R v Masters
[2013] NZHC 2443
•18 September 2013
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CRI-2011-404-185 [2013] NZHC 2443
UNDER Section 32(3) of the Misuse of Drugs Act 1975 and s 199 of the Summary Proceedings Act 1957 BETWEEN
THE QUEEN
Applicant
AND
JOSHUA JAMES MASTERS and NATALIE PATRICIA EYLES
Respondents
| Hearing: | On the papers |
Counsel: | J Shaw for Applicant S Cowdell for N Eyles No appearance for J Masters |
Judgment: | 18 September 2013 |
JUDGMENT OF TOOGOOD J
This judgment was delivered by me on 18 September 2013 at 2:30 pm Pursuant to Rule 11.5 High Court Rules
Registrar/Deputy Registrar
R v MASTERS [2013] NZHC 2443 [18 September 2013]
Introduction and background
[1] The Crown has applied for an order under s 32(3) of the Misuse of Drugs Act 1975 (“MDA”) directing the forfeiture of cash, and orders under s 199 of the Summary Proceedings Act 1957 (“the SPA”) for forfeiture of personal property seized pursuant to a search warrant.
[2] On 3 August 2012, I sentenced Joshua James Masters to a total effective end sentence of ten years and five months’ imprisonment on two counts of supplying methamphetamine, one count of conspiring to supply methamphetamine and one count of money laundering.1 A minimum period of five years and nine months’ imprisonment was imposed.
[3] When Mr Masters was apprehended, the Police seized from a residential property at 9 Collett Road, Otara, which was occupied by him with the other respondent, Ms Eyles, cash totalling $20,456.11; items of clothing and other paraphernalia associated with the Killer Beez gang; and items associated with a music production business, Colourway Records, operated by Mr Masters. The seized items comprise Colourway Records posters, tickets, stickers, CDs, DVDs, and clothing such as hooded sweaters and t-shirts. Also seized were a Colourway Records cheque book and deposit book and a laptop bag containing Colourway Records items. The Killer Beez’ property seized comprises clothing with identifying logos, distinctive yellow bandanas, photographs and drawings.
[4] An indication at the time of sentencing that the Crown sought forfeiture of the cash and other items was deferred for the filing of a formal application and the hearing of submissions.
[5] On 17 October 2012, the Crown applied for an order for forfeiture of the cash pursuant to the MDA, on the grounds that the Court could be satisfied that the cash was received by Mr Masters in the course of or consequent upon the commission of an offence against s 6 of the MDA, and/or was in his possession for the purpose of facilitating an offence against that section.
[6] Applications were also made in respect of the items of personal property on the grounds that the Court should exercise its discretion under s 199 of the SPA to order that the items seized be forfeited to the Crown and destroyed:
(a)so as to suppress criminal activities of the Killer Beez gang; and
(b)given that the items were obtained, at least in part, from proceeds of Mr Masters’s methamphetamine dealing, which proceeds were laundered through Colourway Records.
The respondents’ positions
[7] Mr Masters has taken no steps to resist the orders now sought.
[8] Ms Eyles opposes the orders. She was Mr Masters's partner at the time of the seizure but says, through counsel, that she has been separated from Mr Masters since his arrest. Ms Eyles argues:
(a)She was not charged with any offence under the MDA and the company, Colourway Records, was also not charged with any offence. It is submitted on that basis that the cash and property seized from the respondents’ address at 9 Collett Road, Otara, belonged to Ms Eyles and cannot be forfeited.
(b)The Court should not in any event exercise its discretion to seize the Killer Beez and/or Colourway Records items, there being no evidence that any further criminal activities would result if these items were released to the person entitled to them more than five years after seizure.
(c)The seized items are not of a nature which Parliament intended should be seized under the provisions of s 199 of the SPA.
(d)It is not appropriate for the Crown to rely on s 199 of the SPA to retain alleged proceeds of crime. That, Ms Cowdell submits, would be a
backdoor method of forfeiture when the Police should have made an application under the Criminal Proceeds (Recovery) Act 2009.
[9] Ms Cowdell refers to R v Collis2 in which, counsel submits, the courts were warned not to use the discretion under s 199 too widely. Ms Cowdell submits that the Crown should not be permitted to obtain forfeiture of property seized by the Police pursuant to a search warrant, the purpose of which is to gather evidence. She also argues that Colourway Records was established to be a legitimate business selling DVDs and merchandise and that there is no law permitting forfeiture of property merely because of a suspicion that the property might promote or facilitate an upsurge in criminal activity.
The Crown’s position
[10] On behalf of the Crown, Mr Shaw responds that Mr Masters must have been in joint possession of the cash, at least jointly with Ms Eyles, either as money received by him consequent upon his supply of methamphetamine to others, or as funds in his possession for the purpose of purchasing further wholesale amounts of methamphetamine for supply. Among other things, the Crown relies on the amounts and denominations of cash involved as being inconsistent with a legitimate source related to the Colourway Records business; the lack of any other suggested legitimate source of the money; and Mr Masters’s conviction for money laundering through the Colourway Records business.
[11] As to the other items related to Colourway Records and the Killer Beez clothing and paraphernalia, the Crown’s submission in favour of forfeiture and ultimate destruction is that returning the property “could well have the effect of promoting or facilitating an upsurge in the popularity of the gang and a rekindling of its former criminal activities”. It is submitted also that, in connection with the Colourway Records material, it has been established that the business was used for money laundering and that it is closely associated with the Killer Beez gang.
Discussion
[12] Although Mr Masters pleaded guilty to the charges upon which he was sentenced, I had the advantage of hearing evidence over three days in respect of a dispute between Mr Masters and the Crown over the factual basis upon which his pleas and the convictions were entered.3
[13] Mr Masters claimed that, while he was aware that associates were dealing in methamphetamine and other controlled drugs, the extent of his involvement was limited to putting buyers and sellers in touch with each other so that drug transactions could occur. He denied ever handling controlled drugs and pointed to the absence of any trace of controlled drugs or drug-related paraphernalia at the places he occupied during the relevant period, including the property at 9 Collett Road, Otara. It was Mr Masters’s claim that since the beginning of 2008 he had shifted the focus of his attention away from leadership activities with the Killer Beez and Tribesmen motorcycle gang to the Colourway Records music business. He relied on the concession by the Crown that Colourway Records was a legitimate business supplying CDs and clothing and that the Collett Road property appeared to be the operational headquarters of the company.
[14] In the course of giving my judgment on the disputed facts,4 I held that I was satisfied beyond reasonable doubt, on the totality of the evidence and taking into account what I described as “implausible explanations which Mr Masters gave in evidence”, that Mr Masters was guilty as a principal party of the offending to which he had pleaded guilty.5
[15] In sentencing Mr Masters6 I noted that I had concluded after the disputed facts hearing that he had a substantial role in the Killer Beez gang; that he was heavily involved in major drug dealing; that I rejected his attempt, despite having pleaded guilty, to deny that he had been involved in money laundering; and that I had
3 Sentencing Act 2002, s 24.
4 R v Masters [2012] NZHC 1831.
5 Ibid, at [68].
6 R v Masters, above n 1.
no doubt that he had used the proceeds of his drug dealing to support the music business which was otherwise a legitimate business activity.
Findings as to the cash
[16] Section 32(3) of the Misuse of Drugs Act provides that:
32 Forfeiture
...
(3)If, on the conviction of any person for an offence against section 6 of this Act, the Judge or District Court 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 or District Court Judge may, in addition to any other penalty imposed pursuant to this Act, order that that money be forfeited to the Crown.
[17] On the basis of the evidence provided in support of the disputed facts hearing and this application, I am satisfied that the cash found in the possession of Mr Masters at 9 Collett Road, Otara, was in Mr Masters’s possession for the purpose of facilitating the further commission of drug dealing offences against s 6 of the MDA. I do not consider it makes any difference to the application of the section that Ms Eyles may have been in joint possession of it, or that Ms Eyles was acquitted (by an order under s 347 of the Crimes Act 1961) on the charge of money laundering. I consider it is appropriate to order that the cash seized by the Police from 9 Collett Road, Otara, shall be forfeited to the Crown.
Findings as to the other property
[18] Different considerations apply in respect of the Colourway Records and Killer Beez items. The items identified in the schedule attached to the forfeiture application as the proposed subject of the orders sought were seized by the Police pursuant to a search warrant under s 198(5) of the SPA. Had Mr Masters gone to trial, it would have been arguable by the prosecution that the Killer Beez items demonstrated his connection to, and leadership of, a group of associates with whom Mr Masters was involved in drug dealing activities. The Colourway Records items
would have provided evidence of the business, largely a cash sales enterprise, through which Mr Masters was alleged to have laundered money obtained from drug dealing activities. Thus, therefore, the seized items were evidence of, but not the product of, criminal activity.
[19] Section 199 of the SPA, so far as is relevant, provides as follows:
199 Disposal of things seized
(1)Where any constable seizes any thing under section 198 of this Act, it shall be retained under the custody of a constable, except while it is being used in evidence or is in the custody of any Court, until it is disposed of under this section.
...
(3)If the thing seized is a thing to which subsection (2) of this section does not apply, the following provisions shall apply:
(a)in any proceedings for an offence relating to the thing, the Court may order, either at the trial or hearing or on a subsequent application, that the thing be delivered to the person appearing to the Court to be entitled to it, or that it be otherwise disposed of in such manner as the Court thinks fit:
(b)any constable may at any time, unless an order has been made under paragraph (a) of this subsection, return the thing to the person from whom it was seized, or apply to a District Court Judge for an order as to its disposal; and on any such application the District Court Judge may make any order that a Court may make under paragraph (a) of this subsection:
(c)if proceedings for an offence relating to the thing are not brought within a period of 3 months after the date of The repealed seizure, any person claiming to be entitled to the thing may, after the expiration of that period, apply to a District Court Judge for an order that it be delivered to him; and on any such application the District Court Judge may adjourn the application, on such terms as he thinks fit, for proceedings to be brought, or may make any order that a Court may make under paragraph (a) of this subsection.
[20] The purpose of s 199 is to enable and ensure the proper disposal of things seized by the Police pursuant to warrant.7
[21] Although the Crown’s application in this case does not specify which of the paragraphs of s 199(3) of the SPA are relied upon, an order in relation to the
Colourway Records and Killer Beez items could only be made under s 199(3)(b). Because of the view I have come to as to the merits of the application, I put to one side the question of this Court’s jurisdiction to deal with an application under that provision.
[22] While the discretion conferred by the paragraph is broad and apparently unfettered, the discretion must be exercised judicially and there would need to be good reason for property seized under warrant not to be returned to the person entitled to it.8
[23] In R v Collis, the applicant sought the return of cash which, he admitted, had come from drug dealing but not from offending which was the subject of the prosecution. Collis was able to assert a proprietary right to the money, even though it was derived from illegal conduct, and was not relying upon the Court to establish that right.
[24] The majority of the Court of Appeal held that the fact that the cash which was the subject of the application was admittedly the proceeds of crime did not amount to a sufficient reason to order forfeiture under the SPA, notwithstanding the affrontery to the public conscience which might be caused by ordering the property’s return. That was because establishing entitlement to the property did not depend on an order of the Court and there was no direct connection between the commission of the crimes charged and the property seized under warrant. The Court held further that there was a limited power of forfeiture in s 32 of the MDA and it was for the legislature and not the courts to extend that power.
[25] Casey J added that the Court would not lend its aid to a claimant to recover property if it appeared the property was wanted to further an illegal purpose. It is on this alternative basis that Mr Shaw submitted the forfeiture should be ordered in this case.
[26] I am not persuaded, however, that returning to Mr Masters and Ms Eyles, who were in possession of the property at the time it was seized, items of clothing
(no matter how distinctive) and paraphernalia related to a music production company will facilitate the commission of crime or be likely to lead to an upsurge in criminal activity in Otara.
[27] Under s 199(3)(b) of the Summary Proceedings Act 1957, therefore, I order that the items of property identified by yellow highlighting in the schedule of exhibits seized from 9 Collett Road, Otara, other than the amounts of cash, shall be returned to the persons from whom it was seized.
[28] I order under s 32(3) of the Misuse of Drugs Act 1975 that the sum of
$20,456.11 in cash seized by the Police from 9 Collett Road, Otara, shall be forfeited to the Crown.
..................................................
Toogood J