R v K HC Wellington CRI 2008-085-1530 [2009] NZHC 237 (2 March 2009)

Last Updated: 27 November 2015

This case has been anonymized

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

_{CRI 2008-085-1530}

THE QUEEN

v

K

Hearing: 27 February 2009

Counsel: P K Feltham for Crown

K Jefferies for Accused

Judgment: 2 March 2009

JUDGMENT OF RONALD YOUNG J (Reasons for Decision)

Introduction

[1] Mr K pleaded guilty to possession of methamphetamine for supply, supplying methamphetamine, and possession of a pipe for the purpose of a commission and an offence against the Misuse of Drugs Act 1975, smoking methamphetamine.

[2] At a previous sentencing date counsel for Mr K indicated that Mr K disputed that the sum of $26,520, found in his possession when he was arrested, was the proceeds of drug dealing. The Crown asserted that this money was from drug

_{dealing and was relevant to the sentence I might impose. In addition the Crown}

R V K HC WN CRI 2008-085-1530 2 March 2009

sought an order for forfeiture of the money pursuant to the Proceeds of Crime

Act 1991 (s 15).

[3] I concluded that question of whether the $26,000 was or was not part of the proceeds of drug dealing was a matter of significance as to the appropriate sentence. Accordingly, a hearing was held pursuant to both s 24 of the Sentencing Act 2002 and s 15 of the Proceeds of Crime Act 1991.

[4] For the purpose of sentencing a prosecutor must prove beyond reasonable doubt the existence of any disputed aggravating fact (s 24(2)(c)). It was, therefore, for the prosecution to satisfy me that some or all of the $26,000 found in Mr K ’s possession were proceeds of drug dealing or money available and intended to be used for future drug dealing. Different considerations, which I deal with later in this Judgment, relate to the question of forfeiture although fundamentally in this case the same question arose – whether it could be proved that the money in Mr K ’s possession at arrest was from drug dealing.

[5] At the end of hearing the evidence I indicated to counsel that I was satisfied beyond reasonable doubt that most of the cash in Mr K ’s possession when arrested was the proceeds of drug dealing or intended to be used for drug dealing and, therefore, I proposed to take that into account in setting the appropriate sentence. I indicated I would give my reasons in due course. In addition I indicated that there would be a forfeiture order for some of the money found by the Police in Mr K ’s possession and that I would specify the exact amount and give my reasons subsequent to sentencing. I then proceeded to sentence Mr K . I now give my reasons for concluding that most of the cash in Mr K ’s possession when he was arrested was either the proceeds of drug dealing or intended to be used for drug dealing.

Background facts

[6] Mr K faced an indictment (as to the first count) that between August 2007 and February 2008 he supplied methamphetamine, secondly on 22 February 2008 he had methamphetamine in his possession for the purpose of supplying it to others and

thirdly, on that same date he had possession of a pipe for the purpose of smoking methamphetamine.

[7] When the Police executed a search warrant at Mr K ’s house at

34 Thornley Street, Titahi Bay he attempted to evade the Police by leaving from the front door when the Police were knocking on the rear door. He was carrying a shoulder bag. The bag contained $18,800 cash and 11.3 grams of methamphetamine. A further search of the house revealed, in another backpack, $3,000 cash bundled in amounts of $1,000 and a further $4,720 on the dining room table some of which had been bundled and with other notes loose. The total amount was $26,520.

[8] In addition the Police found a large number of small ziplock bags consistent with methamphetamine deal bags. They found a set of digital scales typical of those used by methamphetamine dealers. The smaller ziplock bags were found throughout the address. The defendant’s cellphone was examined by Police and found to contain a number of text messages relating to methamphetamine dealing. In Mr K ’s vehicle methamphetamine pipes were found. A further 5.5 grams of methamphetamine was also found.

[9] During the period between August 2007 and February 2008 Mr K was employed at Fleur Decorating. Mr K was earning about $600 a week from this employment. In his evidence Mr K provided information, although often vague on detail, about buying and selling motor vehicles in the period before and during the time which is the subject of these charges.

[10] In August 2006 Mr K made application for a loan from the BNZ Bank. A copy of the Loan Application was produced in evidence. It showed as at that date, Mr K had no assets and liabilities of $21,841. His monthly income was identified as $600 per week. He sought to borrow $3,702 which, he said was to consolidate some outstanding debt.

[11] Mr K said in evidence that his 2006 application to the bank for a loan was accurate. He said that he had also borrowed some $15,000 from the bank in 2004 and by 2008 both loans had been reduced to approximately $10,000.

[12] At the date of his arrest, as far as his assets were concerned, Mr K had the

$26,000 cash found as a result of the exercise of the search warrant. In addition he had a 2005 Buell Lightening motorbike which he purchased for $12,000 in November 2007 and sold in December 2008 for $7,000. Presumably that vehicle would have been worth somewhere near $10,000 at the time of his arrest in February 2008 increasing his total assets to somewhere in the region of $36,000. In addition it seems he may have owned other motor vehicles when arrested.

[13] This financial information illustrates that from August 2006 until early 2008

Mr K ’s financial position improved to the tune of at least $45,000. In August 2006 Mr K had no assets and owed $21,000. By early 2008 he had at least $25,000 in net assets ($36,000 in assets less $10,000 loan).

[14] Having heard Mr K ’s evidence I am satisfied that he had no credible explanation for how his financial position improved to the tune of $45,000 during this eighteen months or so. Mr K ’s evidence was as a general observation, incredible, often vague, accompanied by a reluctance to give a straight answer.

[15] Mr K ’s explanation for the spectacular turn around in his finances was severalfold. Firstly, he claimed that he had been trading successfully in motor vehicles during this time. Most of his evidence about his trading in motor vehicles was vague and often unsupported by any documentary evidence. What was clear was that while he sometimes made a profit from the purchase and sale of vehicles he often made a loss. Overall, at least from 2002 through until 2008, if he made a profit it would have been very small and more probably, based on his own evidence, he made a loss.

[16] His second explanation for the money he had was that it was partially money from the BNZ loans. Once again, however, that claim is not matched by the evidence. Mr K ’s evidence was that his first loan to the BNZ of some $12,500 was obtained in 2004. When he returned to New Zealand in 2006 he made a second loan application for some $3,700. He was in debt to the tune of $21,000 in August 2006 with no assets. These loans, therefore, could not possibly explain the

$26,000 in cash he had in early 2008.

[17] The final explanation related to payments he said were made to him in cash by family members. Firstly, he said he had received a $2,000 inheritance from his grandmother’s estate. He said initially he received this shortly after he returned to New Zealand in 2006 although he later suggested 2008. Based on Immigration records he returned to New Zealand from overseas in May 2006. It seems probable, therefore, that this inheritance was paid and used by him before August 2006 when he had no assets.

[18] Mr K said he received $5,000 from his family for whom he had done up a house which had been sold for a profit. No evidence was given by any family member to confirm that that sum had been paid to Mr K . Mr K said in evidence that the $5,000 was paid sometime in 2008 but he was not sure when. He said the property was sold in 2008 and he thought he may have received the money in January 2008 but was not sure. Mr K ’s evidence was that he had asked his father to give him this money in cash and that he had done so.

[19] The final piece of relevant evidence came from Mr Beattie who was a non- sworn member of the Police and financial investigator. He noted that from August to December 2007 there were some limited cash withdrawals but no eftpos transactions recorded on Mr K ’s trading account. This was unusual because in January and February 2008 Mr K spent somewhere between $250 and $300 a week on food, fuel, entertainment, typical every day expenditure one would expect through a trading account. The inference invited was that Mr K was funding his daily living, in part, from the cash he received from buying and selling drugs from August to December 2007

[20] I am satisfied, beyond reasonable doubt, that most of the $26,000 found in cash on Mr K or at his house was the proceeds of drug dealing and/or money he proposed to use to continue to deal in drugs. Mr K has no credible explanation how he managed to improve his financial position by $45,000 in the eighteen months from August 2006 to February 2008. The only credible exception is the $5,000 he received for his contribution to the house. It is clear from his own evidence that little or no money came from car dealing, his income from work was used to pay his outstanding loans and from time to time his daily living needs and he did not obtain

any bank loans during these eighteen months which could possibly explain the significant improvement in his finances.

[21] Given the evidence of drug dealing and given his admissions (albeit reluctant and at times contradictory) in his video interview I am satisfied, beyond reasonable doubt, that most of the money found on Mr K was money which he had made from drug dealing or proposed to use for drug dealing. That was, therefore, an aggravating feature relevant to sentence and I took it into account in my sentencing remarks.

Forfeiture Orders

[22] I turn now, therefore, to forfeiture orders under the Proceeds of Crime Act 1991. The Crown seek an order for forfeiture. Section 15 of the Act provides as follows:

15 Forfeiture orders

(1) On the hearing of an application for a forfeiture order in respect of a person's conviction of a serious offence, the Court may, if it is satisfied that property specified in the application is tainted property in respect of the offence, order that such of the property as is specified by the Court is forfeited to the Crown.

(2) In considering whether or not to make an order under subsection (1) of this section in respect of particular property, the Court may have regard to—

(a) The use that is ordinarily made, or was intended to be made, of the property; and

(b) Any undue hardship that is reasonably likely to be caused to any person by the operation of such an order; and

(c) The nature and extent of the offender's interest in the property (if any), and the nature and extent of any other person's interest in it (if any); and

(d) In addition to the matter referred to in section 14(1)(b) of this Act, any other matter relating to the nature and circumstances of the offence or the offender, including the gravity of the offence.

[23] I am satisfied that at least $21,502 of the $26,502 is tainted property used to commit or facilitate the commission of the offence or proceeds of the offence (see s 2 Proceeds of Crime Act 1991 : Definition of tainted property). Section 15(2) (above) sets out those factors that are relevant in deciding whether or not an order in respect of particular tainted property should be made.

[24] I am satisfied $5,000 of the $26,000 could reasonably be the money paid to Mr K by his father for his contribution to the improvement of a house and sale on profit. I am satisfied the rest of the funds are money Mr K earnt through drug dealing and money he proposed to use to fund his drug dealing in future.

[25] Mr K made no submissions to me on whether any undue hardship would be caused to any person by the operation of such an order, nor indeed any of the factors set out in s 15(2). Given I am satisfied that at least $21,000 is the direct profit from drug dealing, or to be used for dealing, there is no doubt in my mind this should be forfeited to the Crown. I, therefore, make an order that sum of $21,502 of the $26,502 be forfeited to the Crown. The sum of $5,000 should be paid to

_{Mr K .}

Ronald Young J

Solicitors:

P K Feltham, Luke, Cunningham & Clere, PO Box 10 357, Wellington, email: [e-mail]

K Jefferies, Jefferies Raizis, PO Box 10 641, Wellington, email: [e-mail]