawings. It seems, however, to have been common practice (on the basis of Omar Slaimankhel’s evidence) for family members to take cash out of the family business as and when needed to pay living expenses, purchase cars and so on.
[22] Omar Slaimankhel acknowledged during the course of cross-examination that the Jeep had been purchased for Mr Slaimankhel’s use. Indeed, he said that the intention was that Mr Slaimankhel would advertise his supplements business on the side of the vehicle. Omar Slaimankhel accepted that it was intended that Mr Slaimankhel would both use and control the Jeep. As soon as the purchase price was agreed, Mr Zhang and the three Slaimankhel brothers went together to a Post Shop to register the transfer of the Jeep into Mr Slaimankhel’s name.
[23] Later that day, Mr Slaimankhel exchanged enthusiastic emails with his girlfriend and another person to let them know that he had bought a new vehicle. He was subsequently the sole or primary user of the Jeep. He was stopped by the police while driving it in both April and May 2012.
[24] Omar Slaimankhel’s evidence was that, after some months, Mr Slaimankhel asked him to sell the Jeep and buy him another car, one that would be cheaper to run. As a result, on 4 October 2012, Omar Slaimankhel sold the Jeep through a company called U-Sell Limited. He told the staff at U-Sell that he was selling the vehicle on behalf of his brother. U-Sell paid for the car by way of two cash cheques, totalling
$55,000. Omar Slaimankhel’s evidence was that he cashed those cheques and kept
the cash at home with him.
[25] Two weeks later, on 18 October 2012, $50,000 from the proceeds of the sale of the Jeep was used to buy the Audi which was seized from Mr Slaimankhel’s property on 24 October 2012. Mr Slaimankhel attended the car dealership to buy the Audi, together with a cousin, Sabir Slaimankhel. The Audi was paid for and registered in Sabir’s name. (I note that by this time Mr Slaimankhel was aware of the police investigation into his drug dealing activities). Omar Slaimankhel’s evidence was, in effect, that the $55,000 proceeds from the sale of the Jeep was his money, which he gave to Sabir to purchase a car for his (Sabir’s) use. It is not clear, however, exactly why Sabir needed a car. Omar Slaimankhel’s evidence was that Sabir is a professional rugby player who had been playing rugby in Sri Lanka. At the time the car was purchased he already had tickets booked to go to Australia to see his manager and, following that, Sabir was due to go and play rugby in Japan.
[26] As I have noted, the purchase of the Audi occurred against the background of Mr Slaimankhel having asked Omar Slaimankhel, two weeks previously, to sell the Jeep on his behalf. He wanted a car that was cheaper to run. The Audi was purchased with the proceeds of the sale of the Jeep. Omar Slaimankhel accepted in evidence that it was indeed a cheaper car to run. He denied, however, that it was the intended replacement vehicle for the Jeep. He was not able to identify any other vehicle, however, that had been purchased to replace the Jeep.
[27] Omar Slaimankhel’s evidence as to how the Audi ended up in Mr Slaimankhel’s possession on 24 October 2012 (when search and seizure warrants were executed under the Act) was that Sabir had lent the car to Mr Slaimankhel on
23 October 2012, when Sabir went to Australia to see his manager. It was intended to be a short term loan.
[28] When the police seized the Audi on 24 October 2012 two sets of car keys were located. One set of keys was in the vehicle. The other set of keys was in Mr Slaimankhel’s flat, on the same key ring as a key to his front door. During a search of the vehicle, a number of items linked to Mr Slaimankhel were found throughout the car, including in the centre console, the glove box and the boot. These included bank cards, several bail notices, his driver’s licence, his University identity card, a photo of his girlfriend with a handwritten heart on it and the name “Khalid” inside the heart, and an ANZ bank card in the name of “Pro Supplements” (Mr Slaimankhel’s business). When the vehicle was being placed on the tow truck Mr Slaimankhel said “I’m just going to watch you so you don’t smack the bumper of my car”.
[29] The final event relevant to determining whether Mr Slaimankhel owns or has an interest in the Audi occurred on 12 November 2012, after the car had been seized. On that day Mr Zhang received an email from Omar Slaimankhel. It attached a short document, backdated to 17 April 2012 (the date Mr Zhang sold the Jeep) which stated as follows:
17/04/2012
To whom this may concern
I Omar Slaimankhel traded my motor vehicle Audi S4 (plate number
GBH410) to Mr Jin Bin Zhang for his vehicle Jeep Cherokee (plate number
SRT4WD). I also paid Mr Zhang an additional $15,000 as cash difference in the valuation of the vehicles.
Omar Slaimankhel Jin Bin Zhang
[30] Omar Slaimankhel asked Mr Zhang to sign the letter and return it to him as soon as possible, which he did. Omar Slaimankhel then annexed this letter as an exhibit to his affirmation of 31 January 2013. It was only when the police made subsequent inquiries that it came to light that the letter was not contemporaneous, but had been obtained after the car had been seized, and backdated. Under cross-examination, Omar Slaimankhel acknowledged that he had lied to Mr Zhang as to the reason why he had needed such a letter, telling him that it was in order to make an insurance claim because the vehicle had been in a crash. In reality, Omar Slaimankhel wanted the letter to support his claim that he was the true owner of the Jeep, rather than the registered owner, Mr Slaimankhel.
[31] Against this background, the issue I must determine is whether the Commissioner has established, on the balance of probabilities, that Mr Slaimankhel owns or has an interest in the Audi. Under s 58(1) of the Act, if I am satisfied that Mr Slaimankhel has effective control over the Audi, I may order that it is to be treated as though Mr Slaimankhel has an interest in it. In that event, the Audi may be included in a profit forfeiture order.
[32] Tracing the funds used to purchase the Audi back to their original source is a difficult, if not impossible, task. At least $15,000 of the funds used to purchase the predecessor Jeep probably came from the family business, Moshim’s Discount House. The source of the funds originally used to purchase the Audi S4 are less clear, but may well have also come from the family business or, possibly, the proceeds of sale of other family vehicles. The cash sums involved in the various vehicle purchases exceeded, by a very significant margin, any declared income of either Omar Slaimankhel or Mr Slaimankhel.
[33] It is not necessary (in a profit forfeiture context at least) for the Commissioner to prove the precise source of the funds used to purchase the Audi. It is sufficient if he establishes, on the balance of probabilities, that Mr Slaimankhel had effective control over the Audi. That burden has been discharged.
Omar Slaimankhel’s evidence that the Audi was purchased for the use of Sabir Slaimankhel and was only on short term loan to Mr Slaimankhel is not plausible. Neither Mr Slaimankhel nor Sabir Slaimankhel (the alleged lender and borrower) gave evidence to support that claim, despite being the persons best placed to give evidence on the issue.
[34] The clear inference from all of the evidence before the Court is that the Audi was intended as a replacement vehicle for the Jeep previously used and controlled by Mr Slaimankhel. It was purchased with the proceeds of the sale of the Jeep, two weeks later, following a request from Mr Slaimankhel to his brother Omar to buy him a vehicle that was cheaper to run. No other vehicle has been identified as the relevant replacement vehicle.
[35] I do not accept that the vehicle was intended to be owned or controlled by Sabir Slaimankhel. Rather, I am satisfied that the Audi was purchased for Mr Slaimankhel’s use and was under his effective control at all material times. Mr Slaimankhel’s belongings were located throughout the vehicle, its key was on his key ring and he also had the spare set of keys, rather than these being retained by Sabir Slaimankhel. I reject the claim that the Audi was only “loaned” to Mr Slaimankhel by Sabir Slaimankhel the day before it was seized, on a short term basis.
[36] The Commissioner has accordingly established, on the balance of probabilities, that Mr Slaimankhel had effective control of the Audi. That constitutes an interest in the Audi in terms of the Act. All of the necessary pre-requisites for the making of a profit forfeiture order in relation to the Audi have accordingly been made out. I am satisfied that it is appropriate for such an order to be made, subject to the outcome of Omar Slaimankhel’s application for relief from forfeiture, which I now turn to consider.
Has Omar Slaimankhel established, on the balance of probabilities, that he also has an interest in the Audi?
[37] More than one person can have an interest in property. Despite the fact that
Mr Slaimankhel had effective control of the Audi, I must grant whatever relief is, in
my view, appropriate if Omar Slaimankhel satisfies me, on the balance of probabilities, that:
(a) he also has an interest in the Audi; and
(b)he has not unlawfully benefitted from any criminal activity undertaken by Mr Slaimankhel.8
[38] The Audi was purchased from the proceeds of the Jeep registered to Mr Slaimankhel. The consideration for the Jeep was $15,000 cash and the Audi S4 registered in Jamal Slaimankhel’s name. Despite initial claims to the effect that the
$15,000 cash contribution had come from him personally, it was clear by the conclusion of Omar Slaimankhel’s evidence that it had not. Rather, it came from a family business of which Omar Slaimankhel was neither director nor shareholder. Nor did he receive any declared income from the family business.
[39] Omar Slaimankhel’s interest in the Jeep, if any, must therefore derive from his alleged ownership of the Audi S4 registered in Jamal Slaimankhel’s name. There is no evidence, other than Omar Slaimankhel’s word, to support his claim that the Audi S4 was actually his. There are no documents that support such a claim. Nor did Jamal Slaimankhel provide an affirmation confirming his brother’s claim. Further, the purchase price of the Audi S4 appears to have been significantly in excess of Omar Slaimankhel’s declared income.
[40] The Audi S4, the Jeep and the Audi that is the subject of the Commissioner’s application, were all purchased with cash. It is therefore difficult to verify the precise source of funds for the purchase of the vehicles. It seems likely, however, in light of Omar Slaimankhel’s (somewhat reluctantly given) evidence as to the operation of the family business, that significant cash was taken out of the business by various family members and used for living expenses, including the purchase of
cars.
8 Section 66.
[41] There were significant credibility issues with a number of aspects of Omar Slaimankhel’s evidence. On key issues (such as the source of the $15,000 cash) he was evasive and contradictory. I have also rejected Omar Slaimankhel’s claim that the Audi was actually purchased for Sabir Slaimankhel and, in what would have been an extraordinarily unfortunate coincidence of timing, simply “loaned” to Mr Slaimankhel the day prior to the police raid. Further, Omar Slaimankhel acknowledged that he lied to Mr Zhang as to the reasons why he needed a backdated letter to support his claim to be the true owner of the Jeep.
[42] Given my concerns as to Omar Slaimankhel’s credibility, I am not prepared to accept his uncorroborated evidence that the Audi S4, registered in the name of Jamal Slaimankhel (who did not give evidence) was actually owned and paid for by Omar. While that is certainly a possibility, it is equally possible in my view that Jamal paid for that vehicle, or that cash was taken out of the family business to pay for it (as had occurred with the Jeep). Omar Slaimankhel has accordingly not established, on the balance of probabilities, that he has an interest in the Audi. His application for relief against forfeiture accordingly fails.
Asset forfeiture orders
[43] I have concluded that grounds exist for making profit forfeiture orders. It is not therefore necessary for me to determine whether grounds for making asset forfeiture orders also exist. I note for completeness, however, that in my view the Commissioner has not established, on the balance of probabilities, that the Audi is “tainted property” in the sense of having been purchased with the proceeds of significant criminal activity. In particular, there was no evidence linking the cash used to purchase either the Audi (or the predecessor Jeep) with profits made from unlawful drug dealing activities.
[44] The Commissioner noted that the purchase price of both the Audi S4 and the Jeep significantly exceeded the declared income of both Mr Slaimankhel and Omar Slaimankhel. While that is so, it does not necessarily follow that the proceeds of Mr Slaimankhel’s drug dealing activities funded the purchases. The more likely explanation, in my view, is that the source of the cash for the purchase of family
vehicles was Moshim’s Discount House, or other businesses owned and operated by the extended Slaimankhel family. While that may raise other issues, including the possibility of tax avoidance or evasion, the criminal activity relied on by the Commissioner was unlawful drug dealing, not tax evasion.
[45] If it had been necessary, I would have found that the grounds for making an asset forfeiture order in relation to the Audi were not made out.
Result
[46] I order that:
(a) The Commissioner’s application for effective control orders and profit
forfeiture orders, as set out in the Commissioner’s application dated
20 November 2012, is granted.
(b) The value of the unlawful benefit is $1,158,740.
(c) The maximum recoverable amount is also $1,158,740.9
(d)The property that is subject to the profit forfeiture orders, and which is to be disposed of by the Official Assignee under s 83(1) of the Act, is that set out at [1] (a) of the Commissioner’s application.
Costs
[47] The Commissioner is entitled to costs, together with disbursements as fixed by the Registrar. It is my preliminary view that costs should be fixed on a category
2B basis. I encourage counsel to endeavour to reach agreement on costs. If costs cannot be agreed, then any memorandum from the Commissioner is to be filed and served within 15 working days of this judgment. Any memorandum on behalf of either Mr Slaimankhel or Omar Slaimankhel is to be filed within a further 10
working days. Costs will then be dealt with on the papers.
Katz J
9 As no asset forfeiture orders have been made.
0
1