COMMISSIONER OF NEW ZEALAND POLICE v MURRAY [2016] NZHC 2699

COMMISSIONER OF NEW ZEALAND POLICE v MURRAY [2016] NZHC 2699 [10 November 2016]IN THE HIGH COURT OF NEW ZEALANDCHRISTCHURCH REGISTRYCIV-2014-409-000858[2016] NZHC 2699BETWEEN COMMISSIONER OF NEW ZEALANDPOLICEApplicantAND MICHAEL SEAN MURRAYFirst RespondentESTATE OF THE LATE DONNA MARIEHOWSE (Deceased)Second RespondentHearing: 2 November 2016Appearances: H F McKenzie for ApplicantP J Kaye for First RespondentJudgment: 10 November 2016JUDGMENT OF GENDALL JIntroduction[1] On 23 October 2015 the first respondent, Michael Sean Murray (Mr Murray) following a guilty plea, was sentenced to a term of imprisonment of eight years and four months for possession for supply of methamphetamine, possession of methamphetamine (a Class A controlled drug), possession of cannabis (a Class C controlled drug), and possession of GHB (a Class B controlled drug). These offences occurred on 27 and 28 October 2014.[2] In the present proceeding the Commissioner of the New Zealand Police as applicant seeks a profit forfeiture order against Mr Murray and the second respondent, the Estate of Donna Marie Howse (the Estate), under s 55 of the Criminal Proceeds (Recovery) Act 2009 (the Act). The original application was against Donna Marie Howse personally but as she died shortly before 9 June 2016, consent was given to amend the proceeding such that the Estate was substituted as second respondent in place of the late Ms Howse.[3] The Estate was not represented at the hearing before me. It seems, however, that the present application is not opposed by the Estate. It is opposed by Mr Murray however. Essentially, in terms of s 55 of the Act the Commissioner contends that Mr Murray should be required to pay an amount equivalent to the financial benefit that he has potentially derived from his criminal activity in this case.[4] The profit forfeiture order is sought in the present application pursuant to ss 43, 44 and 52 of the Act.The grounds advanced by the applicant on which the order is sought are as follows:(a) Mr Murray has, in the relevant period of criminal activity as defined in s 5(1) of the Act (namely 28 November 2007 up to the date of this present application being 27 April 2016), unlawfully benefitted to the value of at least $479,000 from the significant criminal activity noted above, namely various drug related offending, including possession for supply of methamphetamine and possession of methamphetamine.(b) Mr Murray has the following interest in or effective control over the property sought to be realised:(i) The 2008 Harley Davidson FXST Softail standard motorcycle registration number A2NSP is registered to Mr Murray.(ii) The 2008 Ford Falcon BA XR8 4A motor vehicle registration number DCS13 is currently registered in the name of the Estate, but it is believed that Mr Murray had effective control over it.(iii) The 1995 Chevrolet Silverado pickup motor vehicle registration number TM9664, although registered in the name of Terence Austin McFarland, it is believed Mr Murray purchased or acquired for his own use and control. (This is based on an intercepted text message of 12 October 2014, and Mr McFarland advising the police at interview that he had sold the Chevrolet Silverado for cash to a "gang member".)[5] Before me, Mr Kaye counsel for Mr Murray conceded that for present purposes Mr Murray did have the pleaded interests in or control of the three vehicles noted at [4](b) above. In addition, he confirmed that it is not disputed Mr Murray was a senior patched member of the Head Hunters Motor Cycle Club gang.[6] Before me the applicant also formally applied here for an effective control order under s 58 of the Act to the effect that Mr Murray has effective control over the 2005 Ford Falcon BA XR8 4A motor vehicle. Mr Kaye, counsel for Mr Murray, also indicated before me that there was no issue on this aspect. Effectively he consented to that control order being made. Accordingly, I now make an order to this effect.Background facts[7] In October 2014 it seems police in Christchurch began an operation targeting Mr Murray and others in relation to the alleged distribution of methamphetamine in the South Island of New Zealand.[8] Mr Murray was then arrested on Monday 27 October 2014 in the vicinity of Taupo after being stopped by police following a complaint about the manner of his driving. He was stopped on State Highway 1 driving the Chevrolet Silverado vehicle noted above.[9] Initially, a small amount of methamphetamine was found in the cab of the Chevrolet Silverado vehicle and Mr Murray was arrested for possession of a Class A controlled drug. He was bailed to appear in the Taupo District Court on 29 October 2014. Mr Murray declined to make any comment regarding the methamphetamine, although police also recorded that he had in his possession at the time $1794.90 in cash and a cell phone.[10] A full search of the Chevrolet Silverado vehicle then revealed approximately 500 grams of methamphetamine which was concealed in four containers hidden under the lining of the truck deck. That methamphetamine was thought at the time to have a street value of between $300,000 and $500,000.[11] Following his arrest on 27 October 2014 and being bailed from the Taupo Police Station Mr Murray returned to his home at 158 Marshall Road, Levels Valley, Timaru. He was then arrested and charged in relation to the 500 grams (approximately) of methamphetamine located in the vehicle. This occurred on 29 October 2014 and Mr Murray at that point again declined to make any comment.[12] A search warrant was then executed at Mr Murray's residential address atMarshall Road, Timaru. At the time of Mr Murray's arrest in Taupo on 27 October2014 he was on Court imposed bail, having been arrested on 9 July 2014 in Auckland and charged with:(a) Unlawful possession of a pistol;(b) Unlawful possession of explosives (ammunition); and(c) Possession of the Class B controlled drug Gamma-hydroxybutyric acid (Fantasy).Mr Murray has a number of criminal convictions including for drug related offending.[13] The issues before the Court with the applicant's present application are nowreasonably confined, given the position taken by Mr Murray as outlined before me by his counsel, Mr Kaye. This position is as follows:(a) Mr Murray accepts he was a patched member of the Head Hunters Motor Cycle Club.(b) Mr Murray, it is noted, has already accepted responsibility by his plea of guilty and subsequent sentencing for the drug related offending committed on 27 and 28 October 2014.(c) Mr Murray further accepts responsibility for earlier firearms related offending dated 9 July 2014 and for the methamphetamine found in the Ford Silverado motor vehicle which was established as an amount of 479 grams.(d) Mr Murray's position however is that, so far as the offending whichresulted in his arrest at Taupo is concerned, he was simply the driver of the Ford Silverado vehicle and merely a courier of the methamphetamine drugs from Auckland such that he says he received no benefit from this incident. Mr Murray claims that he was simply stopped with the methamphetamine in the vehicle and, as only the courier engaged in this activity, he got nothing for his troubles.The Criminal Proceeds (Recovery) Act 2009[14] At the outset it needs to be noted that the present application is one seeking only a profit forfeiture order in terms of s 53 of the Act. The applicant is not seeking an assets forfeiture order here.[15] For such an application s 45 of the Act provides that service is required onany person who, to the applicant's knowledge has an interest in the property, theOfficial Assignee, and anyone who the Court directs must be served. The persons entitled to appear and to adduce evidence at the hearing are:(a) The applicant;(b) Any person on whom the application is served; and(c) Any other person who claims an interest in the property.[16] In this case, other than the applicant, the only other party who appeared at the hearing of this matter was Mr Murray through his counsel. No other person claimed any interest in the property concerned.[17] A profit forfeiture order in terms of s 55 of the Act is mandatory where certain requirements are met. In the present case, this Court must make a profit forfeiture order under that provision if it is satisfied on the balance of probabilities that Mr Murray has unlawfully benefitted from significant criminal activity within the relevant period of criminal activity, and has interests in the property in question. Importantly, property that is subject to a profit forfeiture order does not need to be tainted by the significant criminal activity (or any other criminal activity), as is required for an assets forfeiture order.[18] The Court derives its jurisdiction to make profit forfeiture orders from ss 53, 54, 55 and 56 of the Act. Sections 53 and 55 are relevant to the present case. They provide:53 Value of benefit presumed to be value in application(1) If the Commissioner proves, on the balance of probabilities, that the respondent has, in the relevant period of criminal activity, unlawfully benefited from significant criminal activity, the value of that benefit is presumed to be the value stated in—(a) the application under section 52(c); or(b) if the case requires, the amended application.(2) The presumption stated in subsection (1) may be rebutted by the respondent on the balance of probabilities.55 Making profit forfeiture order(1) The High Court must make a profit forfeiture order if it is satisfied on the balance of probabilities that—(a) the respondent has unlawfully benefited from significant criminal activity within the relevant period of criminal activity; and(b) the respondent has interests in property.(2) The order must specify—(a) the value of the benefit determined in accordance with section 53; and(b) the maximum recoverable amount determined in accordance with section 54; and(c) the property that is to be disposed of in accordance with section 83(1), being property in which the respondent has, or is treated as having, interests.(3) Subsections (1) and (2) are subject to section 56.(4) A profit forfeiture order is enforceable as an order made as a result of civil proceedings instituted by the Crown against the person to recover a debt due to it, and the maximum recoverable amount is recoverable from the respondent by the Official Assignee on behalf of the Crown as a debt due to the Crown.[19] As Laing J noted in Pulman v Commissioner of Police:1[10] The making of a profit forfeiture order under s 55 potentially requires the Court to take four separate steps. First, it must determine, whether the Commissioner has proved, on the balance of probabilities, that the respondent has unlawfully benefited from significant criminal activity during the relevant period. If the court is so satisfied, the value of that benefit is presumed to be one of the values prescribed by s 53(1). The respondent may, however, rebut that presumption on the balance of probabilities.[11] Second, the Court is required to determine the maximum recoverable amount. It does that by taking the value of the benefit and deducting from that figure the value of any property already forfeited to the Crown by virtue of any assets forfeiture order made in relation to the same criminal activity as that to which the profit forfeiture application relates.[12] Third, the Court must determine whether any property should be excluded from the operation of the profit forfeiture order because undue1 Pulman v Commissioner of Police (HC) Auckland CIV-2010-404-5666, 27 May 2011, Laing J.hardship is likely to be caused to the respondent if such property were realised.[13] Once the Court has undertaken such of these exercises as may be relevant, it must make a profit forfeiture order under s 55(1) if it is satisfied on the balance of probabilities that the respondent has interests in property. Any such order must specify the value of the benefit, the maximum recoverable amount, and the property that is to be disposed of.(Citations omitted)[20] In the present case Mr Kaye for Mr Murray confirmed that the only question at issue is whether the Commissioner has proved on the balance of probabilities that Mr Murray had unlawfully benefitted from significant criminal activity during the relevant period.[21] In this regard, s 7 of the Act states:In this Act, unless the context otherwise requires, a person has unlawfully benefited from significant criminal activity if the person has knowingly, directly or indirectly, derived a benefit from significant criminal activity (whether or not that person undertook or was involved in the significant criminal activity).[22] In terms of the Court's requirement to determine the maximum recoverableamount, Mr Kaye confirmed that, if the Court is satisfied that the first requirement noted at para [19] above is satisfied, then the maximum recoverable here is $479,000, being the agreed estimate of value of the methamphetamine located in the Chevrolet Silverado vehicle. No deductions are to be made[23] Next, Mr Kaye accepted that Mr Murray did have the required interests in the vehicles in question and he acknowledged also that no argument was being advanced on behalf of Mr Murray that undue hardship was likely to be caused to him in this case if those vehicles were to be realised.[24] The only matter at issue, therefore, I repeat, is whether the Commissioner has proved on the balance of probabilities that Mr Murray has unlawfully benefitted from significant criminal activity during the relevant period here. On this, MrKaye's argument, as I have noted at para [13] above, is that Mr Murray was simply the courier of the drugs in question and he received no benefit from the activity in question.[25] I turn now to examine that aspect.[26] In doing so, it is useful to consider the decision of this Court given in Pulman v Commissioner of Police2 which made a number of useful comments, in a not dissimilar situation, albeit that decision related essentially to an application before the Court relating to non-party discovery.[27] In Pulman, at the time of the offending Mr Pulman was employed at a pharmacy in Pukekohe, having originally owned the pharmacy business and continued to work there as an employee after the new owners acquired it. He pleaded guilty to a representative charge of manufacturing methamphetamine andwas sentenced to five years, eight months' imprisonment on that charge. His conviction stemmed from numerous sales of pseudoephedrine-based products sold from the pharmacy during a period between 2005 and 2007. Mr Pulman had sold approximately 1290 packets of drugs containing pseudoephedrine to persons who called at the pharmacy outside usual trading hours at a price routinely of $100 per packet paid in cash. There was no dispute that Mr Pulman received cash totalling approximately $129,000 for the drugs he sold in that way. He maintained, however, that he deposited the cash that he received from the sale of the drugs into a cash box kept for that purpose, which his employers then used to pay staff wages and to meet other business outgoings. Mr Pulman insists that he never received any personal benefit from the transactions that led to his convictions.[28] Addressing these arguments, Laing J made the following comments:[21] If the definition in s 7 is applied literally, however, Mr Pulman undoubtedly received a benefit from his criminal offending. He did not gift the drugs to the persons who came to the pharmacy. Rather, he sold them to purchasers for $100 per packet. The receipt of cash in those circumstances must, in my view, amount to the derivation of a benefit from criminal activity.[25] Relevantly, the forfeiture regime proposes to eliminate not only the ability of persons to actually profit from undertaking or being associatedwith significant criminal activity, but also the "chance" that they may be ableto do so. In addition, the regime proposes to deter significant criminal2 Above n 1.activity. Finally, it proposes to reduce the ability of criminals and persons associated with crime or significant criminal activity to continue or expand criminal enterprise.[26] When the purpose and objects of the Act are measured against the facts in the present case, a clear outcome emerges. First, the monies that Mr Pulman received were derived directly from significant criminal activity as the proceeds of drugs that he had sold for cash. Second, the proceeds of sale amounted to income in his hands even if he subsequently handed the cash over to his employer. Third, Mr Pulman always had the chance to profit from his criminal activity because he always had the ability to keep the sale proceeds for his own benefit.[27] In addition, the criminal activity in which Mr Pulman engaged was obviously of a type that the forfeiture regime seeks to deter. Finally, the provision of precursor drugs to persons involved in the manufacture ofmethamphetamine meant that Mr Pulman's criminal activity had the effect ofcontinuing or expanding criminal enterprises by others.[28] These factors suggest that the forfeiture regime was clearly designed to apply to criminal activity of the type that Mr Pulman engaged in. The regime provides a strong deterrent to those who are minded to engage in such activity, because it will apply even in circumstances where the offender ultimately derives no personal benefit from his or her criminal activity. TheCommissioner's approach, therefore, accords with both the literal wording ofs 7 and the purpose and objects of the Act.[29] In my view, these comments from Pulman apply directly in the present case and there is no salient difference here. Despite Mr Murray's contention first, that he was simply the courier of these drugs transporting them from Auckland to Christchurch and nothing more, and secondly, that he received nothing nor any benefit for his troubles the fact remains that, like the situation that prevailed inPulman, Mr Murray clearly had charge of the drugs when he was stopped in Taupo and he "always had the chance to profit from his criminal activity" because he always had the ability to keep or deal in these drugs for his own benefit.[30] This, in my view, is clearly in line with the regime proposed under the Act to deter significant criminal activity and major enterprises. The purposes and objects of the Act as I see it are designed to create a forfeiture regime which seeks to deter just the sort of criminal activity in which Mr Murray was engaged.[31] Ms McKenzie for the applicant contends that the evidence must suggest in this case that Mr Murray, as a senior patched Head Hunters gang member, was not simply a courier of the drugs but was to play a major part in their sale anddistribution. She submitted this was a clear inference also from the evidence before the Court of the two sets of scales, the point bags and cash located at his home. In my view, however, the Court does not, in this case, need to go this far (although these additional factors do provide some persuasive support here.)[32] Mr Murray, given his acknowledged background and being someone in control of this large quantity of methamphetamine which he claims he was transporting to Christchurch, clearly had the "chance" at least to actually profit fromthis criminal activity undertaking. This was because, like the situation which prevailed in Pulman, Mr Murray always had the ability to himself sell or divert the drugs onto the market to provide him with a personal benefit.[33] As I see the position, it does not matter in this case that ultimately Mr Murray may not have managed to keep the drugs (or indeed any monies from their possible sale) because he was first intercepted en route at Taupo. The unlawful benefit in thiscase emanated, in my view, from Mr Murray's being in possession of a large and valuable quantity of drugs and thereby being able to deal with or dispose of them as he thought fit.[34] And finally, for completeness, I would simply note that none of the provisions in s 61 - 69 of the Act, providing relief from civil forfeiture orders in certain circumstances, apply here.[35] For all these reasons, I conclude that the Commissioner here has proved on the balance of probabilities that, under all the circumstances prevailing here, during the relevant period Mr Murray has unlawfully benefitted from significant criminal activity and in terms of ss 53 and 55 of the Act a profit forfeiture order should be made.Result[36] Accordingly, the present application succeeds.[37] The following orders are now made:A profit forfeiture order is now made in terms of s 55 of the Act against the first respondent, Mr Murray, and on the following terms:(a) The value of the benefit determined in accordance with s 53 of the Act is at least $479,000.(b) The maximum recoverable amount is $479,000.(c) The following property in terms of this order is to be realised:(i) 2008 Harley Davidson FXST Softail standard motor cycle with the registration number A2NSP.(ii) 2005 Ford Falcon BA XR8 4A motor vehicle registration number DCS13; and(iii) 1995 Chevrolet Silverado pickup vehicle registration number TM9664.Costs[38] Given that these proceedings are described in the Act as civil proceedings, if costs are sought by the applicant here, and counsel are unable to agree, they may file memoranda sequentially which are to be referred to me and I will decide the issue on the material before Court....................................................Gendall JSolicitors:Crown Solicitor's Office, Raymond Donnelly & Co, ChristchurchCopy to:Peter Kaye, Barrister, Auckland