Solicitor-General v Dodd
[2013] NZHC 1489
•20 June 2013
IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY
CIV 2012-488-457 [2013] NZHC 1489
BETWEEN THE SOLICITOR-GENERAL Applicant
ANDKELLY RICHARD DODD Respondent
ANDTREVOR JOHN McTAVISH Other Party
Hearing: 29 April 2013
Appearances: M B Smith for applicant
H D M Lawry for respondent
W McKean for Mr T McTavish (other party) Judgment: 20 June 2013
JUDGMENT OF ALLAN J
In accordance with r 11.5 I direct that the Registrar endorse this judgment with the delivery time of 11 am on Thursday 20 June 2013
Solicitors:
Crown Solicitor Whangarei
H M Lawry, AucklandWebb Ross McNab Kilpatrick, Whangarei
SOLICITOR-GENERAL v DODD [2013] NZHC 1489 [20 June 2013]
Introduction
[1] Mr Dodd pleaded guilty to a number of serious drug charges for which he was sentenced to five years four months imprisonment by Woodhouse J on
24 August 2012.1 Among the offences for which he was sentenced were nine counts
of offering to supply cannabis, eight of offering to supply methamphetamine, two of conspiring to supply a precursor substance and one of money laundering.
[2] The Solicitor-General now applies for a Pecuniary Penalty Order pursuant to s 8 of the Proceeds of Crime Act 1991 (the Act). He also seeks a declaration pursuant to s 29(3) of the Act, that a 2003 Harley Davidson V Rod motorcycle, registration 83ZNN, currently the subject of a restraining order, may be applied in partial satisfaction of any Pecuniary Penalty Order which the Court may see fit to make. It is common ground that the motorcycle is worth $10-12,000.
Pecuniary Penalty Order
[3] Section 8 of the Act empowers the Solicitor-General to apply for a Pecuniary Penalty Order against any person who has been “convicted on indictment of a serious offence”. The section relevantly reads:
8 Application for confiscation order
(1) Where a person is convicted on indictment of a serious offence, the Solicitor-General may, at any time before the expiration of the relevant application period, apply to the appropriate Court for …:
…
(b) A pecuniary penalty order against the person in respect of benefits derived by the person from the commission of the offence.
[4] The expression “serious offence” is defined in s 2 of the Act as any offence punishable by imprisonment for five years or more. Each of the offences to which Mr Dodd pleaded guilty is a serious offence for the purposes of the Act.
[5] An applicant for a pecuniary penalty in respect of a serious offence must
“identify the benefits that are alleged to have been derived from the commission of
1 R v Clarke [2012] NZHC 2146.
the offence”.2 A “benefit derived by a person” includes direct or indirect benefits, or
those obtained at the request or direction of another.3
[6] In Solicitor-General v Pedersen, the Court of Appeal observed that the expression “benefits” was of wide application as had long been recognised in the common law.4 The Court further observed in Pedersen that:5
…being a measure designed to deter serious crime by demonstrating emphatically that it does not pay, the Proceeds of Crime Act should be judicially administered in that spirit. In simple cases of serious drug selling the Court should be slow to award less than the maximum penalty against sellers. This is a move in a necessary direction, involving recognition that imprisonment is not an adequate remedy for crime.
[7] In McQuade v R, the Court of Appeal reconfirmed the approach taken earlier in Pedersen.6
[8] The Court’s jurisdiction to make a Pecuniary Penalty Order is governed by ss 25, 27 and 28 of the Act which relevant provide:
25 Pecuniary penalty orders
(1) On the hearing of an application for a pecuniary penalty order in respect of benefits derived by a person from the commission of a serious offence, the Court may, if it is satisfied that the person derived benefits from the commission of that offence,—
(a) Assess, in accordance with sections 27 and 28 of this Act, the value of the benefits so derived; and
(b) Order the person to pay to the Crown a pecuniary penalty not greater than the penalty amount.
(2) The penalty amount is the value of the benefits assessed under sections 27 and 28 of this Act, reduced by—
(a) An amount equal to the value of any property that has been forfeited, or is proposed to be forfeited, to the Crown under this Part of this Act as proceeds of the relevant serious offence; and
2 The Proceeds of Crime Act 1991 s 9(b).
3 Section 2(3).
4 Solicitor-General v Pedersen (1995) 13 CRNZ 34 at 40.
5 At 40.6 McQuade v R [2010] NZCA 226 at [5].
(b) An amount equal to the value of any pecuniary penalty that has already been imposed, in respect of the benefit, under this Act or any other enactment; and
(c) Any further amount which the Court considers appropriate to take into account, after having regard to the matter referred to in section 14(1)(b) of this Act. … … …
…
27 Assessment of pecuniary penalty
…
(2) For the purposes of an application for a pecuniary penalty order, the value of the benefits derived by a person (in this subsection referred to as the “defendant”) from the commission of an offence or offences shall be assessed by the Court having regard to evidence before the Court concerning all or any of the following matters:
(a) The money, or the value of the property other than money, that came into the possession or under the control of—
(i) The defendant; or
(ii) Another person at the request or direction of the defendant—
byreason of the commission of the offence or any of the offences:
(b) The value of any other benefit provided to—
(i) The defendant; or
(ii) Another person at the request or direction of the defendant—
byreason of the commission of the offence or any of the offences:
(c) The value of the defendant's property,—
(i) Where the application relates to a single offence, before and after the commission of the offence
…
(3) In calculating, for the purposes of a pecuniary penalty order, the value of benefits derived by a person from the commission of an offence or offences, any expenses or outgoings of that person in connection with the commission of the offence or offences shall be disregarded.
…
28 Further provisions relating to assessment of pecuniary penalty
(1) Where an application for a pecuniary penalty order is made in respect of a single offence, and the Court is satisfied that the value of the defendant's property after the commission of the offence exceeded the value of the defendant's property before the commission of the offence, then, for the purposes of section 27 of this Act, the Court may, subject to subsection (3) of this section, treat the value of the benefits derived by the defendant from the commission of the offence as being not less than the amount of the excess.
…
(3) Notwithstanding anything in subsection (1) or subsection (2) of this section, if the defendant satisfies the Court that the whole or part of the excess was due to causes unrelated to the commission of the offence or offences, the excess or that part of the excess, as the case may be, shall not be included, for the purposes of section 27 of this Act, in the value of benefits derived by the defendant from the commission of the offence or offences.
[9] As Mr Smith submits, the Court will not normally be in a position to conduct an arithmetical assessment based on conventional accounting principles. Rather, having regard to the reality of the circumstances in which criminal conduct generally occurs, what is required of the Court is that it conducts a “somewhat rough and ready” assessment.7 The first step in the assessment process is to determine the value of the benefits derived by the respondent from the commission of the serious offences concerned. The second step is to determine the amount of the appropriate
Pecuniary Penalty Order pursuant to ss 27 and 28 in the light of the benefits so derived.
[10] Dodd pleaded guilty to one count of money laundering (count 55). He accepts that the sum of $10,200 was paid into the bank account of his partner by his direction at a time when Mr Dodd was the go-between in respect of a purchase of pseudoephedrine. He concedes that he is clearly caught by the legislation in respect of that sum, and does not oppose a Pecuniary Penalty Order of that order.
[11] But the applicant goes further. Mr Smith refers to the eight counts of offering to supply methamphetamine. The Crown relied, in relation to each of those counts, on a large volume of text message evidence in which Mr Dodd was heavily involved. In respect of three counts, the applicant is able to refer to a nominated sale price.
They are counts 20 (one gram - $800), 22 (half gram - $500), and 25 (half gram -
7 Solicitor-General v Allison HC Auckland CIV-2000-404-2587, 3 February 2006 at [37].
$400). Four counts (18, 21, 26 and 27), involved offers to sell half a gram of methamphetamine on each occasion. In count 31, the quantity is a quarter of a gram. No sale price was specified in relation to these five transactions.
[12] Mr Smith refers the Court to expert Crown evidence to the effect that prices for methamphetamine at the time of Operation Abyss (which concerned Mr Dodd and his co-offenders) were of the order of $400 for half a gram and $200 for a quarter gram. If those prices are allocated to the counts in respect of which no sale figures were actually mentioned by or on behalf of Mr Dodd, then assuming that each of the relevant offers was accepted and a sale took place, the likely benefit he derived was $3,500.
[13] There is no direct evidence that any sale was actually made, and indeed Mr Dodd was not charged with selling methamphetamine. The applicant must establish the relevant benefit on the balance of probabilities. Viewing the matter on that basis, I am satisfied that the applicant has established that Mr Dodd derived a benefit of $3,500 in respect of his methamphetamine related activities, and the ultimate pecuniary penalty ought to reflect that figure. In other words, I consider it more likely than not that the sales actually occurred.
[14] Likewise I accept Mr Smith’s submission that in respect of the charges of offering to supply cannabis, benefits totalling $940 were obtained by Mr Dodd. Again, the Crown is unable to prove actual sales but it relies upon the contents of a great many text messages involving Mr Dodd. Figures were mentioned in each case. The only question is whether on the balance of probabilities the applicant has established that benefits were actually derived from completed sales. As before, I consider that they were, and that therefore a benefit of $940 was derived by Mr Dodd from the cannabis related offending.
[15] Counts two and four charged conspiracies to supply a precursor substance. The sum involved is said to be $128,000. The Crown case was that Mr Dodd was responsible for arranging the supply of ContacNT. Mr Smith accepts that the Crown does not have any evidence that Mr Dodd received or retained any part of the purchase price or any other funds associated with the precursor transactions. In the
absence of such evidence, or of any other evidence of associated benefits flowing to Mr Dodd, there is no proper basis for the making of a Pecuniary Penalty Order in respect of the offending charged in counts two and four.
[16] In the result therefore, having considered ss 25, 27 and 28, I conclude that it is appropriate to make a Pecuniary Penalty Order in the sum of $14,640.
The motorcycle
[17] The applicant seeks a declaration that the pecuniary penalty may be satisfied in part by the sale of the 2003 Harley Davidson motorcycle seized from Mr Dodd, and currently subject to a restraining order under the Act. The applicant relies on s 29 of the Act which as relevant provides:
29 Court may lift corporate veil, etc
(1) In assessing the value of benefits derived by a person from the commission of an offence or offences, the Court may treat as property of that person any property that the Court is satisfied is subject to the effective control of the person whether or not the person has—
(a) Any legal or equitable estate or interest in the property; or
(b) Any right, power, or privilege in connection with the property.
…
(3) Where a Court, for the purposes of making a pecuniary penalty order against a person, treats particular property as that person's property under subsection (1) of this section, the Court may, on application by the Solicitor- General, make an order declaring that the property is available to satisfy the order.
(4) Where a Court declares that property is available to satisfy a pecuniary penalty order,—
(a) The pecuniary penalty order may be enforced against the property as if the property were the property of the person against whom the order is made; and
(b) A restraining order may be made in respect of the property as if the property were property of the person against whom the order is made.
[18] The key issue under s 29 is whether the applicant can show on the balance of probabilities that the motor cycle was subject to Mr Dodd’s effective control.
Determinations under s 29 must be made in a practical commonsense way. In Solicitor-General v Bartlett,8 Stevens J noted that in considering the issue of tracing the proceeds of crime:9
The Court is entitled to consider the real, de facto position of the respondent in relation to the property. The intent is that the respondent should not profit from his crime purely because of the legal structure by which he chooses to organise his assets. In order to determine whether the respondent had effective control of the property, the Court must ask whether in fact the respondent had the capacity to control, use, dispose of or otherwise treat the property as his own.
[19] In support of the s 29 application, the applicant relies almost exclusively upon the contents of an NIA database report produced in evidence. It records a number of interactions between police officers and persons associated with the motor cycle. By reference to the report, Mr Smith submits that Mr Dodd was seen by police officers riding the motor cycle, or at least with it, on several occasions between March and September 2009.
[20] Mr Lawry submits that the report consists entirely of inadmissible hearsay. The two police officers who gave evidence had no independent knowledge of the matters included in it. Mr Lawry is technically correct but Mr D gave evidence which effectively corroborates part of the report. There was therefore some admissible evidence. It is appropriate to consider all of the available material bearing in mind the admissibility issue. Counsel for Mr Dodd and Mr McTavish were able to demonstrate several errors in the police material. For example, it is claimed that the motor cycle was seen by police at 6 Rata Street, Whangarei, being Mr Dodd’s address, and that Mr Dodd was with the motor cycle at the time.
[21] At the hearing of the present application, Mr Dodd and Mr McTavish each gave detailed evidence and were cross-examined at length. As a result of that evidence, it became clear that 6 Rata Street is also the address of Mr Adam Dodd, Mr Dodd’s brother. Mr Adam Dodd was also with the motorcycle at the time. That
evidence is accordingly inconclusive.
8 Solicitor-General v Bartlett [2008] 1 NZLR 87 (HC).
9 At [27]. See also Solicitor-General v Huang HC Auckland CIV-2005-404-1538, 18 December 2007 at [68].
[22] On another occasion, Mr Dodd was said to have been stopped by police and to have claimed that the bike was a company bike. That was on 23 September 2009. One of the two police officers who also gave evidence at the hearing of the application accepted that, upon analysis, that evidence was incorrect, and that the bike was at the time being ridden by Mr Adam Dodd, who had made the claim about ownership of the bike by a company.
[23] Moreover, it is common ground that the motor cycle was not ridden exclusively by Mr Dodd and his brother. On 6 September 2009, the police stopped a Mr Finlay Penitoa when riding the motor cycle.
[24] So the applicant’s evidence on the point goes no further than showing that at times Mr Dodd was seen riding the motor cycle. But at least two others (Mr Adam Dodd and Mr Penitoa) also had access to it.
[25] Against that background I turn to the evidence of Mr McTavish, who sought to be heard on the hearing of the s 29 application. He became the registered owner of the bike on 21 September 2009, about a month prior to the termination of the police covert operation. However, as Mr McKean submits, there was no suggestion that Mr McTavish knew of the pending termination of that operation, or indeed of its existence.
[26] In evidence, Mr McTavish said that he had owned motorcycles all his life. It is common ground that he had owned at least two other motorcycles prior to the events in question here. He said that he purchased this particular motorcycle early in
2009, by swapping it with another bike. He said he lived in the country and did not have a garage to store the motorcycle. For that reason, on occasion he left it at various other addresses: his mother-in-law’s place, the property at Rata Street, Whangarei, occupied at times by Kelly and Adam Dodd, and at Nicky Dodd’s property at Fairburn Street, Whangarei. Mr McTavish summarised his position in the affidavit he filed in opposition to the application:
23.I have had a passion for motorcycles for most of my life. All my motorcycles have been legally purchased, traded in, swapped or sold by me. They have all been registered in my name and when on the road have had current registrations and warrants. It has taken me a
lot of hard work and time to get my motorcycles and I value them beyond the money I paid.
24.Kelly Dodd is related to me in that my wife’s sister is married to his brother. So the fact that my bike was seen at his house could well have been because I was visiting him or it could have been because I had allowed him to borrow it on that day.
25. In 2009 I lost my licence was a result of a build-up of demerit points.
I obviously couldn’t ride my motorcycle during this period. There were very few people that I would allow to ride it. One of the few people that I would allow to ride it was Kelly Dodd. Mr Kelly Dodd knows how to ride these types of American motorcycles. He takes care of them as if they were his own. That is why I allowed him to use it.
26.That is the reason why Mr Kelly Dodd would on occasions ride my bike in 2009. He was not the owner of the motorcycle. He did not own a part of the motorcycle. He did not have an interest in the motorcycle.
27.Mr Kelly Dodd’s control of the motorcycle was limited to the occasion in which he asked permission to use it and when I gave him that permission. He could not do with it as he pleased. He knew he had to return it after he had finished using it or when I asked for it back. He was allowed to use the bike on the basis that it was mine and his authority over it was limited to being a person who was able to use someone else’s bike. He had to look after it on the basis that he would have to return it in the same condition that it had been lent to him. When he had the use of it, he was not allowed to let another person ride it and he was not allowed to alter it in any way. The most he could do to the motorcycle was to put petrol in it.
28.The motorcycle is mine and I was simply allowing him to ride it on occasions because I was unable to ride it.
29. I also let my brother in law’s brother, Adam Dodd, ride the bike in
2009 on a couple of occasions. This was on the same basis that
Kelly Dodd had ridden it.
30.In 2009 I also recall being asked by Finlay Penitoa if he could ride the bike on one occasion and I did allow him to ride it.
[27] During cross-examination it emerged that Mr McTavish’s recollection may have been somewhat defective with respect to the dates during which his licence was suspended, but the thrust of his evidence remained essentially unchallenged. His evidence was supported by that of Mr Dodd.
[28] The case for the applicant is that the Court ought to be cautious about accepting this material because, as Detective Wescott said in an affidavit filed in support of an ex parte application for a restraining order:
…It is common amongst persons involved in organised crime to not register assets in their name, including motor vehicles and motor cycles for the purpose of avoiding Proceeds of Crime action by enforcement agencies.
[29] Detective Wescott also notes that Mr Dodd has never had a motor vehicle or motor cycle registered in his name with Land Transport New Zealand.
[30] In effect, the Court is being asked to draw inferences adverse to Mr Dodd on the basis of a claimed general propensity by the criminal community to obstruct enforcement agencies by placing assets in the names of others. While that approach may well be justified in cases where the applicant has laid a satisfactory evidential foundation, that is not the case here. I accept Mr McKean’s submission that the evidence falls well short of showing that Mr Dodd had the capacity to control, use, dispose of or otherwise treat the motor cycle as his own. The applicant has not established on the balance of probabilities that Mr Dodd had effective control of the bike for the purposes of s 29 of the Act. It is established that at times Mr Dodd rode the motorcycle, but that is common ground, and the circumstances have been explained both by Mr Dodd and Mr McTavish, whose evidence stands effectively unchallenged.
[31] The application for a declaration pursuant to s 29(3) must accordingly fail.
Result
[32] The application for a Pecuniary Penalty Order is granted. I make an order pursuant to s 25 of the Act, directing Mr Dodd to pay a pecuniary penalty of
$14,640.
[33] The application for a declaration under s 29(3) of the Act in respect of the motorcycle is refused.
Costs
[34] Mr Dodd is legally aided. Mr McTavish is not. Each applies for an order for costs against the applicant. The amount of the Pecuniary Penalty Order is higher than the figure expressly accepted by Mr Lawry. To that extent the applicant has succeeded on a disputed point. On the other hand, Mr Dodd has successfully resisted the application under s 29(3). On balance I consider that the proper outcome for costs in respect of Mr Dodd is to direct that they lie where they fall. There will be an order accordingly.
[35] Mr McTavish’s position is different. His interest in the proceeding lay solely in the s 29(3) application upon which he was wholly successful. There will accordingly be an order for costs in his favour against the applicant, calculated on a Band 2B basis.
C J Allan J
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