Davies v Ministry of Health HC Christchurch CRI-2011-409-000026 [2011] NZHC 962 (8 August 2011)

Last Updated: 14 September 2011

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

_{CRI-2011-409-000026}

BETWEEN DEAN GARRY REYNOLD DAVIES Appellant

AND MINISTRY OF HEALTH Respondent

Hearing: 20 July 2011

Appearances: R W Maze for Appellant

T J MacKenzie for Respondent

Judgment: 8 August 2011

_{JUDGMENT OF WHATA J}

This judgment was delivered by Justice Whata on

8 August 2011 at 4.30 p.m., pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Date:

Solicitors:

R A Fraser & Associates, PO Box 163, Christchurch 8140

Raymond Donnelly & Co., Crown Solicitors, PO Box 533, Christchurch Mail Centre, Christchurch

8140

DAVIES V MINISTRY OF HEALTH HC CHCH CRI-2011-409-000026 8 August 2011

[1] Mr Davies was convicted on one charge of possession of a prescription medicine (nitrous oxide), and one charge of sale of a prescription medicine (nitrous oxide). A fine of $1,200 was imposed, plus Court costs of $132.89.

[2] Mr Davies may have achieved some notoriety as a consequence of his appearance on 20/20 television show where he is recorded as saying that he sold nitrous oxide or NOS. This video recording, together with other information, was relied upon by the Judge for the purposes of the conviction.

[3] The nub of the appeal is that the 20/20 television show, together with the other supporting information, did not provide a proper evidential basis for conviction and was inadmissible.

Facts

[4] Judge Farish found Mr Davies guilty on two charges arising out of a

“controlled purchase” operation and search of a shop trading as “The Lab” on

Manchester Street in Christchurch in June 2007. Those charges were:

(a) Sale of a prescription medicine (nitrous oxide) contrary to s 18(1) and

(5), and 79 of the Medicines Act 1981; and

(b) Possession of a prescription medicine (nitrous oxide) contrary to s 43(1), 78 and 79 of the Medicines Act 1981.

[5] Judge Farish identified: 1

The real issue is whether or not 161 Manchester Street, called The Lab, was being run either by or under the direction of Mr Davies.

[6] The case before Judge Farish proceeded on the basis that there needed to be an evidential link established between the The Lab Holdings Ltd and The Lab, 161

Manchester Street. The prosecution and the Judge relied on five key items of

_{evidence including:}

1 Ministry of Health v Davies DC Christchurch CRI-2008-009-007025, 17 January 2011, at [2].

(a) An invoice book including, as of March 2007, an invoice in the name of The Lab Holdings Ltdwith an address of 161 Manchester Street;2

(b) A staff purchase book and a staff tick book. The staff purchase book was seized after the NOS had been sold in June 2007. At the front of the staff purchase book is a type-written instruction in relation to lay- buying of items, and importantly, on the front cover of the book it says “Dean’s Authority and a signature for any item that leaves the premises” and again in the next paragraph “You cannot make a payment without Dean being available to witness the payment being made, therefore no other staff members can accept payments on your behalf.” There are other references in the same book connecting the

lab to a person called Dean.3

(c) A 20/20 programme in which the interviewer, Mr Cronshaw¸ interviewed Mr Davies in relation to publicity around the use of nitrous oxide;4

(d) Companies Office documentation which was admitted by consent. It is a print-out from the Companies Office dated 26 June 2008. It records that The Lab Holdings Ltd was first incorporated on

10 October 2003. It records that Dean Garry Reynold Davies is a director of that company and that he was appointed on 20 October

2003.5

(e) Evidence from a Melanie Noonan. Following the airing of the 20/20 documentary she visited The Lab premises at 161 Manchester Street on 17 May 2005. She gave evidence that she was tasked with serving warning letters on a number of businesses including The Lab premises

_{at 161 Manchester Street. She gave evidence that she had a telephone}

2 _{Ibid, at [4].}

3 _{Ibid, at [5] and [6].}

4 _{Ibid, at [8].}

5 Ibid, at [10].

conversation with Mr Davies and on various occasions sought to serve the warning letters on him, it appears without success.

[7] Having considered the above evidence, Judge Farish resolved that this was a circumstantial case. She mades the following conclusion:6

Here there is no one definitive piece of evidence that says that Dean Davies authorised or, as of 21 June 2007, was the guiding hand or in charge of 161

Manchester Street. However, that overlooks all of the evidence and when puts together all of the facets of the evidence, particularly the staff purchase

book and also the tick book which has the same words on the front of it “No more tick unless Dean says so”. There is, in my view, much to be made of

Mrs Orchard’s submission that “all roads lead to Rome” and I am satisfied

beyond a reasonable doubt that Lab Holdings Ltd was being run by Mr Davies, the defendant, and that, at the material time, being 21 June 2007, he was in charge or directing the business of 161 Manchester Street.

Grounds for appeal

[8] Mr Davies identifies the following main grounds of appeal.

(a) The 20/20 television show was inadmissible as it was an unreliable statement by the defendant or alternatively its prejudicial effect on the proceedings outweighed its probative value;

(b) That the Companies Office documentation could not support any meaningful inference because no evidence was called to interpret it; and

(c) Details about the address of the company on the information were not evidence and could not be taken into account.

[9] Mr Maze made the additional contention that the Judge had misdirected herself in convicting Mr Davies on the narrow basis that she was satisfied that he was a director of The Lab Holdings Ltd. He says she should have satisfied herself that Mr Davies had specific knowledge and control of the offending in question. He

_{said that if Mr Davies is pursued as a director, then the proper charge should have}

6 At [17].

been under s 79(3) of the Medicines Act, where the company is found liable and then Mr Davies is held indirectly liable as a director. Alternatively, he should have been charged as a party under s 66 of the Crimes Act.

[10] I propose to address each of these grounds in turn.

Admissibility of 20/20 programme

[11] The core of Mr Davies complaint is that the 20/20 programme was unreliable and therefore inadmissible in terms of s 28 of the Evidence Act 2006.

[12] Section 28 provides:

Exclusion of unreliable statements

(1) This section applies to a criminal proceeding in which the prosecution offers or proposes to offer a statement of a defendant if—

(a) the defendant or, if applicable, a co-defendant against whom the statement is offered raises, on the basis of an evidential foundation, the issue of the reliability of the statement and informs the Judge and the prosecution of the grounds for raising the issue; or

(b) the Judge raises the issue of the reliability of the statement and informs the prosecution of the grounds for raising the issue.

(2) The Judge must exclude the statement unless satisfied on the balance of probabilities that the circumstances in which the statement was made were not likely to have adversely affected its reliability.

(3) However, subsection (2) does not have effect to exclude a statement made by a defendant if the statement is offered only as evidence of the physical, mental, or psychological condition of the defendant at the time the statement was made or as evidence of whether the statement was made.

(4) Without limiting the matters that a Judge may take into account for the purpose of applying subsection (2), the Judge must, in each case, take into account any of the following matters that are relevant to the case:

(a) any pertinent physical, mental, or psychological condition of the defendant when the statement was made (whether apparent or not):

(b) any pertinent characteristics of the defendant including any mental, intellectual, or physical disability to which the defendant is subject (whether apparent or not):

(c) the nature of any questions put to the defendant and the manner and circumstances in which they were put:

(d) the nature of any threat, promise, or representation made to the defendant or any other person.

[13] Mr Maze noted that the DVD recording was not formally produced by its maker. There was no ability on the part of Mr Maze to test or examine the circumstances in which the recording was made. He says that the recording on its face raises serious doubts about its reliability, including:

(a) It was highly edited and intentionally provocative;

(b) It contains gratuitous sexual material, loud soundtracks and unrelated

“boy racer” activity;

(c) It portrays two protagonists (The Hon. Jim Anderton MP and

Mr Davies) in the most extreme light possible;

(d) The context in which the questions are put and the answers given is not clear;

(e) Specifics as to the location and date of the interview are unknown, except that it pre-dates the alleged offending in the information by more than two years;

(f) It appears to relate to a different shop, rather than the shop subject to the information.

[14] Mr Maze submits that in the absence of any reliable information as to the circumstances in which the recording was made and given its clear commercial purpose, it ought to have been excluded from consideration unless the informant could provide at least some evidence as to its reliability. There was none.

[15] Mr MacKenzie, for the respondent, contended that the primary focal point for the purposes of reliability are the statements made by the accused. He says that the recording itself demonstrates that Mr Davies was clear and coherent at the time he

made his statements, was not under any disability and in fact was as Judge Farish put it in her judgment:7

... positively buoyant about the sale of nitrous oxide at that particular time, that he did not believe that the substance was dangerous and that he would fight any prosecution and would continue, in Mr Davies words, to sell it until he was arrested and would have his day “in court”.

[16] Mr MacKenzie further contends that provided Judge Farish was properly satisfied (as she was) that the immediate circumstances of the statements were reliable, then they were admissible. He suggests that there is nothing in the video recording itself to suggest in any way that Mr Davies was under any misapprehension as to what he was saying or under any inducement to say it. In those circumstances, the defendant needed to produce at least some evidence going to the reliability of the statements made by Mr Davies. The defendant was afforded the opportunity to produce such evidence and did not. In those circumstances, the requirements of s 28 were satisfied (even though they were not argued before Judge Farish) and accordingly there can be no basis for a finding of inadmissibility.

[17] In this regard, I was taken to the case of R v Cameron.8 The Court of Appeal observed:

[37] Perhaps unusually, this is a case in which the first requirement of s 28(1) is not met because, as we have said, there was no evidence by Mr Cameron, or on his behalf, going to this issue. But, even if viewed more broadly, there is no proper basis to doubt the reliability of the statements made by Mr Cameron.

Analysis

[18] Section 28 contemplates a two-step approach to reliability namely:9

Step 1: The defendant must provide an evidential foundation in support of an issue of the reliability of the statement; and

7 _{At [8].}

8 _{R v Cameron [2009] NZCA 87.}

9 Ibid, at [33].

Step 2: If a defendant provides an evidential foundation, the Crown must then show on the balance of probabilities that the circumstances were not likely to have adversely affected the statement’s reliability.

[19] Mr MacKenzie was prepared to accept that an issue of reliability was raised, but regrettably, Judge Farish was not taken to s 28. Rather, she resolved the question of reliability, in her Ruling 1 (dated 18 November 2010), in this way:

[17] The comments made by Mr Davies in May 2005 are highly relevant in relation to whether or not he was linked to the “The Lab”. In June 2007 more so he indicated during the course of that interview a position of somewhat defiance in relation to basically wishing to test his case, that he has a view point that NOS is not illegal and therefore would continue to sell it until he was arrested and had his day in Court. Also the evidence is relevant in relation to whether or not he was the controlling mind behind the entity that sold NOS on 21 June 2007.

[18] The only concern that I have is the prejudice in terms of the late notice to Mr Davies. Initially I was of the view that the matters raised by Mr Maze in terms of calling people from TVNZ as to how the programme may or may not have been edited was not going to assist, it was highly speculative and it was apparent from the discussion that I had with Mr Maze that I was not persuaded by this.

[19] The issues now raised though by Mr Maze which are more specific in relation to the two witnesses that he has nominated in relation to the manager of the subject premises and a witness in relation to the company structure are more directly relevant in terms of prejudice. It is quite apparent that Mr Davies’ case in terms of defence would have taken a different approach if they had known in advance that this DVD was going to be played. This would then be able to place whatever assertions of fact Mr Davies had made during the course of that interview in context and it is the context which is important.

[20] Mr Maze has not disclosed his hand as far as the defence is concerned other than to say that everything is in issue. Therefore the issue is whether or not I allow the DVD to come in as evidence and if I do what are the remedies available, or whether or not I say because of the late notice that this is just going to extend matters too far out.

[21] I have come to the view point that the DVD is admissible and should form part of the Informant’s case. That then leaves me in the position of the remedies.

[22] Reluctantly I am going to have to grant adjournment to allow Mr Maze to be able to call witnesses that he would have been able to call if he had been given notice of the DVD. He will have some time to be able to organise this because I have said there are no dates available before Christmas.

[20] It will be seen that Judge Farish commences her analysis by emphasising the relevance of the recording and then she treats as “highly speculative” concerns raised by Mr Maze as to the reliability of the circumstances in which the recording was made. She then provides an opportunity for evidence to be produced by Mr Maze, but only after admitting the DVD.

[21] Because Judge Farish was not taken to s 28 I cannot know whether she resolved that there was in fact no evidential foundation for the defendant’s concerns. However, I consider that as the Judge could only speculate on the circumstances of the recording, there may be a cogent basis for requiring at least some evidence from the informant on those circumstances. I am of the view that a complete absence of evidence on the circumstances of a recording may very well provide “an” evidential foundation in terms of s 28. An example might be a situation where a statement was given under some form of compulsion, say gang related activity, but in a context where the defendant, for other reasons wishes to maintain his or her silence. If that context is known to the informant, then it might be necessary for the informant to provide some evidence as to whether the circumstances were likely to affect the reliability of the statement.

[22] On that basis the Judge may have missed a key step in the evaluative process. I have therefore undertaken the task of assessing whether the respondent has provided “an” evidential foundation in this case.

[23] Before turning to that assessment it is necessary to address Mr MacKenzie’s

submission that under s 28 the Court is concerned with the reliability of the

“statement”, rather than the circumstances within which the statement was made. There is some support for Mr MacKenzie’s approach. Asher J in R v McCallum10 said:

Reliability is not defined in the Act, but I interpret the word as relating to the accuracy and soundness of the statement, rather than to the fairness of the circumstances that led it to be made.

10 R v McCallum HC Auckland CRI-2006-004-17181, 29 August 2007 at [64].

[24] In R v Cameron the Court of Appeal also said “reliability is concerned with whether what was said is sound”.11 It is not entirely clear to me whether the Court (or Asher J in McCallum) was referring to the outcome sought rather than the focus of the inquiry under s 28. I do note that in the same paragraph the Court immediately moved to an assessment of the circumstances, that is “an opportunity to talk with Tony in circumstances in which the whole emphasis was on trust and honesty ...”.12

[25] For my part I consider that the two, accuracy and fairness, are inextricably linked. I consider that s 28 brings into focus not only the accuracy and soundness of the statement itself, but also the circumstances in which it was made. This is enunciated at subs (2) which requires a Judge to exclude a statement unless satisfied on the balance of probabilities that the “circumstances in which the statement was made” were not likely to have adversely affected its reliability. The assessment criteria in subs (4) refer to, among other things, the nature of any questions put to the defendant and the manner of the circumstances in which they were put and the nature of any threat, promise, or representation made to the defendant or any other person.

[26] Accordingly, it seems to me s 28 is framed in such a way that the wider circumstances must be factored into the assessment of reliability of the statements. I adopt the analogy drawn by Mahoney to the approach taken by the Court of Appeal in R v Edmonds. The Court of Appeal observed in relation to s 45(2) that the reliability of the identification evidence is assessed by reference to “the impact of the

surrounding circumstances on its reliability”. 13

[27] I also approach this issue through the wider lens of the scheme and purpose of the Evidence Act 2006. The Act strives to seek a fair balance between relevance, probative value and prejudice.14 Inevitably the higher the relevance and probative

_{value, the greater the prejudice. This brings into focus the need for care in ensuring}

11 R v Cameron [2009] NZCA 87 at [35], as noted in R Mahoney et al, The Evidence Act 2006: Act and Analysis (Wellington: Brookers, 2010) at p 112.

12 _{At [35].}

13 R v Edmonds [2010] 1 NZLR 762 at [106]. Refer also commentary in R Mahoney et al, The

_{Evidence Act 2006: Act and Analysis (Wellington: Brookers, 2010) at 113.}

14 See s 8.

that highly relevant evidence is reliable. It is one of the fulcra around which a fair balance between relevance, probative value and prejudice is achieved.15

[28] Returning to the present context, the accused raises concerns about the circumstances of the recording. The recording was made for a commercial purpose in a provocative and antagonistic format, and published in a sensationalised way. It was also made two years prior to the alleged offending. In combination it might be said that they raise at least a doubt about whether the recording is a fair and comprehensive account of the defendant’s statements and whether they were qualified in any way. The defendant’s bravado could suggest a high level of encouragement towards hyperbole. It is also troubling that this evidence may be used to establish culpability for a future event committed two years after the recording. In those circumstances it is important to have surety that the recorded statements are comprehensive and were not qualified in any material way.

[29] Mr MacKenzie emphasised to me that the video recording itself demonstrates the circumstances in which the statements made were reliable. But that submission needs to be approached with some care given that it is largely conclusory. In the absence of evidence about the circumstances, we cannot know how the recording was edited, because the person who made the recording was not available to give that evidence. This case is somewhat removed from the formal police interview context or the facts in R v Cameron. In that case the accused was recorded admitting to an actor, Tony, that he had committed various offences. The statement was deemed to be admissible because there was no reason to suspect that the statement was anything other than truthful. The person recording the statement was capable of being tested as to the reliability of the circumstances in which the statement was made. That is not the case here.

[30] Be that as it may, I was afforded the opportunity, by consent, to view the DVD recording. The overwhelming inference to be drawn from that recording is that the defendant was plainly untroubled at the prospect of legal proceedings

_{concerning his actions. The brashness of his defiance in such a public manner}

15 Refer also to the analysis in R Mahoney et al, op cit at 70 and 82 dealing with Sub Part 1, threshold reliability and definition of circumstances – though not directly relevant because s 27 applies to exclude it.

strongly suggests that he meant what he said. It is also difficult to discern how he might have qualified his statements given the very forthright manner in which they were given in the recording. It is also difficult to discern what type of inducement may have encouraged the defendant to make such inculpatory statements. It is also important in my view that the probative value of the statements relates to the linkage between the accused and the activities of The Lab. The inescapable inference to be drawn from the statements is that Mr Davies exercised control over the operations of The Lab at that time. I can see no reason to suspect that the circumstances of the statement would have any bearing on the reliability of the statement for that purpose.

[31] Accordingly, while there must be some speculation as to whether the factors identified by the defendant in combination with other editing policy, may have affected the reliability of the statements, I am satisfied that the defendant has not established “an evidential foundation” for concern about the reliability of those statements or their circumstances. The defendant has elected not to give a statement. And that is the defendant’s right. But it really was for the defendant to produce at least some evidence, against the backdrop of unequivocal statements, that might provide at least some evidential foundation for concern.

[32] In summary, while Judge Farish did not approach the evaluative exercise in accordance with s 28 (because she was not taken to it) I do not consider that there was any prejudice to the defendant. In short, the defendant did not and has not established an evidential foundation for challenging the reliability of the statements.

Company information

[33] I do not agree with the defendant that the reliance on the company information was improper. The information clearly displayed that Mr Davies was a director at the relevant time, at least prior to the offence and subsequent to the offence. I see no prejudice to the defendant having that information produced or relied upon by the Court in the way that it was.

Address – the information

[34] I also do not consider that this point has any merit. There is only passing reference to it in the judgment.16 In my view, if it did factor in the reasoning it barely factored and was not prejudicial to the accused.

Proper charge?

[35] I consider that the defendant is over complicating matters. Section 79(1) of the Medicines Act 1981 provides:

79 Liability of principal for acts of agents, etc

(1) Where an offence is committed against this Act or against any regulations made under this Act by any person acting as the agent or employee of another person, that other person shall, without prejudice to the liability of the first-mentioned person, be liable under this Act in the same manner and to the same extent as if he had personally committed the offence.

[36] Judge Farish properly directed herself to the central question of control. The Judge was plainly satisfied that Mr Davies was in direct control of the offending. I am therefore satisfied that the elements of s 79(1) were satisfied. There is no merit in this point of the appeal.

Result

[37] The appeal is dismissed.

[38] I record my gratitude for the detailed submissions on remedy. But given my conclusion it is unnecessary to traverse their merits.

16 At [10] and [16].

Costs

[39] The Crown should have its costs on a 2B basis, together with disbursements. If quantum cannot be agreed then memoranda should be filed within 14 days.

Whata J