The Queen v Law [2000] NZCA 111; [2000] 3 NZLR 163 (5 July 2000)

Last Updated: 8 December 2011

IN THE COURT OF APPEAL OF NEW ZEALAND

CA72/00 CA73/00

THE QUEEN

V

MALCOLM JAMES LAW
ROBYNNE ELLEN LAW

Hearing:	26 June 2000
Coram:	Tipping J Heron J Williams J
Appearances:	K N Hampton QC for the Appellants K B F Hastie for the Crown
Judgment:	5 July 2000

JUDGMENT OF THE COURT DELIVERED BY TIPPING J

[1] This appeal is against a decision of the District Court ordering the forfeiture to the Crown of the appellants’ property at Prestons Road, Christchurch. That order was made under s15 of the Proceeds of Crime Act 1991 (the Act).

Background

[2] The appellants, who are married, purchased the Prestons Road property as a family home in 1986. On 24 November 1997 the police executed a search warrant at the property and found a sophisticated cannabis operation located principally in a garage. Further evidence of an established cultivation and dealing operation, including large amounts of cannabis material, was found in the ceiling, a hall cupboard, a bedroom and the master bedroom. The appellants were charged with various offences and were bailed. Notwithstanding that indulgence, they continued their cannabis dealing operation. On 28 May 1998 the police executed a second search warrant and found further evidence of cannabis cultivation and dealing in a locked hall cupboard. The police recovered cannabis material and a book on the indoor horticulture of marijuana. They also found an empty safe in a shed on the property, which smelled strongly of cannabis. The value of the cannabis found in November 1997 was between $55,000 and $65,000. The cannabis found in May 1998 had a value of approximately $2,000.
[3] The appellants were each convicted of cultivating cannabis and possession of cannabis for the purpose of sale between 1 January 1993 and 24 November 1997. Mr Law also pleaded guilty to selling cannabis between those dates. In addition, the appellants were each convicted of possession of cannabis for the purpose of sale between 24 November 1997 and 28 May 1998. Mr Law was sentenced to three and a half years’ imprisonment and Mrs Law to two years imprisonment. Mrs Law’s appeal to this Court against sentence was dismissed.
[4] After both appellants had been released from prison, the Crown applied for an order under the Act that the Prestons Road property owned by the appellants should be forfeited to the Crown. The Crown initially also applied for forfeiture of another property owned by the appellants at Woodend and, in the alternative, for pecuniary penalty orders, but those claims were later withdrawn. The Judge made an order forfeiting the Prestons Road property.

Forfeiture orders under the Proceeds of Crime Act

[5] The Act provides for the confiscation of the proceeds and means of commission of serious criminal offending. The policy behind the Act was described by this Court in R v Brough [1995] 1 NZLR 419, 423:

The policy of the Act, therefore, is twofold. First, a person who has engaged in criminal activity should be required to disgorge what in common parlance may be referred to as his or her ill-gotten gains. Requiring these to be paid cannot in any way be regarded as a penalty. Rather, it is simply a recognition that the law should not permit a person to retain the profits of criminal activity. Secondly, it empowers the Court to forfeit property used to facilitate the commission of the offences. That too is not for reasons of penalty or punishment, but rather in recognition of the principle that persons who use property to commit crimes should be liable to have that property forfeited.

[6] The relationship between these two rationales has been elaborated in subsequent cases. In R v Dunsmuir [1996] 2 NZLR 1, 6 McKay J, delivering the judgment of the Court, said:

Where a forfeiture order is made in respect of property representing the proceeds of crime, it merely takes from the criminal his ill-gotten gains. There can be no complaint as to that. A forfeiture order in respect of property used for the commission of a crime goes further. It is an additional penalty provided by Parliament as a deterrent. The criminal is sentenced for his crime, and in addition any of his property used to commit or facilitate the crime is liable to forfeiture. If this is Draconian, that appears to be the intention of the legislation. Innocent third parties who have an interest in the property are protected under ss 17 and 18. The offender who puts his property at risk by using it for criminal purposes must face the consequences.

[7] Offenders who establish “drug houses” and commit serious offences from them can normally expect to forfeit the relevant properties unless there is a gross or severe disproportion between the gravity of the offending and the value of the property sought to be forfeited, coupled with the other punishment imposed on the offender: Lyall v Solicitor-General [1997] 2 NZLR 641, 647.
[8] The appellants accepted that their convictions were for serious offending falling within the Act and that the Prestons Road property was “tainted property” in terms of its use “to commit or facilitate the commission of the offence”. That being so, it was open to the Judge to exercise his discretion to order forfeiture. The factors relevant to the exercise of the discretion include those set out in s15(2), which states:

(2) In considering whether or not to make an order under subsection (1) of this section in respect of particular property, the Court may have regard to--

(a) The use that is ordinarily made, or was intended to be made, of the property; and

(b) Any undue hardship that is reasonably likely to be caused to any person by the operation of such an order; and

(c) The nature and extent of the offender's interest in the property (if any), and the nature and extent of any other person's interest in it (if any); and

(d) In addition to the matter referred to in section 14(1)(b) of this Act, any other matter relating to the nature and circumstances of the offence or the offender, including the gravity of the offence.

Exercise of the discretion

[9] The first ground of appeal is that the Judge wrongly exercised his discretion in all the circumstances when ordering forfeiture of the Prestons Road home. The appellants submitted that the balance, or proportionality, was wrongly struck by the Judge, in that several factors were given insufficient weight. We note at the outset that all of the factors identified by the appellants as relevant to the exercise of the discretion were carefully considered and weighed by the Judge in the court below. We will address each of these factors in turn, bearing in mind also the further evidence which we admitted concerning Mrs Law's mental health.
[10] The first point was that the property was ordinarily used as a family home and the offending was largely ancillary or incidental to this use of the property. In this respect this case, it was said, could be distinguished from Lyall v Solicitor-General (supra); Solicitor-General v Cooper M97/95 Christchurch; and R v Dunsmuir (supra). The appellants were, they submitted, entitled to the benefit of this distinguishing factor. We are satisfied that the Judge gave this factor sufficient weight. He recognised that the house was bought in 1986 as a family home and that it stayed that way until 1993, when the cannabis operation was started. For about five years after that date the premises were used “in a significant way” for the growing, cropping, packaging and sale of cannabis. That the house was originally acquired by honest means is no reason for forfeiture not to occur: Dunsmuir. After 1993 the “ordinary” use of the house was clearly a dual one. The scale and duration of the offending in this case exceeded that present in Dunsmuir.
[11] The second proposition advanced was that forfeiture would cause undue hardship to the appellants and to their children, especially a daughter still at school. The appellants referred to the fact that the sentences of imprisonment earlier imposed on them did not include discounts for the likely consequences of forfeiture, so the need for deterrence should not now be used to justify forfeiture. There was, they submitted, a gross and severe disproportion between the gravity of the offending and the value of the property to be forfeited when coupled with the sentences of imprisonment already imposed. We do not regard these points as persuasive in view of the purpose and policy behind the forfeiture regime.
[12] Other factors emphasised by the appellant as having been given too little weight by the Judge were that there was no contribution of any drug monies into the property and no proof of substantial profits. This was not a case where the property forfeited was one acquired with ill-gotten gains.
[13] We have considered all these points and those raised by Mr Hampton in his oral submissions. We have also borne in mind the evidence about Mrs Law's mental health. To succeed on this aspect of the appeal, as Mr Hampton properly recognised, the appellants must demonstrate that the Judge below was plainly wrong in his decision to order forfeiture. This, in our view, they cannot do. The appellants' offending was substantial and aggravated by its continuance while on bail. The Judge carefully examined and weighed the points addressed to him, and cannot possibly be said to have been plainly wrong in the conclusions to which he came. He correctly applied the policy of the Act to the present circumstances. When viewed in the light of the s15(2) criteria, and all other relevant matters, the offending was such that it was certainly open to the Judge to conclude that a forfeiture order was called for. The evidence concerning Mrs Law's mental health produced in this Court does not cause us to take any different view.

Opportunity to buy back the property

[14] The second ground of appeal is that the Judge wrongly failed to consider and apply the provisions of ss 15(3) and 22 of the Act so as to allow the appellants to buy back the Prestons Road property.
[15] Section 15(3) provides:

(3) A Court that makes a forfeiture order against property may, if it considers that it is appropriate to do so, by order,--

(a) Declare the nature, extent, and value of any person's interest in the property; and

(b) Declare that the forfeiture order may, to the extent to which it relates to the interest, be discharged pursuant to section 22 of this Act.

[16] Section 22 which provides the mechanism by which the provisions of s15(3) are implemented is in these terms:

22 PERSON MAY BUY BACK INTEREST IN FORFEITED PROPERTY--

Where a Court--

(a) Makes a forfeiture order against any property; and

(b) Makes an order under subsection (3) of section 15 of this Act in respect of an interest in the property,--

the payment to the Crown, while the interest is still vested in the Crown, of the amount specified in the order under that subsection as the value of the interest shall operate to discharge the forfeiture order to the extent to which it relates to the interest, and the Minister shall arrange for the interest to be transferred to the person in whom it was vested immediately before the forfeiture order was made.

[17] It is obvious that the question arising under s15(3) will arise only if a forfeiture order has already been made. Thus the person applying for an order under s15(3) must demonstrate that, despite the making of the forfeiture order, it is nonetheless "appropriate" for that person to be able to buy back the property in terms of s22. Ms Hastie accepted that the person or persons who had committed the qualifying "serious offence" could seek an order under s15(3), they having an interest in the forfeited property and coming within the words "any person". Indeed offenders logically fall within the ambit of s15(3) because the interests of innocent third parties are dealt with primarily under sections 17 and 18.
[18] Notwithstanding this ability of offenders to apply under s15(3) it cannot have been Parliament's intention to allow offenders to buy back their forfeited interest as a matter of course. Section 15(3) in its statutory context is not couched on that basis. An applicant under s15(3) must show that an order is appropriate against the primary policy of the Act, which is to forfeit tainted property absolutely to the Crown unless grounds have been shown for not doing so. Thus in the light of the policy and purpose of the Act, it will not be appropriate to permit offenders to buy back unless there is, in the circumstances of the case, some special feature which clearly takes it outside the ordinary run of cases. The fact that if the Crown sells the forfeited property at auction or otherwise the appellants may, as Ms Hastie acknowledged, seek to buy it, does not necessarily mean that it is appropriate for the Court to facilitate their purchase by means of s15(3).
[19] Mr Hampton's argument on this aspect of the case relied essentially on the fact that the forfeited property was a matrimonial home. The appellants, and in particular Mrs Law, have a strong emotional attachment to it, having been living there for nearly 15 years. In addition Mrs Law's mental health is not good, and may suffer further if the home is lost. Mr Hampton also mentioned the interests of the appellants' daughter who is in her last year at school, and those of an adult son who also lives at the property. Against those matters must be set the gravity and duration of the offending, the prominence given in this field to deterrence, and the need to make it clear that matrimonial homes do not occupy any generally privileged position when questions of forfeiture and buy back are in issue.
[20] As noted above, the Judge did not overtly address the buy back issue. We must therefore consider it without the benefit of his views. We cannot accept Ms Hastie's submission that by not mentioning the point the Judge must be deemed to have considered and rejected it. The Crown cannot claim the benefit of a considered exercise of discretion. The only feature of the case which could possibly be thought to be special, in the sense indicated above, is Mrs Law's mental health. We do not consider the emotional attachment to the home, or the children's circumstances, can be said to be outside the ordinary run of circumstances in this sort of case. Mrs Law's mental health problems are obviously influenced by a diversity of matters, of which the prospect of losing her home is clearly a central feature. The psychiatric evaluation describes Mrs Law as suffering from major depressive disorder. It may seem harsh, but nonetheless consistent with the policy and purpose of the Act, to observe that as a willing participant in the offending, Mrs Law has brought her present problems on herself. The position may have been different if she had been involved only peripherally. Nor is the appellants' position helped by the fact that the offending continued while they were on bail. The Court can only hope that once the uncertainties surrounding the appeal are removed there will be some improvement in Mrs Law's condition.
[21] Having given the matter careful consideration we are not persuaded that the circumstances are such as to make it appropriate to exercise the Court's powers under s15(3).

Result

[22] For the reasons given we are satisfied that the District Court was entitled to make a forfeiture order. We are also satisfied that it is not a case for making any order relating to the buy back of the property under sections 15(3) and 22. The appeal is accordingly dismissed.

Solicitors
Geddes & Maciaszek, Christchurch, for Appellants
Crown Law Office, Wellington