The Queen v Cheng [2008] NZCA 253 (24 July 2008)

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The Queen v Cheng [2008] NZCA 253 (24 July 2008)

Last Updated: 30 July 2008

IN THE COURT OF APPEAL OF NEW ZEALAND

CA552/07

[2008] NZCA 253

THE QUEEN

v

CHIA-LE CHENG

Court: William Young P, Chambers and Gendall JJ

Counsel: M Dyhrberg for Appellant
M D Downs for Crown

Judgment (On the papers): 24 July 2008 at 10 am

JUDGMENT OF THE COURT

The appeal is dismissed.

REASONS OF THE COURT

(Given by Chambers J)

Challenge to a forfeiture order

[1] Chia-Le Cheng is a young Taiwanese national who lived in Auckland for some years. He apparently enjoyed an affluent lifestyle. He bought an apartment in the Metropolis complex in central Auckland and paid $148,000 in cash for a new Porsche Cayenne sports car. In due course, Mr Cheng attracted the attention of the police. Evidence emerged to suggest that he was involved in drug-trafficking.
[2] In August 2004, the police searched Mr Cheng and his Porsche without warrants. They found articles and money in his car linking him to methamphetamine-dealing. Armed with this evidence, they obtained a warrant to search Mr Cheng’s security deposit box. They found in it over $400,000 in cash.
[3] For some reason, Mr Cheng was not immediately charged with drug-dealing. Eventually, the police did charge him with possession of a class A controlled drug, namely methamphetamine, for the purpose of supply and with selling methamphetamine. By this stage, Mr Cheng had left New Zealand. He has never returned.
[4] The Solicitor-General, after it became clear that Mr Cheng had absconded in connection with the offences, applied under the Proceeds of Crime Act 1991 for an order forfeiting certain of Mr Cheng’s assets in New Zealand, which the police had seized. The Solicitor-General contended these assets were the proceeds of Mr Cheng’s criminal activities. The Proceeds of Crime Act permits these forfeiture applications to be pursued even in the absence of a conviction if the defendant has absconded in connection with the offence with which he or she has been charged. There has never been any dispute that Mr Cheng is to be treated as an absconder in terms of s 4 of the Act.
[5] The Solicitor-General’s application came before Harrison J. Even though Mr Cheng had left the jurisdiction, he instructed counsel to oppose the application. Harrison J, in his careful judgment of 19 September 2007 (HC AK CIV2005-404-003834) recorded, at [4], that “the hearing proceeded as if it was a criminal trial but without the accused”. That course was dictated by s 13 of the Act. In absconder cases, s 13 requires that the court, before it makes a confiscation order, be satisfied of two things. First, the court has to be satisfied, on the balance of probabilities, that the person has absconded. As we have said, there was no dispute about that in this case. Secondly, the court has to be satisfied, beyond reasonable doubt, that the person was guilty of the offence. That was in contention.
[6] The crucial question in the High Court was Mr Cheng’s challenge to the admissibility of the essential Crown evidence. Mr Cheng, through his lawyers, contended that various searches which led to the discovery of evidence of drug-dealing were unlawful and unreasonable, with the consequence that the evidence was inadmissible. Harrison J rejected that challenge. He found all the evidence was admissible. As a consequence, he was satisfied that Mr Cheng had been selling methamphetamine and that the property – the cash and the car – were tainted. He therefore ordered that the Porsche car, the cash found in it and in the security box, and the credit balance in Mr Cheng’s New Zealand bank account were to be forfeited to the Crown.
[7] From that decision Mr Cheng has now appealed. At Mr Cheng’s request, and with the consent of the Crown, we heard this appeal on the papers. We did not feel disadvantaged by the absence of an oral hearing, thanks to the excellence of the written submissions on both sides.

Issues on the appeal

[8] Ms Dyhrberg, for Mr Cheng, challenged a number of aspects of Harrison J’s reasoning.
[9] First, she challenged Harrison J’s finding that Constable Reginald Alofa’s search of Mr Cheng at the Metropolis on 7 August 2004 was lawful. She submitted it had been unlawful and that this should render inadmissible all the evidence subsequently discovered.
[10] If she failed on that issue, Ms Dyhrberg advanced the following argument. Constable Alofa discovered on his search of Mr Cheng a Porsche car key. He did not return it immediately to Mr Cheng but instead took it and proceeded to the car park under the Metropolis complex. He used the key’s door remote function to identify Mr Cheng’s Porsche car. Having unlocked the car, he then searched it. Ms Dyhrberg argued that the seizure of the car key was unlawful. Its subsequent use in locating and then opening Mr Cheng’s car rendered the search of the car unlawful and unreasonable. This meant, she argued, that the evidence discovered both in the car and subsequently should have been held inadmissible.
[11] On this point, Harrison J had held the seizure of the car key to be unlawful and unreasonable. This, in His Honour’s view, “tainted and invalidated” the searches that subsequently occurred: at [50]. Although they were unlawful and unreasonable, His Honour held, applying the test set out in R v Williams [2007] 3 NZLR 207 (CA), that evidence of what was found in those searches was admissible.
[12] Ms Dyhrberg’s argument on this topic gives rise to two further issues on this appeal. First, was the search of the car unlawful and unreasonable? Secondly, if it was, did the judge correctly apply Williams?
[13] The fourth issue on the appeal relates to the search of Mr Cheng’s security deposit box. Ms Dyhrberg challenged the legality of that search on two bases. First, she submitted there were “significant deficiencies” in the application for the search warrant. Secondly, she submitted it was tainted being a consequence of the earlier unlawful search of the car. The legality of the security deposit box search is the fourth issue on this appeal.
[14] Finally, Ms Dyhrberg submitted that, if the disputed evidence were excluded, there would be no basis upon which Mr Cheng could have been found guilty of selling methamphetamine. That is undoubtedly right. It is essential to the Crown’s case that the evidence from the disputed searches is admitted. Ms Dyhrberg’s argument on this point is accordingly entirely consequential upon the outcome of the issues we have set out above.
[15] We shall deal with the issues in turn.

Was Constable Alofa’s search of Mr Cheng lawful and reasonable?

[16] As we have said, Constable Alofa searched Mr Cheng at the Metropolis on 7 August 2004. The constable, in carrying out that search, purported to rely on s 18(3) of the Misuse of Drugs Act 1975. Under that subsection, a member of the police is entitled to search a person if the constable “has reasonable ground for believing that [the] person is in possession of any controlled drug ... and that an offence against [the] Act has been or is suspected of having been committed in respect of that drug”. Harrison J concluded that the constable did have “reasonable grounds for believing” that Mr Cheng was in possession of methamphetamine when he made the decision to search him: at [42]. Accordingly, the search was lawful and reasonable.
[17] Ms Dyhrberg disputes that conclusion. She submits that the constable had insufficient information for him to form a reasonable belief that Mr Cheng was in possession of methamphetamine at that time.
[18] Like Harrison J, we are unable to accept that submission. We consider the search was lawful under s 18(3). We shall first set out what the constable knew at the time he decided to search Mr Cheng. We shall then deal with Ms Dyhrberg’s submissions on this topic.
[19] Constable Alofa, as at 7 August 2004, was part of Sergeant Peter O’Neill’s team. For some months, Sergeant O’Neill had been working on Operation Brand. This operation had been concerned with the drug-dealing activities of one Reagan Brand. In June 2004, the police had executed a search warrant at Mr Brand’s Auckland home. They found in his apartment empty snaplock bags, three snaplock bags containing methamphetamine, methamphetamine pipes, a syringe, and $13,230. They also found an access card and security box key for the Security Deposits Company in Parnell. When police later searched that box, they found $50,000 in cash.
[20] The police also found in Mr Brand’s apartment a laptop computer. That computer was analysed for fingerprints. A fingerprint lifted from the laptop screen was later identified as Mr Cheng’s. This caused the police to become very interested in Mr Cheng. That interest was heightened when one of Mr Brand’s associates, Anthony Moore, advised the police that Mr Brand’s supplier was Asian.
[21] The police made enquiries about Mr Cheng. They discovered that he owned an apartment at the Metropolis. He had bought that apartment in late 2003 for $260,000.
[22] Another event occurred in June 2004 which heightened police interest in Mr Cheng. Naoki Kusunoki, a Japanese student, approached the police with a concern following the welfare of his sister, Emiko Kusunoki. She had been admitted to Auckland Hospital following a drug overdose. He was concerned she was being supplied with drugs. At about the same time, Mr Kusunoki approached Eddy Alashoti, a security officer employed at the Metropolis, about his concerns. He approached the Metropolis as he knew his sister had been living there with Mr Cheng. He told Mr Alashoti that he suspected Mr Cheng was his sister’s supplier. Mr Alashoti passed this information on to the police. All this information, when considered together, led Mr Cheng to be noted in the police computer system as “a possible drug supplier”. Constable Alofa had himself spoken to Mr Kusunoki about his concern over his sister’s welfare.
[23] On 30 July 2004, Sergeant O’Neill went to the Metropolis. With the assistance of Mr Alashoti, he entered Mr Cheng’s apartment. No one was home. The sergeant asked Mr Alashoti to contact him if and when Mr Cheng returned. To ensure Mr Alashoti knew when that was, he asked Mr Alashoti to place a trace on the security system for Mr Cheng’s apartment. Mr Alashoti complied with that request. The effect of this trace was to prevent Mr Cheng from using his swipe card to obtain elevator access.
[24] Mr Cheng did not return to the complex until late afternoon on 7 August. Because his swipe card did not work, he had to request access assistance from the building’s security staff. It was at that point that Mr Alashoti phoned Sergeant O’Neill. The sergeant instructed two members of his team, Constable Alofa and Constable Owen Arapai, to go to the complex and interview Mr Cheng. Constable Alofa was briefed on the above matters, although he was already aware of most of the information from his prior involvement with Operation Brand. Constable Alofa’s brief was, if possible, to interview Mr Cheng with a view to obtaining his explanation for his fingerprint having been found on Mr Brand’s computer and with respect to Mr Kusunoki’s complaint that his sister (who was also Mr Cheng’s girlfriend) was being supplied with controlled drugs.
[25] When the two constables met Mr Cheng at the Metropolis, they found him “constantly fidgeting” and he “had wide glazed eyes and was a little unsteady on his feet”. He was constantly complaining of being cold and could not explain “his bizarre condition”. Both constables, who had considerable experience regarding the effects of recent methamphetamine use on people’s appearance and behaviour, concluded Mr Cheng was “displaying the symptoms of a person who had recently consumed drugs” and, in particular, methamphetamine.
[26] We have no doubt that, taking all that information together, Constable Alofa was justified in searching Mr Cheng. He presented as a man who had recently taken methamphetamine. He was a man suspected by the police of dealing in drugs, as the constable well knew. He was returning to his apartment after a period away. It was reasonable to suspect he may well have drugs on him at that time.
[27] Ms Dyhrberg advanced four arguments as to why Harrison J’s conclusion on this topic, with which we have agreed, was wrong. First, she submitted Constable Alofa had said he had not relied on Mr Kusunoki’s complaint when invoking the s 18 power. This argument was presented to Harrison J as well. The submission is based on the following exchange in Constable Alofa’s cross-examination:

Are you saying that [the informant information] played any part in your subsequent decision to search Mr Cheng under s 18? ... Not for the search.

So in terms of your powers that you later exercised to search Mr Cheng, that previous information did not form part of your mental processes, did it? No.

[28] Harrison J, who described the constable “as an honest and reliable witness”, found that, at this point in the cross-examination, the constable “was confused”: at [39]. The judge concluded that the exchange quoted above was inconsistent with what he had said in examination-in-chief, other parts of his cross-examination, and in his re-examination. It was also inconsistent with what he had recorded in his contemporaneous report to the Commissioner of Police, the report required by s 18(6) of the Misuse of Drugs Act whenever the s 18(3) search power is invoked. We agree with the judge’s conclusion that the constable “was confused” during the exchange quoted. Those questions did, after all, immediately follow questions concerning Ms Kusunoki and the constable’s confirmation that such information was “going through [his] mind” as he went to the Metropolis that day.
[29] We also agree with the judge’s ultimate conclusion on this topic, which he set out at [42]:

I am satisfied that Constable Alofa’s decision was based upon a combination of grounds: his observation of Mr Cheng’s conduct and demeanour coupled with his knowledge of discovery of his fingerprint at a drug dealer’s house, where an Asian male had been identified as the dealer supplier, and a reliable complaint that Mr Cheng was providing drugs to Ms Kusunoki. In my judgment they went beyond suspicion, and objectively provided “reasonable grounds for believing” that Mr Cheng was in possession of methamphetamine when the decision was made to search him.

[30] We suspect that the exchange on which Ms Dyhrberg relies indicated no more than that the trigger for the search was Mr Cheng’s appearance and behaviour on the day, but obviously the decision was made in light of all the information the constable had at that time.
[31] Secondly, Ms Dyhrberg complained that Harrison J had “unfairly relied on the evidence of the informant information after indicating to counsel that this would not be a material factor in his determination”. There is no evidence in the transcript to support this allegation, as Ms Dyhrberg concedes. Mr Bonnar, who was senior counsel at trial, has not sworn an affidavit. In so far as the transcript deals with this matter, it does not assist the submission Mr Dyhrberg now makes. Harrison J’s bench note reads as follows:

Mr Bonnar has expressed concern that Constable Alofa’s affidavit did not refer in any detail to a complaint by Ms Kusunoki’s brother about allegations that Mr Cheng was supplying her with controlled drugs. I am satisfied that the affidavits have made some reference to this event. It is now given greater prominence in the evidence than might have appeared the case earlier. I am not satisfied that there is any prejudice to the defence, providing that relevant documents are made available to Mr Bonnar during the hearing. The most obvious is Constable Alofa’s notebook. I will direct him to produce it at some stage and allow Mr Bonnar leave to resume cross-examination based upon the contents of the notebook, if he so wishes. The hearing will continue.

[32] Later, the judge returned to the topic, addressing Constable Alofa as follows:

Constable Alofa, Mr Bonnar cross-examined you before about your personal notebook covering these events. You said that you might be able to locate it either at home or at Avondale. Could I ask you when you leave the court to make immediate enquiries into the whereabouts of the notebook? Could you then please report to Ms Longdill [the prosecutor] about the results of your search? If you find the notebook, then I require it to be brought to court as soon as possible so that Mr Bonnar can consider its contents. If he wishes to cross-examine you further on it, then I will have to ask you to come back to court.

[33] The constable was not later cross-examined. We do not know whether he was able to find the notebook. In the absence of evidence, we are not prepared to speculate as to why Mr Bonnar did not take this further.
[34] Ms Dyhrberg’s third argument was that there was no evidential basis for Harrison J’s determination that the information concerning Ms Kusonoki was “reliable”. Constable Alofa’s knowledge concerning Ms Kusonoki and her relationship with Mr Cheng was only part of the total information available to him when he made his decision to search Mr Cheng. Pieces of information are not to be assessed in isolation. There is but one enquiry: on the basis of all the information available to the police officer at the time, did he or she have reasonable grounds for believing the person was in possession of a controlled drug and that an offence against the Misuse of Drugs Act had been or was suspected of having been committed in respect of that drug? Each piece of information may on its own not take one very far; considered together, however, they may well provide reasonable grounds for belief.
[35] Ms Dyhrberg’s fourth argument was that “the evidence of the fingerprint and the informant information [had] no temporal aspect”. That is to say, it did not mean Mr Cheng was likely to have drugs on him at the Metropolis that day. This argument, with respect, misses the point in the same way the third argument missed the point. One does not look at each piece of evidence in isolation. This was important background information which strongly supported the inference Mr Cheng was a drug dealer. When this information was added to other information, namely Mr Cheng’s behaviour and appearance on 7 August and the fact he was returning to his apartment after a considerable period away, the court was entitled to conclude the constable had reasonable grounds for his belief.
[36] We are satisfied that Harrison J was justified in finding Constable Alofa’s search of Mr Cheng lawful and reasonable.

Was the search of the car lawful and reasonable?

[37] When Constable Alofa asked Mr Cheng to empty his pockets, he observed Mr Cheng attempting to hide an object in his jacket pocket. In that pocket, the constable later discovered two objects: a knife with a five centimetre blade and a Porsche car key fitted with a car alarm. With respect to the latter, Harrison J inferred that “the key itself identified the type of vehicle” (at [80]), an inference not challenged on appeal.
[38] Constable Alofa was immediately suspicious. Mr Cheng had previously told him he did not have a vehicle parked on site. Yet here he was, having just returned to the Metropolis after quite some time away, with a car key in his pocket.
[39] We agree with Harrison J that the constable should have returned the key to Mr Cheng immediately. The constable’s continuing to hold the key became an unlawful seizure. But it does not follow that the subsequent search of Mr Cheng’s Porsche was unlawful. Constable Alofa could have returned the key and immediately gone looking through the Metropolis car park for a Porsche. The evidence does not disclose whether Mr Cheng’s Porsche was the only Porsche in the car park, although we can perhaps take judicial notice of the fact that Porsches are not particularly thick on the ground, even in Auckland. No matter how many there were, Constable Alofa could have noted the car registration numbers of the Porsches parked in the car park. When he came across a Porsche with registration BLD225, a quick check with the registration authorities would have revealed that car’s owner as Chia-Le Cheng. He would have been entitled to search the car under s 18(2) of the Act; indeed, Constable Alofa, before leaving Mr Cheng, had told him that, if he found Mr Cheng’s vehicle, he intended to search it pursuant to s 18(2). Once the constable found Mr Cheng’s vehicle, as he surely would have, he could have asked Mr Cheng to give him the key again to facilitate the search. If Mr Cheng had refused, the constable would have been entitled to break into the car: s 18(2) of the Act, incorporating by reference the powers contained in the Summary Proceedings Act 1957, s 198(3).
[40] In our view, therefore, the constable’s search of the car was lawful and reasonable. It was not tainted by the preceding wrongful detention of the car key, as the car would easily have been located without the key and entry to it lawfully achieved, either by getting the key back from Mr Cheng once the car was located or by force. In short, therefore, we do not accept Harrison J’s conclusion that there was a “causal connection” between the unlawful seizure and the search of the car. There was no “real and substantial connection between the breach and the obtaining of the evidence”: cf Williams at [79].
[41] It follows that the evidence obtained from the search of the car was admissible. In our view, there was no need to apply the Williams balancing exercise. We may comment, however, that, had we found the search of the car to be unlawful, we would have come to the same conclusion as Harrison J as to the admissibility of the evidence obtained from the search.

Was Constable Alofa’s search of the security deposit box lawful and reasonable?

[42] As we have said, Ms Dyhrberg challenged the legality of the search of Mr Cheng’s security deposit box on two bases. One was that this search was tainted, being a consequence of what she submitted was the earlier unlawful search of the car. We have found that search to have been lawful. That ground of attack therefore drops away.
[43] This leaves her other line of attack, the alleged “significant deficiencies” in the application for the search warrant. Harrison J had found “the warrant was tainted” because it was preceded by the earlier unlawful car search: at [62]. But he went on to consider “whether the warrant was otherwise lawful, given its relevance also to the admissibility enquiry”. He concluded that it was. We agree, for the reasons he gives. Ms Dyhrberg’s principal complaint was that the application for the warrant did not comply in all respects with the code set out in Williams. We agree it did not, but that is scarcely surprising, given that Williams had not been determined at the date of this application. (Having said that, we appreciate that the Williams code summarised to a large extent what this court had been saying in a number of earlier cases as to how search warrant applications should be framed.) On the whole, however, the application was adequate. It explained the relevant information held by the police, the type of offending, the persons alleged to have been involved, where the evidence was likely to be found, and what was likely to be found in the security deposit box.
[44] Ms Dyhrberg submitted that the affidavit in support of the search warrant application recorded that Mr Cheng was “also affected by the use of methamphetamine”. She submitted this statement of purported fact was simply the officer’s conclusion based on his observations of Mr Cheng. She said that the observations on which that conclusion was based should have been detailed for the benefit of the issuing officer. Ideally, that should have happened. But there seems little doubt that Mr Cheng was at that time affected by methamphetamine. That was the considered view of Constables Alofa and Arapai and they have since specified what led them to draw that conclusion. Their description of Mr Cheng’s behaviour and appearance is supported by Mr Alashoti’s evidence. There is no evidence to the contrary. So, in the circumstances, the officer’s conclusion seems amply supported and was in no way “misleading”.
[45] Further, it must be recognised that, by the time the police were applying for the search warrant, Mr Cheng’s appearance and suspected methamphetamine use were rather insignificant in the scheme of things. What was most significant for the purposes of the search warrant application was what Constable Alofa had discovered in the Porsche : a green diary that contained monetary amounts, initials and names and appeared to be a drug “tick book”, large sums of New Zealand and American currency, 14 empty plastic snap lock “point” bags, a black-handled folding knife with a 10 centimetre blade, and a safety deposit box key and access card to the Security Deposits Company in Parnell, the same company which Mr Brand had used. The police had earlier searched Mr Brand’s box and found a large sum of money.
[46] Ms Dyhrberg’s next complaint was that the application failed to disclose Sergeant O’Neill’s visit to Mr Cheng’s apartment on 30 July, when no drugs had been found. We agree with Harrison J that there was no need for the police to disclose that visit, which had turned up nothing. That was overtaken by the search of Mr Cheng’s car, which had led to the discovery of much incriminating information.
[47] Ms Dyhrberg’s next challenge was that the application did not refer to “the search” of Mr Cheng’s apartment on 7 August 2004. The judge did not make a finding as to whether that search took place. Constables Alofa and Arapai denied searching the apartment on that occasion – and there was no reference to such a search in any of the contemporary documentation. Mr Alashoti did recollect “swiping” them up to the apartment, although he did not accompany them. Either Mr Alashoti or the police officers must be mistaken in their recollection. The fact Harrison J made no reference to this alleged search presumably indicates this point was not one taken before him. We are not prepared to infer in these circumstances that such search did take place.
[48] Finally, Ms Dyhrberg submitted that the warrant was overbroad as it authorised a search of, among other things, an “aircraft, ship or carriage”. This is a legitimate complaint: the warrant should have been directed at the security deposit box. As it turns out, that was the only use to which the warrant was put. When the police later sought to search the Porsche again, they obtained a fresh warrant.
[49] Such defects as there were in the warrant application process did not render the search of the security deposit box unlawful.

Conclusion

[50] We have found all three searches lawful and reasonable. All the evidence obtained from them is accordingly admissible. Ms Dyhrberg’s final point, namely there was insufficient evidence for finding Mr Cheng guilty of selling methamphetamine, is not sustainable. This argument relied on the disputed evidence being excluded.
[51] Harrison J found that “the totality of the [Crown] evidence” (only some of which we have referred to here) left him in no doubt that Mr Cheng was guilty of the crime of selling methamphetamine between 1 August 2003 and 7 August 2004: at [103]. We endorse that finding.
[52] There is no dispute that, if the Crown had proved Mr Cheng guilty, the forfeiture orders were properly made. Those orders are accordingly sustained and the appeal is dismissed.

Solicitors:
Crown Law Office, Wellington