THE COMMISSIONER OF POLICE V HAYWARD HC AK CIV-2011-404-002371

THE COMMISSIONER OF POLICE V HAYWARD HC AK CIV-2011-404-002371 [22 May 2012]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2011-404-002371[2012] NZHC 1097IN THE MATTER OF an application under the Criminal Proceeds(Recovery) Act 2009BETWEEN THE COMMISSIONER OF POLICEApplicantAND JENE CHE TEWANA HAYWARDRespondentAND MARIANA NATALIA CRISTEAHAYWARDAn Interested PersonHearing: 9 May 2012Appearances: K Hogan for ApplicantC F L Godinet for RespondentD R I Gay for Mrs M N HaywardJudgment: 22 May 2012JUDGMENT OF VENNING JThis judgment was delivered by me on 22 May 2012 at 10.00 am, pursuant to Rule 11.5 of the High Court Rules.Registrar/Deputy RegistrarDateSolicitors: Meredith Connell, AucklandEd Johnston & Co, WaitakereCopy to: C F L Godinet, AucklandIntroduction[1] The Commissioner seeks a profit forfeiture order under s 55 of the Criminal Proceeds (Recovery) Act 2009 against the defendant Mr Hayward.[2] Mr Hayward has applied for orders for the issue of subpoenas requiring John Tipene and Lucy Mason to attend and give evidence at the hearing of theCommissioner's application.[3] The Commissioner opposes the application that the Court issue orders of subpoena.Jurisdiction[4] The substantive application by the Commissioner is an originating application under Part 19. Generally, evidence of such a hearing will proceed on the basis of the affidavits filed.1 However, if the Court, on application directs, then evidence may be taken orally on oath.2[5] To that extent the Court has a discretion whether to make an order for subpoena as opposed to the usual procedure in a standard proceeding where the Registrar issues subpoenas in response to a request.3[6] Little turns on the jurisdictional point in this case because even if the subpoenas were issued it is inevitable the Commissioner would seek to have them set aside in accordance with the process discussed in the Commentary to McGechan High Court Rules.41 Rule 19.10, applying r 17.0 and 17.25.2 Rule 19.13.3 Rule 9.52.09.4 Rule 9.52.Brief background[7] The applicant Mr Hayward pleaded guilty to three charges of being in possession of cocaine for supply. On 13 September 2011 Lang J sentenced him tofour years nine months' imprisonment.[8] The Judge described the incidents relating to the charges as follows:The first relates to an incident on 18 December 2009, when you acquired, on your version of events, eight ounces of cocaine at $6,500 per ounce. This meant that you paid $52,000 for that cocaine. Then, just three days later on 21 December 2009, you obtained a sample of two to three grams and then returned to purchase eight ounces of cocaine for the sum of $40,000. Then, three days later on 24 December 2009, you obtained a further two ounces of cocaine for the sum of $5,000 per ounce. In total, therefore, you obtained 18 ounces of cocaine and you spent $102,000 in acquiring it. You say that you then passed that cocaine on to others at no commercial profit.[9] The Judge noted that the purity of the cocaine in question was formerly amatter of dispute. The Crown's position was that the cocaine that Mr Hayward wasinvolved with was between 60 and 80 per cent in purity similar to other cocaine seized and analysed from the same operation. Mr Hayward, however, maintained the purity of the cocaine was around 54 per cent. Prior to sentencing Potter J concluded that whatever the purity was it would not make a significant difference to the outcome. The sentencing then proceeded on the basis that the cocaine that passed through the applicant's possession was around 54 per cent.[10] Mr Hayward wishes to have Mr Tipene and Ms Mason subpoenaed to give evidence to support his argument that the benefit from his criminal activity was limited to the value of 18 ounces of 54 per cent pure cocaine rather than 20 ounces at 65 per cent pure cocaine. Mr Hayward's argument must be that the extent of theprofit made by him is to be calculated at no more than on the basis of the quantum and purity of the drugs involved in the dealing that he was sentenced for.[11] That is not the basis of the Commissioner's application. The basis for the application is the figure nominated by the Commissioner of $404,293 as the value ofthe respondent's benefit from his significant criminal activity. While that figure can be calculated as being 20 ounces (566 grams) at $714.30 a gram in accordance with aWorld Drug Report in 2007, it is the figure nominated, not how it is calculated which is important.[12] The effect of s 53(2) of the Act is to presume that figure to be the value of the benefit received by the respondent unless it is rebutted by him on the balance of probabilities.The competing arguments[13] The respondent's argument, supported by Mrs Hayward, is that the evidence of Mr Tipene and Ms Mason will help to rebut the presumption because they will be able to give evidence about the purity and street value of the drugs passing throughthe respondent's hands and referred to by Lang J at sentencing.[14] The Commissioner opposes the application on three principal grounds:first, determining whether the cocaine was 54 per cent or 65 per cent pure will not assist the Court in determining the material issue, namely the value of the benefit Mr Hayward received from his criminal activity;neither Mr Tipene nor Ms Mason can give relevant evidence regarding purity of the cocaine or its street value in any event; andMr Tipene and Ms Mason are protected witnesses and are due to give evidence in the trial of R v Agwu and Ors, the trial of Mr Hayward's co- accused which is scheduled to commence 21 May 2012. The Commissioner says the subpoenas are sought for an improper purpose, to place Mr Tipene and Ms Mason under pressure.[15] The answer to the last point is that as the substantive forfeiture hearing is not to be heard until after that trial is completed, the subpoenas could lie in Court so that Mr Tipene and Ms Mason would not be subject to the subpoenas until after they had given evidence in the R v Agwu trial. The real focus must be on the first two points.Decision[16] Having reviewed the relevant statutory provisions under the Act, the mattersin issue in this proceeding and counsels' submissions I am satisfied that the application should be dismissed. The Court would not be assisted by the oral evidence of Mr Tipene and Ms Mason in determining the issue it is required to determine. Their evidence will not be relevant and so will not be admissible. The Court should not hear their evidence under r 19.13.[17] The respondent's request for the issue of subpoenas and Mr Gay'ssubmissions on behalf of Mrs Hayward (and the matrix table he prepared to support those submissions) proceed on a fundamental fallacy. The fundamental fallacy underlying their submissions is that the order the Court must make under s 55 is limited to the profits the respondent Mr Hayward may have made from the particular transactions that he pleaded guilty to. The statutory scheme, however, is not predicated on that basis.[18] Section 55(1)(a) provides: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; ...[19] The Court is directed to determine whether the respondent has benefited from significant criminal activity. It is particularly relevant that significant criminal activity is defined in s 6 of the Act as:Meaning of significant criminal activity(1) In this Act, unless the context otherwise requires, significant criminal activity means an activity engaged in by a person that if proceeded against as a criminal offence would amount to offending—(a) that consists of, or includes, 1 or more offences punishable by a maximum term of imprisonment of 5 years or more; or(b) from which property, proceeds, or benefits of a value of $30,000 or more have, directly or indirectly, been acquired or derived.(2) A person is undertaking an activity of the kind described in subsection (1) whether or not—(a) the person has been charged with or convicted of an offence in connection with the activity; or(b) the person has been acquitted of an offence in connection with the activity; or(c) the person's conviction for an offence in connection with the activity has been quashed or set aside.(3) Any expenses or outgoings used in connection with an activity of the kind described in subsection (1) must be disregarded for the purposes of calculating the value of any property, proceeds, or benefits under subsection (1)(b).[20] Drug dealing, which the Commissioner's application is premised on, satisfies the requirement under s 6(1). Section 6(2) makes it clear that it is unnecessary that the respondent to an application even be charged or convicted of an offence in connection with that activity. In Mr Hayward's case he has been charged andconvicted of drug dealing offences. However, the amount the Commissioner may recover under the s 53 application, is not restricted to the unlawful benefit the respondent may have received from the offences he was convicted on. The issue under s 55 is whether the respondent has benefited from significant criminal activity, not the value of the transactions he was convicted of.[21] The Commissioner must nominate a figure for the benefit in an application under s 52(c). The Commissioner may, however, prove the benefit in a number of ways.[22] In determining the application under s 53(1) the first issue for the Court will be whether the Commissioner has proved on the balance of probabilities that the respondent has unlawfully benefitted from significant criminal activity during the relevant period. The Commissioner is not, however, restricted to relying on actual proceeds received by the respondent in relation to the particular offending that he was convicted of. Such convictions provide proof the respondent has engaged in significant criminal offending, but the Commissioner can also seek to prove thebenefit extended beyond the profits from the dealing supporting the convictions. The Commissioner can invite the Court to infer, on the balance of probabilities that the respondent was involved in other significant criminal activities that he was not charged with. The Commissioner can also, for instance, rely on the disparitybetween moneys passing through the respondent's bank account or finding its wayinto the purchase of assets as compared to his declared legitimate income to prove or establish the benefit the respondent received from his significant criminal activities.[23] In the present case Mr Hayward's declared legitimate income between 2005and 2010 was minimal:personal income $8,983 declared in the years ending 31 March 2006 and 31 March 2007 with losses totalling $31,344.27 declared in the other years.Business income $18,480 profit declared, $20,132 loss declared.[24] On the Crown's analysis, during the period January 2007 to the date of his arrest, Mr Hayward purchased motorcycles and other assets including collectable coins and cash on hand to a value of approximately $56,837. In September 2010 he received telegraphic transfers from Romania totalling in excess of $119,000. Further, he received other substantial cash deposits totalling $247,371. Even without taking account of the money Mr Hayward paid to purchase the drugs in relation to the offending which he was convicted on, the Crown estimates over $420,000 has either been received or applied by Mr Hayward at a time when his declaration of income was minimal.[25] The important point is that it is for the Commissioner to nominate a figure in the application as the value of the benefit presumed. The figure could be calculated in a number of ways. If could be calculated as the moneys received directly from the criminal activity of which the respondent was convicted or it could be based on the disparity between his legitimate income and purchases, unexplained deposits to his bank accounts, or even as an estimated calculation of recoveries from other significant criminal activity which he was not charged with or on charges that he was acquitted of. The Commissioner can lead evidence to show the respondent hasreceived large cash deposits into accounts and cash located on termination of the operation, which are not explained or disclosed by the declared legitimate income. Ultimately it is for the Commissioner to satisfy the Court the extent that the respondent has benefited from significant criminal activity.[26] The respondent will then have to satisfy the Court that the otherwise unexplained money passing through his accounts and assets purchased by him were not sourced from the significant criminal activity proved. In the present case, whether the cocaine in the three transactions the respondent was convicted of was 54 per cent or 65 per cent pure is not relevant to this exercise. It will not assist the Court in carrying out its assessment of the unlawful benefit accruing to the appellant.[27] Next, I am not satisfied that Mr Tipene and Ms Mason would be able to give relevant and admissible evidence in relation to the purity of the cocaine and its street value in any event.[28] The application to have them give evidence is supported by reference to an email purportedly sent by Mr Tipene to Mr Agwu which says:they were angry bowt the last 1s they gotthey sed they were gana go wif anotha guy forcoz they no that its gud and not 54%[29] Accepting that is an exchange from Mr Tipene to Mr Agwu it appears to be nothing more than Mr Tipene passing on a third party's view as to the purity of thecocaine in issue in that particular transaction. There is no basis to suggest Mr Tipene could give direct evidence about purity of the cocaine, even if relevant, which I have found it is not. Nor can Mr Tipene and Ms Mason give evidence about the street value. The evidence before the Court is that Mr Tipene and Ms Mason were wholesale distributors rather than distributors on the street as the applicant was.[30] These are civil proceedings brought by the Crown. Section 27(3) applies as Mr Godinet submitted. Mr Hayward has the right to have the proceedings heard according to law in the same way as civil proceedings between individuals. But this application is determined by the admissibility of evidence and issues of relevance. It is not a question of Mr Hayward being denied the opportunity to defend himself.[31] Irrelevant evidence is not admissible.5 The evidence sought to be led from Mr Tipene and Ms Mason will not have a tendency to prove anything of consequence to the determination of the proceeding. The purity of the cocaine is not relevant. To the extent the street value could be relevant on the information currently before the Court I am not satisfied that the evidence the proposed witnesses could give would assist the Court on that particular issue. The respondent himself will be able to give evidence as to the street value because that was what he was involved in dealing in.Result[32] The application for the issue of subpoenas is declined.Costs[33] I am not aware whether the respondent is legally aided. I reserve the issue of costs to follow the outcome of the substantive determination.__________________________ Venning J5 Evidence Act 2006, s 7(2).