|
|
Home
| Databases
| WorldLII
| Search
| Feedback
Court of Appeal of New Zealand |
Last Updated: 6 January 2017
|
IN THE COURT OF APPEAL OF NEW ZEALAND
|
|
|
BETWEEN
|
THE COMMISSIONER OF POLICE
Appellant |
|
AND
|
RONNIE JOSEPH DE WYS
First Respondent
PENELOPE HELEN LOUISA DE WYS
Second Respondent
|
|
Hearing: |
25 May 2016 |
|
Court: |
Cooper, Clifford and Katz JJ |
|
Counsel: |
R G Douch and T C Tran for Appellant
D J Taylor for First Respondent
R J Laybourn for Second Respondent |
|
Judgment: |
JUDGMENT OF THE COURT
____________________________________________________________________
REASONS OF THE COURT
(Given by Katz J)
[1] The Commissioner of Police appeals a judgment of Faire J declining to make profit and assets forfeiture orders, pursuant to ss 50 and 55 of the Criminal Proceeds (Recovery) Act 2009 (CPRA), against the respondents, Ronnie and Penelope de Wys.[1]
Background
[2] Mr de Wys’s father owned a farm on Arapuni Road, near Putaruru, until 2008. Mr de Wys worked on and later managed that farm. He and Mrs de Wys lived in a house on the farm property from 1990 until his father sold the farm in 2008 to Stuart Edmeades.
[3] Mr and Mrs de Wys then moved to a new farm that they had purchased on Kihi Road near Hauturu. The purchase was financed in large part from cash savings that Mr and Mrs de Wys had accumulated. This brought them to the attention of the police Financial Intelligence Unit, as their bank reported to the police that they had made cash deposits totalling approximately $320,000 in the months leading up to the settlement of the purchase of the Kihi Road property.
[4] An investigation commenced. Financial analysis undertaken by the police indicated that the respondents had had access to over $700,000 of unexplained cash income in the years preceding their purchase of the Kihi Road property. The respondents say that this income is simply the proceeds of various legitimate cash businesses that they operated over a period of many years, such as timber milling and the sale of firewood, farm machinery and livestock.
[5] The police also found various cannabis related evidence during the course of their investigation. This included evidence of cannabis being cultivated in the maize crop on the Arapuni Road property while the respondents farmed there and evidence, found approximately 18 months after the respondents had moved out, of a cannabis drying operation in the roof space of the Arapuni Road property. The respondents deny any involvement in or knowledge of cannabis cultivation or sales while they were living at the Arapuni Road property (or indeed Kihi Road). Mr de Wys does admit, however, to being a personal user of cannabis.
[6] As a result of the police investigation, the Commissioner brought these proceedings seeking profit and assets forfeiture orders under the CPRA. He was required to prove on the balance of probabilities that during the period 6 August 2003 to 6 August 2010[2] the respondents unlawfully benefitted from significant criminal activity.[3] The significant criminal activity alleged is the cultivation[4] and sale[5] of commercial quantities of cannabis. The Commissioner says that the respondents unlawfully benefitted from that activity in the sum of $729,558.62. He sought a profit forfeiture order for that amount. The Commissioner claims that Mr de Wys was directly involved in cannabis offending and that Mrs de Wys must, at the very least, have been aware that the funds that she managed were not sourced legitimately.
[7] The Commissioner’s application failed in the High Court because the Judge was not satisfied that the Commissioner had proved on the balance of probabilities that the respondents had benefitted from the cultivation and sale of cannabis. The issue on appeal is whether the Judge erred in that finding.
Circumstantial evidence — legal principles
[8] The Commissioner submitted that Faire J failed to have proper regard to the fact that this is a circumstantial evidence case. As a result, the Judge is said to have erred by considering (and then discarding) each strand of evidence in isolation, rather than focussing on the totality of the evidence. The correct approach is to consider the combined effect of a number of separate items of evidence in order to determine whether the Commissioner has proved, on the balance of probabilities, that the respondents were involved in cannabis cultivation and sale.
[9] Circumstantial evidence allows a fact-finder to infer that a particular fact exists, even if there is no direct evidence of it. A single piece of circumstantial evidence will generally allow for more than one explanation. However, a number of separate items of circumstantial evidence, when considered together, may strongly support the drawing of a particular inference. Circumstantial evidence derives its force from the involvement of a number of factors that independently point to a particular factual conclusion.[6] The analogy that is often drawn is that of a rope: any one strand of the rope may not support a particular weight, but the combined strands are sufficient to do so.
[10] It is only the ultimate issue in a circumstantial case that must be proved to the required standard. In this case that issue is whether the respondents benefitted from significant criminal activity. The Commissioner must prove that they did, on the balance of probabilities. He is not required, however, to separately prove each individual strand of evidence to the balance of probabilities standard before the Court can take that evidence into account.[7] In Thomas v R this Court observed that “[it] is the totality of [the] narrative to which the formula ‘beyond reasonable doubt’ applies”.[8]
[11] The Commissioner says that the respondents have either been involved in the cultivation and sale of cannabis, or are the victims of an implausible and unlikely series of coincidences: that cannabis was grown on their property at Arapuni Road when they farmed there; that cannabis was dried in the ceiling space of the house they lived in on that property after they left; and that they accumulated more than $700,000 in cash income from unidentified sources while living at that property.
[12] Accordingly, while it is necessary at the first stage of the analysis to consider each strand of evidence separately, it is only at the second stage, when the Court considers the ultimate issue (whether benefit from significant criminal activity can be inferred from all of the evidence before the Court), that the standard and onus of proof become relevant.
Did the Judge err in his approach to the evidence?
[13] The Judge identified the following key strands of cannabis-related evidence.
[14] First, cannabis plant remnants were found in the roof cavity of the house at Arapuni Road where the respondents had lived until May 2008, in what appeared to be a space used for drying cannabis. Faire J found that the Commissioner had not proved, on the balance of probabilities, that those remnants could be attributed to either of the respondents.
[15] Second, there was evidence of the presence of cannabis and cannabis constituents at four separate locations at the property at Kihi Road. Faire J found that this did not support an inference that Mr de Wys was involved in the cultivation of cannabis for supply given the small quantities recovered.
[16] Third, there was evidence from Terry O’Brien, a maize harvesting contractor who claimed to have seen Mr de Wys removing cannabis from a maize crop in a field at the Arapuni Road property. Faire J found Mr O’Brien’s identification of Mr de Wys to be unreliable.
[17] The Judge described this evidence as comprising “the full extent of the evidence relied upon by the applicant to show involvement in a significant criminal activity”.[9]
[18] It is not entirely clear whether Faire J accepted that the evidence of over $700,000 in unexplained income was a further strand of circumstantial evidence that could be taken into account in determining whether cannabis offending had occurred, or not. He stated that:
[78] The applicant’s position is that the possession and use of unexplained cash over a comparable period is evidence to be added to the evidential pool regarding significant criminal activity. Clearly, however, it does require, in the first place, evidence of participation in the cultivation of cannabis.
[19] Later in the judgment, however, he identified the relevant question as being:[10]
... whether that inquiry, added to what material the police did uncover in relation to cannabis, is enough to draw an inference on the balance of probabilities that the availability of cash to the respondents was as a result of a significant criminal activity.
[20] Ultimately, he concluded that:[11]
... although one has some suspicions about the source of funds available to the respondents, there is nothing like the degree of proof on the balance of probabilities from which one could draw the inference that they had been involved in a significant criminal activity.
[21] We accept Mr Douch’s submission for the Commissioner that the Judge appears to have largely considered each strand of evidence in isolation, including whether criminal activity could be inferred from that strand of evidence, on the balance of probabilities. As a result the Judge may have underestimated the combined force of all of the circumstantial evidence in the case. Analysed individually, each strand of evidence was found to be wanting. Having approached the matter in this way, by the time the Judge came to consider the financial evidence he had already, in effect, concluded that the Commissioner had failed to prove that the respondents had been involved in significant cannabis offending. The financial evidence was therefore seen as having little or no probative value in relation to that issue.
[22] Given that this appeal proceeds by way of rehearing we will consider afresh the various strands of circumstantial evidence relied on by the Commissioner. We will then consider whether, in light of the totality of that evidence, the Commissioner has proved on the balance of probabilities that the respondents benefitted from significant criminal activity.
The evidence
[23] The Commissioner’s case is that the respondents have unlawfully benefitted from cannabis cultivation and sale between 2003 and 2008 while they were living at the Arapuni Road property. The Commissioner does not allege that significant cannabis offending occurred at the Kihi Road property.
Evidence of cannabis cultivation at the Arapuni Road property
[24] The most significant evidence of cannabis cultivation on the Arapuni Road property is that of Mr O’Brien, who worked for Cameron Bishop, the proprietor of Precision Harvesters, which undertook maize harvesting on the Arapuni Road property over many years. Mr O’Brien’s evidence was that on each occasion he went to the property the centre three rows of maize were missing. He surmised that they had either been sprayed (to kill the maize plants) or pulled out of the ground.
[25] Mr O’Brien’s evidence was that the maize harvesting crew usually phoned the farmer a few days before their arrival to let him or her know roughly when they would be coming to harvest the maize. On the final occasion that Mr O’Brien visited the property he had been unable to make contact with Mr and Mrs de Wys in the days before harvesting. Nor did he phone them on the actual day of the harvest to let them know that the harvesting crew was on its way.
[26] When Mr O’Brien arrived at the property he did not see Mr de Wys, although he said that he had met him on the previous occasions he had visited. Mr O’Brien commenced harvesting the maize. As per usual, he noticed that there were three rows missing out of the middle of the paddock. It also looked like something had freshly been pulled from the empty rows that morning. Further, he could see some cannabis plants remaining in the centre rows. Mr O’Brien described the strip of cannabis plants as being about 30 to 40 metres long and said that he was about 15 metres away from them when he saw them. Mr O’Brien then saw a person further down the paddock, whom he identified as Mr de Wys, carrying mature cannabis plants towards a stand of trees on the property.
[27] Although there was some confusion at trial as to when the relevant events occurred, it was common ground on appeal that it was not in April 2007 or April 2008, as Mr O’Brien originally thought. Based on all of the evidence before the Court, the incident most likely occurred in April 2006. This is because it seems likely that Mr O’Brien harvested maize on the property on two previous occasions in 2005 and 2006. This is consistent with Mr Bishop’s recollection that Mr O’Brien had harvested maize on the property two or three times. Cross-examination of Mr O’Brien, and the evidence of the respondents and Mr Bishop, focussed on the timing of the incident and the reliability of Mr O’Brien’s identification of Mr de Wys. It was not put to Mr O’Brien that he had lied or was mistaken about seeing cannabis plants in the maize or a man carrying mature cannabis plants. His identification of Mr de Wys was, however, strenuously challenged. He maintained that it was Mr de Wys that he saw.
[28] We accept (and the evidence clearly supports) that Mr O’Brien did see mature cannabis plants and a person carrying them away towards a stand of trees. The Judge was correct, however, to find that Mr O’Brien’s identification of Mr de Wys was unreliable. Mr O’Brien initially only had a momentary glimpse of the person in the rear vision mirror of his harvester. He then saw that person for a matter of seconds when he was turning the harvester. The person he saw had his back to him and was walking away at about 60 to 70 metres in the distance. He did not see the person’s face.
[29] The other strand of evidence relied on by the Commissioner in support of his contention that cannabis was grown on the Arapuni Road property was that of Mr Edmeades. He gave evidence that in December 2010 he found 30 to 40 plastic containers with soil in them in a swampy area of the farm under a willow canopy. Drainage holes had been cut in the containers, consistent with them being used for growing seedlings. The containers are the size of small bins or buckets. Mr Edmeades was aware of the police investigation and informed Detective Hopkins of what he had found. Detective Hopkins visited the farm and was shown the containers.
[30] Mr de Wys’s recollection was that there were only four such containers, and that he used them for growing cabbage tree seedlings. Mr Edmeades’s unchallenged evidence (which we accept) is that he found 30 to 40 containers. Mr Douch submitted that the logical inference, when this evidence is considered in the context of all the other evidence in the case, is that cannabis seedlings were grown in the containers.
[31] The final evidence on the issue of cultivation is that of Bryden Lane, Mrs de Wys’s father. Mr Lane’s evidence was that he and his wife would visit the respondents at the Arapuni Road property up to five or six times a year. At no time during his visits did he see anything that caused him concern or that was untoward. He saw no cannabis plants growing and no evidence of any unusual crop having been grown.
Cannabis remnants found at the Arapuni Road house
[32] Following his purchase of the Arapuni Road farm, Mr Edmeades did not move into the house formerly occupied by the respondents. Rather, he rented it out to Kit Ogle and her partner. In late 2009 they called a plumber to make repairs to the header tank. The plumber, Tuiri Samuel, climbed through a manhole into the roof cavity to inspect the tank. While in the roof cavity he noticed some loose leaf cannabis with some stalks attached lying on spread out newspaper. The cannabis was green and had an odour. Mr Samuel deposed that he was familiar with the smell of cannabis. There “did not appear to be a lot of” cobwebs around the cannabis, but there were plenty near the header tank. Mr Samuel told Ms Ogle’s partner of his find.
[33] On 5 December 2009 Ms Ogle contacted the police and told them what Mr Samuel had found. She said that she had contacted the police because she did not want to be blamed. Ms Ogle has a 1996 conviction for cultivating cannabis.
[34] Constable Stephen Maddren visited the property the same day. He accessed the roof space by standing on a ladder held by the occupants and inspected it with a torch. He noted newspaper spread over the ceiling joints with cannabis remnants on it consisting of twigs, leaf and head. He located 15 spread out newspapers, all dated 2001. There were undisturbed cobwebs over the majority of the roof space and newspaper. He removed cannabis weighing 60 grams. His evidence was that the cannabis appeared to be from a historic cannabis drying area. Police concluded the drying area had been undisturbed for many years. No further inquiries were made at that time.
[35] Detective Jonathan Hopkins subsequently visited the address on 13 August 2010 and inspected the roof space. The property was by now vacant. The roof space was warm, despite heavy winds and cold temperatures. Detective Hopkins observed numerous newspapers, some still folded and others spread out, situated at various places over an area of approximately 30 square metres. There were six complete newspapers and 89 newspaper pages from various publications, including “Dairying Today”. They ranged in date from February 1996 to March 2001. Numerous remnants of cannabis leaf and stalk were still on the newspapers and also on the insulation between the ceiling joists. There was also a large pile of cannabis remnants, which included cannabis seed and seed husks. The combined weight of the remnants of cannabis leaf and stalk that he recovered was 28.6 grams.
[36] In his affidavit of 7 October 2013 Mr de Wys deposed that access to the ceiling space was by a manhole in the ceiling, which could only be accessed by a ladder. He had been in the ceiling a long time ago, to have a look and saw toys, papers and rubbish. He said that he had no knowledge of the cannabis remnants the police found, “[n]or [did he] know of the newspapers said to have been found on the ceiling”. In cross-examination, however, Mr de Wys accepted that the newspapers dated to the period when he had lived in the house and that they would have been his newspapers. As for how they got into the roof space, he said:
A. We threw the papers up there, they always went up in the roof
[37] When asked why he would throw the newspapers up in the roof space, Mr de Wys said that he would keep them underneath the sink for a while and then put them in a Woolworths bag on a shelf in the kitchen, in case he needed something that had been in the newspaper recently or needed paper to start a fire. However, “in [his] laziness”, he would then just push the newspapers up through the manhole into the roof instead of burning them. He said that “they all would’ve gone in there, everything went in there that you wanted to get out of the way, storage sort of you know”. This evidence would not explain the spread out sheets of newspaper, or the placing of cannabis on them. Mr de Wys’s attention was drawn to the fact that the newspapers dated from 1996 to 2001. He confirmed that he had put newspapers up in the roof “for years” but was unable to explain why only six papers (and 89 additional loose pages) were found by the police during their search of the roof space.
[38] It is clear from the evidence that at some stage the roof space of the Arapuni Road property was used to dry fairly significant quantities of cannabis. The key issue, which we address further below, is whether the respondents or the subsequent tenants were responsible for that use.
The police search of the Kihi Road property
[39] A search warrant was executed at the respondents’ current address on Kihi Road on 10 August 2010. Mr de Wys was present. A small amount of cannabis, consistent with personal use, was found. Mr de Wys admitted to being a personal user and that the cannabis was his. He was charged with possession of cannabis, to which he pleaded guilty in the Te Awamutu District Court on 27 October 2010.
[40] Constable Aaron Lunt also located a black plastic rubbish bin with a lid inside a large blue feed bin. This was found in a hill paddock situated above the dwelling and towards the back of the farm. He noted a strong cannabis smell. He later questioned Mr de Wys about the smell and Mr de Wys replied “it shouldn’t do, I use it to run water to some of the stock up here”.
[41] Ms Deborah Siegers, a forensic scientist at Environmental Science and Research in Auckland, later examined the bin. Her analysis revealed that it contained traces of cannabis constituents. Mr Douch submitted that this was consistent with the bin having been used, at some stage, for the large scale storage of cannabis.
[42] In his affidavit of 7 October 2013, Mr de Wys deposed that the likely reason why cannabis constituents were found in the black bin was that he had hidden a small amount of cannabis he had for personal use in the bin when it was in the implement shed. Later he had used the bin to carry water for stock. Under crossexamination Mr de Wys offered a somewhat different explanation. He said that the presence of cannabis constituents would have been from him throwing his smokes and butts into the bin.
[43] Mrs de Wys asked the police executing the search warrant who had sent them there. During a second search of the respondents’ home, on 4 November 2010, a note written by Mrs de Wys was found. That note included the following passage:
Some people supplied by ronnie.
informer – undercoverd police office
won’t exclose the person.
remote chance of that.
[44] In her evidence Mrs de Wys acknowledged that during the police search she had asked who had told the police to come to her house. She also confirmed that she had written the above note and that it recorded things she had been told. She said that the note related to a telephone conversation she had with Paul Fisher, a lawyer. She rejected the suggestion that the note related to involvement in drug offending.
Evidence of significant unexplained income
[45] The police investigation into the respondents’ activities was prompted by a report from the respondents’ bank to the police Financial Intelligence Unit. The bank reported that between 8 January 2008 and 26 May 2008 numerous cash deposits (in $20 denominations) had been made into the respondents’ bank accounts, totalling approximately $320,000. The cash smelled of mould. It was deposited by Mr and Mrs de Wys and, on some occasions, other people.
[46] When questioned by the bank, Mr and Mrs de Wys said that they were selling farm equipment on Trade Me. Police inquiries with Trade Me, however, could only account for $8,466 of that sum. Inquiries with the Inland Revenue Department revealed that the respondents’ declared income could not explain access to cash at such a significant level.
[47] The cash deposits were made in the months preceding the respondents’ purchase of the Kihi Road property. Mr de Wys’s evidence was that the purchase of that property was financed in part from cash that he kept stored in a tin box buried under his house, which had been earned legitimately over a period of many years. He said that he had stored cash in that way since childhood to keep it away from his father (who had taken money and a gift off him as a child). In addition, his literacy problems had made it difficult for him to open a bank account. His wife opened one for him in 1994 and he has held bank accounts since then (operated by his wife). The respondents operated three bank accounts, excluding loan and savings accounts, by 2008.
[48] Laura Clay, a financial analyst employed by the police, undertook an analysis of the financial affairs of the respondents for the period between 20 December 2004 and 16 July 2010. Her initial calculations indicated that the respondents received $806,439.97 in cash income during that period, in respect of which no source could be identified. The respondents’ expert, Dennis Parsons, was subsequently able to satisfy Ms Clay that $76,881.35 of that sum had been sourced legitimately, for example from machinery sales. As a result, the benefit figure claimed by the Commissioner was reduced to $729,558.62 (the unexplained cash).
[49] The experts agreed that the unexplained cash figure of $729,558.62 could be further reduced “on the acceptance by the Court as to the source of these funds”. The respondents’ position is that all of the unexplained cash was accumulated legitimately.
[50] The respondents first provided explanations for $416,379.99 of the unexplained cash. This included 14 specific explanations (totalling $44,189.59) proposed by Mr Parsons but rejected by Ms Clay. The remaining $372,190.40 was explained by the respondents’ analysis of the various sources of their cash income during the period 1 June 2001 to 31 May 2008, as set out in “the red book”. The red book was prepared by Mrs de Wys between the first police search in August 2010 and the second police search in November 2010. Mrs de Wys’s evidence was that the red book was prepared for tax purposes in an attempt to calculate the income earned over that period that had not been declared to the Commissioner of Inland Revenue. Mrs de Wys acknowledged that she had no supporting records to refer to in compiling the red book. Rather, it was based solely on Mr de Wys’s memory.
[51] Mr Parsons analysed the various categories of revenue set out in the red book. The key items were firewood sales ($31,700); dumping fees ($30,000); livestock fees ($98,550); machinery sales ($94,500); and scrap metal sales ($86,300). Mr Parsons confirmed in his affidavit that he had not been able to validate the figures asserted.
[52] To take one example, the red book records that, in December 2007, 300 tonnes of scrap metal were sold at $200 per tonne, bringing in $60,000 in cash. This is said to have comprised items such as car bodies that were dumped on the farm. Mr de Wys was cross-examined on this entry as follows:
- For your notation from the 1st of June 2007 through to the 31st of May 2008, you recall that in December ‘07, there was 300 tonnes of scrap metal at $200 a tonne sold for a return of $60,000?
- Yeah. I’m not too sure on that $200 a tonne because it wasn’t sold as a tonne.
Q. $60,000 cash?
A. Yeah.
Q. Who from?
A. From the scrap man.
Q. Who is he?
Q. Sorry?
Q. What sort of truck did he come in, what was written on it?
A. Oh, it didn’t have nothing written on it, it was –
Q. Nothing written on it?
A. No.
Q. How many truckloads is 300 tonnes?
[53] No customers of any of the cash businesses gave evidence. The only corroborating evidence in relation to the various cash businesses was that of Mr Lane. He gave affidavit evidence of the improvement and development of both the Arapuni and Kihi Road properties. He also referred, somewhat in passing, to firewood being sold, as well as “large quantities” of timber being milled. He deposed that “It is worth mentioning that Ronnie and Penelope have used both their digger, mill and tractor as an income earner off the farm.” Mr Lane was not crossexamined.
[54] If the respondents’ evidence as to the various sources of their cash income was accepted in its entirety, then the unexplained cash balance would reduce to $313,178.63.
[55] In relation to this remaining balance, Mr de Wys’s evidence was that there was $230,000 in the tin box buried under the house by the year 2000. If this is deducted from the $313,178.63, the unexplained cash reduces to about $83,000.00. Mr Taylor submitted for the respondents that this sum could be attributable to either the time gap between the beginning of 2000 and the commencement of the period covered by the red book (1 June 2001); possible Trade Me sales prior to 28 June 2006; or the frailties of human memory, given that the red book was prepared from memory in late 2010 and went back to 1 June 2001.
[56] The red book cash analysis indicates that the incoming cash tapered off after the move to the Kihi Road property in 2008. The respondents’ evidence was that there were more limited opportunities to operate cash businesses at Kihi Road. The Commissioner submitted, on the other hand, that the drop off in cash income is consistent with significant cannabis offending having occurred at the Arapuni Road property.
Analysis of the evidence
[57] The key issue on appeal is whether the above evidence, considered in totality, is sufficient to prove on the balance of probabilities that the respondents benefitted from significant criminal activity.
Evidence of cannabis cultivation at the Arapuni Road property
[58] In our view the probative value of Mr O’Brien’s evidence is fairly high. The respondents did not challenge that he saw cannabis growing in the maize crop, but focussed on the reliability of his identification of Mr de Wys. We have concluded that the Judge was correct to reject Mr O’Brien’s positive identification of Mr de Wys. That does not mean, however, that the Court cannot infer, based on the totality of the evidence, that the man Mr O’Brien saw must have been Mr de Wys.
[59] It was common ground that the man was either Mr de Wys or an unknown intruder onto the property. There were no other adult males living on the farm. If the intruder scenario is correct, then an unrelated member of the public elected to grow a valuable cash crop on the respondents’ farm and assume the risk of discovery and destruction of it by the respondents. Based on Mr O’Brien’s evidence, this occurred in three successive years. Further, when the maize harvesting contractors arrived at the property without any advance warning in 2006, the intruder was able to respond immediately to the threat to the cannabis crop posed by the harvesters. He removed the cannabis to safety.
[60] Even when this evidence is considered in isolation we find the intruder scenario to be implausible. It becomes even more implausible when Mr O’Brien’s evidence is considered together with the other strands of evidence relied on by the Commissioner to link the respondents to cannabis offending. The logical inference is that Mr de Wys was the cultivator of the cannabis and also the unidentified man who removed the cannabis plants and walked away with them towards a stand of trees.
Cannabis remnants found at the Arapuni Road house
[61] We now turn to the evidence of the cannabis drying facility in the roof space at Arapuni Road. Again, there are only two realistic possibilities as to who set that up. It was either the respondents (who lived there for 18 years from 1990 to 2008) or the subsequent tenants, who moved into the house some time after May 2008 and moved out some time prior to August 2010. In our view it is inherently unlikely that the subsequent tenants, if they were using the roof space for drying cannabis, would call a plumber to fix the header tank in the roof space and then hold the ladder for him while he climbed up into the roof space without first removing all evidence of their cannabis related activities. That is particularly so given that, on this scenario, the drying room would have been fairly recently established.
[62] Further, the newspapers that the cannabis remnants were spread out on all dated to the respondents’ occupation of the property. Mr de Wys admitted at trial that those papers belonged to him. His explanation of having thrown the papers through the manhole and up into the roof space because he was “too lazy” to do anything else with them is inherently implausible, particularly given that the manhole can only be accessed with a ladder. Further, his evidence of having thrown many years’ worth of newspapers into the roof space was not supported by the evidence obtained from the police search. We also note that Mr de Wys initially denied any knowledge of the newspapers in the roof space in his affidavit, but then claimed in cross-examination to have put them there. Such inconsistencies undermine his credibility.
[63] We also note that both Mr Samuel and Constable Maddren gave evidence of cobwebs in the roof space. This evidence suggests that the space had not been used for some time.
[64] The respondents’ counsel submitted that the logical inference is that the drying space was set up by the subsequent tenants. They were living there when the plumber found the cannabis and Ms Ogle has a conviction for cultivation of cannabis.
[65] In support of this, counsel said it is implausible that the respondents would have left behind a total of 90 grams of valuable cannabis if they were commercial cannabis dealers. We do not find this implausible. It is apparent from both the evidence and the photographs produced as exhibits that the cannabis left behind was remnants dispersed across a wide area of roof space, including in the insulation and between the ceiling joints. It included stalks and husks that likely had minimal commercial value. If anything, the fact that 90 grams of remnants were left behind (together with the fact that the spread out newspapers covered about 30 square metres) tends to indicate the fairly significant scale of the cannabis drying operation that was undertaken.
[66] Counsel for the respondents also relied on Mr Samuel’s evidence that the cannabis was green and had an odour as suggesting that it must have been harvested relatively recently. Mr Douch rejected that submission and suggested that dried cannabis is always green and dealers do not sell brown cannabis. There is no evidence before us as to whether it is possible to date how old cannabis is by its colour and odour. We do note, however, that the photos of the cannabis remnants show that the cannabis remnants were still green in colour when Detective Hopkins returned to the property about eight months after Mr Samuel’s initial visit.
[67] In our view, taking into account all of the evidence we have outlined, it is significantly more likely that the cannabis drying area in the roof is attributable to the respondents than to the subsequent tenants. That likelihood increases further when this evidence is considered in the broader context of all of the circumstantial evidence in this case, including Mr O’Brien’s evidence and the respondents’ access to very large sums of unexplained cash throughout their latter years of living at the Arapuni Road property (discussed in detail below).
Evidence of significant unexplained income
[68] We now turn to consider the final major strand of evidence, namely the sum of $729,558.62 in unexplained cash that both experts agree was available to the respondents during the period from 20 December 2004 to 16 July 2010.
[69] The respondents’ position is that this cash represents the proceeds of a number of legitimate cash businesses that were conducted over a period of many years. Those cash businesses were lawful, albeit the respondents admit that they did not pay income tax on the cash revenue received. They have now regularised their tax position with the Inland Revenue Department.
[70] The Commissioner’s case, on the other hand, is that the unexplained cash is the sale proceeds of the commercial quantities of cannabis that the respondents cultivated.
[71] We accept the Commissioner’s submission that the possession of large sums of unidentified income is potentially very significant. If the cash sums cannot be adequately explained then this will tend to support an inference that the relevant cash has been sourced from illegitimate or criminal activity. Referring to the other circumstantial evidence in this case will then assist in determining the likely nature of such activity.
[72] The respondents first came to the attention of the police by making numerous small bank deposits over several months. At times third parties made deposits into their accounts on Mr and Mrs de Wys’s behalf. Their explanation for the cash (that they had been selling farm equipment on Trade Me) could only account for a very small portion of the cash.
[73] The respondents’ explanation for the $729,558.62 in unexplained cash falls into two main categories, the red book evidence and the tin box evidence. As we have previously noted, where evidence was provided to Ms Clay of a specific cash source, for example relating to identifiable purchases of machinery or livestock, those sums were deducted from the unexplained cash figure. The balance of $729,558.62 remaining therefore relates solely to cash income where no source could be independently validated by either Ms Clay or Mr Parsons.
[74] As mentioned, the red book is an after-the-event reconstruction by the respondents of their income sources for the relevant period, based solely on Mr de Wys’s memory. Their evidence was that it was prepared primarily for the purposes of regularising their tax affairs.
[75] It is significant, in our view, that there is no paper trail to support any of the remaining items included in the unexplained cash figure. We accept that the respondents would not have kept detailed accounts, given that they were not paying tax on their cash income. Nevertheless, we would expect that cash businesses of the magnitude claimed would generate at least some documentation. For example, documentation was provided in relation to some machinery sales and credit was given for those sales. There is no documentation, however, in relation to the remaining machinery sales of almost $100,000. Mr de Wys deposed that this related to such things as farm machinery that he sold on the side of the road. Although it is possible that some machinery may have been sold on the side of the road, it is inherently implausible that almost $100,000 of it was. Further, one would expect at least some of the purchasers of machinery sold in this way to be local and therefore identifiable.
[76] To generate cash of the magnitude claimed, a very significant number of customers must have been involved, including those who paid livestock fees, purchased machinery, scrap metal or firewood, or paid to dump cars or other items on the farm. Not one such person provided corroborating evidence, however.
[77] The inherent implausibility of the sheer scale of some of the businesses is further illustrated by the claimed sale of $60,000 worth of scrap metal to “Santa Claus” in December 2007 (details of which are set out at [52] above). It is simply not credible that, over the space of a few weeks (at most), an individual who was completely unknown to the respondents and who did not even give them his name or that of his business paid them $60,000 in cash for scrap metal.
[78] The respondents clearly operated some legitimate cash businesses. But they have already been given credit for all of the cash transactions that can be verified. Given the sheer scale of the unexplained cash remaining, and the fact that none of it can be verified as coming from legitimate sources, the inevitable inference is that a very significant portion of it has been sourced from unlawful activity.
[79] We now turn to the tin box evidence. The significance of this evidence is that, if Mr de Wys had indeed saved $230,000 in a tin box under his house by the year 2000, then the amount of unexplained cash that can have been accumulated by the respondents during the period of significant criminal activity relied on by the Commissioner will have to be reduced by that amount (unless the financial analysis indicates that the money saved as at 2000 must have been spent prior to 6 August 2003).
[80] Mr de Wys deposed that he could specifically recall having $230,000 in “new plastic money” in the tin under the house by the year 2000, because it was the turn of the century. Detective Hopkins obtained information from the Reserve Bank that modern generation bank notes were first released in May 1999 ($20 notes) and October 1999 ($10 notes). Mr Douch submitted that it was implausible that $230,000 in “new plastic money” could have been accumulated from lawful sources in such a short period of time. (Indeed even if the sum was sourced from cannabis dealing it is difficult to see how such a significant sum could have been accumulated in such a short period.) Counsel for the respondents submitted, however, that Mr de Wys’s evidence should not be disbelieved solely on the basis of his reference to “new plastic money”, when he was not cross-examined on precisely what he meant by that, or how he came to have all his savings in “new plastic money”. For example, he could have exchanged some of his old notes for new notes. We accept that submission.
[81] The Commissioner did not dispute that Mr de Wys kept money hidden in a tin box under his house. Indeed Mr de Wys’s evidence on this issue is inherently plausible, given the extent of cash savings (however sourced) that he kept outside the banking system. It is quite possible that Mr de Wys may have had a significant sum in the tin box by the year 2000. We are somewhat sceptical that that sum would have been as great as $230,000, particularly given that Mr de Wys had to incur the significant expense of purchasing the dairy herd from his parents only five years previously. For present purposes, however, we will err in Mr de Wys’s favour and assume that there was $230,000 in the tin box by 2000.
[82] However, even disregarding any cash that may have been in the tin box as at 1 January 2000, and any other cash that may have been accumulated (lawfully or otherwise) by the respondents prior to 6 August 2003, it is clear that a substantial amount of unexplained cash was available to the respondents during the period from 6 August 2003 to 6 August 2010. As we have already noted, the lack of any corroborating evidence of cash businesses on the considerable scale claimed by the respondents supports the inference that a very significant portion of this cash was sourced from unlawful activities.
Absence of current evidence of cannabis offending
[83] Faire J accepted the respondents’ submission that it was significant that the police had failed to find any evidence in their two searches of the Kihi Road property of items associated with cannabis offending such as electronic scales, packaging material, customer lists and so on. We accept Mr Douch’s submission that this overlooks that the Commissioner’s case (at least in this Court) is not based upon cannabis cultivation and sale at the time of the police searches in 2010. Rather, the Commissioner’s case is that cannabis was cultivated at the Arapuni Road property and subsequently dried, processed and sold at that property. Further, even on the respondents’ own analysis, most or all of the unexplained income dates to the period when they lived at Arapuni Road.
Conclusion
[84] In conclusion, taking into account all of the strands of circumstantial evidence relied on by the Commissioner, we are satisfied that he has proved, on the balance of probabilities, that the respondents benefitted from significant criminal activity during the relevant period. As with most circumstantial cases, any one strand of evidence, considered in isolation, would not have been sufficient to prove the Commissioner’s case to the requisite standard. However, all of the circumstantial evidence, when considered together, strongly supports the inference that from 6 August 2003, until they moved to the Kihi Road property in May 2008, the respondents were involved in (and benefitted from) cannabis cultivation and sale on a commercial scale. The proposition that they were the innocent victims of an implausible and unlikely series of coincidences linking them to various aspects of cannabis offending is simply untenable.
[85] Our conclusion is further supported by the remaining circumstantial evidence (albeit of somewhat less probative value) of cannabis cultivation and sale that was not analysed in detail above. This includes the note written by Mrs de Wys, the seedling containers found by Mr Edmeades (which could have been used to cultivate cannabis) and the black drum found at Kihi Road. Mr de Wys’s claim that he stored a small amount of cannabis, for personal use, in the drum is not particularly credible. We also note his changing evidence as to the likely reasons why the drum tested positive for cannabis constituents, as set out at [42] above.
Value of the benefit received by the respondents
[86] The value of the benefit received by the respondents during the relevant period is presumed to be that stated in the Commissioner’s profit forfeiture application, unless that presumption is rebutted by the respondents on the balance of probabilities.
[87] Given his conclusion that the Commissioner had not proved that the respondents had benefitted from significant criminal activity, it was not necessary for Faire J to make a formal finding as to whether the evidence adduced by the respondents persuaded him, on the balance of probabilities, that the figure stated by the Commissioner should be reduced by a particular amount.
[88] Unfortunately, determining the precise value of the benefit received is unlikely to be entirely straightforward. Indeed, the Judge was clearly of the view that at least some further financial evidence, together with supporting submissions, would likely be necessary in order for the Court to fully analyse the issues relating to the unexplained cash.[12] In addition, if the Commissioner wishes to advance the submissions made in this Court on the plastic money issue then that matter will need to be put to Mr de Wys for comment, as any unexplained cash that was accumulated prior to 6 August 2003 (even unlawfully) will likely need to be excluded from the value of the benefit received by the respondents.
[89] Mr Douch submitted that, given this appeal proceeds by way of rehearing, it was open to us to simply determine the value of the benefit received on the existing evidence, rather than remit the matter back to the High Court. We are not prepared to adopt such a course as it would deprive the respondents of an appeal right in respect of this issue.
The respondents’ undue hardship application
[90] As is commonly the case, the Commissioner’s application sought both an assets forfeiture order and a profit forfeiture order. At trial the sole focus was on the profit forfeiture order and the assets forfeiture order was not pursued. The respondents appear to have anticipated, at some stage at least, that the assets forfeiture order would be the primary focus, as they both filed hardship applications pursuant to s 51 of the CPRA, which relates to assets forfeiture orders. We understand from counsel, however, that their general intention was that the hardship applications would apply to both the assets and profit forfeiture applications. The inquiry is essentially the same under both ss 51 and 56 of the CPRA.
[91] Hardship issues have not yet been considered and determined by the High Court. Given the Judge’s finding on the substantive application it was not necessary for him to do so. As a result of our decision to allow the appeal, the hardship application (amended, as necessary, to include the profit forfeiture application) will now have to be determined. Whether this requires the filing of additional evidence will be a matter for the parties and the High Court.
Result
[92] The appeal is allowed. The High Court judgment is set aside. We find that during the relevant period of criminal activity (6 August 2003 to 6 August 2010) the respondents have unlawfully benefitted from significant criminal activity, namely the cultivation and sale of the class C controlled drug cannabis.
[93] Determination of the quantum of the unlawful benefit received during the relevant period is remitted back to the High Court, together with the respondents’ hardship applications.
[94] The restraining orders in favour of the Commissioner are to continue in force until further order of the High Court.
[95] The respondents are jointly and severally liable to pay costs to the appellant for a standard appeal on a band A basis and usual disbursements.
Solicitors:
Crown Solicitors,
Hamilton for Appellant
Kit Clews Law Limited, Hamilton for First
Respondent
Gavin Boot Law, Hamilton for Second Respondent
[1] The Commissioner of Police v de Wys [2015] NZHC 540.
[2] Being the relevant period of criminal activity in terms of ss 5 and 52 of the Criminal Proceeds (Recovery) Act 2009.
[3] Significant criminal activity is activity that would amount to either an offence punishable by a maximum term of imprisonment of five years or more, or from which property, proceeds or benefits of NZ$30,000 or more have been directly or indirectly acquired or derived: s 6.
[4] The cultivation of cannabis is an offence against s 9 of the Misuse of Drugs Act 1975, which carries a maximum sentence of seven years’ imprisonment.
[5] Selling cannabis is an offence against s 6(l)(e) of the Misuse of Drugs Act, which carries a maximum sentence of eight years’ imprisonment.
[6] See R v Guo [2009] NZCA 612 at [49]–[52]; and R v Hoto (1991) 8 CRNZ 17 (HC) at 21.
[7] Thomas v R [1972] NZLR 34 (CA) at 38; R v Puttick (1985) 1 CRNZ 644 (CA) at 647; and Ngarino v R [2011] NZCA 236 at [26].
[8] Thomas v R, above n 7, at 38.
[9] The Commissioner of Police v de Wys, above n 1, at [74].
[10] At [100].
[11] At [101].
[12] The Commissioner of Police v de Wys, above n 1, at [91]–[95].
NZLII:
Copyright Policy
|
Disclaimers
|
Privacy Policy
|
Feedback
URL: http://www.nzlii.org/nz/cases/NZCA/2016/634.html