Elliot v R Coa

• Jurisdiction: New Zealand
• Judge: Venning J
• Judgment Date: 11 August 2011
• Neutral Citation: [2011] NZCA 386
• Docket Number: CA631/2010
• Court: Court of Appeal
• Date: 11 August 2011

Between

Rodney George Elliot

Appellant

and

The Queen

Respondent

[2011] NZCA 386

Court:

Wild, Venning and Courtney JJ

CA631/2010

IN THE COURT OF APPEAL OF NEW ZEALAND

Appeal against forfeiture order under s142N Sentencing Act 2002 (instrument forfeiture orders) — convicted of cultivating cannabis — operated from his premises — whether s142N allowed for part of a property to be forfeited — appellant's partner had share under Property (Relationships) Act 1976 — property held in one title — whether s142N(1) allowed a specified monetary interest to be retained by an offender — effect of s70 Criminal Proceeds (Recovery) Act 2009 (effect of instrument forfeiture order).

Counsel:

J Krebs for Appellant

C J Lange for Respondent

• A The appeal is allowed.

• B The order for forfeiture is set aside and the resulting sentence of supervision quashed.

• C The issue of forfeiture is to be considered again by the High Court and the appellant is to be re-sentenced by that Court.

JUDGMENT OF THE COURT

REASONS OF THE COURT

Introduction

1 The appellant, Mr Elliot, pleaded guilty to charges relating to the cultivation and sale of the Class C controlled drug cannabis. As part of the sentencing process Heath J made an order under s 142N of the Sentencing Act 2002 for the forfeiture of the appellant's property at 42 Moana Road, Okitu, Gisborne. 1 The Judge then sentenced the appellant to a term of supervision for one year. Without the forfeiture order the Judge would have imposed a sentence of two years six months' imprisonment.

2 The appellant appeals against his sentence, in particular against the forfeiture order. The appellant says the Judge was wrong when he concluded that the provisions of the Sentencing Act, and s 142N(1) in particular, did not enable forfeiture of part of the property. He argues there was jurisdiction to forfeit part only of the property and that such an order was appropriate in this case. The appellant acknowledges that if the appeal is allowed that would lead to him being re-sentenced with the likelihood a term of imprisonment would be imposed.

3 In the alternative the appellant argues that if the Judge was correct, and it was not possible to forfeit part of the property, then the forfeiture order should not have been made as it caused him undue hardship.

4 The Crown submits that the Judge could not order forfeiture of part only of the property as it was held in one title and that, in this case, the forfeiture of the entire property did not result in undue hardship to the appellant.

The issues

5 This appeal raises the following issues:

• (a) Is there jurisdiction to forfeit part only of the property?

• (b) If there is, how is the order to be implemented?

• (c) If there is no jurisdiction to forfeit part only of the property, was it open to the Judge to forfeit?

Background

6 On the termination of a covert drug investigation police executed a search warrant at 42 Moana Road. During the search of the property they located an indoor (hydroponic) cannabis growing area at the rear of a garage on the property. It was divided into two separate rooms. One was for plants in the process of growing while the other was used to facilitate flowering. The appellant owned the property. When interviewed by the police the appellant acknowledged he was responsible for the indoor growing operation. He said that he had been growing cannabis in the garage for some three years. He subsequently pleaded guilty to the charges and was remanded to the High Court for sentence, as the District Court declined jurisdiction.

7 A disputed fact hearing was held to determine the size and profitability of the cannabis growing operation. Heath J found, for the purposes of the forfeiture application and sentence, the annual yield to be $30,000 per annum, leading to a total yield of something in the vicinity of $90,000 over the three years of the appellant's operation.

8 The property was valued at approximately $485,000. The appellant had owned it since 1988. He had acquired it from legitimate sources.

The forfeiture decision

9 Heath J concluded that s 142N(1) of the Sentencing Act did not permit the Court to make a forfeiture order in respect of part of the Moana Road property. 2 As the property was held in one title he considered it to be indivisible so that it had to be forfeited entirely or not at all. 3 Section 142N(3) did not provide a jurisdictional basis for relief in favour of an offender. That provision was directed at providing relief to third parties by declaring the nature, extent and value of the interest of, for example, a mortgagee or joint owner of the property to be forfeited. 4

10 Heath J then went on to consider whether to make a forfeiture order in respect of the entire property under s 142N(1). He accepted that under s 142N(2) the Court could consider any undue hardship caused to the appellant but considered that in the circumstances of the present case he could not justifiably refuse a forfeiture order on that basis. 5 The Judge noted that while the result was harsh the appellant would receive the advantage of a benign sentence.

11 The Judge considered Parliament intended the forfeiture to be part of the sentencing process. The harshness of any penalty suffered through forfeiture could be ameliorated by the reduction of an otherwise appropriate sentence. 6

12 Significantly for the present appeal the Judge noted that: 7

Had jurisdiction existed, I would have been minded to grant Mr Elliot a not insignificant monetary interest so that he was not left without capital at his age [53] and likely earning capacity. While the absence of such a jurisdiction reflects Parliament's intention that the best way to deter crime is to put significant assets at real risk of forfeiture, there are other risks inherent in not granting any relief to someone such as Mr Elliot; for example, he might become a burden on the State or, worse, be given an incentive to reoffend to restore his capital base.

Forfeiture of part

13 The principal legal issue raised by this appeal is whether s 142N of the Sentencing Act provides jurisdiction for the Court to order that part of a property that is an instrument of crime held in one title be forfeited to the Crown.

14 Heath J found that the Court did not have jurisdiction to forfeit part of the property. The options were to either forfeit the whole property to the Crown (without recognising any interest on behalf of the offender) or to refuse forfeiture.

Proceeds of Crime Act 1991

15 To put this issue in context, and to inform consideration of s 142N, it is necessary to consider the former Proceeds of Crime Act 1991 and decisions of this Court under that Act. Section 15(1) of that Act provided:

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.

  (Emphasis added.)

16 —Tainted property” was relevantly defined as: 8

• (i) property used to commit, or to facilitate the commission of, the [serious] offence; or

• (ii) proceeds of the offence; …

17 The issue raised on this appeal was directly considered by this Court in relation to s 15(1) of the former Act in R v Dunsmuir. 9 Mr Dunsmuir had used his house property, which was held in one title, for cultivating cannabis. The High Court had made an order forfeiting the entire property to the Crown.

18 On appeal it was argued on behalf of Mr Dunsmuir that the order for forfeiture should not have been in respect of the whole property, but in respect only of a portion of it.

19 The Court considered that argument raised an issue of jurisdiction. The Court's reasoning on the point was as follows: 10

Jurisdiction

Section 15(1) says that the Court “may” order the forfeiture “of such of the property as is specified by the Court”. The word “may” clearly allows the

Court a discretion. The Court must first be satisfied that the property specified in the application is “tainted property”, but it may limit its order to such of the property as it specifies in the order. Thus if there are a number of items of tainted property in respect of the offence, such as various houses and vehicles, the Court is not bound to forfeit every item. The words “such of the property” clearly enable some items only to be selected for forfeiture. They do not, in their ordinary meaning, authorise the forfeiture in part of a particular item.

“Property” is defined in s 2 as meaning real or personal property of any description, whether in New Zealand or elsewhere, and whether tangible or intangible, and as including an interest in any such property. Thus a mere interest, such as that of a lessee, can be subject to forfeiture. That does not suggest, however, that part of an interest can be forfeited, or that the Court can by its order create a new interest which can be forfeited. It is the property or interest in property used to commit the offence which becomes “tainted property”. The Court may order the forfeiture of such of the property as it specifies in the order. There is no reason to go beyond the ordinary meaning of the words “‘such of the property”, and to read them as if they continued “or such part thereof as is specified by the Court”.

(Emphasis added.)

20 The Court rejected an argument that s 15(5) which provided:

Where a Court makes a forfeiture order, the Court may give such directions as are necessary and convenient for giving effect to the order.

enabled forfeiture in part. 11 Section 15(5) was only an incidental power, which did not enlarge the power to make the order.

21 The Court then went on to consider the decision of the New South Wales Court of Criminal Appeal in R v Bolger as follows: 12

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