[2015] NZHC 540 in the MATTER of an Application Pursuant To

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY CIV-2010-419-990 [2015] NZHC 540 IN THE MATTER of an application pursuant to sections 49, 50, 53 to 55 and 58 of the Criminal Proceeds (Recovery) Act 2009 BETWEEN THE COMMISSIONER OF POLICE Applicant AND BONNIE JOSEPH DE WYS First Respondent PENELOPE HELEN LOUISA DE WYS Second Respondent Hearing: 8 to 12 December 2014 (final submissions received 18 December 2014) Counsel: RG Douch and TC Tran for applicant PJ Gorringe for first respondent RJ Laybourn and RM Laybourn for second respondent Judgment: 24 March 2015 JUDGMENT OF FAIRE J This judgment was delivered by me on 24 March 2015 at 4 pm, pursuant to Rule 11.5 of the High Court Rules. Registrar/Deputy Registrar Date…………… Solicitors: Almao Douch, Hamilton Gina Jansen, Hamilton To: Laybourn Law, Hamilton The Commissioner of Police v de Wys [2015] NZHC 540 [24 March 2015] Table of Contents The application ....................................................................................................... [1] The procedural history ........................................................................................... [4] The first issue ......................................................................................................... [7] General background ............................................................................................. [14] Suspicious transaction reporting .......................................................................... [31] The law ................................................................................................................. [36] Assets forfeiture [39] Profit forfeiture 11] Have the respondents unlawfully benefited from significant criminal activity from 6 August 2003 to 25 May 2012? ............................................................. [54] Cannabis plants remnants found in the ceiling cavity at 344 Arapuni Road [60] Cannabis and cannabis constituents found at 501 Kihi Road 18 Mr O’Brien’s evidence [67] The financial inquiry ............................................................................................ [76] Conclusion............................................................................................................ [96] Costs ................................................................................................................... [103] The application [1] The Commissioner applies for civil forfeiture orders pursuant to Part 2, Subpart 3 of the Criminal Proceeds (Recovery) Act 2009 (the Act) for civil forfeiture orders. [2] The application was filed on 25 May 2012. The principal orders sought are: (a) A number of identified vehicles be treated as though the respondents have an interest in the vehicles; (b) That listed real property and vehicles which are alleged to be tainted property be vested in the Crown and that the Official Assignee have custody and control over this property. The property is alleged to be tainted property; (c) That the value of the benefit determined in accordance with s 53 of the Act is $729,558.62; and (d) That the property vested in the Crown is to be sold. [3] The Commissioner had originally sought a higher value. I granted leave to the Commissioner to vary that the application so that the amount was reduced to $729,558.62. The procedural history [4] The Commissioner applied pursuant to Part 2 Subpart 2 of the Act for restraining orders. [5] A without notice application was filed on 6 August 2010. A restraining order was made on 19 October 2010 over three items of property, namely: (a) A farm of 60.8780 hectares at 501 Kihi Road, Hauturu, Oparau (which is situated near the west coast of Waikato and is the home of the respondents); (b) A Mahoe mini-max trailer, inclusive of the portable sawmill; and (c) A Hyundai excavator (digger). [6] On 29 August 2011, the Commissioner applied for a further restraining order over eleven items of property. The order was made on 13 September 2011. It covered cars, motorbikes, utilities, a lawnmower, a motorised sprayer and tractor. The first issue [7] The Commissioner is required to prove, on the balance of probabilities, that the respondents in the period commencing 6 August 2003 and ending 25 May 2012 unlawfully benefited from significant criminal activity. [8] The significant criminal activity alleged is the cultivation of cannabis for the purpose of onsale on a commercial basis for the respondents’ benefit and for the purpose of generating income. [9] There has been no criminal charge laid which would fall within the definition of significant criminal activity in this case against either respondent. That, of course, is not required having regard to the definition of significant criminal activity in s 6. It does, however, mean that this case is different from many others that have been determined under the Act. [10] Counsel for the Commissioner had submitted that the significant criminal activity is either or both of the following: (a) The cultivation of cannabis, which is an offence against s 9 of the Misuse of Drugs Act 1975 and carries a maximum sentence of seven years’ imprisonment; and (b) Selling cannabis, which is an offence against s 6(1)(e) of the Misuse of Drugs Act 1975 and carries a maximum sentence of eight years’ imprisonment. [11] The background facts suggested the possibility of a money laundering and a possible breach of s 243 of the Crimes Act 1961. [12] These offences fall within the definition of significant criminal activity contained in s 6 of the Act. [13] The Commissioner relies on the definition of “unlawfully benefited from significant criminal activity” contained in s 7 of the Act, namely that: … a person has unlawfully benefited from significant criminal activity if the person has knowingly, directly or indirectly, derived a benefit from significant criminal activity (whether or not that person undertook or was involved in the significant criminal activity). General background [14] The first respondent was born in 1968. His parents owned and lived on a dairy farm on Arapuni Road, near Putaruru. His parents owned another farm on Waotu Road. [15] The first respondent commenced milking cows before and after school from the age of 8. In fact, his farm work caused him to miss a large number of days at school and he permanently withdrew from education at the age of 14. As a result he never learned to read and write properly. [16] At 14 years old he worked in a factory in Putaruru, which produced chaff. In addition, he worked on the farm. Then, in 1983, he became the sole manager of his parents’ Waotu Road farm. At a later time, his sister and her husband took over the management of that farm. [17] The first respondent then worked at a sawmill for six months. In addition, he worked for Mr Frank Parata cutting and delivering firewood. That apparently was an introduction for him into a firewood business, which he undertook in a small way, relying on wood which he cut from the farms at Arapuni and Waotu. [18] In 1985, his father made him the sole manager of the Arapuni Road farm. For the next four years he managed the farm and, at the same time, continued to do firewood work for Mr Parata and for himself. [19] In 1989, he met the second respondent. She had been working on a neighbouring farm. In 1990 she left that position and commenced living with the first respondent. That change coincided with the first respondent moving from the cottage that he had been living in on the Arapuni farm and into the main house on that farm. By this time, his parents had moved to the main house on the Waotu farm. The first and second respondents were married in 1992. They have two children, Daniel who was born in 1992 and Shari who was born in 1998. [20] The first and second respondents continued farm work, including milking, and some off-farm work for the next four years. In the summer, the first respondent cut gum and lawsoniana trees on the Arapuni Road farm, which was stored for drying purposes on the farm before sale. [21] In 1995, the first respondent’s parents built a new house on the Waotu farm. The first respondent says that they were under some financial pressure as a result. That led to a 50/50 sharemilking agreement being entered into with the first respondent’s parents. The first respondent said there were discussions at that time with a view to the first respondent eventually buying the Arapuni Road farm. The couple carried on the sharemilking arrangement. The first respondent also carried on his firewood business and also some contract work on other farms. In addition, he later established a pit on the farm and allowed local people to dump car bodies. That saved them the need to travel to Tokoroa to dump the cars. It also allowed the first respondent to set up a small business whereby he would strip parts from the car bodies and sell parts to members of the public. He was also involved in establishing a dirt track, although that only lasted for a year or so. In addition to general farm work the couple reared and sold Friesian bull calves. [22] In 2007, the couple decided to buy a mill so that the first respondent could produce timber. The Waotu and Arapuni Road farms both had a good supply of gum, douglas fir, and lawsoniana trees. They commenced milling trees in 2007. Wood was advertised for sale at the farm gate. [23] This time marked another significant change for the first and second respondent. The first respondent’s parents wished to sell the Arapuni Farm but were not proposing that the respondents buy it. They were anxious to sell the property without an existing sharemilker in place. In early 2008, the first respondent said his parents offered them $300,000 if they would move off the farm. That sum was meant to reimburse them for the effort they had put into the property over and above the completion of their sharemilking responsibilities. The respondents say that they decided to accept the proposal and that then meant that they had to find a purchaser for their herd. They also began looking for a farm which they could buy. Clearly, they were in no position to buy a farm of the value of the Arapuni Road property. The first respondent was aware that that property’s market value at the time was approximately $2,700,000.

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