Commissioner of Police v Keen
[2020] NZHC 3365
•16 December 2020
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2016-485-968
[2020] NZHC 3365
UNDER the Criminal Proceeds (Recovery) Act 2009 IN THE MATTER
of an application under sections 22, 24 and 25
BETWEEN
THE COMMISSIONER, THE NEW ZEALAND POLICE
Applicant
AND
TONY ROBERT KEEN
First Respondent
WENDY JANE MILLIGAN
Second RespondentAND
ANZ BANK NEW ZEALAND LIMITED
Interested Party
Hearing: 24 November 2020 Counsel:
A W M Britton and S McCusker for Applicant V C Nisbet and E Blincoe for First Respondent L C Ord for Second Respondent
Judgment:
16 December 2020
JUDGMENT OF ELLIS J
[1] On 5 November 2015, Police twice searched the respondents’ home at 2A Huia Street, Masterton.1 In one bedroom they found two “grow” tents, containing a total of 12 cannabis plants and 6 cannabis seedlings. Elsewhere, they found 72 g of
1 There were two searches: one warrantless and one warranted. Both searches were later held to be unlawful but the evidence obtained from the earlier (warrantless) search was ruled admissible under s 30 of the Evidence Act 2006.
COMMISSIONER OF POLICE v KEEN & ANOR [2020] NZHC 3365 [16 December 2020]
dried cannabis in four snap-lock bags, 18 tinnies, some cut tin foil, some scales, and a twenty dollar note.2
[2] During the second (warranted and more intrusive) search, Police found in the fridge a “Kinder Surprise” egg containing 18.5 g of cannabis oil. Also in the kitchen were empty plastic drums of isopropyl alcohol3 and a large stainless steel tray that contained cannabis oil residue.4
[3] No cash (apart from the $20 note—later returned by Police) was found at the home during the Police searches, and there was no evidence in the form of other property or lifestyle that suggested spending out of the ordinary.
[4] The first respondent, Mr Keen, was interviewed by Police immediately following the search. Relevantly, he said:
(a)He had undertaken three “grows” in the previous seven to eight month period, of which the last was by far the most successful. He denied any cultivation activity before then.
(b)He did not sell cannabis but would sometimes give it to friends.
(c)He was trying to keep his cannabis consumption down to two or three foils a day, and he was using methamphetamine a couple of times a week.
(d)He was out of work but had been doing some cash jobs; he had recently had to sell an expensive car (a Camaro) to help make ends meet.
(e)He took responsibility for a message on the second respondent’s Facebook (which had been found open at the time of the search) asking if he had any “green”.
2 Under Schedule 5 of the Misuse of Drugs Act 1975 it is presumed that an excess of 28 g of cannabis is for the purposes of supply.
3 This can be used to prepare cannabis oil.
4 The evidence of Detective Sergeant Dombroski explains that it is common for those cultivating cannabis to also produce cannabis oil in order to make maximum profit from their plants.
[5] The second respondent, Ms Milligan, had been sick in bed at the time of the searches. She later told Police that the cannabis operation had nothing to do with her and that she did not use the drug herself. She said she had asked Mr Keen not to grow it in the house, but he would not listen to her.
[6] The Commissioner of Police (the Commissioner) was on 6 December 2016 granted a without notice restraining order over 2A Huia Street under the Criminal Proceeds (Recovery) Act 2009 (the CPRA). The order was made on notice in February 2017. The Huia Street property was alleged to be “tainted”,5 and Mr Keen and Ms Milligan were also said to have unlawfully benefited from significant criminal activity.
[7] Mr Keen on 21 February 2017 pleaded guilty to charges of cultivation and possession of cannabis for the purposes of supply. He was sentenced by Judge Morris to six months’ community detention and nine months’ supervision.6 On 2 November that year, Mr Keen’s partner, Ms Milligan, was convicted and discharged on one charge of allowing the property to be used for the cultivation of cannabis.
[8] The Commissioner then, on 4 March 2019, applied for profit forfeiture orders under the CPRA against Mr Keen and Ms Milligan. In the application (as amended at the hearing before me), he says that Mr Keen and Ms Milligan received an unlawful benefit of $239,5207 from significant criminal activity—the cultivation and supply of cannabis. The only property liable to forfeiture is the 2A Huia Street property.8
Approach to profit forfeiture order applications
[9] Section 55(1) of the CPRA states that the Court must make a profit forfeiture order if it is satisfied on the balance of probabilities that:
5 Defined in the CPRA as any property that has been acquired or derived from significant criminal activity (see s 5).
6 R v Keen [2017] NZDC 13459.
7 As explained later, this figure was later slightly reduced by the Commissioner.
8 There is now no suggestion that the Huia Street property is, itself, tainted; it was acquired by the couple 15 years ago with legitimate funds. Nor is there any suggestion that any profit from the supply of cannabis has been used to pay the mortgage or on improvements.
(a)the respondent has unlawfully benefited from significant criminal activity within the relevant period of criminal activity; and
(b)the respondent has interests in the property sought to be forfeit.
[10] The Court must first determine whether the Commissioner has proved (on the balance of probabilities) that the respondent has unlawfully benefited from significant criminal activity during the relevant period. That requires that the respondent has knowingly, directly or indirectly, derived a benefit from significant criminal activity. It does not matter if they personally undertook, or were involved in, the activity. Wilful blindness is sufficient to meet the knowledge requirement.
[11] If that threshold is met, then, under s 53(1), the value of that benefit is presumed to be the value stated in the Commissioner’s application.
[12] This presumption may nonetheless be rebutted by a respondent, again on the balance of probabilities. As the Court of Appeal recently confirmed in Cheah v Commissioner of Police, it is not enough for the respondent to rebut the value nominated by the Commissioner or to critique the methodology relied on. The respondent must prove a different value.9 The Court recognised that while this burden gives rise to some potential for harshness, the respondent will always be best placed to explain not only in what respects the Commissioner’s assessment is wrong, but also what the correct figure should be.
[13] But the presumption does not in my view mean that the Commissioner can simply pluck a figure randomly out of the air and then require a respondent to call evidence to disprove it. That would constitute an arbitrary and wrongful exercise of statutory power. Rather, I would suggest that there must be a prior evidential burden on him to show the basis for the amount of the unlawful benefit claimed. Indeed, that is what the Commissioner invariably does. And if it becomes apparent—either as a result of the respondent’s evidence, cross-examination of the Commissioner’s witnesses, or simply as a matter of logic—that the presumed figure is wrong and another figure is (on the balance of probabilities) right, then the respondent will have
9 Cheah v Commissioner of Police [2020] NZCA 253 at [47].
discharged the reverse onus. Whether the Court then deals with the matter by amending the application under s 47 (as suggested by the Court in Cheah) or by making its own assessment based on the evidence as a whole, will depend on the circumstances of the case.
[14] Once the value of the benefit has been established (whether by the operation of the presumption or the rebuttal of it), the Court must then determine the “maximum recoverable amount” by subtracting the value of any property that has already been forfeited.
[15] Then the Court must consider whether any property should be excluded from the operation of the profit forfeiture order because undue hardship is likely to be caused to the respondent (or any person who has not unlawfully benefited from the significant criminal activity).
[16] Finally, the Court must make a profit forfeiture order if satisfied, on the balance of probabilities, that the respondent has interests in property.
Amendment to the unlawful benefit figure in this case
[17] The $239,520 figure specified in the application was based on the Police’s view that Mr Keen had grown and sold cannabis for the three years between the loss of his job in early 2013 and his arrest in late 2015. That assumption was, I think, initially based on Mr Keen’s admissions that his own cannabis use had increased markedly over that period and that he had a lot of spare time on his hands. But later, particular reliance was also placed on a statement made by the sentencing judge that:10
[4] The probation report speaks of someone who was out of work for some three years, and it is during this time that your addiction to cannabis accelerated and during that time that this commercial operation grew.
[18]I return to the significance of that statement later.
[19]In terms of how the $239,520 figure was arrived at:
10 R v Keen, above n 6.
(a)The evidence of Sergeant Dombroski (a Police drug expert) was that:
(i)the price of $350 an ounce (28 g) referred to in Mr Keen’s text messages was a standard price, with (1 g) tinnies selling for $20;
(ii)plants such as those found growing at Huia Street could be expected to yield between 3.5 and 5 ounces (or 100–150 g) of cannabis;
(iii)the method of growing used at Huia Street can yield four or five harvests a year (the plants at different stages of maturity found at the address representing three such potential harvests); and
(iv)the estimated value of all the cannabis found (both growing and dried) at Huia Street—depending on whether it was sold in tinnie form or by the ounce—was between $19,460 and
$34,260, plus $500 in cannabis oil.
(b)Mr Graham Beattie (a Police financial investigator) then calculated the likely past benefit of Mr Keen’s cultivation operation. He said:
If a similar amount had been grown at the potential yield of 4 harvests a year, this would provide a benefit of between
$77,840 and $137,040 per year.
(c)The lower $77,840 figure was then multiplied by three11 to give
$233,520. To this was added $6,000, to represent 12 cannabis oil sales of $500 each, giving the $239,520 total.
[20]The Commissioner acknowledged at the hearing of the application that this
$239,520 included the value of the dried cannabis, cannabis plants, and oil seized by Police. Those items were part of the grows for year three from which Mr Keen could not be said to have received any benefit. The Commissioner therefore reduced the
$239,520 figure by the value of the seized cannabis plants and products, giving a new
11 On the assumption that Mr Keen had been cultivating cannabis for supply at the same level for three years.
unlawful benefit amount of $204,760. As counsel for the Commissioner noted at the time, that concession was a generous one, because the initial figure was based on the lower Dombroski value, whereas the deduction was based on the higher Dombroski value.
[21] I made a direction under s 47 of the CPRA that the civil forfeiture order application be amended to substitute new unlawful benefit figure.
[22] During closing submissions, however, a further issue about the unlawful benefit figure was flagged by counsel for Mr Keen. Upon specific inquiry from me after the hearing, it become clear that it was necessary to make a further amendment. That was because the values taken from Sergeant Dombroksi’s evidence ($19,460 to
$34,260 for the cannabis found at the house) did not represent the value of a single grow, but rather the value of a little over three grows (the potential value of the plants, which were at three different stages of maturity, and the dried remainder of a previous grow). It seemed to be wrong, and inconsistent with Sergeant Dombrowski’s evidence, to multiply his two figures by four to get the annual unlawful benefit figure, as Mr Beattie had done. That seemed to me to be not simply a matter of critiquing the Commissioner’s methodology, but a fundamental error.
[23] Counsel for the Commissioner later confirmed the error and advised his revised calculations, as follows:
… over the three year period of alleged significant criminal activity, the unlawful benefit to the respondents fell between $73,500-$105,000.
Subtracting the value of the five mature cannabis plants and dried cannabis head seized of $34,260 produces and unlawful benefit figure between
$39,240-$70,740.
[24] The Commissioner did not go on to nominate a specific figure to be substituted. In light of his earlier (and in my view proper) approach—consistently adopting the lowest available figure—I now amend the application and substitute a new unlawful benefit figure of $39,240. That figure is also the maximum recoverable amount in terms of s 54. And it is that figure that the respondents now bear the onus of disproving, on the balance of probabilities.
[25] In my analysis below, I deal with the position of each of the respondents separately.
Mr Keen
Did Mr Keen unlawfully benefit from significant criminal activity?
[26] There is no dispute that the cultivation and possession of cannabis for supply qualifies as significant criminal activity; Mr Keen’s 2017 conviction on that charge establishes this element.12 But the conviction does not, by and of itself, establish either past supply or unlawful benefit.
[27] Both these matters are confirmed, however, by Mr Keen’s evidence at the hearing, which was largely consistent with his 2015 statement to police and (a little less so) his subsequent affidavit. Mr Keen’s position (which, as a matter of fact, I accept) has consistently been that he was growing cannabis for his own use or to swap for methamphetamine. Certainly the latter would qualify as an unlawful benefit, but the position in relation to the former is less clear and was not addressed by counsel.13 In any event, the texts put to him under cross-examination—which spanned the one- month period just before the November 2015 search—also show a number of requests made to Mr Keen to buy cannabis and (rather fewer) offers to sell made by him. The going rate was either $340 or $350 an ounce. And during cross-examination there was also the following exchange:
Q. … you were selling some of this cannabis for money?
A. Yes I did.
Q.And if you took the definition of commercial that it’s a transcript or you know you’re growing for money that’s in the sense what you were doing?
A. I was actually growing for personal use. People wanted some, I wanted to swap what they had, their product, yeah.
Q. But end of the day you were selling some of that cannabis for cash?
A. But I didn’t intentionally grow it to sell it.
12 Because possession for supply is an offence punishable by five or more years’ imprisonment.
13 The value of the cannabis used by Mr Keen personally would presumably constitute an unlawful benefit derived from relevant significant criminal activity, namely cultivating cannabis.
Q.But as a spinoff you were, would you say, that some of that cannabis was being sold for money?
A. A little bit.
[28]Accordingly, the real issue in Mr Keen’s case is whether he has rebutted the
presumed value ($39,240) of the unlawful benefit he received.
Has Mr Keen rebutted the presumed unlawful benefit of $39,240?
[29] Whether the presumption can be rebutted essentially depends on whether I am satisfied on the balance of probabilities that Mr Keen did not grow cannabis:
(a)on the scale alleged by the Commissioner (namely on a scale that is reflected in the number of plants found during the Police search); and/or
(b)from the beginning of 2013, which was the starting point for the Commissioner’s analysis.
[30] The first point can immediately be put to one side; although he consistently maintained that he was growing largely for his own use, Mr Keen did not claim that the former grows had been on a smaller scale.
[31] As to the second point, Mr Keen’s evidence was that he was not engaged in any cultivation before 2015 and that in that year he undertook three grows. He said the first of these was ruined by mites and the second also had mite issues, although he was able to harvest some low grade “cabbage”, which he only smoked himself.
[32] On this last point, I accept the evidence of Sergeant Dombroski that the remainder of (what Mr Keen said was) the second grow was of a considerably higher quality than Mr Keen would have it. As well as Sergeant Dombroski’s undoubted expertise, the photos of the bagged cannabis clearly indicate a good quality crop. But because of the concession recorded at [20] above (that the potential sale price of the cannabis found during the search is not counted as part of the unlawful benefit) this makes no difference to the presumed amount.
[33] The more difficult question relates to the duration of Mr Keen’s growing activity. In that respect the Commissioner sought to fortify his position that Mr Keen had been cultivating for supply for the three years before the search in late 2015 by reference to:
(a)Mr Keen’s sentencing notes;
(b)Mr Keen’s tax records;
(c)Mr Keen’s estimated methamphetamine use over that three-year period, and the funds he would have needed to fund that habit;
(d)unexplained cash deposits in the couple’s bank accounts totalling a little over $17,000; and
(e)two cash purchases, totalling $400, made at Countdown by Ms Milligan shortly after the search of the property and seizure of the cannabis.
[34]I address each in turn.
Sentencing notes
[35] Based on the passage from Judge Morris’ sentencing notes, quoted at [17] above, the Commissioner submitted that Mr Keen had himself admitted that his “commercial” operation was related to, and coincided with, his increased spare time and increased personal use of cannabis after the loss of his job in 2013.
[36] In my view, however, it is drawing a long bow to interpret this passage as reflecting any kind of acceptance by either the Judge or Mr Keen that he had been growing cannabis commercially since 2013. The statement was expressly based on the advice in Mr Keen’s Provision of Advice to Courts (PAC) report, which (in fact) stated:
[Mr Keen] advised that after losing his employment approximately three years ago his cannabis use increased significantly due to being depressed and having plenty of spare time, thus resulting in the growing operation to provide for his
increased use. He advised that he normally smoked 5-6 ‘tinnies’ per day during this period.
[37] Given that the PAC report was written in February 2017, Mr Keen’s reference to losing his job “approximately three years ago” suggests only that he had been unemployed since the beginning of 2014 (not 2013). And while it does suggest that there was some connection between the evolution of his growing operation and his unemployment, there is nothing to suggest that they precisely coincided. Rather, it is generally consistent with Mr Keen’s narrative of the operation evolving slowly over time, initially at least as a result of his own increased use.
Tax records
[38] Mr Keen’s tax records show no declared income from the end of the 2012/13 tax year (that is, from 31 March 2013). This assists in establishing the start date for his unemployment. By and of itself it is of no real assistance is establishing the start of his cannabis growing operation. That depends on a specific temporal link between the two events being supported by other evidence.
Methamphetamine spending
[39] When Mr Keen was first interviewed by Police, he admitted to smoking methamphetamine. When asked how often he smoked it, he said, “lately been a couple of times a week”. In his later affidavit, Mr Keen’s evidence was that he had been using about two points (0.2 g) a month for two or three months before his arrest.
[40] But Ms Milligan’s affidavit evidence was that at the point of their arrest Mr Keen had been in the throes of a methamphetamine addiction for some time, which he had funded by the sale of a Camaro motor vehicle. That evidence was not inconsistent with what Mr Keen had first told Police, and it was later corroborated by inquiries made by them, which showed that the sale of the vehicle occurred in April 2013. Police confirmed that the sale price was $33,000, of which $10,000 was paid in cash. Mr Keen and Ms Milligan also said that he had sold his Harley Davidson motorbike for around $12,500 at about this time.14
14 Although there was evidence of the bike having been advertised for sale by Mr Keen on Trademe, there was no independent evidence as to whether or when it had been sold, or for what price.
[41] Evidence was called by the Commissioner that a methamphetamine habit involving the consumption of two points a week over the course of year would cost
$10,400.15 I accept that evidence and also that Mr Keen’s methamphetamine usage
was likely in that order. And I find that while Mr Keen’s habit in 2013 may (as Ms Milligan said) have been funded by the sale of one or both vehicles, by early 2014 the position had changed. This is consistent with other objective evidence about the couple’s straitened financial circumstances in 2014. Based on Sergeant Dombroski’s evidence I consider that, from the beginning of 2014 until the end of 2015, the respondents would have needed an extra $10,400 a year to support Mr Keen’s methamphetamine use.
Cash deposits
[42] I begin this part of my analysis by noting that Ms Milligan had a full-time job (working in a bank) during the period in question. By 2015, her salary was in the vicinity of $70,000 a year. While it could not be suggested that the couple was well off (particularly in light of the cost of Mr Keen’s addiction), there was a legitimate source of income from which they could meet their living costs. The present circumstances are not, therefore, the same as those found in many profit forfeiture cases, where a respondent simply has no explanation (other than the illegal activity said to give rise to the unlawful benefit) as to how day-to-day expenses costs were met.
[43] Similarly, there is no evidence of any of the ordinary indicia of a longstanding or profitable drug supply business. Ms Milligan drives a 20-year-old car. Their home and chattels are very modest. There is no suggestion of extravagance of any kind. No cash (apart from the $20 note that was later returned to Mr Keen) was found at the house or elsewhere. This is not a case where the Court is faced with lavish expenditure and a respondent who is unable to explain how it was funded.
[44] But now the question of the unexplained deposits. Although Police analysed the couple’s bank accounts from the beginning of 2013 to just after their arrest in
15 Sergeant Dombroski’s evidence at the hearing was that a point of methamphetamine can yield between four and eight “hits”.
November 2015, there were no unexplained cash deposits identified until 2 December 2013. That is consistent (in my view) with Mr Keen funding his drug habit during 2013 from the proceeds of the vehicle sales and inconsistent with (or at least not supportive of) any cash proceeds from cannabis sales during that year.
[45] But from 2 December 2013 until the end of November 2015, there were 23 unexplained cash deposits made into Ms Milligan’s bank account, totalling
$17,665. Of these:
(a)there are seven (five of which are for sums between $1000 and $1500) between March 2014 and August 2015 that bear the notation “TK wages”;16
(b)there is a deposit of $1,600 with the notation “Sarah” made on
10 August 2015; and
(c)there are two for $1,000 made a week apart over the 2013/14 Christmas/New Year period.
[46] I accept the explanation given by Ms Milligan (who was in charge of the couple’s finances and made the deposits) for all the deposits just mentioned. She said that the notation “TK wages” was an abbreviation of “Tony Keen wages” and signified that the deposits were cash Mr Keen had received from doing under-the-table plastering jobs.17 As noted earlier, Mr Keen acknowledged to Police from the outset that he had been undertaking such jobs. The fact that he chose not to pay tax on them is neither here nor there, for present purposes at least. There was also corroborating evidence from Mr Keen himself and from Ms Milligan’s father as to the source of some of those jobs.
[47] The suggestion that these notations were part of some sort of ruse, in case the accounts might one day be scrutinised defies common sense. If that had been so, one would expect all the cash deposits to be so annotated. And with no disrespect intended,
16 The other two are for $380 and $2520.
17 Plastering is Mr Keen’s trade.
neither Mr Keen nor Ms Milligan strike me as sophisticated enough to engage in a calculated deception of that kind.
[48]I also accept Ms Milligan’s evidence that:
(a)The notation “Sarah” was also a reference to money received by Mr Keen for a cash plastering job done for friends; and
(b)The two $1,000 deposits made a week apart in December 2013 and January 2014 represented the price received from the sale of two puppies bred by Ms Milligan.18
[49] Removing these explained amounts from the calculations leaves unexplained deposits totalling $4,055:
2 December 2013 $785 17 January 2014
$300
24 March 2014
$350
12 May 2014
$200
26 May 2014
$200
11 August 2014
$180
10 September 2014
$100
29 September 2014
$100
20 October 2014
$340
17 July 2015
$1,500
[50] It is difficult not to dismiss these deposits as de minimis. Nonetheless, it must be accepted that they do coincide with the period in which—based on the other evidence—I find that Mr Keen’s cannabis growing operation took off in earnest.
18 Again, there was quite detailed corroborating evidence from both Mr Keen and Mr Milligan about the dogs, which I found plausible.
One Card records
[51] Other evidence produced by the Commissioner was the analysis of Ms Milligan’s One Card records over a two-year (2014/15) period. These showed that on two occasions over a three-year period she paid for groceries in cash.19 The combined total of the purchases was $411.70. I also regard these as de minimis, and indicative of no more than that the purchases were made using cash.
Conclusion: amount of unlawful benefit
[52] I do not accept Mr Keen’s evidence that there were only three grows or that these were limited in time to the seven to eight months before his arrest. But I do consider that the respondents have rebutted the presumption to the extent that I am satisfied that no unlawful benefit was obtained from any cannabis growing operation until the beginning of 2014.
[53]Based on Sergeant Dombroski’s evidence, therefore, I find that:
(a)There were eight grows (the last of which is the seedlings seized);
(b)Based on the Commissioner’s latest calculations20 those grows give rise to an unlawful benefit amount of $49,000 ($24,500 per year);
(c)Subtracting the value of the cannabis seized ($34,760) gives a total unlawful benefit of $14,240.
[54] Those figures are consistent with, and account for, the cost of Mr Keen’s methamphetamine addiction and also subsumes the residual amount of the unexplained deposits.
[55] So the presumption is rebutted to that extent. I find the value of the unlawful benefit obtained by Mr Keen is $14,240. That is also the maximum recoverable amount.
19 Both occasions were after the 5 November search.
20 As noted at [23] above.
Ms Milligan
Did Ms Milligan unlawfully benefit from the significant criminal activity?
[56] While the Commissioner acknowledges that Ms Milligan was not directly involved in Mr Keen’s cultivation and supply of cannabis, he says that she knowingly derived a benefit from his significant criminal activity and therefore received an unlawful benefit for the purposes of s 7 of the CPRA.
[57] I agree with the Commissioner that, although Ms Milligan may not have been happy about it, she must have known that Mr Keen was involved in the qualifying criminal activity. More particularly:
(a)it would have been evident from paraphernalia of the sort found in the living room of the property—plastic bags, scales, and tin foil—that Mr Keen was supplying cannabis and not just growing it for his personal use; and
(b)Ms Milligan allowed her mobile phone and her Facebook account to be used by Mr Keen to communicate with customers for the sale of cannabis.
[58] Ms Milligan’s conviction for permitting the house to be used by Mr Keen for the cultivation of cannabis supports that view. At best, it could be said that she was wilfully blind to what was going on under her roof.
Amount of the unlawful benefit
[59] The unlawful benefit enjoyed by Ms Milligan must be the same as that enjoyed by Mr Keen: $14,240. The simple reason for that is that couple had joint finances; a benefit received by one of them—either in money or money’s worth—was a benefit to them both. So, for example, if Mr Keen sold or swapped cannabis for methamphetamine that he then smoked, that was of benefit to Ms Keen because that was an expense that did not need to be met out of their joint account.
[60]And again, the maximum recoverable amount is $14,240.
Undue hardship
[61] Both Mr Keen and Ms Milligan have applied under s 56 of the CPRA for an order excluding the 2A Huia Street property from the reach of the assets forfeiture order. They each hold a half-share in the property.
[62]Section 56 of the CPRA relevantly provides:
56 Exclusion of respondent’s property from profit forfeiture order because of undue hardship
(1)The High Court may, on an application made by the respondent before a profit forfeiture order is made, exclude certain property from being able to be realised under section 55(2)(c) if it considers that, having regard to all the circumstances, undue hardship is reasonably likely to be caused to the respondent if the property were realised.
(2)The circumstances the Court may have regard to under subsection (1) include, without limitation,—
(a)the use that is ordinarily made, or was intended to be made, of the property that is, or is proposed to be, the subject of the profit forfeiture order; and
(b)the nature and extent of the respondent's interest in the property; and
(c)the circumstances of the significant criminal activity to which the profit forfeiture order relates.
[63] I do not propose to deal with the relevant authorities on “undue hardship” in any detail here; the principles are well known. The threshold is high. The claimed hardship must be disproportionate. The need for deterrence is said to outweigh the needs of the wrongdoer. And the fact that a respondent may, as a result of a forfeiture order, become reliant on the State for housing during a housing crisis is, apparently, of little consequence.
[64] Even applying these rather swingeing and unforgiving principles, however, I consider undue hardship has been made out by both Mr Keen and Ms Milligan here. The significantly reduced quantum of the unlawful benefit favours them greatly in terms of disproportionality as does the nature and seriousness of their offending. On any analysis, it is at the lowest qualifying level; their sentences (or, in Ms Milligan’s case, the absence of any sentence) makes that clear.
[65]I make the following, additional, “proportionality” points:
(a)The house is the respondents’ family home and was purchased by them from legitimate funds over 10 years ago. It is now worth in the vicinity of $400,000, although the respondents have a mortgage of around
$150,000.
(b)Given their age and current employment status, and Ms Milligan’s health (discussed below), it seems highly unlikely that the respondents would ever be able to buy back into the housing market, if this property is lost to them.
(c)The (admittedly limited) evidence also suggests that they would not be able to rent an equivalent house in Masterton for the amount of their current mortgage payments. They would need to seek further State assistance.
(d)Mr Keen’s offending was plainly driven by his addiction and the loss of his job. His more recent ability to obtain employment has been affected by the COVID-19 pandemic.
(e)Notwithstanding that the law requires me to conclude that Mr Keen and Ms Milligan have enjoyed an unlawful benefit from their offending, the fact of the matter is that pretty much the entirety of it has been smoked by Mr Keen.
[66] As well, it is not disputed that Ms Milligan has experienced severe physical and mental health issues since 2015. I do not propose to detail her afflictions here. I simply record that she is undoubtedly vulnerable and, although one aspect of her medical troubles has recently been resolved, there remains an underlying condition that can only be treated, not cured. I do not accept the suggestion that the loss of her home would not exacerbate this illness; it is impossible to see how it would not. Nor do I accept the Commissioner’s proposition that, due to the ongoing financial pressures the couple is under, it might come as a relief to them to have their house forfeit.21
21 The submission was that: “The making of the forfeiture order sought may in fact have the effect of reducing any hardship experienced by Mr Keen and Ms Milligan – forfeiture will have the
[67]Undue hardship is, accordingly, established here.
[68] For completeness, I record that I would also have found undue hardship established had the quantum of unlawful benefit been in the Commissioner’s higher presumed amount of $39,240.
Result
[69]In terms of s 55 of the CPRA, I make the following orders:
(a)the respondents have unlawfully benefited from significant criminal activity (the cultivation and supply of cannabis) during the relevant period of criminal activity;
(b)the respondents have interests in property, namely the property situated at 2A Huia Street and described in certificate of title WN665/67, legal description Lot No 9 Deposited Plan 17879;
(c)the value of the benefit determined under s 53 is $14,240;
(d)the maximum recoverable amount under s 54 is $14,240; and
(e)under s 56, the respondents’ interests in the property situated at 2A Huia Street and described in certificate of title WN665/67, legal description Lot No 9 Deposited Plan 17879 is excluded from the order and may not be disposed of under s 55(2)(c), on the grounds that undue hardship is likely to be caused to the respondents if the property were realised by the Crown.
Rebecca Ellis J
Solicitors:
Luke Cunningham and Clere, Wellington for Applicant Val C Nisbet, Wellington for First Respondent
Ord Legal, Wellington for Second Respondent
effect of releasing them from a financial burden which they have been unable to satisfy for a substantial period of time.”
3