Commissioner of Police v Wong
[2015] NZHC 158
•12 February 2015
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2012-404-2847 [2014] NZHC 158
BETWEEN THE COMMISSIONER OF POLICE
Appellant
AND
PETER R WONG Respondent
AND
PATRICIA MARGARET LOWE Interested Party
Hearing: 10 December 2014 Appearances:
M Harborow/ Miss Eastwood for the Appellant
A Speed for the Interested PartyJudgment:
12 February 2015
JUDGMENT OF THOMAS J
This judgment was delivered by me on 12 February 2015 at 4.30 pm pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date:………………………….
Solicitors:
Meredith Connell, Auckland.
Counsel:
A Speed, Auckland.
THE COMMISSIONER OF POLICE v WONG [2014] NZHC 158 [12 February 2015]
[1]
(Co
By
missi
application dated 24 May 2012 the Commissioner of Police
ner) sought orders in the alternative:
(a)
assets forfeiture orders pursuant to s 50 of the Criminal Proceeds
(Recovery) Act 2009 (Act);
(b)
profit forfeiture orders pursuant to s 55 of the Act.
[2] The orders are sought on the basis that:
(a) assets were acquired from the proceeds of significant criminal activity
(assets forfeiture); or
(b)assets were owned by the respondent, Peter Wong, and should offset the unlawful benefit received by him from that activity, namely
$688,500 (profit forfeiture).
[3] The assets subject of the Commissioner's application were:
(a) the proceeds of sale of the property at 14 Tyne Street, Island Bay, Wellington;
(b)the proceeds of sale of a 2012 Jeep Grand Cherokee Chrysler SRT8, registered number PUMP3D, valued at $106,995 (2012 Jeep); and
(c) the proceeds of sale of the property at 103 Haverstock Road, Sandringham, Auckland.
[4] Peter Wong died in July 2012.
[5] On 27 August 2014 Justice Andrews made assets forfeiture orders in respect of 14 Tyne Street and 103 Haverstock Road. The Commissioner's application in this regard was unopposed.
[6] Patricia Margaret Lowe is the oldest sister of Mr Wong. She is an interested party as the registered owner of the 2012 Jeep. Ms Lowe opposes the Commissioner's application for forfeiture orders in respect of the 2012 Jeep. She has filed a notice of opposition and a claim for relief together with an affidavit dated 8
April 2013.
[7] The Commissioner relies on affidavits of Detective Nicholas Davenport dated
23 May 2012 and 30 May 2012.
[8] Both deponents were required for cross-examination at the hearing.
[9] The Official Assignee received $81,505 (net) upon sale of the 2012 Jeep.
The Law
[10] The purpose of the Act is set out in s 3:
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; and
(d) deal with matters associated with foreign restraining orders and foreign forfeiture orders that arise in New Zealand.
Assets forfeiture orders
[11] Section 50(1) of the Act provides:
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.
[12] "Tainted property" is defined in s 5(1) of the Act as meaning any property that has, wholly or in part, been either:
(a) acquired as a result of significant criminal activity; or
(b) directly or indirectly derived from significant criminal activity.
[13] "Tainted property" includes any property that has been acquired as a result of, or directly or indirectly derived from, more than one activity if at least one of those activities is a significant criminal activity.1
[14] "Significant criminal activity" is defined in s 6 of the Act as an activity engaged in by a person that if proceeded against as a criminal offence would amount to offending:
(a) that consists of, or includes, one 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.
[15] Pursuant to s 51 of the Act, property may be excluded from an assets forfeiture order if its inclusion is likely to cause hardship to the respondent.
Profit forfeiture orders
[16] Section 55 of the Act provides that 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.
[17] Section 7 of the Act defines the phrase "unlawfully benefited from significant criminal activity" as meaning that a person has knowingly, directly or indirectly, derived a benefit from significant criminal activity (whether or not that person undertook or was involved in a significant criminal activity).
[18] Section 5(1) of the Act defines the phrase "relevant period of criminal activity" in relation to an application for a profit forfeiture order as the period which ends on the date the application is made and starts seven years before the date of the application for the profit forfeiture order.
[19] Provided the Commissioner proves, on the balance of probabilities that the respondent unlawfully benefited from significant criminal activity the onus is on the respondent to disprove the level of that benefit.2
[20] By s 58, the Court can treat effective control over property as an interest in property.
[21] Section 56 provides that the Court may exclude certain property from being able to be realised in satisfaction of a profit forfeiture order if the Court 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.
Relief from forfeiture for interested persons
[22] Persons other than the respondent who claim an interest in property sought to be forfeited (whether by an assets or a profit forfeiture order) can apply for relief under ss 61- 69 of the Act.
[23] Section 66 provides for relief "that the Court considers appropriate" to be granted if the applicant proves, on the balance of probabilities, that the applicant:
(a) has an interest in the property;
(b)has not unlawfully benefited from the significant criminal activity in question.
[24] Section 67 provides for relief to be granted to the applicant on the basis of undue hardship. Section 67(2) sets out the circumstances to which the Court may have regard in considering this issue.
Was Mr Wong involved in significant criminal activity?
[25] The Commissioner asserts that Mr Wong carried out the significant criminal activity of dealing in controlled drugs. Evidence of that drug dealing includes the following:
(a) on 6 March 2012, Police located a significant cannabis cultivation at
Mr Wong’s address of 103 Haverstock Road, Sandringham;
(b) they also located 'tick books' and snap lock bags;
(c) the electricity metre at the address had been tampered with so that it was not recording the correct supply of electricity to the address;
(d) Mr Wong admitted cultivating cannabis but denied selling it;
(e) Mr Wong pleaded guilty to the criminal charges of cultivating cannabis and theft of electricity;
(f) the cultivation commenced by at least the end of 2008, as evinced by: (i) the cessation of Mr Wong's legitimate employment at that time;
(ii)Mr Wong avoiding Empower attending his address and checking the electricity metre from that date, such that he stole $11,000 worth of power;
(iii) Mr Wong disposing of cannabis leaf and stalk on 14 August 2009.
(g) the Police estimate that the cultivation would have generated between
$76,500 and $229,500 annually;
(h) Mr Wong's unexplained income in the years 2009 to 2012:
(i) Mr Wong ceased employment as an air steward in 2008 or 2009; (ii) there is no record of Mr Wong or Erikka Investments Limited (a
company owned wholly by him) receiving any legitimate income from 1 April 2009;
(iii) nonetheless, Mr Wong acquired assets during that period:
(A) he made significant mortgage repayments in respect of
14 Tyne Street and 103 Haverstock Road and so acquired equity in those properties;
(B) on 18 March 2010 he purchased a 2005 Jeep Grand
Cherokee, registration CRY715, for $29,990;
(C) he also acquired a 2006 Chrysler 300C, registration
GCG211;
(D) on 23 April 2012 he purchased the 2012 Jeep for
$106,990 (including $8,642.19 realised from trading-in the 2006 Chrysler 300C, registration GCG211);
(E) during the period 6 March 2007 to 6 March 2012
$472,250 cash was deposited into Mr Wong's bank accounts (as well as $40,470.05 unidentified deposits).
Extent of cannabis cultivation operation
[26] That Mr Wong was involved in significant criminal activity at his address,
103 Haverstock Road, is not disputed. The extent and value of this criminal activity is disputed.
[27] Ms Lowe’s case was that the benefit derived might have only been a figure less than $300,000. It is claimed that this figure is easily represented by the equity in Haverstock Road, the bank accounts and the remaining equity in Tyne Street.
[28] Ms Lowe questioned the period over which Mr Wong had been involved in cultivating cannabis. A search warrant was executed at the Haverstock Road address in March 2012. Three receipts for purchases totalling approximately $10,000 from a hydroponics retailer since prosecuted in respect of provision of equipment for the cultivation of cannabis were found. On that basis Mr Speed, representing Ms Lowe, said it could be inferred that the cannabis growing operation was a relatively recent one, particularly when coupled with Detective Davenport’s admission that there was no evidence that Mr Wong cultivated cannabis at any other address.
[29] How that equipment was used or intended to be used and whether or not it was to replace existing equipment is pure speculation. However, when balanced against the other evidence, I am satisfied on the balance of probabilities that the cannabis growing operation had continued at Haverstock Road for some time.
[30] Judging from the electricity records, Mr Wong lived at the Haverstock Street address from 2007. The summary of facts to which Mr Wong pleaded guilty stated that the amount of power stolen was $11,000. Mr Wong said to the Police that he
had set up the hydroponics system about two years prior to the search. He said that a friend had bypassed the metre about a year prior, and before that he had simply paid for the electricity use.
[31] There was no challenge to the evidence at paragraph 3.21 of Detective Davenport’s affidavit wherein he deposed to his belief that Mr Wong was cultivating cannabis from at least the end of 2008 and gave his reasons for that.
[32] Mr Speed challenged the admissibility of two exhibits to Detective Davenport’s evidence. The first challenge concerned exhibit M, a signed statement of Detective Sowter containing his opinion as to the value of Mr Wong’s cannabis cultivation. His evidence was that the cannabis crop located at Haverstock Road would have yielded 68-204 ounces, generating between $20,000–$60,000. On the basis of a harvest 17 times a year, the annual yield would have generated between
$76,500 and $229,500 annually. The evidence was objected to as hearsay and opinion evidence. Mr Harborow, who represented the Commissioner, referred to s
53(2) of the Act. The purpose of Detective Sowter’s evidence was to justify the profit forfeiture figure. Pursuant to s 53 of the Act, if the Commissioner proves on the balance of probabilities that the respondent has unlawfully benefitted from significant criminal activity, the value of that benefit is presumed to be the value stated in the application for the profit forfeiture order. The presumption can be rebutted by the respondent on the balance of probabilities. Therefore, said Mr Harborow, it is only Mr Wong who can rebut that presumption. It is not for a third party to do so. In any event, the presumption could only be rebutted on the basis of
positive evidence.3 In Tang, at [39], the Court saw that how the Commissioner
calculated the figure is irrelevant. It is the figure itself which is important. Ms Lowe must do more than “critique” the figure. To rebut the presumption, Ms Lowe must adduce her own evidence to establish that, on the balance of probabilities, the true figure was less than $300,000.
[33] The second challenge to the evidence involved a consolidated financial worksheet prepared by police officer McMillan attached as exhibit V to Detective
Davenport’s affidavit. The worksheet covers the period 6 March 2007 to 6 March
3 The Commissioner of Police v Tang [2013] NZHC 1750.
2012 and was prepared using data obtained by the Police. Police officer McMillan has since deceased. Mr Speed made no request for disclosure of the source documents which could have been provided. The worksheet shows income and expenditure for Mr Wong over that relevant period.
[34] The worksheet was compiled from a spreadsheet. The spreadsheet contained information obtained by Detective Davenport as a result of search warrants for all bank account records in the name of Mr Wong. In his affidavit Detective Davenport deposed that he had undertaken spot checks of the data entered into the spreadsheet and that the information could be relied on in his opinion.
[35] Given that Detective Davenport had obtained the raw data through search warrants, reviewed the spreadsheet into which that raw data was entered and arranged for the preparation of the worksheet, he was properly able to answer questions in relation to it.
Is the 2012 Jeep tainted?
[36] The Commissioner must satisfy the Court on the balance of probabilities that the 2012 Jeep is tainted in order to obtain an assets forfeiture order. That is, it must be more likely than not that the 2012 Jeep was wholly or in part acquired/derived from proceeds of significant criminal activity (irrespective of ownership).
[37] The 2012 Jeep was paid for as follows:
(i) Mr Wong paid $5,000 by way of deposit;
(ii)$8,642.10 of the purchase price was met by trading-in a vehicle owned by Mr Wong;
(iii)$80,000 was withdrawn from one of Mr Wong's accounts and deposited into Ms Lowe's account on 12 March 2012;
(iv) Ms Lowe paid $88,000 by cheque to the car dealership. (The
Commissioner says that the remaining $8,000 was later (in
May 2012) paid by Mr Wong to Ms Lowe. Ms Lowe disputes that but accepts Mr Wong later paid her $5,000);
(v) $6,000 was paid by Mr Wong's credit card;
(vi) $4,347.56 was paid by Mr Wong's eftpos card.
[38] The Commissioner submits it is more likely than not that the 2012 Jeep was wholly or in part acquired/derived from proceeds of Mr Wong's significant criminal activity for the following reasons:
(a) Mr Wong had no legitimate income from which to acquire the 2012
Jeep;
(b)Mr Wong was receiving significant income from cannabis dealing, estimated as between $76,500 and $229,500 annually;
(c) $472,250 cash was deposited into Mr Wong's accounts over a 5-year period (averaging $94,450 per year).
[39] The Commissioner says it is clear that it was Mr Wong who acquired the
2012 Jeep and he did so from criminal proceeds. Mr Wong endeavoured to distance himself from the 2012 Jeep by arranging for $80,000 of the purchase price (provided by him) to appear to be paid by Ms Lowe and for the vehicle to be registered in her name.
14 Tyne Street
[40] Ms Lowe does not accept that Mr Wong funded the 2012 Jeep from criminal proceeds and it was thereby tainted.
[41] Mr Wong purchased 14 Tyne Street in 2002. There is no suggestion that it was purchased using tainted property or the proceeds of crime.
[42] Ms Lowe concedes that the Haverstock address was clearly tainted property.
[43] Haverstock Road was transferred to Erikka Investment Limited in 2004. Mr Wong was the sole shareholder and director of that company. Both properties were subject to a mortgage to the National Bank. Significant loan repayments were made between 6 March 2007 and 6 March 2012.
[44] A loan of $100,000 drawn down on 8 April 2002 was repaid on 8 April 2010, although it is not clear whether it was repaid in one lump sum or progressively. Detective Davenport confirmed that Tyne Street was a rental property. He was unable to say if the rental had contributed to the repayment of the loan but noted the agent managing the property paid the rent into a bank account of Mr Wong different from the loan accounts. The second loan secured against Tyne Street in the sum of
$50,000 was drawn down on the 24 March 2010 for the purpose, according to the bank records, of purchasing shares in a café. It was repaid on the 8 April 2010.
[45] The Tyne Street property was used as security for a personal loan to Mr Wong for the $80,000 withdrawn by him on 12 March 2012 for the purchase of the 2012
Jeep. In Mr Speed’s submission, all the other funding was of a legitimate kind being
borrowings or assets used as part trade-in. Ms Lowe does not concede that the
$80,000 loan was tainted property. In Mr Speed’s submission, there was no evidence that Tyne Street had been funded through illegal activities and it was therefore speculative to say that the $80,000 was tainted.
Analysis and conclusion
[46] The cannabis was grown at Mr Wong’s Haverstock Road property and there
was no suggestion that the Tyne Street property was used for any illegal purposes.
[47] Mr Wong was meeting his mortgage obligations on the Tyne Street property, although he had no legitimate income. It can therefore safely be concluded that the mortgage payments were met through illegitimate means.
[48] I am satisfied on the balance of probabilities that Mr Wong was involved in significant criminal activity and the 2012 Jeep was wholly or in part acquired or derived from proceeds of Mr Wong’s significant criminal activity.
[49] Therefore, subject to Ms Lowe’s application for relief, I must make an asset forfeiture order.
Profit forfeiture
[50] In any event, as an alternative to an asset forfeiture order, the requirements for a profit forfeiture order have been established. Where the Commissioner can prove an unlawful benefit from significant criminal activity but cannot prove that assets sufficient to offset that level of benefit are tainted a profit forfeiture order can be made. Once unlawful benefit is established, otherwise innocently owned assets can be realised to offset it.
[51] The Commissioner seeks such an order in the sum of $688,500 against Mr
Wong. Pursuant to s 53(1) of the Act, the value of the benefit is presumed to be
$688,500 but may be rebutted on the balance of probabilities. There has been no attempt to rebut this presumption.
Unlawful benefit from significant criminal activity
[52] In this case, the Commissioner has conservatively calculated the unlawful benefit with reference to the estimated value of Mr Wong's cannabis cultivation over a three-year period.
[53] Pursuant to s 54(1) of the Act, the maximum recoverable amount is determined by taking the unlawful benefit and deducting 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.
[54] The net proceeds of sale of 103 Haverstock Road were $181,058.23, of which all but $21,145.23 had been dissipated by Mr Wong. As at April 2012, 14 Tyne Street had a rateable value of $450,000 and a mortgage with $124,373.85 outstanding.
[55] I am satisfied on the balance of probabilities that Mr Wong unlawfully benefited from significant criminal activity within the relevant period of time, and
that Mr Wong has an interest in the 2012 Jeep. Although the 2012 Jeep is registered in Ms Lowe’s name, Mr Wong clearly had an interest in it. “Interest” is widely defined in s 2 of the Act and I am in no doubt that he had an equitable interest in it and exercised rights, powers and privileges in connection with the 2012 Jeep.
[56] Fairly, Mr Speed acknowledged that he was not in a position to argue against a profit forfeiture order in connection with the 2012 Jeep.
Is Ms Lowe entitled to relief from civil forfeiture?
Does Ms Lowe have an interest in the 2012 Jeep?
The evidence
[57] In her affidavit, Ms Lowe recounted an approach by Mr Wong late in 2011 asking if she would be interested in getting a vehicle together with him on the basis that he would help her pay for it but it would be hers as pay back for helping Mr Wong in the past. Ms Lowe said she was the closest of all the family to Mr Wong. He came to her for help and when he wanted things. She estimated she lent him
$20,000 over the years. She contributed $8,000 towards the purchase cost at Mr
Wong’s request.
[58] Ms Lowe’s evidence was that:
·Mr Wong had owned two or three similar jeeps before the 2012 Jeep. He liked that type of vehicle.
·Mr Wong had all the dealings with the car dealership and she left all the purchase arrangements to him.
· Ms Lowe was not present when the choice of vehicle was made.
·Mr Wong did not consult with Ms Lowe over the extras he ordered for the vehicle for example, the leather trim and sunroof.
·Ms Lowe was aware that Mr Wong borrowed money from the bank in order to buy the 2012 Jeep. She did not consider it odd even though he said it was a gift to her.
· The number plate on the 2012 Jeep, Pump3D, was Mr Wong’s personalised
number plate and had been used on his previous cars.
· Part payment for the 2012 Jeep was made by a trade-in of Mr Wong’s then
existing car.
·Ms Lowe wrote a cheque for $88,000, being most of the balance due to purchase the 2012 Jeep in April 2012. Just prior to that she banked a cheque of $80,000 Mr Wong gave her drawn on his account. She did not consider that unusual because Mr Wong “had his quirks”.
·Mr Wong told her he might be a little short on the balance of the purchase price.
·Ms Lowe did not think the money had come from the cannabis operation. Mr Wong had told her the Police had seized everything and she believed him when he told her the cannabis was grown for his personal use only. She knew he was not well and was HIV positive.
·Ms Lowe denied that Mr Wong repaid her the $8,000 she contributed to the balance of the purchase price for the 2012 Jeep. She said she received
$5,000 from him in cash, after the purchase of the 2012 Jeep.
· The 2012 Jeep was stored at Mr Wong and Ms Lowe’s mother’s address at 17
Darlington Place.
· Ms Lowe had never seen the 2012 Jeep. She had never driven it.
·Mr Wong had personal items in the 2012 Jeep including items associated with his two dogs.
·Ms Lowe paid the insurance on the 2012 Jeep and Mr Wong did not reimburse her.
· Mr Wong gave her a car key.
· Although Ms Lowe was overseas when Mr Wong took delivery of the 2012
Jeep, she was back in New Zealand for some two to three weeks before it was seized. She did not take control of the 2012 Jeep immediately because she went straight back to work and had two cars of her own (a Mazda Capella and an Impreza) and she knew Mr Wong did not have a car.
· Ms Lowe had previously shared vehicles with a sister and brother.
[59] Three documents were produced in evidence relevant to the acquisition of the
2012 Jeep. The vendor was Procession Automobiles in Takapuna, Auckland. The three documents were as follows:
(1)Vehicle offer and sale agreement dated 2 November 2011in the name of Peter Wong, 17 Darlington Place, Auckland. The sale price was
$107,000, accessories were $3,495 and the trade-in allowance in respect of Mr Wong’s existing car was $35,000. The document was signed by Mr Wong and Ms Lowe confirmed the signature was his.
(2)Vehicle offer and sale agreement dated 3 November 2011in the name of Mr Peter Wong at 17 Darlington Place. The sale price was
$106,990, ten dollars less than the document date 2 November 2011. Ms Lowe’s name as purchaser is handwritten beside the name of Mr Wong. The address of 17 Darlington Place has been crossed out manually and replaced by 18 Darlington Place, Ms Lowe’s address. Ms Lowe did not recognise the signature on that document. It is not possible to say who made the handwritten amendments or when they were made.
(3) Vehicle offer and sale agreement dated 16 April 2012 in the name of
Ms Lowe and signed by Mr Wong “pp”.
[60] The evidence confirmed that the deposit was paid on the 2 November 2011 and the transaction was completed on 16 April 2012.
[61] Reliance was placed on the fact that the second document was dated 3
November 2011, the date of Mr Wong’s birthday. That corroborated, in Mr Speed’s submission, the evidence from Ms Lowe that 2011 was a special year because he had turned 50 and Ms Lowe had turned 60. The full text of Ms Lowe’s affidavit in this regard is:
PETER first approached me concerning the above vehicle, the subject of the claim, late in 2011 and asked me if I would be interested in “getting a vehicle together”. He said he would pay for it but it would be mine as a way of paying me back for helping him out in the past. The way he described it we would share it but it would ultimately be mine and he specifically mentioned that last year 2011 was a special year in that I turned 60 and he turned 50. Of course I was delighted and agreed with his proposal and left it to him.
[62] The Commissioner relied on the penultimate sentence of that paragraph in support of his position that the agreement for the 2012 Jeep to be purchased in Ms Lowe’s name was a device to try and shield the 2012 Jeep from restraint and forfeiture, an arrangement entered into once Mr Wong had been arrested and charged. Ms Lowe relies on the first part of that paragraph to say that the arrangement was entered into in November 2011, well before Mr Wong was arrested. That analysis is supported by her later comment that Mr Wong ordered the 2012
Jeep. There is no dispute that 2012 Jeep was ordered on 2 November 2012 in Mr
Wong’s name.
[63] It is also clear that a revised offer and sale agreement was prepared on 3
November 2011. It does not appear to have been signed by Mr Wong, however. Indeed, the signature of the purchaser closely resembles that of the dealer leading to the inference that a replacement document was created because, for some reason, the price of the 2012 Jeep was reduced by ten dollars. All that can be said is that at some point an unknown person wrote Ms Lowe’s name alongside of Mr Wong’s name. I cannot take it further than that.
Submissions on behalf of Ms Lowe
[64] Ms Lowe claims to be the beneficial owner of the 2012 Jeep by one of two routes. Either by having paid good consideration for it by way of natural love and affection, repayment of previous debts owing to her by Mr Wong and a payment of
$8,000 from her own savings. Alternatively, it is claimed that the 2012 Jeep was a gift in recognition of previous past services albeit with an element of the purchase price being paid by Ms Lowe.
[65] Mr Speed said the Court can be sure that Ms Lowe entered into an agreement with her brother in 2011 around the time of his birthday on 3 November for them to purchase the 2012 Jeep.
[66] In Mr Speed’s submission the following facts support the proposition that Mr Wong, as donor, had done everything that was necessary to complete the gifting transaction, that is:
(a) ensured Ms Lowe had paid for the 2012 Jeep in part albeit through a loan and partial consideration provided by Mr Wong;
(b) told Ms Lowe they were purchasing a vehicle together;
(c) told the vendors that Ms Lowe was to be the registered proprietor;
(d) registered the 2012 Jeep in Ms Lowe’s name and insured it in her
name with Mr Wong being permitted to drive the 2012 Jeep; (e) given her the keys to the 2012 Jeep.
[67] Mr Speed submitted that while Mr Wong purchased the 2012 Jeep and paid for it in large part, there was a history of prior motor vehicle transactions between Ms Lowe and Mr Wong, a “debt” of family obligation and responsibility, actual payment made by Ms Lowe, and an expressed wish to independent parties by Mr Wong that Ms Lowe was to be the owner. In Mr Speed’s submission, the fact that the insurance was in her name meant that Ms Lowe was the beneficiary in the event
of accident or theft and this, coupled with delivery of the keys to her, means she did in fact have an ownership interest which superseded that of Mr Wong. Mr Speed submitted that Ms Lowe had effective control of the 2012 Jeep and Mr Wong neither could nor would be able to resist an application by Ms Lowe to enforce her ownership interest at law.
[68] Mr Speed referred to Ms Lowe’s evidence that she had no knowledge of the significant criminal activity believing that Mr Wong used the cannabis for medical purposes in connection with his HIV. Her evidence was that Mr Wong told her that he borrowed the money and that was true.
[69] That being the case, she should receive the value of the 2012 Jeep. She owned it and had accepted it as a gift without knowledge of any potential tainting of it.
Ownership or effective control of 2012 Jeep
[70] I am satisfied that Mr Wong had at least effective control of the 2012 Jeep because:
(a) he funded the purchase of it and he physically purchased it;
(b) on 29 May 2012 the 2012 Jeep was located in the basement garage at
Mr Wong's bail address;
(c) Mr Wong said that he and his sister were insured to drive it;
(d)Mr Wong had personal property inside the car, including items in the driver's area and dog blankets and other items in the rear of the car;
(e) Ms Lowe's account that the 2012 Jeep which cost $106,000 was a gift to her is implausible:
(i)Ms Lowe had no involvement in the physical purchase or the funding of the vehicle (other than acting as a conduit for
$80,000 of the purchase price);
(ii)before it was seized by police on 29 May 2012, Ms Lowe had not seen the 2012 Jeep, yet alone driven it. This is despite it being in Mr Wong's possession just across the road from her address;
(iii)the 2012 Jeep was purchased after Mr Wong had pleaded guilty to serious criminal charges.
Has Ms Lowe unlawfully benefited from Mr Wong’s significant criminal activity?
[71] The Commissioner accepts that Ms Lowe has an interest in the 2012 Jeep, at the very least, in the technical sense as the legal owner. In Mr Harborow’s submission however, the Court should not simply assume the interest, given it arose after the date of Mr Wong’s arrest and, in his submission, for the purpose circumventing the Act. Furthermore, in his submission, Ms Lowe has unlawfully benefited from the significant criminal activity.
[72] Section 7 of the Act sets out the meaning of unlawfully benefited from significant activity and provides as follows:
Meaning 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).
[73] The requisite knowledge required to be proved is that Ms Lowe knew that Mr Wong was involved in commercial cannabis growing. Mr Speed submitted that was not established for the following reasons:
(a) the non-commercial growing as related to Ms Lowe by Mr Wong would not, conventionally, excite anything much more than a fine;
(b) there is no evidence to suggest that Ms Lowe had any inkling of what
Mr Wong was up to.
[74] Ms Lowe disavowed any knowledge of the cannabis growing operation. She said that she had in the past visited Mr Wong at the Haverstock Road property but over the period of 2010 to 2012 she did not visit him at the property as she saw him at her mother’s address. She was not aware that he had stopped working as a flight attendant.
[75] When Mr Wong was spoken to by Detective Steward on 6 March 2012 he said he had finished work as an airline steward three to four years prior. He spent his time caring for his ailing mother and, if he needed financial support, he asked his mother or one of his sisters. He said his family had several commercial properties which were sold when his father became ill. The money was in a family trust and was the source of his income. Ms Lowe’s evidence was that she had received a relatively large payout from that family trust and Mr Wong had received about
$10,000.
[76] I accept the Commissioner’s submission that there should have been alarm bells ringing, particularly given the movement of money from Mr Wong’s account into Ms Lowe’s account just prior to it being used to purchase the 2012 Jeep.
[77] The case of Vincent and Ashby v The Commissioner of Police4 confirms that wilful blindness cannot avoid knowledge. The Court said.5
The person must have his or her suspicions aroused (for example, be aware that a particular state of affairs may exist) and must deliberately refrain from making any enquiry in order to avoid learning whether the suspicion is justified.
[78] Ms Lowe knew at the time of the purchase of the 2012 Jeep that Mr Wong had been arrested and had pleaded guilty to the charges. I am satisfied that Mr Wong then used the ruse of purchasing the 2012 Jeep in Ms Lowe’s name and routed
money through her account in order to protect the 2012 Jeep from forfeiture. In those
4 Vincent and Ashby v The Commissioner of Police [2013] NZCA 412.
5 At [52].
circumstances I am satisfied that Ms Lowe must have had her suspicions aroused and at best, refrained from making any enquiries as to why the balance of the purchase price was directed through her account and the 2012 Jeep was registered in her name.
[79] Ms Lowe has therefore unlawfully benefited from the significant criminal activity. In those circumstances, an order for relief under s 66 cannot be made.
Is there any undue hardship?
[80] Alternatively Mr Speed submitted that Ms Lowe would suffer “undue hardship” if relief is not granted. This claim is restricted to the claims of actual money Ms Lowe paid (which she claims as the $8,000 from her own funds) which went to the purchase price of the 2012 Jeep and the loans she claims she made to Mr Wong which were unpaid and amount to approximately $20,000 over the years.
[81] Any order for relief is at the discretion of the Court. At best, this could be the value of Ms Lowe’s interest in the 2012 Jeep, $8,000 at its highest, discounted to reflect the sale price.6 The Commissioner claims the $8,000 was repaid and in any event Ms Lowe’s own evidence was that Mr Wong repaid her at least $5,000 after the date of purchase of the 2012 Jeep although she says that was towards legal costs and did not elaborate.
[82] I am not persuaded that Ms Lowe is entitled to be repaid the $20,000 she claims she lent to Mr Wong over the years. There was no real evidence of this, much less that it was a loan or loans made with the intention of repayment. Any such loan or loans were never documented or evidenced by bank records. Ms Lowe was challenged on this issue on the basis that Mr Wong’s financial records showed he had considerable cash and owned two properties. He was therefore inherently unlikely to have borrowed $20,000 from Ms Lowe. She responded that the loans were made over a period which dated much further back in time. Those circumstances reinforce
my conclusion that there was no intention that any loans there may have been were
6 An $8,000 share of a vehicle costing $107,000 is 7.5 per cent. 7.5 per cent of the 2012 Jeep’s
sale price of $ 81,505 is $6113.
to be repaid. Mr Wong had been in a financial position to have done so for quite some time. It is inherently unlikely that Mr Wong would give Ms Lowe a vehicle worth over $100,000 when she had loaned him $20,000.
[83] There is no evidence that forfeiture of the 2012 Jeep would cause Ms Lowe hardship, let alone undue hardship. On her own evidence, Ms Lowe is in a comfortable financial position.
Result
[84] Ms Lowe’s claim for relief fails. The 2012 Jeep is made subject to an assets forfeiture order.
[85] The Commissioner is entitled to costs. If costs cannot be agreed, leave is given to file memoranda, from the Commissioner by 6 March 2015 and on behalf of
Ms Lowe, one week thereafter.
Thomas J
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