Commissioner of Police v Elliot HC Gisborne CIV 2010-416-0065
[2011] NZHC 1640
•28 October 2011
IN THE HIGH COURT OF NEW ZEALAND GISBORNE REGISTRY
CIV 2010-416-0065
BETWEEN THE COMMISSIONER OF POLICE Applicant
ANDRODNEY GEORGE ELLIOT Respondent
Hearing: 28 October 2011
Counsel: N Graham for Crown
J Krebs for Accused
Judgment: 28 October 2011
(ORAL) JUDGMENT (NO. 3) OF HEATH J
Solicitors:
Crown Solicitor, Gisborne
Counsel:J Krebs, Napier
THE COMMISSIONER OF POLICE V ELLIOT HC GIS CIV 2010-416-0065 28 October 2011
Introduction
[1] Last year, Mr Elliot pleaded guilty to charges of cultivating and selling the Class C controlled drug cannabis. Prior to the sentencing process, the Commissioner of Police sought an instrument forfeiture order under s 142N of the Sentencing Act
2002. I gave judgment on that application on 19 August 2010. I decided that a forfeiture order should be made in respect of a property situated at 42 Moana Road, Wainui Beach, Gisborne.
[2] I excluded from the forfeiture order amounts payable to a mortgagee and to a third party, Ms Christie. Ms Christie is Mr Elliot’s de facto partner. They are shortly to be married.
[3] I declined to grant relief in favour of Mr Elliot from a complete forfeiture. That decision was reached on jurisdictional grounds. I took the view that s 142N did not permit the Court to make a partial forfeiture order, in respect of real property.[1]
[1] R v Elliot HC Gisborne CRI 2009-016-3799, 19 August 2009 at paras [69]–[75].
[4] I sentenced Mr Elliot on 27 August 2010. In light of the form of the forfeiture order I had indicated would be made, Mr Elliot was sentenced to a term of supervision of 12 months. The final form of the forfeiture order was settled and made on 8 November 2010.[2]
[2] R v Elliot (No. 2) HC Gisborne CRI 2009-016-3799, 8 November 2010 para [9] and Schedule.
[5] Mr Elliot appealed against the forfeiture order on the grounds that I erred in holding there was no jurisdiction to make a partial forfeiture order. The appeal was allowed on that basis.[3] Both the forfeiture order and the sentence imposed were set aside and remitted for reconsideration by this Court in accordance with the principles
[3] Elliot v R [2011] NZCA 386.
set out in the Court of Appeal’s decision.[4]
[4] Ibid, at para [56].
[6] The Court of Appeal was mindful of a comment I had made that, if jurisdiction had existed, I would have been minded to make an order permitting Mr Elliot to retain some of the proceeds of sale of the Wainui Beach property.
[7] I reheard the application today. This judgment deals only with the forfeiture application. Following determination of the application, I shall hear further from counsel and then proceed to sentence Mr Elliot.
Background
[8] The original application was heard on 5 and 6 August 2010. I heard oral evidence from both Mr Elliot and Detective Eric Hunter, of the Gisborne Police, about the cannabis cultivation that took place at the Wainui Beach property. The evidence considered the level of sophistication of the hydroponic operation, the growing cycle of the plants, the potential yield and the frequency and number of sales or supplies while the cultivation continued.
[9] Following that evidence, I made a number of factual findings, both for the purpose of sentencing and the forfeiture application. I accepted, from photographic evidence, that a “tidy and functional cannabis growing operation, was carried out”. Use of the hydroponic system pointed to cultivation for commercial purposes, as did the number of plants found at Moana Road. The operation was undertaken from two rooms in a garage area of the property. One was used to grow mother plants, to take cuttings from them that could be cloned and to grow further plants. The other was used to provide a suitable environment for the flowering of the plants.
[10] Detective Hunter had opined that Mr Elliot was making a profit from cannabis sales, within the range of $15,000 per annum to $90,000 per annum. Based on the evidence I heard I assessed the annual yield to be $30,000 per annum. Over a period of three years that made a total yield of $90,000.[5]
[5] R v Elliot HC Gisborne CRI 2009-016-3799, 19 August 2009 at para [35].
[11] For the purpose of today’s hearing, Mr Elliot filed additional evidence by which he sought to “correct” some of my findings, by reference to documentary
evidence not made available at the first hearing. The primary focus of the additional evidence was designed to demonstrate that Mr Elliot had been in paid employment for longer than I had found to be the case. If accepted, that evidence could have had a bearing on the likely yield from the cultivation activities.
[12] The additional evidence was directed, in part, to the extent of Mr Elliot’s employment with his former de facto partner, Ms Rae from 2004. The evidence in August 2010 had suggested that relationship ceased at the end of 2006, whereas Mr Elliot in his present evidence said it continued until August 2008. During the period between June and August 2008 Mr Elliot was paid sums of $500 on a weekly basis by Ms Rae. It was put to Mr Elliot in cross-examination that those sums were in fact repayment of a loan made to Ms Rae for her bakery business. Mr Elliot denied that was the case.
[13] The problem with the evidence is that it is inconsistent with that of Ms Christie, on the basis of which an allowance was made to her on Property (Relationship) Act principles.
[14] I do not intend to discuss Mr Elliot’s evidence. It is unreliable. It does not persuade me to depart from my previous findings of fact. That means the present application must be considered in light of my finding that the yield from the cannabis growing operation was something in the vicinity of $90,000 over a period of three years.
Should a forfeiture order be made?
[15] The Court of Appeal determined that I had interpreted s 142N(1) incorrectly in ruling that there was no jurisdiction to make a partial forfeiture order. Section
142N(1) provides:
142N Instrument forfeiture orders
(1) Following a hearing under section 142K, the court may, if it is satisfied that the property described in the notice given under section 142B is an instrument of crime, order that the instrument of crime or any part of it specified by the court be forfeited to the Crown.
...
[16] In a judgment delivered by Venning J, the Court of Appeal considered that the addition of the words “or any part of it” were designed to reverse the effect of the Court of Appeal’s earlier judgment in R v Dunsmuir.[6] That decision was given in respect of s 15(1) of the former Proceeds of Crime Act 1991. In drawing that conclusion, the Court referred also to a previous call made by it for an amendment to the law allowing partial forfeiture, in Lyall v Solicitor-General.[7] The Court of Appeal took the view that s 142N bridged the gap that Dunsmuir had found to exist.
[17] The Court of Appeal also provided assistance on questions of mechanics where partial forfeiture orders were made. A indicative draft order was set out in the Court of Appeal’s judgment.[8] While a percentage figure was used by the Court of Appeal, it was made clear that a final assessment was for me to determine.[9]
[18] In my decision on the original forfeiture application I identified a number of factors that could be brought to account in determining whether “undue hardship” had been established to deny forfeiture.[10] Those factors remain applicable (and indeed assume greater significance) on consideration of partial forfeiture. I said:
[6] R v Dunsmuir [1996] 2 NZLR 1 (CA) at 3–4.
[7] Lyall v Solicitor-General [1997] 2 NZLR 641 (CA) at 647 set out in Elliot v R [2011] NZCA 386 at para [26].
[8] Elliot v R [2011] NZCA 386 at para [50].
[9] Ibid, at para [51].
[10] R v Elliot HC Gisborne CRI 2009-016-3799, 19 August 2009 at paras [69]–[71].
[71] In determining whether “undue hardship” has been established, I
take the following factors into account:
a) The property is no longer used as a family home.
b)The value of the property. The two valuations have reached a similar conclusion; one valuing the property at $490,000 and the other at $480,000.
c)Mr Elliot is the registered proprietor of the property. The only other interests to be taken into account are those of the Bank of New Zealand and Ms Christie.
d)The commercial cultivation occurred over a period of three years, with a yield of about $90,000 during that time. The offending took place exclusively from the property. There are also admissions from Mr Elliot of earlier involvement in cultivation of cannabis.
e)Mr Elliot has admitted illegal use of Class C controlled drug cannabis since he was aged 15; a period of some 37 years. Only since he faced the possibility of losing the Moana Road property has he taken any steps to desist from using the drug.
f) The property has been owned by Mr Elliot since 1988, was acquired from legitimate sources, and was refinanced by him to meet a matrimonial property settlement with his ex wife.
g) If forfeiture were not denied, Mr Elliot would be left without capital at the age of 53 years, making it difficult for him to re-establish himself financially.
h)The cultivation operation is a medium size commercial venture. In terms of the gravity of the offending, a starting point of something in the order of three to four years imprisonment would, ordinarily, be taken.
[19] Having identified as factors weighing in favour of Mr Elliot, “the financial impact of a forfeiture order and the fact that the property was acquired from legitimate sources”, I said:
[73] Viewed in terms of the policy of the Act, I see no basis on which I can justifiably refuse a forfeiture order, having regard to the factors in favour of making one. While the result is harsh, Mr Elliot will receive the advantage of a benign sentence. Had jurisdiction existed, I would have been minded to grant Mr Elliot a not insignificant monetary interest so that he was not left without capital at his age and likely earning capacity. While the absence of such a jurisdiction reflects Parliament’s intention that the best way to deter crime is to put significant assets at real risk of forfeiture, there are other risks inherent in not granting any relief to someone such as Mr Elliot; for example, he might become a burden on the State or, worse, be given an incentive to reoffend to restore his capital base. (my emphasis)
[20] Those considerations continue to weigh with me. The impact on Mr Elliot needs to be considered in the context of the yield from illicit activity. In terms of the previous orders, the interest of the Bank of New Zealand, as mortgagee, and Ms Christie have been protected. The question today is what further amount should be carved out of the forfeited property for Mr Elliot’s benefit.
[21] Counsel have referred me to a number of decisions given before and after the Court of Appeal’s ruling in this case. However, this is an area in which all cases turn on their own facts. The assessment of the extent of forfeiture is one of judgment and degree.
[22] Taking account of the factors to which I referred in my earlier judgment, I conclude that an appropriate allowance to Mr Elliot, to meet the public policy concerns I identified (particularly the possibility of a perverse incentive to reoffend to restore a capital base) is 40% of the net proceeds of sale. That allowance takes into account the likelihood that Ms Christie’s protected interest and that awarded to Mr Elliot will be combined for use as a matrimonial fund, from which living expenses can be paid.
[23] A subsidiary issue was raised in relation to alleged outstanding fees to Mr Elliot’s former counsel, Mr Snell. At the time Mr Snell sought to intervene in the proceeding, no challenge to the quantum of his fee had been made. That situation has changed, in consequence of Mr Snell’s application in this case.
[24] In light of the order I have made and the time it will take before payment is made to Mr Elliot, I consider that Mr Snell should be left to his civil remedies regarding any outstanding costs. If he were to justify his position that the costs were reasonable and payable by Mr Elliot, it would be open to him, for example, to seek a charging order over the funds pending payment.
[25] In those circumstances, I do not consider it is appropriate for this Court to
make any allowance to reflect Mr Snell’s claims for outstanding fees.
Result
[26] I make the following orders:
(a) This order relates to 42 Moana Road, Okito, Gisborne registered in the name of Rodney George Elliot (the property) (s 70(1));
(b)The Court considers the present value of the property to be $485,000 (s 142N(4));
(c) Ms Christie has an interest in the property to the value of $20,000 (s 142N(3)(a));
(d)60% of Rodney George Elliot’s interest in the property is forfeited to the Crown (s 142N(1));
(e) The property is vested in the Crown absolutely and is to be in the custody and control of the Official Assignee (s 70(1));
(f) After repayment of the monies secured by the BNZ mortgage and payment of the $20,000 to Ms Christie, the Crown is to account to Rodney George Elliot for 40% of the monies paid to it by the Official Assignee pursuant to s 85(d) of the Criminal Proceeds (Recovery) Act
2009 (s 142N(3)(b)). By consent the Crown shall pay the amount due to Rodney George Elliot to his solicitors, of Langley Twigg, Napier,
for his credit.
P R Heath J
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