The Commissioner of Police v Wharehinga [2019] NZHC 1207

The Commissioner of Police v Wharehinga [2019] NZHC 1207 [31 May 2019]IN THE HIGH COURT OF NEW ZEALANDTAURANGA REGISTRYI TE KŌTI MATUA O AOTEAROATAURANGA MOANA ROHECIV-2018-470-126[2019] NZHC 1207UNDER the Criminal Proceeds (Recovery) Act 2009BETWEEN THE COMMISSIONER OF POLICEApplicantAND JORDAN MICHAEL WHAREHINGARespondentHearing: On the papersCounsel: RW Jenson for applicantWT Nabney for respondentJudgment: 31 May 2019JUDGMENT OF FITZGERALD J[As to application for assets and profit forfeiture orders]This judgment was delivered by me on 31 May 2019 at 4 pm,pursuant to Rule 11.5 of the High Court Rules.Registrar/Deputy RegistrarDateSolicitors: Pollett Legal Ltd, TaurangaTo: W Nabney, TaurangaIntroduction[1] The Commissioner of Police has applied for an asset forfeiture order againstMr Wharehinga (and in the alternative, a profit forfeiture order). The property thesubject of the application is $20,000 in cash which was found hidden in a tissue boxat Mr Wharehinga's address during a Police search. During that search, Police alsolocated a substantial quantity of methamphetamine, cannabis, and ephedrine.[2] Mr Wharehinga opposes the application. He says the $20,000 belongs to hisbrother (who now resides in Australia) and is unrelated to the drugs found at hisproperty. Mr Wharehinga says he was merely looking after the cash for his brother.[3] The key issue I must determine is whether the Commissioner of Police hassatisfied me, on the balance of probabilities, that the $20,000 is tainted property andso should vest in the Crown.Further background[4] This summary of events is in large part drawn from an affidavit sworn insupport of the Commissioner's application by Mr Labone, an Investigator with theNew Zealand Police. There is no substantive challenge to the evidence.[5] On 21 June 2017, the Police executed a search warrant at Mr Wharehinga'saddress. During the search Police located 880.6 grams of methamphetamine,1.7 kilograms of cannabis, 2.99 kilograms of ephedrine, scales, and plastic bags of atype commonly used to supply methamphetamine. They also found a green tissue boxcontaining nine bundles of cash, which together totalled $20,000. That cash is thesubject of the present application.[6] Following the search, Mr Wharehinga was interviewed by Police. Thetranscript of the interview has been produced in evidence and I have read it. Duringthe course of the interview, Mr Wharehinga admitted possessing the drugs to on-sell,and gave details of the likely prices he could obtain for them. The cash which wasfound was also discussed and photographs of it shown to Mr Wharehinga.Mr Wharehinga was not sure how much was there, but said he thought there wasaround "5-10 K" and that he had "just chucked it there". Mr Wharehinga acceptedduring the interview that the various items and cash found were his. He did not suggesthis brother as a potential owner of the cash.[7] At the end of the interview, the interviewing Detective gave a summary ofeverything Mr Wharehinga had said during the interview, including thatMr Wharehinga had confirmed that all property seized belonged to him.Mr Wharehinga agreed that summary was a fair representation. Again, he did notsuggest his brother was the owner of the cash.[8] Mr Wharehinga subsequently pleaded guilty to possession ofmethamphetamine for supply, possession of cannabis for supply, and possessingequipment/materials. He has already been sentenced and is currently a servingprisoner at Waikeria Prison.[9] This is not the first time Mr Wharehinga has been convicted of drug offending.In 2015, Mr Wharehinga received a sentence of imprisonment of 3 years 9 months forsupplying methamphetamine, and conspiracy to supply methamphetamine.The proceedings to date[10] Mr Wharehinga filed a notice of opposition to the forfeiture application inOctober 2018. The notice stated that the cash located at his property was not his, butinstead belonged to his brother who is now resident in Australia. The notice ofopposition stated that his brother "will file an application seeking relief from forfeitureand a supporting affidavit." No affidavit by Mr Wharehinga himself was filed insupport of the notice of opposition.[11] A telephone conference was held before Woolford J on 25 October 2018. Atthat conference, Mr Nabney for Mr Wharehinga advised he had been in email contactwith Mr Wharehinga's brother in Australia, but had been unable to confirminstructions to file an application seeking relief from forfeiture. Woolford Jaccordingly adjourned the matter, and recorded that:If no affidavit has been filed from the respondent and from his brother,together with an application seeking relief from forfeiture by the date of thenext telephone conference, the Court is liable to make an order in favour ofthe Commissioner of Police which would vest the sum of $20,000 cash in theCrown absolutely.[12] Mr Wharehinga later filed an affidavit in support of his opposition, in whichhe deposed that the cash belongs to his brother in Australia. He said he had beenlooking after the cash on behalf of his brother and did not want to see him lose hismoney. He further stated that:I understand [my brother] has been in touch with my lawyer who has givenhim advice as to what he needs to do in relation to making a claim on thatcash.[13] In the subsequent telephone conference before me on 11 December 2018, theparties were content to file submissions in support of and in opposition to theapplication, and for the matter to thereafter be determined on the papers. TheCommissioner's submissions were to be filed on or before 21 December 2018, withMr Wharehinga's to follow by 18 January 2019.[14] The Commissioner's submissions were duly filed and served on 19 December2018.[15] Mr Wharehinga's submissions were not received until 3 April 2019.Mr Nabney submits that as the Commissioner is on notice there is a third partyclaiming an interest in the property, he is obliged to serve that party with theproceedings before forfeiture orders are made. Mr Nabney stated that he otherwisehad no submissions in response to the matters raised in the Commissioner'ssubmissions.[16] No application for relief against forfeiture or affidavit has been filed byMr Wharehinga's brother.The law[17] Asset forfeiture orders are governed by s 50 of the Criminal Proceeds(Recovery) Act 2009 (the Act), which relevantly provides:50 Making assets forfeiture order(1) If, on an application for an assets forfeiture order, the High Court issatisfied on the balance of probabilities that specific property is taintedproperty, the Court must make an assets forfeiture order in respect of thatspecific property.[][18] "Tainted property" is also defined in the Act:1tainted property –(a) means any property that has, wholly or in part, been—(i) acquired as a result of significant criminal activity; or(ii) directly or indirectly derived from significant criminalactivity; and(b) includes any property that has been acquired as a result of, or directlyor indirectly derived from, more than 1 activity if at least 1 of those activitiesis a significant criminal activity[19] "Significant criminal activity" relevantly means an activity engaged in thatwould amount to offending punishable by a maximum term of imprisonment of fiveyears or more.2 Here, the seriousness of the charges on which Mr Wharehinga hasbeen sentenced meet this definition.[20] In terms of service, s 45(1) of the Act provides that:(1) The Commissioner must serve a copy of an application for a civilforfeiture order, so far as is practicable to do so, on every person who, to theknowledge of the Commissioner, has an interest in the property to which theapplication relates (including, if applicable, the respondent).(3) On an application for a civil forfeiture order, the High Court may, atany time before the application is finally determined, direct the Commissionerto serve notice of the application on a specified person or class of persons, inthe manner and within the time the Court thinks fit.[21] Finally, s 46 governs who may be heard on an application for a civil forfeitureapplication:1 Criminal Proceeds (Recovery) Act 2009, s 5.2 Section 6.The following persons are entitled to appear and to adduce evidence at thehearing of an application for a civil forfeiture order:(a) the applicant; and(b) any person on whom the application is served (including, ifapplicable, the respondent); and(c) any other person who claims an interest in the property to which theapplication relates.DiscussionIs the cash "tainted property"?[22] I am satisfied that the following factors, drawn from the affidavit evidence ofMr Labone, when taken together, clearly establish on the balance of probabilities thatthe property is tainted property:(a) The property was found during a search that also recoveredmethamphetamine and cannabis, which Mr Wharehinga conceded hewas supplying;(b) The sale of drugs generally is a very cash intensive activity; and(c) An investigation into Mr Wharehinga's IRD records reveals that overthe last six and a half years, he has received a total net income of only$2,708.40. Although he did spend a number of years over this periodincarcerated, there remains a substantial gap between his declaredincome and his likely actual expenditure. It can be inferred he wasreceiving substantial amounts of money from illegal activity.[23] Considering the undisputed factual background, it is highly improbable thatthe $20,000 in cash belongs to Mr Wharehinga's brother as claimed. In addition tothe factors set out at [22] above, it is notable that in his Police interview, MrWharehinga acknowledged the cash belonged to him. He made no mention of hisbrother owning or otherwise having an interest in it. Against that backdrop, and MrWharehinga's clear involvement in a cash intensive drug-related activity, thesuggestion that he was "looking after" the cash for his brother living overseas is simplynot credible.[24] The fact that Mr Wharehinga's brother has been on notice of these proceedingsfor some time, and was stated in the notice of opposition to be filing an application forrelief against forfeiture but has not done so, also supports the conclusion that the cashdoes not belong to him and rather is tainted property.Should Mr Wharehinga's brother be served?[25] Nor am I persuaded the Commissioner must first take steps to serveMr Wharehinga's brother in Australia before the orders ought to be made. Serviceunder s 45(1) is only required on a person who, to the knowledge of the Commissioner,has an interest in the property in question. That is not the case in relation toMr Wharehinga's brother. Section 46 also reflects the distinction between a personwho has been served with the application (which will include anyone theCommissioner knows to have an interest in the property), and any other person whoclaims to have an interest in the property.3[26] I do not propose to direct the Commissioner to serve notice of the applicationon Mr Wharehinga's brother pursuant to s 45(3). His brother has clearly been onnotice of the application since at least 3 October 2018, has been in contact withMr Wharehinga's counsel about it, and was stated to be intending to file an applicationfor relief from forfeiture but has not done so. Woolford J made it clear in his minutedated 25 October 2018 that if no application for relief was filed before the further callof this matter on 11 December 2018, the Court was liable to make the forfeiture order.Mr Wharehinga's brother has now had a further five months to file any application tosupport his claim to an interest in the property. As noted, he has not done so.[27] In these circumstances, I propose to make an asset forfeiture order.[28] As the Commissioner's application for a profit forfeiture order was sought inthe alternative only, it is not necessary to address it further.3 See also s 50(4)(c) which requires attempts to "contact" any person the Commissioner believesmay have an interest in the property, rather than formal service on any such person.Result[29] The asset forfeiture application is granted. There are orders that:(a) The property described in paragraph (2) of the Commissioner'sapplication dated 3 October 2018 vests in the Crown absolutely; and(b) That property is to be in the Official Assignee's custody and control.____________________Fitzgerald J