LAMBERT-v- THE STATE OF WESTERN AUSTRALIA
[2014] WASC 145
•23 APRIL 2014
LAMBERT-v- THE STATE OF WESTERN AUSTRALIA [2014] WASC 145
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2014] WASC 145 | |
| Case No: | CPCA:74/2012 | 13 MARCH 2014 | |
| Coram: | COMMISSIONER SLEIGHT | 23/04/14 | |
| 24 | Judgment Part: | 1 of 1 | |
| Result: | Objection dismissed Property of first plaintiff confiscated | ||
| B | |||
| PDF Version |
| Parties: | DANIEL JOHN RUSSELL [Action dismissed 21 March 2014] KYLIE ANNE LAMBERT DAKOKTA RUSSELL [Action dismissed 21 March 2014] MALCOLM DONALD TAYLOR [Action dismissed 21 March 2014] CHERYL FRANCES TAYLOR [Action dismissed 21 March 2014] LACHLAN JOHN RUSSELL [Action dismissed 21 March 2014] THE STATE OF WESTERN AUSTRALIA |
Catchwords: | Criminal confiscation Real property Property 'crimeused' Whether second plaintiff an innocent party Constructive trust De facto relationship Nature of contributions Claim of equitable proprietary interest Whether unconscionable to deny proprietary interest Relevance of finding second plaintiff not an innocent party |
Legislation: | Criminal Property Confiscation Act 2000 (WA) Misuse of Drugs Act 1981 (WA) |
Case References: | Barker v Director of Public Prosecutions (WA) [2011] WASC 299 Baumgartner v Baumgartner [1987] HCA 59; (1987) 164 CLR 137 Campana v The State of Western Australia [2008] WASC 230 Centurion Trust Company Ltd v Director of Public Prosecutions (WA) [2010] WACSA 133 George v Rockett [1990] HCA 26; (1990) 170 CLR 104 Giumelli v Giumelli [1999] HCA 10; (1999) 196 CLR 101 Green v Green (1989) 17 NSWLR 343 Hendricks v The State of Western Australia [2002] WASC 86 Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 Kamleh v The Queen [2005] HCA 2; (2005) 213 ALR 97 Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 583 Re Smith; Ex parte Director of Public Prosecutions (WA) [No 3] [2004] WASC 157 Roberts v The State of Western Australia [2010] WASCA 223 Smith v The State of Western Australia [2009] WASC 189 Whittle v The State of Western Australia [2012] WASC 244 Willis v The State of Western Australia [No 3] [2010] WASCA 56 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- First Plaintiff
KYLIE ANNE LAMBERT
Second Plaintiff
DAKOKTA RUSSELL [Action dismissed 21 March 2014]
Third Plaintiff
MALCOLM DONALD TAYLOR [Action dismissed 21 March 2014]
Fourth Plaintiff
CHERYL FRANCES TAYLOR [Action dismissed 21 March 2014]
Fifth Plaintiff
LACHLAN JOHN RUSSELL [Action dismissed 21 March 2014]
Sixth Plaintiff
AND
THE STATE OF WESTERN AUSTRALIA
Defendant
Catchwords:
Criminal confiscation - Real property - Property 'crimeused' - Whether second plaintiff an innocent party
Constructive trust - De facto relationship - Nature of contributions - Claim of equitable proprietary interest - Whether unconscionable to deny proprietary interest - Relevance of finding second plaintiff not an innocent party
Legislation:
Criminal Property Confiscation Act 2000 (WA)
Misuse of Drugs Act 1981 (WA)
Result:
Objection dismissed
Property of first plaintiff confiscated
Category: B
Representation:
Counsel:
First Plaintiff : Mr D N Ryan
Second Plaintiff : Mr D N Ryan
Third Plaintiff : Mr D N Ryan
Fourth Plaintiff : Mr D N Ryan
Fifth Plaintiff : Mr D N Ryan
Sixth Plaintiff : Mr D N Ryan
Defendant : Mr M Seaman
Solicitors:
First Plaintiff : Chelmsford Legal
Second Plaintiff : Chelmsford Legal
Third Plaintiff : Chelmsford Legal
Fourth Plaintiff : Chelmsford Legal
Fifth Plaintiff : Chelmsford Legal
Sixth Plaintiff : Chelmsford Legal
Defendant : Director of Public Prosecutions (WA)
Case(s) referred to in judgment(s):
Barker v Director of Public Prosecutions (WA) [2011] WASC 299
Baumgartner v Baumgartner [1987] HCA 59; (1987) 164 CLR 137
Campana v The State of Western Australia [2008] WASC 230
Centurion Trust Company Ltd v Director of Public Prosecutions (WA) [2010] WACSA 133
George v Rockett [1990] HCA 26; (1990) 170 CLR 104
Giumelli v Giumelli [1999] HCA 10; (1999) 196 CLR 101
Green v Green (1989) 17 NSWLR 343
Hendricks v The State of Western Australia [2002] WASC 86
Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298
Kamleh v The Queen [2005] HCA 2; (2005) 213 ALR 97
Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 583
Re Smith; Ex parte Director of Public Prosecutions (WA) [No 3] [2004] WASC 157
Roberts v The State of Western Australia [2010] WASCA 223
Smith v The State of Western Australia [2009] WASC 189
Whittle v The State of Western Australia [2012] WASC 244
Willis v The State of Western Australia [No 3] [2010] WASCA 56
1 COMMISSIONER SLEIGHT: On 5 September 2012, police executed a search warrant under the Misuse of Drugs Act 1981 (WA) (the MDA) of premises at 112 Newburn Road, High Wycombe. The police located on the premises 33 plants of cannabis being hydroponically grown (in a rear shed) and also a quantity of loose leaf cannabis. The first plaintiff, Mr Daniel John Russell (Mr Russell), is the sole registered proprietor of the property situated at 112 Newburn Road, High Wycombe, being lot 621 on plan 14669, and being the whole of the land in the certificate of title vol 1961 folio 297 (the High Wycombe property).
2 On 10 September 2012, a freezing notice under the Criminal Property Confiscation Act 2000 (WA) (the CPCA) was filed and issued from the Supreme Court of Western Australia. This freezing notice had the effect of freezing the property of Mr Russell, including High Wycombe property. The freezing notice was issued on two grounds: firstly, that there were reasonable grounds for suspecting the High Wycombe property was 'crime-used'; and secondly, that Mr Russell was potentially a person who might be declared a drug trafficker. The plaintiffs in this matter all lodged objections to the freezing notice, but subsequently, by consent, all plaintiffs except Ms Lambert (the second plaintiff) have had their objections dismissed. Ms Lambert is the de facto partner of Mr Russell.
3 It is common ground that the freezing notice was registered on 10 September 2012 as a memorial against the title of the High Wycombe property as required under s 38(1) of the CPCA.
4 On 1 February 2013, Mr Russell was convicted in the District Court of Western Australia of an offence of cultivation of a prohibited plant (namely cannabis) with intent to sell or supply contrary to s 7(1)(a) of the MDA. The offence was in respect of 33 cannabis plants. Mr Russell was also convicted of an offence of possession of cannabis with intent to sell or supply in relation to the loose leaf material found on the premises.
5 Under the provisions of s 32A of the MDA, a person who commits a serious drug offence in respect of 20 or more cannabis plants shall, on application of the Director of Public Prosecutions (WA) (the DPP), be declared a drug trafficker. On 1 February 2013 her Honour Judge Sweeney declared Mr Russell a drug trafficker arising from the cultivation charge.
6 These proceedings concern the objection lodged by Ms Lambert and orders sought by the State declaring that the High Wycombe property is confiscated pursuant to the provisions of the CPCA. The objection lodged by Ms Lambert to the confiscation is on the ground that she is an innocent party in relation to the High Wycombe property and has a proprietary interest in the property by virtue of a constructive trust.
Relevant statutory framework
7 In this decision I propose to avoid as much as possible quoting at length the relevant provisions of the CPCA. Instead I propose to give a sketch of the relevant provisions:
1. The DPP or a police officer may apply for a freezing notice for any property if there are reasonable grounds for suspecting the property is crime-used (as defined in the CPCA) or if the property is owned or effectively controlled by a person who is likely to be charged with an offence and could be declared a drug trafficker (s 34(1) - (3) of the CPCA). The freezing notice of 10 September 2012 issued pursuant to these provisions.
2. Pursuant to s 8 of the CPCA, when a person is declared to be a drug trafficker under s 32A(1) of the MDA as a result of being convicted of a confiscation offence, all the property that the person owned or effectively controlled at the time he was declared to be a drug trafficker is confiscated to the State of Western Australia. By virtue of the declaration that Mr Russell is a drug trafficker, the property of Mr Russell was confiscated pursuant to s 8 of the CPCA on 1 February 2013 when Mr Russell was declared a drug trafficker. That is not disputed in this matter. It appears to be accepted that if an innocent person has an equitable interest in 'property', as defined in the CPCA, and that interest is sufficient to satisfy the definition of 'owner' under the CPCA, then that equitable interest is not subject to confiscation. Only the interest of the drug trafficker is confiscated: see, for example, Whittle v The State of Western Australia [2012] WASC 244 [40] (Allanson J); Smith v The State of Western Australia [2009] WASC 189 [4], [10] (McKechnie J); Barker v Director of Public Prosecutions (WA) [2011] WASC 299 [4] (EM Heenan J). However some reservations have been expressed by McLure P in Willis v The State of Western Australia [No 3] [2010] WASCA 56 [1].
3. If a court finds that property has been confiscated under s 8 of the CPCA the court must, pursuant to s 30(2) of the CPCA, make a declaration to that effect: Hendricks v The State of Western Australia [2002] WASC 86 [19] (Roberts-Smith J); Re Smith; Ex parte Director of Public Prosecutions (WA) [No 3] [2004] WASC 157 [15] (Roberts-Smith J).
4. A person may file an objection to the confiscation of frozen property (s 79 of the CPCA). The objection is to be in the form of an originating summons filed in the Supreme Court of Western Australia. The plaintiffs filed such an originating summons, dated 3 October 2012. On the hearing of an objection, the court may set aside the freezing notice to the extent permitted under s 82, s 83 and s 84 of the CPCA. Section 82 relates to the power of the court to set aside a freezing notice for property that was frozen on the ground it was crime-used. Section 83 relates to the power of the court to set aside a freezing notice for property that was frozen on the ground it was crime-derived. Section 84 relates to setting aside a freezing notice for property that was frozen on the ground that it was owned or effectively controlled by a person who was likely to be charged with an offence and could be declared a drug trafficker.
5. If property is frozen on two or more grounds, but the court does not set aside the freezing notice in relation to both or all grounds, the freezing notice continues in force as if it has been made on each remaining ground: s 81(2) of the CPCA; Hendricks v The State of Western Australia [15] (Roberts-Smith J).
6. The DPP may apply to the court for a declaration that property has been confiscated (s 30(1) of the CPCA). On 14 June 2013 the DPP applied for orders that:
(a) the objections filed be dismissed; and
(b) a declaration that all the property (including the High Wycombe property) which Mr Russell owned or effectively controlled by him, has been confiscated to the State of Western Australia.
7. The objection by Ms Lambert and the application by the State can be heard together: Campana v The State of Western Australia [2008] WASC 230 [38] - [40] (Jenkins J).
8. If an objection to the confiscation of frozen property is finally determined and the freezing notice is not cancelled or set aside then the property is confiscated: (s 7(2) of the CPCA).
9. It is common ground that to be successful the objection by Ms Lambert must first set aside the freezing notice issued on the ground that the premises were crime-used and, secondly, obtain a declaration that the freezing notice (which was issued on the alternative ground that the premises were confiscated by virtue of Mr Russell being potentially declared a drug trafficker) does not apply or should be set aside, in relation to any equitable proprietary interest she has in the High Wycombe property.
10. The objection to the freezing notice issued on the ground that the premises were crime-used (it is not disputed that the High Wycombe property was crime-used) seeks orders pursuant to s 82 (4) - (5) of the CPCA. These subsections relevantly provide as follows:
82(4) The court may set aside the freezing notice or freezing order if the objector establishes that it is more likely than not that -
(a) the objector is the owner of the property, or is one of 2 or more owners of the property; and
(b) the property is not effectively controlled by a person who made criminal use of the property; and
(c) the objector is an innocent party in relation to the property; and
(d) each other owner (if there are more than one) is an innocent party in relation to the property.
(5) If the objector establishes the matters set out in subsection (4)(a), (b) and (c), but fails to establish the matter set out in subsection (4)(d), the court may order that, when the property is sold after confiscation, the objector is to be paid an amount equal to the amount that bears to the value of the property the same proportion as the objector's share of the property bears to the whole property.
11. The effect of s 82(4) - (5) of the CPCA is that to be successful in setting aside the freezing notice (issued on the grounds that the High Wycombe property was crime-used), Ms Lambert will need to establish:
(a) that she was the owner of the property. The term 'owner' is defined in the glossary to the CPCA to mean a person who has a legal or equitable interest in the property. Ms Lambert is not a registered proprietor of the property so in order to establish any entitlement of ownership she needs to establish a proprietary interest in equity;
(b) that the property was not effectively controlled by Mr Russell, who made criminal use of the property. (The term 'effective control' is defined at s 156 of the CPCA as follows:
For the purposes of this Act, a person has effective control of property if the person does not have the legal estate in the property, but the property is directly or indirectly subject to the control of the person, or is held for the ultimate benefit of the person.
- Accordingly, the term 'effective control' relates to a person who does not have the legal estate in the property. Because Mr Russell had the legal estate as the registered proprietor it is common ground this condition has been met.); and
(c) that the objector was an innocent party in relation to the property. (Section 153 of the CPCA relevantly provides:
(1) A person is an innocent party in relation to crime-used property if the person -
(a) was not in any way involved in the commission of the relevant confiscation offence; and
(b) did not know, and had no reasonable grounds for suspecting, that the relevant confiscation offence was being or would be committed, or took all reasonable steps to prevent its commission.
(2) A person is an innocent party in relation to crime-used property if the person -
(a) did not know, and had no reasonable grounds for suspecting, that the property was being or would be used in or in connection with the commission of the relevant confiscation offence; or
(b) took all reasonable steps to prevent its use.
(3) A person who owns or effectively controls crime-used property is an innocent party in relation to the property if -
(a) the person did not acquire the property or its effective control before the time that the relevant confiscation offence was committed or is likely to have been committed; and
(b) at the time of acquiring the property or its effective control, the person did not know and had no reasonable grounds for suspecting that the property was crime-used; and
(c) if the person acquired the property for valuable consideration - the consideration was lawfully acquired; and
(d) the person did not acquire the property or its effective control, either as a gift or for valuable consideration, with the intention of avoiding the operation of this Act.
- Ms Lambert's knowledge or lack thereof of Mr Russell's criminal use of the High Wycombe property is directly in issue in this matter.)
13. The onus of proving the objection under s 82(4) of the CPCA is on the objector who must establish the criteria under s 82(4) of the CPCA on the balance of probabilities (that is, that it is more likely than not): see s 82(4) of the CPCA.
14. As the freezing notice was also issued on the ground that potentially Mr Russell might be declared a drug trafficker, it is common ground that in order to set aside the freezing notice on this ground Ms Lambert will also need to obtain an order under s 84 of the CPCA. Section 84(2) relevantly provides:
84(2) The court may set aside a freezing notice issued for property under section 34(3) ... if the court finds that it is more likely than not that the person who is or will be charged with the offence does not own or effectively control the property, and has not at any time given it away.
- The contention of both counsel is that s 84(2) gives power to set aside the freezing notice insofar as Ms Lambert has a proprietary interest in the property under a constructive trust. In support of this proposition I was referred to the decision of McLure P in Centurion Trust Company Ltd v Director of Public Prosecutions (WA) [2010] WACSA 133 [31]. In that case, her Honour was considering the effect of a freezing order under s 43(5) in similar circumstances to the issuing of a freezing notice under s 34(3), that is, on the basis of a potential order being made that the owner of property be declared a drug trafficker. Her Honour stated as follows:
The power in s 43(3) and s 43(5) is to freeze all or any property that is owned or effectively controlled or was given away by a specified person. The power in s 43(1) and s 43(8) is to freeze property without reference to its ownership or control. The DPP contends, correctly in my opinion, that all that can be frozen under s 43(3) and s 43(5) and confiscated is the interest in the property that the respondent or accused owns or effectively controls or gave away. Thus, third party ownership interests in the same property will only be frozen and confiscated if the respondent or accused controlled those interests or had given them away [31].
As mentioned earlier in this decision, by virtue of s 156 of the CPCA Mr Russell does not have effective control of the property because he has the legal ownership of the property. The logical extension of McLure P's observations in Centurion Trust Company Ltd v Director of Public Prosecutions (WA) is that if Ms Lambert has a proprietary interest in the premises by virtue of a constructive trust, then that interest was never the subject of the freezing notice issued on the basis Mr Russell could be declared a drug trafficker and therefore the freezing notice need not be set aside in relation to that interest. On this construction, what Ms Lambert is seeking is a declaration of her equitable interest and a declaration that her equitable interest is exempt from the confiscation provisions based upon Mr Russell being declared a drug trafficker. The issue of whether an equitable proprietary interest of a non-offender is exempt from the confiscation provisions relating to a drug trafficker declaration per se or whether an order is required under s 84(2) of the CPCA has not been fully argued before me but, in any event, it has been agreed that if I find that Ms Lambert has an equitable proprietary interest in the premises by virtue of a constructive trust, then the freezing notice should not apply in relation to that interest insofar as the right to confiscation is dependent on Mr Russell being declared a drug trafficker.
15. If Ms Lambert does not establish an equitable proprietary interest by virtue of a constructive trust, then the whole of the High Wycombe property is confiscated as a result of the declaration that Mr Russell is a drug trafficker.
Issues
8 It follows from the above that the two issues to be decided in this case are as follows:
1. Was Ms Lambert an innocent party in relation to the High Wycombe property? If Ms Lambert fails to establish that she was an innocent party in relation to the High Wycombe property, then her objection fails against the freezing notice issued on the grounds the High Wycombe property was crime-used, and the High Wycombe property is confiscated regardless of any equitable interest held by Ms Lambert in the High Wycombe property.
2. If Ms Lambert is able to establish that she was an innocent party in relation to the High Wycombe property, then the second issue is whether she can establish an interest in the High Wycombe property. In this case, it is not contended that she fully owned the High Wycombe property, but rather she had a part interest in the High Wycombe property in the form of an equitable proprietary interest by virtue of a constructive trust.
Was Ms Lambert an innocent party in relation to the High Wycombe property?
9 In this matter, it is common ground that in order for Ms Lambert to establish that she is an innocent party in relation to the High Wycombe property she must prove that she did not know, and had no reasonable grounds for suspecting that the High Wycombe property, was crime-used (see s 153 of the CPCA).
10 When a statute prescribes that there must be reasonable grounds for a state of mind, it requires the existence of facts which are sufficient to induce a state of mind in a reasonable person: George v Rockett [1990] HCA 26; (1990) 170 CLR 104, 112 (the Court).
(a) Evidence adduced by Ms Lambert
11 The evidence adduced by Ms Lambert consisted of affidavits sworn by her on 9 April 2013 (Ms Lambert's first affidavit); 23 August 2013 (Ms Lambert second affidavit); and 19 December 2013 (Ms Lambert's third affidavit) which formed her evidence-in-chief. She then gave oral evidence under cross-examination and re-examination. Ms Lambert also called as a witness her relative, Melisa Tabather Crafter. Ms Crafter's evidence-in-chief consisted of an affidavit sworn on 12 March 2014. Ms Crafters oral evidence consisted of cross-examination.
12 The evidence of Ms Lambert can be summarised as follows:
1. She is aged 31 years and has worked as a chef at a number of well known restaurants in Perth ([9] - [10] of Ms Lambert's first affidavit).
2. She met Mr Russell in February 2011 and moved into his house on the High Wycombe property as his de facto partner in April 2011. At the time Mr Russell's son Lachlan was also residing at the property ([12] - [16] of Ms Lambert's first affidavit).
3. In November 2011, Ms Lambert and Mr Russell decided to have children together and Ms Lambert became pregnant in December 2011 ([17] of Ms Lambert's first affidavit).
4. In March 2012, Ms Lambert and Mr Russell became engaged while holidaying in Europe ([18] of Ms Lambert's first affidavit).
5. In May 2012. Ms Lambert ceased working due to complications with her pregnancy ([19] of Ms Lambert's first affidavit).
6. Ms Lambert had the odd small puff of marijuana when she was a teenager. In about 2004 (when she was aged about 22), she smoked cannabis occasionally. She stopped smoking cannabis in 2005 as she was working on a mine site which had a drug-free policy. In 2009, her brother died and she again started smoking cannabis (as a means of dealing with grief). She was working at that time in a number of Perth restaurants, and she stated that the use of cannabis was common in the hospitality industry. Ms Lambert said that in 2010 she had virtually stopped smoking cannabis as she focused on work ([5] - [9] of Ms Lambert's second affidavit).
7. When Ms Lambert became pregnant in December 2011, she stopped her occasional drug use immediately ([13] of Ms Lambert's second affidavit).
8. When Ms Lambert met Mr Russell in 2011, they discussed their past marijuana use but did not discuss using marijuana again prior to the charges being laid against Mr Russell ([10] of Ms Lambert's second affidavit).
9. Ms Lambert has never smoked marijuana with Mr Russell. From the outset of their relationship, drug use was not a feature of their relationship nor was it pursued in their social setting ([11] of Ms Lambert's second affidavit).
10. Ms Lambert has never smoked marijuana on the High Wycombe property ([12] of Ms Lambert's second affidavit).
11. Ms Lambert had no knowledge that any marijuana was grown in the shed on the High Wycombe property. This was because she had never been in the shed and she could not see inside the shed because there were no windows ([55] - [56] of Ms Lambert's first affidavit; [51] - [52] of Ms Lambert's second affidavit).
12. Mr Russell always kept the shed locked by both key and padlock and he was the only one that had the keys ([58] of Ms Lambert's first affidavit).
13. Ms Lambert rarely went out the back yard area of the High Wycombe property, except to hang out the washing. The laundry has a sliding door that goes directly to the clothes line behind the house, so she did not move beyond this area. The backyard area was Mr Russell's area, much like the kitchen was hers, and she did not infringe with his space ([55] of Ms Lambert's second affidavit).
14. Ms Lambert's mother disapproved of the use of cannabis ([71] of Ms Lambert's second affidavit).
15. Ms Lambert's biological father, with whom Ms Lambert has had little contact, is what Ms Lambert described as 'an old hippie'. Ms Lambert believes that her biological father still uses drugs regularly. Mr Russell has never met Ms Lambert's father. In July 2012, Mr Russell directed Ms Lambert's attention to a tin on top of a refrigerator and said 'that up there is for your old man when I meet him'. Ms Lambert assumed there was cannabis in the tin and make no further enquiries about it. She assumed Mr Russell had acquired the cannabis through one of his friends. The tin was sealed in cryovac plastic ([16] - [23] of Ms Lambert's second affidavit).
16. When the police arrived on 5 September 2012 Ms Lambert was due to go to a medical appointment. She told the police of the cannabis in the tin in the kitchen. She stated that she was unaware of any other cannabis on the premises and left before the shed was searched. She told the police she did not know what was in the shed and only Mr Russell had a key. She told them 'it's Daniel's shed and I don't have anything to do with it' ([37] - [49] of Ms Lambert's second affidavit).
17. Ms Lambert denied having any knowledge of a quantity of cannabis found by the police in a cupboard in the dining room of the house. She also denied knowledge of some seeds found in Mr Russell's drawer in their bedroom ([65] - [67] of Ms Lambert's second affidavit).
18. Ms Lambert explained various things that she had said in a reference she provided to the District Court of Western Australia prior to Mr Russell's sentencing. In this reference she stated as follows:
My baby brother passed away at the age of 18 in 2009, I am one of five children, not only did he crushed my world, my world came to a stand still. At that time I started heavily smoking marijuana again for the second time in my life, first time was when my parents separated in my early 20s [2002 - 2003]. When I met Daniel I could relate to his smoking, it was an escape. We had shared a loss. Losing his Grandfather [the father figure in his life] was just as hard to him, as the loss I feel for James, he understood my escape with having lost my James. Daniel could see he was my closest brother.
This has rocked our world to the extent that Daniel doesn't smoke marijuana any more. Daniel and I were heavy smokers in the past. I haven't smoked for over a year now and I'm happy to say that. At the time when we met, we had accepted each other and social smoking seemed accepted in our circle of friends. I had felt that way until I decided to start getting my body in order to fall pregnant. We had hoped to fall pregnant while in Europe and then we actually found out I was pregnant and had been since December. (emphasis added)
- In Ms Lambert's third affidavit she stated that in describing her use of cannabis as 'heavily smoking' she meant heavily smoking for her, which was one to two joints per week; and that her comment that 'social smoking seemed accepted in our circle of friends' was true, but she and Mr Russell never smoked together socially.
(b) The State's evidence
14 The State filed the following affidavits:
• affidavit of Jodie Kathleen Cuschieri sworn on 6 June 2013;
• affidavit of Tiffany Danuta Nojunas sworn on 21 October 2013;
• affidavit of Craig Stephen sworn 29 October 2013.
15 The affidavit of Ms Cuschieri sets out the various procedural steps which were undertaken in relation to the issuing of the freezing notice and these proceedings and annexed a copy of the transcript from the sentencing of Mr Russell in the District Court of Western Australia. The affidavit of Ms Nojunas annexed a copy of the reference provided by Ms Lambert at the sentencing hearing. The affidavit of Craig Stephen sworn 29 October 2013 goes to the conduct of the police search of the premises on 5 September 2012. The deponent of the affidavit is a detective sergeant in the WA Police Service and he was the investigating officer in relation to the charges made against Mr Russell. Detective Sergeant Stephen attended the High Wycombe property on 5 September 2012 and searched the property as authorised under a search warrant issued under the MDA. Annexed to the affidavit is a video recording taken at the time of the search. I have viewed this recording and I make the following findings:
1. The 33 plants located by the police were grown in a garden shed which had a locked door on it which a key was used to open.
2. The 33 plants were being grown hydroponically in a reasonably elaborate setup. It consisted of an area of the shed sealed off with reflective plastic sheeting covering the floor, ceiling and walls. Each plant was located in a separate black plastic pot. Suspended from the ceiling were a series of heating/light tubes with downward reflecting shields. Also in place was an extractor fan and a filter with associated tubing. The pots were raised slightly off the ground and there appears to be reticulation piping running to the bottom of the pots.
3. The shed contained other items including a motor vehicle under a car cover, a refrigerator and various containers and tools.
4. Located on the refrigerator was a set of electric scales. The refrigerator was immediately inside the door and the hydroponic setup was behind the refrigerator.
5. The shed was located approximately 2 m from the rear door of the house.
6. The shed was located adjacent to rear garden areas.
7. The shed contained a number of esky-type containers which contained cannabis leaf material.
8. The soil around the cannabis plants appeared moist indicating recent watering.
9. In the house the police located a tin of cannabis sealed in cryovac plastic. This tin was located in the kitchen.
10. Police also located in a cupboard in the dining room of the house a large water container, containing seven clip-sealed bags of cannabis.
(c) Conclusion
16 I find that on 5 September 2012, prior to the police executing their search of the premises, Ms Lambert knew that the premises were being used for and in connection with the cultivation of cannabis and that she was therefore not an innocent party within the meaning of s 153 of the CPCA. I reach this conclusion on the basis of the following:
(a) I find that it is improbable that Ms Lambert was not aware of the existence of such an elaborate hydroponic system in a shed which was located in such close proximity to the house. In my opinion, it is improbable that Ms Lambert would not have been aware of the cultivation given the nature of the setup and the number of times that Mr Russell would have needed to attend the shed in order to maintain the cultivation.
(b) I find that Ms Lambert was not a truthful witness and sought to distance herself from any activity in close proximity to the shed. Since May 2012 she had ceased employment and I infer therefore would have been present on the premises most of the time. Also although Ms Lambert claimed in her second affidavit that she rarely went out to the back yard area of the High Wycombe property except to hang out the washing, in her third affidavit to substantiate her constructive trust claim, she stated that she and Mr Russell had together carried out substantial improvements to the front and rear gardens. In cross-examination she admitted that she was involved in maintaining the rear gardens.
(c) Ms Lambert's evidence that she rarely went out into the backyard was contradicted by the evidence of Ms Crafter in cross-examination.
(d) In cross-examination, Ms Lambert stated that when Mr Russell alerted her to the presence of the tin of cannabis in the kitchen she asked no questions about the source of the cannabis. I find Ms Lambert's account of the cannabis located in the tin in the kitchen to be improbable. I find this cannabis was being preserved for use by Mr Russell and Ms Lambert in light of her admission that they were both historically cannabis users.
(e) I do not accept the evidence of Ms Lambert that she was not aware of the cannabis in the water container in the cupboard. The video of the police search shows that the container stored seven bags of cannabis. In my opinion it is improbable that Ms Lambert would not have been aware of this cannabis stored in the dining room of her home. Ms Lambert's counsel relies upon the fact that Ms Lambert, when questioned by the police, admitted to the cannabis in the tin in the kitchen, but denied all knowledge of any other cannabis and also stated that Mr Russell was the only one who had access to the shed. In my opinion the statements that Ms Lambert made to the police concerning her knowledge of other cannabis and the cultivation of the shed were self-serving and not truthful.
(f) I take into account that Ms Lambert failed to call Mr Russell to give supporting evidence of her account that she was not aware of the presence of the cannabis cultivation in the shed or cannabis elsewhere on the property (other than the tin in the kitchen). In my opinion, the failure to call Mr Russell to give evidence gives rise to an inference that his evidence would have been adverse to Mrs Lambert's claim of ignorance and innocence: Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298.
Counsel for Ms Lambert submitted it was not appropriate to draw such an adverse inference because there was a reasonable explanation for Ms Lambert not calling Mr Russell to give evidence. The explanation proffered was that his evidence was likely to be dismissed by the court on the basis of bias. I do not accept this submission. I believe it is remarkable that Mr Russell, the one person who could confirm that Ms Lambert did not know of the cannabis crop and was able to describe to the court how the existence of the crop and presence of other cannabis was hidden from Ms Lambert, did not give evidence. An adverse inference can be drawn in this matter, particularly in light of what Mr Russell told the police when he was questioned during the police search of the premises on 5 September 2012. Mr Russell told the police that the crop of cannabis was for himself, Ms Lambert and sometimes for friends. He also said that the crop was being grown for medicinal purposes for both he and Ms Lambert. When describing various activities concerning the cultivation and the presence of the quantities of cannabis in the house he frequently used the pronoun 'we'. Of course, what Mr Russell told the police during the police search of the premises is hearsay. The evidence as to what Mr Russell told the police was led by the State without objection from counsel for Ms Lambert. However, I do not propose to rely upon the evidence as to the truth of what was said by Mr Russell, but simply the fact that these things were said by Mr Russell. The evidence can be used for this limited purpose: Kamleh v The Queen [2005] HCA 2; (2005) 213 ALR 97, 100 - 103 (Gleeson CJ & McHugh J), 103 (Kirby J agreeing), 104 (Heydon J agreeing); Roberts v The State of Western Australia [2010] WASCA 223 [5] (McLure P). The fact that Mr Russell made these comments to the police is a further reason why an adverse inference should be drawn from the failure of Ms Lambert to call Mr Russell to give evidence.
(g) I find that the evidence of Ms Lambert was generally evasive and self-contradictory in terms of her knowledge of the extent of her husband's use of cannabis and the use of cannabis by their circle of friends. I find that her affidavit evidence that drug use was not a feature of their relationship, and nor was cannabis use pursued in their social setting was inconsistent with the reference she provided for Mr Russell in the proceedings in the District Court.
(h) In cross-examination, Ms Lambert stated she had a close relationship with Mr Russell. However, Ms Lambert stated that they did not at any time discuss their cannabis use. That is despite her evidence that when she was working in the hospitality industry she used cannabis after work with work colleagues and that she observed the smell of cannabis when she collected Mr Russell from friends' homes. She also on occasion observed him to be under the effect of cannabis at the High Wycombe property. Ms Lambert also stated that she decided to give up cannabis when she became pregnant but she did not mention this to Mr Russell. Given the closeness of their relationship, I do not accept that Ms Lambert and Mr Russell did not discuss the use of cannabis whilst living together.
17 Having found that Ms Lambert was not an innocent party within the meaning of the CPCA it necessarily follows that her objection to the freezing notice issued on the grounds of crime-use should be dismissed. It is acknowledged that the effect of this finding is that Ms Lambert's objection is dismissed so that the freezing notice is not set aside. By virtue of s 7 of the CPCA the property is confiscated.
Does Ms Lambert have an equitable interest in the High Wycombe property?
18 It is strictly speaking unnecessary for me to consider whether Ms Lambert has an equitable interest in the High Wycombe property in light of my finding that her objection to the freezing notice issued on the basis of crime-used property is dismissed. However, for the sake of completeness I will briefly deal with this issue.
19 The claim made by Ms Lambert is that she has an equitable proprietary interest in the High Wycombe property by virtue of a constructive trust. The claim is based on alleged financial contributions and improvements made to the property.
20 It is necessary to give some consideration to the nature of a constructive trust. As has often been said, the word 'constructive' in the context of the term 'constructive trust' is derived from the word 'construe'. The court construes the facts and circumstances of a particular case by explaining or interpreting them: Giumelli v Giumelli [1999] HCA 10; (1999) 196 CLR 101 [2] (Gleeson CJ, McHugh, Gummow, Kirby & Hayne JJ); Willis v The State of Western Australia [51] (Buss JA).
21 In this case Ms Lambert claims that the circumstances should be construed as giving rise to a constructive trust in the form of an equitable proprietary interest in property. Her claim is based upon equitable principles as recognised in a number of cases involving claims by de facto partners. One such case is Baumgartner v Baumgartner [1987] HCA 59; (1987) 164 CLR 137. That case concerned a de facto couple who pooled their incomes for living expenses and fixed commitments. They first lived in a unit owned by the man, which was sold when they acquired a house in his name. The house was purchased with the aid of a mortgage in the name of the man, who also contributed the net proceeds of the sale of the unit. The parties aggregated earnings were pooled in the proportion of roughly 55% by the man and 45% by the woman. The High Court held that the man held the house in trust for the parties in the proportions in which they contributed to its acquisition, subject to a charge in the man's favour for the net proceeds of his unit. Mason CJ, Wilson and Deane JJ stated as follows:
The case is accordingly one in which the parties have pooled their earnings for the purposes of their joint relationship, one of the purposes of that relationship being to secure accommodation for themselves and their child. Their contributions, financial and otherwise, to the acquisition of the land, the building of the house, the purchase of furniture and the making of their home, were on the basis of, and for the purposes of, that joint relationship. In this situation the appellant's assertion, after the relationship had failed, that the Leumeah property, which was financed in part through the pooled funds, is his sole property, is his property beneficially to the exclusion of any interest at all on the part of the respondent, amounts to unconscionable conduct which attracts the intervention of equity and the imposition of a constructive trust at the suit of the respondent (149) [36].
22 In Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 583 a man and woman who had lived together for three years decided to buy a property on which to erect a prefabricated house and to restore a cottage. The woman was to provide $20,000 from the sale of her house and the man was to pay the cost of construction and improvement from $9,000 he would receive on the finalisation of his divorce and from loans. The property was conveyed to them as tenants in common. Although some improvements were made by the man, the erection of the house did not proceed and the parties separated. The woman contributed $25,259.45 and the man contributed $2,549.77 to the purchase and improvement of the property. The High Court declared that the parties held their respective legal interests upon trust to repay to each his or her respective contribution and as to the residue for them both in equal shares. Again the basis for granting equitable relief was that it would have been unconscionable for the man to retain a full half share in the property.
23 The claim by Ms Lambert that she has an equitable interest in the High Wycombe property is based upon claims that she contributed financially and with her labour to the acquisition and improvement of the property. Mr Russell had acquired the High Wycombe property in 2005. The High Wycombe property was mortgaged, but no evidence was led as to the details of the mortgage and what repayments were made. Ms Lambert moved into the property on 22 April 2011 when the de facto relationship with Mr Russell commenced. At the time of the issue of the freezing notice Ms Lambert had been living in the property for approximately 17 months. There was a pooling of financial resources as evidenced by Ms Lambert, in May 2011, authorising the ANZ bank to permit Mr Russell to have access to Ms Lambert's saving accounts and credit card.
24 Ms Lambert and her brother had purchased land in Thiele Road, Banksia Grove, Western Australia in 2009 and then built a house on it in 2010. Ms Lambert resided in the house until she commenced living with Mr Russell in his property. The property in Thiele Road was sold in July 2012 for $420,000. Ms Lambert's evidence was that it was jointly proposed that eventually the High Wycombe property would be sold and from the proceeds, together with the proceeds from her interest in the Thiele Road property, she and Mr Russell would purchase a home in their joint names.
25 Ms Lambert's evidence was that after she and Mr Russell commenced to cohabitation she paid 'at least half of the bills', but no accurate financial records were kept of these contributions. Her evidence was that she had paid bills relating to the premises either by giving Mr Russell cash or paying the bills herself. She also said that she provided funds for the purchase of various household goods such as furniture, bedding, lighting and other items. Her evidence was that by making these financial contributions she freed Mr Russell to pay his mortgage from his income alone. She provided, in her first and third affidavits, details of financial contributions she could recall which amounted to approximately $8,000. Of the payments she made she detailed three payments of cash ($700, $500 and $650), which she described as being given to Mr Russell for bills and for mortgage repayments. Ms Lambert also gave evidence of renovations to the property in the form of painting, tiling and other home improvements of a minor nature. She also gave evidence of Mr Russell and herself reconstructing the garden on the premises.
26 No evidence was given as to the respective incomes of Ms Lambert and Mr Russell, the extent to which Mr Russell had paid for the property prior to Ms Lambert commencing cohabitation with him, the extent of mortgage repayments, and any evidence as to the extent to which any painting and other house improvements contributed by Ms Lambert increased the value of the property. Further, as to the pooling of financial resources, no evidence was given as to how Mr Russell's income was utilised within any pooling arrangement.
27 Further, Mr Russell did not give any evidence concerning the financial arrangements and, again under the principles of Jones v Dunkel, I draw an inference that his evidence was likely to be unhelpful in terms of contribution made by Ms Lambert.
28 I find that there was a de facto relationship in place between Ms Lambert and Mr Russell from April 2011 and that as a part of that relationship there was some limited pooling of financial resources. I am unable to say how this worked other than that Mr Russell had authority to use Ms Lambert's bank account, that from time to time some bills were paid by Ms Lambert and on some occasions she gave cash to Mr Russell. However, the pooling of financial resources and the commitment to one another in a de facto relationship is by itself not sufficient to establish an equitable entitlement based upon a constructive trust. The central issue is whether it would be unconscionable to deny Ms Lambert an equitable proprietary interest in the property. In Green v Green (1989) 17 NSWLR 343, 353, Gleeson CJ emphasised that the mere existence of a de facto relationship, in which both parties provide support to one another, will not constitute by itself a sufficient basis for a constructive trust (see also Willis v The State of Western Australia [65] (Buss JA)). The case of Green v Green concerned clear undertakings by a deceased de facto husband, over a long relationship, that he would grant to his de facto wife proprietorship in property owned by the de facto husband alone. The de facto husband had taken steps to instruct his solicitors to effect such a transfer but had died before the transfer was put into effect. A constructive trust was recognised on the basis that it would be unconscionable to deny the claim of the de facto wife who had suffered to her detriment relying upon the undertakings. Central to this decision and other decisions concerning constructive trusts is that the denial of the claim would be unconscionable. In Muschinski v Dodds, Deane J stated as follows:
The mere fact that it would be unjust or unfair in a situation of discord for the owner of a legal estate to assert his ownership against another provides, of itself, no mandate for a judicial declaration that the ownership in whole or in part lies, in equity, in that other ... . Such equitable relief by way of constructive trust will only properly be available if applicable principles of the law of equity require that the person in whom the ownership of property is vested should hold it to the use or for the benefit of another. That is not to say that general notions of fairness and justice have become irrelevant to the content and application of equity. They remain relevant to the traditional equitable notion of unconscionable conduct which persists as an operative component of some fundamental rules or principles of modern equity (616) [9].
29 In Green v Green, Gleeson CJ acknowledged that such unconscionable conduct giving rise to a remedy of a constructive trust can arise in circumstances where a de facto partner has made a direct or indirect contribution towards the cost of acquiring, improving or maintaining a property. He stated:
Nevertheless, it is now well-settled that there are circumstances in which a court of equity will intervene to declare the existence of a proprietary interest in a family home on the part of [a] spouse or de facto partner, and the unifying principle underlying the cases where such intervention is regarded as appropriate is that in the circumstances of the case, and in accordance with equitable doctrines, it would be unconscionable on the part of the person against whom the claim is set up to refuse to recognise the existence of the equitable interest: Baumgartner v Baumgartner [1987] HCA 59; (1987) 164 CLR 137 at 147 per Mason CJ, Wilson and Deane JJ.
The most common case of intervention of that kind to be found in the law reports is the case where the person in whose favour a constructive trust is found has, directly or indirectly, made a financial contribution towards the cost of acquiring, improving, or maintaining the property in question (353).
30 Applying their principles in the present circumstances, I am not satisfied that it would be unconscionable to deny Ms Lambert a proprietary interest in the High Wycombe property. In my view, on the evidence before me, her contributions were minor, were made over a relatively short period and were more in the nature of establishing a comfortable co-existence rather than giving rise to an expectation that, by way of her contributions, she would receive an interest in the High Wycombe property.
31 One interesting aspect of this case is the question of whether, in view of my finding that Ms Lambert was not an innocent party as defined in the CPCA, she could complain that it would be unconscionable for her to be denied an equitable proprietary interest in the High Wycombe property, where the property was being confiscated as result of the commission of an offence on the property. It is unnecessary for me to decide this point in light of my finding that, in any event, no constructive trust arises for the reasons given above.
32 Accordingly, for the reasons I have given, the objections of Ms Lambert are dismissed and I find that the High Wycombe property and other property of Mr Russell are confiscated.
33 I will hear counsel as to the terms of the final orders.
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