THE COMMISSIONER OF THE NEW ZEALAND POLICE v PAUL WILLIAM CARSON [2015] NZHC 2442 [re-issued 26 January 2016]

THE COMMISSIONER OF THE NEW ZEALAND POLICE v PAUL WILLIAM CARSON [2015] NZHC 2442[6 October 2015] [re-issued 26 January 2016]IN THE HIGH COURT OF NEW ZEALANDCHRISTCHURCH REGISTRYCIV-2015-409-392[2015] NZHC 2442IN THE MATTER of an Application pursuant to ss 22 and 25of the Criminal Proceeds (Recovery) Act2009BETWEEN THE COMMISSIONER OF THE NEWZEALAND POLICEApplicantAND PAUL WILLIAM CARSONFirst RespondentLAUREN REBECCA FRENCHSecond Respondent(proceedings discontinued by thisJudgment)Hearing: On the Papers and Teleconference with Counsel H McKenzie6 October 2015Counsel: H McKenzie and BM Stanaway for the ApplicantPC Maciaszek for the Second RespondentNo appearance for first RespondentJudgment: 6 October 2015Reissued: 26 January 2016JUDGMENT OF DAVIDSON JA The Judgment of the Court dated 6 October 2015 is re-issued on26 January 2016 under the Slip Rule (HCR 1.9).B Paragraph [17](1)(i) has been corrected to reflect a different bank accountnumber.Introduction[1] The plaintiff Commissioner began these proceedings by a without noticeapplication for a restraining order that certain property not be disposed of or dealt withother than as provided for in the restraining order, and that such property be under theOfficial Assignee's custody and control.[2] Her Honour Justice Dunningham granted an interim order on 19 June 2015,and the Commissioner then sought a restraining order in respect of the same propertyby application on notice.[3] A restraining order does not require a finding that the respondents haveunlawfully benefitted from significant criminal activity because that determination isa function of s 5 of the Act. Instead, a restraining order is based on the existence ofreasonable grounds to believe the respondents have unlawfully benefited fromsignificant criminal activity.[4] When an order is obtained on an application made without notice it expiresseven days after the date on which it was made,1 but if an application on notice is filedin that time the without notice order remains in force until formal disposition of the onnotice application.[5] Forfeiture may not marry with the property which is the subject of a restrainingorder. Further, forfeiture may be ordered on grounds other than those on which theproperty was restrained.2 The restraint may go beyond that which is ultimatelyforfeited.[6] The Court was provided with evidence of service of these proceedings on thefirst respondent. No steps were taken in opposition.1 Section 39(1) of the Act.2 Section 14 of the Act.The application[7] The application is based on the first respondent (Mr Carson) having pleadedguilty to cultivation of cannabis and possession of cannabis for supply, thus"significant criminal activity" for the purposes of s 6 of the Criminal Proceeds(Recovery) Act 2009. The Commissioner's investigations were ongoing but as of24 June 2015 the unlawful benefit allegedly obtained by Mr Carson from suchcriminal activity was $153,646.00.[8] The Commissioner originally contended that the second respondent,Ms French, had unlawfully benefitted from the same criminal activity, and may withMr Carson have been involved in tax evasion and money laundering. TheCommissioner's position has changed based on his present knowledge. Theproceedings against Ms French are discontinued by this Judgment.3[9] The formal grounds remain (modified to reflect Ms French's position) that:a. That the Court can be satisfied that it has reasonable grounds tobelieve that:i. The respondent Paul William Carson has unlawfully benefitedfrom significant criminal activity;ii. The first respondent has an interest in or effective control overthe property identified in paragraph 2 of the submissions.[10] The application is made in reliance on ss 21 and 25 of the Criminal Proceeds(Recovery) Act 2009.[11] Counsel for the Commissioner made a written submission reminding the Courtthat a restraining order is a "holding device" of limited duration.4 It does not constituteforfeiture and it does not make a final determination.[12] To do justice to the submission on behalf of the Commissioner, and to warrantthe orders made in this Judgment, I refer to further statutory provisions beforeconsidering the evidence.3 Para [16].4 Commissioner of Police v Vincent [2012] NZHC 2581.6 Meaning of significant criminal activity(1) In this Act, unless the context otherwise requires, significant criminalactivity means an activity engaged in by a person that if proceededagainst as a criminal offence would amount to offending—(a) that consists of, or includes, 1 or more offences punishable bya 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 orderived.(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 offencein connection with the activity; or(b) the person has been acquitted of an offence in connection withthe activity; or(c) the person's conviction for an offence in connection with theactivity has been quashed or set aside.(3) Any expenses or outgoings used in connection with an activity of thekind described in subsection (1) must be disregarded for the purposesof calculating the value of any property, proceeds, or benefits undersubsection (1)(b).[13] Section 7 of the Act provides:7 Meaning of unlawfully benefited from significant criminal activityIn this Act, unless the context otherwise requires, a person hasunlawfully benefited from significant criminal activity if the personhas knowingly, directly or indirectly, derived a benefit fromsignificant criminal activity (whether or not that person undertook orwas involved in the significant criminal activity).[14] The basis for alleging there are reasonable grounds to believe the respondenthas unlawfully benefited from significant criminal activity is derived from thefollowing information, supported by the affidavit of Detective Howe:a. The first respondent pleaded guilty on 26 May 2015 to the followingcharges which carry maximum penalties that constitute "significantcriminal activity" for the purposes of s 6 of the Act:i. Cultivation of cannabis, ss 9(1) and 9(2) of the Misuse ofDrugs Act 1975, maximum penalty of 7 years' imprisonment;andii. Possession of cannabis for supply, ss 6(1)(f) and 6(2)(c) of theMisuse of Drugs Act 1975, maximum penalty of 8 years'imprisonment.b. as is further detailed in Detective Howe's affidavit and the attachedPolice summary of Facts, a search warrant was executed at the firstrespondent's residential address on 9 April 2015. An indoor cannabiscultivation site was found in the garage containing 3 separate rooms.As Detective Howe deposes, the first respondent had designed andmaintained a complex cultivating system to ensure optimal growingconditions including heat pads, heating lights, thermostats, timers,power boxes, control boxes, fans, air pumps, and ducting.5 A total of38 plants were found growing. The first room contained 12 cannabisplants between 150cm and 160cm in height, the second had 17cannabis plants approximately 40cm tall, and the third had 9 plantsbetween 100cm and 120cm in height. A further 151 cuttings fromharvested cannabis plants were found drying as well as 60 grams ofdried cannabis head.c. A search revealed a manhole in the floor of a wardrobe in one of thebedrooms. Concealed under the house but accessible through themanhole were bags of dried cannabis head weighing a total of 1,370.7grams.d. From 25 March 2008 to 1 May 2015 the first respondent was thepower account holder at 25 Landy Street, Christchurch.6 As DetectiveHowe deposes with reference to the relevant power record as annexedto her affidavit, power consumption was "unusually high" which"further suggests that cannabis has been cultivated during this time."7e. the first respondent may also have engaged in tax evasion and moneylaundering by virtue of the large amount of cash deposits into his bankaccounts and payment of power bills in cash as is detailed in DetectiveHowe's affidavit.[15] The Commissioner refers to tax evasion being an offence pursuant to s 143Bof the Tax Administration Act 1994 with a maximum penalty of 5 years' imprisonment,and money laundering as an offence pursuant to s 243 of the Crimes Act 1961, withmaximum penalties of 5 and 7 years imprisonment.The second respondent[16] The application first alleged the second respondent may have engaged in taxevasion by virtue of undeclared income received in a different bank account, and mayhave engaged in money laundering, and benefited from registration of the Holden5 Affidavit of Detective Howe dated 17 June 2015, at paragraph 35.6 Affidavit of Detective Howe dated 17 June 2015, at paragraph 44.7 Affidavit of Detective Howe dated 17 June 2015, at paragraph 49.Commodore registration number GHJ393 being transferred into her name after thesearch warrant was executed a later memorandum indicated that the Commissionerhad received further information from counsel, he had then decided without prejudiceto discontinue to proceedings against the second respondent, and sought leave todiscontinue, which by this Judgment is granted.Disposition[17] I consider there is ample evidence to make the on notice restraining order assought and order as follows.Orders(1) This order relates to the property being:(i) The funds attributed to Westpac New Zealand Limited accountnumber 03-1599-0001003-081 in the name of Paul WilliamCarson, which as at 9 June 2015 were $101,764.04;(ii) The funds attributed to Westpac New Zealand Limited accountnumber 03-1599-0001003-25 in the name of Paul WilliamCarson, which as at 9 June 2015 were $6,013.10; and(iii) A white 2012 Holden Commodore SV6 Utility vehicleregistration number GHJ493 currently valued at $30,000.00 andregistered to Lauren Rebecca French. There are no furtherknown interests in this vehicle;(2) The property in Order (1) above is not to be disposed of or dealt withother than as provided for in the restraining order or any further orderof this Court and is to be held in the Official Assignee's custody andcontrol.For completeness, as the orders sought seem to comprehend termsattaching to the restraining order sought, with reference to the wording"other than as is provided for in the restraining order", I have added "orany further Order of this Court".(3) These orders are otherwise to subsist until further Order of the Court.(4) The proceedings against the second respondent are discontinuedwithout prejudice to the Commissioner's position.(5) Costs (if any) are reserved..Davidson JSolicitors:Raymond Donnelly & Co (Christchurch Crown Solicitor's Office) for the ApplicantPaul William Carson (Balcairn) Self Represented First RespondentGeddes & Maciaszek (Christchurch) for the Second Respondent