COMMISSIONER OF POLICE v MCDONALD [2019] NZHC 1089

COMMISSIONER OF POLICE v MCDONALD [2019] NZHC 1089 [17 May 2019]IN THE HIGH COURT OF NEW ZEALANDINVERCARGILL REGISTRYI TE KŌTI MATUA O AOTEAROAWAIHŌPAI ROHECIV-2013-425-334[2019] NZHC 1089BETWEEN COMMISSIONER OF POLICEPlaintiffAND KERRYN ROBERT MCDONALDFirst RespondentKERRI-ANNE REBECCA PIPSONSecond RespondentHearing: 9 May 2019Appearances: R Donnelly for ApplicantG Williamson for RespondentJudgment: 17 May 2019JUDGMENT OF MANDER J[1] The Commissioner of Police (the Commissioner) has made two applicationsfor profit forfeiture orders against the respondent, Kerryn McDonald, under s 55 ofthe Criminal Proceeds (Recovery) Act 2009 (the Act).[2] On 9 December 2015, Mr McDonald was convicted on three counts ofimporting the Class C controlled drug pentedrone from China. He was sentenced totwo years and four months' imprisonment. On 23 August 2017, he entered a guiltyplea to an unrelated charge of possession of methamphetamine for supply and wassentenced to four years' imprisonment. The Commissioner contends thatMr McDonald should be required to pay an amount equivalent to the financial benefitthat he derived from this criminal activity.The offendingThe importation of pentedrone[3] On 29 July 2013, a package was intercepted by New Zealand Customs thatcontained 256 g of pentedrone. The package originated from a pharmaceuticalcompany in China which specialises in the development and sale of various chemicalsand pharmaceutical products, including pentedrone. The package was addressed to aMichael Flannery of 284 Tramway Road, Invercargill. The following day, 30 July,two further packages from the same pharmaceutical company were intercepted byCustoms entering New Zealand. The first contained 264 g of pentedrone and wasaddressed to a Jay Rothera, 23 Murphy Street, Invercargill. The second packagecontained 206 g of pentedrone and was addressed to an Eve Flannery, 45 RegentStreet, Invercargill.[4] The police conducted an electronic surveillance operation which establishedthat Mr McDonald and two other men were involved in the importation of pentedrone.Some of the intercepted conversations referred to the purchase of cheap disposablecell phones. Enquiries by police of a local supermarket established that Mr McDonaldhad purchased a cell phone in addition to a prepaid top up voucher on the night of 1August. The following day, the police intercepted a phone conversation whichcaptured one of Mr McDonald's co-offenders asking him whether he had checked onthe status of the inbound package that they were waiting on. Mr McDonald repliedthat he had not.[5] Later that evening, police intercepted another conversation between the twomen. They both discussed the parcel they were waiting to arrive by international mailand to clear Customs. Mr McDonald informed his associate that he had made aninquiry of the Chinese pharmaceutical company and that the woman he spoke to musthave understood him because she emailed him advising she was going to make furtherenquiries with her "boss" and told him it was a matter of luck getting the packagethrough New Zealand Customs. Mr McDonald was asked by his associate whether hehad asked the Chinese woman if they could change the address they were sending itto. She was going to make an enquiry about that as well. Mr McDonald also informedhis associate that he had asked her if they could change it, so they would not have topay for it using Western Union.[6] As a result of this information, the police executed a search warrant where theassociate worked. The police located a piece of paper with the names and addressesand tracking numbers of two of the three importations of pentedrone. They alsolocated in the associate's car the mobile top up voucher receipt that related toMr McDonald's purchase from the local supermarket on the evening of 1 August. Thereceipt also had details of the cell phone that Mr McDonald had purchased at the sametime. This allowed the police to make enquiries of Telecom about phone calls and textmessages made from the cell phone purchased by Mr McDonald.[7] It was established that seven minutes after Mr McDonald purchased the phonefrom the supermarket a six minute call was made from the phone to the Chinesepharmaceutical company. It is a reasonable inference that this is the call, the contentof which was relayed by Mr McDonald to his associate the following day. Theinformation obtained from Telecom also revealed that the same phone was used tomake calls to New Zealand Post. Information obtained from New Zealand Postconfirmed the use of Mr McDonald's phone. Recordings of those calls were obtained.[8] The calls to New Zealand Post were for the purpose of enquiring about thewhereabouts and status of the three packages. The tracking numbers of the interceptedpackages was provided to New Zealand Post by the caller. One of the calls was madeby Mr McDonald. On 16 July, he enquired as to the whereabouts of the interceptedpackage destined for 45 Regent Street. He quoted the tracking number for the packageand told the call taker that the package contained a new hard drive valued at $40.When the police terminated their operation and spoke with Mr McDonald, he declinedto comment or answer any questions.Possession of methamphetamine for supply[9] On 25 May 2017, the police executed a search warrant at Mr McDonald'saddress in relation to unrelated matters. While the police were seeking to gain entryto the property, they observed Mr McDonald at the rear of the property throwing a bagover the fence into a neighbouring yard. The bag was subsequently recovered andfound to contain 112 g of methamphetamine with an estimated street value of$100,700.[10] Mr McDonald pleaded guilty to possessing the methamphetamine for supply,but his sentencing was the subject of a disputed facts hearing. During the search,surveillance cameras (in the form of old smart phones) and a number of plasticcontainers were seized. A set of scales were found in the pantry. Judge Callaghan wasnot satisfied that the cameras were used for the purpose of alerting Mr McDonald tothe presence of people coming to the house to buy drugs. He noted there were othermeans of accessing the house which were not the subject of this type of surveillance.[11] Nor was the Judge satisfied that the scales found in the pantry were used fordealing in methamphetamine. In relation to some plastic containers found in a toolbox,the Judge remarked that he was also not satisfied they were used for the breaking downof methamphetamine. Judge Callaghan proceeded to sentence Mr McDonald on thebasis that while the quantum of the drug was for a commercial purpose, the Crowncould not refute the submission made on behalf of Mr McDonald that he was only a"caretaker" for those drugs. It was on that basis that he was sentenced.Criminal Proceeds (Recovery) Act 2009[12] Section 7 Criminal Proceeds (Recovery) Act 2009 (the Act) provides:In this Act, unless the context otherwise requires, a person hasunlawfully benefitted from significant criminal activity if theperson has knowingly, directly or indirectly, derived a benefit fromsignificant criminal activity (whether or not that person undertook orwas involved in the significant criminal activity).[13] The Court's jurisdiction to make profit forfeiture orders is provided by ss 53,54, 55 and 56 of the Act. Section 53 provides as follows:53 Value of benefit presumed to be value in application(1) If the Commissioner proves, on the balance of probabilities, that therespondent has, in the relevant period of criminal activity, unlawfullybenefitted from significant criminal activity, the value of that benefitis 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 therespondent on the balance of probabilities.[14] Section 55 states:55 Making profit forfeiture order(1) The High Court must make a profit forfeiture order if it is satisfied onthe balance of probabilities that—(a) the respondent has unlawfully benefitted from significantcriminal activity within the relevant period of criminalactivity; and(b) the respondent has interests in property.(2) The order must specify—(a) the value of the benefit determined in accordance with section53; and(b) the maximum recoverable amount determined in accordancewith section 54; and(c) the property that is to be disposed of in accordance withsection 83(1), being property in which the respondent has, oris 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 ofcivil proceedings instituted by the Crown against the person to recovera debt due to it, and the maximum recoverable amount is recoverablefrom the respondent by the Official Assignee on behalf of the Crownas a debt due to the Crown.[15] The term "benefit" is defined in the Act as including proceeds and property.1[16] In Pulman v Commissioner of Police, Lang J identified four steps required tobe taken by a Court in determining whether to make a profit forfeiture order under s55.2 It must determine the following:(a) Whether the Commissioner has proved, on the balance of probabilities,that the respondent has unlawfully benefitted from significant criminal1 Section 5.2 Pulman v Commissioner of Police HC Auckland CIV-2010-404-5666, 27 May 2011, at [10]-[13].activity during the relevant period.3 If the Court is so satisfied, thevalue of that benefit is presumed to be that stated in the Commissioner'sapplication. That presumption can be rebutted by the respondent on thebalance of probabilities.4(b) The Court must determine the maximum recoverable amount. That isdone by taking the value of the benefit, as already determined inaccordance with s 53, and deducting from that figure the value of anyproperty already forfeited to the Crown by virtue of any assetsforfeiture order made in relation to the same criminal activity as that towhich the profit forfeiture application relates.5(c) Whether any property should be excluded from the operation of theproperty forfeiture order because undue hardship is likely to be causedto the respondent if such property were realised.(d) Once the steps at (a)-(c) have been undertaken, the Court must make aprofit forfeiture order if satisfied, on the balance of probabilities, thatthe respondent has interests in the property.[17] The profit forfeiture order under s 55(1) must specify the value of the benefit,the maximum recoverable amount (as determined under s 54), and the property that isto be disposed of, being that in which the respondent has, or is treated as having, aninterest.6[18] In the present case, the Court has not made any assets forfeiture orders, nor isit argued that there are any circumstances of undue hardship that are required to beconsidered. Accordingly, the maximum recoverable amount under s 54 will be thevalue of the benefit as determined in accordance with s 53.3 Criminal Proceeds (Recovery) Act 2009, s 6, defines "significant criminal activity" as an activitythat if proceeded against a person as a criminal offence would be punishable by a maximum termof five years' imprisonment or more; or from which there is $30,000 or more of resulting profits,proceeds or benefits.4 Section 53(1) and (2).5 Section 54(1).6 Section 55(2)(c).The Commissioner's applicationsThe pentedrone offending[19] In relation to the first application, the Commissioner claims Mr McDonaldunlawfully benefitted from significant criminal activity between 22 November 2006to June 2014 to the value of $133,720, as a result of his involvement in the importationof pentedrone. That value was ascribed to the criminal activity from a calculation ofthe value of the imported pentedrone (726 g) which was intercepted by Customs andthe results of a financial analysis of Mr McDonald's bank accounts between 1 April2010 and 30 November 2013, which identified $24,820 in cash derived from unknownsources.[20] The Commissioner claims that Mr McDonald has an interest in or effectivecontrol over the following property which is sought to be realised:(a) The proceeds from the sale of a property at 20 Dundee Street,Invercargill, currently held on restraint by the Official Assignee, being$55,422.24.(b) A property at 10 Largs Street, Wallacetown, of which he was theproprietor until 3 December 2013. On that date, and after his arrest, theproperty was transferred to Mr McDonald's ex-partner. The value ofthe property as at 20 June 2014 was $45,000 but the property now hasa current market valuation of $70,000.(c) A 2010 Harley Davidson Dyna motorcycle, registration A8BJA, inrespect of which Mr McDonald is the sole registered owner. The valueof the motorcycle is estimated to be $18,700, according to a websitethat provides market values for motor vehicles.[21] In summary, the Commissioner's application is that between November 2006and June 2014, Mr McDonald unlawfully benefitted from the importation ofpentedrone to the value of $133,700. That offending represents significant criminalactivity because it is punishable by a maximum term of imprisonment of eight years.The Commissioner's case is that Mr McDonald has an interest in the identifiedproperty.Methamphetamine offending[22] The second application is based on Mr McDonald's possession ofmethamphetamine for supply, which carries a maximum penalty of life imprisonment.The Commissioner maintains that Mr McDonald has unlawfully benefitted to thevalue of $100,700 from that significant criminal activity, being the value of themethamphetamine seized from his address. The property to be realised is the same asthat listed in respect of the first application.IssuesPentedrone importation[23] In relation to the pentedrone offending, Mr McDonald accepts theCommissioner has proved, on the balance of probabilities, that he unlawfullybenefitted from significant criminal activity during the relevant period. However, hedisputes the Commissioner's assessment of that benefit and seeks to rebut thepresumed benefit put forward by the Commissioner in his application. Mr McDonaldclaims the total sum he received as a benefit was $6,000 being the total amount he waspaid to contact the Chinese pharmaceutical company. It will be necessary for me todetermine whether Mr McDonald has rebutted the presumed benefit and, if he has, theamount to which he has benefitted.[24] However, a more fundamental question arises in relation to theCommissioner's first application as to whether the sum of $108,900, calculated to bethe value of the three packages of pentedrone intercepted by Customs, none of whichwere received by Mr McDonald or his co-offenders, is capable of constituting abenefit.Methamphetamine offending[25] In relation to the methamphetamine offending, Mr McDonald disputes that theCommissioner has proved that he has unlawfully benefitted from significant criminalactivity. He maintains he received no benefit, and that if he has benefitted, he obtainedno profit, nor did he have a chance to profit from the activity. It will be necessary forthe Court to determine if Mr McDonald has rebutted the presumed benefit derivedfrom the calculated street value of the methamphetamine.The property[26] It is not disputed that Mr McDonald has an interest in the proceeds of the saleof 20 Dundee Street or the property at 10 Largs Street. The Harley Davidsonmotorcycle has never been seized nor located. Mr McDonald's evidence was that hehas stripped the motorcycle down and sold it as parts, and that it no longer exists as anitem of property.The value of the benefit from the importation of pentedroneMr McDonald's evidence regarding his involvement[27] Mr McDonald sought to rebut the presumed benefit he obtained from theimportation of pentedrone by giving evidence that he played a limited role in theimportation of the drug. He claimed he was only paid relatively small amounts of cashfor his assistance. Mr McDonald said he was approached in early 2013 to see whetherhe wanted to earn some "easy money". He claimed he was asked to send emails toorder chemicals and was provided with the name and address of the person to whomthe chemical was to be delivered. The order was paid by the person who engaged him,but who Mr McDonald refuses to identify.[28] Mr McDonald said the first order was for $40 for one gram, and that he waspaid $500. This was the same amount he was paid after placing further orders. Hereceived the cash after the drugs arrived at the postal addresses. He maintains therewere between 10-12 orders and that he received between $5,000-$6,000 in cash.Mr McDonald deposed that he spent the money almost immediately, and a lot of it waslost on gambling. He knew it would not be a good idea to put the money into his bankaccount, and so avoided doing that.[29] I do not accept Mr McDonald's evidence. I find it unconvincing andunbelievable. There is no rationale for why he would be recruited simply for thepurpose of contacting the Chinese pharmaceutical company to place the orders, havingbeen provided with the addresses to which the pentedrone was to be sent. Moreover,Mr McDonald's evidence did not substantively meet or engage with the evidenceagainst him, which is based on the interception of his communications.[30] Mr McDonald did not explain, or at least satisfactorily explain, the extent ofhis involvement in the ongoing importation scheme as disclosed in the interceptedconversations. This included details of him purchasing a cell phone for the purposeof allowing the members of the joint enterprise, including himself, to make illicitcommunications, discussions Mr McDonald had with a co-offender about checkingthe status of the packages that had not arrived at the intended addresses, the follow-upthat Mr McDonald undertook with the Chinese pharmaceutical company, and thediscussions he had with the representative of that company about getting the packagespast Customs. The evidence shows that Mr McDonald was aware of such details ashow the drugs were to be paid, and the intercepted conversations capturedMr McDonald discussing with his co-offender methods of shipping and payment toensure future packages could enter the country and arrive at their intendeddestinations.[31] One conversation was particularly telling. Mr McDonald is recorded as sayingto his co-offender:One part we were getting 500s and then they kept getting stopped so wedropped back to (inaudible) and they were getting trimmed fucken.. like itstarted in like 50 I think for the first one. I think the first one was only 30 or50 and then it progressively got up 'til it was like half a kg at a time but thenso (inaudible).[32] Mr McDonald provided no satisfactory explanation for this statement whichrevealed his close involvement in the illegal importation scheme from its verybeginning. That passage together with the other evidence set out in Detective SergeantAndrew Beswick's affidavit in support of the Commissioner's applicationdemonstrates Mr McDonald's past and ongoing involvement as a co-conspirator in thejoint importation enterprise. Insofar as Mr McDonald has sought to present himselfas a "bit player" in the offending as a means to rebut the value of the unlawful benefithe received from the criminal activity, he has failed to do so.Did the importation of the three packages of pentedrone constitute an unlawful benefitof any value?[33] The second issue that arises in relation to the alleged value of the significantcriminal activity is more problematic for the Commissioner. That relies on the valueof the pentedrone that was imported in the three packages but intercepted and seizedby Customs. From information obtained by the police regarding the street price ofpentedrone in the Southland region, it was calculated that the 726 g contained in thethree intercepted packages was worth $108,900. However, the imported pentedronenever came into the possession of either Mr McDonald or his associates, and none ofthem were ever able to exercise any control over the drug despite its importation.[34] To overcome the fact the drug never came into Mr McDonald's or his co-offenders' possession, the Commissioner sought to rely on an earlier decision of thisCourt, Commissioner of Police v Murray.7 The judgment considered whether anoffender had unlawfully benefitted from being found in possession of a large amountof methamphetamine. He was the courier of the drugs and had been apprehendedbefore he was able to complete his delivery. That case together with the earlierdecision of Pulman v Commissioner of Police,8 to which I have earlier referred, are ofrelevance both to the Commissioner's application as it relates to the issue of whetherMr McDonald benefitted from the importation of pentedrone and to theCommissioner's second application based on Mr McDonald's possession ofmethamphetamine for supply.[35] In Pulman, the respondent was employed in a pharmacy. He pleaded guilty toa representative charge of manufacturing methamphetamine. His convictionsstemmed from numerous sales of pseudoephedrine-based products that he sold fromthe pharmacy over a two year period. He sold approximately 1,290 packets of drugscontaining pseudoephedrine to persons who called at the pharmacy outside usualtrading hours, at a price routinely of $100 per packet, paid in cash. It was not disputed7 Commissioner of Police v Murray [2016] NZHC 2699.8 Pulman v Commissioner of Police, above n 2.that the respondent received cash totalling approximately $129,000 for the drugs hesold in that way. He argued that he deposited the cash that he received from the saleof the drugs into a cashbox kept for that purpose, which his employers then used topay staff wages and to meet other business outgoings. The respondent insisted henever received any personal benefit from the transactions that led to his conviction.[36] In considering the Commissioner's application, Lang J concluded:[20] At first sight, the Commissioner's approach appears to produce aharsh outcome. That is particularly the case if, as Mr Pulman maintains, heimmediately handed all of the proceeds of sale of the drugs to his employer.If he did that, he did not ultimately derive any financial reward as a result ofhis criminal activity.[21] If the definition in s 7 is applied literally, however, Mr Pulmanundoubtedly received a benefit from his criminal offending. He did not giftthe drugs to the persons who came to the pharmacy. Rather, he sold them topurchasers for $100 per packet. The receipt of cash in those circumstancesmust, in my view, amount to the derivation of a benefit from criminal activity....[25] Relevantly, the forfeiture regime proposes to eliminate not only theability of persons to actually profit from undertaking or being associated withsignificant criminal activity, but also the "chance" that they may be able to doso. In addition, the regime proposes to deter significant criminal activity.Finally, it proposes to reduce the ability of criminals and persons associatedwith crime or significant criminal activity to continue or expand criminalenterprise.[26] When the purpose and objects of the Act are measured against thefacts in the present case, a clear outcome emerges. First, the monies thatMr Pulman received were derived directly from significant criminal activityas the proceeds of drugs that he had sold for cash. Second, the proceeds ofsale amounted to income in his hands even if he subsequently handed the cashover to his employer. Third, Mr Pulman always had the chance to profit fromhis criminal activity because he always had the ability to keep the saleproceeds for his own benefit.[27] In addition, the criminal activity in which Mr Pulman engaged wasobviously of a type that the forfeiture regime seeks to deter. Finally, theprovision 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 designedto apply to criminal activity of the type that Mr Pulman engaged in. Theregime provides a strong deterrent to those who are minded to engage in suchactivity, because it will apply even in circumstances where the offenderultimately 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.(Footnotes omitted)[37] Applying the reasoning of Lang J in Pulman to the circumstances in Murray,Gendall J concluded there was no salient difference between the two cases. The factMr Murray was simply a courier of drugs, transporting them from Auckland toChristchurch and nothing more, and that he ultimately received nothing for his efforts,did not remove the fact that he had charge of the drugs at the time he was stopped bypolice. He "always had the chance to profit from his criminal activity" because healways had the ability to keep or deal in those drugs for his own benefit.[38] Because Mr Murray had control of the methamphetamine and clearly had the"chance" to profit from the criminal activity by selling or diverting the drugs onto themarket himself, he was held to have obtained a personal benefit. Gendall J concludedthat it did not matter in that case that ultimately Mr Murray may not have managed tokeep the drugs or, indeed, any monies from their possible sale because he wasapprehended by police. His Honour considered the unlawful benefit in that caseemanated from Mr Murray being in possession of a large and valuable quantity ofdrugs and thereby being able to deal with or dispose of them as he thought fit. As aresult, it was held that the Commissioner had proved that during the relevant periodMr Murray had unlawfully benefitted from significant criminal activity.[39] The Commissioner, in this case, sought to argue that the unlawful benefitobtained by Mr McDonald and his associates from the importation of the threepackages of pentedrone was "the ability to control the drug and to direct where it wasto be sent". While it was accepted by Mr Donnelly, who appeared on behalf of theCommissioner, that the circumstances of this case represented a step further on fromthe situation in Murray, he argued the same reasoning applied.[40] The difficulty with the Commissioner's submission is that neitherMr McDonald nor his associates ever obtained possession of the three packages ofpentedrone, nor were they ever in a position to exert control over the drug for thepurpose of obtaining a benefit notwithstanding its importation. The offence wasundoubtedly completed notwithstanding the interception of the three packages byCustoms, but that intervention shortly after the pentedrone crossed the border deniedthe opportunity for any unlawful benefit to be derived from those particularimportations.[41] Furthermore, unlike in Pulman and Murray, the issue for determination is notlimited to whether the importation of the three packages of pentedrone represented anunlawful benefit from significant criminal activity. A further issue that arises in thepresent case is whether the presumed value of the benefit set out in theCommissioner's application, which predominantly relies on the valuation of the threeintercepted packages, can be rebutted.[42] In both Pulman and Murray neither respondent actually personally benefitted;neither in Mr Pulman's case from the receiving of the cash, nor in Mr Murray's casefrom being in possession of the drug. The passing on of the cash in Pulman and theintervention of the police by stopping Mr Murray's vehicle meant neither offenderreceived an actual benefit. However, in each case what was important was theopportunity or chance each had to benefit from the unlawful criminal activity whichresulted in them having possession or control over the cash received from the illegalactivity or the drugs the subject of the charge.[43] I have considered closely, in the circumstances of the present case, whetherdespite the pentedrone not having come into the possession of Mr McDonald or hisconfederates, the importation at least provided them with the "chance" of benefittingfrom the criminal activity.9 In both Pulman and Murray the factual narrative disclosedthe opportunity or chance to derive a benefit from the criminal activity, namely todivert the cash or to sell the methamphetamine. The fact that neither occurred did notprevent the chance or opportunity to do so from being a benefit to which a value couldbe ascribed.[44] However, in the present case, the seizure of the three importations preventedMr McDonald and his associates from having the opportunity or chance to derive abenefit from the importation of those particular packages of pentedrone. The presentcase is distinguishable from Pulman and Murray because in each of those cases the9 Section 7.respondents possessed the proceeds or property (in the form of cash or drugs) whichin their hands represented a benefit derived from the significant criminal activity.While in each case they did not convert the benefit into a personal gain for themselves,the opportunity or chance was there for them to do so.[45] In my view, Lang J's approach in Pulman and that of Gendall J's subsequentlyin Murray were dependent upon the receipt of the benefit of the offending. In Pulman,the Crown had argued that Mr Pulman unlawfully benefitted from his criminal activityas soon as he received the cash and that how he then dealt with the cash was of nomoment. His Honour acknowledged that, at first sight, the Commissioner's approachwould appear to produce a harsh outcome, particularly as Mr Pulman immediatelyhanded the proceeds of the sale of the drugs to his employer and did not thereforederive any financial reward as a result of his criminal activity. However, Lang Jconcluded that the application of s 7 meant that Mr Pulman undoubtedly received abenefit from his criminal activity. He noted that Mr Pulman had not gifted the drugsbut had sold them to purchasers for $100 per packet. Importantly, Lang J held that itwas the receipt of cash in those circumstances which, in his view, amounted to thederivation of a benefit from criminal activity.[46] In the present case, in the absence of the imported drugs being received, whichof itself, without more, would represent a benefit, there was no opportunity for eitherMr McDonald or his associates to derive a benefit from the importation and, even ifthat was capable of representing a benefit, it was one that held no value in the absenceof the pentedrone being received. Mr McDonald need only point to that fact to rebutthat part of the Commissioner's calculation of the value of the unlawful benefit whichis reliant on the street value of those three intercepted packages of pentedrone.[47] It follows from my conclusion that I do not consider the Commissioner can, atleast directly, rely on the value of the three packages of pentedrone which were neverreceived by Mr McDonald or his associates as a benefit which had value. In theabsence of those drugs being received, they did not amount to the derivation of abenefit from the significant criminal activity. To that extent, Mr McDonald hassucceeded in his challenge to the $133,720 figure included in the Commissioner'sapplication, to which the presumption provided by s 53(1) of the Act applies.Valuation of the benefit from the earlier importations[48] However, the Court is still charged with determining the value of the benefitderived from the criminal activity. Mr McDonald maintains it is only some $5,000-$6,000, but I consider the benefit of the offending to be well in excess of such a figure.[49] In assessing the value of the benefit, the Court is entitled to draw on evidenceof the value of the pentedrone and the number of importations which Mr McDonaldadmitted had occurred – some 10 to 12. During the intercepted conversation with hisco-offender, he referred to amounts of pentedrone that had previously been imported.10Mr McDonald in his evidence denied that the figures referred to in that excerpt relatedto weights. However, he was unable to explain his reference in that passage to "half akilogram at a time...", and I consider it obvious that he was referring to amounts ofpentedrone that had previously been imported.[50] It can be ascertained from Mr McDonald's statement to his associate that"500s" is a reference to 500 g, being half a kilogram. He refers to the "first one" beingonly "30 or 50", which I find to be a reference to 30 or 50 g, and they progressed upto "half a kilogram at a time". Mr McDonald remarks that they were "getting 500sand then they kept getting stopped so we dropped back to...". The importation of thepentedrone took place over a considerable period before the interception of the lastthree packages and Mr McDonald's arrest. It appears from Mr McDonald's statementthat the amounts imported varied over that period from as much as half a kilogram to,as Mr McDonald refers, 30 or 50 g when they first began.[51] Taking a conservative approach, I am satisfied, on the balance of probabilities,that based on the 10 importations admitted by Mr McDonald, there must have been atleast one importation of half a kilogram of pentedrone, but very likely more.Proceeding on the basis that the other nine importations could have been as little as30 g at a time, a very conservative calculation of the amount of pentedrone importedover the period of the offending is 770 g.10 See [31].[52] There was some challenge to the accuracy of Detective Sergeant Beswick'sevidence regarding the street price of pentedrone. Detective Sergeant Beswickacknowledged that it was a relatively rare drug and there was only limited informationregarding its price. Information obtained from the National Drug Intelligence Bureauhad one record of street pricing information in relation to pentedrone which indicateda price of between $100-$150 per gram or $30 per capsule. That informationspecifically related to the Southland region. A typical quantity of pentedronecontained in a capsule would be 100 mg or 0.1 of a gram. Accordingly, one gramwould result in the production of 10 capsules at $30 each, which results in a gram ofpentedrone in capsule form being worth $300. Detective Sergeant Beswick took amidpoint of $150 per gram in carrying out his valuation exercise, which I consider tobe a reasonable approach.[53] Evidence was also received from Detective Sergeant Boucher, who is veryexperienced in the investigation of drug offending and was permitted to provideopinion evidence. He noted that pentedrone, like methylone and ethylone, are all soldas MDMA or Ecstasy "replacements" on the street for the same value that MDMAwould predominantly be sold for. Information he provided largely corroborated theapproach taken by Detective Sergeant Beswick. His evidence was that MDMAreplacements on the street currently sell from $25 to $40 per tablet, with tabletscontaining dosages of between 100-200 mg per tablet. Street values therefore rangefrom $100-$250 for the Ecstasy substitutes of which pentedrone is one.[54] Based on an extremely conservative assessment, Mr McDonald and his co-offenders must have imported at least 770 g over the course of 10 importations. At$150 per gram, the benefit from that offending can be calculated as amounting to$115,500.[55] Mr Williamson sought to argue on behalf of Mr McDonald that his clientshould only be liable for a specific portion of the overall proceeds of the criminalenterprise. However, that argument was based upon me accepting that Mr McDonaldwas only paid cash totalling some $6,000 for having played a limited role in theoffending. I have rejected that contention. It follows that, being satisfied thatMr McDonald played a full part in the joint criminal venture and that benefits derivedfrom the significant criminal activity were received jointly by him together with hisco-offenders, he is, as a result, liable for the full amount of the benefit obtained.11[56] While Mr Williamson did not press the issue, it is also clear that the value ofthe benefit is to be assessed with reference to the total amount of money or propertyobtained or received, rather than on the basis of the net profits generated from thecriminal activity.12The cash analysis[57] For the purposes of the pentedrone offending, the Commissioner also reliedupon the evidence of a financial analyst, Ms Melanie Van der Pol, in calculating theunlawful benefit derived from the importation of the pentedrone. Ms Van der Pol'scalculation was based on identifying unknown and unexplained sources of cashreceived into Mr McDonald's bank accounts, which totalled some $24,820. Itoriginally fell to Mr McDonald to rebut that evidence which made up part of the figureset out in the Commissioner's application, which would otherwise be presumed to bethe value of the unlawful benefit derived from the significant criminal activity.However, as the figure relied upon by the Commissioner in the application has alreadybeen displaced, the presumption no longer applies.[58] In response to Ms Van der Pol's analysis, Mr McDonald claimed, in hisaffidavit of 30 November 2015, that there were no unexplained cash deposits in hisbank records relating to the 43 month period of analysis undertaken by Ms Van derPol between 1 April 2010 and 30 November 2013. Mr McDonald suggested that theonly money that would have gone into his account that might "be unexplained" wouldhave related to the sale of second-hand cars, and that he would often buy and sellsecond-hand cars and parts.11 Solicitor-General v De Bruin HC Auckland CIV-2002-404-3302, 9 August 2006; Solicitor-General v Rhodes HC Auckland CIV-2007-404-3773, 16 February 2010; R v May [2008] UKHL28, [2008] AC 1028; R v Rooney [2010] EWCA Crim 2, as discussed in Commissioner of Policev Tang [2013] NZHC 1750.12 Commissioner of Police v Tang, above n 11, at [21]-[25]; Pulman v Commissioner of Police, aboven 2, at [29]-[32]; R v Pedersen [1995] 2 NZLR 386 at 389.[59] Mr McDonald filed a further affidavit, dated 22 July 2016, in which he soughtto explain a number of the cash deposits. However, in relation to many of thetransactions identified by Ms Van der Pol, no explanation was provided apart fromMr McDonald's general explanation that on occasions he would make cashwithdrawals from other accounts and then physically take the cash and deposit it intoother accounts in order to increase the balance when he knew payments were due fromthat particular account. Ms Van der Pol, when questioned in cross-examination abouther view of that explanation, refused to accept, in today's modern banking world, thatpeople would deal in cash rather than make electronic transactions. I do not acceptMr McDonald's evidence that he would have withdrawn large amounts of cash andphysically taken it from one bank to another for the purposes of depositing it intoanother account. He would have known his bank account numbers and if he wishedto transfer sums from one account to the other it would have been a simple exercise tohave made an electronic transfer. I therefore reject that explanation.[60] However, in the absence of any evidence to the contrary and the Commissionerbeing able to rely upon the presumption for the purposes of his application in relationto the pentedrone importation, where Mr McDonald has identified particular cashtransactions as relating to him trading, either for himself or on behalf of others, inmechanical parts, motor vehicle equipment, engines and the like, I am unable to besatisfied that in the face of those explanations I can still draw the inference that thosetransactions, albeit involving cash, represent the proceeds from the importationoffending.[61] There is, however, one exception which relates to the deposit of $3,050 on 29November 2012. Mr McDonald in his affidavit said that this was money deposited topay for iron for a shed to be constructed at the Wallacetown property. He said heobtained $1,000 from a Mr Edgerton and that $2,000 was from him. Mr McDonald,under cross-examination, maintained that the $2,000 from him was sourced from aSouthland Building Society mortgage account, he having borrowed money from thebank to build the shed. The difficulty with that explanation is that this loan was notobtained until 6 December 2012 and could not have been the source of the cash. Whencoupled with the unlikelihood of Mr McDonald having physically withdrawn the cashfor the purpose of depositing it in another account, I consider Mr McDonald'sexplanation of the $3,050 is false.[62] Mr McDonald only made matters worse when, after the discrepancy waspointed out to him in cross-examination, he sought to explain that it must have beensourced from earlier loans that he took out in 2009, some three years prior. If the 2009loan represented a credit facility which was still available to him three years later, thenclearly a record of drawing $2,000 from that account in November 2012 would havebeen available.[63] Mr Donnelly submitted that Mr McDonald's demonstrably false explanationin relation to the $3,050 cash deposit of 29 November 2012 should undermine thebalance of his evidence relating to the other cash deposits. There is some substancein that submission. I found Mr McDonald's evidence vague. With the exception ofone transaction, it was unsupported by any supporting documents and while personsto whom he said he had sold equipment were named, no one else was called to supportthe particular transactions which Mr McDonald claimed were genuine. However, as Ihave already observed, the Commissioner cannot rely upon the presumption and, inrespect of those other transactions which Mr McDonald proffered some explanation, Iconsider that to be sufficient in the circumstances to prevent me from drawing theinference from Ms Van der Pol's evidence that those particular cash deposits weresourced from the serious criminal activity.[64] Ms Van der Pol's analysis arrives at a figure of $24,820 as being the benefitfrom an unknown source of cash income. Mr McDonald has provided an explanationfor $12,470 which I consider I am obliged to take cognisance. Putting to one sidethose amounts referred to in Mr McDonald's affidavit for which he has no explanationand the $3,050 being the cash deposit of 29 November 2012, Ms Van der Pol'scalculation must be reduced by $12,470. This leaves a balance of cash income froman unknown source, which may reasonably be inferred as being derived from theimportation of pentedrone, of $12,350.[65] However, Ms Van der Pol's cash analysis has now been overtaken by myfindings regarding the value of the benefit derived from the pentedrone which wasimported during the period prior to the importation of the three intercepted packagesof pentedrone. Both Ms Van der Pol's analysis and the assessment of the benefit fromthe value of the drug imported relate to the same period. The unsourced cash whichwas the subject of Ms Van der Pol's analysis is therefore overtaken by my assessmentof the value of the benefit derived from the 10 importations which Mr McDonaldadmitted had occurred. The two separate calculations for the same period of theoffending cannot be combined as they represent different ways of assessing the samebenefit received from the criminal activity.Conclusion as to unlawful benefit obtained from the importation of pentedrone[66] It follows from my review of the parties' respective cases that Mr McDonalddid unlawfully benefit from significant criminal activity between November 2006 andJune 2014, namely from the importation of a Class C controlled drug, pentedrone. Iam satisfied that the value of that unlawful benefit, at a minimum, is $115,500 and thata profit forfeiture order should be made for that amount.Did Mr McDonald obtain an unlawful benefit from his possession ofmethamphetamine for supply?[67] I turn now to the Commissioner's second application which relates to themethamphetamine offending. Mr McDonald claims that he held the bag of 112 gm ofmethamphetamine for a friend and that no benefit was received by him from hispossession of the drug. He maintains he had no opportunity to profit from it because,he claims, he only found out immediately prior to his arrest that the methamphetaminewas in his possession. Judge Callaghan sentenced Mr McDonald on the basis that hewas a "caretaker" of those drugs. However, there is significant other evidence whichit appears the sentencing Judge was not made aware of at the time of the disputed factshearing.[68] In addition to the circumstances summarised at [9]-[11], three plasticcontainers were located on a dresser in Mr McDonald's bedroom. These were thesame type of plastic containers found in the toolbox. One of the plastic containerslocated on the dresser contained a slight powdery residue. A subsequent chemical testof the container returned a positive result for methamphetamine. Two sets of scales,not one, were located in the kitchen of the address. Both were small electronic scalescapable of weighing minute amounts as low as 0.01 of a gram and are not the type ofscales used for cooking or food preparation. Detective Sergeant Boucher's evidencewas that these types of electronic scales are typically used for breaking up quantitiesof drugs such as methamphetamine.[69] After Mr McDonald was arrested and taken to the police station, the policerealised they had not seized the two cell phones that were being used as surveillancedevices at the address. They returned to Mr McDonald's residence. While there, aman arrived at the address who was known to police. He was found to be in possessionof a large amount of cash and a methamphetamine pipe. He had also concealed on hisperson a plastic container holding 3.5 g of methamphetamine and a plastic pillcontainer containing 18.5 g of methamphetamine. In a waist bag another plasticcontainer containing 3.5 g of methamphetamine and $1,700 in cash was found. Eachof the two plastic containers containing 3.5 g of methamphetamine were identical tothe containers found in Mr McDonald's bedroom.[70] These circumstances reveal that Mr McDonald's claim of being ignorant ofwhat was contained in the plastic bag until only moments before he sought to disposeof it over his fence is unbelievable. There is a reasonable inference that Mr McDonaldhas an association with the man found in possession of some 25.5 g ofmethamphetamine who visited his address later that morning and was found inpossession of the same type of containers, containing set amounts ofmethamphetamine as that located at Mr McDonald's address, one of which was foundto contain traces of methamphetamine. Mr McDonald was clearly involved with theperson who was apprehended by the police at his address, and I reject his claim ofhaving no knowledge or involvement in the commercial quantity of methamphetaminelocated in his possession.[71] The precise role of Mr McDonald in the trafficking of methamphetamine is notimportant. It makes no difference whether he was the custodian of themethamphetamine or had a more active role. The circumstances point to a muchdeeper level of participation in the supply of methamphetamine than he claims, but forpresent purposes that is of no consequence. The situation as it pertains toMr McDonald's involvement with methamphetamine is the same as that whichapplied in Murray, the details of which I traversed earlier. Despite Mr McDonald'scontention that he was simply a custodian of the methamphetamine (which , ifnecessary, I would reject) and his claim of having received no benefit from carryingout that role, he clearly had charge of the methamphetamine and "always had thechance to profit from his criminal activity" from his possessing that drug. As inMurray, Mr McDonald always had the ability to keep or deal in that drug for his ownbenefit. As I have already noted, the evidence suggests that was indeed the case.[72] The circumstantial evidence points to Mr McDonald as having played an activerole in the distribution of methamphetamine. The two sets of scales and the containers,together with the visit by the person who appears to have been distributing the drugusing the containers located at Mr McDonald's address from where he was likelysourcing the methamphetamine, indicate an involvement by Mr McDonald in thedistribution of the drug. However, it is not necessary for the Commissioner to provethat was the case.[73] Mr McDonald was in control of a large quantity of methamphetamine. He hadthe "chance" to profit from his possession of the drug if, indeed, he had not alreadyprofitted from such criminal activity. He always had the ability himself to sell or divertthe methamphetamine onto the market to provide himself with a personal benefit. Theunlawful benefit in this case emanates from Mr McDonald being in possession of alarge and valuable quantity of the drug and his ability to thereby deal in or dispose ofthe methamphetamine as he saw fit.Conclusion as to unlawful benefit obtained from the possession ofmethamphetamine[74] For these reasons, I conclude the Commissioner has proved on the balance ofprobabilities that during the relevant period that Mr McDonald unlawfully benefittedfrom significant criminal activity in terms of ss 53 and 55 of the Act and that a profitforfeiture order should be made. There was no dispute as to the Commissioner'sassessment of the value of the methamphetamine.Result[75] The Commissioner's application as it relates to the importation of pentedronesucceeds and a profit forfeiture order is made in terms of s 55 of the Act againstMr McDonald, on the following terms.(a) The value of the benefit determined in accordance with s 53 of the Actis $115,500.(b) The maximum recoverable amount is $115,500.(c) The following property in terms of this order is to be realised ordisposed of under s 83(1) of the Act:(i) the proceeds of the sale of 20 Dundee Street, Invercargill;(ii) the property situated at 10 Largs Street, Wallacetown; and(iii) the 2010 Harley Davidson Dyna motorcycle, registrationA8BJA.[76] The Commissioner's application as it relates to the methamphetamine succeedsand a profit forfeiture order is made in terms of s 55 of the Act against Mr McDonaldon the following terms:(a) the value of the benefit, determined in accordance with s 53 of the Act,is $100,700;(b) the maximum recoverable amount is $100,700; and(c) the following property in terms of this order is to be realised or disposedof under s 83(1) of the Act:(i) the proceeds from the sale of 20 Dundee Street, Invercargill;(ii) the property at 10 Largs Street, Wallacetown; and(iii) the 2010 Harley Davidson Dyna motorcycle, registrationA8BJA.The motorcycle[77] The motorcycle was never seized by the police and Mr McDonald's evidencewas that it has been broken down and sold by him as parts. It may therefore be thecase that this item of property no longer exists. However, in the circumstances, I seeno prejudice to Mr McDonald from listing the motorcycle as an item of property towhich the order is subject, notwithstanding it may never be able to be realised.Costs[78] If costs are sought by the Commissioner and counsel are unable to agree, theymay file memoranda sequentially, which will be referred to me and I will decide thatissue on the papers.Solicitors:Preston Russell Law, InvercargillMalcolm McKenzie Law Ltd ta Hewat Galt, Invercargill