Commissioner of Police v Wisely
[2020] NZHC 2941
•6 November 2020
IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTEPOTI ROHE
CIV-2018-412-000103
[2020] NZHC 2941
BETWEEN THE COMMISSIONER OF POLICE
Applicant
AND
KELVIN BRUCE WISELY
Respondent
Hearing: 28 July 2020 and 5 August 2020 Appearances:
M J Grills for the Applicant
M A Stevens QC for the Respondent
Judgment:
6 November 2020
JUDGMENT OF NATION J
Introduction
[1] On 17 July 2017, the Police intercepted $39,000 in cash sent by Mr Wisely to an associate in payment for four ounces of methamphetamine.
[2] On 19 July 2017, the Police executed a search warrant at Mr Wisely’s address at Clutha. They found a purpose-built commercial cannabis growing operation behind a false internal wall in the three bay barn. In a freezer at his house, they found 26.5 grams of methamphetamine. Digital scales and bags associated with methamphetamine dealing were located in the kitchen. Cash of $25,110 was located in the master bedroom. Also on 19 July 2017, a thermos flask containing three ounces of methamphetamine was intercepted by Police en route to Mr Wisely’s address.
[3] In 2018, Mr Wisely pleaded guilty to charges of supply and possession for supply of methamphetamine, conspiracy to supply methamphetamine, possession of
POLICE v WISELY [2020] NZHC 2941 [6 November 2020]
cannabis for supply and cultivation of cannabis. On 12 March 2018, he was sentenced to imprisonment for seven years and 10 months.
[4] The Commissioner has pursued an application for assets forfeiture and profit forfeiture orders under the Criminal Proceeds (Recovery) Act 2009 (the Act). The Commissioner seeks forfeiture orders in respect of the benefit he says Mr Wisely obtained from dealing in methamphetamine and cannabis cultivation and dealing in the sum of $233,737.50.
The legal context
[5] With this application, the Commissioner must prove, on the balance of probabilities, that Mr Wisely has, in the relevant period of criminal activity, unlawfully benefited from significant criminal activity.
[6] The relevant period of criminal activity on this application was the period that started seven years before 16 November 2018, the date the application was made for a restraining order.
[7] Significant criminal activity means an activity engaged in by a person that, if proceeded against as a criminal offence, would amount to offending:1
(a) that consists of, or includes, 1 or more offences punishable by a maximum term of imprisonment of 5 years or more; or
(b) from which property, proceeds, or benefits of a value of $30,000 or more have, directly or indirectly, been acquired or derived.
[8] There is no dispute that Mr Wisely was engaged in significant criminal activity within the relevant period. The Commissioner proceeds on the basis Mr Wisely was involved in the alleged way with methamphetamine dealing, and cannabis cultivation and dealing in the period between March 2016 and his arrest on 19 July 2017.
[9] “Benefit” means gross receipts rather than profits.2 The Act defines “benefit” as including “proceeds and property” and specifies that any “expenses or outgoings
1 Criminal Proceeds (Recovery) Act 2009, s 6(1).
2 Cheah v Commissioner of Police [2020] NZCA 253 at [24].
used in connection with [qualifying significant criminal activity] must be disregarded for the purposes of calculating the value of any [qualifying] property, proceeds, or benefits”.3
[10]Section 53 of the Act provides:
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.
[11]Relevantly, s 55 of the Act states:
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—
(a)the value of the benefit determined in accordance with section 53; and
(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.
[12] Section 55(1) and (2) are subject to s 56. The High Court may exclude certain property from the profit forfeiture order if it considers that, having regard to all the
3 Criminal Proceeds (Recovery) Act, ss 5(1) and 6(3); Cheah v Commissioner of Police, above n 2, at [24].
circumstances, undue hardship would result to Mr Wisely if his property had to be sold. Mr Wisely has made an application under s 56. I discuss that further below.4
[13] Here, the benefit stated in the application was $242,389.81. That figure included the amount of a benefit paid to Mr Wisely by the Ministry of Social Development for approximately 27 weeks from June 2016, being $8,652.31.
[14] The Crown’s application for a profit forfeiture order was based on Mr Wisely’s convictions for dealing in methamphetamine and cannabis cultivation and dealing, and not the alleged unlawful obtaining of an unemployment benefit. On the hearing of the application, the Commissioner sought to amend the benefit as stated in the application to $233,737.50. This was consistent with the amount calculated as the value of the benefit Mr Wisely had received, less the amount of the unemployment benefit. The application is amended accordingly so is to be considered on the basis the benefit, as stated in the application, is $233,737.50.
[15] Mr Wisely has the burden of rebutting the statutory presumption that he benefited to the value of $233,737.50. Accordingly, Mr Wisely has to adduce evidence which establishes, on the balance of probabilities, what the actual amount of his benefit was.5
[16] The property which the Commissioner asks the Court to refer to in a profit forfeiture order is Mr Wisely’s residential property at 215 Circle Hill Road, Circle Hill, Clutha. The rateable value of that property at 1 September 2017 was $335,000. It was subject to a mortgage on which $211,338.03 was owing as at 14 October 2019.
[17] The Commissioner says the maximum recoverable amount for the purposes of s 54 is $208,627.50. That is the amount of the claimed benefit, less the $25,110 cash the Police had seized and was forfeited by an order of Judge Crosbie at Mr Wisely’s sentencing on 12 March 2018.
4 At [116]-[124].
5 Cheah v Commissioner of Police, above n 2, at [48].
[18] The Commissioner relied primarily on an affidavit from Detective Gillespie. A forensic accountant, Andrew Robert Hugel, in an affidavit, also analysed relevant banking records obtained by Detective Gillespie. Mr Wisely filed two affidavits. Both Detective Gillespie and Mr Wisely were cross-examined at the hearing of this application.
[19] The primary issue before me is whether Mr Wisely’s evidence was sufficient to rebut the statutory presumption and, if so, to what extent.
Background
[20] On 19 July 2017, Mr Wisely was 48 years of age. He had a conviction for possessing cannabis from 1999 and for cultivating cannabis from 1996. He had a conviction for possession of cannabis plant for supply from 2006. On 22 January 2016, he purchased a four hectare residential lifestyle block at Clutha for $330,000 with a mortgage from the ANZ. He was then employed as a truck driver for Dynes Transport. His application for a mortgage for the purchase of 215 Circle Hill Road was based on his then employment with Dynes Transport. On 11 June 2016, while driving a car, Mr Wisely failed alcohol breath testing procedures. This resulted in his sixth drink driving conviction. He was unable to continue working as a truck driver from that time. He was later disqualified from driving for a year and a day from 23 August 2016.
[21] Mr Wisely swore an affidavit on 8 June 2020 in opposition to the application. In it he confirmed he was sentenced for the drink driving offence on 23 August 2016, received nine months’ supervision with four months’ community detention, and a 12 months and one day disqualification. He was to be on community detention until 23 December 2016 and was disqualified from driving until 24 August 2017. He received a payment of $4,785.22 from Dynes Transport at the end of his employment with them on 15 June 2016, which included his last pay and holiday pay. He said he worked at the freezing works, Finegand Balclutha, for three months from January 2017, then at the Waitahuna Goldmine as a digger operator at $25 an hour for 12 hour days, two or three days a week. He said his income from this was $200 net a day. He said this meant he was “on the edge financially”. The mortgage payment owing fortnightly
was $573.59 and there were other expenses. He said during the period he was on the benefit it barely covered the mortgage and his credit card was used to pay other bills like insurance, food, power, phone and transport. He said his credit card balance as at 9 December 2016 was $14,340.77 owing. He said he then idiotically decided he could sell drugs to give him a safety buffer economically rather than be under the stress of living on the financial edge.
[22] Mr Wisely said he decided to sell drugs when he was working at Waitahuna where he could only get two to three days work a week and so was making no headway on the credit card debt. He said he was approached by a woman while he was still working to see if he wanted to “sell some stuff with an enticing profit margin”. He was then put in contact with the Hamilton supplier. It was arranged he would receive the first shipment of two to three ounces “on tick” and have three weeks to pay it.
Benefit from cannabis offending
[23] The evidence of Detective Gillespie was that, in March 2016, Mr Wisely made a $100 purchase from Hyalite Ltd, a hydroponics supplier. At the same time, there were other purchases from garden supply companies, along with numerous cash withdrawals. In April 2016, Mr Wisely paid Genesis Energy $105, presumably for his monthly power bill. In May 2016, his power bill was $404. Based only on electronic bill payments for power, Mr Wisely’s power consumption averaged $401 per month until July 2017. Detective Gillespie considered this a strong indicator that Mr Wisely’s cannabis growing operation was running from early May 2016. This would have allowed for an additional three cycles over what had been described in the summary of facts. Detective Gillespie said that the finding on 19 July 2017 of dried cannabis plant, some 214 grams, indicated there had been at least two cycles of the cultivation.
[24] Detective Gillespie said, on the basis Mr Wisely had been involved in cannabis cultivation for 15 months, from the time of his purchase and highlighted power consumption increase, Mr Wisely would have obtained a benefit of $32,200 from cannabis cultivation over that period.6
6 See [48] of this judgment.
[25] In his first affidavit, Mr Wisely said Detective Gillespie over-estimated the yield from his cultivation of cannabis. He said the grow the Police found was his fourth. He said his first cannabis grow was pretty bad and he could not do much with it. His second was a bit better. The third was his first decent one. He said:
I was an amateur and clearly like everything it takes practice. I must have got about 22 ounces of cannabis and I sold some ounces, smoked a bit and the remainder, the seven and a half ounces was seized by the Police.
[26] He said his electricity bill at $400 a month was for lighting, coolers, chest freezer, stove and fridge. He said he was growing cannabis for about 10 months and from roughly September 2016. He accepted he sold about 14 ounces at $400 an ounce.
[27] In a second affidavit of 20 July 2020, Mr Wisely said his first commercial grow was from eight clones. He said the first crop had a spider mite and the crop was a failure. He said the second crop was cuttings from the first grow but he must have unwittingly transferred the mites and this crop failed as well. He said, before the third grow, he obtained a spray to avoid another mite activity. He said 11 plants flourished, he picked the cannabis and obtained about two ounces per plant. He said he had seven ounces left from this grow at the time of his arrest, after he had smoked and sold about 15 ounces. He accepted he had sold 15 ounces at $400 an ounce.
[28] Through adopting a calculation made by his counsel, Mr Wisely claimed the benefit he obtained from cannabis should be on the basis he had sold 15 ounces at
$400 an ounce, that is $6,000.
[29] Detective Gillespie considered the cultivation of cannabis for sale likely began around the time of the purchase from the hydroponics business in March 2016 and the increase in the cost of electricity consumption from that time. Consistent with that and from what had been observed with the cannabis grow in July 2017, he estimated there had been four growing cycles, concluding with what was observed in July 2017. Mr Wisely himself acknowledged four growing cycles, consistent with Detective Gillespie’s analysis.
[30] With his reply affidavit, Detective Gillespie had annexed the brief of evidence from Detective Sergeant Boucher. In a statement of 19 July 2017, he provided expert
evidence as to the evidence of the commercial growing operation he had observed, concluding:
In my opinion this was a sophisticated commercial operation utilising the three stage cultivation method. It was apparent to me that it was not the first time WISELY had cultivated cannabis and that based on the set up and the associated costs involved it was likely to be an ongoing commercial operation if left un-detected.
[31] Mrs Stevens QC said this evidence was hearsay and should not be admitted. Ms Grills for the Commissioner said, before the hearing, she had asked Mrs Stevens if Detective Boucher was required to give evidence in person and be available for cross-examination. She had been told this was not necessary.
[32] Mrs Stevens relied on statements and a photograph associated with Detective Boucher’s statement when presenting arguments in support of Mr Wisely’s case.
[33] I consider Detective Boucher’s statement was admissible evidence pursuant to s 18(1) Evidence Act 2006. It was prepared by a detective, conscious it was to be used in criminal proceedings. What he said was not subject to challenge by counsel. The circumstances relating to the statement provide reasonable assurance his statement was reliable. He was not available as a witness at the hearing before me because Mr Wisely’s counsel indicated he did not have to be available for cross-examination.
[34] In any event, the nature of the grow was detailed in the summary of facts which Mr Wisely had accepted with his guilty plea to the cultivation charge. What was found would not appear to have been cultivation by an “amateur” as Mr Wisely claimed. In the summary it was referred to as a purpose-built commercial cannabis growing operation.
[35] The grow was located in the one locked bay of a free-standing three bay barn. It was in a fully enclosed hidden room behind a false wall. Shelving had been constructed for storing products commonly found in the cloning and cultivation of cannabis plants. An old fridge had been converted into a cloning chamber for growing cannabis plants from clones with fluorescent lighting on the top shelf and a heat pad on the bottom shelf. Within the room, Mr Wisely had erected an indoor growing tent
complete with operating high-density discharge lights, carbon filter and centrifugal fan.
[36] In his second affidavit, Mr Wisely denied the cannabis cultivation was a sophisticated commercial operation, utilising the three-stage cultivation method. He described the cannabis cultivation beginning with his purchasing eight clones and growing his first crop in pots in one room with light on a timer, a fan and manual watering. He did not provide any detail as to when he built the false wall or when and how he developed the grow facility to the way it was in July 2017.
[37] Had there been a complete failure of the first two cycles of cannabis cultivation, it is hard to see why he would have proceeded to put in place the elaborate setup that was found by the Police.
[38] In his second affidavit, Mr Wisely said the first two crops failed completely because of spider mites. In his first affidavit of 8 June 2020, Mr Wisely only said:
My first cannabis grow was pretty bad, could not do much with that, my second was a bit better, the third my first decent one. The grow the police found was my fourth.
There was none of the detailed evidence about spider mites causing a complete failure of the first and second crops.
[39] As is apparent from the summary of facts, when first spoken to by the Police, Mr Wisely claimed what they found was his second cultivation and the cannabis was for personal use.
[40] I do not accept that Mr Wisely was a novice grower as he claimed. He had a previous conviction for cultivating cannabis from 15 January 1996. He was able to set up a sophisticated commercial cannabis growing operation and admitted to four cycles of cultivation. The photographs produced with Detective Boucher’s statement illustrate just how sophisticated it was. Mr Wisely did not suggest in his evidence that he needed the assistance of anyone else to establish this setup.
[41] There was evidence of a purchase from a hydroponics business in March 2016. Despite the loss of an income from his employment as a driver in June 2016, there was evidence of significantly increased cash deposits to Mr Wisely’s bank accounts from September 2016.
[42] There have been significant inconsistencies in Mr Wisely’s descriptions of the duration, extent, success and purpose of his cannabis cultivation. There have been other instances where I find the evidence he has given in response to the Commissioner’s case has been dishonest and/or unreliable.
[43] In submissions for Mr Wisely, Mrs Stevens suggested there were a number of shortcomings in the evidence provided for the Commissioner as to the proceeds obtained from cannabis cultivation and sales. For instance, she said his calculation assumed that earlier grows were successful when there was no direct evidence of this. She said there was inadequate evidence from which to conclude Mr Wisely’s electricity use was out of the ordinary.
[44] The fact a small container of a spider mite herbicide was photographed in the area of the grow when it was searched by the Police does not provide a sufficient evidential basis to conclude, even on the balance of probabilities, that Mr Wisely was giving honest or reliable evidence in saying the first two grows failed completely because of spider mites.
[45] Counsel’s criticisms however overlook the way the Act must be applied and interpreted. As other courts have referred to, the explanatory note to the Criminal Proceeds (Recovery) Bill 2007 explained, with this legislation, the onus was placed on a respondent to establish the value of profit derived from significant criminal activity because of the difficulty of obtaining evidence showing the unlawful origins of profit or property.7 With the presumption referred to in s 53(1), the Commissioner was not required to prove the extent to which Mr Wisely benefitted from significant criminal activity. How the Commissioner calculated the benefit relied upon was strictly irrelevant. It was not for the Commissioner to prove, on the balance of
7 Commissioner of Police v Tang [2013] NZHC 1750 at [21]-[22]; Cheah v Commissioner of Police, above n 2, at [28].
probabilities or otherwise, the amount Mr Wisely received or to justify how the amount relied on was calculated. It was not enough for Mr Wisely to critique aspects of the Commissioner’s methodology.8 It was accordingly for Mr Wisely to rebut the statutory presumption by adducing evidence as to what the actual amount of his benefit was. He has not done that as to either his cannabis or methamphetamine offending.9
[46] Mr Wisely has not proved, on the balance of probabilities, that the gross proceeds he received from the sale of cannabis amounted to only $6,000.
[47] The Commissioner’s calculation of the benefit obtained from cannabis cultivation was based on three successful cultivation cycles of 11 plants with what was obtained from the sale of each cycle being the amount Mr Wisely accepted he would have obtained from the third cycle. The plants grown in the fourth cycle were seized by the Police so no benefit was obtained from them nor is any claim made on the basis of such a potential benefit.
[48] Detective Gillespie’s calculation of the benefit obtained from cannabis cultivation was on the basis there had been four cycles yielding two ounces per plant from 11 plants, that is a total of 22 ounces at a value of $400 per ounce. Mr Wisely accepted this would have been obtained from the sale of cannabis from 11 plants. Detective Gillespie thus arrived at a total value from the four cycles of $35,200. The Police however found and seized 214 grams of dried cannabis head, located in a plastic bag in the wardrobe of Mr Wisely’s master bedroom. At the same value of $400 per ounce, the value of the dried cannabis was over $3,000. Mr Wisely said the dried cannabis was from the third cycle as the fourth cycle plants found by the Police were still growing. Detective Gillespie discounted $3,000 from the value of four cycles before arriving at the claimed benefit from cannabis cultivation of $32,000.10
[49] I find, on the balance of probabilities, that the benefit obtained from three cycles of cultivation was:
8 Commissioner of Police v Tang, above n 7, at [39].
9 Commissioner of Police v Tang, above n 7, at [33] and [39], cited with approval by the Court of Appeal in Cheah v Commissioner of Police, above n 2, at [32]-[33] and [48].
10 Detective Gillespie rounded down $32,200 to come to the $32,000 claimed benefit.
3 x $8,800 $26,400
Less value of 7.5 ounces of dried cannabis seized by Police $3,000 Gross $23,400
Methamphetamine dealing
[50] In his restraint affidavit, Detective Gillespie said “[a] very conservative view” had been taken in determining a preliminary benefit figure. He then calculated a benefit based on the median between wholesale rates and retail rates from the sale of methamphetamine based on the quantities of methamphetamine involved in the supply and conspiracy to supply charges to which Mr Wisely had pleaded guilty and the accepted summary of facts as to those charges. The summary of facts related to Mr Wisely’s admitted methamphetamine dealing from May to July 2017.
[51] On that basis, Detective Gillespie calculated Mr Wisely’s benefit from dealing in 11 ounces of methamphetamine was $201,537.50. That was calculated on the basis the wholesale rate for methamphetamine was, at its lowest, $110,000, that is $10,000 an ounce, and the retail value, commonly $950 per gram in the Dunedin area at the time, that is a street value of $293,075 for 308.5 grams. In calculating the benefit, Detective Gillespie adopted the figure of $201,537.50 as being the median between the $110,000 and $293,000. Detective Gillespie said his calculations took into account methamphetamine dealing Mr Wisely was involved in only from May to July 2017.
[52] In his second affidavit and through submissions of his counsel, Mr Wisely accepted this was the benefit obtained from his methamphetamine dealing but claimed there had to be a deduction from that sum for the value of methamphetamine and cash intercepted or seized by the Police.
[53] The Commissioner, through Detective Gillespie’s evidence, was not however saying Mr Wisely was involved in methamphetamine offending only between May and July 2017, as referred to in the summary of facts. The Commissioner had simply adopted the value of methamphetamine involved in that offending as the benefit Mr Wisely obtained from all his methamphetamine offending. Once that figure had been adopted by the Commissioner, pursuant to s 53(1), it was for Mr Wisely to prove, on
the balance of probabilities, that the benefit obtained from all his methamphetamine offending was a lesser sum.
[54] Although Detective Gillespie had calculated the benefit obtained from methamphetamine dealing with regard to the quantities of methamphetamine he obtained for sale over the period of May to July 2017, that was not the limit of the period during which the Commissioner alleged Mr Wisely had been involved in serious methamphetamine-related criminal offending. I am satisfied that, in calculating a benefit based on the methamphetamine Mr Wisely had purchased or sold in the period between May and July 2017, the Commissioner was, as Detective Gillespie said, calculating the benefit from methamphetamine dealing on a very conservative basis.
[55] As referred to earlier, Mr Wisely said in his first affidavit he had decided to sell drugs when he was working at Waitahuna Goldmine in approximately April 2017. He said he acted on a suggestion from a woman that he “sell some stuff with an enticing profit margin”.
[56] At another point, Mr Wisely said the first purchase of methamphetamine from the Hamilton supplier “was in April 2017 as I recall now. I think it was two ounces at
$11,500.00 an ounce.”
[57] When spoken to by the Police on 19 July 2017, referring to his sending cash to Hamilton and receiving methamphetamine in return, Mr Wisely said “he had only been doing this for several weeks and had been approached with an offer too good to refuse”.
[58] In his first affidavit however, Mr Wisely referred to his inability to meet his outgoings while he was on a benefit, which barely covered mortgage payments, and the fact his credit card balance as at 9 December 2016 was $14,340.77 owing. That was followed immediately by the statement “I then idiotically decided that I could sell drugs to give me a safety buffer economically rather than be under the stress of living on the financial edge.”
[59] The summary of banking transactions provided indicated that the way Mr Wisely used his bank account and credit card changed significantly after June 2016 when his employment ended. Before June 2016, there was a pattern of cash deposits to his bank account when funds were needed to pay bills. On occasions, cash was withdrawn from the account. Between August 2016 and July 2017, the number of recorded purchase transactions through the bank account dropped significantly. After July 2016, there were no instances of cash being withdrawn from that bank account.
[60] Detective Gillespie also referred to evidence, which I accept, from the analysis of bank accounts that, in July 2016 after he had lost his employment, Mr Wisely withdrew a total of $9,200 in cash, including $8,000 withdrawn on 13 July 2016. Detective Gillespie observed the $8,000 could have been the start up funding for Mr Wisely’s methamphetamine dealing. Mr Wisely’s recorded spending reduced significantly from that point on. Cash deposits became a feature, particularly on his credit card. There were cash deposits from September 2016 to June 2017 of $23,830.
[61] I accept the evidence of Detective Gillespie from his analysis of bank accounts that Mr Wisely’s outgoings in April, May and June 2016 were greater than his income.
[62] I accept the analysis of Mr Wisely’s bank accounts indicates he had a source of income alternative to the benefit and wages he was receiving in the months after August 2016, and probably from earlier than that.
[63]Mr Wisely said:
I was growing cannabis for about 10 months or from roughly September 2016. I accept I sold about 14 ounces at $400 an ounce and some of that money went on beer and other treats, gifts for people running me around and the rest was in the click clack or helping to pay for the meth because the people buying the meth from me were slow in paying.
[64] That indicates Mr Wisely had decided to involve himself in selling drugs for cash, including methamphetamine, much earlier than April 2017.
[65] Accordingly, in assessing the benefit Mr Wisely obtained from all his methamphetamine dealing, based on just the offending referred to in the summary of facts, the Commissioner’s approach was very conservative. That can also be said as
to the Commissioner’s calculation of the value of the methamphetamine involved in that offending.
[66] With his guilty pleas and acceptance of the summary of facts, Mr Wisely accepted the methamphetamine totals for both the supply and conspiracy to supply charges was 308.5 grams, with a street value of $293,075 if sold by the gram. At the time, the value of methamphetamine in the Otago region, if sold retail, was $950 per gram. The summary of facts recorded the wholesale value would have been between
$10,000 and $12,000 per ounce so that, on that basis, the 308.5 grams, or 11 ounces, sold would have provided a gross revenue of $110,000 to $132,000. The benefit the Commissioner claimed Mr Wisely had obtained from his methamphetamine offending at $201,537.50 was based on the median between the $110,000 for 11 ounces sold assuming a wholesale value of $10,000 and the street value of that amount of methamphetamine at $293,075. As already referred to, Mr Wisely accepted
$201,537.50 was the value of the methamphetamine dealing referred to in the summary of facts.
[67] In any event, the value Detective Gillespie used in assessing the benefit obtained from dealing in methamphetamine was reasonable. Mr Wisely claimed he generally sold only at wholesale rates. There was however evidence of sales of one gram quantities. The median value was also arrived at on the basis of the lower range of values that could have been obtained for methamphetamine if sold in one ounce quantities at the wholesale value.
[68] In his first affidavit, Mr Wisely said the profit on each ounce was about $2,000 although on one occasion he sold methamphetamine to a particular person for a $1,000 profit. He referred to this person normally paying him $11,500 an ounce. He said the first two ounces he bought from the Hamilton supplier were $11,500 each but from then on it was $10,500 an ounce.
[69] At the forfeiture hearing, Mr Wisely sought to explain the $25,110 cash found at his house on 19 July 2017. He said he had sold 20 sheep at $200 each a week before the search. He produced a receipt from his friend Barry Youngman for $600, supposedly paid by Mr Youngman to Mr Wisely for three sheep. Mr Wisely said he
had this receipt at his home, but accepted he had not been to his home (and was thus unable to collect the receipt) after his arrest.
[70] Under re-examination, Mr Wisely said Mr Youngman brought the receipt to him while he was in prison after Mr Wisely had asked him to. He said Mr Youngman and a woman had found the receipt when they were emptying out his house.
[71] Mr Wisely claimed the remaining $21,000 or so was from the sale of a Harley Davidson motorcycle for $9,200 on 7 September 2016, paid for on a drip feed basis after 7 September 2016, and from the sale of a Victory Hammer for $12,000 on 16 July 2017.
[72] At the forfeiture hearing associated with his sentencing, Mr Wisely claimed Mr Youngman had bought the Victory Hammer motorcycle and begun paying for it in September 2016 but, the Sunday before his arrest, another person had purchased the Victory Hammer and paid $12,000 for it. So, the payments Mr Youngman had supposedly made for the Victory Hammer were treated as payments for a Harley Davidson Night Train motorcycle instead.
[73] At the forfeiture hearing, Mr Wisely produced pages, supposedly from an exercise book, which he said recorded payments by Mr Youngman for the Victory Hammer motorcycle. The writing in that book was however Mr Youngman’s writing. Although it recorded payments supposedly on account to Mr Wisely, it was Mr Wisely’s evidence that the book had been kept by Mr Youngman. Despite Mr Youngman supposedly having bought this motorcycle and been paying for it, the motorcycle had remained parked in Mr Wisely’s garage.
[74] Although the pages from the claimed notebook recorded payments supposedly for the purchase of a Victory Hammer, the notes referred only to payments for a Harley Davidson.
[75] Although Mr Wisely and Mr Youngman said the payments Mr Youngman had made in instalments were for the Victory Hammer, Mr Youngman was referred to a heading on the top of a page “payments to Kelvin Wisely from Barry Youngman for
Harley”. Mr Youngman said he would have written that around the time of the first payment, around 7 September 2016. On being questioned about why the entry would have related to a Harley if he was buying a Victory, Mr Youngman said the heading would have been “updated” once the Victory was changed, that he probably added that in afterwards.
[76] Mr Wisely claimed the exercise book in which Mr Youngman’s payments had been recorded had been in Mr Wisely’s lounge at the time of his arrest but Mr Youngman had brought the sheets of paper to the prison. Then, when asked about the exercise book, Mr Wisely said it had been in his lounge at the time of his arrest but he had taken sheets of paper out of the book. He did not produce the book in evidence at the time of the forfeiture hearing.
[77] Mr Youngman said at the time of the forfeiture hearing (12 March 2018) the exercise book was kept at Mr Youngman’s house and had been on a stationery shelf at home for the kids’ school books. He said he had taken the book into Mr Wisely at the prison after Mr Wisely asked if he had the book. Mr Youngman said nothing about having collected it from Mr Wisely’s home.
[78] In his evidence, Mr Youngman accepted he did not have a licence at the time he supposedly agreed to purchase the Victory Hammer and started paying for it.
[79] Mr Youngman said he had paid “just over 9,000, nine and a-half or 9,300 or something like that” for the Victory Hammer.
[80] Mr Youngman said he was pretty sure he and Mr Wisely agreed to substitute the Harley Davidson for the Victory Hammer after Mr Wisely sold the Victory Hammer to another person, this would have been around the end of 2016. Mr Wisely said at the forfeiture hearing he had sold the Victory Hammer to someone else during the week before he was arrested, that is July 2017.
[81] After the forfeiture hearing, Judge Crosbie found the evidence from Mr Wisely and Mr Youngman lacked both reliability and credibility. He concluded that, if he was wrong in this and there were legitimate transactions in relation to the motorcycles, the
scale of Mr Wisely’s methamphetamine purchases and sales were such that the Judge found the overwhelming inference was that all of the cash found was for the purpose of funding the purchase of methamphetamine or represented profit from the sale of methamphetamine.
[82] On reviewing the evidence from the earlier forfeiture hearing, I am satisfied the evidence both Mr Youngman and Mr Wisely gave at that hearing to explain the
$25,110 cash found at Mr Wisely’s home was dishonest and a fabrication.
[83] Detective Gillespie referred to the $8,000 cash withdrawn on 13 July 2016 and cash deposit of that amount in October 2016. Mr Wisely said he withdrew the $8,000 from the bank to pay Doug Sinclair, his friend, for a Holden ute he intended to buy. Mr Wisely kept it out as cash but put it back into the bank a few months later when Mr Sinclair decided not to sell the vehicle. When first giving evidence about this, in answer to questions, Mr Wisely said, when Mr Sinclair said he wanted to keep the vehicle for a while, Mr Sinclair “didn’t say exactly when he was going to sell it. I gave him three months and he decided he didn’t want to sell it.”
[84] At the time Mr Wisely says he took $8,000 out to pay for this vehicle, the income available to him was insufficient to cover all his normal outgoings and other expenses. At the time he withdrew that $8,000, he had received the first payment of a benefit. Under cross-examination, he accepted that the future was looking bleak. He had lost his job with Dynes Transport and he was inevitably going to lose his licence for drink driving.
[85] Despite Mr Wisely’s difficulty in being able to pay all his outgoings while receiving a benefit, he claimed to have withdrawn $8,000 in cash and then kept this cash intact in the same denominations until he deposited $8,000 back into his account in October 2016. Ms Grills has referred to bank records of the cash deposited in October 2016 and Mr Wisely’s evidence as to the denominations in which he had withdrawn cash in July 2016. In doing so, she showed that Mr Wisely’s evidence as to withdrawing, keeping and redepositing the same cash was untrue.
[86] I find Mr Wisely’s explanation as to why he withdrew $8,000 in cash from his credit card account in July 2016, kept it as cash and then paid it back into the account in October 2016 to be so implausible that his evidence as to that has to be regarded as a fabrication. I do not accept the evidence of Mr Wisely as to his withdrawing and holding the $8,000 in the same notes to buy a Holden vehicle from Mr Sinclair was “cogent evidence” as submitted by Mrs Stevens. The inference I draw is that the
$8,000 was withdrawn to be used in connection with his drug dealing activities. I also consider the $8,000 he paid back into that account in October 2016 had to have come from drug dealing activities, in all likelihood proceeds from the sale of methamphetamine.
[87] I thus find Mr Wisely gave dishonest evidence as to the source of the $8,000 paid into his account in October 2016. I find that he and Mr Youngman fabricated evidence and records as to the supposed sale and payment on an instalment basis for the Victory Hammer motorcycle in 2016. Having made those findings as to his dishonesty, I have been unable to accept Mr Wisely as a credible witness on a number of crucial matters, including the duration and extent of his cultivating and selling cannabis and the period over which he was dealing in methamphetamine.
[88] From September 2016 to June 2017, in excess of $23,000 of cash deposits went into Mr Wisely’s bank accounts. Mr Wisely was not able to explain where those cash deposits came from. Generally, when a cash deposit was made into an account, there was a matching withdrawal from either a credit card account or another account. There was thus evidence of Mr Wisely relying on cash deposits to make payments between September 2016 and June 2017 without Mr Wisely being able to explain how those deposits could have come from legitimate income.
[89] On all the evidence I heard, I consider it likely that Mr Wisely was regularly receiving and selling three ounces of methamphetamine at least fortnightly from at least December 2016 to July 2017. On that basis, he would have received and sold methamphetamine 16 times over the period between 1 December 2016 and 12 July 2017. That would be consistent with his selling around 48 ounces of methamphetamine at that time. At a wholesale value of $10,000 an ounce, that would
result in his realising gross sales of $480,000 from the methamphetamine supplied. He would likely have been selling the methamphetamine for more than that.
[90]That would also have been consistent with him receiving approximately
$15,000 a week from the sale of methamphetamine over that time.
[91] Mr Gillespie’s evidence, which I accept, was that the net profit Mr Wisely would have made from the sale of methamphetamine after paying for that methamphetamine would have been half the amount he was selling the methamphetamine for. That would equate to $7,500 a week.
[92] On 11 July 2017, Mr Wisely had a conversation with Amanda Dale. Mr Wisely said it was a general conversation about a ticket. He told her he had a count up of what was sitting in the bedroom. He said he had $30,000 in cash in the bedroom, that he never had that much cash sitting in his bedroom before, that “it’s just building really fast”, “building around about and eight and ten a week”.
[93]I accept that the “eight and ten a week” was a reference to his accumulating
$8,000 to $10,000 a week.
[94] At the forfeiture hearing, Mr Wisely accepted that, in talking to Ms Dale and referring to about $8,000 to $10,000 coming in, he was talking about cash from methamphetamine.
[95] In evidence before me, Mr Wisely claimed, in saying this, he was exaggerating and what he said to Ms Dale was not true. He had made no such claim when he was asked about these statements and accepted he had made them during the forfeiture hearing at the time of his sentencing.
[96] There was other evidence consistent with Mr Wisely dealing generally in methamphetamine which would have had a gross value to him of at least $201,537.50.
[97] In pleading guilty to the charge of conspiracy to supply methamphetamine, through the summary of facts, Mr Wisely accepted that he and his Hamilton associate had been involved in his being sent four ounces of methamphetamine which Mr Wisely
had sold and paid for with $39,500 in cash sent in a package to the Hamilton associate on Monday 17 July 2017. He also accepted that, on 19 July 2017, a package containing three ounces of methamphetamine, sent to him by the Hamilton associate, was intercepted by Police.
[98] He accepted the seven ounces of methamphetamine had a wholesale value of between $10,000 and $12,000 per ounce, that is between $70,000 and $84,000 in total. He accepted that, if that methamphetamine had been sold for $950 a gram, a common sum that a gram was sold for in Otago, the street value of that seven ounces of methamphetamine would have been $186,200.
[99] On 19 July 2017, the Police found a bag containing 26.5 grams of methamphetamine in Mr Wisely’s freezer. That equated to just under one ounce (28 grams methamphetamine), which again would have been worth $10,000 to $12,000 wholesale and much more if sold by the gram.
[100] There was also evidence that, around the time of his arrest, Mr Wisely had either paid for or could commit to significant expenditure:
(a) approximately $8,000 for solar panels for his property;
(b) laser eye surgery at a cost of around $6,000; and
(c) the cost of extending a deck and installing a spa.
[101] Through intercepted phone calls, there was evidence that in July 2017 Mr Wisely indicated he was busy with his small lifestyle block and did not want to work more than a few days a week. In a conversation on 14 July 2017, Mr Wisely said he had solar power coming the following week and the builder coming to extend and cover the deck so he could put in a spa. In that conversation, Mr Wisely spoke about having a farmlet, being over driving trucks and said he had a few other bits and pieces going on that paid more than driving trucks. In another part of the conversation, Mr Wisely and the other person responded as if they were both talking about other things going on, not to be talked about over the phone, but of it being about something to make a living.
[102] It was established from ANZ records that there were three $1,000 purchases of bonus bonds in Mr Wisely’s name on 16 June, 26 June and 14 July 2017.
[103] Mrs Stevens submitted that a major factor in Mr Wisely’s favour was the absence of evidence he was living a life of luxury or was out “spending up large”. There was the evidence that he had spent $8,000 on purchasing solar panels and was ready to commit to further expenditure but the absence of evidence as to his having an expensive lifestyle has not helped Mr Wisely prove the benefit he obtained from methamphetamine dealing was less than the $201,537.50 referred to by the Commissioner.
[104] Counsel submitted, despite the arrangement Mr Wisely had with his Hamilton associate, there was no evidence methamphetamine was supplied to Mr Wisely on a weekly basis. Counsel submits the Court could not accept there would be weekly shipments without evidence of payment for the particular supply.
[105] These submissions however ignore the fact that it was not for the Commissioner to prove just what Mr Wisely supplied and how often. The onus was on Mr Wisely to establish just what methamphetamine was supplied to him, when it was supplied and what he sold that methamphetamine for. He failed to do that.
[106] Though adopting a calculation made by his counsel, Mr Wisely claimed the benefit he obtained should have been calculated as follows:
Methamphetamine benefit as determined by Detective Gillespie $201,537.50
Cannabis benefit on basis of 15 ounces at $400 an ounce:
$6,000
Subtotal:
$207,537.50
Less three ounces seized on 17 July 2017 from courier pack at $10,500 per ounce:
$31,500
One ounce seized from freezer on 19 July 2017:
$8,000
$39,500 seized from courier pack on 19 July 2017:
$39,500
$25,110 seized from bedroom on 19 July 2017:
$25,110
Subtotal:
$104,110
Benefit:
$103,427
[107] That calculation however starts from the mistaken premise that Mr Wisely’s cannabis and methamphetamine dealing was limited to the extent described in the summary of facts.
[108] The Commissioner did not have to explain or justify the way the benefit she claimed Mr Wisely had obtained from his methamphetamine dealing was calculated. Nevertheless, on my analysis of all the evidence and having regard to the likely period over which Mr Wisely was dealing in methamphetamine, there was no error in the Commissioner calculating the benefit Mr Wisely received, that is the gross proceeds, would have been at least $201,537.50. I reach this conclusion without in any way bringing into account the methamphetamine or cash the Police seized or the $39,500 Mr Wisely had sent to the Hamilton supplier in payment for methamphetamine that had already been delivered.
[109] I do not consider it necessary to make any such allowance as to those matters. The Commissioner’s calculation of the benefit obtained from methamphetamine dealing was based on the quantity of methamphetamine of which there was evidence through the summary of facts accepted in Mr Wisely’s guilty pleas. There was no suggestion this was the only methamphetamine Mr Wisely had received and sold. It was used only as a basis for calculating, on a conservative basis, the benefit he was likely to have received from dealing in methamphetamine over a more sustained period than the 1 May to 19 July period referred to in the summary of facts.
[110] I have held there was a reasonable basis for the Commissioner’s calculation of the benefit obtained from methamphetamine dealing at $201,537.50. There was no onus on the Commissioner to prove that was the benefit obtained. I had to accept that value unless Mr Wisely was able to prove on the balance of probabilities that the benefit was for a lesser sum. He has not been able to do that. He has not been either a reliable or honest witness as to his evidence on crucial matters. I do not accept that his dealing in methamphetamine began only in April 2017. I do not accept the suggestion that methamphetamine was supplied to him at intervals or over a period which would not have allowed him to receive and sell methamphetamine worth at least
the $201,537.50 which the Commissioner says was the benefit from the methamphetamine offending.
[111] The benefit Mr Wisely thus obtained from methamphetamine dealing remains at $201,537.50 as claimed by the Commissioner.
[112] I have accepted that the benefit obtained from the cultivation and dealing in cannabis is $23,400. The Commissioner’s application is accordingly amended so the total unlawful benefit which the Commissioner says Mr Wisely obtained from significant criminal activity is $224,937.50. Mr Wisely has not, on the balance of probabilities, rebutted the presumption that this is the value of the unlawful benefit he obtained.
[113] Before the Court makes a profit forfeiture order as sought by the Commissioner, it must determine the maximum recoverable amount by taking the value of the benefit, calculated in accordance with s 53, namely $224,937.50. It must then deduct from that value the value of any property forfeited to the Crown as a result of an assets forfeiture order made in relation to the same significant criminal activity to which the profit forfeiture order relates.
[114] Associated with Mr Wisely’s sentencing, the Court made an order for Mr Wisely to forfeit to the Crown the sum of $25,110, cash which was found in Mr Wisely’s bedroom when his house was searched and he was arrested on 19 July 2017. With a deduction for that sum, the maximum recoverable amount is the sum of
$199,827.50.
[115] Section 55(1) requires me to make a forfeiture order for that sum unless Mr Wisely is entitled to relief because of undue hardship.
Mr Wisely’s hardship application
[116] The Court’s obligation to make a profit forfeiture order, as set out in s 55(1), is subject to s 56. Section 56 states:
56 Exclusion of respondent’s property from profit forfeiture order because of undue hardship
(1) The High Court may, on an application made by the respondent before a profit forfeiture order is made, exclude certain property from being able to be realised under section 55(2)(c) 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 were realised.
(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 profit 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 profit forfeiture order relates.
(3) After a profit forfeiture order is made, nothing in this section prohibits a respondent from realising the property that was excluded from being able to be realised under section 55(2)(c) if—
(a)after realising other property under that section there is still a debt owed to the Crown under section 55(4); and
(b)the respondent agrees to realise the excluded property in order to pay all or part of that debt.
[117] Mr Wisely has made an application for his lifestyle property at 215 Circle Hill Road, Circle Hill, Clutha to be excluded from the profit forfeiture order on the grounds, in all the circumstances, undue hardship would likely be caused to him if the property were sold to recover the maximum recoverable amount in a profit forfeiture order. The 1 September 2017 rateable value of his property was $335,000. At 14 October 2019, it was subject to a mortgage for $211,338.03. The equity is thus likely to be less than the maximum recoverable amount which the Commissioner will be entitled to retain from a sale of the property pursuant to a profit forfeiture order. If Mr Wisely does not succeed with his application on hardship grounds, he will thus lose his home and all the equity in that property.
[118] Mr Wisely says the property was purchased with the proceeds of sale from a “pretty crummy house in town” that he had been able to buy “after years of hard work truck driving” and with an inheritance from his father. He said the property is a link to his father and it is precious to Mr Wisely and his sanity to have that link to his father
through owning the farmlet. He says he suffers from anxiety but does not want to be medication-dependent to deal with this, so having a home to go to is critical to his mental health. He says he will have nothing if he has no home. He will be an ex- prisoner in his 50s with only his truck driving experience. Just trying to rent will, he says, be a miserable experience. He says he has resolved never to offend again. He has no family support. He says it would “be beyond hardship” to have to rehabilitate himself without his own home. He says he would work to obtain the income needed to pay the order made under the Act.
[119]In Cheah, the Court of Appeal said:11
[64] The threshold for relief under s 56 is high. Hardship for offenders and third parties is to be expected. For the Court to grant relief an applicant must show not merely inconvenience or difficulty, but that any hardship will be so disproportionate as to require the objectives of recovery and deterrence to be subordinated to the particular needs of the wrongdoer.
[65] The loss of equity in a home acquired from legitimate sources before the criminal activity, and the consequent prospect the respondent will need to rely on State assistance for housing, has been held not to constitute undue hardship; the risk of losing a home ought to have been contemplated at the time the respondent embarked on the criminal activity.
[120] As Gilbert J said in Commissioner of Police v Filer, and as approved by the Court of Appeal in Cheah, the purposes of the forfeiture regime include “eliminating the chance for persons to profit from undertaking or being associated with significant criminal activity and deterring such activity”.12
[121] Mr Wisely put his ownership of his Circle Hill property at risk when he chose to engage in a significant commercial cannabis cultivation on the property and then sold cannabis, and when he involved himself in serious methamphetamine dealing from that property. Thermoses containing significant quantities of methamphetamine were delivered to his home. He was found with nearly one ounce of methamphetamine worth between at least $10,000 and $12,000 wholesale in a freezer at his address. He kept cash accumulated from the sale of methamphetamine at his address. A package containing three ounces of methamphetamine, intercepted by Police on 19 July 2017,
11 Cheah v Commissioner of Police, above n 2 (footnotes omitted).
12 Commissioner of Police v Filer [2013] NZHC 3111 at [13], cited by the Court of Appeal in Cheah v Commissioner of Police, above n 2, at [35].
was destined to Mr Wisely’s address. The summary of facts referred to associates, a Mr Hood and Karen Youngman, coming to his address to collect methamphetamine and, in Hood’s case, bringing cash he owed through purchasing methamphetamine from Mr Wisely. Mr Wisely’s property was thus connected to the extremely serious criminal offending that Mr Wisely admitted to.
[122] Mr Wisely says he will suffer added anxiety if his home is not available to him. That however has to be kept in perspective. In embarking on commercial cannabis cultivation and involving himself in extensive methamphetamine dealing, he was willing to subject himself to what should have been the stress of engaging in serious significant criminal activity, and financial dealings with people who were also committing serious criminal offences. He was purchasing, at great cost, significant amounts of methamphetamine from people who, on his own evidence, would not tolerate delays in payment of the purchase price.
[123] To the extent Mr Wisely suffers from anxiety now, it is not to the extent that requires medication. With the time he has spent in prison, he says he is now committed to avoiding further criminal offending. With the forfeiture of his property, he will not have a farmlet to provide him with financial support, but he was not dependent on or apparently obtaining an income from that property sufficient for his own support before he involved himself in his drug dealing activities. He says he can now husband sheep and drive long hours and, from such work, would be able to obtain an income sufficient to pay the debt he will have to the Commissioner. If he considers himself able to do that, he should be able to obtain employment and support himself in the future. With that income and through such employment, he should also be able to have a home. He does not have dependents.
[124] In Cheah, the Court of Appeal held the Judge was correct to find that undue hardship had not been established where Mr Cheah would lose his home with the making of a profit forfeiture order. So too here, I hold that forfeiture in this case will not lead Mr Wisely to suffer undue hardship in the correct legal sense, having regard to both the severity of his offending and his personal circumstances. His application for relief from forfeiture on the grounds of undue hardship is declined.
Conclusion
[125] Accordingly, I make a profit forfeiture order pursuant to the Criminal Proceeds (Recovery) Act 2009 in respect of the property at 215 Circle Hill Road, Circle Hill, Clutha owned by the respondent Kelvin Bruce Wisely, legal description Lot 2, DP462524, title number 610347, subject to mortgage 10356129.3 to the ANZ Bank New Zealand Ltd.
[126]The value of the benefit determined in accordance with s 53 of the Act is
$224,937.50.
[127]The maximum amount recoverable is $199,827.50.
[128]That property is to be disposed of in accordance with s 83(1) of the Act.
Costs
[129] The Commissioner is entitled to costs together with disbursements as fixed by the Registrar. Costs should be fixed on a 2B basis. If agreement cannot be reached over costs, a memorandum is to be filed for the Commissioner within four weeks. A memorandum for Mr Wisely is to be filed within three weeks of the filing of the memorandum for the Commissioner. The Commissioner may file a memorandum in reply within two weeks of receiving the memorandum from Mr Wisely. I will deal with any costs issue on the papers.
Solicitors:
RPB Law, Dunedin
M A Stevens QC, Barrister, Dunedin.
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