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Court of Appeal of New Zealand |
Last Updated: 21 April 2006
IN THE COURT OF APPEAL OF NEW ZEALAND
BETWEEN DAVID WILLIAM
COOKSLEY-MELLISH
Appellant
AND SOLICITOR-GENERAL OF NEW
ZEALAND
Respondent
Hearing: 27 October 2005
Court: Chambers, Williams and Rodney Hansen JJ
Counsel: J Soondram for Appellant
D G Johnstone for Respondent
Judgment: 27 March 2006
A The appeal is allowed.
B The forfeiture order is set aside.
REASONS
(Given by Rodney Hansen J)
Introduction
[1] In 2001 the appellant had a stroke of luck. He won a first division prize in Lotto. He put most of his winnings into a 10-acre lifestyle block in a quiet rural location in Northland. He grazed a few animals and planted a garden. He bought a shade house and raised a crop of cannabis. Then his luck ran out. [2] The police raided the appellant’s property. They found cannabis with an estimated value of $47,000 and evidence of the recent harvest. The appellant admitted cultivating cannabis and, after a jury trial, he was convicted of possession of cannabis for the purpose of supply and unlawful possession of a firearm. He was sentenced to two years imprisonment. [3] The Crown applied for forfeiture of the appellant’s property under the Proceeds of Crime Act 1991 (the Act). After a defended hearing, Judge Lance QC granted the application. The appellant appeals against the forfeiture order.
Further background
[4] The appellant is now 50 years of age. He had a troubled childhood; a probation report refers to physical and sexual abuse and to periods spent in institutions and foster homes. He was expelled from school. He became involved in drugs and a criminal lifestyle soon afterwards. He appeared regularly before the Courts until he was in his mid-twenties when, he says, he gave up hard drugs and committed to a change of lifestyle. He continued, however, to use cannabis which he grew for his own use. Over the next ten years he was twice convicted of cultivating cannabis; the sentences suggest they were not commercial quantities. However, the appellant was largely successful in putting his criminal past behind him. His last conviction (for possession of cannabis) before the subject offending was in 1990. [5] In 1987, while working as a bushman, the appellant was hit by a falling tree. He injured his shoulder and back. He has been unable to work since and has received Accident Compensation since soon after the accident. He found cannabis to be an effective painkiller and became a heavy user. On his own account, he habitually grew enough to meet his personal needs but no more. [6] The appellant had his lucky win - $430,000 as a share of the first division prize money – in July 2001. He bought the property for $330,000 in January 2002. It was the first time he had owned a home of his own. He lived there with his partner with whom he had previously shared rented accommodation. [7] The appellant said the property was ideally suited to his needs. He could occupy his time productively in a garden fed by natural spring water, in a shed suited to wood carving and looking after a small number of animals. The property has a pool and spa which are therapeutic for the appellant’s shoulder and back. [8] When the police raided the property in September 2002, they found 13 x 20 litre plastic pails of cannabis, graded according to quality. There was 45 pounds (approximately 20 kilos) in total. The cannabis was the product of 116 plants which had been grown in the shade house bought for the purpose. In the house the police found a set of electronic scales and a quantity of snaplock bags commonly used for packaging cannabis. A sawn-off shotgun was found in a shed. [9] The appellant admitted giving a small quantity of the cannabis to friends but claimed he had grown it for his own needs. He said he had decided to do one "big grow" of cannabis to last him several years. He claimed the crop was more abundant than he expected but he decided to keep the excess anyway. [10] In sentencing the appellant, the trial Judge (not Judge Lance) said she accepted there was no evidence of sales of cannabis but having regard to the quantity of cannabis and the way it had been graded, the appellant had faced an "almost insurmountable hurdle" in convincing the jury there was not an element of supply. She assessed the offending as towards the upper end of Category 2 in R v Terewi [1999] 3 NZLR 62 but because of the absence of evidence of sale, settled on a term of imprisonment which was at the lower end of Category 2.
Proceeds of Crime Act
[11] By s 8(1)(a) of the Act, where a person has been convicted of a serious crime, the Solicitor-General may apply for a forfeiture order against tainted property. A serious crime is one which is punishable by imprisonment for five years or more. Tainted property means property used to commit or to facilitate the commission of the offence or proceeds of the offence. [12] In deciding whether or not to order forfeiture, the Judge should have regard to the factors listed in s 15(2) of the Act which provides:
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.
Judge’s decision
[13] Judge Lance noted that it was not in issue that the appellant had been convicted of serious offences for the purpose of the Act and that his property was tainted. His decision focused on the factors he was required to consider under s 15(2). [14] The Judge accepted that the prime objective for the purchase of the property was as a residential dwelling with features which accommodated the appellant’s particular needs and requirements. He commented on the short time between the purchase of the property in January 2002 and the offending and on the appellant’s previous drug convictions. He said there was insufficient evidence to support an inference that the property was bought for the purpose of the illegal activity but that very quickly its predominant use became for illegal purposes. He described the offending as "moderately serious offending of its type". [15] On the issue of hardship, the Judge noted there was no evidence of current value. He referred to the purchase price of $330,000, the apparent absence of improvements and to the existence of a mortgage for $30,000. He saw it as of real significance that the property was purchased totally from the proceeds of a Lotto win shortly before the commencement of the offending. He contrasted this with cases where the property had been owned for a long time before being used for illegal purposes and where its increase in value was substantially the result of hard work. [16] The Judge referred to the possible interest of the appellant’s partner of 13 years, Lisa Marriner. He noted she had taken no steps to identify or quantify her interest in the property and saw it as of significance that she was not residing permanently in the house immediately prior to the appellant’s arrest. [17] He observed that if a confiscation order were made, it would merely put the appellant:
... a few short years later, back in the same position he was and would have been but for his stroke of luck and the offending.
He concluded that he did not see, in balancing all the circumstances, any undue hardship.
Discussion
[18] It is convenient to review the Judge’s decision and the competing arguments by reference to the factors in s 15(2).
[a] The use that is ordinarily made, or was intended to be made, of the property
[19] The Judge accepted in the appellant’s favour that the property was bought primarily for residential purposes and because it met the special needs of the appellant. His finding that the predominant use of the property very quickly became for illegal purposes is, however, disputed. The appellant accepts that the cannabis crop was grown within the first six months or so of his taking occupation but says the Judge was not entitled to conclude that it became the predominant use to which the property was put. [20] We find some force in this submission. At all times the intended and actual use of the property was principally as the appellant’s place of residence. Mr Johnstone submitted that the Judge was entitled to form the view that a significant purpose of the purchase of the property was to use it for cultivation of cannabis on a major scale. But the Judge made no such finding. He said the evidence did not support such an inference. It would, he said, be "speculation". [21] In the circumstances we think the appellant’s cannabis-related activities could more fairly be seen as subordinate to the property’s main use. They are to be contrasted, for example, with a house used principally and over a period for drug-dealing (Lyall v Solicitor General [1997] 2 NZLR 641 is an example) or premises specially modified for indoor cannabis cultivation (as in R v Dunsmuir [1996] 2 NZLR 1 (CA)) or for cultivation and dealing (as in R v Law [2000] 3 NZLR 163). The link between the property and the offending is less than in cases of this kind.
[b] Any undue hardship that is reasonably likely to be caused to any person by the operation of a forfeiture order
[22] The Judge was asked to consider hardship by reference to the position of the appellant and Ms Marriner. In considering whether there was undue hardship to the appellant himself, the Judge focused on the source of the funds used to acquire the property, contrasting the circumstances with cases in which a property had been acquired from savings and its value enhanced by hard work. However, an assessment of undue hardship requires a consideration of all circumstances which might have consequences going beyond the simple loss of a valuable asset. The loss of a property which is especially suited to the appellant’s special needs is one such circumstance. Another is that because he is unable to work and now aged 50, there is no realistic prospect of his ever acquiring another property; he will have lost his major asset. Of relevance too, though of less significance, is that a number of chattels with an estimated value of $10,000 were also confiscated because of their use in the growing operation. [23] We accept that the appellant’s lucky win precluded any argument that undue hardship derived from the way in which the property had been acquired or built up. But that is not the end of the matter. Forfeiture has consequences for the appellant which go beyond those which would follow in the usual run of cases. Those we have referred to should have been taken into account. [24] It is unclear whether Ms Marriner had any interest in the property. She deposed that she lived with the appellant at the property, although the Judge found she was not residing there permanently immediately prior to the appellant’s arrest. However, she shared expenses and helped with the upkeep of the property and, after the appellant went to prison, she took full responsibility for its maintenance. It is possible, as the appellant submitted, that Ms Marriner could establish a right under the Property (Relationships) Act 1976, although we doubt the alternative submission that she could maintain a claim to an equitable interest under constructive trust principles. However, as the Judge noted, she made no claim for relief under s 17 of the Act. We think he was right to acknowledge that she may have an interest in the property but to accord it no great weight in assessing undue hardship.
[c] The nature and extent of the offender’s interest in the property and the nature and extent of any other person’s interest in it
[25] There is no dispute that the appellant was the legal owner of the property, his interest subject only to the mortgage to the ASB Bank which was properly allowed for. We have already concluded that the Judge was right to exclude any claim of interest by Ms Marriner.
[d] Any other matter relating to the nature and circumstances of the offence or the offender, including the gravity of the offence
[26] The Judge referred to the value of the cannabis found at the property and described the offending as moderately serious. There was no further discussion of the circumstances of the offending. The circumstances and gravity of the offending will, however, invariably be important to the exercise of the discretion. Some further consideration of the evidence is called for. [27] The critical issue at trial was whether the appellant had possession of the harvested cannabis for the purpose of supplying others. He maintained in evidence that he was a long time and heavy user of cannabis who grew it to meet his addiction. He claimed cannabis also provided pain relief for his injured back. He hoped the crop would meet his needs for several years hence. He admitted giving small amounts to others but denied selling any or having an intention to sell. [28] As we have earlier noted, the sentencing Judge saw the quantity of cannabis and the way it had been graded as creating an "almost insurmountable hurdle" to convincing a jury there was no element of supply. However, she said there was no physical evidence of sales and her final sentence of two years, after taking into account the aggravating features of previous cannabis convictions and the presence of the firearm, was at the lower end of the range for Category 2, representing small scale cultivation for a commercial purpose and with infrequent or limited sales. [29] There is much about the appellant’s operation to distinguish it from the purely commercial undertakings which lead to many forfeiture orders. There is no evidence of financial gain. The appellant’s longstanding addiction to cannabis and his use of it for pain relief were important contributors to the offending. There were mitigating factors which led to the lenient sentence and which should have been acknowledged and weighed in the exercise of the discretion.
Decision
[30] We are mindful that a forfeiture decision under the Act involves the exercise of a discretion. It should be interfered with only if there has been an error of principle, the Judge has failed to take into account relevant considerations or has taken account of irrelevant matters, or the decision is plainly wrong. We have come to the view that there were relevant errors in the Judge’s analysis which led him to make an order which could not be justified by reference to the criteria in s 15(2). [31] Our principal concern is that the Judge failed to give adequate consideration to the undue hardship to the appellant which would result. One element of this is the value of the property he would lose as a consequence. As it happens, there was no evidence of current value before the Judge when he made his decision. He referred only to the purchase price of the property. When he made the final order six weeks later, he nominated its value at $385,000. There is no valuation or other evidence on the Court file to support the valuation but there was no suggestion that it could not be relied on for the purpose of the appeal. The effect of forfeiture is accordingly that, in addition to his two-year prison sentence, the appellant would lose his equity in the property of $355,000. [32] The consequences to the appellant are exacerbated by his personal circumstances. As we have already noted, forfeiture will strip him of his major asset and leave him with no realistic prospect of rebuilding his asset base. The impact of forfeiture on the appellant, fifty years old and disabled, will be dire indeed. [33] The consequences would be out of proportion to offending which lacked many of the aggravating features often found in large scale cannabis growing operations. In particular, there is no evidence of selling or of personal gain. Of relevance also is that the property was intended and used primarily for residential purposes. [34] These considerations lead us to the clear view that the Judge erred in ordering forfeiture, an outcome which arguably also amounted to disproportionately severe treatment or punishment in terms of s 9 of the New Zealand Bill of Rights Act 1990. In Lyall (supra) this Court accepted that it is appropriate to have regard to s 9 when considering forfeiture under the Act. The Court commented (at 647) that the inability under the Act to forfeit part of an offender’s interest in property, unless legislatively corrected, could lead to the entire refusal of a Crown application on the basis of severe disproportionality. We note that the Criminal Proceeds and Instruments Bill would, if enacted, remove that defect. In the meantime, we must interpret and apply the legislation in a way which is consistent with s 9.
Result
[35] The appeal is allowed. The order for confiscation of the appellant’s property is set aside.
Solicitors:
Crown Law Office, Wellington
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