Karaka v The Queen
[2013] NZCA 125
•29 April 2013
| IN THE COURT OF APPEAL OF NEW ZEALAND |
| CA407/2012 [2013] NZCA 125 |
| BETWEEN RUPENE PAERATA ERNEST KARAKA |
| AND THE QUEEN |
| Hearing: 16 April 2013 |
| Court: Harrison, Allan and Clifford JJ |
| Counsel: D R F Gardiner for Appellant |
| Judgment: 29 April 2013 at 10.15 am |
JUDGMENT OF THE COURT
The appeal against conviction is dismissed.
REASONS OF THE COURT
(Given by Clifford J)
Introduction
The appellant, Rupene Paerata Ernest Karaka, was tried by a jury in the District Court at Auckland before Judge Callander and found guilty on 28 March 2012 on one count of money laundering. Mr Karaka was subsequently convicted and sentenced by the Judge to ten months’ home detention.[1] Mr Karaka now appeals against his conviction, but not his sentence.
[1] R v Karaka DC Auckland CRI-2008-004-20453, 14 June 2012.
Mr Karaka says that the Judge erred on the admissibility of an agreed statement of facts which was before the jury in terms of s 9(2) of the Evidence Act 2006, and when he directed the jury on recklessness.
Facts
Mr Karaka faced three money laundering charges at trial.
The first two charges relate to incidents on 22 February 2007 and 31 December 2007. In the first instance, Mr Karaka purchased €10,000 from a bank in Queen Street using New Zealand dollars. In the second, having deposited $30,050 cash into his bank account on 27 December 2007, Mr Karaka purchased €10,000 from that account. Mr Karaka was found not guilty on those two charges.
The third charge related to events on 14 and 15 April 2008 when Mr Karaka deposited a total of $100,000 in cash into his personal bank account: $70,000 in $20 notes and $30,000 in $50 notes. On 17 April 2008, Mr Karaka attempted to transfer $100,000 to an account at a Liechtenstein bank controlled by a Mr Ronald Brown. Owing to errors in the instructions Mr Karaka gave to the bank in question, that transfer did not occur and Mr Karaka withdrew the money in cash from his bank account. It is not known where that money ended up.
In October 2010 Mr Brown had pleaded guilty to a number of charges in the High Court at Auckland of importing Class A and Class B drugs, selling Class B drugs and money laundering. Mr Brown was a prolific importer and distributor of Ecstasy and his dealings had generated an income of approximately $4.5 million. A large proportion of that money had been laundered by persons within New Zealand.
The agreed statement of facts at Mr Karaka’s trial recorded the essential details of Mr Brown’s offending and the fact that the amounts of money specified in each of the three charges laid against Mr Karaka were the proceeds of Mr Brown’s offending.
As particularly relevant to the charges Mr Karaka faced, the following appears in the agreed statement of facts:
Mr Brown also used local associates in New Zealand to send money overseas on his behalf via telegraphic transfers under their own names or latterly through a company set up for this purpose.
Mr Brown also used a number of local persons to change New Zealand dollars for him into either Euro or American dollars as those currencies were requested by Mr Karpavicius because New Zealand dollars were difficult for him to exchange in Europe.
...
Mr Karaka was identified during the investigation as a close associate of Mr Brown’s and a long term friend. They were in frequent telephone contact with each other during the interception phase and Mr Karaka would also visit Mr Brown at the K Road Ballroom.
At trial, Mr Karaka’s explanation for the deposit, attempted transfer and subsequent withdrawal of the $100,000 was that the money had come from a Silvio Blazevich.
Mr Blazevich, who Mr Karaka had known for many years, ran a construction company. Mr Karaka had worked for him on occasion. Mr Karaka, Mr Blazevich and Mr Brown were all mutual friends.
The $100,000 was money that was to go towards purchasing a hot mix paving machine from Europe for Mr Blazevich’s business. Mr Karaka put that money into his account because Mr Blazevich spoke limited English, and, as he drank a lot “always got fumes”. We take it that, in effect, Mr Karaka was saying he used his bank account because Mr Blazevich would have had difficulties if he himself had tried to deposit the money in a bank and then transfer it to Europe. At the time, Mr Karaka – when asked by the bank attendant, explained that the money had come “from an iwi settlement”.
When Mr Karaka was unable to transfer the money to Europe as had been planned, he withdrew the money and gave it back to Mr Blazevich.
The challenge to the agreed statement of facts
The nature of Mr Karaka’s challenge to the agreed statement of facts, which followed a pre-trial admissibility ruling by Judge Callander, was not made particularly clear to us by Mr Gardiner. In general terms, the proposition appeared to be that there was material in that statement of facts that was adverse to Mr Karaka, and should not have been included. We pointed out, however, that the statement had been agreed to by Mr Karaka’s counsel, Mr Earwaker, and that that there was no challenge to Mr Earwaker’s actions in so doing. Mr Gardiner then acknowledged, properly, that that was not an identifiable ground of appeal that could be further advanced.
The challenge to the recklessness direction
Section 243 of the Crimes Act 1961 provides for the crime of engaging in a money laundering transaction in respect of property that is the proceeds of a serious offence where the person in question knows or believes that all or part of the property is the proceeds of a serious offence, or is reckless as to whether or not the property is the proceeds of a serious offence. Hence the need for a recklessness direction in Mr Karaka’s case.
Mr Karaka’s defence, as put by Mr Earwaker in his opening address, was that Mr Karaka:
... did not know the case that he was asked to deal with was the process of dealing in drugs, nor did he consider that that was a possibility, it just didn’t occur to him that that’s what it was. So that, in a nutshell, is his defence. He didn’t know. He was not acting for the purpose of trying to conceal the money or assist anybody to do that. That wasn’t his purpose, that wasn’t what he was doing [sic].
The Judge summed up with the aid of written materials which were distributed to the jury. On the question of Mr Karaka’s knowledge of the fact that he was dealing with the proceeds of a serious offence, or his recklessness as to that, the written materials put the position this way:
Third. The accused knew or believed that all or part of the property in question was the proceeds of some serious offence. The Crown does not have to establish that the accused knew or believed that the property was the proceeds of a particular serious offence, or a particular class of serious offence. This is the critical issue in this trial.
OR
was reckless as to whether the property was the proceeds of a serious offence. This is when the defendant can see at least some of the possible consequences, is willing to take the risk, and nonetheless deliberately takes that risk.
Putting it another way:
A man is reckless when he is consciously aware that certain bad consequences or risks might happen if he goes ahead with his proposed actions, but despite this deliberately decides to carry on regardless of the risks involved.
The question you must ask is “was the risk in the accused’s mind at the time he carried out his actions at the bank?”
In his summing up, the Judge directed the jury in the following terms:
The only focus for you in the context of this trial is whether he was trying to clean that dirty drug money, it is accepted that it is drug money. The issue is going to be whether he tried to conceal it and whether he knew what it was all about or whether he was a naïve dupe really, just doing what he was told by Silvio. So that is really the crunch issue.
...
There is a double-edged factor here because the law says, the Crown either proves that Mr Karaka did know or believe that it was hot drug money that was being laundered but, if you are uncertain about that, you can look at the other option, which is what we call “recklessness”, and that, if he is reckless as to what he is doing, then that, in itself, can be enough from the Crown perspective. So if you were satisfied beyond reasonable doubt that he was reckless as to whether or not the cash came from a drug deal, then that could be sufficient for you to find guilt. That is where he can see at least, some of the possible consequences, but is willing to take the risk and nonetheless deliberately takes that risk. Then I have put it in a slightly different form for you. A man is reckless when he is consciously aware that certain bad consequences or risks might happen if he goes ahead with a deal, but despite this, he decides to carry on regardless of the risks. That is the context and the concept that I ask you to consider, and you can reflect back to those notes.
Mr Karaka’s challenge to the Judge’s summing up is that the jury might have been confused by the Judge’s “naïve dupe” comment: their confusion could well have been, Mr Gardiner asserted, that he could be a naïve dupe, and not know or be reckless about the unlawful origins of the money, but nevertheless be found guilty by the jury. That confusion could have arisen, Mr Gardiner asserted, because the Judge’s reference to “certain bad consequences or risks” was not specific enough: Mr Karaka’s evidence had been that he did have a concern, but it was about the taxation consequences of the transaction. The jury might have fallen into error and based their finding of guilty upon his acknowledged awareness of those consequences.
In our view, that argument is not tenable.
First, when the Judge referred in his summing up to the “crunch issue”, he was clearly referring to an issue on which guilt or innocence turned. In that context, it is clear that if Mr Karaka was indeed a naïve dupe, as opposed to knowing what it was all about, then he would not be guilty.
Secondly, and on the particular issue of recklessness, in his summing up and written materials the Judge very clearly identified that the thing Mr Karaka could have been reckless about, so as to make him guilty, was whether or not the money in question was “hot drug money”, “cash from a drug deal” or “the proceeds of some serious offence”. That is clearly what the Judge was referring to when he referred to “certain bad consequences or risks”. We do not think there was any real risk that the jury would have been confused about that element of the Judge’s directions to them.
Mr Karaka’s appeal is therefore dismissed.
Solicitors:
Crown Law Office, Wellington for Respondent
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