Fraser-Jones v Solicitor-General [2010] NZCA 622 (17 December 2010)

Last Updated: 5 January 2011

IN THE COURT OF APPEAL OF NEW ZEALAND

CA199/2010 [2010] NZCA 622

BETWEEN ROSEMARY FAITH FRASER-JONES
Appellant

AND THE SOLICITOR-GENERAL
Respondent

Hearing: 17 November 2010

Court: Glazebrook, Chisholm and Miller JJ

Counsel: W T Nabney for Appellant
M J Inwood for Respondent

Judgment: 17 December 2010 at 4pm

JUDGMENT OF THE COURT

A The appeal is allowed.

2. The appellant’s application for relief under s 18 of the Proceeds of Crimes Act 1991 is granted.

C It is declared that the appellant has a 50 per cent interest in the property which is valued at $209,000.

D The appellant is permitted to purchase the Crown’s interest in the property.

E Leave to apply for costs is granted.
____________________________________________________________________

REASONS OF THE COURT

(Given by Chisholm J)

Introduction

[1] After the appellant’s husband was convicted on drugs and firearm charges, Judge Ingram made an order pursuant to s 15 of the Proceeds of Crimes Act 1991 (the Act) forfeiting the couple’s jointly owned residential property at Matata, a small seaside township.[1] He declined the appellant’s application for relief under s 18 of the Act on the basis that she was “involved” in the cultivation and that forfeiture was not disproportionate to the seriousness of the offending.
[2] The appellant’s appeal against the decision to decline relief effectively relies on two primary grounds, namely, the Judge:

• (a) misconstrued the involvement of the appellant in her husband’s offending when applying s 18(2) of the Act; and
• (b) applied the wrong test as to proportionality arising from s 9 of the New Zealand Bill of Rights Act 1990 (the Bill of Rights Act).

If the appeal succeeds the appellant seeks orders declaring that she has a 50% interest in the property and permitting her to purchase the Crown’s interest in the property.

Background

[3] In April 1996 the police executed a search warrant at the Matata property. At the time, 32 cannabis plants were recovered from the garden at the rear of the house which stands on a section of 1561 square metres. In addition, dried cannabis material was found throughout the house. There was a total of 2.22kg of dried cannabis head and a further 4.766kg of cannabis leaf.
[4] Both the appellant and her husband were jointly charged with cultivating and possessing cannabis for sale. In the alternative, the appellant was charged with knowingly permitting premises to be used for the commission of an offence against the Misuse of Drugs Act 1975. The appellant’s husband pleaded guilty to cultivation and was found guilty by a jury on the possession for sale charge. He was sentenced to 18 months imprisonment. The appellant was found not guilty. An application by the Crown for forfeiture of the property failed primarily because of the undue hardship that would be caused to the couple’s son (then aged 12 years).
[5] Further search warrants executed at the property in March 2007 gave rise to the forfeiture order involved in this appeal. At this time, 85 mature cannabis plants were found growing in the back yard and cannabis leaf was located in the house. A drug expert for the Crown estimated that the cannabis could be worth between $177,000 and $285,000. A shotgun and ammunition were also located on the property.
[6] The appellant’s husband was charged with cultivating cannabis, possession of cannabis for supply, and unlawful possession of the firearm/ammunition. Initially, he pleaded not guilty to all those charges. However, at an early stage of the trial he pleaded guilty to the cultivation and firearms charges. He was found guilty by the jury of possessing cannabis for supply. He was sentenced to two years and eight months imprisonment.

Application for forfeiture

[7] In due course, the Solicitor-General made an application for forfeiture of the property as a result of the husband’s cultivation of cannabis. Apart from filing a notice of opposition, the appellant’s husband did not take any steps.
[8] Relief under s 18 of the Act was sought by the appellant and her affidavit in support traversed the matters that she relied on: the appellant and her husband had been together for 38 years; she is 53 years of age; since they acquired the property it had been used as a family home for themselves and their son; the mortgage over the property had been discharged in the early 1990’s; during the period of her husband’s offending she was the sole breadwinner; she was not involved in the offending; during the period that the appellant was cultivating the cannabis she had been working long hours and she was unaware of exactly what her husband “got up to” during the day and in her absence.
[9] The appellant deposed that when she initially saw the plants in the garden she was very angry and raised the issue with her husband. Two or three days later she went into the garden and uprooted the plants that were there (two or three). There was then a “huge argument”. About a month after she had pulled the plants out she saw that her husband was growing further plants and told him to get rid of them. His response was that he “owned half the property” and that he would do what he liked. After that she did not go back to the garden because she disapproved and wanted to have absolutely nothing to do with it. Given the duration of the marriage and that the appellant was the father of her son, she did not feel that she could “nark on him to the police”. About a month before the police came she could see that two or three plants had grown very large. She denied knowledge of the cannabis leaf in the house.

Forfeiture hearing

[10] The appellant was represented by counsel and gave oral evidence. She was cross-examined by counsel for the Solicitor-General.
[11] In his decision Judge Ingram proceeded on the basis that the value of the property was somewhere between $156,000 and $209,000. He accepted that the appellant had a half share in the property, that it had not been acquired with the proceeds of criminal offending, and that it had been used as a residence by the appellant and her husband for the past 25 years.
[12] Having summarised the appellant’s case the Judge observed:

[21] In the circumstances outlined in her evidence, there can be no doubt that the second respondent failed to take practical steps open to her to prevent the cultivation of the cannabis. She felt that she could not do so because of the length of the marriage to the first respondent, and there was a possibility that her husband would become extremely angry. There was no evidence at all that he ever threatened her.

[22] The issue of wilful blindness in this connection has previously been the subject of rulings by the Courts. Turning a blind eye to cannabis cultivation has been dealt with in a number of cases, and the law if clear that turning a blind eye constitutes complicity in cannabis growing. See Solicitor-General v Sanders (1994) 2 HRNZ 24; Solicitor-General v Phillips 2002 DCR 927. Failing to prevent property being used for criminal purposes where practical preventative steps could have been taken can be sufficient involvement for refusal of relief; Lyall v Solicitor-General [1997] 2 NZLR 641.

We pause to note that the Judge’s statement that there was no evidence that the appellant had ever threatened her[2] was incorrect. We will return to that matter.

[13] In response to the submission of the appellant’s counsel that the appellant was not “involved” in the offending in terms of s 18(2), the Judge said there might be some substance to that submission if he accepted the appellant’s evidence, but he did not accept her evidence. The Judge found her evidence about not knowing of the cannabis inside the house to be “unbelievable and completely unpersuasive”. However, that was not the charge underpinning the forfeiture application.
[14] The Judge said that even if he had accepted the appellant’s evidence that she disapproved of her husband’s activities and sought to persuade him from continuing with those activities:

[24] ... there were several clearly straight forward steps open to her to prevent him from continuing with his efforts. Firstly, she could have simply cut the plants down. Secondly, she could have given her husband an ultimatum that the police were to be informed by irrevocable means, such as having already posted the letter informing them that there was cannabis growing at the property, leaving him time to remove the cannabis before the police arrived. Thirdly she could simply have given him an ultimatum that if he did not remove the plants she would tell the police herself in order to preserve her interest in the property...

It was noted by the Judge that the appellant had done none of those things.

[15] With reference to the 1996 offending, the Judge commented that the appellant had been through the cycle of a police search, charge, conviction of her husband, and a proceeds of crime application. In response to the appellant’s evidence that with hindsight she acknowledged that she could have done more, the Judge observed that he did not accept that any hindsight was needed, given the appellant’s intimate familiarity with the whole process in relation to the 1996 matters.[3] In the end result, the Judge was satisfied that the appellant’s “failure to take any practical step” to prevent her husband’s cultivation of the plants amounted to wilful blindness and constituted “involvement in the offence” within the meaning of s 18(2).[4]
[16] Then the Judge considered the question of proportionality:

[27] The issue of proportionality requires consideration. It is clear that questions of undue hardship and proportionality need to be balanced. The assessment is whether the effect of the forfeiture is appropriately proportionate to the seriousness of the offending. Disproportionate severity is a high threshold. In this case the value of the plants, the fact that it is repeat offending, and the fact that it was clearly known to both first and second respondents this consequence would follow offending of this nature, all combine to take this case out of any category where it could fairly be said that forfeiture would be a disproportionately severe outcome.

[28] It is clear the legislature’s objective in enabling this legislation was that forfeiture is intended to be a deterrent. The consequences of forfeiture in this case will be to render a couple in their fifties homeless, without any realistic prospect of either of them ever again being capable of obtaining sufficient resources to purchase a further residential property. That consequence may be severe, but it is the legislature’s intended consequence, and the proportionality of that consequence can be seen in the fact that in the case of these respondents, it has not deterred further offending of the same kind, the outcome of the 1996 prosecution and application for forfeiture notwithstanding.

A forfeiture order was made with the property being valued at $209,000.

This appeal

[17] As to the first ground of appeal, Mr Nabney placed particular reliance on the decisions of this Court in Lyall v Solicitor-General[5] and R v Matamua.[6] He emphasised that the evidence did not indicate any active involvement of the appellant in her husband’s offending. In fact, he submitted, the “wilful blindness” mentioned by the Judge accurately reflected the extent of any involvement that the appellant had in the offending.
[18] A strong challenge was mounted to the Judge’s suggestion that there were practicable steps available to the appellant to prevent her husband from continuing his offending. Mr Nabney submitted that her status as a registered proprietor of the property did not confer the necessary control to prevent the offending and that the Judge had failed to take into account the positive steps that she had taken by pulling out some of the plants and arguing with her husband about his activities. His submission was that it was unrealistic to expect her to report her husband to the police having regard to the length of the marriage and her fear of him. Mr Nabney also claimed that the previous application for forfeiture was irrelevant.

Finally, Mr Nabney argued that the forfeiture of the appellant’s interest in the house was disproportionate to the appellant’s role in the offending. He complained that the Judge had overstated the test when he had reasoned that the appellant had to surmount a “high threshold”. It was sufficient for the appellant to show a severe disproportion between her involvement and the value of the interest that she will lose if relief is not granted. More weight should have been given to the fact that the appellant was married to her husband for 30 years, the property has been owned as a

family home for 25 years, it is the appellant’s only significant asset, and the consequence would be that a couple in their fifties would be rendered homeless.

Solicitor-General’s response

[19] Ms Inwood argued that the Judge’s finding that the appellant was “involved” in the cultivation was open to him on the evidence and accords with the approach taken by this Court in similar circumstances. She submitted that no tangible and specific errors in the Judge’s factual analysis had been identified and that the broad thrust of the appellant’s case was that the Judge had reached the wrong result.
[20] Counsel claimed that there were some parallels between the decisions of this Court in R v Banks, Martin and Martin[7] and R v Spellacey, Spellacey and Wagstaff[8] and that the Matamua decision was distinguishable. She submitted that the Judge properly found that there were reasonable steps that could have been taken by the appellant to put an end to the offending
[21] While Ms Inwood acknowledged that the Court can have regard to s 9 of the Bill of Rights Act (which protects people from disproportionately severe treatment or punishment) she claimed that the threshold is necessarily a high one.[9] Although the Judge had not expressly averted to the degree of the appellant’s involvement in the offending when considering the issue of proportionality, that was plainly at the forefront of his mind. While the appellant’s involvement in the offending was “not substantial” it amounted to knowingly permitting the premises to be used for the purpose of cultivating a substantial commercial quantity of cannabis, the value of the drugs were close to the value of the property, and this was the second time that there had been drug offending involving the property.

First ground of appeal – involvement of the appellant in the offending

[22] Given the evidence accepted by Judge Ingram, s 18(1) obliged the Court to grant relief unless s 18(2) applied. That subsection relevantly provides:

(2) The Court may refuse to make an order under subsection (1) of this section if it is satisfied that –

(a) The applicant was, in any respect, involved in the commission of the offence in respect of which forfeiture of the property is or was sought; ...

The pivotal issue was whether the appellant was “involved” in the commission of her husband’s cultivation of cannabis.

Earlier decisions of this Court

[23] In Lyall v Solicitor General, this Court discussed the application of s 18(2)(a). That case involved a situation where two offenders, Lyall and Black, were independently involved in drug dealing from two separate flats in the same villa (which only contained those flats). Lyall’s offending had ceased before Black’s offending began. Although each man knew about the other’s offending, neither were directly involved in the other’s offending. The villa was held in trust by a third party for Lyall as to a two thirds share and Black as to a one third share.
[24] Because no application for forfeiture had been made within the prescribed time in relation to Lyall’s offending, the Solicitor-General’s application for forfeiture was confined to Black’s offending. In the District Court, Lyall unsuccessfully sought relief under s 18. However, he successfully appealed to the Court of Appeal which granted relief by declaring that he had an undivided two thirds share in the property and that the Crown was to pay him an amount equivalent to that interest. Black’s appeal against the forfeiture order failed.
[25] When considering s 18(2)(a) in the context of Lyall’s application for relief this Court observed:[10]

We agree that something less than participation as a party may amount to an involvement. If the legislature had intended that only party status gave rise to the Court’s right to refuse relief it would surely have said so by a cross-reference to s 66 of the Crimes Act 1961. We understand the legislature to be saying that a material association with the offending is enough. It may take the form of assistance of a kind which would make the applicant a party to the crime. Or it may simply be a failure to prevent property in which the applicant has an interest being used for criminal purposes which are known to the applicant in circumstances in which the applicant should have taken practical preventative steps. Mere knowledge of the criminal use of the property does not amount to involvement, even when the applicant benefits from the use, as in R v Matamua (Court of Appeal, Wellington, CA 569/95, 10 July 1996) where the applicant was never in a position to control the drug dealing and had no active involvement in it, but knew that money being paid to her was “dirty money”. The Court said that to be involved required more than mere suspicion or awareness of an offence and “more than mere reluctance through fear to give early assistance to police investigations.”

[26] Although the Court considered that the District Court Judge’s view that Lyall had an involvement in Black’s offending was “robust”, it was not inclined to differ from that view. Amongst other things this reflected that as a two thirds owner Lyall could have “inhibited” Black’s activities, or requested the trustee terminate his licence to occupy. It also reflected that Lyall was present at the property when Black’s drug selling was actually occurring.
[27] Notwithstanding its conclusion that the appellant was “involved” this Court then took the further step of considering the degree of Lyall’s involvement in Black’s offending:[11]

However, s 18(2) is so focused on the offending giving rise to the application to forfeiture that the Court must keep the degree of the applicant’s involvement at the forefront of its mind in considering whether to exercise the discretion to refuse relief. The Judge did not advert to this and consequently has proceeded on an incorrect basis in deciding not to exercise his discretion. The proven involvement of Lyall in Black’s offending was relatively slight. It may have amounted to permitting premises to be used for dealing in cannabis. That is an offence but not a “serious offence”, as Mr Atkinson pointed out, so that if Lyall had been convicted of it the Court would not thereby have had jurisdiction to make a forfeiture order.

In the end result, the Court decided that while it was permissible to take into account Lyall’s earlier offending, that offending was not continuing when Black offended

and that there was a severe disproportion between Lyall’s involvement and the value of the interest that he would lose ($80,000) if relief was not granted.

[28] Matamua is relied on by the appellant. That case involved the sale of the appellant’s property under a long term agreement for sale and purchase. Before the whole of the monies owing (rental) had been paid in full, the purchaser used the property for drug dealing. There was evidence that the appellant was aware that the property was being used for drug dealing and that some of the money that she received was “dirty money”. The District Court made a forfeiture order and declined Matamua’s application for relief under s 18. Ms Matamua appealed.
[29] Having accepted that there was no evidence that the appellant was ever in a position to control the situation or that she had any active involvement in the offending, this Court explained:[12]

The Crown must show that Mrs Matamua was “involved” in the offence in respect of which “forfeiture is sought”. That offence was one of “conspiring to sell” cannabis. Even if she accepted money from drug dealing in payment of the legitimate debt owing to her, there is no evidence to show that she was involved in a conspiracy, or even aware of a conspiracy. In any event, to be “involved” in an offence must require more than mere suspicion or awareness of the offence, and more than mere reluctance through fear to give early assistance to police investigations.

It allowed the appeal on the basis that the grounds for refusing an order under s 18(2) had not been made out.

[30] Banks, Martin and Martin, which was relied on by the Crown, involved offending at a property owned by a family trust. One of the trustees, Mrs Martin, committed the offences and another trustee, Mr Banks, sought relief under s 18 on behalf of the beneficiaries of the trust (including himself). However, he had been convicted of knowingly permitting the property to be used for the commission of the offence of which Mrs Martin was convicted. Relief was declined in the District Court and an appeal to this Court was dismissed.
[31] In response to the submissions on behalf of Banks that the District Court had failed to apply the correct test as to the degree of involvement required by s 18(2) as interpreted in Lyall, this Court commented:

[21] ... What the Court said there was that something less than participation as a party may amount to involvement. A material association with the offending is enough. Mere knowledge does not amount to involvement. In terms of those tests, Mr Banks’ acknowledged action in knowingly permitting premises to be used for the commission of a serious offence fully justified the District Court refusing to grant relief under s 18(2)(a). We also agree with Mr Boldt’s submission that Mr Banks’ conduct needs to be viewed in the light of the scale of a large-scale commercial enterprise that would have yielded substantial profits.

As to the other beneficiaries, the Court noted that they had made no financial contribution to the assets of the trust, they “could not have been unaware” of the cannabis cultivation, and granting relief simply on the basis that they were innocent victims would be an incentive for those considering criminal activity involving the use of property to set up trusts in respect of it.[13]

[32] The other decision relied on by the Solicitor-General is Spellacey, Spellacey and Wagstaff. A property from which drug offending had been conducted was forfeited and applications by the offender’s mother and de facto wife (Ms Wagstaff) for relief were declined by the District Court. The mother’s application relied on an alleged loan to her son which the District Court Judge concluded was fictitious. And the application by Ms Wagstaff was rejected on the basis that she had failed to establish that she had an interest in the property qualifying for relief under s 18. Although the Judge did not need to consider whether Ms Wagstaff was “involved” in the commission of the offence giving rise to the forfeiture, he considered that she “may still have been sufficiently entangled to be disqualified”.[14]

The appeal to this Court by the appellant’s mother was allowed because this Court considered the Crown’s cross-examination of her was unfair in that it did not give her a real opportunity to answer the matters on which she was being challenged.[15] Her application was remitted back to the District Court for re-hearing.

Ms Wagstaff’s appeal was dismissed with this Court commenting that having regard to her awareness of the cannabis growing and that she did nothing to prevent it, Ms Wagstaff could regard herself as perhaps fortunate that an order was not also refused under s 18(2)(a)[16].

[33] Arguably there might be some difficulty in reconciling Lyall with the decisions relied on by the Crown. But, as we shall explain shortly, we do not have to consider that possibility because we have reached a clear view on the facts. In any event, if there are conflicts it would be more appropriate for the permanent Court to resolve the issue.

Knowingly allowing premises to be used

[34] Given the parallels between s 18(2)(a) of the Proceeds of Crimes Act and s 12(1) of the Misuse of Drugs Act, we have considered whether decisions of this Court under the latter provision might assist in resolving this appeal. Section 12(1) provides that every person commits an offence against this Act who “knowingly permits any premises ... to be used for the purpose of the commission of an offence against this Act”.
[35] The leading authority on s 12(1) is R v Sweeney.[17] In that case, this Court confirmed that proof of actual knowledge is necessary and that mere suspicion or reasonable grounds for suspicion will not do. But it accepted that the necessary knowledge can be inferred as a matter of fact from wilful blindness.
[36] Importantly for present purposes, the Court also stated:[18]

... it is enough in this country to show that the defendant had control or a share of control over the premises in fact and deliberately refrained from steps which he knew that he could reasonably have taken to prevent the unlawful use.

We equate the reference in this decision to steps that the defendant knew that he could “reasonably” have taken with the “practical preventive steps” described in Lyall. In other words, there needs to be an element of reality as to whether or not the steps could, or should, have reasonably been taken in all of the circumstances.

[37] The other relevant decision of this Court, R v Woods,[19] involved an unusual situation. The appellant lived in a flat with two others who he knew were drug addicts, and it was not disputed that heroin had been manufactured in the flat immediately before the police arrived. However, there was no suggestion that the appellant was involved in drug use. Indeed, there was evidence that he had an altruistic concern for the welfare of addicts, had imposed house rules that no drugs were to be used in the flat, and had evicted people who used drugs. The issue before this Court was whether the jury had been properly directed about whether the appellant had taken practical steps to prevent the offending on this occasion.
[38] Having observed that mere knowledge is not enough, the Court discussed whether the appellant “could have done anything” about the offending and whether he was “unwilling to take available steps”.[20] It concluded that evidence about the appellant’s prohibition against offending and that he had required addicts to leave his house was relevant. The summing up was found to be deficient because it had not adequately examined what “practical” steps that the appellant could have taken to prevent the offending. The appeal was allowed.
[39] The approach taken by this Court in Sweeney and Woods, highlights that when assessing whether an applicant under s 18(2)(a) of the Act has taken “practical preventive steps” to prevent the offending it is necessary to consider whether the applicant could reasonably have been expected, in all the circumstances, to have taken those steps. If the applicant could not have reasonably been expected to take such steps, the applicant would not be “involved” in the offending for the purposes of s18(2)(a).

Discussion

[40] Clearly the Judge’s conclusion that the appellant was aware of her husband’s offending, or at the very least turned a blind eye to it, was open to him on the evidence. Indeed, that conclusion was hardly surprising. But as this Court said in Lyall, mere knowledge of the criminal use of the property does not amount to involvement for the purposes of s 18(2).[21] Something more is required.
[41] In terms of Lyall that something more can be by way of a failure to prevent the property being used for criminal purposes in circumstances where the appellant should have taken “practical preventative steps”.[22] Whether such practical preventative steps were available will usually be a question of fact for the Judge hearing the application and this Court would not usually intervene.
[42] Unfortunately, as already noted, when the Judge in this case reached the conclusion that the appellant had failed to take reasonable practicable steps open to her to prevent the cultivation of cannabis, he did so on the basis that there was “no evidence at all that [the appellant’s husband] ever threatened her”. In fact the appellant had said under cross-examination:

... he threatened me that if I dared touch his plants, um, something might happen to me.

She had earlier stated in her evidence that she had not pulled the plants out “for fear of what my husband might do”. She also stated “I did nothing for fear [of] what could happen” and that while she could have probably chopped the plants down she had a “fear of what might happen”.

[43] It might be inferred from the Judge’s specific reference to the absence of any evidence that the appellant had ever been threatened by her husband that the presence of such evidence could have affected the Judge’s thinking. In Matamua, this Court decided that to be “involved” in an offence must require more than “mere reluctance through fear to give early assistance to police investigations”.[23] Thus, despite the Judge’s rejection of the applicant’s evidence we are not prepared to dismiss the error as inconsequential. If it had stood alone we might have referred the matter back to the District Court for reconsideration. But it does not.
[44] As we have already mentioned when discussing Lyall, that appeal was allowed because the Judge hearing the application for relief had not adverted to the degree of the applicant’s involvement in the offending and this Court decided that he had consequently proceeded on an incorrect basis in deciding not to exercise his discretion in favour of relief.[24] Ms Inwood attempted to persuade us that even though the Judge had not specifically referred to this aspect it was plainly at the forefront of his mind. We reject that submission.
[45] While the Judge said that he was satisfied that the appellant’s failure to take any practicable steps to prevent her husband’s cultivation of the plants amounted to wilful blindness to the criminal offending and constituted “involvement in the offence within the meaning of s 18(2)”,[25] he did not specifically address the degree of the appellant’s involvement. Apart from being important to the exercise of the Judge’s discretion and having parallels with Lyall, it is also important to the second ground of appeal, which we now consider.

Second ground of appeal – refusal of relief disproportionately severe treatment

[46] Section 9 of the Bill of Rights Act protects people from disproportionately severe treatment or punishment. The forfeiture cases that we have discussed earlier considered proportionality in situations where the applicant for relief had been charged with, and convicted of, an offence. Thus, it is necessary to consider whether s 9 is available in a case like this where the applicant has not been charged with, or convicted of, an offence.
[47] We have no doubt that s 9 is available whether or not the person seeking to rely on it has been charged with, or convicted of, an offence. This reflects the wording and context of s 9 which provides:

Everyone has the right not to be subjected to torture or to cruel, degrading, or disproportionately severe treatment or punishment. (Emphasis added)

This wording can be contrasted with other provisions in the Bill of Rights Act that apply to persons who have been arrested or who are under detention. For example s 23 expressly limits the scope of that section to those who have been arrested or are under detention. We also note that in Puli’uvea v The Removal Review Authority[26] this Court proceeded on the basis that s 9 might apply to a removal order.

[48] Having reached the conclusion that s 9 might apply, we keep in mind that the policy factors in favour of forfeiture of property utilised in the commission of offending are cogent and that the s 9 threshold is high.[27]
[49] In this case, the Judge approached the issue of proportionality on the basis that the assessment “is whether the effect of the forfeiture is appropriately proportionate to the seriousness of the offending”.[28] He took into account the value of the plants, the fact that it was repeat offending and that both the appellant and her husband knew the consequences that would follow for offending of that nature. He concluded that those factors took it out of the category where it could fairly be said that forfeiture would be a disproportionately severe outcome. He acknowledged that it would render a couple in their fifties homeless without any realistic prospect of obtaining sufficient resources to purchase a further residential property, but considered that deterrence was a clear legislative objective which had not been achieved by the outcome of the prosecution and forfeiture application in 1996.
[50] We reject Mr Nabney’s complaint that the Judge had erred by applying a high threshold. We also reject his contention that the Judge was not entitled to refer to the 1996 prosecution and forfeiture application. In Lyall, the Court considered that it was permissible to have regard to Lyall’s earlier offending.[29] We do not see any reason why a different approach should be taken on this occasion.
[51] Having said that, we cannot find any indication in his decision that the Judge considered whether there was any disproportion between the appellant’s involvement in the offending and the value of the interest that she would lose if relief was not granted (which was the approach taken by this Court in Lyall.[30]) By concentrating on the seriousness of the offending the Judge effectively linked the appellant to the offending without attempting to define the extent of her involvement. This would not have happened if he had specifically addressed the degree of her involvement in the offending.
[52] Even allowing for the Judge’s rejection of the appellant’s evidence, there was no sound basis on which the Judge could have inferred that she was actively involved in her husband’s offending and he did not attempt to do so. Instead he found her to be involved by virtue of “wilful blindness” and her failure to take steps to bring the offending to an end. But this reasoning is clouded by the failure to take into account her evidence that her husband had threatened that something might happen to her if she dared touch his plants. Moreover, given all the circumstances, especially the length of the marriage and her alleged fear of her husband, we have reservations about the Judge’s conclusion that the appellant should have gone to the police. We cannot escape the conclusion that whatever way this matter is viewed the appellant’s involvement in the offending was at the very lowest end of the spectrum.
[53] It is also necessary to factor into the proportionality assessment that either the whole of the appellant’s interest in the property is forfeited or relief is granted. As was noted in Lyall[31] (and in other cases) there is no middle ground. It is all or nothing.
[54] Adopting the Lyall approach we think the forfeiture of the whole of the appellant’s interest in the property was too severe. As we see it, the appellant’s case is even stronger than Lyall’s. Whereas Lyall had earlier offended from the same premises, the appellant was acquitted in relation to the 1996 offending, including the allegation that she had permitted the premises to be used, and no charges were laid against her in relation to the present offending.
[55] Apart from those factors, the appellant has been a joint owner of the property for 25 years, there is no suggestion that the proceeds of offending were used to acquire or maintain it, and, as the Judge acknowledged, if her share in the property is forfeited there is no realistic prospect that she will be able to acquire another property for herself. In our view, forfeiture would be disproportionately severe and nothing would be achieved by referring the matter back to the District Court for reconsideration.

Result

[56] We therefore allow the appeal and grant the appellant relief by declaring that she has a 50 per cent interest in the property at 5 Western Close, Matata, subject to the statutory charge in favour of the Legal Services Board. For the purposes of s 18(1)(c) of the Act we declare that the value of the property is $209,000. The appellant is to be permitted to purchase the Crown’s share in the property.
[57] Leave is reserved to the parties to apply for costs if agreement cannot be reached.

Solicitors:
Crown Law Office, Wellington for Respondent

---

[1] Solicitor-General v Fraser-Jones, District Court, Tauranga, CIV-2009-070-000465, 12 March 2010.
[2] At [21].
[3] At [25].
[4] At [26].
[5] Lyall v Solicitor-General [1997] 2 NZLR 641 (CA).
[6] R v Matamua CA569/95, 10 July 1996.
[7] R v Banks, Martin and Martin CA386/01, CA403/01, 19 March 2002.
[8] R v Spellacey, Spellacey and Wagstaff CA128/00, CA133/00, CA134/00, 10 August 2000.
[9] R v Crombie CA453/05, 29 June 2006 at [16].
[10] At 648.
[11] At page 649.
[12] At 13.
[13] At [22].
[14] At [34].
[15] At [51].
[16] At [68].
[17] R v Sweeney [1982] 2 NZLR 229 (CA).
[18] At 230.
[19] R v Woods CA 213/98, 9 December 1998.
[20] At 5.
[21] See at [26] above.
[22] See at [26] above.
[23] See at [30] above.
[24] See at [26] above.
[25] At [26].

[26] Puli’uvea v The Removal Review Authority (1996) 2 HRNZ 510.
[27] R v Crombie CA453/05, 29 June 2006 at [16].
[28] See [27] of his decision, which is quoted at [16] above.
[29] At 649.
[30] At 649.
[31] At 649.