R v Kite
[2017] NZHC 2784
•14 November 2017
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CRI-2016-004-6518 [2017] NZHC 2784
THE QUEEN
v
JOSHUA MASON KITE
Hearing: 26 October 2017 Counsel:
H D L Steele for Crown
M E Goodwin for DefendantJudgment:
14 November 2017
JUDGMENT OF BREWER J
This judgment was delivered by me on 14 November 2017 at 3:30 pm pursuant to Rule 11.5 High Court Rules.
Registrar/Deputy Registrar
Solicitors:
Meredith Connell (Auckland) for Crown
R v KITE [2017] NZHC 2784 [14 November 2017]
Counsel:
Matthew Goodwin (Auckland) for Defendant
The application
[1] The Crown seeks forfeiture of $38,480 pursuant to s 32(3) of the Misuse of
Drugs Act 1975:
If, on the conviction of any person for an offence against section 6, the Judge
… is satisfied that money found in the possession of that person was received by that person in the course of or consequent upon the commission of that offence, or was in the possession of that person for the purpose of facilitating the commission of an offence against that section, the Judge … may, in addition to any other penalty imposed pursuant to this Act, order that that money be forfeited to the Crown.
[2] On 6 October 2017, Mr Kite pleaded guilty to a charge of possession of methamphetamine for supply (93 grams), which is an offence against s 6(1)(f). He was convicted of the offence by Jagose J on the same day.
[3] The $38,480 was found, together with the 93 grams of methamphetamine, in a boot bag in Mr Kite’s bedroom. There is no doubt that he was in possession of the money. The contest is whether the money was in his possession for the purpose of facilitating the commission of an offence against s 6.1
[4] The onus of proof is on the Crown and the standard of proof is the balance of probabilities.2
[5] The Crown’s case is that the money was in Mr Kite’s possession as part of a float to be used for purchasing more methamphetamine as stock-in-trade.
[6] Mr Kite’s position is:
(a) The money was working capital for, and profit from, a car trading venture he carried on with his father;
1 The first option in s 32(3) does not apply where the s 6 charge is possession for supply: Keen v R
[2015] NZCA 221 at [8].
2 Keen v R, above n 1, at [10].
(b)The methamphetamine was purchased using $10,000 of the venture’s money;
(c) The purchase of the methamphetamine occurred some two days before the Police search in which the methamphetamine and the money were discovered;
(d)He had never before purchased methamphetamine and had not yet attempted to sell any of it; and
(e) Consequently, the money was not in his possession for the purpose of facilitating the commission of an offence against s 6.
The law
[7] Before I turn to an analysis of the evidence, I will discuss what the Crown has to prove by reference to the leading decision on s 32(3), Keen v R, a judgment of the Court of Appeal.3
[8] Mr Keen appealed a forfeiture order in circumstances where he was found in possession of a plastic shopping bag containing $43,170 in cash and 21.8 grams of methamphetamine.
[9] On the facts, the Court of Appeal agreed with the District Court Judge that the money was a float intended to fund future purchases.4 The Court held:
[15] It is important to have regard to the language of s 32(3). The test is that the money be possessed for the purpose of facilitating the commission of further offences. We consider this language answers the submissions advanced by Mr Bailey — it is the availability of the money as the working capital of the enterprise that renders it liable to forfeiture. We do not consider the legislature envisaged detailed and inherently speculative analysis of how the money might be used in future offending.
[16] The standard definition of “facilitate” is “to make easy or easier”. In the context of future drug offending, the ready availability of a pool of money able to be deployed to purchase product as the offender wishes comfortably comes within the concept. The emphasis must remain on the purpose of possession, but if it is established on the balance of probabilities to be a sum
3 Keen v R, above n 1.
of money held at readiness to be used as needed, and to the extent desired, for
the drug enterprise, we consider the entire sum is liable to be forfeited.
(Footnotes omitted)
[10] The Court of Appeal went on to say it regarded “as irrelevant that Mr Keen may or may not have dipped into the float for other purposes such as occasional day-
to-day living expenses”.5 To remove money from the float would require a clear
evidential foundation showing it to be actually not part of the float at all:
[17] … A court is not required to analyse all the possible other uses to which an offender may put the money, so long as, as we say, the money was also to be held as a float available to fund future drug dealing.
[11] Therefore, in this case, the focus has to be on the overall purpose for which
Mr Kite was in possession of the money. The Crown has to satisfy me, on the balance of probabilities, that although the money might be used by Mr Kite for personal needs, at base it was being held as a float to fund future drug dealing.
[12] I pause to note that an ancillary issue has been raised on behalf of Mr Kite’s father, who gave evidence. Mr Thomas Kite claims that part of the money is due to him as unpaid revenue from the car trading venture. He wants to be paid from the money because, even if Mr Kite was keeping a float to fund future drug dealing, the money due to Mr Thomas Kite was not part of the float.
The evidence
[13] Mr Kite was imprisoned from 7 December 2006 to 18 May 2015 on three charges of aggravated robbery and one of using a document for pecuniary advantage. When he was released he had accumulated $13,927.77 in release to work earnings.
[14] According to counsel’s memorandum of agreed facts, when the Police searched
Mr Kite’s bedroom on 8 June 2016:
3. In the defendant’s bedroom (Bedroom 2) inside a chest of drawers
Police located a black Asics “boot bag”. Inside the boot bag were: (a) A grey Adidas “boot bag” containing:
(i) $38,480 cash in various denominations; (ii) a single small snaplock bag; and
(iii) a white plastic spoon.
(b) A grey plastic bag containing:
(i) a further snaplock bag in which there were four smaller snaplock bags which contained methamphetamine in the following amounts, 27.6g,
27.5g, 27.3g and 10.6g, a total of 93 grams.
4.Police also located in the defendant’s bedroom: (a) In the same set of drawers:
(i) $150 cash ($50 x 3) in a green plastic sleeve; and
(ii) $350 cash ($100 x 1, $50 x 5) in a stack of magazines.
(b) $1,500 cash in various denominations inside a brown envelope which was inside a brown envelope pinned to a cork board.
(c) On top of the drawers a tin money jar containing $370.30 in notes and coins.
[15] Mr Kite’s evidence-in-chief was in the form of an affidavit supplemented by answers to questions from Mr Goodwin. In summary, he said:
(a) In September/October 2015 he and his father commenced the venture of buying cars, doing work on them and selling them at a profit.
(b)Mr Thomas Kite lent Mr Kite $10,000 as start-up capital and Mr Kite contributed his release to work earnings, totalling almost $24,000.
(c) The venture turned over about 13 cars in the nine months it was in operation.
(d)The cars were bought on Trade Me, through wreckers and from other sources.
(e) On 9 March 2016, the venture advanced $9,600 to Mr Thomas Kite on repayment terms which included interest at 10 per cent.
(f) The money found with the methamphetamine came from the venture;
$5,000 of it was a “float” for the venture and the balance was undistributed profit. The money had, until two days prior to the Police search, been $10,000 greater in sum. Mr Kite had reduced the venture’s fund by $10,000 to buy the methamphetamine.
[16] In response to questions from Mr Steele and from me, Mr Kite’s evidence was:
(a) The money was kept at his father’s house under his father’s bed. Every time he sold a car he would add to the hoard. Mr Thomas Kite did not know it was there until he needed to borrow the $9,600. Mr Kite told him where the money was at that time because he was travelling and
Mr Thomas Kite needed to obtain the $9,600. Mr Kite could not remember his father’s address, only that it was in Manurewa.
(b)Mr Kite removed the money from under his father’s bed when he decided to buy the methamphetamine. That was about five days before the Police search. He did not tell his father.
(c) The quantity of methamphetamine he thought he was buying was
100 grams. The 93 grams he was found with meant he received less than expected. He did not weigh the methamphetamine.
(d)That $10,000 was a cheap price for 100 grams of methamphetamine, but that is what he paid.
(e) His father borrowed the $9,600 from the venture at 10 per cent interest, even though the $10,000 he had advanced to the venture was outstanding and not accruing interest, because the $9,600 was for his father’s personal use and the $10,000 was an investment and was needed as working capital. This is notwithstanding that the loan was in March 2016 when the money had already accumulated to a substantial amount.
(f) The money was in the same bag as the methamphetamine because he had retrieved the money to buy the methamphetamine and felt it was safer to keep the money and the drugs together, and he was still trying to decide what to do with it.
(g)The $1,500 found in an envelope pinned to a notice board in his room belonged to the venture and was from the sale of a car.
(h)The reason why the $1,500 had not been added to the money was because he had just left it there and it did not cross his mind to put it with the rest of the money.
(i)The venture was a partnership between Mr Kite and his father. Mr Kite drew his living expenses of $300 to $500 a week out of the money earned from the venture but his father had not taken a dollar out of the venture that he knew of.
(j)The money was not distributed to Mr Kite and his father as profit because there was no need to do so.
(k)The $150 in the green plastic sleeve was probably money left over from buying equipment for fixing up cars.
(l)The $350 in cash in the stack of magazines probably got lost a long time ago when Mr Kite was first released from prison.
[17] Mr Goodwin called Mr Thomas Kite to give evidence also. Mr Kite’s evidence-in-chief consisted of an affidavit plus supplementary questions. Relevant testimony from Mr Thomas Kite’s evidence-in-chief was:
(a) He estimated they sold around 14-15 cars during the nine month period in which the venture was operating.
(b) Mr Kite looked after the financial side of the venture.
[18] In response to questions from Mr Steele and from me, Mr Thomas Kite’s evidence was:
(a) A copy of his bank statement for the period 26 April 2010 to 6 May
2010 evidences the withdrawal of the $10,000 he advanced to Mr Kite to help establish the venture. The withdrawal took place on 27 April
2010. The money was withdrawn some four-and-a-half years before it was advanced to Mr Kite because Mr Thomas Kite thought it was better to get it out then and have it ready for Mr Kite when he came out of prison.
(b) He did not know where Mr Kite kept the money related to the venture:
I don’t know, you’d have to ask him.
(c) He did take some profit from the venture. Probably a couple of thousand dollars. In re-examination, he clarified that the money would come spontaneously from Mr Kite:
Here Dad, here’s a couple hundred.
Or:
Hey Dad, there’s $500 or do you need some money for this.
(d)Mr Thomas Kite had little knowledge of the profits being made because that was all in the hands of Mr Kite. He was aware that they were “making good money”.
(e) In response to the suggestion that the money was Mr Kite’s and not
Mr Thomas Kite’s, the latter’s response was that he did not know.
(f) As to the interest on the loan of $9,600, that was Mr Thomas Kite’s suggestion.
(g)Mr Thomas Kite’s part in the venture was negotiating with the vendors of cars. Once a price was negotiated:
That would be paid either by myself, depending on – let me just be a little clearer. We worked, collaborated together me and my son, and I worked separately. So if we had a case where a vehicle, and we have, was purchased and we both liked it, my son would purchase it, or we’d go half and half on it. We’d split, you know, the price of the car, and then we’d split the price, I’m sorry, we’d split the profit made from that vehicle sale.
(h)Mr Kite did the work on the cars, unless there was mechanical work that needed to be done by a garage, and Mr Kite did that work “all over the place”, including at Mr Thomas Kite’s residence in Manurewa.
(i)During the period of the venture, Mr Thomas Kite was a sickness beneficiary.
Discussion
[19] My decision will turn on whether I find Mr Kite credible and, to a much lesser extent, whether I find Mr Thomas Kite credible.
[20] Mr Kite has no inherent credibility in the sense that he cannot claim an honest character. Mr Thomas Kite has a self-evident motive to take the money out of the hands of the Crown. I do not place any weight on demeanour in these circumstances and so I will reach my findings of credibility by assessing what Mr Kite and
Mr Thomas Kite said in evidence against the factual background I accept and the inferences to be drawn from it.
[21] First, I accept there was a venture in which Mr Kite and Mr Thomas Kite collaborated. However, I do not accept that it was as extensive and as profitable as
Mr Kite said.
[22] Mr Kite exhibited to his affidavit Trade Me records which he said illustrated
that source of the venture’s stock-in-trade. It is quite sparse and the vehicles were not in a price range that would attract a great profit margin once given a superficial makeover. The records show:
(a) A Holden Astra bought on 4 April 2016 for $545.
(b) A VW Polo bought on 8 April 2016 for $1,020.
(c) A VW Golf bought on 24 May 2016 for $2,030.
[23] I accept that within the Trade Me documentation is a collection of emails showing Mr Kite’s interest in purchasing parts for motor cars and these illustrate an activity which goes beyond the purchase of cars shown in the Trade Me records.
[24] Consistent with the evidence of both Mr Kite and Mr Thomas Kite, I find that profits on the vehicles sold by the venture would generally be in the $1,000 range or less. I accept that there could have been the odd windfall profit at a higher amount.
Mr Kite’s affidavit refers to selling a 1998 Cadillac Seville V8 for a profit of $6,000.
[25] Both Mr Kite and Mr Thomas Kite said the venture was in operation for nine months. I find that it was in operation for, at most, eight months. Mr Kite said it started in September or October 2015 and the search of his house took place at the beginning of June 2016.
[26] I do not accept that the venture was in the nature of a partnership between
Mr Kite and his father. Mr Thomas Kite’s evidence was that sometimes there would be a 50/50 collaboration between him and Mr Kite on a particular vehicle but that at other times each of them would purchase vehicles on their own account.
[27] I do not accept that Mr Thomas Kite advanced $10,000 to Mr Kite to commence the venture. In my view, the bank statement produced by Mr Thomas Kite goes against that proposition rather than in its favour. There is no credible reason why
Mr Thomas Kite would withdraw $10,000 from his account in 2010 and keep it somewhere for four-and-a-half years waiting for his son to be released from prison. I think it is far more likely that Mr Thomas Kite has simply gone back to a coincidental withdrawal and used it to bolster his credibility on this point.
[28] I do not accept that until just prior to the Police search, the money was kept under Mr Thomas Kite’s bed and added to every time there was a sale. That does not make sense given that Mr Kite did not live at his father’s address and it was not a case
of Mr Kite giving the money to his father for safekeeping. Mr Kite said that until the time in March 2016 that his father needed $9,600, his father was ignorant of the fact that he was sleeping above the money. However, Mr Thomas Kite, I find genuinely, gave evidence that he had no idea where the profits from the venture were being kept.
[29] I find that the money was Mr Kite’s. It did not come from the venture:
(a) The $1,500 found in the envelope pinned to the board in Mr Kite’s room is clearly a proceed of the venture. It was kept separate from the money.
(b)The other sums found in the drawer were probably also from the venture. They too were not mingled with the money.
(c) The loan of $9,600 to Mr Thomas Kite, at interest and on specified repayment terms, point to the money being Mr Kite’s and not jointly owned funds.
(d)Mr Thomas Kite was a sickness beneficiary. If he were part of a highly profitable business then, logically, he would be drawing funds from it.
[30] I find that the source of the money was from the sale of drugs:
(a) The money and the drugs were found together. There was a snaplock bag and a plastic spoon in the bag that held the money. These are common items associated with measuring and storing drugs.
(b)Mr Kite accepts that the methamphetamine was in his possession for the purpose of supply.
(c) There is far too much money for it to come from the venture as I have found it to be. By Mr Kite’s own account, the money had reached a total of $48,000 before he paid $10,000 for the methamphetamine. In addition, the venture was his only source of income and so the $48,000 was the balance after his living expenses had been deducted. Even if I were to accept that his living expenses were no more than $500 a week,
that still amounts to about $16,000 over an eight month period. The total is now about $66,000 if the other money found in his room is included. If the venture turned over a dozen cars in that period, then the average profit would have had to have been in excess of $5,000. That cannot have been the case. It is much more likely that the profit was in the region of $12,000 to $18,000 and went on living expenses.
(d)Mr Kite said he paid $10,000 for 100 grams of methamphetamine. He explained that he was found with only 93 grams of methamphetamine because the vendor did not sell him the amount represented. Mr Kite was cross-examined on the unlikelihood of anybody selling 100 grams of methamphetamine for $10,000. Mr Kite accepted that he knew he was getting a good deal. This is surprising given Mr Kite’s evidence that he was not a repeat customer or otherwise experienced in the trade. This was a one-off transaction in which he had been approached by the vendor.
(e) I have regard to the memorandum of agreed facts which tells me that an ounce (28 grams) of methamphetamine generally sells for between
$8,000 and $15,000. Mr Kite’s methamphetamine was in three bags containing one ounce each and a fourth bag containing nine grams. Therefore, the value of the three ounce bags was between $24,000 and
$45,000. The remaining nine grams, if sold as grams ($600 to $1,000), would be worth from $5,400 to $9,000. The value would be considerably more if sold at street level in weights of 0.1 of a gram for around $80 to $120.
(f) I conclude from these amounts that Mr Kite paid considerably more than $10,000 for his 100 grams and the amount of the money is readily explained by the prices I have set out above.
Decision
[31] The Crown has discharged its onus of proof. I find that the money was available to Mr Kite for his personal expenses but that predominantly it was part of a float for the purchase of future supplies of methamphetamine as stock-in-trade.
[32] The money was Mr Kite’s and the sums claimed as owing by Mr Thomas Kite are not part of it. There was no mingling of funds. Mr Thomas Kite will have to pursue Mr Kite for the debt.
[33] The Crown’s application for forfeiture is granted. I order that the money be forfeited to the Crown.
Brewer J
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