Commissioner of Police v Whakatihi [2014] NZHC 1774 (1 August 2014)

Last Updated: 26 August 2014

IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY

CIV-2013-454-417 [2014] NZHC 1774

BETWEEN	THE COMMISSIONER OF POLICE Applicant
AND	JACK MAKITANIA WHAKATIHI Respondent

Hearing:	29 July 2014
Counsel:	D J Flinn for Crown P L Murray for Respondent
Judgment:	1 August 2014

_{JUDGMENT OF WILLIAMS J}

Introduction

[1] The respondent, Mr Whakatihi, was sentenced for his (relatively small) part

in a methamphetamine drug ring to two years six months’ imprisonment on

12 October 2012. He had pleaded guilty to one count of possessing methamphetamine for supply. He has since been released on parole.

[2] The Commissioner now seeks profit forfeiture orders under ss 25 and 55 of the Criminal Proceeds (Recovery) Act 2009 (the Act) respectively.¹ The application relates to the following property:

(a) a white 1999 Ford Falcon, registration number YO7058 said to be valued at $3,250; and

_{(b) $390 in cash.}

¹ _{The application is dated 20 September 2013.}

THE COMMISSIONER OF POLICE v WHAKATIHI [2014] NZHC 1774 [1 August 2014]

[3] These were seized from Mr Whakatihi’s home by police on 10 February

2011. Restraining orders were granted by Simon France J on 22 October 2013. I

must now address the profit forfeiture order.

[4] I wish at the outset to record how troubled I am by this application. The value of the property at issue is (at best) $3,640. It is probably a good deal less than that in reality because the Falcon is in fact damaged. The cost to the State of bringing this application in terms of the police, lawyer and Judge time involved, and the cost of providing Mr Whakatihi with legal aid support to defend it, must together exceed the value of the items sought by a very wide margin indeed. Mr Beattie’s four affidavits in support of the application (three by way of reply) ran to 395 paragraphs of text. This is a poor use of State resources and bears all the hallmarks of unthinking bureaucratic decisions being made without thought or care as to the consequences. I had considered dismissing the application accordingly for abuse of process but have since thought better of it. Such a response would be as disproportionate as the application itself.

Hearsay application

[5] There is a preliminary issue with respect to the draft affidavit of Joanna Enid Ngatai-Packer. Her draft statement related to the Ford Falcon. Her evidence was that she was the owner of the Falcon and swapped it with Mr Whakatihi for his car (a Mitsubishi) and $500 cash. She said she did this on behalf of her friend, Nancy Roos who needed a car. She said the transaction took place on 25 October

2010 but that Mr Whakatihi did not complete the change of ownership form until

4 November 2010. As a result she received traffic offence tickets that should have gone to him.

[6] Ms Ngatai-Packer passed away suddenly on 20 May 2014 and had not sworn the affidavit by the time of her death.

[7] Sections 16 and 18 of the Evidence Act 2006 apply. Before I admit what would otherwise be inadmissible hearsay, I must be satisfied that the circumstances relating to the making of the statement provide a reasonable assurance as to its

reliability. It is important to note that reliability in this context is not ultimate reliability but threshold reliability.²

[8] I must simply be satisfied that the evidence is sufficiently reliable for me in my guise as fact-finder to consider it and draw my own conclusions. I have no hesitation in concluding that the threshold reliability test is met. There is no reason to believe that Ms Ngatai-Packer no longer stood by her draft statement at the time of her death and it is significant that it was prepared in affidavit form for swearing. The broad definition of “circumstances” in s 16 is also of assistance in reaching this conclusion.

[9] I admit the draft affidavit accordingly.

The money

[10] The police say that the $390 is the proceeds of drug sales. It was seized at Mr Whakatihi’s address on 10 February 2011. It was found inside a notebook containing a list of names, values and whether the relevant sum had been “pd” (paid), or was a “koha”.

[11] Mr Whakatihi says that the $390 was not drug money but “club fees” collected by him as President of the Nomads gang, Foxton branch. He says all of the names on the list are those of fellow gang members who paid fees weekly or fortnightly. In his affidavit, he names and identifies each of the 17 individuals on the list including himself – he is recorded as paid. The two individuals with koha against their names indicate that they made an overpayment and the amount of it. Mr Whakatihi says the sum involved is too small to be drug money.

[12] Mr Whakatihi said that the money was not his, but that he held it on behalf of the gang. I will return to this sum below.

2. See R Mahoney and others The Evidence Act 2006: Act and Analysis (2nd ed, Thomson Reuters, Wellington, 2010) at [18.02], and cases cited therein.

The Falcon

[13] Mr Whakatihi says he swapped a Mitsubishi car for the Falcon. The Falcon was then owned by Ms Ngatai-Packer and the transaction took place on 25 October

2010. He said he gave Ms Ngatai-Packer $500 in addition to the Mitsubishi. Mr Whakatihi said he borrowed his $500 from his sister, Divina Morgan. Ms Morgan confirmed that in her own affidavit. As I have said, Ms Ngatai-Packer supported Mr Whakatihi’s story in her draft affidavit.

[14] For the Commissioner, Constable Beattie says he received a different account of the Ford transaction from Mr Whakatihi and Ms Ngatai-Packer when he interviewed them. Originally, Mr Whakatihi said he had paid $1,000 for the Ford. There was no mention of a swap involving the Mitsubishi, or the additional $500.

[15] Mr Beattie pointed to evidence that showed Ms Ngatai-Packer had in fact purchased the Falcon 11 days prior to 25 October from a car sales lot for $3,500. Mr Beattie suggested that Ms Ngatai-Packer’s statement was a fabrication invented to cover up the fact that Mr Whakatihi purchased her car with money derived from drug sales. Mr Beattie also tracked the bank statements of Divina Morgan, Mr Whakatihi’s sister. The bank statements suggest that Ms Morgan lived hand to mouth and could never have accumulated the $500 necessary to lend to her brother. That too, the Constable said, was a fabrication.

[16] I will come back to the question of the car below.

The legislation

[17] Profit forfeiture orders are somewhat more complex than asset forfeiture orders. In the latter procedure, the Court need only be satisfied that the property claimed for forfeiture is tainted property, i.e. that it had been acquired wholly or in part as a result of significant criminal activity, or was directly or indirectly derived from such activity.

[18] Profit forfeiture orders are different. They require the Court to assess the benefit the respondent may have derived from significant criminal activity. Once

that figure is identified, then the respondent stands to forfeit any property (drug related or not) in which he or she has an interest up to that value. Rather than tracing tainted property, profit forfeiture orders are an equivalent value regime.

[19] These applications are covered in ss 52 to 58 of the Act. The starting point is that the respondent must hold “interests” in the property for forfeiture. Interest in this context is defined in s 5 as meaning:

(a) a legal or equitable estate or interest in the property; or

(b) a right, power, or privilege in connection with the property.

[20] Section 53 provides that if the Commissioner proves the respondent has unlawfully benefitted from significant criminal activity, then the value of that benefit is presumed to be the value stated in the Commissioner’s application. According to subsection (2), the onus is on the respondent to rebut that presumed benefit figure on the balance of probabilities.

[21] By the terms of s 54, the Court must determine the maximum recoverable amount by adopting the value set under s 53 and deducting from that any property already forfeited to the Crown by means of an assets forfeiture order.

[22] By the terms of s 55, the Court must make a profit forfeiture order if satisfied on the balance of probabilities that:

(a) the respondent has unlawfully benefitted from significant criminal activity with the relevant period of criminal activity; and

(b) the respondent has interests in property.

[23] Section 56 contains the hardship exclusion. If the profit forfeiture order will create “undue hardship”, then the Court may grant relief. Undue hardship requires something more than the ordinary hardship arising as a consequence of the execution

of the forfeiture order.³ The hardship must be excessive or greater than the circumstances warrant. The applicant for relief must show that the hardship would be grossly disproportionate, or an extreme and undue want or privation.⁴ Relevant considerations include, in terms of subsection (2): likely use of the property, the nature of the respondent’s interest in it, and the particular circumstances of the significant criminal activity.

[24] Finally under s 58, even if the respondent has no interest in the property under s 55, the Court can take the view that the respondent has “effective control” over the property. If that is so, the property must be treated as though the respondent had an interest in it anyway. Thus, a profit forfeiture order can be made even though the respondent has no interest in the property at all. The question is whether the degree of effective control is such that the respondent is able to treat the property as

his or her own.⁵

My initial conclusions

[25] It is clear that it is not appropriate to make a profit forfeiture order with respect to the $390. The Commissioner has not established that the money is the proceeds of drug sales. On the contrary, it is more likely than not, that the money is indeed “club fees”. It is not Mr Whakatihi’s money. Nor do I consider that Mr Whakatihi has effective control over the money. It is more likely than not that he holds the money on behalf of the club and is not able to treat it as his own for all intents and purposes.

[26] The application in respect of the cash is therefore dismissed.

[27] It is established, on the other hand, that the Falcon belongs to Mr Whakatihi so it is necessary, in relation to that property, to consider whether a profit forfeiture order should be made. For Mr Whakatihi, Mr Murray argued that the Crown has

_{provided no evidence of the benefit derived from his receipt of the}

³ _{Lyall v Solicitor-General [1997] NZCA 73; [1997] 2 NZLR 641 (CA) at 646.}

⁴ _{Commissioner of Police v Nelson HC Auckland CIV-2010-404-989, 30 July 2010 at [73]–[75].}

⁵ Solicitor General v Bartlett [2007] NZHC 684; [2008] 1 NZLR 87.

methamphetamine sufficient to make the Crown’s scenario more likely than that

offered by Mr Whakatihi.

[28] Mr Whakatihi’s story is that the methamphetamine was provided in payment for a Harley Davidson motorbike. He said that this was provided on behalf of the gang, and was not his. He said the methamphetamine was distributed to, and consumed by, members.

[29] Mr Flinn submitted that this scenario is not credible. Mr Flinn pointed to the following factors:

(a) Mr Whakatihi pleaded guilty to possession of methamphetamine for supply;

(b) Ronald Young J noted in his sentencing notes (reflecting the summary of facts) that some of the methamphetamine was for Mr Whakatihi’s personal use, but a significant portion was for supply. These are the facts to which Mr Whakatihi pleaded guilty;

(c) three sets of scales were found at his home – they were electronic and manual scales, and in working order;

(d) in intercepts prior to the exchange, Mr Whakatihi was recorded variously as saying “it’s all about business man” and “making money”; and

(e) the methamphetamine was supplied to Mr Whakatihi on 14 December

2010 and by 10 February 2011 there was none left – it had to have gone somewhere.

[30] Mr Murray in response argued that these factors should not be decisive. The guilty plea, he argued, was a response to the statutory presumption of supply and should not be taken as an acceptance of supply itself. There was, he said, no evidence of the sort of income to Mr Whakatihi from the sale of the methamphetamine that one would expect. And, he argued, cellphone seizures after

the arrests were made produced nothing of evidential value around Mr Whakatihi’s on-supply of the methamphetamine. Mr Murray submitted that the Crown must show something more than that the methamphetamine came into Mr Whakatihi’s hands.

[31] I note, before passing over it, that Mr Flinn’s initial argument was that the Crown did not need to show what happened to the methamphetamine after it landed in Mr Whakatihi’s hands because the methamphetamine was simultaneously the significant criminal activity required by s 55, and the benefit from it. In light of s 3(1)(b) as to the Act’s purpose, I rather doubt that that is right, but in any event it is unnecessary for me to reach any conclusion in that respect because the evidence of supply by, and therefore benefit to Mr Whakatihi is clear enough.

[32] The Crown is right, Mr Whakatihi pleaded guilty to possession for supply and the summary of facts confirmed that he accepted that he sold much more than he consumed. Additional items of circumstantial evidence – the scales, and the intercepts in particular – corroborate that acceptance.

[33] I conclude therefore that a benefit accrued to Mr Whakatihi equal to $16,800, being 21 grams of methamphetamine at $800 per gram. There is no deduction to be made in relation to any assets forfeiture order, and I am satisfied that Mr Whakatihi has unlawfully benefitted from the sale of methamphetamine which is a significant criminal activity, and that he owns the Falcon motor vehicle, the subject of the application.

Undue hardship

[34] Being satisfied as to the foregoing matters, the final question is whether undue hardship will be caused to Mr Whakatihi as a result of the vehicle’s forfeiture.

[35] Mr Murray submits that Mr Whakatihi is not a man of any means and that forfeiture of this vehicle will create hardship for him that is out of proportion to the circumstances of the offending and the offender.

[36] I agree that the forfeiture of this vehicle will create undue hardship. Mr Whakatihi has been recently released and is reliant on family support for his livelihood. He lives in a community with little public transport infrastructure, and a car is essential. This car is of a very modest nature and value indeed. I consider, in the circumstances, that undue hardship is made out.

_{[37] I therefore decline the Commissioner’s application accordingly.}

_{Williams J}

Solicitors:

Ben Vanderkolk & Associates, Palmerston North

P L Murray, Barrister and Solicitor, Palmerston North