R v Allison Ca20/05
[2005] NZCA 204
•15 August 2005
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IN THE COURT OF APPEAL OF NEW ZEALAND
CA20/05
THE QUEEN
v
BRETT LIONEL ALLISON
Hearing:19 July 2005
Court:Glazebrook, Randerson and Goddard JJ
Counsel:D G A Reece for Appellant
D G Johnstone for Crown
Judgment:15 August 2005
JUDGMENT OF THE COURT
THE APPEALS AGAINST CONVICTION AND SENTENCE ARE DISMISSED.
____________________________________________________________________
REASONS
(Given by Glazebrook J)
Introduction
[1] Mr Allison was arrested after a police operation named “Operation Flower”. He was charged with various drug offences relating to the manufacture and supply of methamphetamine. The first trial was aborted but Mr Allison was convicted on the re-trial on charges of manufacturing methamphetamine and conspiracy to supply methamphetamine.
[2] Two money laundering charges under s 257A(2) of the Crimes Act 1961 were also faced by Mr Allison but these were severed from the indictment on 13 February 2004. The first count related to the period between 10 November 1999 and 6 September 2000 and involved an amount of not less than $500,000 cash. The second count related to the period between 7 September 2000 and 9 November 2000 and involved not less than $10,000 cash. Mr Allison elected trial by Judge alone on those counts.
[3] On 16 November 2004, Williams J found Mr Allison guilty of the first charge of money laundering and dismissed the second. On 13 December 2004, Williams J sentenced him to a term of two years’ imprisonment.
[4] Mr Allison now appeals to this Court against his conviction on the basis that Williams J erred in finding that the Crown had proved beyond reasonable doubt that the cash involved in the first count was the proceeds of a serious offence or offences. It is conceded that, if Williams J is upheld on this point, then the other elements of the offence were proved in relation to the first count. This decision therefore deals only with that point and we make no comment on any other aspect of Williams J’s decision.
[5] Mr Allison’s sentence appeal was not pursued before us and is accordingly dismissed.
The legislation
[6] Prior to its repeal, s 257A of the Crimes Act provided:
257A Money laundering
(1) For the purposes of this section,—
conceal, in relation to property, means to conceal or disguise the property; and, without limiting the generality of the foregoing, includes—
(a) To convert the property from one form to another:
(b)To conceal or disguise the nature, source, location, disposition, or ownership of the property or of any interest in the property:
deal with, in relation to property, means to deal with the property in any manner and by any means; and, without limiting the generality of the foregoing, includes—
(a)To dispose of the property, whether by way of sale, purchase, gift, or otherwise:
(b)To transfer possession of the property:
(c)To bring the property into New Zealand:
(d)To remove the property from New Zealand:
interest, in relation to property, means—
(a) A legal or equitable estate or interest in the property; or
(b) A right, power, or privilege in connection with the property:
proceeds, in relation to a serious offence, means any property that is derived or realised, directly or indirectly, by any person from the commission of the offence:
Property means real or personal property of any description, whether situated in New Zealand or elsewhere and whether tangible or intangible; and includes an interest in any such real or personal property:
serious offence means an offence punishable by imprisonment for a term of 5 years or more; and includes any act, wherever committed, which if committed in New Zealand would constitute an offence punishable by imprisonment for a term of 5 years or more.
(2) Subject to subsections (6) to (6B), every one is liable to imprisonment for a term not exceeding 7 years who, in respect of any property that is the proceeds of a serious offence, engages in a money laundering transaction, knowing or believing that all or part of the property is the proceeds of any serious offence.
(3) Subject to subsections (6) to (6B), every one is liable to imprisonment for a term not exceeding 5 years who obtains or has in his or her possession any property (being property that is the proceeds of a serious offence committed by another person)—
(a)With intent to engage in a money laundering transaction in respect of that property; and
(b)Knowing or believing that all or part of the property is the proceeds of any serious offence.
(4) For the purposes of this section, a person engages in a money laundering transaction if that person—
(a) Deals with any property; or
(b)Assists any other person, whether directly or indirectly, to deal with any property—
for the purpose of—
(c) Concealing that property; or
(d) Enabling another person to conceal that property.
(5) In any prosecution for an offence against subsection (2) or subsection (3) of this section,—
(a)It shall not be necessary for the prosecution to prove that the accused knew or believed that the property was the proceeds of a particular serious offence or a particular class of serious offence:
(b)It is no defence that the accused believed any property to be the proceeds of a particular serious offence, when in fact the property was the proceeds of another serious offence.
(6) It is a defence to a charge under this section if the act to which the charge relates was done by that person, in good faith, for the purpose of or in connection with—
(a)The enforcement or intended enforcement of this section or any other provision of this Act or of any other enactment relating to a serious offence; or
(b)The enforcement or intended enforcement of the Proceeds of Crime Act 1991; or
(c)The enforcement or intended enforcement of the Financial Transactions Reporting Act 1996.
(6A) Subject to subsection (6B), this section does not apply if—
(a)Any property is alleged to be the proceeds of a serious offence; and
(b)The act that is alleged to constitute that serious offence was committed outside New Zealand; and
(c)The act was not, at the time of its commission, an offence under the law of the place where the act was done.
(6B) If a person is charged with an offence under this section and the act that is alleged to constitute the serious offence resulting in proceeds was committed outside New Zealand, it is to be presumed, unless the person charged puts the matter at issue, that the act was an offence under the law of the place where the act was done.
(7) Nothing in this section limits or restricts the operation of any other provision of this Act or any other enactment.
Decision of Williams J
[7] On the issue with which this appeal is concerned, Williams J began by considering whether Mr Allison had committed a discrete serious offence in relation to both counts. He held, on the basis of a comment by this Court in R v Harris CA15/00 1 August 2000, that the Crown was required to prove (beyond reasonable doubt) the commission of a discrete serious offence that occurred before the money laundering began.
[8] With regard to the first count, Williams J said that the alleged antecedent serious offence yielding proceeds on which the Crown relied began with the activities of Mr Allison at the Park Lane Motor Lodge on the weekend of 19 ‑ 20 November 1999. On 19 November 1999, a Mr Kingi arrived at the Motor Lodge reception to book a room for two nights. He was known to the receptionist, Ms Maher, because he had booked the Penthouse Room at the rear of the complex on three or four occasions over previous months. However, on the night of 19 November, the Lodge was heavily booked and Ms Maher could only offer Mr Kingi a room nearer the front and then only for the one night.
[9] As he had done on all previous occasions, Mr Kingi left reception and spoke to a person in the car in which he had arrived. On earlier occasions, Mr Kingi returned to reception alone and paid for the room in cash. On this occasion, however, the driver came to reception with Mr Kingi. He agreed to take the room and paid some $200 in cash for the hire and the bond for the mini bar, extracting the money from a “wad” of cash he took from his pocket. Ms Maher identified the payer as Mr Allison. Her identification was not challenged.
[10] Ms Maher then saw the pair carrying a couple of bags to the room. Next morning, the housekeeper said the room had a “do not disturb” sign on it. Ms Maher was unable to raise the occupants by phone. The cleaner opened the door but retreated because there were possessions still in the room. Ms Maher went up to inspect. She said there was an overwhelming smell of cannabis, she saw cannabis on the desk and there were pieces of cling film scattered around the room. The Police were called, who searched the room and seized the cannabis. In addition, in a carry bag in the room, a police officer, Sergeant Cochrane, located a plastic bag containing a shoe shine sponge with a cut in one end. A plastic bag containing a brown substance was inserted in the cut. That was subsequently analysed by ESR and found to contain four grams of high purity methamphetamine consistent with it being “final product”. One of the other officers, Sergeant John, said that, when she first saw the methamphetamine at the Motor Lodge, it appeared moist and still crystallising.
[11] Mr Allison returned to the Lodge later that day and spoke to Ms Maher. She told him that the Police had removed his belongings, gave him the business card she had been given by the Police and advised him to ring them to obtain the return of his belongings. She said he replied, “I can’t believe you let them in”, rushed out of reception and drove off at speed. After discussion, the Police decided to return Mr Allison’s belongings, other than the sponge and its contents, giving him a formal warning concerning the cannabis. There were delays before that occurred. Mr Allison spoke to the Police on several occasions, concerned that he would be arrested if he came to the police station. Finally, once he and counsel had been reassured on that score, he recovered his belongings.
[12] Of those matters, the only issues in contention at the hearing before Williams J were whether Mr Allison was satisfactorily identified as having been present in the car on the earlier occasions and whether the Police had been entirely truthful in telling Mr Allison and his counsel that the cannabis was the only item of interest found in the search. The Judge considered that those matters were clearly of little weight in deciding whether the recital of facts constituted proof to the required standard of the commission of a serious offence, either by Mr Allison or with his knowledge.
[13] The Crown’s submission was that it had proved that Mr Allison had manufactured the methamphetamine found in the room at the Lodge. The Judge noted that there was a complete absence in the room of any manufacturing equipment and that the Police did not have the room scientifically examined. However, the Judge held that there was no doubt the methamphetamine was in the room, there was little doubt it was freshly manufactured and there was no suggestion it may have been there before Mr Allison hired the room. Though Mr Kingi made the initial approach to Ms Maher, all the actions thereafter were those of Mr Allison. As a matter of law, therefore, the Judge considered that, at the very least, Mr Allison must be regarded as having been proved to have manufactured methamphetamine or to have been in possession of it either alone, jointly or as a party.
[14] The Judge said that, since even simple possession of that amount of methamphetamine potentially attracts a sentence of imprisonment of over five years, the conclusion must be that the Crown had proved beyond reasonable doubt the commission by Mr Allison of a “serious offence”, as defined, through his actions at the Park Lane Motor Lodge on 19 ‑ 20 November 1999. Accordingly, Williams J concluded that there was sufficient proof of the commission of a serious offence, either committed by Mr Allison or to which he was a party, antecedent to the money laundering transactions on which the Crown relied. We note that, although the Judge referred to simple possession, he cited s 6(2) of the Misuse of Drugs Act 1975, which relates to possession for supply, rather than s 7(2)(b) of the Act relating to possession alone. We note, however, that, at the time, the s 6(6) presumption applied only if a person was in possession of 56 grams or more of methamphetamine (although this has recently been amended to five grams).
[15] The Judge then turned to what he termed the next question. That was whether “property”, as defined in s 257A(1), was derived as the proceeds of a serious offence. Williams J said in this regard that the Crown is not required to prove that the property involved was the proceeds of a specified serious offence or class of offence. Further the indictment does not need to allege the commission of a named serious offence or class of offence – see R v Allison HC Auckland T002481 14 November 2002 at [8] and [9] per Nicholson J. He noted also that the Crown does not need to prove in this regard that Mr Allison committed any serious offence provided it is proved that Mr Allison knew or believed that all or part of the property was the proceeds of a serious offence.
[16] The Judge found that, over the period from 10 November 1999 to 6 September 2000, Mr Allison had engaged in a large number of transactions, mostly in cash, and his ability so to do far outstripped his ability to finance those transactions from proved legitimate income. The Judge remarked that the source and disposition statement covering the period in the first count was of considerable assistance to the Crown, particularly as it was conservative in its assessment of unexplained funds available to Mr Allison. That was especially the case when, apart from two property transactions, there was no evidence of Mr Allison having substantial assets from the sales of which the transactions reviewed might have been financed.
[17] The Judge also noted the Crown’s submission that the cash expenditures were concentrated in time with each period of considerable spending being followed by periods where little cash appears to have been available to Mr Allison. It was the Crown’s contention that he was probably manufacturing during the periods of reduced expenditure and disposing of the proceeds in the large cash transactions which followed. The Judge said that there was force in that submission.
[18] The Judge also commented that, although occupancy alone was proved and there was no proof of Mr Allison having manufactured methamphetamine at any of the establishments, the cash payments of sizeable sums to Auckland hotels for accommodation carried echoes of the Park Lane Motor Lodge matter. He said that there may be a suggestion, but no more, that Mr Allison, a man who lived in Auckland and owned property in that city, regularly used hotel accommodation paid for in cash, for the same activity as that in which he had been proved to have been involved at the Park Lane Motor Lodge on 19 ‑ 20 November 1999.
[19] Williams J remarked that there was no proof of the quantity of any methamphetamine manufactured by Mr Allison during the weekend of 19 ‑ 20 November 2000, other than the four grams uplifted by Police. Since it had been seized, that could not have yielded proceeds from a serious offence for Mr Allison to use in money laundering transactions. The Judge, however, went through other evidence of Mr Allison having been directly involved in the commission of serious offences during the period of the first count. These included the purchase of precursor chemicals in about April 2000 and earlier, and the finding of recipes for methamphetamine manufacture dated 21 May 2002 in a house visited by Mr Allison. The Judge also pointed to the facility with which Mr Allison had manufactured methamphetamine during the period from 1 September 2000 to 9 November 2000, which, in the Judge’s view, reflected back on his manufacturing abilities at an earlier time. This had to be taken into account alongside the equipment Mr Allison had accumulated, the amount of methamphetamine manufactured during the period from 1 September 2000 to 9 November 2000 and the very considerable amounts of unexplained income he had received during the period covered by the first count.
[20] Williams J concluded that, put shortly, Mr Allison had been shown to have been involved in the ways mentioned in the manufacture of methamphetamine on the weekend of 19 - 20 November 2000. He had been involved in the purchase of precursor chemicals for such manufacture in April 2000 and earlier. He had access to internet recipes for manufacturing methamphetamine in May 2000 and thereafter. He was shown in the Operation Flower re-trial to have been a manufacturer of methamphetamine on a large scale with considerable equipment and expertise. Throughout the period, methamphetamine sold at $100 for a “point”, which is one‑tenth of a gram, $1000 per gram, or $20,000 - $25,000 per ounce. There was no means by which Mr Allison could have financed his lifestyle, largely cash-based, over the period in the first count. The Crown’s calculation was that he had at least $711,774.34 of unexplained sources of funds over the period from other than legitimate income. Taken in combination, the Judge held that the only conclusion logically open was that Mr Allison had been manufacturing and selling methamphetamine repeatedly over the period covered by first count.
[21] In those circumstances, the Judge held that the Crown had proved beyond reasonable doubt that, between 10 November 1999 and 6 September 2000, Mr Allison engaged in money laundering transactions within the definition of s 257A of the Crimes Act, that he derived funds exceeding $500,000 from those serious offences and that he knew those funds were the proceeds of such offences. The Judge concluded that the Crown had accordingly proved Mr Allison guilty on the first count in the indictment.
The appellant’s submissions
[22] Mr Allison based his challenge on s 385(1)(a) of the Crimes Act, namely, that the Judge’s verdict cannot be supported having regard to the evidence. At its core, the challenge rested on the claim that there was no evidence upon which the Judge could have concluded that Mr Allison committed a serious crime at the Park Lane Motor Lodge on the weekend of 19 – 20 November 1999, as required by Harris.
[23] Mr Reece, for Mr Allison, submitted that there is no evidence to support the contention that Mr Allison manufactured the drug or that he was in possession of it. Mr Reece pointed out that no manufacturing utensils were found in the room at the Lodge and no further enquiries were made by the police to locate any such utensils. Mr Reece submitted that it is pure speculation to conclude that Mr Allison manufactured methamphetamine in November 1999. While methamphetamine had been found in the room, it was open to a court to conclude that such an amount could just as easily have been recently purchased by any of the occupants of the motel room and left there by mistake.
[24] With regard to Mr Allison possessing the methamphetamine found in the room there was, in Mr Reece’s submission, no evidence to show that Mr Allison had knowledge of the existence of the drug or that he had control of it. He was never interviewed or charged with possession of the drug. Other persons were known to have occupied the Lodge room over the relevant period, notably Mr Kingi. In addition, the Judge was, in Mr Reece’s submission, wrong when he said that even simple possession of that amount of methamphetamine potentially attracts a sentence of imprisonment of over five years. Section 7(2)(b) of the Misuse of Drugs Act applies to the simple possession of a Class B controlled drug, which attracts a maximum penalty of three months imprisonment and/or a $500 fine.
[25] Mr Reece also submitted that none of the other matters relied on by the Crown, such as the unexplained income, the purchase of assets, the cash payments, the downloading of details concerning the manufacture of methamphetamine from the internet or the purchase or precursor substances, either singly or together, was sufficient to prove beyond a reasonable doubt that Mr Allison had committed a serious offence.
The Crown’s submissions
[26] Mr Johnstone, for the Crown, urged a more holistic analysis than the approach taken by Mr Reece. He submitted that proof of a particular antecedent offence is not required. Rather, what is required is proof that the property in question came from a serious offence, whether or not that offence is capable of being further particularised. Taking that approach, the Crown submitted that the manufacture and distribution of methamphetamine is the inevitable explanation for the unexplained income in excess of $700,000 during the period addressed by the first count. Unsurprisingly, this was the conclusion the Judge therefore drew.
[27] The fact that the Judge considered it also necessary to find that a discrete serious offence had been committed does not, in Mr Johnstone’s submission, make the verdict on the first count unsafe. It simply means that an additional but unnecessary factor has been held to have been proved beyond reasonable doubt.
Discussion
[28] We accept the Crown submission that there is no need for the Crown to prove an antecedent discrete serious offence before an accused can be found guilty of an offence under s 257A(2). What the Crown must prove beyond reasonable doubt is that all or part of the property, the subject of the money laundering transaction, is the proceeds of a serious offence and that the accused either knew or believed that to be the case. Proof that the property was the proceeds of a particular proved serious offence is not necessary. Nor is it necessary to prove that the accused was involved in the serious offending. Proof that the property is the proceeds of a serious offence can be by inference properly drawn from the evidence. These were the principles set out by Nicholson J in the related decision of R v Allison at [8] - [9].
[29] Williams J accepted the principles set out by Nicholson J as an accurate statement of the law – see at [15] above. His decision on this matter thus proceeded on the correct legal basis. Further, there was certainly evidence upon which the Judge was entitled to consider that the Crown had proved that all or part of the property was the proceeds of any serious offence and that Mr Allison knew that – see the summary of the matters considered by Williams J at [16] - [21] above. Indeed, we accept the Crown submission that, given these factors, the Judge’s conclusion that the Crown had proved this element of the offence was inevitable.
[30] As indicated above at [7], Williams J considered that it was necessary to prove, as an additional and separate element, that there had been the commission of a discrete antecedent serious offence. This view derived from a comment of this Court in Harris. That comment was not, however, intended to introduce an additional element into the section. The Court was merely pointing out that the Crown must prove that the property was the proceeds of a serious offence other than the money laundering itself. There is no need for the Crown to prove the commission of a discrete antecedent serious offence. What the Crown must prove is set out at [28] above.
[31] We accept the Crown’s submission that the conclusion by the Judge that it was necessary to establish a discrete antecedent serious offence did not undermine the verdict. His finding that the Crown had proved a specific serious offence on 19 ‑ 20 November 1999 was not inconsistent with the verdict. Indeed, it supported it and the Judge otherwise correctly applied the relevant legal principles.
[32] Even had it been necessary to prove the discrete antecedent offence of manufacturing or possession for supply, we do not, in any event, consider that the Judge’s verdict would have been one that could have been challenged under s 385(1)(a) of the Crimes Act. The Judge held that there was little doubt that the methamphetamine was freshly manufactured. It was found in the room at the Lodge which Mr Allison had paid for in cash and used in conjunction with his associate Mr Kingi. The Judge also noted the evidence of cannabis in the room, the fact that there were pieces of cling film scattered around the room and Mr Allison’s reaction on being told that the police had been in the room. No doubt another conclusion, including one of those suggested by Mr Reece, would have been open to the Judge but, as this Court noted in R v Eide (2004) 21 CRNZ 212 at [72], it would not have been for us, in this Court, to retry the appellant.
Result
[33] The appeals against conviction and sentence are dismissed.
Solicitors:
Stephen R Anderson, Auckland for Appellant
Crown Law Office, Wellington
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