R v GAN [2016] NZCA 354

R v GAN [2016] NZCA 354 [27 July 2016]ORDER PROHIBITING PUBLICATION OF THE JUDGMENT AND ANYPART OF THE PROCEEDINGS (INCLUDING THE RESULT) IN NEWSMEDIA OR ON THE INTERNET OR OTHER PUBLICLY AVAILABLEDATABASE UNTIL FINAL DISPOSITION OF TRIAL. PUBLICATION INLAW REPORT OR LAW DIGEST PERMITTED.IN THE COURT OF APPEAL OF NEW ZEALANDCA227/2016[2016] NZCA 354BETWEEN THE QUEENAppellantAND YIXIN GANRespondentHearing: 11 July 2016Court: French, Fogarty and Collins JJCounsel: Z R Johnston for AppellantG J Newell for RespondentJudgment: 18 July 2016 at 10.00 amReasons: 27 July 2016 at 3.00 pmJUDGMENT OF THE COURTA The application for leave to appeal is granted.B The appeal is allowed.C The order discharging the respondent under s 147 of the Criminal Procedure Act2011 is set aside and charges three and four are reinstated.D Order prohibiting publication of the judgment and any part of the proceedings(including the result) in news media or on the internet or other publicly availabledatabase until final disposition of trial. Publication in law report or law digestpermitted.____________________________________________________________________REASONS OF THE COURT(Given by French J)Introduction[1] The Solicitor-General sought leave to appeal a decision of Wylie J dischargingMs Gan on two representative charges of importation of pseudoephedrine.1[2] In a results judgment delivered on 18 July 2016 we allowed the appeal andreinstated the two charges.2[3] Our reasons for that decision now follow.Background[4] The Crown alleges Ms Gan was instrumental in an operation that involvedimporting pseudoephedrine into New Zealand in shipments from China to Tonga viaAuckland. The pseudoephedrine would allegedly be smuggled inside productslabelled and listed on the shipping manifest as potato starch. While the goods werebeing held in Auckland in a customs-controlled area prior to being shipped to Tonga,the pseudoephedrine would be removed and replaced with real potato starch. Thepseudoephedrine would then be distributed in Auckland.[5] There are four charges against Ms Gan.[6] Charges one and two both relate to a specific shipment in 2013. Charge one isa charge of importing pseudoephedrine jointly with two other persons, Messrs Tranand Uele. Charge two is a charge of possession of pseudoephedrine for supply jointlywith two other persons, Messrs Lee and Shao.1 R v Gan HC Auckland CRI-2015-404-114, 27 April 2016.2 R v Gan [2016] NZCA 336.[7] The case against Ms Gan in relation to charges one and two is a very strongone. The relevant container was addressed to a company associated with her husband.She was involved at critical times in communications and meetings with co-defendants, resulting in a van containing potato starch being left in a supermarketcarpark and then driven to the customs-controlled zone the day before the ship arrivedin Auckland. There are incriminating texts between her and co-defendants while theship was berthed in Auckland and after the swap is alleged to have been made. Policesurveillance tracked the van and executed search warrants at connected addresses.Pseudoephedrine was located at these addresses in packaging labelled as potato starch.[8] The co-defendants have all pleaded guilty to the respective charges facingthem. Ms Gan accepts there is sufficient evidence against her to go before a jury inrelation to counts one and two.[9] Charges three and four — the counts at issue in this appeal — arerepresentative charges of importation of pseudoephedrine relating to earlier shipments.Charge three relates to shipments between 1 December 2009 and 28 September 2011and charge four to shipments between 21 May 2012 and 11 June 2013.[10] There is no direct evidence of pseudoephedrine being found on any of theearlier shipments. The Crown case in relation to the representative counts is a purelycircumstantial one.[11] In inviting the jury to infer the earlier shipments also containedpseudoephedrine and that Ms Gan played a similar role in overseeing the importations,the Crown relies on the combined effect of the following:(a) The fact she was involved in both the 2013 and earlier shipments.(b) The similarities between the 2013 shipment and the earlier shipments,including the quantities and packaging of potato starch listed in themanifests, the identities of the consignor, the consignee, the shippingcompany and the shipping company's agent.(c) Evidence of large unexplained cash deposits into Ms Gan's bankaccounts between 3 April 2007 and 31 December 2013 (totalling $7million) that spiked in the period following each shipment.[12] As will be apparent, propensity reasoning is an important aspect of the Crowncase.The High Court decision[13] Ms Gan faced trial on all four counts in the High Court at Auckland, Gilbert Jhaving granted a Crown application for joinder on the basis of cross-admissibility ofthe evidence relating to each shipment.3[14] At the conclusion of the Crown case, Wylie J discharged the jury for reasonsunrelated to this appeal. He also granted an application to discharge Ms Gan unders 147 of the Criminal Procedure Act 2011 of the two representative counts on theground no properly directed jury could reasonably convict Ms Gan on either count.Were a jury to do so, the Judge said, it would not be supported by the evidence.4The Crown's appeal[15] The Crown's right to appeal a decision discharging a defendant is governed bys 296 of the Criminal Procedure Act and is limited to questions of law. The Crownsubmits the decision was wrong in law because the Judge held evidence of the 2013importation could not be taken into account for the purposes of the discharge. Heaccordingly failed to take the Crown's case at its highest, as is required by theauthorities when considering a discharge application.5[16] The specific questions of law stated for the opinion of this Court are:(a) Was the Judge correct that evidence relating to the alleged importationon or about 4 October 2013 could not be taken into account for thepurposes of an application for discharge pursuant to s 147 of the3 R v Gan [2015] NZHC 711.4 R v Gan, above n 1, at [32].5 R v Flyger [2001] 2 NZLR 721(CA) at [17]–[18] and [25].Criminal Procedure Act in respect of the representative charges ofimporting pseudoephedrine?(b) If the Judge was wrong that this evidence could not be taken intoaccount, was the Judge correct to grant the application for dischargepursuant to s 147 of the Criminal Procedure Act?Analysis[17] The first issue for us is to determine whether the Judge did in fact exclude theevidence of the 2013 importation from consideration. Counsel for Ms Gan,Mr Newell, accepts it should have been taken into account, but submits the Judge didtake it into account and therefore there was no error of law.[18] We do not accept that submission. In our view, the Judge's decision does notreasonably permit of any other interpretation than that advanced by the Crown. Inseveral paragraphs the Judge referred to the evidence of the cash deposits as being the"only" evidence supporting charges three and four.6 The judgment also contains anexplanation why the Judge is not taking the evidence of the 2013 importation intoaccount. The Judge specifically stated:7At this stage Ms Gan has not been convicted of charge 1. She may be acquittedand she is presumed innocent until she is proven guilty. I must determine thisapplication now and I cannot assume that the jury will find Ms Gan guilty ofcharge 1.[19] The evidence of the 2013 importation is propensity evidence in relation to theearlier shipments. Insofar as the Judge appears to have assumed the evidence couldonly be used as propensity evidence if proved beyond reasonable doubt, that wascontrary to well established authority and an error.8 There is no such requirement. Infairness to the Judge, it appears (as was accepted by the Crown on appeal) he mayhave been misled by a badly worded submission made to him on behalf of theprosecution.6 R v Gan, above n 1, at [27]–[30].7 At [28].8 R v Guo [2009] NZCA 612 at [49]; Te Rito v R [2013] NZCA 147 at [35]; T (117/2015) v R [2015]NZCA 572 at [25]–[26]; Prasad v R [2016] NZCA 163 at [66].[20] We are satisfied the Judge did exclude the evidence of the 2013 importationfrom consideration and that this was a material error of law.[21] We should add we also disagree with the Judge's analysis of the evidencerelating to the cash deposits. The Judge considered the cash deposits might beconsistent with legitimate activity and accordingly for the jury to draw the inferencesought by the Crown would be for the jury to speculate.9 However, to date Ms Ganhas not provided any explanation for the deposits and while the existence of possiblealternative explanations was accepted by the relevant Crown witness incross-examination, the concessions were not unqualified. In any event, the role of theJudge on an application for a discharge is whether the established facts are capable ofsupporting the inference contended for by the Crown not whether the relevantinference should be drawn.10Conclusion[22] We answer the first question of law submitted to us for determination "no".[23] We are also satisfied that as a result of the error a miscarriage of justice hasoccurred. If the evidence of the 2013 shipment is taken into account for the purposesof a discharge application under s 147, there is a sufficient evidential basis for chargesthree and four to be put before the jury. The second question is therefore answered"no".[24] The application for leave to appeal is granted.[25] The appeal is allowed.[26] The order discharging the respondent under s 147 of the Criminal ProcedureAct is set aside and charges three and four are reinstated.9 R v Gan, above n 1, at [29].10 R v Flyger, above n 5, at [17]–[18] and [25].[27] For fair trial reasons, we make an order prohibiting publication of the judgmentand any part of the proceedings (including the result) in news media or on the internetor other publicly available database until final disposition of trial. Publication in lawreport or law digest permitted.Solicitors:Crown Law Office, Wellington for AppellantKevin McDonald & Associates, Auckland for Respondent