Commissioner of Police v Ladbrook

[2018] NZHC 1227

IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY

I TE KŌTI MATUA O AOTEAROA WAIHŌPAI ROHE

CIV-2013-425-000334

[2018] NZHC 1227

BETWEEN

THE COMMISSIONER OF THE NEW ZEALAND POLICE
Applicant

AND

DIRK JAMES LADBROOK

Third Respondent

Hearing:

8 May 2018

Appearances:

R W Donnelly for the Applicant

R G R Eagles for the Third Respondent

Judgment:

29 May 2018

JUDGMENT OF NATION J

Introduction

[1]    The Police Commissioner seeks profit forfeiture orders under the Criminal Proceeds (Recovery) Act 2009 (the Act) on the basis that the third respondent, Dirk James Ladbrook, has unlawfully benefitted from significant criminal activity. The orders sought are for a 2008 Harley Davidson Motorcycle (registration 44ZSD) and a residential property at 306 Crinan Street, Invercargill owned by Mr Ladbrook.

[2]    On 6 December 2013, the Commissioner of Police (the Commissioner) obtained restraining orders preventing any dealing with the above assets. On 27 June 2014, the Commissioner filed an application for profit forfeiture orders under the Act.

POLICE v LADBROOK [2018] NZHC 1227 [29 May 2018]

That application specifies that Mr Ladbrook had unlawfully benefited from cultivating cannabis,1 selling a Class C drug,2 possession of a Class C drug,3 and theft.4

[3]    In the application, the Commissioner claimed the value of the unlawful benefit which Mr Ladbrook had obtained from significant criminal activity was $241,025. On 22 August 2016, Mr Ladbrook filed a notice that he intended to oppose that application. He denied he had benefited to the value of $241,025 from significant criminal activity. He further sought relief from forfeiture on the basis that full forfeiture would cause undue hardship.5

The Criminal Proceeds (Recovery) Act 2009

[4]    Section 55 of the Act provides that, if the High Court is satisfied on the balance of probabilities, that the respondent has unlawfully benefited from significant criminal activity within the “relevant period of criminal activity” and has interests in property, then the Court must make a profit forfeiture order in respect of that property.

[5]“Significant criminal activity” is defined in the Act to mean:6

(a)        one or more offences punishable by a maximum term of five years’ imprisonment or more; or

(b)        an offence from which property, proceeds, or benefits of a value of

$30,000 or more have, directly or indirectly, been acquired or derived.

[6]    The term “unlawfully benefited from significant criminal activity” means the person has “knowingly, directly or indirectly, derived a benefit from significant criminal activity (whether or not that person undertook or was involved in the significant criminal activity)”.7

1      Misuse of Drugs Act 1975, s 9(1).

2      Misuse of Drugs Act 1975, s 6(1)(e).

3      Misuse of Drugs Act 1975, s 6(1)(e).

4      Crimes Act 1961, s 219(1)(a).

5      Criminal Proceeds (Recovery) Act 2009, s 56.

6      Criminal Proceeds (Recovery) Act 2009, s 6.

7      Criminal Proceeds (Recovery) Act 2009, s 7.

[7]    Section 53 provides that the value of that benefit is presumed to be the value stated in the application if the Commissioner proves, on the balance of probabilities, that the respondent has, in the relevant period of criminal activity, unlawfully benefited from significant criminal activity. The respondent can, however, rebut that presumption on the balance of probabilities.8

[8]    The Court is then required to determine the maximum recoverable amount. Section 54 provides that the maximum recoverable amount is the value of the benefit under s 53, less the value of any property forfeited to the Crown as a result of an assets forfeiture order made in relation to the same significant criminal activity. Thus, if an assets forfeiture order is made, the terms of the profit forfeiture order must be adjusted to reflect that.9

[9]    Under s 56, the Court must determine 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 if such property were realised.

[10]   Once the Court has undertaken such of these exercises as may be relevant, it must make a profit forfeiture order under s 55(1) if it is satisfied, on the balance of probabilities, that the respondent has interests in property. Any such order must specify the value of the benefit, the maximum recoverable amount, and the property that is to be disposed of.

Mr Ladbrook’s serious criminal offending

[11]   There is no dispute that Mr Ladbrook was involved in serious criminal offending, as defined in the Act. Mr Ladbrook has been convicted of cultivating cannabis, selling a Class C drug, possession of a Class C drug, and theft. He pleaded guilty to those charges on 22 June 2014 and was sentenced to three years’ imprisonment.

[12]   The evidence which the Police relied upon, in initially seeking a restraining order, was contained in an affidavit of Detective Beswick. It largely repeated what

8      Criminal Proceeds (Recovery) Act 2009, s 53(2).

9      Criminal Proceeds (Recovery) Act 2009, s 50. No assets forfeiture order is made here.

was set out in a summary of facts supporting charges to which Mr Ladbrook pleaded guilty.

[13]   The summary explained that a search of Mr Ladbrook’s property arose out of a Police investigation, between December 2012 and November 2013, of members and associates of the Invercargill and Dunedin chapters of the Road Knights motorcycle gang. The investigation included the interception of incoming and outgoing voice calls. On 22 July 2013, the Police intercepted a conversation between Mr Ladbrook and Christian Dollman, the president of the Invercargill Road Knights. During that conversation, the two discussed a recently harvested crop of cannabis belonging to Mr Ladbrook.

[14]   On 24 July 2013, Police executed a search warrant at the residential address of Karl Dollman. The Police located a “tick book” which outlined a series of financial records totalling $12,480 that had been “paid to Dirk”. It was apparent that, through intercepted communications and the $400 monetary amounts contained within the tick book, these payments were for large quantities of cannabis which Karl Dollman had purchased off Mr Ladbrook.

[15]   On 31 October 2013, the Police executed a search warrant at Mr Ladbrook’s residential address. The summary describes a sophisticated indoor growing operation in a number of vacant rooms inside the property, designed to allow the growing of cannabis on an ongoing basis:

(a)        In the bathroom, 46 cannabis seedlings were being grown under lights within polystyrene fish containers and in buckets of soil.

(b)        In a spare bedroom, 21 maturing cannabis plants were located ranging from 90 to 120 centimetres in height, being grown under lights in soil in plastic bags.

(c)        Contained in another spare bedroom at the property were 19 cannabis plants in a vegetative state of growth, ranging from 60 to 80 centimetres in height, being grown under lights in plastic bags. There was white reflective lining around the walls to reflect light and heat, high-density

discharge lights and shields hanging from the ceilings, ballasts, plastic ducting running from each of the rooms with carbon filters to extract the odour of the cannabis, oscillating fans, dehumidifiers and electronic timers.

(d)        Located on the outside of each of the three growing room walls were 2013 calendars outlining dates of previous cannabis cultivations that occurred on 3 March, 19 May, 5 June and 14 September 2013. These calendars also contained key dates for fertiliser and nutrient feeding as well as temperatures.

(e)        Located in another room of the house were a number of lateral branches from cannabis plants that had been recently harvested and were hanging and drying from a string. To assist the drying process, an oscillating fan and heater were operating in the room. When the cannabis was manicured and weighed by Police at a later date, there were 44 ounces of dried usable cannabis with a street value of $17,600.

(f)         Also scattered around the address were various pieces of cultivation equipment such as high-density discharge bulbs, stakes, ballasts and various plant food nutrients used for growing cannabis.

(g)        The electronic meter at the property had been tampered with. There were wires hanging from it. In the summary, it was said this had been done so as “not to raise suspicions with the power company”.

[16]   As to yield, the summary said a cannabis cultivator can expect to obtain between three to five ounces of dried usable cannabis head from each cannabis plant as they grow through to maturity. The summary said the 86 cannabis plants grown by the defendant were in excellent condition, high grade and could conservatively generate three to five ounces of dried usable cannabis per plant which was being sold for $400 per ounce. A successful cannabis growing operation indicates significant experience and/or skill on behalf of the grower.

[17]   The summary said the total yield between 3 March 2013 to 31 October 2013 (138 cannabis plants) would be between 414 to 690 ounces of dried usable cannabis, with a street value of between $165,600 and $276,000. The Police said that figure did not take into account any previous cannabis grows or the cannabis grows that Mr Ladbrook told Police he was going to continue doing through until February 2014. The Police said any future cannabis grows through until February 2014 could conservatively generate a further 76 plants, on average yielding between 228 to 380 ounces of dried usable cannabis, with a street value of between $91,200 to $152,000. On that basis, the potential yield for this operation could have been between 642 to 1,070 ounces of dried usable cannabis that could be cultivated and sold for $256,800 to $428,000 per annum. This figure did not include the 44 ounces of dried cannabis already mentioned, valued at $17,600.

[18]   The summary said Mr Ladbrook acknowledged the facts as outlined. In explanation for the cannabis cultivation, possession and sale of cannabis, Mr Ladbrook explained that he was compelled by greed and what he saw as an easy way to make money.

[19]   In his affidavit, Detective Beswick said that, when Mr Ladbrook was interviewed by a detective after the search, he admitted the cultivation, claimed he had only been in operation for about four months and had never actually sold any cannabis. He also denied knowledge of tampering with the power meter at the address.

[20]   In his first affidavit, sworn on 10 November 2016, Mr Ladbrook said he had wanted to challenge a number of matters in the summary of facts. He referred specifically to Police estimates as to the value of the drugs but said that his lawyer did not engage with him and, in the end, he took his lawyer’s advice and pleaded guilty. There was no challenge to the summary of facts.

[21]   Mr Ladbrook asserted there was nothing sophisticated about the operation. In his affidavit, he commented specifically on various matters in the summary which he took issue with:

(a)         As to the number and size of the plants, the only point he made was that Police estimates of height were from the ground, not the height of actual plants, which he said were smaller.

(b)        The rooms had not been altered to allow the cultivation of cannabis with white reflective lining around the walls. He said it was simply polystyrene and black and white panda film.

(c)        He referred to the low cost of the two dehumidifiers which he said had been bought second-hand at a garage sale, the oscillating fan he had bought from the Warehouse and an electronic timer which cost about $10.

(d)        He said there were no carbon filters but there was a foam filter over the extractor which was intended to stop insects from entering the house.

(e)        He said he had been unaware that the electricity meter at the property had been tampered with.

Calculation of the benefit obtained and maximum recoverable amount

[22]   Section 53 of the Act provides that the value of the benefit of serious criminal offending is presumed to be the value stated in the application if the Commissioner proves, on the balance of probabilities, that the respondent has, in the relevant period of criminal activity, unlawfully benefited from significant criminal activity. The respondent however can rebut that presumption on the balance of probabilities.10

[23]   In the application for forfeiture dated 27 June 2014, the Commissioner claimed Mr Ladbrook had, during the relevant period of significant criminal activity between 22 November 2006 and 26 June 2014, benefited to the value of $241,025.00.

[24]   In submissions for the Commissioner, the figure of $209,025.00 was adopted. This figure was based on the affidavit of Detective Beswick, who estimated a yield of

$160,000 from five cycles of cultivation over an eight-month period, and what the Commissioner said were unexplained cash deposits totalling $49,025 between 6 April 2010 and 4 December 2013.

10     Criminal Proceeds (Recovery) Act 2009, s 53(2).

The yield per plant

[25]   The affidavit of Detective Beswick estimates the quantity of cannabis produced per plant by Mr Ladbrook. The Police identified that the cannabis drying at the address was derived from the 17 harvested plants of which only the stalks in plastic pots remained. The drying cannabis plants were manicured by the Police and produced 45 ounces of cannabis head, an approximate yield of 2.6 ounces per plant. They also found cannabis stalks in a plastic bag which they believed had come from the 17 harvested plants. They said this indicated those stalks had already been manicured and would have produced cannabis head. Detective Boucher, who had specialist knowledge in this area, considered that, putting together the cannabis head obtained from the drying material and what would have been obtained from the earlier manicured plant, the probable yield per plant would have been four ounces.

Total yield of the plants

[26]   Detective Beswick said the plants found at the address were in four different stages of maturity. When interviewed by Detective Sergeant Boucher on 28 November 2013, Mr Ladbrook stated that his typical cannabis crop rotation was every four to six weeks, meaning he would have harvested plants every four to six weeks. Detective Beswick inferred from the cannabis plants at the address, that a typical harvest was approximately 20 cannabis plants. Detective Beswick said that, based on a harvest every six weeks, this would equate to a minimum of eight harvests per year. Over the eight-month period, between 1 March and 31 October 2013, there would have been at least five harvests. The harvest would have been of 100 plants, with each plant yielding approximately four ounces of cannabis head. On this basis, the Police said Mr Ladbrook would have obtained 400 ounces of cannabis head over that period.

[27]   The onus was on Mr Ladbrook to show, on the balance of probabilities, that the Police assessment of the benefit obtained was wrong. He attempted to do this in his affidavits and when being cross-examined in Court by saying the operation was not sophisticated in the way the Police described and that his cultivation only started in March.

[28]   Mr Ladbrook said in his affidavit that there had been only three different grows. He referred to the Police information as to the calendars and said there had been three cycles of cultivation. He said, in the first cycle, the cannabis plants were open and sparse. They were over-dried and unproductive. He said the second attempt at growth was also defective and only half of the plants reached healthy maturity. He put this down to problems from power cuts to the nearby freezing works that affected the house where the grow was taking place. He said only the third yield had been successful.

[29]   The evidence of Detective Beswick in an affidavit of 1 October 2015 was that, when Mr Ladbrook was interviewed by Detective Johnston on 31 October 2013, the day of the search, he claimed that an unnamed person owned all the plants except for three of them but admitted the cultivation of the cannabis and claimed he had only been in operation for four months. He stated that the drying cannabis obtained from the 17 harvested plants was his first harvest in the operation. He stated he had not sold any cannabis. In contradiction, he said his first ever grow was seven or eight plants and the funds received from those plants were used to purchase more cultivating equipment.

[30]   He was interviewed again by Detective Sergeant Boucher on 28 November 2013 when the surveillance investigation was terminated. At that time, Mr Ladbrook said that he had two previous cannabis cycles which funded equipment to expand his enterprise. He acknowledged he had a cannabis crop in March 2013. He acknowledged that entries on the calendars found at the address represented three cannabis crops and the cannabis harvest rotation was every four to six weeks.

[31]   Mr Ladbrook’s credibility was not assisted by the conflicting explanations he gave under cross-examination when asked what he knew of the way the electricity meter had been tampered with. He claimed he had not known of the tampering, but also that he had known of it but did not know who had done it or why this had happened. The tampering was obvious from photographs showing wires hanging from the meter. In his affidavit, Detective Beswick explained that an examination by an electrical inspector had established that two wires were fitted as electricity breakers, effectively preventing the meter from measuring some of the power usage at the address. One breaker prevented the measuring of power usage in the bedroom where

21 plants, ranging from 20 to 120 centimetres, were growing. The other breaker did this in a bedroom where 19 plants, ranging from 60 to 80 centimetres, were growing. Both breakers were wired to the plug sockets in those respective bedrooms. There would have been considerable electricity usage with the lighting and heating set up for the plants in those rooms. I am satisfied Mr Ladbrook well knew what had been done with the meter board and that it had been rewired to assist with the cannabis cultivation operation.

[32]   Mr Ladbrook did not, in either of his two interviews, tell the Police that the initial grows had been unsuccessful. When asked by the Police about the tick list found at Mr Dollman’s address on 24 July 2014, he did not indicate the list had nothing to do with him. His response, as described by the Police, suggested the contrary.

[33]   Notwithstanding the inconsistencies of his testimony, there was some evidence that, with the way Mr Ladbrook dried the plants, he had not always achieved the optimum production. In the conversation on 22 July 2013, Mr Ladbrook had talked to Christian Dollman as to how it was possible to over dry the plant and how, as a result, he had some “crunchy” material. After his house was searched, there was an intercepted conversation in which Mr Ladbrook told an associate that he had not been able to “bag up anything” from what was hanging up drying.

[34]   I have not been able to accept as reliable Mr Ladbrook’s evidence as to the quantity produced. It may be that the cultivation was not as “sophisticated” as some but, with the facts as now accepted by Mr Ladbrook and the photographs of what the Police found at the address, this was a set-up which had been and was going to be used on an ongoing basis.

The revenue Mr Ladbrook obtained from selling cannabis

[35]   Mr Donnelly, for the Commissioner, submitted the value to be taken into account for forfeiture purposes was the ‘street value’ of the cannabis rather than the amount for which Mr Ladbrook actually sold the cannabis.

[36]   Mr Donnelly directed the court to Commissioner of New Zealand Police v Murray as support for the value adopted by the Police in this case.11 That case concerned an offender who was apprehended with drugs in his possession. He argued that he was simply a courier of the drugs and gained no benefit from them. Gendall J said that he had possession of the drugs and “always had the chance to profit from his criminal activity.”12 On that basis, the Court found that the unlawful benefit was the value for which the drugs could be sold.

[37]   The stated purpose of the Act is to establish a regime for the forfeiture of property that has been derived, directly or indirectly, from significant criminal activity or that represents the value of a person’s unlawfully derived income.13 In Nicholas v Commissioner of Police, the Court of Appeal rephrased that:14

The underlying purpose of this aspect of the civil forfeiture regime is to expose those who have obtained benefit from significant criminal activity to the loss of their assets (however obtained) up to the assessed value of that benefit.

[38]   In the case of a drug courier, who is not directly profiting from committing criminal activities, it is likely the gang member will profit from such activities either in good will or monetary terms at a later date. It will be open to the court to assess the indirect value of the benefit of that offending. If there is no evidence of actual sales, the value of the cannabis to the grower could nevertheless be assessed as the market value of that cannabis.

[39]   If Mr Ladbrook was a member of the Road Knights and was growing cannabis for the gang without being directly paid for it, it might be open to the Court to assess the benefit of his offending as the market value of the cannabis. However, if Mr Ladbrook was selling cannabis to the Road Knights motorcycle gang who were then reselling it for a profit, with such sales, Mr Ladbrook would have received a direct monetary benefit from selling to the gang. The value of Mr Ladbrook’s unlawfully derived income would have been the price for which he sold the cannabis to the Road Knights, not the amount for which it could be resold.

11     Commissioner of New Zealand Police v Murray [2016] NZHC 2699.

12     Commissioner of New Zealand Police v Murray [2016] NZHC 2699 at [29].

13     Criminal Proceeds (Recovery) Act 2009, s 3(1).

14     Nicholas v Commissioner of Police [2017] NZCA 473 at [23] (emphasis added).

[40]   There is no evidence that the cannabis was grown for Mr Ladbrook’s own use and thus to avoid the cost of having to buy the cannabis from someone else. Indeed, his evidence in an affidavit was that he did not smoke or use marijuana. Mr Ladbrook had been working mainly in the freezing works over the last 20 years. He said he had undertaken some 30 to 40 drug tests at work over that time and never showed a positive result. The benefit for Mr Ladbrook was generally the price at which he sold the cannabis.

[41]   The Police suggest this was $400 per ounce. When Karl Dollman’s address in Invercargill was searched on Wednesday 24 July 2014, the Police found various tick lists. There were a number of entries under the heading DRK, each for $400. Detective Beswick considered these were consistent with Mr Ladbrook selling cannabis head to Karl Dollman for $400 per ounce.

[42]   Mr Ladbrook said the cannabis obtained from the grows was not worth $400 an ounce to him. In his first affidavit, Mr Ladbrook accepted the Police contention that there were 44 ounces of dried usable cannabis but objected to the Police contention that this had a street value of $17,600 on the basis he was not selling “on the street” but to an individual. He said he was being paid $250 an ounce so that the 44 ounces would have been worth just $11,000 for him.

[43]   There was no evidence from the Police to indicate that Mr Ladbrook was regularly selling to individuals. His offending was uncovered through an investigation and surveillance of a number of people associated with the Road Knights. Detective Beswick’s evidence in respect of Mr Ladbrook and the summary of facts for Mr Ladbrook’s offending also referred to the offending of these other people. The summary of facts states that Christian Dollman was, at the time of the investigation, the president of the Invercargill Road Knights group. Mr Ladbrook referred to him in an affidavit as being a friend. The Judge’s sentencing notes for these defendants indicates that Christian Dollman’s eight charges represented 66 controlled drug dealing offences. His father, Karl Dollman’s charges represented 131 controlled drug dealing offences. The Commissioner’s forfeiture application, to which these two men along with Mr Ladbrook were respondents, valued the benefit Christian Dollman had

obtained from his drug dealing at $506,787 and the value of Karl Dollman’s offending at $397,877.

[44]   I consider it likely that Mr Ladbrook was supplying at least some cannabis to others who were in a better position to obtain the value of that cannabis on a street- sale basis but the value to Mr Ladbrook would have been less than this, as he claimed in an affidavit.

[45]   I am satisfied Mr Ladbrook had sold cannabis before the house was searched on 31 October 2013. I do not accept that it was only the cannabis plants growing or drying in the house at that time which would result in his obtaining money. I consider it likely that he was selling cannabis throughout the period between March 2013 and October 2013, consistent with the cultivation as noted on the calendars at his address.

[46]   The Police said Mr Ladbrook would have obtained 400 ounces of cannabis head over that period, at a price of $400 per ounce. This would have provided a total benefit of $160,000 over the eight-month cultivation period.

[47]   The Police calculation as to the benefit that Mr Ladbrook would have obtained in the March to October 2013 period however assumes that each grow would have been completely successful, that the drying process would have been carried out expertly without anything going wrong and that, with each harvest, production from 20 plants would have been obtained.

[48]   In his affidavit of 10 November 2016, Mr Ladbrook said that he had been able to undertake just three cycles of cannabis cultivation. He said the first cycle was completely unsuccessful but, in light of the evidence I referred to earlier, I do not accept this. He said the second was more successful but did say half of the plants reached maturity. I do not accept that what he says is an accurate assessment of how productive the grows were but I do accept that they may well not have been as productive as the Police have assumed in calculating the benefit he obtained in the period March to October 2013.

[49]   Although there is no direct evidence of Mr Ladbrook cultivating cannabis over the years prior to March 2013, the nature of the cannabis growing set up that existed at his address over his time suggests that it had all been set up with the benefit of previous experience. The affidavit of Detective van der Pol supports this.

[50]   Detective van der Pol analysed Mr Ladbrook’s bank accounts over the period 1 April 2010 to 31 October 2013. Detective van der Pol identified that a total of

$49,025 had been deposited into three different accounts over that period, with the cash deposits being for amounts of between $150 and $4,000. Most of the deposits were in multiples of $100, including $200, $400 and $500. She identified that cash deposits had increased significantly during July, August and September 2013 with

$16,730 paid into the bank accounts of Mr Ladbrook over that three-month period.

[51]   In his third affidavit, sworn on 1 March 2018, Mr Ladbrook said that, since 1996, he had a business cutting and selling firewood. He said he also accumulated cash through savings when he was working in the freezing works and sometimes lent money. He believed the cash deposits could largely be attributed to the sale of firewood and from cash loan repayments. There was no documentation to support this. There were no affidavits from the two people who he had identified as often supplying him with firewood to support what he was saying.

[52]   Mr Ladbrook told me that, over the winter of 2013, he was in full employment at the freezing works so, at that time, would not have needed to cut firewood for an income. The significant cash deposits into his bank accounts during the winter of 2013 are consistent with his receiving significant cash payments over that time from the sale of cannabis.

[53]   Mr Ladbrook has not produced satisfactory evidence to show there was a lawful explanation for the cash deposits to his bank account. It was his evidence that over that time his employment had been mainly of a seasonal nature with the freezing works. Despite that, he was able to provide the deposit required to buy the property at 306 Crinan Street, Invercargill on 13 September 2012 for $124,000. As at 5 October 2012, the ANZ bank mortgage over the property was $99,000. He also purchased the

Harley Davidson motorcycle for $25,000 although this appears, in part, to have been with a loan.

[54]   When giving evidence, Mr Ladbrook seemed genuinely startled at the proposition that he had received something like $160,000 from selling cannabis over that period. However, the onus falls on a respondent to prove that a different amount should be taken as the actual benefit. As was said by Gilbert J in Commissioner of Police v Filer:15

Once the Commissioner discharges the initial onus under s 53(1), the onus of proving the correct figure rests with the respondent under s 53(2) and does not pass back to the Commissioner. This interpretation serves the purposes of the forfeiture regime which include eliminating the chance of persons who profit from undertaking or being associated with significant criminal activity and deterring such activity. These objectives could be frustrated if the legislation was interpreted so as to require the Commissioner to prove the benefit in all cases where a respondent can establish some error in the Commissioner’s assessment. The respondent will know what the benefit was and all of the access to the witnesses and records that may be needed to prove this, whereas the Commissioner does not. I conclude that if the respondent fails to prove the benefit, on the balance of probabilities, the amount stated in the Commissioner’s application must stand, even if the correctness of the underlying assessment is questionable.

[55]   Mr Ladbrook has put little satisfactory evidence before me to meet the onus which was upon him to provide the actual benefit he had obtained from his offending. While I accept the police estimate is high, even a modest estimate of the benefit of his offending would still be greater than the value of the assets being seized. Pursuant to s 53 of the Act, the value of that benefit is presumed to be the value stated in the application of $209,025.00. I determine the maximum recoverable amount as being the same figure.16

Application for relief on the grounds of hardship

[56]   Mr Ladbrook has applied to have property excluded from a profit forfeiture order on the basis he is likely to suffer undue hardship. Relief against civil forfeiture orders is provided for pursuant to s 56 of the Act in relation to claims of undue hardship on the respondent against whom the application is made. It provides:

15     Commissioner of Police v Filer [2013] NZHC 3111 at [13].

16     Criminal Proceeds (Recovery) Act 2009, s 54.

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 of 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.

(3)After a profit forfeiture order is made, nothing in this section prohibits a respondent from realising the property that was excluded from being able to be realised under section 55(2)(c) if—

(a)after realising other property under that section there is still a debt owed to the Crown under section 55(4); and

(b)the respondent agrees to realise the excluded property in order to pay all or part of that debt.

[57]   In this case, the Commissioner seeks forfeiture orders as to two significant assets owned by Mr Ladbrook:

(a)        The property at 306 Crinan Street, Invercargill. This was purchased on 13 September 2012 for $124,000. In his affidavit of 27 October 2017, Mr Ladbrook provided an appraisal of the Crinan Street property from a real estate agent, based on a street-side evaluation. The agent suggested a selling price of $123,000-$135,000. As at 28 February 2018, the ANZ bank mortgage over the property was $93,385.19.

(b)        A 2008 Harley Davidson Softail motorcycle. Applying for a restraining order, the Police said this motorcycle had a value of $17,500. On their forfeiture application, they said this motorcycle had a value of $8,000. In his second affidavit, Mr Ladbrook said he bought this motorcycle in 2012

for $25,000. In an affidavit of 27 October 2017, Mr Ladbrook said he did not know what the then value of the motorcycle would be.

[58]   In his application to have the property excluded from forfeiture order because of undue hardship, Mr Ladbrook sought to exclude both the property at 306 Crinan Street, Invercargill and the Harley Davidson motorcycle. In submissions for Mr Ladbrook, Mr Eagles said Mr Ladbrook was no longer resisting the seizure of the motorcycle but submitted the seizure of the motorcycle should be taken into account with regard to whether the Commissioner should also be able to seize and sell the house property.

[59]   In seeking relief due to undue hardship, Mr Ladbrook gave evidence as to his background. He was born at Invercargill and had 14 brothers and sisters. He said his father left them when he was born and the family were “very poor”. He has never married, never had children and, from his affidavit, appears to be someone who is content to live a singular life. He said, and I accept, that he likes being in employment and he must be well regarded by employers.

[60]   To his credit, Mr Ladbrook has been able to find employment again at the freezing works following his recent release from prison. That provides good employment up to the end of the freezing work season in May. He has good prospects of obtaining employment during the off-season. He has also given evidence as to the way he is able to obtain an income from cutting and selling firewood. He says his only extravagance was what he described as a lolly habit. Mr Ladbrook is aged 43 and has no dependents. He has only himself to care for.

[61]   In considering an application for relief, s 56(2)(a) directs the Court to consider the use ordinarily made of the property. Mr Ladbrook is currently living with his twin brother. The Crinan Street property has been rented out with the rent being used to pay the mortgage. Mr Ladbrook says the house is important for him as a home and he wishes to return there. I cannot accept that Mr Ladbrook has a particular financial or emotional investment in the Crinan Street property, meaning it would be onerous for him if he were required to sell it. He was not living at the address when he involved himself in the cultivation of cannabis. He has not lived at the property since his release

from prison on parole on 2 October 2016. Mr Ladbrook said in his affidavit of 27 October 2017 that he was living with his brother as a temporary arrangement and he needed to get back into the property at an early date. He was, however, not living at Crinan Street when this application was heard in May 2018. It cannot be said that Mr Ladbrook will find it difficult or impossible to obtain accommodation for himself if the property at Crinan Street is sold.

[62]   The Act also directs the Court to consider the nature and extent of the respondents’ interest in the property.17 Thus, it would be open to the Court to consider that undue hardship would be caused by, for example, making asset forfeiture orders in respect of items of significant value where only a small portion of their value was obtained illegitimately.18 Mr Ladbrook involved himself in significant criminal offending. I am satisfied the benefits he obtained from that were well in excess of the value of both the Harley Davidson motorcycle and the equity in his Crinan Street property. Mr Eagles urged me to find that, for Mr Ladbrook to lose his house as well as his motorcycle, would be severely disproportionate to the benefit which he obtained from his offending. I cannot accept that.

[63]   As reflected in his prison sentence, Mr Ladbrook’s offending was serious. It was of significant financial value to him. As he acknowledged, he became involved in that offending and sought those benefits out of greed.

[64]   The threshold for establishing hardship is high and has to be assessed in light of the legislative policy that wrong-doers should be stripped of proceeds of crime.19 Mr Ladbrook must show not merely inconvenience or difficulty but that any hardship he will suffer will be disproportionate to the gravity of his offending. He has not done so.

17     Criminal Proceeds (Recovery) Act 2009, s 56(2)(b).

18     Commissioner of the New Zealand Police v Drake [2017] NZHC 2919 At [131].

19     Lyall v Solicitor-General [1997] 2 NZLR 641 (CA).

Conclusion

[65]   Once the criteria for forfeiture is met, orders must be made subject to the exception as to undue hardship.20 I am satisfied that Mr Ladbrook has unlawfully benefited from significant criminal activity and has an interest in the residential property and motorcycle over which forfeiture is sought. I accept the value of the benefit obtained from the significant criminal activity is, as the Police state, at

$209,025.00 and I set the maximum recoverable amount at that figure. Mr Ladbrook has not satisfied me that he will suffer undue hardship to the extent required to avoid forfeiture. The Commissioner has established the criteria for forfeiture of a 2008 Harley Davidson Motorcycle (registration 44ZSD) and a residential property at 306 Crinan Street, Invercargill. The Court must make the orders sought. I do so.

[66]   Leave is reserved to the Commissioner to seek orders in the particular form that may be required to give effect to this judgment.

Solicitors:

Preston Russell Law, Invercargill

Eagles Eagles & Redpath, Invercargill.

20     Criminal Proceeds (Recovery) Act 2009, s 55.