The Queen v Jury [2004] NZCA 37; [2004] 2 NZLR 457 (29 March 2004)

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The Queen v Jury [2004] NZCA 37 (29 March 2004); [2004] 2 NZLR 457

Last Updated: 18 December 2011

IN THE COURT OF APPEAL OF NEW ZEALAND

CA366/03THE QUEEN

v

CHRISTOPHER ROSS JURY

Hearing: 17 March 2004

Coram: Anderson P Laurenson J Paterson J

Appearances: P J Goldsworthy for Appellant
D G Johnstone for Crown

Judgment: 29 March 2004     

JUDGMENT OF THE COURT DELIVERED BY PATERSON J

Introduction and background

[1] On 28 August 2003, Venning J ordered, pursuant to the provisions of s8 of the Proceeds of Crime Act 1991 (the Act), that Mr Jury pay a pecuniary penalty of $410,000 to the Crown. This was in addition to a fine of $250,000 previously imposed upon him for his offending. Mr Jury appeals against this pecuniary penalty order.
[2] Mr Jury was on 6 March 2002 convicted on three counts of cultivating cannabis, two counts of selling cannabis and 25 counts of money laundering. All offences were serious offences as defined in the Act. The period of offending was from 1 July 1994 to 24 March 1999.
[3] The application for a pecuniary penalty order was made on 12 April 2002. The notice of application sought both a pecuniary penalty “for the penalty amount as assessed by this honourable Court” and an order:

That the Official Assignee be directed to pay to the Crown, out of the proceeds of the restrained property an amount equal to the amount payable under the pecuniary penalty order.

[4] The grounds set out in the written application were:

3. That on the 6th day of March 2002 the Respondent was found guilty following a jury trial on three counts of cultivating cannabis, two counts of selling cannabis and twenty five counts of money laundering, all of which are “serious offences” as defined in the Proceeds of Crime Act 1991.

4. That the Respondent derived a benefit from these serious offences.

5. The evidence given at the trial of the Respondent.

AND UPON THE FURTHER GROUNDS as set out in the Crown Memorandum to be filed in support of this application.

[5] On 17 April 2002, Morris J sentenced Mr Jury to a total of six years imprisonment for his offending, fined him $400,000 and ordered him to pay $100,000 in costs.
[6] On 6 May 2002, the Crown Solicitor filed and served a “Memorandum of Counsel in Support of Application for a Pecuniary Penalty Order.” This was a memorandum which in general terms set out the Crown’s position in support of the application for a pecuniary penalty order. It was superseded and replaced before the hearing in August 2003 by a second memorandum from the Crown Solicitor.
[7] Mr Jury’s counsel filed both an affidavit sworn by Mr Jury and a memorandum in regard to the application for a pecuniary penalty. Both documents were dated in August 2002. In his affidavit, Mr Jury explained that his home farm which was valued at about $1.4 m. had been in his family since it was owned by his great grandfather. It had passed by survivorship to his grandfather, then to his father and finally to Mr Jury. A smaller run-off was valued at approximately $500,000, and had been acquired by his grandfather, passed by survivorship to his father and subsequently passed by survivorship to Mr Jury. One of the pleas in the affidavit was to allow both farm properties to remain with Mr Jury so that he could pass them on to his children. Mr Jury averred that none of the cannabis had been grown on the home farm, but had been grown on the run-off. He stated that there was no tainted property on the home farm, and that a sum of $7100 found by the police in a freezer at that property was obtained from legitimate sources. In his affidavit, Mr Jury conceded he may have made a profit of between $400,000 and $500,000 from his cannabis activities.
[8] On 31 October 2002, this Court allowed an appeal against Mr Jury’s sentence. It reduced the fine from $400,000 to $250,000 and set aside the costs award. The six years term of imprisonment remained.
[9] On 29 November 2002, the Crown filed a second memorandum which replaced the first memorandum dated 6 May 2002. It updated the position in relation to Mr Jury’s sentence and the appeal against it. In most other respects, it was the same as the first memorandum.
[10] After a hearing in the New Plymouth High Court on 21 August 2003, Venning J delivered his judgment of 28 August 2003. Mr Jury gave evidence at that hearing as did Detective Senior Sergeant Coward of the New Plymouth Criminal Investigation Branch. In accordance with s 14(1)(c) of the Act, His Honour had regard to the evidence given at the substantive trial, in particular the evidence in cross-examination of Mr Vevers, a forensic accountant. Mr Vevers’ evidence was that Mr Jury had received income of $660,122 which had not been earned from legitimate farming operations and which could not be explained or accounted for by any independent accounting record. A second exercise by Mr Vevers calculated on a less favourable (but more realistic) basis for the crops of macadamia nuts and avocado which Mr Jury had sold, assessed income of $738,074 which was not earned from legitimate farming operations. Venning J found that the benefits Mr Jury derived from his cannabis operations were at least in the lower of Mr Vevers’ two sums, namely, $660,000. He deducted from this amount the fine already imposed of $250,000 and ordered that Mr Jury pay a pecuniary penalty of $410,000.
[11] The Judge noted that there were currently two restraining orders in force in respect of the farm properties. The combined total of the pecuniary penalty and the monetary fine exceeded the value of the run-off. Venning J accepted that it was likely that in order to meet these payments, Mr Jury may have to sell the run-off property at least, and may need to borrow additional funds to be secured by way of mortgage over the home block. Because of the restraining order, the making of the pecuniary penalty order created a charge on both properties. Therefore, the Crown would be able to register a charge in accordance with s 56(1) of the Act and the Statutory Land Charges Registration Act 1928. In order to give Mr Jury time to consider the best means of either raising the money to meet the charge, or to determine which of the blocks of farmland are to be sold to meet the charge, he directed that Mr Jury was to pay the penalty to the Solicitor-General on or before 31 March 2004.

Points on appeal

[12] There are two discrete points of appeal, namely:

1. The High Court did not have jurisdiction in August 2003 to make the pecuniary penalty order;
2. The conditions of payment of the pecuniary penalty order.

Appellant’s submissions on jurisdiction

[13] The jurisdictional point is based on the provisions of s 9 of the Act, the relevant portions of which read:

9. Application to identify tainted property or benefit-

Every application made under section 8 of this Act in respect of a serious offence shall,-

(a) ...

(b) In the case of an application for a pecuniary penalty order, identify the benefits that are alleged to have been derived from the commission of the offence. (emphasis added)

[14] Mr Goldsworthy submitted on behalf of Mr Jury that the “identification of the benefits” is a mandatory requirement for an application under the Act. While the Solicitor-General in his application stated “the respondent derived a benefit from these serious offences”, he did not in the application identify the benefit that was “alleged to have been derived.” Counsel relied upon this Court’s decision in Carter v Solicitor-General (1998) 16 CRNZ 192 where it was said at p196:

It is necessary to identify what is claimed to be a particular benefit and the offending said to be the source of that benefit.

It was submitted that in this case there was no identification or description of the benefit at all. Also, it was submitted that the source of the unidentified benefit was not adequately specified. It was submitted that non-compliance with these mandatory statutory provisions deprived the Court of jurisdiction to make the orders which Venning J made. Further, it was submitted that the Crown could not rely upon the memoranda filed because these were not part of the application which must be self contained. It was also said that the failure to comply with the statutory provisions had prejudiced Mr Jury.

[15] In summary, Mr Jury’s position is that the application did not comply with the mandatory requirements of s 9 of the Act which require both identification of the benefits and specific reference to the source of the benefits. Consequently, the High Court did not have jurisdiction to make the pecuniary penalty order. The order is therefore void and any restraining order based on that order should be cancelled.

Crown’s submissions on jurisdiction

[16] Mr Johnstone, for the Crown, submitted that the “application” referred to in s9 of the Act is not only the notice of application which initiates the proceeding. Section 9 does not indicate that any particular document is to be regarded as the sole extent of the “application”. The provisions of the Act refer to “an application” and not to the “notice of the application.” In particular, there is no reference in s 9 itself to the “notice of application.”
[17] Mr Johnstone submitted was that “the application” in this case includes the documents referred to in the notice of application, namely, the evidence given at the trial and the Crown memorandum filed in support. Those documents, when read together, sufficiently identified the benefit derived in terms of s 9. In this respect, the notice of application differed from the notice referred to in Carter, where this Court held that the supporting memorandum was not part of the application which must be self contained.
[18] It was further submitted that in this case there was no confusion or misunderstanding on the part of Mr Jury raised either in the submissions at the hearing in front of Venning J, or in the affidavits filed on his behalf before that hearing. The submission on behalf of Mr Jury that there was prejudice has not in the circumstances been made out.
[19] A further submission on behalf of the Crown was that the High Court had power under s 12(1) of the Act to amend the application at the time of the hearing in August 2003. Section 12(1) gives the Court a discretion to amend the application “either of its own motion or at the request of the applicant.” This power is limited by s12(2) which provides that the Court shall not amend an application “to include an additional benefit in an application for a pecuniary penalty order” (emphasis added) unless it is satisfied that the benefit was not reasonably capable of identification when the application was made, or evidence necessary to support the application in relation to that benefit became available only after the application was made. Mr Johnstone’s point was that the Court could have amended the application to identify the benefit, if that were deemed to be necessary, as it would not be including an additional benefit.
[20] The relevance of the submission on the High Court’s power to amend was that s 83(2) of the Act enables, amongst other things, this Court to “make such other order or decision as the Court of Appeal thinks ought to have been made in the first place.” The submission was that if necessary the Court should set aside Venning J’s orders, amend the application, and impose orders in accordance with the substance of Venning J’s judgment.

Discussion

[21] We note that no objection was taken to the form of the notice of application at the hearing. It was raised for the first time in submissions on appeal and was not mentioned as one of the grounds of appeal in the notice of appeal.
[22] The Solicitor-General’s application was in the form of an originating application under the provisions of Part 4A of the High Court Rules. Rule 458D(1)(a)(vii) states that Part 4A applies to any application to the Court under the provisions of the Act. Under r458F certain rules apply with the necessary modifications as they apply in relation to interlocutory applications. Rule 237(1), which is one of the relevant rules, states that “an interlocutory application is made by filing a notice of the application” (emphasis added) in the prescribed form. It follows from these provisions of the High Court Rules that an application under the Act is made by filing a notice of the application. The requirement under s 9 of the Act is that the benefits must be identified when the application is made. Under r 237(1), the application is made with the filing of the notice of application and, in our view, it follows that the benefits must be identified in the notice of application.
[23] It is necessary under s 10 of the Act to serve notice of the application on the convicted person. That notice must comply with the requirements of s 9 of the Act. The convicted person is entitled to details of the application which by s 9 must include an identification of the benefits that are alleged to have been derived from the commission of the offence. Thus, whether the matter is looked at from the viewpoint of the provisions of the High Court Rules, or of the provisions of the Act, we are of the view that the application is made when the notice of application is filed.
[24] We are also of the view that the benefits must be identified in the notice of application. It is not necessary for there to be a precise quantification of those benefits. However, there should be sufficient particularity to enable the respondent to identify the type of benefit alleged, and if it is not possible to quantify the amount of the benefit with exactitude, the alleged method or alternative methods of calculation should be specified. In this case, the Solicitor-General should have included after the word “benefit” in Ground 4 of the notice of application words to the effect, “namely the sale proceeds arising from the sale of the cannabis.” In this case, the Crown at trial presented alternative methods of calculating the sale proceeds. The notice of application should have identified in general terms the two proposed alternative methods so that it was abundantly clear to Mr Jury what benefits were being claimed.
[25] In a Part 4A application, the notice of application is the substitute for a statement of claim in other proceedings. It is necessary to identify what is being claimed, and it is not sufficient to identify the benefits by reference to other documents or material. In this case, the Crown submitted that it had done this by the reference to “the evidence given at the trial” and to “as set out in the Crown memorandum to be filed in support.” By the time the memorandum was filed, the application had been made. The purpose of identifying the benefit in the notice of application is to enable the convicted person to know what the Crown seeks. That person should not be expected to trawl through the evidence of a lengthy trial to identify the precise benefits. As was noted in R v Pedersen [1995] 2 NZLR 386, the word “benefit” can have various meanings. The precise benefit should be identified in the notice of application. It is our view that in this case the Solicitor-General did not identify the benefit in the notice of application and, as such, it did not comply with s 9 of the Act. It does not, however, follow that a non-complying application deprives the High Court of jurisdiction or renders the application a nullity.
[26] The consequences of non-compliance with statutory requirements were considered in both London and Clydeside Estates Ltd v Aberdeen District Council [1979] 3 All ER 876, and R v Immigration Appeal Tribunal [1999] 3 All ER 231 (CA). The position is summarised in the headnote of the latter case where it was stated:

In determining the consequences of a failure to comply with a procedural requirement, the court had to assess the intention of the legislator against the factual circumstances of non-compliance, and in most cases it would be of little if any assistance to inquire whether the requirement was mandatory or directory. That question was at most a first step, and normally there were other questions which were likely to be of greater assistance, namely: (i) whether the statutory requirement was fulfilled if there had been substantial compliance with it and, if so, whether there had been such compliance; (ii) whether the non-compliance was capable of being waived, and if so, whether it had been, could or should be waived: and (iii) what was the consequence of non-compliance if it was not capable of being waived or had not been waived.

[27] The purpose of the Act was commented on by this Court in R v McCormick (CA180/94, 21 December 1994). The purpose relevant to the present case is that a person who engages in criminal activity should be required to pay the profits from that activity, either by a forfeiture order or by a pecuniary penalty order. It would therefore defeat the purpose of the Act to hold that the application in this case was a nullity. Mr Goldsworthy, for Mr Jury, could not point to any prejudice. There can be little doubt that Mr Jury was aware from the time of the application that the Crown was seeking an order that he pay to it the proceeds of the sale of the cannabis. The memorandum of counsel filed and served on 6 May 2002 made this clear. Counsel suggested two alternative methods for assessing the benefit. The evidence given at the trial included the evidence of Mr Vevers, the forensic accountant, on which Venning J relied in fixing the figure of $660,000 (see para 10 above). The alternative methods of assessing the benefit set out in the memorandum and in the evidence of Mr Vevers both attempted to measure the amount of the sale proceeds.
[28] Mr Jury swore an affidavit dated 19 August 2003. Paragraphs 43 and 44 of that affidavit read:

43. Also so far as the profits are concerned I am in a difficult situation because the cash which I received from the sale of legitimate products is now very difficult for me to establish in its true amount and I had to reconcile myself to accepting lower figures as put forward by the forensic accountant called by the Crown.

44. Although I still believe this figure to be an exaggeration, for the purposes of getting this whole matter settled I am prepared to concede using the run-off farm to grow cannabis, I may well have made a profit over the period contained in the indictment of between $400,000.00 and $500,000.00.

Mr Jury’s counsel also filed a memorandum dated 22 August 2003. That memorandum included the following:

27. It is submitted that for the reasons set out in the affidavit of the respondent he is not in a position to seriously rebut the evidence of Mr Vevers who submits at paragraph 28 of the Solicitor-General’s memorandum that there was unidentified income during the relevant period of $660,122.00 to $738,074.00.

There can be no doubt that both Mr Jury and his counsel were aware of the nature of the benefit being sought by the Solicitor-General.

[29] It is also relevant to note that the form of the notice of application was not raised before Venning J, nor was it referred to in the original notice of appeal. There was no prejudice to Mr Jury and, in the circumstances, we are not prepared to treat the application as a nullity. This was a case of substantial compliance, albeit in documents other than the notice of application. It was moreover a case where strict compliance must be taken as having been waived by Mr Jury. No objection was taken to the form of the notice at the High Court hearing, where Mr Jury was represented by a barrister in the front ranks of Queen’s Counsel. Mr Jury and his counsel were well aware of what the Crown was seeking and responded accordingly during the High Court hearing. There was no prejudice to Mr Jury.
[30] In coming to this conclusion, we have considered whether the principles of the London and Clydeside Estates Ltd and Immigration Appeal Tribunal cases should be applied to a case which is part of the criminal justice process. As noted by this Court in Black v R (1997) 15 CRNZ 278, the application is civil in form but is part of the criminal justice process. We see no reason in principle to not apply the principles in this case. Mr Jury in the application acknowledged his offending. He is a convicted person. The purpose of the Act is to pay to the Crown the profits earned from his criminal activity. It would, in our view, be contrary to the purpose of the Act to deny in the circumstances of this case the Crown’s right to the pecuniary penalty order. It could not have been within the contemplation of the Act that a failure of strict compliance with form in circumstances where no objection was taken nor prejudice suggested, would let a criminal keep his forbidden gains. In our view, non-compliance would justify an application for further particulars, but would not justify immunity in circumstances such as these.
[31] In the circumstances it is not necessary to consider the alternative argument, namely, that this Court could have amended the application in the manner suggested in paras 20 and 21 above.

Appellant’s submissions on conditions of payment

[32] Mr Goldsworthy submitted that Venning J structured the conditions of paying the pecuniary penalty contrary to the intentions of the Act, namely, with a punitive purpose and with the consequences being unfair and unreasonably harsh. In support of this submission, he relies upon dicta in R v McCormick. It was noted in that judgment that the policy of the Act was that a person who engages in criminal activity should be required to pay the profits from that activity, either by a forfeiture order or by a pecuniary penalty order, and that “it is not part of the policy of the Act to punish offenders or to include a penalty other than for the two purposes to which we have referred.”
[33] Venning J accepted that it was likely that in order to meet the fine of $250,000 and the pecuniary penalty of $410,000, Mr Jury may have to sell the run-off at least, and may need to borrow additional funds which will have to be secured by mortgage over the home block. Counsel for Mr Jury before Venning J, not Mr Goldsworthy, submitted that Mr Jury should be given a lengthy period of time to meet the penalty fixed. Venning J did not agree but did give a period of seven months, until 31 March 2004, to pay the pecuniary penalty. In the event that the penalty is not paid by that date, he directed in accordance with s 51(1) of the Act that the Official Assignee is to sell the property (either or both farms) in order to satisfy the pecuniary penalty and to account to Mr Jury in relation to the balance.
[34] In rejecting submissions regarding hardship on Mr Jury in paying the pecuniary penalty order in August 2003, the Judge referred to R v Wallace (CA287/00, 2 April 2001). This Court in Wallace upheld the High Court order which had the effect of forcing a sale of Mr and Mrs Wallace’s matrimonial home. It was submitted that this case should be distinguished because there was in Wallace, no prospect of them being able to pay the order without selling the matrimonial home, whereas in the present case, Mr Jury may be able to pay the order given time to do so from farming operations. It was submitted that a reasonable accommodation for payment is consistent with this Court’s direction in McCormick that the intention of the Act is not to punish. In this respect, we note that Mr Goldsworthy acknowledges that the properties will not service a loan of more than $450,000 and that if time is given for payment, a substantial portion of the amount due under the pecuniary penalty order would need to be deferred on an interest free basis. This is because it will also be necessary to pay the fine of $250,000 from either borrowings or the sale of the property.
[35] We see no reason for departing from the order made by Venning J in his discretion. We do not interpret this Court’s comments in McCormick as meaning that although the Court has made a pecuniary penalty order, it should defer payment to suit the convenience of the convicted person. The Crown is in this case entitled to its pecuniary penalty order and to enforce that order in the normal way. There are no provisions in the Act which require the Court to consider the convenience of the convicted person and give an extended period of time for payment. In this case, it is apparent that that period would have to extend for at least six or seven years. We accept that it is not the policy of the Act to further punish other than make the pecuniary penalty order, but once that order is made the Crown is entitled to enforce payment in the normal manner.
[36] In the circumstances, the Judge extended leniency to Mr Jury by giving him seven months to make payment. This was not contrary to the purpose of the Act, and the Judge was not required to give an extended period of time for payment. This is particularly so in the circumstances where it was obvious that any extended period for payment would mean that the Crown would have to stand out of both its money and interest on a portion of that money for a considerable time. This point cannot succeed.
[37] Mr Goldsworthy also submitted that the Judge should have taken into account the provisions of s 8 of the Sentencing Act 2002. This is because s 82(3) of the Act states that a person against whom a pecuniary penalty order is made may appeal against that order as if the order were a sentence imposed on the person in respect of the relevant conviction. Mr Goldsworthy submitted that the provisions of s 8(g) of the Sentencing Act which required the Court to impose the least restrictive outcome that is appropriate in the circumstances, and the provisions of ss8(h) and (i) should have also been taken into account. The first subsection requires the Court to take into account any particular circumstances of the offender that mean that a sentence that would otherwise be appropriate would in the particular instance be disproportionately severe, and the latter subsection requires the Court to take into account the offender’s personal family, whanau, community and cultural background in imposing a sentence.
[38] We do not accept that the provisions of s 82(3) of the Act require the provisions of s 8 of the Sentencing Act to be considered when fixing a pecuniary penalty. Section 82(3) of the Act refers to the procedure to be followed, and not the substance to be taken into account when fixing a pecuniary penalty order. The provisions of the Act itself govern those matters. If Mr Goldsworthy were correct in his submission, the Judge would have had to have taken those matters into account when considering the pecuniary penalty order. Section 82(3) refers to the appeal after the order has been fixed and in no way governs the fixing of the pecuniary penalty amount or payment of the same. In the circumstances, this submission cannot assist Mr Jury.

Result

[39] For the reasons given, the appeal is dismissed.

Solicitors
Till Henderson King, New Plymouth for Appellant
The Crown Solicitor, Auckland