R v Schwalger CA328/04 [2004] NZCA 358 (21 October 2004)

Last Updated: 22 April 2018

NOT TO BE PUBLISHED IN NEWS MEDIA OR ON INTERNET OR PUBLICLY ACCESSIBLE DATABASE UNTIL COMPLETION OF TRIAL. PUBLICATION IN LAW REPORT OR LAW DIGEST PERMITTED

IN THE COURT OF APPEAL OF NEW ZEALAND

CA328/04

THE QUEEN

v

LAWRENCE SCHWALGER

Hearing: 30 September 2004 Coram: Glazebrook J
Potter J Salmon J

Appearances: J L Cagney for Applicant
D Marshall for Crown Judgment: 30 September 2004
Reasons: 21 October 2004

REASONS FOR JUDGMENT DELIVERED BY GLAZEBROOK J

Introduction

[1] Mr Schwalger, along with a number of other defendants, faces trial on charges relating to conspiracy to manufacture and supply methamphetamine. Mr Schwalger is also charged with possession of firearms and explosives.
[2] He sought leave to appeal against a pre-trial ruling which refused his application to sever the firearms count from the drugs counts. On 30 September 2004, leave to appeal was granted but the appeal was dismissed. The reasons for that decision follow.

Background

[3] The Organised Crime Squad ran an operation, code named Operation Illusion, over several months which involved the interception of cellphone communications between people suspected of manufacturing and supplying methamphetamine in Auckland. At the termination of the operation, which resulted in the arrest of Mr Schwalger and a number of others, a number of search warrants were executed in the Auckland area. A large number of firearms and ammunition were found at various addresses.

[4] At the premises Mr Schwalger was occupying at an address in Waverley Street, but which were leased by a Mr Jacomb, police found a cut off remnant of a wooden rifle stock and rubber stock pad along with sawdust filings and a spent .22 calibre cartridge casing lying on a floor area in a room where people commonly walked. They also found shotgun cartridges behind a bed adjacent to the lounge and a pistol, a pump action shotgun, a further firearm and a loaded magazine under a raised floor area in the lounge, where Mr Schwalger slept. There was no evidence to connect Mr Schwalger with the firearms, apart from his presence on the premises. Mr Schwalger, in his statement to the police, denied knowledge of or control over the firearms, apart from some .22 cartridges which he said he knew about but which had been there since before he moved in. Police also found drug-related items including a glass pipe with a white substance in it, tablets, snaplock plastic bags, plastic straws and a piece of paper on which was written “re Methanol”.

[5] At the address of alleged co-conspirators, firearms located included a loaded
.38 pistol in a shoulder holster and a loaded revolver within arm’s reach of the bed in which a suspect was sleeping. Police were also led to storage units where they found further firearms and ammunition and a packed away stored clandestine laboratory
and related equipment. Methamphetamine and related equipment, along with large sums of cash, were also found at the various other addresses that were the subject of the search warrants. For example, at one address $30,000 in cash was found in a binocular case under a bed and, at another address, police located a tinfoil package containing $9,000 in cash and a quantity of substances commonly used in the manufacture of methamphetamine.

[6] The first of the three resulting trials has been held in the Auckland District Court. The principal in that trial, Mr Jacomb, pleaded guilty and has been sentenced. The principal in trial two (the trial involving Mr Schwalger) is alleged to be Iain Clegg who has also pleaded guilty and been sentenced.

[7] Evidence relating to the other participants is being adduced by the Crown at Mr Schwalger’s trial in order to prove the conspiracy. The main evidence against Mr Schwalger consists of various intercepted telephone conversations with those other participants and text messages, showing, say the Crown, that his role was as a procurer of raw materials and equipment. The communications contain one reference to what the Crown says is a meeting at the premises where Mr Schwalger was staying. They also show Mr Schwalger worried about police surveillance. There is one conversation where Mr Schwalger expresses concern about meeting someone the previous night in a dodgy situation and Mr Clegg asks whether they are “pushing for someone to get shot”.

[8] We understand that Mr Schwalger’s case is that he was not a conspirator. He was merely the caretaker of the premises and a customer.

The pre-trial ruling

[9] Mr Schwalger applied, pursuant to s340(3) of the Crimes Act, for the weapons charges to be severed from the drugs counts on the basis that the firearms evidence is irrelevant, but highly prejudicial, to the conspiracy charges. The application was heard in the Auckland District Court before Judge Bouchier.
[10] The Crown called a Detective, David Nimmo, to give evidence on the application. Detective Nimmo’s evidence was that drug dealers often possessed firearms and that others arrested at the termination of Operation Illusion, but not charged in the same indictment as Mr Schwalger, had firearms in their possession at the time of arrest, including Mr Jacomb, who Detective Nimmo said was the lessee of the property in which Mr Schwalger was living. The Detective said he would assume, on the arrest of a drug dealer with firearms in his possession, that the firearms were for drug purposes. When asked why, he said he had formed the view that it was due to drugs having a value that needed to be protected. He acknowledged, however, that there was no forensic evidence to link Mr Schwalger with the firearms found at Waverley Street and that, during the whole operation, no one had been observed carrying firearms whilst drug dealing.

[11] The Crown’s position was that any severance decision should weigh the public interest in matters of convenience and expense and the inevitable prejudice resulting from hearing a number of charges together. The Crown submitted that the possibility of prejudice could be removed by a proper direction from the Judge. Here also there was a clear link between the possession of the firearm, the ammunition and the drug activities of the accused. The decision in R v Pearce and Fagan CA270/96, 31 July 1996, was pointed to as an example of where this Court has allowed drugs and firearms counts to be joined in one indictment.

[12] The defence argued that the prejudicial effect of finding someone else’s firearms hidden at an address where Mr Schwalger was the caretaker (and in the absence of evidence of knowledge or possession of them) would be so prejudicial as to be incapable of correction by direction. It was submitted that this case was on all fours with R v Burridge CA 86/80 7 October 1980. In that case the Court of Appeal quashed a conviction of possession of heroin for supply because it said evidence put before the jury of a shotgun and a knife found on the premises of the appellant had a highly prejudicial effect, in that it did not bear on the issue to be resolved by the jury and could have influenced the critical question of whether the admitted possession of a small amount of heroin was for supply rather than personal use. A District Court decision in R v Harney (1999) DCR 1069 was also relied on. In that case a severance application was allowed in a trial involving both drugs and firearms counts.
[13] Judge Bouchier concluded that, weighing the legitimate interests of the Crown and accused, she was unable to see that there was any possible miscarriage of justice in leaving the indictment as it was. Burridge was not on point, she said, as it involved a different situation.

Applicant’s submissions on the appeal

[14] Mr Cagney, for Mr Schwalger, submitted that the conspiracy charges require the Crown to establish that Mr Schwalger reached an agreement with any or all of the named co-conspirators or others to manufacture or assist in the manufacture of methamphetamine, or to supply or assist in the supply of methamphetamine. In the absence of evidence that firearms were ever used in the particular conspiracies with which Mr Schwalger is charged, the only relevance of the firearms, at an address at which Mr Schwalger is sometimes resident, must be that many drug dealers are found to have firearms. It was submitted that that argument is in reality an argument that relies entirely on propensity.

[15] In Mr Cagney’s submission, the suggestion that Mr Schwalger was in possession of the firearms and ammunition is clearly prejudicial to his defence on the drugs counts. In this regard, he submitted that the fact that there was a different charge in Burridge and Harney does not make the principles to be found in those cases any less applicable to this case. Indeed, it was submitted that the principles should clearly be followed in the present case. There will be undue prejudice to Mr Schwalger if the firearms charges are tried with the drug conspiracy charges which will, in Mr Cagney’s submission, not be able to be cured by jury directions.

Crown submissions on the appeal

[16] The Crown submitted that the possession of the firearms and ammunition by Mr Schwalger is related in time and circumstances to the evidence on the conspiracy counts and it would be artificial to sever the firearm count from the indictment. In the Crown’s submission, it is in the interests of justice that the counts be tried together and Judge Bouchier decided correctly in this regard.
[17] The Crown wishes to lead evidence at trial of the searches of all the properties involved and the items found at each of the addresses. This is because that forms, in the Crown’s submission, evidence of the wider conspiracy, in which it is alleged Mr Schwalger played the part of procuring equipment and raw materials. The Crown’s case is that firearms are commonly associated with drug operations, given the value of the ingredients and the drugs involved and, in this case, were there at all the addresses searched to protect those alleged drug operations. In the Crown’s submission, it would be artificial to exclude the evidence of the firearms found at Mr Schwalger’s premises in this context.

[18] The evidence of the firearms is an integral part of the context of the case. The firearms found in the premises occupied by Mr Schwalger were ready to use, with the loaded magazine, and of a serious character. Mr Schwalger, by his own admission, knew that there was ammunition on the premises. In the circumstances, therefore, the Crown submitted that there is no illegitimate prejudice to Mr Schwalger in the admission of the evidence and the trying of the firearms charge with the conspiracy charges.

Discussion

[19] We accept the Crown submission, as did Mr Cagney, that the firearms charge is related in time and circumstance to the other charges faced by Mr Schwalger. The firearms were located in the searches conducted as a result of the information gathered through the interception warrants. There was evidence from Detective Nimmo that firearms are often linked to drug operations, even though, apart from the possession of firearms by a number of the accused, there was no specific evidence linking this particular alleged drug operation to firearms.

[20] We also accept the Crown submission that the evidence of the firearms found at the various addresses is legitimately part of the context of the alleged conspiracy and that it is important for the jury to have the whole context. It would be artificial to exclude part of the evidence relating to the searches and artificial to treat the firearms as different from other items found in the searches. In these circumstances, we
accept the Crown submission that it is quite proper for the Crown to use the evidence of the firearms in the way it proposes to do.

[21] We also consider it an available inference for the jury that the firearms are associated with the drug operations. In drug cases there are often items found where there are other possible innocent explanations – for example, cash (“I won it at the races”), scales (“I like cooking”), surveillance equipment (“I feel nervous in the house by myself”). In this case, there could no doubt be alternative explanations for the firearms – for example, that they were to shoot rabbits or that they were for some purpose (legal or illegal) other than protection of the drug operations. It will be for the jury to assess those possible explanations if made.

[22] In addition, even though there is no physical evidence linking Mr Schwalger to the firearms, they were found in premises occupied principally by him. He has admitted knowing of ammunition on the premises. The cut-off rifle stock, rubber stock pad and cartridge casing were in full view and he occupied the bedroom cum/lounge where the other firearms were found under a raised floor. The premises in question were commonly known as “the warehouse” and the detective gave evidence that, as a result of the intercepted conversations, the police were aware of a “number of goings on” at the address associated with the alleged conspiracy. We understand it is not suggested that any of the manufacturing occurred on these premises but, as noted above, evidence of drug related activity were also located on the premises as a result of the search.

[23] There will be circumstances where the prejudicial effect of such evidence outweighs its probative value. Mr Schwalger’s is not such a case. In this case Mr Schwalger is alleged to be part of a major drug manufacturing conspiracy. As indicated above, the evidence of the firearms is an integral part of the context.

[24] In this regard, we do not consider that the case of Burridge lays down any general principle. In that case, the evidence of weapons was left for consideration by the jury as bearing on the issue of whether the small amount of heroin in the possession of the accused, a heroin addict, was for supply or personal use. In those
circumstances, the Court considered the introduction of the weapons into the matter as not bearing on that issue.

[25] The concern in Harney was that an amount of cannabis over the presumption level had been found. The accused would, therefore, have to give evidence to rebut the presumption. As a result, he would have been forced also to give evidence on the firearms charges when otherwise he may not have needed to do so. It was, therefore, considered unfair that the charges be tried together. There are no such considerations in this case.

[26] In our view, given the factors discussed above, Judge Bouchier has not been shown to be wrong in the exercise of her discretion to decline severance in this case.

Solicitors:

Crown Solicitors, Auckland