DPP (Vic) v Nikolaou
[2008] VSC 111
•14 April 2008
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMON LAW DIVISION
No. 1471 of 2006
| DIRECTOR OF PUBLIC PROSECUTIONS (VICTORIA) | Applicant |
| v | |
| THEODOROS NIKOLAOU | Respondent |
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JUDGE: | KAYE J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 27, 28 March; 4 April 2008 | |
DATE OF JUDGMENT: | 14 April 2008 | |
CASE MAY BE CITED AS: | Director of Public Prosecutions (Victoria) v Nikolaou | |
MEDIUM NEUTRAL CITATION: | [2008] VSC 111 | |
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CONFISCATION ACT 1997 – Cultivation and trafficking of cannabis and theft of electricity at home owned but not resided in by respondent – Whether property should be forfeited – Hardship – Applicable principles – Relevance of lack of candour of respondent.
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APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr A Flower | Office of Public Prosecutions |
| For the Respondent | Mr T McLean | GPZ Legal |
HIS HONOUR:
In this proceeding the Director of Public Prosecutions has applied, under s 32(1) of the Confiscation Act 1997 (Vic), for a forfeiture order with respect to a property situated at 18 Gawalla Street, Rye, which is owned by the respondent.
Background
The respondent is now 43 years of age. Since 1986 he has been the registered proprietor of the property at Rye. On 8 February 2006, police obtained a warrant to search the premises pursuant to s 81(1) of the Drugs Poisons and Controlled Substances Act 1981. Upon executing the warrant, the police observed that all three bedrooms of the house had been set up to grow cannabis hydroponically. Eight cannabis plants were located in the first bedroom, and fifteen cannabis plants were located in the second bedroom. There were no plants growing in the third bedroom. In each of the three bedrooms there was an elaborate growing system, consisting of buckets of grow-wool and an electric irrigation system of pumps and irrigation hoses, which were used to water and feed the plants. Lamps and fan shrouds were hanging from the roof to assist with the cultivation. In addition, a venting system, made of eight inch plastic pipe, had been installed and ducted under the floor of the three bedrooms. Police observed that internal panelling had been removed from one of the lounge room walls, in order to gain access to the fuse box, thus enabling the power supply to the house to be bypassed.
At the time of the search there were no occupants present at the property. The respondent was subsequently identified as the owner of the property and was contacted by the informant, Senior Constable Richardson. At the request of Mr Richardson, the respondent attended at the Rosebud Police Station. There he was arrested and interviewed.
In the course of that interview, which was recorded on tape, the respondent admitted that he was the sole owner of the property. He told the police that he did not live at the property, that it was a holiday house, and that no other person had access to it. The respondent further admitted that he had bypassed the power supply and built the hydroponic and venting system on his own. He told the police that his marriage had broken down, and that he had commenced cultivating cannabis in order to make money. He stated that he would sell the harvested cannabis in grams or ounce quantities, and would sell one ounce for approximately $100 to $200. He had sold the cannabis at local hotels. In total, he calculated that he had derived a couple of thousand dollars from selling the cannabis.
During the interview, the respondent stated that he had been growing cannabis at the property for about six months, and that during the whole of that period he had bypassed the electricity system in order to do so. He said that he had harvested the cannabis every fourteen weeks, and that he attended the premises every two to three days in order to tend to the plants. He stated that the 23 plants located by the police in the first and second bedrooms had been growing for several weeks.
At the completion of the interview the respondent was charged on four counts, namely, that between 8 August 2005 and 8 February 2006: he cultivated a narcotic plant, namely cannabis (contrary to s 72B of the Drugs Poisons and Controlled Substances Act 1981); he trafficked a drug of dependence, namely cannabis L (contrary to s 71AC of the Drugs Poisons and Controlled Substances Act 1981); he possessed cannabis (contrary to s 73 of the Drugs Poisons and Controlled Substances Act 1981); and he stole electricity, being property belonging to United Energy and valued at $1,000 (contrary to s 74 of the Crimes Act 1958). The respondent was then released on bail.
The matter subsequently came before the Frankston Magistrates’ Court on 21 June 2006 as a contest mention. On that date, agreement was reached between the prosecution and the respondent. As a consequence, the respondent pleaded guilty to the charges of cultivating cannabis, trafficking cannabis, and theft of the electricity. The charge of possessing cannabis was withdrawn. The prosecution presented a short summary of the case to the magistrate. A plea was made in mitigation of sentence on behalf of the respondent. The magistrate convicted the respondent on each of the three charges, and, on each charge, placed him on a community based order for a period of 12 months. It was a condition of the order that the respondent perform 200 hours of unpaid community work over the following 12 months. The respondent was also ordered to pay $2,957.12 compensation to United Energy.
Subsequently, on 11 July 2006, the Director of Public Prosecutions applied to the County Court for a restraining order in respect of the Rye property pursuant to s 16 of the Confiscation Act. Before that date, the respondent had not been given any notice of the intention of the DPP to make that application. On 29 August 2006, a judge of the County Court made a restraining order in respect of the property. The judge declared, pursuant to s 15(3)(a) of the Confiscation Act, that the restraining order had been obtained for the purposes of satisfying any forfeiture order which may be made under Division 1 of Part 3 of the Act, and for the purpose of satisfying any pecuniary penalty order which may be made under Part 8 of that Act. No application for a pecuniary penalty order has been made by the DPP.
The application for the forfeiture order is made under s 32(1) of the Confiscation Act. That section provides that, if a defendant is convicted of a “Schedule 1 offence”, the DPP may apply to the Court for a forfeiture order in respect of “tainted property”. It is common ground that the three offences, to which the respondent pleaded guilty, were each Schedule 1 offences for the purposes of the Act. Further, it is common ground that the Rye property is “tainted property” as defined by s 3 of the Act, since it was used by the respondent in, or in connection with, the commission of the three offences.
Section 33(1) provides that, on an application under s 32(1), if the Court is satisfied that the property is tainted property in relation to the offence, the Court “may order” that the property “or such of the property as is specified by the Court in the order” be forfeited to the Minister. Section 33(5) is relevant to this application. It provides:
“(5) In considering whether to make an order under subsection (1) in relation to particular property, the court may have regard to –
(a)the use that is ordinarily made, or had been intended to be made, of the property; and
(b)any hardship that may reasonably be likely to be caused to any person by the order; and
(c)the claim of any person to an interest in the property having regard to the matters specified in section 50(1).”
The course of the proceeding
The case initially came before me for hearing on 27 March 2008. The evidence was on affidavit, and the respondent was briefly cross-examined. The hearing completed on 28 March and I reserved judgment. Subsequently, the applicant sought to reopen the case, and to rely on a further affidavit sworn by the applicant’s solicitor. At a mention on 2 April, I fixed the case for further hearing on 4 April. On that day, the respondent did not oppose the applicant’s application to reopen the case and to rely on the further affidavit. In response, the respondent relied on two affidavits sworn by himself, and he was cross-examined.
The evidence
When the case was first before me, the applicant relied upon three affidavits to establish the circumstances of the search of the Rye property, the observations and findings by police upon execution of the search warrant at those premises, the admissions made by the respondent, and his conviction on the three charges. Two of the affidavits exhibited a substantial number of photographs, which depicted the hydroponic equipment found by the police at the Rye property, as well as the cannabis plants growing there. As I have stated, it is common ground that that evidence establishes the “jurisdictional facts” specified under s 32(1), namely that the respondent has been convicted of a Schedule 1 offence, and that the property, which is the subject of this application, is “tainted property”.
In response, the respondent relied on two affidavits sworn by himself, and on an affidavit sworn by his solicitor, Mr Nick Galatas. Those affidavits were directed to the exercise by me of my discretion under s 33. In summary, the respondent deposed that he purchased the property in 1986. At that time he mortgaged the property to the State Savings Bank. The debt secured by that mortgage was repaid within three or four years, primarily out of earnings which he derived as a cabinet maker, and with the benefit of some financial assistance from his parents. In the years following the acquisition of the property, it was mainly used by the respondent’s parents as a holiday home every second weekend. The respondent’s parents ceased using the property as a holiday home in about 2002, when the respondent’s mother passed away. During the same period the respondent had used the property as a holiday home from time to time for his own family, until he separated from his wife in about 2005.
The respondent met his wife in the late 1980s. There are two children of the marriage, a daughter, who is now aged 13 years, and a son, who is aged 11 years. During the marriage, the respondent and his family lived at their home in Cranbourne.
In early 2005 the respondent separated from his wife. In evidence before me he stated that, before that separation occurred, his wife told him that she did not wish to continue to be married to him. Although the respondent endeavoured to maintain the relationship, he was unsuccessful in doing so. Ultimately, the respondent moved out of the matrimonial home, in order that his children might remain there with his wife. The respondent left the former matrimonial home and moved into the Rye property. He did not live there for the entire period following his separation from his wife, as, from time to time, he lived with a female friend. He told the police that, at the time of his arrest, he attended the Rye property every two to three days to tend the cannabis plants. It appears that he would then stay at the premises for a short time during each visit.
In September 2006, the respondent reached an agreement with his wife, and the Family Court made consent orders. The effect of those orders was that the respondent’s wife would be entitled to the proceeds of the sale of the former matrimonial home, which were then held by a firm of solicitors in trust on behalf of the parties. In addition, the respondent was to pay his wife the sum of $10,000. As a result of the restraining order over the Rye property, the respondent was unable to comply with that part of the order of the Family Court. Accordingly, he borrowed the sum of $10,000 from a friend and paid it to his wife.
The respondent successfully completed the term of his community based order, and has no subsequent convictions. Nor does he have any previous convictions. In late 2006 he set up his own cabinet making business. In his affidavit sworn 4 December 2007, the respondent described that business as a “fledgling one”, which was improving with the passage of time. The respondent’s daughter resides with him, because she has difficulty getting on with her mother. The respondent’s son also stays with him from time to time. At the moment the respondent’s ex-wife has a new partner, and his son is not particularly happy living with her in those circumstances.
The respondent also gave evidence before me explaining the circumstances in which he came to be involved in the offending. He told me that his mother had died three years previously. At about the same time his father commenced to suffer from dementia, and his father is now in a care facility. The respondent told me that his grief over the loss of his mother, and over his father’s illness, had not resolved, when his wife told him that she wished to terminate the marriage. He said that in the six month period over which he offended, his state of mind was “very scattered, very lost”. Before his arrest he had commenced to see a psychologist in Frankston. The respondent stated that he had had about 8 visits to the psychologist before his arrest, and that he consulted her a couple of times after that.
The further material, which was filed after the completion of the hearing on 28 March, arose out of evidence which had been given by the respondent in his first two affidavits in relation to the potential financial effect on him of an order for forfeiture of the Rye property. In his first affidavit, sworn 4 December 2007, the respondent deposed to the terms of the resolution of the Family Law issues with his former wife. In his second affidavit, dated 26 March 2008, the plaintiff swore:
“In the event that the (forfeiture) application is granted, my children and I will suffer severe hardship. Following my property settlement with my former wife and the implementation of the orders made by the Family Court the (Rye) property is the only piece of real estate that I own. If it is taken from me I believe that I will not be able to save sufficient money to buy another property and at the same time pay for the necessities of my life and that of my children before I reach retiring age.”
The further material on which the applicant sought to rely, after the conclusion of the hearing, is contained in an affidavit sworn by the solicitor for the applicant. The solicitor deposed that on 31 March 2008, she received a telephone call from a solicitor employed by the Commonwealth Bank informing her that the respondent had recently applied for a home loan with the bank, that the respondent had offered real property as security for the loan, and that the property which had been offered as security was not the Rye property. The applicant subpoenaed to Court the file of the bank, which was produced on the further hearing before me on 4 April.
In response, the respondent swore two affidavits dated 1 April and 3 April 2008 respectively. In the affidavit of 1 April, the respondent deposed that, approximately two years previously, he had met Ms Jennifer Migliore, and had moved into her property in Tumut Court, Wantirna South (“the Tumut Court property”) as a tenant. Subsequently, the respondent and Ms Migliore formed a relationship. He is still paying rent to her. Ms Migliore owns the Tumut Court property, having purchased it for $240,000 in 2002. That purchase was financed by a bank loan secured by a mortgage. The amount of the mortgage debt is presently approximately $183,000. In about late 2007, Ms Migliore and the respondent decided to try to purchase a house. The Tumut Court property was not of sufficient size, as Ms Migliore’s daughter and the respondent’s daughter were both living with them. Consequently, on 23 February 2008, they successfully bid at auction for a property at Chiswick Court, Wantirna (“the Chiswick Court property”). The purchase price was $464,500. Settlement is due on 24 April. The respondent and Ms Migliore applied for a loan to the Commonwealth Bank. Before attending the auction, the bank had provided them with a blank cheque to pay the deposit, to be drawn against a credit facility provided to Ms Migliore.
The respondent, in his affidavit of 1 April 2008, stated that when they applied for the loan, the bank had informed Ms Migliore and him that the application would probably be approved. Ms Migliore intended to keep the Tumut Court property and to rent it. It was the respondent’s intention to sell the Rye property, in the event that he successfully opposed this forfeiture application. In that affidavit, the respondent also stated that the firm of solicitors representing him in the present proceedings are not handling the conveyancing transaction in relation to the purchase of the Chiswick Court property. The respondent had not told his solicitors or his counsel about that purchase, or the loan application, because he did not consider it relevant, and he did not wish to involve Ms Migliore in this proceeding. The respondent also deposed that on 27 March the bank had informed Ms Migliore and him that their application for the loan had been declined.
The respondent swore a further affidavit dated 3 April, in which he set out details of his financial circumstances, to which I shall later refer. He also stated that, in early 2007, he obtained a line of credit from the Commonwealth Bank of $25,000. He used that line of credit to repay his legal fees from the Family Court proceedings, and also to repay the debt of $10,000 which he owed to his friend.[1] The respondent also stated that he did not intend to mislead the Court by not providing those financial details, but had summarised the information for his solicitor in order to avoid involving Ms Migliore in the case. He confirmed that he intended to sell the Rye property, if it is not forfeited, or to use his equity in it to purchase a home in which he could live with his daughter.
[1]See Para [16], above.
Forfeiture – legal principles
The principles, which are relevant to the exercise of the discretion to order forfeiture, under s 33, have been discussed in a number of authorities over the last 20 years. In particular, they have been clearly identified in decisions which include those of the Court of Appeal of New South Wales in R v Lake,[2] the Court of Criminal Appeal of South Australia in Taylor v Attorney-General (South Australia),[3] and the Court of Criminal Appeal of Victoria in Winand v R.[4] Those authorities have been helpfully discussed in the recent decision of Kellam J (as his Honour then was) in Director of Public Prosecutions v Gyurcsik.[5] In summary, the principles which are relevant to the present application are as follows:
[2](1989) 44 A Crim R 63.
[3](1991) 53 A Crim R 166.
[4](1994) 73 A Crim R 497.
[5][2007] VSC 424, [17] to [19]; see also R v Tran [2004] VSC 218, [9] to [11] (Warren CJ).
1.In an application for forfeiture, where the “jurisdictional facts” have been established by the applicant, the question whether to order forfeiture is a matter for the exercise of a judicial discretion.
2.The starting point is to be found in the clear intention of the statute, namely, to deter those minded to commit offences of the type enumerated in Schedule 1, by exposing such persons to the risk that, not only will they be deprived of their ill-gotten gains upon conviction, but, also, that any property used in connection with the commission of such an offence may be liable to forfeiture.[6]
3.Clearly, it is contemplated that the Act work in a way that inflicts a degree of hardship. Accordingly, in determining whether there has been “hardship” for the purposes of s 33(5)(b), and in particular for the purposes of successfully resisting an application for forfeiture, a respondent must be able to establish hardship other than what might be expected to arise from the ordinary operation of the Act. In Lake v R, Kirby P stated the relevant principle as follows[7]:
“In considering hardship, it is necessary to bear in mind that, of necessity, in achieving its objects, the Act will cause a measure of hardship in the deprivation of property. Indeed that is its intention. It is not that kind of hardship, therefore, that can give rise to relief under s 5(1)(b)(ii). The provision for relief on that ground must not be so interpreted as to frustrate the achieving of the purpose of Parliament in enacting the exceptional provisions of the Act. Something more than ordinary hardship in the operation of the Act is therefore meant. Otherwise the Act would have, within it, the seeds of its own effectiveness in every case.”
4.In determining whether to exercise the discretion in relation to an application for forfeiture, the Court takes into account a variety of circumstances, which predominantly relate to the gravity of the offending, the degree to which the property in question was used for the purposes of the offending (as distinct from being used for legitimate purposes), and the potential effect of forfeiture on the respondent and on innocent third parties. In Winand v R,[8] the Court of Criminal Appeal, consisting of Phillips CJ, Crockett and Southwell JJ, having referred to a number of previous decisions, including Lake and Taylor, stated:
“Those cases, which his Honour accepted as having been correctly decided, established that matters which are to be regarded as relevant to a judicial determination of an application under section 5 of the Act include the following: the value of the subject property, the nature and gravity of the offence, the use made of the property, the degree of the offender’s involvement, the offender’s antecedents, the value of any other property confiscated and the penalty imposed, the nature of the offender’s interest in the property, the value of the drugs involved or the size of the crop, whether the property was acquired with the proceeds of the sale of drugs, the utility of the property to the offender, the length of ownership of the property, the degree to which the property was connected with the commission of the offence, the fact that forfeiture is intended as a deterrent, the interest of innocent parties in the property and the extent (if any) to which the retention of the property might bear on the offender’s rehabilitation.”[9]
5.Ultimately, the question is whether forfeiture of the property would be unacceptably disproportionate to the nature and gravity of the offence, and the circumstances of the offender, which include the sentence imposed on the offender. Thus, in Winand, the Court of Criminal Appeal posed the final question for the judge, in determining such a case, as whether it would be “fair or cause unacceptable hardship” to order forfeiture.[10] In similar terms, in Taylor v Attorney-General (South Australia),[11] Debelle J (with whom King CJ and Millhouse J agreed) stated that the ultimate test for the judge was whether:
“ … the order of forfeiture would be severely disproportionate to the circumstance of the offence and the nature and degree of the offending.”[12]
[6]Taylor v Attorney-General, 177 (Debelle J).
[7](1989) 44 A Crim R 63, 66.
[8](1994) 73 Aust Crim R 407.
[9]Ibid, 500 to 501.
[10]Ibid, 501.
[11](1991) 53 A Crim R 166.
[12]Ibid, 179. See also R v Bolger (1989) 16 NSWLR 115, 126-127 (Allen J); R v Wealand (2002) 136 A Crim R 159, 164-5 [30]-[31] (Kirby J).
Submissions
Mr A Flower, who appeared for the applicant, and Mr T McLean, who appeared for the respondent, each directed their submissions, on the first hearing before me, to the principles which I have just set out. Mr McLean, on behalf of the respondent, submitted that an order for the forfeiture of the Rye property would involve the imposition of hardship on the respondent, and on his children, which would be manifestly disproportionate to the gravity of the respondent’s offending. In support of those submissions, he made the following points:
(a)The respondent is 43 years of age, and has no prior or subsequent convictions. The offending was entirely out of character. It was the product of the family and matrimonial stresses, which he was then undergoing. On his apprehension by the police, the respondent was entirely cooperative, made full and frank admissions, and readily pleaded guilty. The order of the Court, imposing a community based order in relation to each of the three charges, reflects the view of the magistrate as to the gravity of the offences charged. The respondent has successfully completed his community based order, has rehabilitated, and is engaged in gainful work.
(b)The nature and scale of the cultivation of the cannabis plants was not particularly large or sophisticated. Further, the police did not find any paraphernalia, which might be expected with any large scale or sophisticated operation relating to the trafficking of illicit drugs, such as scales, plastic bags, ties, and the like. The operation undertaken by the respondent was basically amateurish and small in scale.
(c)The Rye property was not purchased with any of the proceeds of the crime but, rather, had been paid for by the respondent (with some help from his parents) out of his legitimate earnings. Although the admitted period of the use of the property for the purposes of offending amounted to six months, that period must be seen in the context of 22 years’ ownership of the property by the respondent. Thus, for the overwhelming majority of the time in which the property was owned by the respondent, it was used for legitimate purposes.
(d)As a result of the proceedings in the Family Court, the importance of the property to the respondent has significantly increased. It is the only real estate in which he has any equity. Thus, it is the only real property owned by him, in which he might reside, or, alternatively, the proceeds of sale of which he might use to purchase another residence for himself and his children.
(e)The respondent is responsible for providing a home and shelter for his young teenage daughter. There is at least a prospect that he may also need to bear the same responsibility in relation to his 11 year old son, given the current difficulties which the son has in his relationship with his mother. Thus, innocent children may be adversely affected, if a forfeiture order were made in respect of the Rye property.
In response, Mr Flower submitted that, in the circumstances of this case, a forfeiture order would not result in disproportionate hardship to the respondent or his children. Mr Flower pointed, first, to the nature and gravity of the offending. He submitted that the operation was sophisticated, involving a significant amount of equipment, which had been assembled and used with a degree of expertise. Although the profits which the respondent had admitted to deriving from the operation were modest, that is not to the point. Rather, the intention and purpose of the venture was to undertake the cultivation and trafficking of cannabis on a repeated and substantial scale. The fact that that intention did not come to fruition was because it was “nipped in the bud” by the police. Secondly, Mr Flower pointed out that the Rye property was not, and is not, the respondent’s principal place of residence. At best the house could be described as a holiday house. At the time of the offending, the principal, if not sole, use of it was for the purposes of cultivation and trafficking an illicit drug of dependence. Further, at present the property is unoccupied. It is neither used, nor needed, to provide accommodation for the respondent and his family. Thus, if a forfeiture order were made, it would not result in unfair hardship to the respondent’s children.
Mr Flower further submitted that if, contrary to the above submissions, I were to conclude that an order for forfeiture of the whole of the respondent’s interest in Rye would involve disproportionate hardship to the respondent and his children, then I should make an order for “partial forfeiture” in respect of the property. Mr Flower submitted that s 33(1) empowers the Court to make such an order, since it provides that the Court may order that “the property, or such of the property as is specified by the Court in the order” be forfeited to the Minister. Thus, he submitted, for example, that I have power to make an order that, say, one half of the “property” be forfeited to the Minister.
In response to the last submission by Mr Flower, Mr McLean argued that s 33(1) does not have the effect contended for by Mr Flower. He submitted that s 33(1) does not empower a Court to order forfeiture of a part of an undivided interest of a respondent in property. Rather, s 33(1) empowers the Court to order forfeiture either of an entire property, or of undivided interests in the property. Further, Mr McLean submitted that, if the Court does have such a power, there was no proper basis laid for the exercise of it in this case. He pointed out that no evidence has been adduced as to the street value of the cannabis plants found at the Rye premises, or as to the usable quantity of those plants. He submitted that, in those circumstances, the quantification of the “interest” to be forfeited would be no more than an exercise in guesswork by a Court, and not a proper exercise of the Court’s discretion.
When the matter came on for further hearing on 4 April 2008, Mr Flower and Mr McLean each made further submissions. Mr Flower contended that the additional evidence, in relation to the rental arrangement which the respondent has with Ms Migliore, and in relation to the contract to purchase the Chiswick Court property, discredits the respondent’s claim that, if the Rye property is forfeited, he will be condemned to rent a residence for the indefinite future. By contracting to purchase the Chiswick Court property, the respondent considered that he was able to purchase a property without selling the Rye property, and indeed while he faced the risk that that property might be forfeited to the Crown. Further, Mr Flower submitted that the first two affidavits sworn by the respondent were deliberately and contumeliously misleading, and that they concealed material facts. He submitted that the lack of candour by the respondent was a discrete circumstance relevant to the exercise of my discretion. In addition, he submitted, I should take the view that that lack of candour significantly undermined the respondent’s credibility in relation to other matters asserted by him in his earlier affidavits, and in evidence before me.
In response, Mr McLean argued that I should put the additional evidence into its proper context. He submitted that the failure of the respondent to disclose the purchase of the Chiswick Court property did not alter the circumstance that, in reality, if the Rye property is forfeited, he will be unable to purchase a home in which to live. Mr McLean submitted that, on the evidence contained in the exhibits, Ms Migliore’s property at Tumut Court is valued at $390,000. The Chiswick Court property was purchased for $465,000. Thus, if that purchase is completed, Ms Migliore and the respondent would have real estate (apart from the Rye property) valued at $860,000, which could be used to secure a loan from a bank. However, they would need to borrow almost $700,000, in order to purchase the Chiswick Court property, and to refinance the present loan over the Tumut Court property. Thus, Mr McLean argued it was hardly surprising that the bank rejected the loan application. Further, he submitted that it is clear that the respondent and Ms Migliore will be unable to purchase a home unless the respondent is able to provide the Rye property by way of additional security, or alternatively sell the Rye property and use the funds to assist in the purchase of a home.
Mr McLean accepted that I may come to the conclusion that there are statements contained in the first two affidavits sworn by the respondent which are false. Nonetheless, he submitted that they do not alter the objective facts upon which the discretion should be properly exercised in favour of his client. He submitted that the facts relating to the respondent’s financial position are such as to establish that, if the Rye property is forfeited, the respondent will not be able to purchase a house of his own. Further, he submitted that the respondent’s lack of candour is not a discrete factor relevant to the exercise of my discretion. He submitted that if that lack of candour by the respondent is relevant to the questions of specific deterrence and rehabilitation of his client, I should bear in mind that the respondent was cooperative with the police, that he answered the questions put to him by the police honestly and fully, and that he pleaded guilty. The respondent completed his community based order, has established his own business, and has entered into a stable relationship, assuming prime responsibility for the care of his teenage daughter. In those circumstances, notwithstanding that I might make a finding that the respondent had been less than truthful in his first two affidavits, I should nonetheless accept that he had rehabilitated, and that thus issues of specific deterrence are not of importance in this case.
Findings as to respondent’s offending
Apart from two matters, the evidence relating to the nature and extent of the respondent’s offending was substantially, and if not wholly, uncontroversial. The first matter which was in dispute related to the weight of the plants seized from the Rye property. In an affidavit in support of the application, Detective Senior Constable Chippindall stated that the total weight of the cannabis was approximately 8 kilograms. The respondent takes issue with that assertion. Mr Galatas, who appeared on behalf of the respondent in the proceedings in the Frankston Magistrates’ Court, has exhibited to his affidavit a copy of the brief of evidence against the respondent in the prosecution in the Frankston Court. The prosecution brief did not specify, or refer to, the total weight of the 23 plants. Nor was the total weight alleged in the summary of the charges which was attached to the brief of evidence, and which was read to the Court by the police prosecutor when the matter proceeded before the Frankston Court. Ms Chippindall did not disclose how she has estimated the weight of the plants. Nor did her evidence disclose whether the weight of the plants relates to the plants when wet or dry. Mr Galatas, in his affidavit, stated that, in other cases relating to drugs of addiction, an expert has given evidence to the effect that a significant proportion of the gross weight of a plant is lost when the plant dries. Further, the only section of a dry plant which is used for trafficking is the head of the plant. In those circumstances, the assertion by Ms Chippindall, that the weight of the plants was 8 kilograms, is of little assistance to me. However, I do take into account that the number of plants seized was well in excess of the “traffickable” quantity of cannabis as defined in the Drugs Poisons and Controlled Substances Act 1981. Thus, for the purposes of s 73(2), possession of those plants by the respondent constituted prima facie evidence of trafficking by him in the cannabis.
One other matter of evidence, relating to the respondent’s offending, was somewhat unclear, although it was not really a matter of dispute before me. In her affidavit, Ms Chippindall stated that, in the course of the interview with the informant (Senior Constable Richardson), the respondent had stated that he did not live at the Rye property. In cross-examination, the respondent confirmed that he had made that statement to the informant in his interview. However, in his affidavit in opposition to the application, the respondent swore that he did in fact live at the property at the time of the offence, on 8 February 2006. He stated that he slept in the lounge room. I have listened to the whole of the tape of the record of interview. The answers made by the respondent to that part of the interview are not entirely clear. However, he did seem to say that at the time of the offending he was using the property because of his marital break down, and that he was also “growing dope” at the premises. When I raised this matter with counsel, it was common ground that the effect of the evidence is that the respondent was not, at the time of the offending, using the Rye property as his place of residence. Rather, he was visiting it every two or three days to tend the plants, and, when he did so, on occasion he slept there. Taking the evidence which I have so far summarised on this aspect of the case, I accept that counsel’s construction of that evidence is correct.
The respondent’s credibility
Some of the findings of fact as to why the respondent offended, and whether forfeiture of the Rye property would result in disproportionate hardship to the defendant, depend, in part, on the credibility of the respondent. In light of the materials which were put before me when I reheard the matter on 4 April 2008, I have a number of reservations about the reliability of the respondent as a witness of truth. It is clear that he was, to say the least, less than candid in at least two respects, when he swore the first two affidavits on which he relied at the initial hearing of this case. As I have already set out, in his second affidavit, which was sworn on 26 March 2008 (one day before the commencement of the case), the respondent deposed that, if the Rye property were taken from him, he believed he would not be able to save sufficient money to purchase another property and at the same time pay for the necessities of life for himself and his children, before he reached retiring age. The respondent swore to the truth of that evidence, notwithstanding that he had, less than five weeks previously, entered into a contract for the purchase of the Chiswick Court property. At the time at which the respondent swore the second affidavit, the bank had not rejected the application for a loan. Indeed, according to the respondent, Ms Migliore and he were confident that their application for a loan would be successful. The respondent had not offered the Rye property as security for the loan for which he and Ms Migliore had applied. In those circumstances, it was wholly misleading for the respondent to depose, on 26 March, that he believed that he would not be able to purchase another property if the Rye property were forfeited to the Crown.
I accept that the respondent did not wish to involve Ms Migliore in the present application, and thus he avoided making any reference to her in his first two affidavits. However, it was not necessary for the respondent to make the assertion in his second affidavit – that he believed that he would not be able to purchase another property if the Rye property were forfeited – in order to avoid involving Ms Migliore in this application. In other words, the explanation proffered by the respondent does not account for why he chose to state an important matter in his second affidavit, which he knew to be untrue.
In addition, as I have already indicated, in his first affidavit the respondent stated that, in order to comply with a part of the order of the Family Court, he borrowed the sum of $10,000 from a friend (Mr Young) in order to pay his obligation to his wife. He also swore that “I presently owe the sum of $10,000 to Mr Young”. That statement is incorrect. In his further affidavit sworn 3 April 2008, the respondent stated that, in early 2007, he was granted a line of credit by the Commonwealth Bank, which he used to discharge his debt to his solicitors for his legal fees, and also to discharge the $10,000 debt to Mr Young. In cross-examination, the respondent agreed that he had repaid the debt to Mr Young, before he swore his second affidavit on 4 December 2007. Thus, it was incorrect for him to state, in that affidavit, that he then presently owed the sum of $10,000 to Mr Young. It may be – although this was unclear on the evidence – that he still owed $10,000, or part of it, to the Commonwealth Bank under the line of credit. To that extent, the impact of the discrepancy in the second affidavit is of less moment. However, it is clear that it was false for the respondent to depose, as at 4 December 2007, that he then presently owed $10,000 to Mr Young. Mr Flower suggested, in cross-examining the respondent, that the respondent had deliberately told that untruth in order to conceal his involvement with the Commonwealth Bank. The respondent denied that suggestion. In the face of that denial, I am unable to determine why the respondent’s second affidavit was inaccurate in the manner to which I have just referred. Nevertheless, at the very least, the discrepancy in the second affidavit indicates, or indeed reinforces, what may euphemistically be described as a casual attitude by the respondent to the truth in pledging his oath to the earlier affidavits in this case.
Conclusions
I turn, then, to the question whether, in the exercise of my discretion, I should order the forfeiture of the property. As I stated, that question is to be resolved by determining whether such an order would involve hardship to the respondent which would be unacceptably disproportionate, particularly in comparison to the respondent’s offending and his antecedents, and his use of the property. An appropriate starting point, in considering this question, is an assessment of the gravity of the offending. Clearly, the offending in this case involved a number of serious characteristics. Whether or not the cultivation of the plants involved a sophisticated venture by the respondent, it is clear that it involved a significant degree of planning and preparation. The respondent acquired a number of items of equipment, installed them, and regularly tended the cannabis plants, which were growing at the property. The offending occurred over a period of time, and involved, necessarily, a degree of subterfuge. Similarly, the trafficking, while not, in the scale of other offences, large, was repeated and, in some measure, planned. The offence of theft of electricity involved dishonesty, and the deception on an institution which provides what could be properly regarded as an essential service to the public. Further, I agree with Mr Flower that it is relevant that the offending only came to an end because of the intervention of the police. Plainly, the intention of the respondent, at that time, was that the offending would continue for some time.
However, and on the other side of the ledger, it is relevant that the respondent has no prior convictions. Nor has he any subsequent convictions. Notwithstanding my reservations as to the credibility of the respondent as a witness, I accept the respondent’s explanation that, in the period leading up to his offending, and at the time of the offending, he was subject to considerable personal and family stresses. The death of his mother, the onset of his father’s illness, and the failure of his marriage, all coalesced to produce a significant degree of stress on the respondent. It appears that at the time he was in some financial difficulty. I listened carefully to the respondent’s evidence, and also to the explanation he gave to the police for his offending. I am prepared to accept that the respondent’s explanation for the circumstances, in which he came to engage in the offending, was truthful. I note that the respondent was not cross-examined as to his explanation for offending, and it was not suggested by Mr Flower that that explanation was untrue or exaggerated. It is significant that the respondent told the police, and I accept, that before his arrest he had already been consulting a psychologist about his difficulties.
Thus, it is clear that the offending in this case was out of character for the respondent. That conclusion is reinforced by the circumstance that the respondent successfully completed the community based order imposed by the Magistrates’ Court, and that he has not incurred any subsequent convictions. It is equally significant that the respondent has successfully established his own business, and has assumed the responsibility as prime carer for his young daughter. Those circumstances confirm, in my view, that the offending in this case was somewhat of an aberration in the life of a man, who had otherwise been a law abiding and productive citizen. Those circumstances are relevant, because they bear on the degree of culpability of the respondent for the offending, in respect of which the application for forfeiture has been brought in this case.
It is necessary to express one qualification or reservation to the views which I have stated in the preceding paragraph. The two untruths, which I find the respondent stated in his affidavit, do reflect adversely on his character. To some extent, they are also relevant to the question of the respondent’s rehabilitation, reflecting a lack of respect for the law and its institutions. However, those reservations must be viewed in the context of matters to which I have already referred, namely the lack of any other offending by the respondent, his successful completion of the community based order, and the productive and positive steps which he has taken to re-establish his life over the last two years.
I also accept that the prime, if not sole, use of the Rye property, at the time of the offending, was for the purposes of the cultivation of cannabis for trafficking. Based on the findings I have already made, it is clear that the premises were not relied on, or used, by the respondent, for the purposes of providing a shelter for himself or his children. On the other hand, it is relevant that the period of offending – six months – was but a small proportion of the 22 years over which the respondent had owned, and otherwise lawfully used, the Rye property. That property had been lawfully purchased, predominantly using funds earned by the respondent from gainful employment. For most of the time in which he owned it, he and his parents had used it for legitimate purposes. This case is far removed from the category of case in which a property has been purchased for the purposes of criminal activity, and it is equally far from the type of case in which the prime function of the property, during most of its period of ownership by a respondent, has been for criminal purposes.
Further, I accept that, as a consequence of the Family Court orders, the Rye property is the sole asset of any worth in which the respondent has any equity. He also owns a boat which he values at $15,000. On the other hand, he is indebted to the Commonwealth Bank in the sum of $20,000 in respect of the line of credit which he arranged in early 2007. In addition, the respondent owes the Child Support Agency $5,075.88 in respect of child support arrears. During the last 12 months the respondent’s business has been largely dependent for its income on a contract with Alpine Kitchens Pty Ltd, in respect of which he is paid the sum of $1,480 gross per week on average. The respondent also receives rental payments of $390 per fortnight in respect of the Rye property.
Neither party adduced any expert evidence as to the value of the Rye property. The respondent, in his affidavit, states that he believes that the property is presently worth approximately $200,000 to $210,000. In the absence of any evidence to the contrary, I am prepared to accept that statement as a broad guide as to the value of the property, and to the respondent’s equity in it.
At present the respondent is residing with Ms Migliore. Notwithstanding that they are living in a relationship, he is paying rent to her. The relationship is, at present, sufficiently strong for them to have had confidence to attempt to purchase the Chiswick Court property together. However, it is relevant that the application to the Commonwealth Bank for a loan to finance that purchase was unsuccessful, in circumstances in which the Rye property was not offered by way of security. Further, apart from his present arrangement with Ms Migloire, the Rye property is the only real estate owned by the respondent in which he could reside if he needed to, and, perhaps more relevantly, it is the only property of any value owned by the respondent which he might be able to use for the purposes of funding the acquisition by him of a home for himself. I also accept on the evidence that it appears likely that, at least for some time, the respondent will have the responsibility for the care of his 14 year old daughter. There is also at least some prospect that the respondent may, at least for some time, need to undertake the responsibility for the care of his 11 year old son.
The question whether, in the circumstances to which I have just referred, a forfeiture order would involve unacceptable hardship to the respondent, in the sense defined in the authorities, is not clear cut. In the course of argument I was referred to a number of decisions at first instance, including the decision of Kellam J in DPP v Gyurcsik[13] (to which I have referred), the decision of Warren CJ in Director of Public Prosecutions v Tran[14], and the decision of Mandie J in DPP v Smith[15]. However, as acknowledged in argument, those cases, while providing a useful guide to the approach of a number of judges of this Court to the question, have limited value in providing the answer to the difficult question to which I have just referred. Each case necessarily depends upon on its own facts. Points of similarity, and points of distinction, can be found in a comparison between the facts of this case and the facts of those three cases. In some respects, the case for the respondent, and the case for the applicant, was either stronger or weaker in those proceedings than the case for the respondent and applicant in this proceeding. Ultimately, the question is whether, in all the circumstances to which I have referred, a forfeiture order in respect of the Rye property would have consequences for the respondent which are unacceptably disproportionate in light, particularly, of the gravity of the offending and the respondent’s culpability for it.
[13][2007] VSC 424.
[14][2004] VSC 218.
[15][2007] VSC 98.
As I have stated, the resolution of that question is not easy. However, I have reached the conclusion that, in all the circumstances, a forfeiture order would have consequences adverse to the respondent which, in terms of the authorities to which I have referred, would be unacceptably disproportionate and harsh in light of the circumstances of the respondent and his offending. In reaching that conclusion, I take particular account of a number of the circumstances to which Mr McLean has referred me, and which, at the risk of repetition, I state again. First, I take into account the circumstance that the offending in this case, while premeditated and over a period of time, was out of character for the respondent. In addition, it was offending that was not embarked on purely for the purposes of greed; rather, while the purpose of the offending obviously was for financial gain, nonetheless the offending took place in circumstances in which the respondent’s personal life had undergone significant upheaval, as a consequence of which he suffered emotional and psychological stress. I also take into account that the purpose for which the respondent had purchased the property, and had used it for in excess of two decades before the offending, was entirely lawful and innocent. While the property was not, and is not, his place of residence, nonetheless, in light of the dissolution of the respondent’s marriage, it is now his sole asset of any real worth. If the property were forfeited, the respondent would have little prospect of acquiring a home of his own, at least in the foreseeable future. Allied to that consideration is the respondent’s responsibility as prime carer for his 14 year old daughter. It is also relevant that there is some prospect that he may need, at least for some time, to assume the same responsibility for his 11 year old son.
As I have stated, I do regard the offending in this case as being serious. Further, in approaching this question, it is important to take into account the clear intention of the Confiscation Act, namely, that those who use their property for the purposes of committing Schedule 1 offences stand a real risk of losing that property as part of the consequences of their unlawful activity. Nonetheless, taking into account all the considerations to which I have just referred, I am persuaded that, if I were to make an order for forfeiture of the Rye property, that would involve consequences adverse to the respondent which are out of all proper proportion to the gravity of his offending, as I have found it.
Mr Flower submitted that, in determining whether to exercise the discretion to order forfeiture of the Rye property, I should take into account, as a discrete factor, the lack of candour of the respondent in swearing the two affidavits upon which he relied in resisting the application. Certainly, as I have indicated, I consider that the respondent’s lack of candour is relevant to the reliability and credibility of the evidence which he has given on affidavit and before me. In addition, that lack of candour is relevant to assessing the respondent’s character and antecedents, and also the issue of rehabilitation, in the manner to which I have already referred. However, I do not consider that the lack of candour of the respondent, in an application such as this, operates as a discrete factor in the exercise of the discretion under s 33(1) of the Confiscation Act. The relevant factors enumerated in the decisions of the Court of Criminal Appeal in Winand, and of the Court of Criminal Appeal of South Australia in Taylor, are directed to the issue whether the effect of a forfeiture order on a respondent would be unacceptably disproportionate, taking into account the gravity of the offending, the use of the property, and the respondent’s circumstances. A lack of candour by a respondent does not readily fit within those categories of factors. Certainly, in the present case I do not consider that it is relevant as a discrete factor, but, rather, it is relevant to determining the credibility of the respondent, and to assessing the degree to which he has rehabilitated. However, and for the purpose of completeness, if, contrary to that view, the lack of candour of the respondent were, on its own, a discrete factor relevant to the exercise of the discretion, I do not consider that it would alter the views at which I have already arrived, namely, that an order for forfeiture of the Rye property would cause disproportionate and unacceptable hardship in the circumstances of this case.
As I have stated, Mr Flower submitted, as an alternative, that if I were to reach such a conclusion, then it would be appropriate that I make an order for what he described as “partial forfeiture” of the Rye property. For the purposes of this decision, I do not need to decide the question whether I have the power to make such an order under s 33(1). Assuming that I do have such a power, in my view it would not be appropriate in the circumstances of this case for me to do so. For the reasons I have already stated, I am of the view that the effect of the forfeiture, even of a part of the respondent’s interest in the property, would be unacceptably disproportionate to the respondent’s offending in this case. Further, I agree with Mr McLean that, on the evidence, a decision by me as to what proportion of the respondent’s interests in the property should be forfeited, would be based on little more than guesswork, rather than on a proper assessment of the evidence. Ultimately, given the culpability of the respondent, in comparison with the effect on him of the forfeiture of his interest, or any part of that interest, in the property, I am persuaded that any such order (if I have power to make it) would involve consequences unduly disproportionate to the offending in this case.
For those reasons, the application by the Director of Public Prosecutions should be dismissed.
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