[1] The appellant was sentenced on 1 September 2006 to an effective sentence of three years imprisonment on a number of cannabis related charges under the Misuse of Drugs Act 1975. The sentencing Judge, Baragwanath J, also made an order for forfeiture of a motor vehicle and of a number of other items related to the cannabis offending such as bags and utensils.
[2] The question of forfeiture of a sum of $2,590, which had been found in the appellant’s possession when he was searched by the police was left to be dealt with at a later date as was a further application for the forfeiture of a property owned by the appellant at Tokarahi. Subsequently, on 22 February 2007, John Hansen J declined to order forfeiture of the property but granted the Solicitor-General’s application for forfeiture of the $2,590 on the basis that the money was the proceeds of drugs sales: HC DUN CRI-2005-412-49.
[3] The appellant appeals against the forfeiture order of John Hansen J on the grounds that this sum was not “tainted property” as defined in the Proceeds of Crime Act 1991 and that there was no proper evidential foundation for the Judge’s factual findings.

Background

[4] It is helpful first to briefly summarise the chronology of events leading up to the decision to forfeit this sum. As we have said, the appellant was stopped and his vehicle searched by the police on the Waitaki River bridge on 17 August 2005. Cannabis, cash, and a quantity of benzylpiperazine (“BZP”, the active ingredient in the majority of “party pills” and currently not a controlled substance) were found in the car and, as well, some cash was found on the appellant. The appellant was sentenced in relation to charges arising from the search as well as other charges by Baragwanath J on 1 September 2006.
[5] The Crown memorandum filed at sentencing indicated that the Crown sought forfeiture of the cash under s 32 of the Misuse of Drugs Act as did the summary of facts. However, the Crown also provided the sentencing Judge with a list of items for which forfeiture was sought and there was no reference in that list to either the money or the motor vehicle. Subsequently, on 29 September 2006, the Solicitor-General made an application for forfeiture of the appellant’s property at Tokarahi under s 8 of the Proceeds of Crime Act. There was no reference to forfeiture of the cash in that application.
[6] The forfeiture hearing was adjourned on 9 November 2006 and then proceeded to a hearing on 15 February 2007. The appellant filed an affidavit in those proceedings and was cross-examined on that affidavit. As we have said, the forfeiture order in relation to the money was made on 22 February 2007.
[7] We need to outline, secondly, the offending for which the appellant was sentenced. That offending and the terms imposed were summarised at [25] by Baragwanath J as follows:

Court	Charge and sentence
High Court	possession of cannabis for the purposes of sale (count 2) – three years offering to sell a class C controlled drug (cannabis) (counts 3, 9 and 10) - two and a half years selling a class C controlled drug (cannabis) (counts 6, 7, 11, 12, 14, 15 and 16) – two and a half years
District Court – cultivation charges	cultivation of cannabis (x6) – two years
District Court – other charges	receiving – one month possession of cannabis – one month possession of a class A drug – one month possession of a class B drug – one month cultivation of cannabis – two years

[8] Expanding on this chart in relation to the relevant charges, we note that earlier in the day on 17 August 2005 the appellant had in his possession about three pounds of cannabis for supply which he appeared to have bought in Christchurch. This gave rise to count two.
[9] Count six related to the sale of about half an ounce cannabis to an associate at some time between 1 June and 29 July 2005.
[10] Count ten was a single count of offering to sell cannabis and count 12 related to a sale of cannabis between 1 July and 18 July 2005 to his daughter’s boyfriend.
[11] Finally, we expand on what was found on the appellant and in his vehicle in the course of the search, referred to in [4], later in the day on 17 August. After the police told the appellant that his car was going to be searched, the appellant produced a plastic shopping bag containing four snaplock bags of cannabis head weighing about 27 grams each. The police then found the following additional quantities of drugs: a plastic bag containing approximately two grams of cannabis; a snaplock bag with about two grams of cannabis in the glove box; an ammunition box with approximately 407 grams of cannabis head; and a further three snaplock bags containing cannabis head in the pocket behind the front passenger seat containing about 11, 11 and two grams respectively. The police also located $535.75 in cash on the appellant and $2,062.35 in the car. (This means the total cash was in fact $2,598.10 although the sum referred to in the relevant documentation is $2,590.)
[12] In addition, a black sports bag was found in the appellant’s car containing the following: a rubbish bag with cannabis head weighing approximately 662 grams; a snaplock bag with about seven grams of cannabis; a box of Glad snaplock bags; a set of electronic scales with a measuring bowl containing cannabis residue; and an electronic calculator.
[13] In all the police found some 1212 grams of cannabis. In addition, the appellant said he had a quantity of BZP in the vehicle.

The judgment appealed from

[14] The central focus of John Hansen J’s decision was on the application for forfeiture of the Tokarahi property. That application was unsuccessful. On the application relating to the money, the Judge said this:

[21] ... The same principles set out above are applicable. The [appellant] has given explanations that extend to having money from the sale of a vehicle and receiving money for selling tattooing equipment. The latter to an un-named person. He does name someone in relation to the vehicle sale, but there is no affidavit from that person, and having observed him in the witness box I am not satisfied that is the case. I am quite satisfied the money is the proceeds of drug sales, and, accordingly, is tainted. Considering the other matters necessary under the section I am also satisfied that the money should be confiscated.

The appeal

[15] The appellant’s case is that the money was forfeited by the Court under the Proceeds of Crime Act. That decision reflected John Hansen J’s finding that the cash seized was all the proceeds of drugs sales. The appellant says that decision is not supported by the evidence but, even if it was, it cannot produce forfeiture under the Proceeds of Crime Act. That is because there is no link between the cash and a specific serious offence which the appellant has been convicted. Finally, the appellant argues that the Crown cannot be right in its submission that an order can be made by this Court applying the Misuse of Drugs Act.

Discussion

[16] Our starting point is that the application was dealt with as an application under the Proceeds of Crime Act. That is apparent from John Hansen J’s decision at [2] where the Judge observes that the application alleges that the property “and money” is tainted in terms of s 2 of the Proceeds of Crime Act. The forfeiture order was made under that Act.
[17] For the purposes of this appeal, the Solicitor-General accepts that the Proceeds of Crime Act requires the property to be tainted in relation to a specific serious offence of which the offender has been convicted. That follows from s 15(1) of the Proceeds of Crime Act which allows for forfeiture if the relevant property is tainted property “in respect of the [serious] offence” (our emphasis). “Tainted property” in relation to a serious offence means, relevantly, “proceeds of the offence” (s 2(1)(a)) (our emphasis).
[18] By contrast, the Misuse of Drugs Act provides for forfeiture where the Judge is satisfied that the money was, relevantly, in the possession of that person “for the purpose of facilitating the commission of an offence” (s 32(3)) (our emphasis).
[19] The issue arises in this case because the “serious offence” relied on was the offence of possession for supply. As the Judge said, the summary of facts demonstrates that this offence “was completed upon arrest at the Waitaki River” (at [10]). In this case, the Solicitor-General says that the money constituted a “float” to further the commission of future drug dealing offences.
[20] The Solicitor-General placed some reliance on R v Polain (1989) 52 SASR 526 in which the Supreme Court of South Australia made a forfeiture order of cash which the Court found was the defendant’s “working capital” and a “cash float” for any purchasers of drugs who wanted change (at 530). However, the Court emphasised that the terms of the relevant legislation provided for forfeiture of both property used “in connection with” the commission of the offence as well as that used “in the commission” of the offence (at 531 - 532).
[21] If, then, forfeiture was not available under the Proceeds of Crime Act where does that leave matters?
[22] The Solicitor-General says that this Court should allow the forfeiture order to stand on the basis that there has been no miscarriage. Alternatively, the Solicitor-General submits that this Court has the power to make a forfeiture order on the basis that forfeiture was available under the Misuse of Drugs Act.
[23] In the course of the hearing, a number of potential ways of achieving the result contended for by the Solicitor-General were discussed. The first option discussed was that the proviso to s 385(1) of the Crimes Act 1961 applies. The second option was whether this Court could make an order under either s 385(2) or s 385(3) of the Crimes Act or under s 83(2) of the Proceeds of Crime Act.
[24] The argument that the proviso is available flows from the appeal provisions in ss 82 and 83 of the Proceeds of Crime Act.
[25] Section 82 of the Proceeds of Crimes Act relevantly provides that:

(1) In this section, “relevant conviction”, in relation to a forfeiture order, a pecuniary penalty order, or an order under section 29(3) of this Act, means the conviction of a serious offence which was relied on to support the order.

(2) A person who has an interest in property against which a forfeiture 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.
[26] The procedure on appeal is set out in s 83 which states that:

(1) An appeal under section 82 of this Act shall be made to the Court of Appeal, and the provisions of Part 13 of the Crimes Act 1961 shall, with all necessary modifications, apply as if the appeal were an appeal under section 383 of that Act.

(2) On any appeal under section 82 of this Act, the Court of Appeal may confirm the decision or order or refusal appealed against, or vary it, or set it aside and make such other order or decision as the Court of Appeal thinks ought to have been made in the first place.
[27] The appellant says the proviso does not apply. Mr Lithgow acknowledges that s 83(1) imports the whole of Part 13 of the Crimes Act “as if” the appeal were one under s 383. But, he argues, when read together with s 82(2) that must logically be those parts of Part 13 that relate to a sentence appeal. The proviso applies only to conviction appeals because s 385(1) (the proviso provision) applies to appeals to which s 385(1AA) applies. Section 385(1AA) says it applies to appeals against conviction. Similarly, the ability in s 385(2) to make “such other order as justice requires” is applicable to conviction appeals.
[28] Mr Lithgow observes that in Tareha v Solicitor-General (1996) 13 CRNZ 487 at 494 this Court said that the incorporation of Part 13 allowed the remittal of the case to the lower Court. He submits that cannot be correct as remittal is a power only available on conviction appeals and those deemed to be conviction appeals which forfeiture orders under the Proceeds of Crime Act are expressly not.
[29] We have doubts about the application of the proviso to the present case where essentially the Court is being asked to conclude that an order could have been made under a different Act (Misuse of Drugs) from that under which the application was actually made (Proceeds of Crime). That is a different proposition from that considered by the Court in Tareha. The same reasoning applies to the suggestion that an order could be made under s 83(2) of the Proceeds of Crime Act.
[30] On the basis of Tareha, the power under s 385(2) to make such other order as justice requires (on a conviction appeal) or the power under s 385(3) on a sentence appeal to pass “such other sentence warranted in law” in substitution could be applicable. However, we do not need to reach any conclusion on these possibilities for two reasons.
[31] First, Mr Downs properly accepted that the appellant would have had to be on notice of the possibility of forfeiture under the Misuse of Drugs Act so that he could respond properly to that possibility. Although Mr Downs made an argument that the forfeiture application was a dual one, that is, under both the Proceeds of Crime and Misuse of Drugs Acts, the material before us does not support that.
[32] Second, we accept the appellant’s submissions that the evidence was insufficient for the conclusion that forfeiture was appropriate. It is perhaps not surprising that the Judge when faced with the evidence of drug dealing drew the conclusion he did. However, this was a case where the appellant gave evidence that he was receiving income from a number of sources including selling tattoo supplies, sale of a car, selling BZP, and gambling. The Judge was entitled to reject the evidence about the tattoo supplies, gambling, and the car sale, absent any other evidence to support that. The BZP is in a different category in that the appellant had on him some 212 grams of BZP that he said was worth between $8,000 and $12,000. The appellant also said that there was “probably” BZP money on him or in the car. He was not directly challenged about that in cross-examination. It was not therefore open to conclude that all of the money was the proceeds of drug sales.
[33] Mr Downs acknowledged there were evidential difficulties. It appears that the focus at the hearing in the High Court was on the more significant application for forfeiture of the Tokarahi property and that focus probably explains what has occurred.
[34] For these reasons, we conclude that the forfeiture order could not have been made under the Proceeds of Crime Act. Further, it would not be appropriate for this Court, assuming (without deciding) that it has the power, to make a forfeiture order given the procedural and evidential difficulties.
[35] The appeal is therefore allowed and the forfeiture order is quashed.

Solicitors:
Crown Law Office, Wellington

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