R v H HC Auckland CRI 2006-404-184

[2008] NZHC 2618

This case has been anonymized

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CRI 2006-404-184

THE QUEEN

v

H

Hearing:         31 July 2008

Counsel:         F C Deliu and Y Wu for Applicant

J C Down for Respondent

Judgment:      9 October 2008

JUDGMENT OF HEATH J

This judgment was delivered by me on 9 October 2008 at 9.00am pursuant to Rule 540(4) of the High Court Rules.

Registrar/Deputy Registrar

Solicitors:

Equity Law, PO Box 8333, Auckland Crown Solicitor, PO Box 2213, Auckland Copy to:

J C Down, PO Box 941, Shortland Street, Auckland

R V H HC AK CRI 2006-404-184  9 October 2008

The application

[1] H was tried in this Court in February 2007 on a single charge of money laundering. A not guilty verdict was returned. He seeks indemnity costs under the Costs in Criminal Cases Act 1967 (the Act).

Introduction

[2]      On  8  July 2004,  five  cardboard  boxes  arrived  at  Auckland  International Airport by courier from China.  The contents were listed as “Light Sample”.  They were examined by a Customs Officer.  An “unusual white powder substance” was noticed at the opening of one of the lava lamps found in the boxes.

[3]      Subsequent analysis established that the consignment of lava lamps contained

8.7 kilograms of the Class A controlled Drug Methamphetamine, all suspended in liquid form.   The estimated street value of such a quantity is about $8 million. Investigations revealed that other lava lamps had been imported into New Zealand in April and May 2004.

[4]      On 9 July 2004, a controlled delivery of the freight was undertaken.   As a result of that delivery, Alex Wong (also known as Gang H  ), Chi Yai Fung, Harry Yu and Song Sheng were charged with drug offences, including importation and supply of Methamphetamine.   A warrant to search Mr Wong’s home address was executed on 4 August 2004.

[5]      Although he advised the Police that he was unemployed, Mr Wong was driving a 2004 Mercedes vehicle valued at $133,000 and living in an expensive apartment at the Metropolis Hotel, in Auckland.  Further inquiries established that he owned another apartment, jointly with his parents.  The present applicant, Mr H  , is Mr Wong’s father.

[6]      Mr Wong was living with his girlfriend.   She said that she was a student. Nevertheless, she was the registered owner of a 2004 Porsche motor vehicle, valued at over $90,000.

[7]      Subsequent inquiries revealed that both the Mercedes and Porsche motor vehicles had been purchased by Mr Wong in cash.

[8]      After learning of the financial connection between Mr Wong and his father, a search warrant was executed at Mr H  ’s home, in Howick.  Detective Brennan spoke to Mr H   while that search was in progress.

[9]      Mr Edgar, a financial analyst attached to the Police, undertook an analysis of bank account records in the names of Mr Wong and Mr H  .  An interim Source and Disposition Statement was prepared for the period 23 April 2004 to 8 July 2004. The  statement  revealed  unexplained  income  of  $287,853.33  during  that  period. Later, another statement was prepared in which the amount of unexplained income was revised to $184,817.20.

The charges

[10]     On  12  April  2005,  Mr  H    was  charged  with  engaging  in  money laundering transactions, in a sum not less than $250,000.   Subsequently, he was committed for trial on that charge.

[11]   Meanwhile, Mr Wong had been charged with importing and supplying Methamphetamine, possessing Methamphetamine for supply and money laundering. Originally, Mr Wong and Mr H   were charged jointly with the money laundering charge.  The proceeding was transferred to the High Court, so that all charges could be heard together.

[12]     For reasons into which it is unnecessary to go, severance was ordered and Mr H   was tried alone.  Mr Wong was convicted on all charges, including money laundering.    Subsequently,  however,  his  conviction  was  quashed  and  a  re-trial

ordered, because the verdict was delivered by a jury of 10, something the Supreme

Court found to give rise to a miscarriage of justice: Wong v R [2008] NZSC 29.

[13]     Before Mr H   was tried, his (then) counsel applied for an order that he be discharged under s 347 of the Crimes Act.  That application was not pursued.  It was dismissed formally on 24 April 2006: see R v Wong (High Court, Auckland, CRI

2005-004-15296, 1 May 2006, Williams J) at para [1](a).

[14]     Mr H   also sought an order that the statement that he made orally to Detective  Brennan  be  ruled  inadmissible.    That  application  was  dismissed  by Venning J: R v H   (High Court, Auckland, CRI 2006-404-184, 5 October 2006).

[15]     Mr H   was tried before Frater J and a jury over four days in February

2007.  Just before the trial, the indictment was amended to state more specifically the terms on which Mr H   was alleged to have been complicit in the money laundering transaction.    The amended indictment referred, specifically, to “gambling”, something to which the original count had not referred.

[16]     The amended form of the indictment laid read:

THE CROWN SOLICITOR AT AUCKLAND charges that DE SHAN HUANG, between 23 April 2004 and 17 September 2004, together with ALEX KWONG WONG (also known as GANG HUANG), in respect of property,  namely  cash,  that  was  the  proceeds  of  a  serious  offence  or offences, engaged in money laundering transactions, either:

(i)  Knowing or believing that all or part of the property was the proceeds of a serious offence or offences; or,

(ii) Being reckless as to whether or not the property was the proceeds of a serious offence or offences.

Particulars:     Through   gambling   and   other   unexplained expenditure.

Legal principles

[17]     Section 5 of the Act sets out the circumstances in which a Court may order that the costs of a successful defendant be paid, in whole or in part, by the Crown. Section 5(1) and (2) provide:

5     Costs of successful defendant

(1)        Where any defendant is acquitted of an offence or where the information  charging  him  with  an  offence  is  dismissed  or  withdrawn, whether  upon the  merits  or  otherwise,  or  where  he is discharged  under section 167 of the Summary Proceedings Act 1957 the Court may, subject to any regulations made under this Act, order that he be paid such sum as it thinks just and reasonable towards the costs of his defence.

(2)      Without limiting or affecting the Court's discretion under subsection (1) of this section, it is hereby declared that the Court, in deciding whether to grant costs and the amount of any costs granted, shall have regard to all relevant circumstances and in particular (where appropriate) to—

(a)      Whether the prosecution acted in good faith in bringing and continuing the proceedings:

(b)        Whether at the commencement of the proceedings the prosecution had sufficient evidence to support the conviction of the defendant in the absence of contrary evidence:

(c)      Whether the prosecution took proper steps to investigate any matter coming into its hands which suggested that the defendant might not be guilty:

(d)        Whether generally the investigation into the offence was conducted in a reasonable and proper manner:

(e)      Whether the evidence as a whole would support a finding of guilt but the information was dismissed on a technical point:

(f)     Whether the information was dismissed because the defendant established (either by the evidence of witnesses called by him or by the cross-examination of witnesses for the prosecution or otherwise) that he was not guilty:

(g)     Whether the behaviour of the defendant in relation to the acts or omissions on which the charge was based and to the investigation and proceedings was such that a sum should be paid towards the costs of his defence.

…

[18]     There  is  no  presumption,  either  for  or  against,  an  award  of  costs  to  an acquitted accused: s 5(3).   Section 5(4) and (5) direct that no defendant shall be granted  costs  by  reason  only  of  the  fact  that  he  or  she  has  been  acquitted  or discharged and no accused shall be refused costs by reason only of the fact that criminal proceedings were properly brought and continued.

[19]     The authorities recognise that a broad discretion is conferred on a Judge when determining an application of this type: see, for example, Solicitor-General v Moore [2001] 1 NZLR 533 (CA) at [33].

[20]     An appellate Court will interfere with the exercise of the Court’s discretion, whether in favour or against an accused, only if some error in principle were established or if another orthodox ground on which a discretionary decision may be challenged were made out.   In R v Reid [2008] 1 NZLR 575 (SC), Anderson J, delivering the judgment of the Supreme Court, said:

[23]     Counsel for the Crown accepted that the verdicts of acquittal cannot be challenged by a collateral impugning of the costs orders. That constrains the ability of an appellate court to examine the relative strength of a prosecutor’s  case.  But,  in  any  event,  an  appellate  court  cannot  hope  to capture the ephemeral but significant impressions which inform the assessments and discretions of the trial judge. That is why, of course, a challenge to the exercise of discretion must demonstrate what would be termed, generally, an error of principle.

[21]     Regrettably, I do not have the advantage of having presided over Mr H  ’s trial.  The trial Judge retired from office last year.  I have done my best to capture the flavour of the trial by reading the evidence to which counsel have referred me.   I have also obtained a copy of Frater J’s summing up.  A copy of the summing up was made available to counsel. No dispute with its terms has been raised.

The claim for costs

[22]     Mr H   seeks indemnity costs totalling $44,513.63.  While he was legally aided for trial, that is the amount currently charged against a property, in favour of the Legal Services Agency.

[23]     While a question of standing might arise, the Crown has taken no objection to the application on that technical ground.  I am content to assume, without deciding, that Mr H  ’s application is authorised by R v Harrington [1994] 3 NZLR 272 (CA) at 275.

[24]     The grounds on which costs are sought can be summarised as follows:

a)        Mr H   was found not guilty by the jury.

b)The  Crown  failed  to  take  proper  steps  to  investigate  the  alleged offending prior to trial.

c)       The Crown did not have reasonable grounds to bring or to continue the proceeding.

d)Distress caused to Mr H  , aged 73 years at the time of trial, as a result of being subjected “to undeserving suspicion and a long investigation, culminating in a four day trial at an age where distress materially, and unnecessarily, affected his well being”.

I use the term “Crown” generically, to include both by the Police and the Crown

Solicitor, exercising their respective investigative and prosecutorial functions.

[25]     The Crown opposes the application.   Mr Down, on its behalf, submits that there were good grounds to put Mr H   on trial and that the investigation and prosecution were undertaken diligently.

The evidence

[26]     Two Crown witnesses, Detective Sergeant Sowter, the officer in charge of this investigation, and Mr Edgar, a financial analyst attached to the Auckland Proceeds of Crime Unit, gave evidence before me.   Both were cross-examined. Their evidence explained the investigatory steps that were taken before the money laundering charge was laid and the way in which important financial information was collated and put before the jury.

[27]     Mr H   filed an affidavit in support of the application for costs.  Mr Down, for the Crown, indicated that he no longer wished to cross-examine Mr H  . Nevertheless, I raised an issue with Mr Deliu before an election was made as to whether Mr H   wished to give evidence to respond to any matters raised by Detective Sergeant Sowter or Mr Edgar.

[28]     During  the  course  of  the  hearing  I  had  been  referred  to  a  Legal  Aid application form lodged in respect of civil proceedings by Mr H   in February

2004.   Mr H  ’s evidence at trial and his affidavit on the present application contended that he had legitimate sources of income which provided substantial sums of cash which he chose to keep at home through lack of trust in the banking system stemming from his earlier life in China.

[29]     I put to Mr Deliu that Mr H  ’s statutory declaration to the Legal Services Agency conflicted with that evidence and that, if he chose to give evidence before me, I would provide a self-incrimination warning in relation to the possibility of perjury, on either occasion.

[30]     After taking instructions, Mr Deliu advised me that Mr H   did not wish to give further evidence.

The Crown case at trial

[31]     In her summing up to the jury, Frater J put the Crown case in these terms:

a)       The jury should focus on the Source and Disposition Statement in the form produced by Mr Edgar at trial.  The Crown recognised that some data from casino records may have been misleading but contended that it remained relevant because it provided a picture of Mr H  ’s gambling habits.

b)There was evidence on which the jury could find that Mr H   had unexplained income.   The Crown submitted that the evidence given by Mr H   added to inferences that could be drawn against him.  In particular, reference was made to Mr H  ’s inability to pay for some items, his need to borrow, his limited sources of income and statements he made to the Inland Revenue Department and the Legal Services Agency.   The Crown contended that the evidence was not consistent with Mr H  ’s contention that he “stashed $120,000 or so away”.

c)       Mr H  ’s pattern of financial dealings and his relationship with his son was suggestive of no conclusion other than that Mr H   was dealing with money, from a serious offence, for money laundering purposes.

[32]     So far as the relationship was concerned, the Crown relied upon business dealings between father and son and gambling at the same casino.  The Crown also relied on evidence that Mr Wong had lived with his parents at times and that, at other times, he had lived in an apartment acquired by Mr H  .

[33]     The defence case was that there were too many possibilities of what could have happened.  Therefore, the jury could not be sure of guilt; in particular, the jury could not be sure of the link between money Mr H   had and used in 2004 and any unlawful actions by his son.

The issues

[34]     Mr Deliu made detailed submissions on aspects relating both to the original money laundering charges and the jurisdiction to be exercised by the Court under the Act.    Notwithstanding Mr  Deliu’s  industry,  I consider that  the  issues  are  more narrow than those he raised initially.

[35]     There are two competing policy considerations underlying the factors listed in s 5(2).  They are:

a)       First, a significant award of costs against the Crown could have the unintended consequence of acting as a disincentive for similar prosecutions to be brought in the future.

b)Second, the possibility of an adverse costs order being made is likely to operate as an incentive for prosecuting agencies to keep standards of investigation and prosecution at an appropriately high level.

[36]     Put into that context, the s 5(2) issues that assume prominence are:

a)       Did the prosecution have sufficient evidence, at the commencement of the proceeding, to support a conviction, in the absence of other evidence at trial? (s 5(2)(b))

b)Was the investigation into the offence conducted in a reasonable and proper manner? (s 5(2)(d))

c)       Did  Mr  H  ’s  conduct  effectively  bring  the  proceedings  on himself? (s 5(2)(g)).

[37]     Mr Deliu did not challenge the good faith of the prosecution in bringing or continuing the proceeding.  Given the way in which the defence case was put to the jury at trial, it cannot be said that Mr H   established he was not guilty.  Those two aspects rule out the factors identified in s 5(2)(a) and (f) of the Act.

Analysis

[38]     The three issues identified in para [36] above, narrow my inquiry.   Rather than focussing on the more extensive submissions made by Mr Deliu I intend, with respect to him, simply to set out my reasons for reaching the view that costs should not be ordered.

[39]     There are two factors which indicate to me that there was sufficient evidence for the prosecution to be commenced and continued.

a)       The first is that, based on evidence given at the preliminary hearing in the District Court, no application was pursued under s 347 of the Crimes Act 1961.  If it had been pursued, it is unlikely that it could have  succeeded,  given  the  admissions  made  by Mr  H    to  the Police.

b)Overall,  I  conclude  that  the  investigation  was  conducted  in  a reasonable manner  and that  the  decision  to  prosecute  was  proper. While there were flaws in the Police inquiry, in particular the need to

withdraw allegations relating to two vehicles (a Mercedes and a Porsche) from unexplained income, there was sufficient evidence on which Mr H   could prepare a defence.  That particular flaw in the investigation can be given little weight on a costs application, given the nature of admissions made to Detective Brennan by Mr H   when interviewed at his home on 20 December 2004.

c)       Third,  I  do  not  accept  that  Mr  H  ’s  conduct  brought  the proceedings on his own head.   Evidence gathered from proper investigative steps led the Police, inevitably, to lay the charge in issue.

[40]     In the course of Detective Brennan’s interview with Mr H  , the latter was asked about property he owned.  The information imparted to the police officer by Mr H   suggested accumulation of a number of assets of high value  from a takeaway business he had operated in Pakuranga.   Mr H   also asserted that various money he received was his own, including savings that he had made in China.  In the light of the limited sources of income of which there was evidence, the admissions made to the Police were incriminating.  The fact that attempts were made to have those admissions ruled inadmissible tends to support that proposition.

[41]     An allied factor which weighs with me is the conflicting evidence given by Mr H   to the Court and to Legal Aid authorities concerning his income and assets.  Although Mr H   obtained legal aid to defend the charges, it is clear that he was suggesting that he had independent means to acquire property at a much earlier stage than when he gave evidence at trial.

[42]     Nor do I give any weight to Mr Deliu’s submission that Mr H   was caused distress through undeserving suspicion and a long investigation which culminated in a trial over four days when he had attained the age of 73 years.  Mr H  ’s robustness of character was assessed by Venning J, in giving judgment on the application to have the statements made to Detective Brennan ruled inadmissible. The Judge said:

[40]  I  reject  the  evidence  of  Mr  H    that  during  the  course  of  the interview  he  was  terrified,  trembling  and  very  afraid  as  he  suggested.

Although he was 70 (approaching his 71st birthday) when the search warrant was executed Mr H   is no frail, disadvantaged old age pensioner in carpet slippers.  Mr H   is a forceful character.  As he was at pains to point out during the course of his evidence he was an extremely successful businessman who had run a number of businesses.   In the course of the statement itself he said that he had purchased and sold a lot of homes, he had been very successful in running takeaways and buying and selling property in New Zealand.   He was drawing $1,000 a month for gambling and apparently having some success at the Sky City Casino with that.  Even though he is 72 now, during the course of his evidence he said that he was still trying to buy a new business.  In addition, Mr H   has two central city apartments in his name and an expensive Mercedes Benz.

…

[42]    During  the  course  of  giving  evidence  Mr  H    became  quite animated and was quite forceful and directive in the responses given at times.  I can accept that he would make a dismissive gesture as described by Sergeant Brennan in response to being told of his rights, and at the same time saying he did not want to say anything.  Mr H   was sure in his own mind neither he nor his son had done anything wrong and his response was directed at that.  I am satisfied that he is of a sufficiently strong character not to be overborne by the police in the situation that he faced.  While the police had not searched his property before, he had previously had dealings with the police arising out of his son’s offending.   On that earlier occasion Mr Young had assisted Mr H   as interpreter with the police.  Mr Young was with Mr H   throughout the interview.  (my emphasis)

….

[43]     There is the added point that Frater J let the charge go to the jury.  It is clear that she, as presiding Judge, considered there was sufficient evidence on which a reasonable jury, properly directed, could convict.

[44]     I agree that Mr Edgar could have undertaken a more detailed analysis of unexplained income.  However, on information presently available, I do not consider that an earlier and more comprehensive analysis would have affected the decision to charge or to continue prosecution.

[45]     It is clear from Frater J’s summing up, that the jury was aware of errors that had been made previously in the unexplained income calculation.  The jurors were able to take that into account in determining whether the charge had been proved beyond reasonable doubt. That point was put clearly by the trial Judge, who said:

[49]   The Crown accept that some of the data, particularly the data from the casino, may be misleading in parts, but they say it’s still relevant because it gives you a good idea of the nature of Mr H  ’s gambling.  But they say

don’t focus on that;  focus on the schedule prepared by Mr Edgar and the source and disposition statement;   and consider Mr Edgar’s evidence and consider also the process that he went through which, they say, addresses the concerns put forward by the defence about any possible double counting, and when you consider that evidence, Mr Down submitted, together with all the other evidence, there’s ample evidence from what you could conclude that there was significant – whatever the final figures are – unexplained income, and the Crown say that you can reach that conclusion by looking at the explanation which Mr H   gave for his expenditure, when you look at his inability to pay for certain things, his need to borrow, his limited source of income or his limited income from other sources, and the various statements that he made to the IRD, to the Legal Services Agency and so on, and when you consider that evidence, the Crown ask, is that all consistent with him having stashed $120,000 or so away?  They say not.  They say that he simply didn’t have money, that even if he did put some money aside, that by  the  critical  period  he  simply  didn’t  have  enough  money  to  pay  his expenses and he certainly didn’t have enough money to gamble what he did at the casino.  They say that there are simply too many things in his story which don’t add up.  And I won’t go through all the various items which the Crown rely upon but really, they say, that when you consider his pattern of financial dealings and weigh that against his relationship with his son, the fact that they had business dealings together, that they gambled at the same casino, that they had been working together, that they lived either together or the son lived at his apartment, that beggars belief that the accused didn’t know what his son was doing.  They say that you can’t trust their story that Mr H   put forward and that when you consider the overall picture, you’ll be sure of his guilt.

[46]     In my view, there is no justification to order costs in favour of Mr H  .  I

decline to order that any costs be paid.

Result

[47]     For those reasons, the application for costs is dismissed.

P R Heath J