The Queen v Lenaghan

[2008] NZCA 123

IN THE COURT OF APPEAL OF NEW ZEALAND

CA54/2008
[2008] NZCA 123

THE QUEEN

v

KEVIN ANTHONY LENAGHAN

Hearing:24 April 2008

Court:William Young  P, Chisholm and Ronald Young JJ

Counsel:M E Goodwin and A Malik for Appellant

M D Downs for Crown

Judgment:9 May 2008 at 3pm

JUDGMENT OF THE COURT

AThe appeal is dismissed.

BThe sentence of home detention imposed upon the appellant is now reactivated but lest there be need for any further orders in that regard, we reserve leave to the parties to apply.

____________________________________________________________________

REASONS OF THE COURT

(Given by William Young P)

Introduction

[1]       The appellant was found guilty by a jury of possessing the precursor substance hypophosphorous acid with the intention that it be used for the commission of an offence against s 6(1)(b) of the Misuse of Drugs Act 1975.  Hypophosphorous acid is used in the manufacture of methamphetamine.  He was subsequently sentenced to home detention, a sentence which was suspended by Robertson J on 20 February 2008 pending determination of this appeal.

[2]       His appeal against conviction raises two issues:

(a)Was there an adequate evidential basis for the jury’s conclusion that the appellant had possession of hypophosphorous acid?

(b)Were the Judge’s directions as to intention adequate?

Before we turn to discuss those issues, it necessary to discuss briefly the factual background.

The factual background

[3]       The appellant, using the name Kevin Sarich, telephoned Asia Pacific Specialty Chemicals Ltd (“APS Chemicals”), a company which supplies chemicals, and ordered 2.5 litres of hypophosphorous acid.  He subsequently paid in cash the purchase price of $618.75.  When he returned to pick up his order on 28 October 2005, he received a polystyrene box that was labelled as containing hypophosphorous acid.  He was then taken into custody by the police who had been tipped off by APS Chemicals.  The box was returned by the police to the company unopened.

[4]       The appellant initially told Constable Steven Williams that he had purchased the acid to strip paint from a car that he was intending to restore and that he had done so on the advice of some people he named.  One of these people was interviewed by the police that day and he denied having given the alleged advice.  Another police officer spoke briefly to the appellant.  In the course of this discussion the appellant volunteered that he had intended to sell the hypophosphorous acid and referred to the possibility of a “big profit”.  When asked if he had the right buyer, the appellant replied, “I don’t know, you know what druggies are like”.  At a subsequent interview the appellant told Constable Williams that he was going to on-sell the solvent to “Kelvin” for as much as $2,000 per litre.  When he was asked what he thought the acid would be used for, he answered, “Well all I can say is that, you know that my speculation is that it could well be used for drug manufacture”.  He went onto say that the acid was “probably going to be used in that way”. 

[5]       In the wrap-up phase of the interview there was this exchange:

Constable Williams:   Um.  OK mate.  Is there anything else you want to say?

Mr Lenaghan:          Oh yeah you can ask me any questions if you like.  Um .. I’m ready to answer

Constable Williams:   Um.  Is there anything you want to say about it?

Mr Lenaghan:          No but all I can say is like um .. Kelvin said that his mate yeah .. sells it anyway for two thousand a litre so I wasn’t expecting that sort of money and he did like mention like oh, people are selling it on the black market ten thousand dollars.  I said fuck that is a hell of a lot of money when you think about it.

Constable Williams:   Didn’t you say anything to him at that stage about why .. why is it so expensive?

Mr Lenaghan:          He doesn’t like mentioning that fucken P anyway, you know.  That’s the thing.  He doesn’t .. he doesn’t mention to me .. oh lets to make some P or you know, he doesn’t mention it.

Constable Williams:   Um

Mr Lenaghan:          No and see from what I understood that they don’t actually use Hypo.  I though it was red phosphorous or something.  Have you heard of red phosphorous?

Constable Williams:   Ahum

Mr Lenaghan:          Yeah.  From what I understood was that they use red phos which is I don’t know, same as those matches

Constable Williams:   Um.

Mr Lenaghan:          Um so ..

Constable Williams:   So when did you become aware that Hypophosphorous could be used?

Mr Lenaghan:          Oh I just seen it on TV you know.  Wasn’t it Hypophosphorous?  Especially that one that just got stolen last week, that’s the one, you know.  Fuck that’s a lot …….. ……. Do you think I’m going to use P, you know

Constable Williams:   Um

Mr Lenaghan:          You know knowing that I wouldn’t dream of fucken manufacturing that stuff

Constable Williams:   Um

Mr Lenaghan:          you know.  I don’t know …… potent or something … [laughs]

Constable Williams:   Um alright.  So in a nutshell you weren’t going to make any P with this yourself

Mr Lenaghan:         No

Constable Williams:   You were selling it on to someone for a large profit and they could possibly have made P.

Mr Lenaghan:         Yeah .. you’ve got it.  Possibly yes

(Emphasis added)

Was there an adequate evidential basis for the jury’s conclusion that the appellant had possession of hypophosphorous acid?

[6]       At trial the Crown did not call any evidence of analysis as to the nature of the material that the appellant had purchased.  The evidence on the point was as follows:

(a)The appellant approached APS Chemicals which, in its ordinary course of business, sells hypophosphorous acid (and many other chemicals);

(b)He placed an order for hypophosphorous acid;

(c)That order was accepted and paid for;

(d)APS Chemicals ordered hypophosphorous acid from a supplier in New South Wales;

(e)APS Chemicals received from New South Wales, in response to its order, a polystyrene box which was labelled as containing hypophosphorous acid;

(f)The appellant uplifted that box from APS Chemicals;

(g)Constable Williams believed that he inspected the box and its contents before it was uplifted by the appellant but was not sure that he had done so; and

(h)The box was returned to APS Chemicals after the appellant was detained.

What APS Chemicals later did with the box and its contents was not the subject of evidence.  It does, however, seem at least likely that at some stage the box would have been opened and its contents either disposed of or perhaps re-sold.  If it had transpired that the box did not contain hypophosphorous acid, this fact would have likely surfaced at the trial.

[7]       Mr Goodwin, who appeared for the appellant at trial as well as on the appeal, cross-examined the Crown witnesses to establish (as he did) that they could not (from personal knowledge and expertise) vouch for the fact that hypophosphorous acid was in the polystyrene box.  But in the course of this cross-examination, he did not explicitly challenge the assertions made by the witnesses that what had been supplied by the company was hypophosphorous acid.  As well, there was no challenge to the admissibility of photographs which showed the labelling. Thus the prosecutor did not, at least initially, recognise that the Crown was being put to proof on the identity of the substance in the polystyrene box.  This point was only squarely taken at the conclusion of the Crown case in the context of an application to have the appellant discharged pursuant to s 347 of the Crimes Act 1961.

[8]       The Judge (Judge Epati) rejected the s 347 application on the basis that the label on the box was admissible evidence as to the contents of the box.  It is not entirely clear from either the ruling given by the Judge or what we were told at the hearing of the appeal whether the argument on the s 347 application was that the labelling was inadmissible or rather was insufficient to establish beyond reasonable doubt that hypophosphorous acid was in the box.

[9]       In this Court the challenge was primarily to admissibility.

[10]     In a number of pre-Evidence Act 2006 cases, it was held that assertions as to the nature of goods appearing on labels or packaging (or perhaps engraved on the goods themselves) had no direct evidential value.  Thus the words “produce of Morocco” on bags of seed were held not to be admissible evidence of the Moroccan origin of those seeds, see Patel v Comptroller of Customs [1966] AC 356 (PC). Likewise, the words “Denmark” and “Made in USA” which appeared on packaging, a slip attached to the relevant goods or, in one instance, engraved on the handle of a piece of equipment were not admissible as to the countries of origin of the relevant goods, see Comptroller of Customs v Western Lectric Co Ltd [1966] AC 367 (PC). The judgments in Patel and Western Lectric proceeded on the basis that the labels’ (or like) assertions of origin were hearsay and that, consistently with the narrow approach taken in Myers v Director of Public Prosecutions [1965] AC 1001 (HL), they were, as such, inadmissible. An important feature of Patel and Western Lectric is that in neither case was there any evidence as to course of business or even business context.  The labels on the goods thus stood alone.

[11]     The practical significance of Patel and Western Lectric was largely overtaken by the statutory exceptions to the hearsay rule which were enacted in many jurisdictions after Myers.  Under the Evidence Act 2006, the default rule still is that hearsay is inadmissible (see s 17) but there are broadly expressed exceptions (see ss 18 and 19).  Before us, however, Mr Downs for the Crown did not seek to rely on the exceptions.  There were two reasons for this:

(a)If the person who attached the labels to the box did so after hypophosphorous acid was placed in the box, the labels would be a hearsay statement by that person as to the contents of the box.  But if the box had been pre-labelled there would be no hearsay statement by anyone.  There would simply presumably be a system which was intended to ensure that chemicals were placed in correctly labelled boxes.  There was no evidence as to when the label was affixed.

(b)The notice provisions of s 22, which apply where a party to a criminal proceeding proposes to offer hearsay evidence, were not complied with.

[12]     Mr Downs instead argued the case before us on the basis that the label had an evidential significance other than as hearsay and was therefore admissible under s 7 of the Evidence Act which provides:

7        Fundamental principle that relevant evidence admissible

(1)       All relevant evidence is admissible in a proceeding except evidence that is—

(a)       inadmissible under this Act or any other Act; or

(b)      excluded under this Act or any other Act.

…

(3)       Evidence is relevant in a proceeding if it has a tendency to prove or disprove anything that is of consequence to the determination of the proceeding.

Broadly, the Crown argument was that the course of business evidence which was adduced (ie the evidence referred to in [6](a) – (f) above) was relevant, and thus admissible, as to the contents of the box and this relevance arose independently of the hearsay value (if any) of the label.

[13]     A motorist going to a garage and pouring petrol from a pump which is labelled appropriately can be confident to the point of virtual certainty that the product dispensed is petrol.  There is no need to first pour a little to check that it is not water or diesel.  The markings on the pump obviously have no hearsay value.  The motorist’s confidence is, rather, based on confidence in the underlying business system.  It is, indeed, common in every day life for there to be high levels of confidence about business systems delivering correctly the products which are sold.  A supplier of chemicals, some of which are dangerous, can be expected to have high quality systems in place to ensure that the chemicals which are supplied conform to what was ordered.  Accordingly, evidence about the chain of orders which were placed and how they were met was material to whether the box contained hypophosphorous acid.

[14]     There is a pre-Evidence Act authority which is consistent with this logic.

[15]     A postmark on an envelope has always been  evidence of where the letter was posted, see Perkins’s case (1826) 1 Lew CC 99, R v Kelly (1975) 12 SASR 389 at 396 and R v Leroy (1984) 55 ALR 338 at 341 – 342. This is consistent with the common experience of the business systems operated by postal authorities. In the context of that common experience, the affixing of a postmark by a post-office clerk was not just a hearsay statement by that clerk that he or she had processed the envelope at a particular place but also circumstantial evidence as to the place of posting. This is because post office systems did not permit a letter posted at location A to be post-marked as if sent from location B.

[16]     A similar approach has been taken in breath alcohol cases.  So in Miller v Howe [1969] 1 WLR 1510 (QB), the Court held that evidence from a police officer that the device he used to breath-test the defendant came from a package labelled “Alcotest 80” could be sufficient to prove that the device was an “Alcotest 80”. The judgment of this Court in Transport Ministry v Markland [1977] 1 NZLR 11 is broadly to the same effect.

[17]     When the Judge summed up, he left it to the jury to determine on the evidence whether the box contained hypophosphorous acid and in doing so he referred broadly to the considerations referred to in [6](a) – (f) above.  As is apparent from what we have said, we regard those circumstances as relevant to the nature of the substance in the box and thus as admissible under s 7(1) and (3) of the Evidence Act.  Obviously the Crown case would have been more cogent had there been evidence which established with certainty that the box had been opened and its contents inspected (as the case would then have been more similar to Miller v Howe and Markland).  The case would have been more cogent still had there been analysis of the contents.  But these considerations do not detract from the reality that there was an adequate evidential basis for the verdict.

[18]     We add that had we taken a different view on this point, we would have substituted a conviction for attempted possession.

Were the Judge’s directions as to intention adequate?

[19]     At trial the primary defence advanced for the appellant was that his state of mind in relation to the likely end use of the hypophosphorous acid could be categorised as one of recklessness as to its likely eventual use rather than an intention that it be used for a proscribed purpose. 

[20]     The relevant direction given by the Judge in the summing up as to this aspect of the case was as follows:

[24]     I must direct you that the Crown does not have to prove that the accused himself would do the production or manufacturing of the drug.  It is sufficient that the Crown satisfies you beyond reasonable doubt that his purpose for possession was to sell it to someone who will manufacture it.  It is not for the Crown to prove that it was in fact used that way.  All that the Crown needed to do was to prove beyond a reasonable doubt and satisfy you so, that at the time he possessed it he intended that it be onsold or that it be used ultimately for the manufacture of methamphetamine.

[25]     Secondly, it does not require the Crown to prove that it was the only intention that he had.  Even if you find that he, amongst other things, he intended to have it for stripping of cars, as long as you are satisfied that one of those intentions was to on-sell it for the manufacture of methamphetamine, that is sufficient, even if you find that he may have some other intention for some other purpose for the same acid.

[26]     Well, the defence had said, look very carefully about those interviews and look very carefully about the answers that were given and he put to you that you would not be satisfied beyond a reasonable doubt that that was his intention.  Note, and you have copies of the interviews, he had referred you to page 16 of the second tape of the transcript and he had cited to you those passages.  Look at that and ask, are we satisfied that the Crown has proved to us beyond reasonable doubt that that was the case?  Remember you never ask whether the defence has proved anything.

[21]     After the Judge had completed the summing up, Mr Goodwin asked for a direction as to recklessness.  The purpose was to highlight the sort of state of mind which would not constitute an intention.  The Judge was not prepared to redirect on that issue.

[22]     The Judge’s treatment of the defence was nothing if not succinct. But he did put to the jury fairly and squarely the primary point which was relied on by the defence. The passages at page 16 of transcript of the second interview include the passage which we italicised in the extract cited at [5] above. So the appellant’s defence must have been clear to the jury: he did not intend the acid to be used to manufacture methamphetamine. He knew that the prospective purchaser might use it in such a manner, but saw this as only a mere possibility.

[23]     When summing up, it is always best to direct a jury in terms which are simple and as closely referenced as possible to what the Crown has to prove.  An elaborate direction on recklessness (which of course is not an element of the offence) would have been apt to confuse the jury and was not required.  It is also appropriate to recognise that the more elaborate the discussion of this particular line of defence, the worse it was likely to be for the appellant.  This is because his defence did not address why a purchaser from the appellant would pay an inflated price (ie many times the price charged by the company that sold it to the appellant) for the hypophosphorous acid unless to use it for the purpose of manufacturing methamphetamine. 

Disposition

[24]     The appeal is dismissed.

[25]     As we understand the order made by Robertson J on 20 February 2008 and s 399 of the Crimes Act 1961, the sentence of home detention imposed upon the appellant is now reactivated.  But lest there be need for us to make any further orders in that regard, we reserve leave to the parties to apply.

Solicitors:

Jackson Reeves, Tauranga for Appellant
Crown Law Office, Wellington