Waterworth v R [2012] NZCA 58 (2 March 2012)

Last Updated: 8 March 2012

IN THE COURT OF APPEAL OF NEW ZEALAND

CA408/2011 [2012] NZCA 58

BETWEEN JOHN FRANCIS WATERWORTH Appellant

AND THE QUEEN Respondent

Hearing: 22 February 2012

Court: Randerson, Potter and Simon France JJ

Counsel: P H B Hall and K H Cook for Appellant K Raftery and S C M Waalkens for Respondent

Judgment: 2 March 2012 at 4 p.m.

JUDGMENT OF THE COURT

The appeal against conviction and sentence is dismissed.

___________________________________________________________________

REASONS OF THE COURT

(Given by Randerson J)

Introduction

[1] The appellant was convicted after jury trial in the District Court before Judge Doherty of one count of conspiracy to supply the class B controlled drug MDMA (ecstasy) between 1 August 2008 and 25 June 2009.[1] He was charged along with four others: Messrs Whittle, Wilkes, David and Dillon. Both Mr Whittle and Mr Wilkes had pleaded guilty prior to trial. Mr David and Mr Dillon were acquitted.
[2] The appellant was subsequently sentenced to three years six months imprisonment.[2]
[3] He now appeals against both conviction and sentence.
[4] Leave to appeal out of time is not opposed by the Crown. Leave is granted accordingly.

The conviction appeal

[5] The appeal against conviction raises three grounds:

• (a) Wrongful admission of propensity evidence of the appellant’s prior convictions for drug dealing;
• (b) Wrongful admission of hearsay evidence under s 12A of the Evidence Act 2006; and
• (c) The Judge ought to have directed the jury that the Crown’s failure to call Mr Whittle meant they were entitled to infer he would not have assisted the Crown’s case against the appellant.

First ground: propensity evidence

[6] The appellant admitted conspiring to sell the class C drug BZP, but denied conspiring to sell ecstasy. The jury was told this at the outset of the trial. The jury was also told that Messrs Whittle and Wilkes admitted conspiring to sell ecstasy. The sole issue for the jury to determine was whether the drugs the appellant was conspiring to sell were ecstasy or whether he was conspiring to sell only BZP.
[7] The Crown sought to lead evidence of the appellant’s previous convictions for supplying ecstasy in 2005. It proposed to call formal evidence of the convictions along with a statement of admitted facts. The admitted facts showed that the appellant sold ecstasy on a number of occasions in June and July 2005 to a range of purchasers. The evidence also showed, amongst other things, that the appellant was familiar with the price of the ecstasy tablets; negotiated deals with the purchasers; used a “tester kit” to test the content and quality of the ecstasy; used a variety of code names for the tablets; and that he was sourcing the ecstasy from Auckland.
[8] The appellant was convicted for the 2005 offending on 2 November 2006. He was sentenced to four and a half years imprisonment and was released on parole in 2008. The offending which is the subject of this appeal occurred while the appellant was on parole. He was recalled to prison in June 2009 and served a further nine months.

The Judge’s ruling on propensity evidence

[9] Judge Doherty ruled on 18 January 2011 that the propensity evidence was admissible.[3] He correctly identified the trial issue to be whether the appellant was involved in selling ecstasy as distinct from class C drugs. He considered the evidence to be relevant for four principal reasons: the drugs were sourced from Auckland where the appellant had had previous dealings in commercial quantities of ecstasy; he knew where to access the quantities required; he utilised test equipment and accepted “promo” quantities for testing purposes; and he was versed in the terminology of the drug trade.
[10] The Judge did not think it material that the code words alleged to have been used might be generic to various classes of drugs, nor that the tester kits could be used to test for both class B and C drugs. Those matters were not seen to be determinative. Rather, the Judge considered them to be possibilities the jury might accept when considering the evidence as a whole.
[11] The Judge concluded that the probative value of the propensity evidence was high and was not outweighed by any unfairly prejudicial effect upon the appellant. In that respect, since the appellant was to admit dealing in class C drugs, the evidence of the prior convictions was unlikely to predispose the jury against him nor cause the jury to give disproportionate weight to the previous convictions. As well, the Judge proposed to give the usual directions and warning to the jury with regard to propensity evidence and did so in his summing up at trial.

Propensity evidence - discussion

[12] Mr Hall for the appellant submitted that the probative value of the propensity evidence was diminished because it was accepted that the appellant may have been sourcing drugs, particularly in Auckland; that he was using code words and tester kits in relation to drugs; and that he knew Mr Whittle and discussed drugs and related matters with him. He further submitted that propensity evidence did not materially assist the jury in determining the trial issue (the identity of the drugs being sold). There was, in the circumstances, an unacceptable risk that the jury would engage in impermissible propensity reasoning.
[13] Finally, Mr Hall submitted that the Judge had failed to consider several of the matters identified in s 43(3) of the Evidence Act, namely frequency; connection in time; the extent of similarities; and the extent to which the conduct in question was unusual.
[14] The principles relating to the admission of propensity evidence are well-settled and are not in dispute.[4] We accept the submission made by Mr Raftery on behalf of the Crown that the propensity evidence was highly probative of the key trial issue. We were referred to two recent decisions of this Court in which decisions admitting propensity evidence of a similar nature were upheld. In Crown v R,[5] the appellant was charged with dealing in class A, B and C drugs. The defence was that the drugs were for personal use. This Court upheld the admission of evidence of the appellant’s prior convictions for dealing in class A and C drugs two years before. And in Brown v R,[6] this Court declined to grant leave to appeal against a refusal to sever charges the appellant was facing for drug importation in 2001 from charges for drug dealing in 2006 and 2007. The evidence of the 2001 offending was treated as propensity evidence which demonstrated a tendency on the appellant’s part to engage in the importation of controlled drugs.
[15] The most obvious factor here is that the appellant had been convicted of supplying ecstasy sourced from Auckland on a number of occasions as recently as 2005. Then, within a short period after his release on parole for that offending, he was again involved in the admitted supply of drugs. The Judge’s conclusion that the propensity evidence was highly probative of the identity of the drugs at issue was supported by the fact that the appellant was again sourcing drugs from Auckland, his familiarity with the market and sale prices for ecstasy and his admitted connection with Mr Whittle (who had pleaded guilty as a party to the conspiracy to supply ecstasy). Put simply, it was evidence tending to show that the appellant had a propensity to engage in the sale of ecstasy sourced from suppliers in Auckland.
[16] We agree with the Judge that the probative value of the evidence clearly outweighed any unfairly prejudicial effect. The evidence was unlikely to predispose the jury against the appellant. We note in particular that the jury was told at the outset that the appellant admitted selling class C drugs. The careful directions and warning the Judge gave to the jury were sufficient to avoid the risk the jury might engage in impermissible propensity reasoning or give disproportionate weight to the prior convictions.
[17] We conclude that the propensity evidence was properly admitted.

Second ground: the admission of evidence under s 12A of the Evidence Act

[18] The Crown sought to lead evidence of intercepted conversations involving drug dealings between Mr Whittle and various witnesses. The intercepted conversations showed that Mr Whittle was discussing with a number of persons the sale of a variety of drugs including ecstasy. Mr Hall also accepted that the intercepted conversations showed that Mr Wilkes was a party to a conspiracy with Mr Whittle to supply ecstasy. It is common ground that the appellant was not a party to any of these conversations. The Crown relied on s 12A of the Evidence Act which preserves the common law exception to the rule against hearsay for statements made by co-conspirators.
[19] We observe at the outset that it may have been unnecessary for the Crown to rely on s 12A since two of the appellant’s co-accused (Messrs Whittle and Wilkes) admitted conspiring to sell ecstasy and the appellant admitted knowing Mr Whittle and discussing drugs and related matters with him. Nevertheless, we consider whether the evidence of the intercepted conversations between Mr Whittle and others was properly admitted under s 12A.
[20] The admission of evidence under s 12A arises where the Crown seeks to adduce evidence of conversations between co-conspirators against another accused who is alleged to be part of the conspiracy but who is not party to the conversations. This Court held in R v Messenger[7] that, before the acts or declarations of one alleged conspirator will be admitted as evidence against another accused, three threshold issues have to be determined by the judge:

• (a) That there was a conspiracy or joint enterprise of the type alleged;
• (b) That the accused was a member of that conspiracy or joint enterprise; and
• (c) That the statements were made and/or the acts were done in furtherance of the conspiracy or joint enterprise.

[21] In relation to the first two matters, it is sufficient for the Crown to show there was reasonable evidence that there was a conspiracy or joint enterprise and that it involved the accused. “Reasonable evidence” connotes evidence which, of itself, would not sustain a guilty verdict, but which it is considered safe to admit.[8] Reasonable evidence is also required for the third matter, but that is not disputed here.

Section 12A – counsel’s submissions

[22] Mr Hall’s submissions focussed solely on the first and second threshold issues identified in Messenger. Counsel submitted that the Crown was required to show reasonable evidence of an agreement between the appellant and one or more of the alleged co-conspirators to supply ecstasy (as distinct from any other drug). He submitted further that the agreement to supply ecstasy had to be proved from evidence independent of the hearsay evidence in the intercepted conversations.
[23] In advancing this submission, Mr Hall relied on an unreported decision of Tipping J in R v Olliver.[9] Tipping J held that, in relation to the threshold level of determining the admissibility of hearsay evidence of a conspiracy, it was necessary for the Crown to demonstrate that the alleged conspirator had knowledge of the particular drug that was said to be the subject of the conspiracy. While Mr Whittle may have been selling ecstasy, Mr Hall submitted that he did not do so in the presence of, or with the knowledge of, the appellant.

Section 12A – the Judge’s ruling

[24] Mr Hall made the same submission in the District Court but it was not accepted. Judge Doherty held that the Court could have regard to the hearsay evidence on the basis that it went to the state of mind of one of the participants in the alleged conspiracy. On that footing, the evidence could be relied upon to infer an agreement to engage in the illegal activity but could not be used to prove the truth of the appellant’s participation in the alleged conspiracy. The Judge rejected Mr Hall’s submission that the threshold issue could only be satisfied if there was reasonable proof that the conspiracy related to ecstasy. In any event, the Judge considered there was independent evidence that Mr Whittle may have been dealing in both ecstasy and BZP.

Section 12A - discussion

[25] It is well established that the statements of co-conspirators are not hearsay to the extent they are received as evidence of the state of mind of the person speaking and their purpose and intention at that time. Such evidence is received not to prove the truth of the participation of someone not a party to the conversation but as facts from which the existence of the conspiracy to engage in unlawful activity may be inferred. But evidence of that kind cannot be used to show the participation in the conspiracy of an accused who is not a party to the relevant conversations. Independent evidence is required. The principles were stated by this Court in R v Morris (Lee):[10]

[17] The existence of the conspiracy and the accused’s participation in it must be shown to the requisite standard without use of hearsay. But statements made by other persons about what they are intending to do, against the background of their statements about what they have done, are not hearsay if received as evidence of their state of mind at the time of speaking, and thus of their purposes and intentions at that time. Such statements are received not to prove the truth of the participation of someone not a party to the conversation, but as facts from which the existence of the agreement or combination to engage in an illegal common enterprise may be shown. The existence of a conspiracy can thus be shown by their statements, including what they have said about the accused.

[18] But the accused’s membership of that conspiracy cannot be proved by reference to what the conspirators have said about the accused in his absence. To admit such material for that purpose, as contrasted with the purpose of establishing the existence of a conspiracy, a design by the speakers, would be hearsay. It is therefore necessary for the Crown, having shown that there is evidence of a conspiracy, to prove the accused’s membership of it to the requisite standard by reference to matters external to the statements which have been made in the absence of the accused.

[26] These principles were followed by this Court in R v Messenger.[11]
[27] The first threshold issue identified in Messenger (the existence of a conspiracy to sell controlled drugs) was clearly established. The intercepted communications showed that Mr Whittle was dealing in various controlled drugs including ecstasy. As well, he and Mr Wilkes each pleaded guilty to conspiring to supply that drug. There was also direct evidence from a number of witnesses who had purchased ecstasy from Mr Whittle at relevant times.
[28] As to the second threshold issue, there was reasonable evidence from which a jury could safely infer that the appellant was a party to a conspiracy (at least with Mr Whittle) to sell ecstasy. In particular, there was the propensity evidence of the appellant’s recent convictions for dealing in that drug; he acknowledged he knew Mr Whittle and discussed drugs and related issues with him; there was surveillance evidence and intercepts to show that the appellant met with Mr Whittle and Mr Dillon on 30 May 2009 when money was exchanged “on the same pattern as last time”; on 13 June 2009 the appellant flew from Auckland to Christchurch and was found on his return to be in possession of a spray can with a false bottom in which various drugs were found including an analogue of ecstasy (the analogue is a class C drug); and the appellant was also found in possession of a tester kit which was similar to one found in Mr Whittle’s apartment. While the Crown accepts that a tester kit can be used to test other substances, the kit found in Mr Whittle’s apartment contained an instruction booklet describing a “quick and simple quality test for pills sold as ecstasy”.
[29] Given the independent evidence demonstrating the appellant’s participation in a conspiracy to sell ecstasy, it is not strictly necessary for us to determine whether, as a threshold issue, it is necessary for the Crown to show reasonable evidence of the appellant’s agreement to supply the particular drug alleged. We note that Tipping J expressed a caveat about his conclusions in Re Olliver, since he had not had the opportunity of researching the issue.
[30] However, we are inclined to the view that, at the threshold level, it is sufficient if the Crown shows reasonable evidence of a conspiracy to supply controlled drugs even if it is not possible to demonstrate the appellant’s agreement (express or implied) to participate in a conspiracy to supply the particular drug charged. As this Court held in Messenger [12] the Crown is not obliged to prove every detail of the conspiracy when considering the threshold issue of admissibility. It is enough to show an agreement (express or implied) of the kind alleged and what, in general terms, the conspirators intended to achieve.
[31] However, we do not express a final view since, in this case, there was reasonable evidence from which a jury could infer an agreement by the appellant to participate in the supply of ecstasy.
[32] We conclude that the hearsay evidence of the appellant’s co-conspirators was properly admitted.

Third ground: the Judge ought to have directed the jury that the Crown’s failure to call Mr Whittle meant they were entitled to infer he would not have assisted the Crown’s case against the appellant

[33] This ground of appeal was argued by Mr Cook. It is accepted that Mr Whittle was a competent but not compellable witness because he had not been sentenced at the time of trial.[13] The Crown did not call Mr Whittle. Defence counsel were critical of this in their closing addresses. The Judge directed the jury in the following terms:

[53] Now you may be curious about the fact that there [were] others named in the indictment that we haven’t heard from, namely Mr Whittle. We did hear from Mr Wilkes. We’ve heard all about Mr Whittle both through the transcripts and the intercepts and through what others who gave evidence in the witness box said about him. Now each of Mr Whittle and Mr Wilkes pleaded guilty to this count. You should not speculate as to why they did that, they have done it and they either have been dealt with or will be dealt with by due course of law. So don’t speculate about their motives.

[54] Mr Lascelles, in his address to you yesterday made comments about why Mr Whittle and other persons we’ve heard about haven’t been brought along here to give evidence to you. Now that’s irrelevant, the fact they haven’t come to give evidence is irrelevant and you must not speculate upon it. You have to deal with this case on the evidence that’s been presented to you and you have to decide on that evidence that alone whether the Crown has proved the charge.

[34] Mr Cook cited the decision of the Privy Council in Seneviratne v R[14] for the general proposition that witnesses essential to the unfolding of the narrative on which the prosecution is based must be called by the prosecution whether their testimony is helpful or unhelpful to the prosecution.
[35] Mr Cook acknowledged the views expressed in the joint judgment of Gaudron and Hayne JJ in the High Court of Australia in Dyers v R[15] to the effect that a judge should not direct a jury that they are entitled to infer that the evidence of those who were not called would not have assisted the prosecution. Those Judges further stated that a direction should be given to the jury not to speculate about what a person who is not called might have said. However, Gaudron and Hayne JJ acknowledged that there may be rare exceptions to the general rule in a case where the prosecution has been in breach of a duty to call all material witnesses.[16]

Third ground - discussion

[36] We are not persuaded that this ground of appeal has any merit. Mr Cook accepted that he could not cite any authority for the proposition that the prosecution is bound to call a co-accused who has pleaded guilty prior to the trial of another accused. More importantly, Mr Cook acknowledged that defence counsel had not requested the Crown to call the co-accused. We add that there is no evidence as to whether Mr Whittle would have agreed to give evidence if asked. Nor is there any evidence as to what he might have said about the appellant’s involvement had he been called.
[37] We also accept Mr Raftery’s submission that good grounds existed for not calling Mr Whittle. He had a history of dishonesty and had also to face a charge of perverting the course of justice by attempting to influence witnesses in the proceeding.
[38] This ground of appeal must fail.

Sentence appeal

[39] The appellant was sentenced on 12 May 2011 on the conspiracy charge. He was also sentenced on two other charges to which he had pleaded guilty, namely possession of 298 tablets of BZP and possession of 87 grams of methamphetamine (which, it was accepted, was for his own use).
[40] The Judge did not accept a submission made on the appellant’s behalf that he was not a prime mover in the conspiracy. The Judge considered that he was “right in it”. A three year starting point was adopted on the conspiracy charge which was uplifted by three months for the other offending. The Judge made a further uplift of nine months to reflect the fact that the offending had occurred while the appellant was on parole after his previous convictions for dealing in ecstasy.
[41] The Judge then deducted six months upon advice from counsel that the appellant’s release conditions when he was granted parole did not include a requirement that he undertake rehabilitation programmes. This resulted in the end sentence of three and a half years imprisonment.
[42] The first point taken on appeal is that the Judge was wrong to treat the appellant as equally culpable with Mr Whittle. We reject this submission as did the Judge who found both were equally culpable. No basis is shown to persuade us to go behind the Judge’s finding of fact on this issue.
[43] The only other point taken on appeal is that the Judge ought not to have applied the nine month uplift for the appellant’s offending while on parole. It was said this had resulted in a sentence which was manifestly excessive. It was submitted that the Judge had failed to take account of the fact that the appellant was recalled to prison and served a further nine months for the previous offending; that after he was released from that term he was placed on strict bail terms involving a curfew; that he had self-referred to a drug programme and had completed it successfully; and that he had a positive pre-sentence report.
[44] The Crown accepted that, although a recall to prison for breach of parole is part of the punishment for the original offending, it may operate unfairly when combined with the conventional uplift for previous convictions. However, as this Court said in Vernon v R,[17], that does not mean that no account should be taken in subsequent sentencing of the fact that the further offending was committed while on parole.[18] This Court rejected the suggestion that a mechanical or “one for one” reduction was required noting that previous convictions and offending while on parole are both aggravating factors under the Sentencing Act 2002.[19]
[45] We accept the Crown’s submission that the nine month uplift was proper in the circumstances and fairly reflected a proper concern with recidivist drug offenders. We also accept the Crown’s submission that the end sentence of three and a half years was well within range and was not manifestly excessive.

Result

[46] The appeal against both conviction and sentence is dismissed.

Solicitors:
Crown Law Office, Wellington for Respondent

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[1] R v Waterworth DC Christchurch CRI-2009-9-9782, 28 January 2011.
[2] R v Waterworth DC Christchurch CRI-2009-9-9782, 12 May 2011.
[3] R v Waterworth DC Christchurch CRI 2009-9-9782, 18 January 2011.

[4] Mahomed v R [2011] NZSC 52, [2011] 3 NZLR 145; Hudson v R [2011] NZSC 51, [2011] 3 NZLR 289; Fenemor v R [2011] NZSC 127.
[5] Crown v R [2010] NZCA 484.
[6] Brown v R [2010] NZCA 260.
[7] R v Messenger [2008] NZCA 13, [2011] 3 NZLR 779 at [11].

[8] R v Messenger at [12]; R v Buckton [1985] 2 NZLR 257 (CA) per Cooke J at 258 and per Somers J at 263 ; R v Qiu [2007] NZSC 51, [2008] 1 NZLR 1 at [28].
[9] R v Olliver HC Christchurch, T74/90, 27 February 1991.
[10] R v Morris (Lee) [2001] 3 NZLR 759 (CA).
[11] At [13] and [14].
[12] At [14].
[13] Evidence Act 2006, s 73.
[14] Seneviratne v R [1936] 3 All ER 36 (PC).
[15] Dyers v R [2002] HCA 45; 210 CLR 285. .
[16] At [6].
[17] Vernon v R [2010] NZCA 308.
[18] At [15].
[19] At [16] – referring to Sentencing Act 2002, s 9(c) and (j).