Solicitor General of New Zealand v Kelly [2006] NZCA 343 (7 December 2006)

Court of Appeal of New Zealand

[Index] [Search] [Download] [Help]

---

Solicitor General of New Zealand v Kelly [2006] NZCA 343 (7 December 2006)

Last Updated: 12 December 2006

IN THE COURT OF APPEAL OF NEW ZEALAND

CA215/06

BETWEEN THE SOLICITOR-GENERAL OF NEW ZEALAND
Appellant

AND GREGORY JAMES KELLY
Respondent

Hearing: 27 November 2006

Court: Ellen France, Chisholm and Gendall JJ

Counsel: M F Laracy for Appellant
A E Lankovsky and R B Phillip for Respondent

Judgment: 7 December 2006 at 3.15 pm

JUDGMENT OF THE COURT

The appeal is dismissed.

____________________________________________________________________

REASONS OF THE COURT

(Given by Gendall J)

[1]

This is an appeal against a decision of Judge M E Perkins sitting in the District Court at Gisborne declining to make a forfeiture order in respect of a residential property in Tolaga Bay owned by the respondent. He had been convicted on a charge of cultivating cannabis between 1 August and 9 September 2004 and of having in his possession a sawn-off double barrel shotgun except for some lawful purpose. The cultivation of cannabis had occurred at the Tolaga Bay property.

Background

[2]	The respondent purchased the property in Tolaga Bay in March 2004 for $50,000, subject to a mortgage of $25,000. Neither he nor anyone else resided there and at the end of March he began to establish cannabis plants in the dwelling. The police executed a search warrant on 9 September 2004 and found a total of 324 cannabis plants and a sophisticated hydroponic unit in the bedroom. Other plants were located throughout the dwelling, including a large number of cuttings. A sawn-off double barrel 12-gauge shotgun was located in a bedroom. The police evidence was that the estimated yield from cannabis that was being cultivated would have been 18 pounds weight, having a street value of approximately $45,000.
[3]	The police found $1,930 in cash and a set of electronic scales in the respondent’s vehicle.
[4]	When interviewed the respondent admitted growing the cannabis but denied that it was for commercial purposes and contended that it was for his own use for pain relief. On his estimate of the amount of cannabis consumed he would have used only about 1.5 pounds in a year. He said that the cash in his vehicle had been derived from the sale of tools and that the electronic scales were for weighing whitebait. His explanation for the sawn-off shotgun was that he had purchased it for protection from a gang when he was living in Nelson.
[5]	It was the Crown’s contention that the cultivation of cannabis in the dwelling was carried out primarily for commercial purposes but it did not proceed with a charge of possession of cannabis for supply.
[6]	The respondent was sentenced to an effective term of two years imprisonment on 22 June 2005. He had two previous convictions for cultivating cannabis, both of which were associated with firearms offences and had five other cannabis related convictions. The sentencing Judge (it was the same Judge who later dealt with the forfeiture application) described the "sophisticated operation, a large number of plants, presence of the firearm (although it was dismantled) and [the respondent’s] previous convictions" as aggravating features, noting that the respondent’s "dependency and emotional and physical pain" were mitigating factors. The Judge said that he could not reach any other conclusion than that a commercial element was involved because of the quantity of cannabis discovered and concluded that the offending came within the second category referred to in R v Terewi & Hutchings [1999] 3 NZLR 62 (CA). Adopting a starting point on the cultivation charge of three years imprisonment the Judge allowed a significant discount for the guilty plea and other mitigating factors and imposed a sentence of two years imprisonment, declining leave to apply for home detention.
[7]	The forfeiture application was presented on the basis that the dwelling was "tainted" property. The Judge had an affidavit from a detective as to factual matters concerning the cultivation and income and apparent means of the respondent. The Judge also had material, including an affidavit of the respondent, tracing some of the financial background. The respondent prior moving to the East Coast had resided in the Nelson district. He owned a property which was rented out as a student flat in Dunedin but which was sold at a loss. He owned a property at Takaka Hill on which he had cultivated cannabis and was charged with that offence and sentenced to imprisonment for eight months in the Nelson District Court on 20 November 2002. That property was later sold on 7 February 2003.
[8]	The respondent’s affidavit, which was not challenged in cross-examination, described the background of his property dealings; his disability arising out of a motor accident in 1991; explanations as to the cash found in his vehicle; the fact that he was on an unemployment benefit but able to work part-time and earn up to $80 per week; and a denial that he grew cannabis for the purpose of supply. He deposed that the property represented everything that he owned, being the only place that he could call home and be able to be used by him upon his release from prison as his dwelling and place at which he would be able to have his son (who lives in Wellington) on access visits.

Proceeds of Crime Act 1991

[9]	Section 15 provides:

15 Forfeiture orders
(1) On the hearing of an application for a forfeiture order in respect of a person’s conviction of a serious offence, the Court may, if it is satisfied that property specified in the application is tainted property in respect of the offence, order that such of the property as is specified by the Court is forfeited to the Crown.
(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.

[10]	Section 14(1)(b) entitles the Court to take into account any sanction in the nature of a pecuniary penalty or forfeiture of property imposed upon a person consequent upon his conviction.

The District Court Judge’s decision

[11]

After setting out the essential facts and statutory provisions the Judge said that the value of the crop seized was reasonably substantial and that he had some suspicion that the respondent had understated the position as regard to his assets and level of income. He noted the respondent’s concession that he was not actually living in the house at Tolaga Bay. In dealing with the four criteria contained in s 15(2) Proceeds of Crime Act 1991, the Judge found that the primary use to which the respondent put the property was to grow cannabis in a concealed environment. He said the respondent was given the benefit of doubt at sentencing that he was indeed growing cannabis for his own use. The Judge noted the equity in the property was in the vicinity of $25,000 and referred to counsel’s submissions that the respondent was unlikely to be able to re-establish himself in any way if the property was taken from him. Counsel had submitted that the respondent’s position was similar to that disclosed in the facts in the case of Cooksley-Mellish v Solicitor-General of New Zealand CA209/05 27 March 2006. In that case an appellant had a mortgage free property worth $330,000, acquired from a Lotto win, being a 10-acre lifestyle block occupied by himself and his partner as the matrimonial home. Cannabis was grown on it and in a way which fell into the upper end of Category 2 in R v Terewi. The property was the first ever owned by the appellant and the offending was described as "moderately serious".

[12]

In his decision the Judge described there being some suspicion that the respondent may not be disclosing the true status of his financial position. He concluded that his case was more closely aligned to Cooksley-Mellish than other cases because he "stands to lose virtually all his worldly goods". The Judge went on to say of the respondent:

He is not quite 50 years old but is certainly approaching that age. On the balance of probabilities his evidence discloses that he has no other assets apart from the equity in the property at Tolaga Bay. The value of that equity is approximately $25,000 - $30,000. Certainly it is nowhere near as substantial as the equity held by Mr Cooksley-Mellish. However, the principle would seem to me to be the same in that in each case an order for forfeiture would leave them both in the same position of owning nothing....

[13]	The Judge referred to remarks made in Cooksley-Mellish to the effect that:

Of relevance also is that the property was intended and used primarily for residential purposes.

and went on to say that such is a consideration if applied to the present case was not quite as clear cut as in Cooksley-Mellish but:

Nevertheless, I am prepared to give Mr Kelly the benefit of the doubt particularly having regard to the special circumstances, which exist in the considerably economically depressed rural towns on the North Island East Coast.

[14]	The Judge said that he exercised his discretion in favour of the respondent and declined the forfeiture application.

Discussion

[15]	Counsel for the Solicitor-General contended that the decision of Judge Perkins was plainly wrong because the facts or evidence supported the conclusion that the cultivation was commercial offending and the respondent did not live at the property which did not have a dual use. An order was required to deter serious criminal offending by removing legitimately acquired property from an offender where a property is used to facilitate the commission of the offence and that there must be undue hardship in the sense of something extraordinary which would inevitably flow from forfeiture before a Judge should exercise the discretion not to forfeit the "tainted" property. Counsel submitted that the Judge erred in relying to the extent he did upon the decision in R v Cooksley-Mellish because there were important factual differences. Counsel contended that where, as here, a property had been used exclusively to commit serious offending, undue hardship was most unlikely to arise because the loss of the property was no more than the removal of the wholly "tainted" asset and the reliance upon the reasoning process adopted in R v Cooksley-Mellish was an error of principle.
[16]	Attempts to compare factual situations between different cases involving forfeiture applications are not generally helpful. Other cases will generally have broader relevance where they set out the applicable principles. In any event, apart from the factors to which the Court may have regard under s 15(2) the discretion vested in a Judge is a wide one. That is because apart from the factors to which the Court may have regard under s 15(2) the discretion vested in a Judge is especially wide. All matters relating to the nature and circumstances of the offence and the offender may be taken into account. Obviously, some s 15(2) considerations, such as the use to which the property is put and whether undue hardship is reasonably likely to arise, are relevant. But "any other matter" involves an infinite variety of situations and the discretionary decision has to be tailored to the individual circumstances of the offender and the "tainted" property.
[17]	Of course the wide discretion cannot be exercised in an arbitrary or capricious way. Concepts such as "hardship" or "undue hardship" are not capable of being confined by definition. In the present case the Judge did not say that he exercised his discretion solely on the basis of there being any "undue hardship" to the respondent. Rather, he endeavoured to balance what he saw as the competing interests of the State with those of the respondent, emphasising that the matter was one of degree. The Judge considered the s 15(2) factors and other matters involving the circumstances of the respondent. Clearly, there was a commercial element to the cultivation but on the material that he had before him, the Judge concluded that this was a small part of what the respondent was doing. He alluded to it being possibly temporary, because it was said that the property was to become the respondent’s home where he could have his son visit and stay.
[18]	On the evidence and material before the Judge it was open to him to conclude that whilst there were commercial elements of the cultivation there was, nevertheless, a large element of personal use. Factors such as the equity in the property, the age of the respondent, and the difficulty of re-establishing himself in an economically depressed area, were relevant. Many Judges may have seen the commerciality and sole use of the property for cultivation as being decisive and ordered forfeiture. But an appellate Court cannot replace its discretion for that exercised by a Judge at first instance unless the decision is clearly wrong or the Judge has applied irrelevant, or ignored relevant, considerations. The conclusion the Judge came to that forfeiture was not warranted may well have been merciful but because of the respondent’s general circumstances and the conclusions the Judge came to on the factual material before him, the decision was one that was open to him to make in the exercise of his discretion.
[19]	It was not appropriate to align this case with the facts in R v Cooksley-Mellish. Nevertheless, the decision to decline to order forfeiture was open to the Judge on the material and facts as he found them to be and he did not fall outside permissible boundaries in the exercise of his discretion. That is, it has not been shown that the Judge was clearly wrong.
[20]	The exercise by the District Court Judge of his discretion resulted in a benevolent outcome to the respondent, but in the particular circumstances of this case it was an exercise of a discretion that was permissible and open to the Judge.

Result

[21]	The appeal is dismissed.

Solicitors:
Crown Law Office, Wellington for Appellant
Bate Hallett, Hastings for Respondent