Commissioner of the New Zealand Police v McKinley

[2014] NZHC 3131

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2014-485-8962 [2014] NZHC 3131

IN THE MATTER

of an application pursuant to the Criminal

Proceeds (Recovery) Act 2009

BETWEEN

THE COMMISSIONER, THE NEW ZEALAND POLICE Applicant

AND

DARREN GEORGE SAMUEL MCKINLEY

First Respondent

JAMIE LIU
Second Respondent

DEBORAH JEAN COLLINS First Interested Party

SCOTT PAUL WALLACE Second Interested Party

KELLY KUINI RIMENE Third Interested Party

Hearing:	8 December 2014
Counsel:	K Grau for Applicant J Blathwayt for Second Interested Party
Judgment:	9 December 2014

JUDGMENT OF WILLIAMS J

[1]      The  Commissioner  has  made  an  application  for  restraining  orders  under ss 21, 24 and 25 of the Criminal Proceeds (Recovery) Act 2009, ‘effective control’ applications under s 58, and orders for sale together with applications for assets and

profit forfeiture orders under ss 35(e)(v), 45, 49, 50 and 55.

THE COMMISSIONER, THE NEW ZEALAND POLICE v MCKINLEY & ORS [2014] NZHC 3131 [9 December 2014]

[2]      The respondents Darren McKinley and Jamie Liu are charged with the sale and supply of methamphetamine.  Numerous assets owned by or allegedly under the control of this pair are covered in the applications.

[3]      The matter before me relates to one of these vehicles a 2003 Harley Davidson V-Rod motorcycle, registration 14ZZZ.  The vehicle is registered to one Scott Paul Wallace, the second named interested party in the application.

[4]      The Commissioner says that while the motorcycle is registered in the name of Mr Wallace, it is in fact under the effective control of Mr Liu and it is open to this Court to order that it be treated as though Mr Liu has an interest in it.

[5]      The Commissioner points to circumstantial evidence in seeking to establish Mr Liu’s  effective  control.     These  matters  were  set  out  in  the  affidavits  of Detective Aidan Neville dated 4 July and 31 October 2014. They were:

(a)      the motorcycle has been located by police at Mr Liu’s address on two dates  in  2013  and  2014  almost  exactly  a  year  apart.    On  both occasions the motorcycle was registered to other people;

(b)on two occasions in January and May this year, Mr Liu was stopped by police in the Masterton area riding the motorcycle;

(c)       the retail value of the motorcycle – at approximately $22,850 – is far

beyond Mr Wallace’s declared annual earnings over recent years;

(d)no information has been provided to explain Mr Wallace’s alleged purchase of the motorcycle even though he was a licensed motor vehicle dealer at the relevant time;

(e)       Mr Wallace has never held a motorcycle licence;

(f)      Mr Wallace’s explanation for it being found at Colombo Street is inherently unbelievable – that it had been left in Mr Liu’s custody for an  entire  year  in  order  for  Mr  Liu  to  sell  it  when  (according  to

Mr Wallace’s evidence) the motorcycle was his only significant asset and, having been a dealer, he could have sold it himself;

(g)      in fact Mr Liu had been in prison for six of those 12 months; and

(h)Mr Wallace said that he came to collect the motorcycle on the very day  in  June  2014  when  the  police  searched  Mr  Liu’s  address  in relation to methamphetamine charges.

[6]      Detective  Neville  was   made  available  to  respond  to  questions  from Mr Blathwayt.  He confirmed that the date upon which the ownership transfer was registered – 28 June 2013 – was not coincidental with the first police search of Mr Liu’s property.   He accepted that the date of registration reflected delays in attending to this matter by Mr Martin of Langlands Motorcycles.

[7]      Mr Wallace filed evidence in reply.  In his own affidavit he explained that he had bought the motorcycle – which he said was probably worth between $12-13,000 at the time because it needed work – which he swapped for two cars and a payment of $2,000.  The date of purchase was “in or about” 17 May 2013.  At the time, he said, he was “making a bit of a living trading motor vehicles” and he had a motor vehicle dealer’s licence.  The salesman at a local motorcycle shop was apparently to attend to transfer of the registration but did not.  Mr Wallace eventually attended to registering the transfer himself.

[8]      Mr Wallace said that he had taken the bike’s registration details to Langlands Motorcycles for Graham Martin to register the transfer through their online system but  apparently  Mr  Martin  had  indicated  that  management  did  not  agree  to  the transfer being put through the shop’s books and so he could not do it.

[9]      An affidavit was also filed by Graham Martin of Langlands Motorcycles.  He confirmed Mr Wallace’s story.  Mr Martin referred to a diary entry on 17 May 2013 recording  Mr  Wallace’s  request.    He  confirms  that  he  overlooked  making  the transfer.

[10]     Mr Wallace gave viva voce evidence and was cross-examined by Ms Grau. He said that he had bought the motorcycle in poor condition and had taken it to Mr Liu to be fixed as Mr Liu was well-known in the area as a skilled backyard motorcycle  mechanic.    He  produced  a  receipt  dated  15  May  2013  signed  by Mr Wichman,  apparently  confirming  that  the  motorcycle  had  been  purchased  in exchange for two vehicles and $2,000 cash making a total value of $12,000.

[11]     Mr Wallace said that he and Mr Liu had worked on the bike intermittently over the period between the purchase and the second police search.  But the bike had not been at Mr Liu’s residence for the whole time.   Mr Wallace had taken it back during the period of Mr Liu’s imprisonment, but returned it upon his release in the hope that the work would be finished and because there was nowhere at his home to store it under cover.

[12]     Mr Wallace finally indicated that he had visited Mr Liu’s home the day before the police search of 10 June 2014 to give Mr Liu a computer hard drive.  He went back the next day to retrieve it (apparently Mr Liu was to download some movies from the hard drive) to find that the police were searching the premises.  He said he hung back until he saw the police removing his motorcycle, he then stepped in and remonstrated with the police.  He rejected the suggestion that he was there to retrieve the motorcycle in some sort of strange coincidence.  The explanation, he said, was more prosaic than that.

[13]     Before I can make a restraining order under s 25, I must be satisfied that there are reasonable grounds to believe that:

(a)       Mr Liu has been engaged in the supply of methamphetamine;

(b)      that the proceeds or benefits received by Mr Liu exceed $30,000; (c) that Mr Liu has unlawfully benefitted from this; and

(d)Mr Liu had the capacity to control, use, dispose of, or otherwise treat the motorcycle as his own.1

[14]     As the Court of Appeal make clear in Vincent v Commissioner of Police reasonable grounds to believe is a relatively low threshold because restraining orders are holding measures rather than final orders.2

[15]     I am satisfied that the factors identified by the Commissioner amount to reasonable grounds.  The length of time in Mr Liu’s possession, his relatively regular (it  appears)  use  of  the  vehicle,  and  the  fact  that  Mr  Wallace  did  not  have  a motorcycle licence (at any stage it appears) all provide grounds for reasonable belief. I hasten to add they may not on their own provide sufficient grounds for final orders but that is not the test I must apply.

[16]     Having said that, Mr Wallace has provided a genuine explanation covering some matters in detail.   The Commissioner is clearly put on inquiry to provide credible responses to Mr Wallace’s explanations.  Meanwhile there will be a lengthy delay until resolution of the criminal proceedings against the two respondents, and it would oppressive, in my view, to leave matters with respect to the motorcycle in limbo in the meantime.  I intend therefore to make the restraining order but to limit it

as to time.3

[17]     The application  for  restraining  orders in  respect  of the  Harley Davidson motorcycle is granted accordingly.   The order will expire on Friday, 27 February

2015 unless renewed on or before that date or unless final orders for forfeiture and

sale are made.

Williams J

1      Solicitor-General v Bartlett [2008] 1 NZLR 87 at [27].

2      Vincent v Commissioner of Police [2013] NZCA 412.

3      Criminal Proceeds (Recovery) Act 2009, s 28(1).