Director of Public Prosecutions for Western Australia v McPHERSON
[2012] WASC 342
•17 SEPTEMBER 2012
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: DIRECTOR OF PUBLIC PROSECUTIONS FOR WESTERN AUSTRALIA -v- McPHERSON [2012] WASC 342
CORAM: EM HEENAN J
HEARD: 8 AUGUST 2012
DELIVERED : 8 AUGUST 2012
PUBLISHED : 17 SEPTEMBER 2012
FILE NO/S: CPCA 65 of 2010
CPCA 85 of 2010
MATTER :Sections 41 and 43 of the Criminal Property Confiscation Act 2000 (WA)
and
Director of Public Prosecutions for Western Australia against Toby Andrew McPherson
BETWEEN: DIRECTOR OF PUBLIC PROSECUTIONS FOR WESTERN AUSTRALIA
Applicant
AND
TOBY ANDREW McPHERSON
Respondent
Catchwords:
Criminal property confiscation - Objections dismissed - Declaration for crime-used property substitution
Legislation:
Criminal Property Confiscation Act 2000 (WA)
Misuse of Drugs Act 1981 (WA)
Result:
Objection dismissed
Declaration pursuant to s 22 that substituted property owned by respondent is available for confiscation
Declaration of confiscation
Category: B
Representation:
Counsel:
Applicant: Ms F A Humphries
Respondent: No appearance
Objector: No appearance
Respondent to Objector : No appearance
Solicitors:
Applicant: Director of Public Prosecutions (WA)
Respondent: No appearance
Objector: No appearance
Respondent to Objector : No appearance
Case(s) referred to in judgment(s):
Director of Public Prosecutions (WA) v Bowers [2010] WASCA 46
White v Director of Public Prosecutions (WA) [2011] HCA 20
EM HEENAN J: By consent orders made on 30 August 2010, Jenkins J directed that action no CPCA 85 of 2010 between Kristy McPherson and the State of Western Australia be consolidated with action no CPCA 65 of 2010 which is an application by originating summons by the Director of Public Prosecutions for Western Australia against Toby Andrew McPherson under the Criminal Property Confiscation Act 2000 (WA) for a crime‑used property substitution declaration. By those orders, the two consolidated actions were ordered to be carried on as one action, with CPCA 65 of 2010 being the leading action. The heading of the consolidated actions was also amended to include Kristy McPherson as the objector and the State of Western Australia as respondent to the objector in the leading action CPCA 65 of 2010. Other directions were then also made relating to the appointment of the objector for the control and management of certain subject land while the freezing order, the subject of the second action, was in force or until further order.
In July 2012, the objector, Kristy McPherson, formally consented to the originating summons of 23 July 2010 (CPCA 85 of 2010) being dismissed. An order to that effect was made on 8 August 2012 and consequently the objection by Ms McPherson to any confiscation of her property and to the freezing order was dismissed. That left the application by the DPP in CPCA 65 of 2010 for a crime‑used property substitution declaration to be determined. That matter came before the court on 8 August 2012 and for the reasons which follow, and in the absence of any appearance or further objection by Ms Kristy McPherson or by Mr Toby Andrew McPherson, declarations and orders as sought by the DPP were then made. After a brief statement of the reasons for concluding that those orders and declarations should be made, I announced that more detailed reasons would follow shortly. These are those reasons.
Background
On 16 December 2009, Mr Toby Andrew McPherson was charged with two offences under s 6(1) and s 7(1)(a) of the Misuse of Drugs Act 1981 (WA) ('the MDA'). On 11 April 2011, he was convicted of one count of manufacturing a prohibited drug, namely methylamphetamine, contrary to s 6(1)(b) of the MDA, committed between the dates of 15 August 2009 and 17 December 2009. He was also then convicted of cultivating a prohibited drug, namely cannabis, contrary to s 7(1) of the MDA on 16 December 2009.
Because the property used for the commission of these crimes was not available for confiscation, the DPP applied for an order freezing Toby Andrew McPherson's interest in a property jointly owned by him and his former wife, Ms Kristy McPherson. An order freezing that property was made by McKechnie J on 21 June 2012 relating only to the interest of Toby Andrew McPherson as joint tenants. The basis for the grant of the freezing order was the stated intention of the DPP to apply for and obtain a crime‑used property substitution declaration against Toby Andrew McPherson's interest in that property. This history accounts for the two separate actions which have since been consolidated which, as already stated, are:
(a)the DPP's application for a crime‑used property substitution declaration against Toby Andrew McPherson (CPCA 65 of 2010); and
(b)Ms Kristy McPherson's objection to the confiscation by the State of Toby Andrew McPherson's share of the jointly owned property in satisfaction of the amount due of any eventual crime‑used property substitution declaration likely to be made on the DPP's application (CPCA 85 of 2010).
Basis for crime‑used property substitution declaration
In order to obtain such a declaration, it is necessary for the DPP to establish that the crime‑used property, namely 19 Nolan Place, Bayswater ('Bayswater property') is not available for confiscation. This must be established pursuant to s 22(1) of the Criminal Property Confiscation Act ('CPC Act')and the property will not be available for confiscation if it was not owned or effectively controlled by Toby Andrew McPherson at the time of the commission of the offences and that 'it is more than likely that the respondent made criminal use of the crime‑used property' - s 92(2)(a).
In the event that the DPP successfully establishes that the Bayswater property was a crime‑used property and that Toby Andrew McPherson made criminal use of it, the court then becomes obliged to assess the value of the crime‑used property and to declare that Toby Andrew McPherson's property is available for confiscation. In this respect, the case for the DPP is that the two offences of which Toby Andrew McPherson was convicted, namely the manufacturing of the prohibited drug methylamphetamine and the cultivation of the prohibited drug cannabis, both occurred at the Bayswater property.
The objection by Kristy McPherson to the confiscation of the frozen property pursuant to s 79 of the CPC Act becomes significant in the event that a crime‑used property substitution declaration is made. The substituted property in respect of which the DPP seeks a declaration is Mr McPherson's interest in a different property which he jointly owned with his former wife. Arising from the breakdown and dissolution of their marriage, Ms Kristy McPherson and Mr Toby Andrew McPherson had reached an agreement for the settlement of their mutual property upon the dissolution of the marriage. This agreed property settlement had not been formalised by any order of the Family Court or otherwise documented, but the DPP accepts the oral terms that the parties had themselves reached. These were that for his interest in the jointly owned matrimonial property, Mr Toby Andrew McPherson would accept $150,000 in cash and retain his entitlement to superannuation, his motor vehicle and tools. In exchange, Kristy McPherson would obtain and retain the entire interest in the former matrimonial property. This oral agreement was reached between the two in 2008.
Evidence relied on by the DPP
The DPP relies upon the two convictions of Toby Andrew McPherson on 11 April 2011 already described. Again, as previously stated, these offences were committed by him at the Bayswater property which is owned by Ms Valerie Iris McPherson and, hence, is therefore not available for confiscation. Nevertheless, Mr McPherson is a joint tenant with Kristy McPherson of certain land at Ellenbrook, the title particulars of which are contained in the affidavit of L Buckham sworn 2 June 2010. It is in respect of that Ellenbrook land that the informal property settlement agreement reached between Toby McPherson and Ms Kristy McPherson in 2008 applies.
As a consequence of the DPP's acceptance of the validity of that settlement agreement, the State recognises that Toby Andrew McPherson has only a $150,000 interest in the property. Other than that entitlement, Mr McPherson has no other significant property available to satisfy any crime‑used property substitution declaration which might be made. There is affidavit evidence from Mr D Criddle in his affidavit of 1 May 2012 that the value of the crime‑used property, namely the Bayswater property, at the time of the commission of the offences, was $600,000.
The legislative scheme provided under the CPC Act provides for mandatory confiscation of property in the various circumstances set out in s 4. In brief, this legislative scheme is to the effect that:
(a)confiscation of property is mandatory once the necessary legislative preconditions have been met;
(b)all other declared drug trafficker's property is confiscated regardless of whether it was lawfully acquired (s 8);
(c)the lawfully acquired property of a person the subject of an unexplained wealth declaration (s 11 ‑ s 14), a criminal benefits declaration (s 15 ‑ s 20) or a crime‑used property substitution declaration (s 21 ‑ s 24) may be confiscated to satisfy the relevant declaration of indebtedness to the State;
(d)except in the case of drug traffickers confiscation is not conviction based;
(e)in the case of unexplained wealth, confiscation can occur in the absence of any offence;
(f)except in crime‑used matters where there is an innocent third party, there is no claim for relief on the grounds of hardship available to a respondent;
(g)confiscation proceedings are civil proceedings where issues are to be decided upon the balance of probabilities.
It follows from this scheme that the CPC Act exhibits the clearest intention by the legislature to interfere with, by means of confiscation, what would otherwise be fundamental property rights of a person whose property becomes liable to confiscation.
If an offender makes criminal use of some other person's property, who is not in any way involved in the commission of those offences, then the Act provides for the confiscation of the property of the offender, even though that property was not involved in the commission of the offences. The CPC Act, in the glossary, defines the meaning of crime‑used property as having the meaning contained in s 146. Section 146(1) ‑ (3) contains definitions of circumstances in which a property is to be regarded as crime‑used. A property will be crime‑used if it is used, or an act is done on the property, in connection with a confiscation offence and it has been determined that s 146(1)(c) is of broad application: White v Director of Public Prosecutions (WA) [2011] HCA 20.
A confiscation offence is defined to mean any offence against Australian law punishable by imprisonment for 2 years or more ‑ CPC Act s 141(a). The punishment for an offence under s 6(1)(b) and s 7(1)(a) of the Misuse of Drugs Act is imprisonment for 2 years or more in each case. Accordingly, the offences of which McPherson was convicted for activity on or in connection with the Bayswater property were confiscation offences. The manufacture of the methylamphetamine and the cultivation of the cannabis on the Bayswater property clearly demonstrate that that property was used in the commission of the confiscation offences and those illegal acts were done in connection with the commission of a confiscation offence on that property. Because the Bayswater property was not owned by Mr McPherson, it is not available for confiscation, which means that the attention of the court becomes directed to the obligation to declare the property which is owned by him is available for confiscation if it is more likely than not that he made criminal use of the crime‑used property: White v Director of Public Prosecutions (WA).
By virtue of s 22(3) of the CPC Act Mr McPherson is presumed to have made criminal use of the Bayswater property unless he can establish the contrary. By virtue of s 146(1)(c) a person who performs an act on property in connection with the commission of a confiscation offence is a person who does acts which make the property crime‑used and so becomes liable to be the subject of a crime‑used property substitution declaration. Any such declaration pursuant to s 22 can include a declaration of the valuation of the crime‑used property at the time of the commission of the offences between 15 August 2009 and 17 December 2009 which, as already mentioned, is $600,000 established by the affidavit evidence of Mr Criddle.
Objections
As noted, Ms Kristy McPherson has instituted proceedings objecting to the confiscation of frozen property pursuant to s 79 of the CPC Act. By s 81 a freezing notice or a freezing order may be set aside under the provisions of s 82 (crime‑used property), s 83 (crime‑derived property) or s 84 (unexplained wealth, criminal benefits, crime‑used property substitution and drug‑trafficker matters). Section 82 contains the grounds upon which a court may uphold an objection and so exclude or release some or all of crime‑used property. For example, s 82(3) provides for an innocent partner or a dependent child under the age of 18 years to obtain a release from the freezing order or notice of crime‑used property on certain grounds. Section 153(1) ‑ (4) set out the various circumstances in which a person would be regarded as an innocent party 'in relation to crime‑used property'. However, s 82 and s 153, allowing for the release from freezing orders or notices of some or all crime‑used property on the grounds of hardship because the applicant is an innocent party, relate only to property which is frozen, as crime‑used, or also in cases where the court is not required to decide whether or not the property was crime‑used (s 82(2)).
The submission by the DPP is that there are clear distinctions between the various types of relief available to an objector under s 82, s 83 and s 84 which point to a conclusion that for an objector in a crime‑used property substitution declaration application the only avenue for relief is under s 84. This submission proceeds to contend that the only objection which could successfully be made to confiscation of property frozen on crime‑used property substitution grounds is that the frozen property is not owned or effectively controlled by the offender. This is not a suitable case in which to reach any final or authoritative conclusion about these submissions because, in the absence of the offender and the objector, the issues have not been fully argued or contested. More importantly, it is not necessary to do so because the DPP accepts that, in the case of Ms Kristy McPherson, she is an innocent party and is entitled to relief to the extent of her ownership or interest in the former matrimonial property which is sought to be made the subject of the substitution declaration. In this case the DPP does not attempt to assert that Ms Kristy McPherson's interest in the proposed substituted property is owned or effectively controlled by the offender, Toby Andrew McPherson.
It is important to recognise clearly that in the case of an application for a crime‑used property substitution order, the substituted property even when frozen or the subject of a freezing order, is never treated as crime‑used property. It is instead, so far as it is owned or controlled by the offender, treated as security for any amount found to be owing by the offender in the crime‑used property substitution declaration proceedings ‑ in other words, the value as declared by the court in those proceedings of the actual property which was crime‑used ‑ Director of Public Prosecutions (WA) v Bowers [2010] WASCA 46.
In the present case there is no occasion to examine further the reach of the relief available to an objector under s 82(3) in view of the acknowledgement by the State and the DPP that Mr Toby Andrew McPherson's interest in the Ellenbrook property is limited to the amount of $150,000 rather than the value of the one undivided half‑share interest in that property, because of the terms of the informal property settlement agreement already described. Consequently, the value of the property to become the subject of the crime‑used property substitution declaration will be the $150,000 interest in the Ellenbrook property to which Mr McPherson is entitled pursuant to the property settlement agreement and nothing more. Ms Kristy McPherson is not entitled in any way to that interest of her former husband and, consequently, has no entitlement to object or to obtain any relief in respect of a substitution declaration which is limited to that specific asset of her former husband. There may appear to be some imprecision of language in the submissions which have been received, and the account of the background which has already been described, because of the implication that Toby Andrew McPherson has an interest in the Ellenbrook property limited to $150,000 rather than a one undivided half‑share in the property as a joint tenant. However, upon reflection there does not appear to be any true inconsistency or imprecision in this regard. Rather, what has transpired is that a series of tacit assumptions appear to have been made about the nature of Mr McPherson's property which is to become the subject of the substitution declaration. These assumptions appear to flow from inferences drawn from the account of the property settlement agreement and its current effect. Because these have not been fully articulated and because neither Mr McPherson nor Ms Kristy McPherson have been heard in this respect, it is not possible to reach any final determination about the nature of these interests. However, the treatment of the process by the DPP very strongly suggests that upon the termination of the marriage between the McPhersons and their mutual agreement to resolve their entitlement to property on the terms recorded, their joint interest as tenants in common in the Ellenbrook property became severed and, by that agreement, were converted into an entitlement by Ms Kristy McPherson to the entirety of the property subject to making a payment of $150,000 to her former husband and upon her agreement to allow him to retain his superannuation entitlements, motor vehicles and tools. Because that agreement has, apparently, not been documented and may yet remain to be fully implemented, the conversion of the joint interest in the land by Mr McPherson to an entitlement to payment of $150,000 may operate only in equity until it is implemented or effected by formal legal agreements or by a transfer of his interest in the property to his former wife. It is possible that, in the circumstances, his entitlement to payment of the $150,000 may give rise to an equitable charge over the property enforceable, in the absence of registration or a caveat, only against his wife. Be that as it may, the agreement is being treated as effective in equity and giving rise to an entitlement to an enforceable transfer at law upon compliance with its terms.
This accounts for the acknowledgement by the DPP and the State that Mr Toby Andrew McPherson's only interest now is his entitlement to payment by Ms Kristy McPherson of the $150,000 and, that being the case, that is the only interest at all derived from the Ellenbrook property to which the substitution declaration will apply. It also provides the reason for the dismissal of the objection application by Ms Kristy McPherson.
For these reasons, therefore, on 8 August 2012 I ordered and directed as follows:
1.The originating summons dated 23 July 2010 (CPCA 65 of 2010) be dismissed.
2.The title to the consolidated proceedings be amended to name Toby Andrew McPherson as respondent.
3.There be a declaration pursuant to s 22 of the Criminal Property Confiscation Act 2000 ('the Act');
(a)The property owned by the respondent is available for confiscation instead of crime‑used property on the grounds that:
(i)crime‑used property, namely land comprised in Certificate of Title vol 1892 folio 535 commonly known as 19 Nolan Place, Bayswater, in the State of Western Australia ('the Bayswater property'), is not available for confiscation by reason that the respondent does not own nor effectively control the Bayswater property; and
(ii)it is more likely than not that the respondent made criminal use of the Bayswater property.
(b)The assessed value of the Bayswater property pursuant to s 22(6) and s 23 of the Act is $600,000.
4.There be no order as to costs.
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