Commissioner of Police v Sheehan HC Auckland CIV-2011-419-1024
[2011] NZHC 1992
•7 December 2011
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
CIV-2011-419-1024
IN THE MATTER OF an application pursuant to sections 21 and
26 of the Criminal Proceeds (Recovery) Act
2009
BETWEEN THE COMMISSIONER OF POLICE Applicant
ANDKEVIN JOSEPH SHEEHAN First Respondent
ANDSUSANNE CLAIRE HARRISON Second Respondent
Hearing: 24 November 2011
Counsel: R G Douch for the Crown
MLA Wright for the Respondents
Judgment: 7 December 2011
RESERVED JUDGMENT OF ELLIS J
This judgment was delivered by me on 7 December 2011 at 2 pm, pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Solicitors: Crown Solicitors, PO Box 19-173, Hamilton
Rae & Wright Ltd, PO Box 2, Morrinsville 3340.
POLICE V SHEEHAN HC HAM CIV-2011-419-1024 7 December 2011
[1] Mr Sheehan has pleaded guilty to two charges, namely:
(a) cultivating cannabis under s 9 of the Misuse of Drugs Act 1975 (the maximum penalty for that offence being seven years imprisonment); and
(b) unlawful possession of a pistol in terms of s 50(1)(a) of the Arms Act
1983 (the maximum penalty being three years imprisonment and/or a
$4000 fine).
[2] On 29 July 2011 Duffy J made a without notice restraining order under the Criminal Proceeds (Recovery) Act 2009 (―the CPRA‖) in relation to property located at 1162 Te Aroha-Gordon Road, Manawaru, Te Aroha. The property is jointly owned by Mr Sheehan and his partner, Ms Susanne Harrison. In formal terms the property restrained is described as:
All that parcel of land containing 4.5000 hectares more or less being Lot 1
Deposited Plan South Auckland 50108 and being all that land comprised and described in certificate of title FA42D/358 South Auckland Land
Registration District.
[3] On 30 August 2011 the Crown solicitor filed a prosecutor’s notice inviting the Court to consider making an instrument forfeiture order in respect of that property.
[4] The following day, pursuant to s 142C of the Sentencing Act 2002 (―the SA‖), Woolford J directed that the Crown issue and serve a notice under s 142E of the SA on the joint owner of the property, namely Ms Harrison. He then adjourned all matters (including Mr Sheehan’s sentence which had been transferred to the High Court by the District Court at Morrinsville) for a half day fixture on 25 November
2011. It was on that basis that the matters came before me on 24 November (the scheduling having been somewhat shuffled by the Registry in the meantime).
[5] Prior to the hearing, however, I had asked the Registry to advise counsel that it was my view that it would be difficult to proceed with both the sentencing and the forfeiture on the same day.
[6] In the present case I considered a forfeiture hearing was required principally because it was clear that the application for forfeiture was not only opposed by Mr Sheehan but Ms Harrison had also applied under s 142J of the SA for relief from forfeiture on the basis of both her interest in the property and undue hardship. Thus I was concerned that the forfeiture issues might not be capable of instant resolution and, in those circumstances, it would not be appropriate immediately to proceed to Mr Sheehan’s sentencing. That is because the SA now requires any instrument
forfeiture order to be taken into account in the sentence handed down.1 While
separate hearings are not required, they are expressly contemplated by ss 10B(3)(b)
and s 142K of the SA.
[7] Conversely, however, because instrument forfeiture and sentencing are now intertwined under the new regime, it seems to me also to be necessary for a Court considering instrument forfeiture to have formed some preliminary views as to sentence. That is a matter to which I shall later return.
[8] I record at this point that Mr Sheehan’s sentencing is now scheduled to take
place before me next week.
Background
[9] It is not in dispute that the lead offence for sentencing purposes would be the cultivation of cannabis charge. That charge related to the cultivation of 64 cannabis plants on the property that is now the subject of the forfeiture application.
[10] The property itself has been the family home of Mr Sheehan and Ms Harrison for the last 12 years. It comprises some 11 acres and has previously been used for rearing calves, and growing lilies in glasshouses, until a drought in 2008 put an end to that. The cannabis was planted next to, rather than inside, the glasshouses but Mr Sheehan was able to utilise the existing watering system. Similarly, it seems that the existing security system (designed to protect the calves from theft) required only
slight modification for cannabis cultivation purposes.
1 Sentencing Act s 10B. It is no doubt for this reason that since the enactment of the 2009 amendments to that Act, all applications for instrument forfeiture have been heard and determined prior to the sentencing of the offender.
[11] In any event, when found by Police, the cannabis plants on the property were healthy and bushy and some had started to flower or bud. It is the flower or bud that has the highest monetary value.
[12] The Crown says that if the plants had progressed to maturity and harvest, each plant would easily yield four ounces of premium cannabis plant material worth up to $1,000. Mr Sheehan himself, in his interview with police, spoke of paying
$250 for an ounce of cannabis. Accordingly, it is not really in dispute that the return from the cannabis crop would be in the vicinity of $64,000 or more. There is no suggestion that there had been earlier crops. Nor is there any suggestion that Mr Sheehan had, at the time he was apprehended, derived any income from the plants.
[13] Mr Sheehan, however, contends that most of that money would not have been returned to him. Rather, his position is that the cannabis was the property of an acquaintance named ―Joe‖ and that while he (Mr Sheehan) tended to the plants and operated the security system, all he was to get in return was approximately $10,000 that he planned to use to fix up a car. The Crown does not accept that explanation.
[14] Mr Sheehan has a previous conviction for the cultivation of cannabis, in
1981. It appears that on that occasion he received a fine.
Instrument forfeiture application
[15] Section 142N of the SA 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.
(2) In considering whether or not to make an instrument forfeiture order under subsection (1) in respect of particular property, the court may have regard to –
(a) any matter raised in an application for relief under section 142J;2
and
(b) the use that is ordinarily made, or was intended to be made, of the instrument of crime; and
(c) any undue hardship that is reasonably likely to be caused to any person by the operation of such an order; and
(d) the nature and extent of the offender's interest in the instrument of crime (if any), and the nature and extent of any other person's interest in it (if any); and
(e) in addition to the matters referred to in section 77(1) of the Criminal Proceeds (Recovery) Act 2009,3 any other matter relating to the nature and circumstances of the qualifying instrument forfeiture offence or the offender, including the gravity of the qualifying instrument forfeiture offence.
(3) A court that makes an instrument forfeiture order may, if it considers that it is appropriate to do so, by order, —
(a) declare the nature, extent, and value of any person's interest in an instrument of crime; and
(b) declare that the instrument forfeiture order may, to the extent to which it relates to the interest, be discharged under section 85 of the Criminal Proceeds (Recovery) Act 2009.
(4) If the court orders that property (other than money) be forfeited to the Crown, the court must specify in the order the amount that it considers to be the value of the property at the time the order is made.
(5) If a court makes an instrument forfeiture order, the court may give any directions that are necessary or convenient for giving effect to the order.
(footnotes inserted)
[16] Although Mr Douch initially submitted that there was a legislative presumption in favour of forfeiture, he resiled from that before me. I note, however, that Cooper J in R v Brazendale4 said that, for the reasons recorded by him at [21], such a contention ―may have merit‖ but found it unnecessary to determine the issue.
[17] As I have said, the order sought by the Crown relates to the residential property owned by Mr Sheehan and Ms Harrison, situated at 1162 Te Aroha-Gordon
2 Section 142J provides that applications for relief may be made on either of the grounds specified in s 77(1) of the CPRA, namely an interest in the property or undue hardship.
3 As recorded in the previous footnote, s 77(1) states that relief from forfeiture may be sought by an y person other than the offender on the grounds that that person has an interest in the property or that undue hardship is likely to be caused by the operation of the order.
4 R v Brazendale HC Auckland CRI-2009-092-17133, 20 August 2010.
Road, Manawaru, Te Aroha. Mr Sheehan and Ms Harrison are registered proprietors in equal shares and have been since 28 June 1999. No encumbrances are registered on the title. There is no dispute that the property falls within the definition of an instrument of crime, being ―property used (wholly or in part) to commit or facilitate the commission of a qualifying instrument forfeiture offence‖.5
[18] A valuation of the property dated 29 September 2011 has been obtained as a consequence of the property being restrained and put into the custody and control of the Official-Assignee. In accordance with usual practice, two valuations were given. The first was a valuation based on normal sale conditions assuming a willing buyer and willing seller. On that basis, the current market value (including chattels) is assessed to be $495,000. The second valuation was based on a forced sale hypothesis. On that basis the current valuation is between $374,000 and $398,000.
[19] There was also no issue between counsel as to the existence of Ms Harrison’s
50 per cent share in that property. The Crown agreed that her share in the property should be recognised by the Court and, in light of the Court of Appeal’s decision in R v Elliott,6 proposed that an order for sale be made out of which Ms Harrison would
receive half of the market value of $495,000.7 It was also agreed by Crown that in
the event that forfeiture of Mr Sheehan’s interest was ordered, directions should be
made enabling buy back.
[20] Thus the issue insofar as Mr Sheehan is concerned is whether, after taking into account the matters listed in s 142N(2), I should decline to make a forfeiture order at all, or, alternatively should make some further adjustment in relation to the remaining 50 per cent share to take account of those factors. That is what both Mr Sheehan and Ms Harrison sought.
[21] In Mr Sheehan’s case it seems to me that the relevant issue under s 149N can
essentially be reduced to whether it can be said that forfeiture of his share in the property will cause undue hardship either to himself or to Ms Harrison. That is
5 Sentencing Act 2002, s 4(1).
6 R v Elliott [2011] NZCA 386, [2011] 3 NZLR 811.
7 Ms Harrison was herself charged with permitting her premises to be used for the purpose of cultivating cannabis. She accepted a diversion on that charge. The Crown does not seek to rely on this as a disqualification in terms of s 142L(3).
because the other factors listed in the section are those which, under earlier legislation, the Courts have traditionally taken into account in determining undue hardship. As those, and subsequent cases, make clear the concept of undue hardship has, at its heart, a proportionality inquiry.
[22] In terms of the effects of forfeiture on Mr Sheehan and Ms Harrison, the following matters seem to me necessary to be taken into account.
[23] First, Ms Harrison’s interest in the property will be recognised and protected and it is possible (if forfeiture of Mr Sheehan’s interest is ordered) that she and Mr Sheehan will be able to purchase back his share.
[24] Secondly, the mere fact that Ms Harrison’s share is protected, however, does not necessarily lead to the conclusion that no undue hardship will be caused to her if Mr Sheehan’s share is forfeited. There is also the question of any undue hardship to Mr Sheehan (which would necessarily take into account the fact that Ms Harrison’s share is protected).
[25] In that respect, I accept that the property is the family home and has been for over 10 years. I also accept it was acquired from legitimate sources. There is no evidence to suggest that the acquisition of the home was in any way connected with criminal offending and indeed the opposite is the case. The property cannot fairly or in any sense be viewed as a ―drug house‖.
[26] Also relevant in that respect is the fact that Mr Sheehan and Ms Harrison do not appear to own any other property. That can be contrasted with the position in R v Brazendale8 where the fact that Mr Brazendale owned other property in which he could reside seems to have weighed against him in terms of the instrument forfeiture
application. The Court of Appeal certainly took the view that this was a feature that
8 R v Brazendale HC Auckland CRI-2009-092-17133, 20 August 2010.
differentiated Brazendale from R v Elliot9 in terms of considering whether a partial forfeiture order was appropriate.10
[27] Thirdly, it is relevant that Mr Sheehan is 53 years old. Ms Harrison is a few years older. Mr Sheehan is presently in employment and is highly regarded in that context. Ms Harrison has recently been made redundant. While there is some prospect of their building up sufficient capital to purchase another property (or being able to purchase any forfeited part of the subject property) in the next 15 years or so, that would probably be difficult.
[28] For that reason it seems to me that issues similar to those that weighed on Heath J’s mind in Elliot are also at play here. Mr Elliott was the same age as Mr Sheehan. In his first judgment in that proceeding Heath J said:11
[73] ... 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.
[29] The Court of Appeal subsequently determined that Heath J did have the jurisdiction that he had believed he lacked.12 Thus in his second, recent, decision Heath J said:13
[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.
9 R v Elliot HC Gisborne CRI-2009-016-3799, 19 August 2010; Elliot v R [2011] NZCA 386, [2011] 3 NZLR 811; R v Elliott HC Gisborne CRI-2010-416-65, 28 October 2011.
10 Brazendale v R [2011] NZCA 494. An application for leave to appeal to the Supreme Court was dismissed on 5 December 2011: Brazendale v R [2011] NZSC 149.
11 R v Elliot HC Gisborne CRI-2009-016-3799, 19 August 2010.
12 Elliot v R [2011] NZCA 386, [2011] 3 NZLR 811.
13 R v Elliott (No 3) HC Gisborne CRI-2010-416-65, 28 October 2011.
[30] A competing consideration, however, is that there is also an interest in enabling Mr Sheehan to stay in his present employment and out of jail. Because of the relationship between forfeiture and sentence, that outcome is rendered considerably more likely if at least a partial forfeiture order is made.14 I note that all three instrument forfeiture decisions made under the CPRA thus far have resulted in the imposition of non-custodial sentences.15
[31] In terms of the gravity of Mr Sheehan’s offending, I have noted above that the expected yield from the plants has been valued at $64,000. As I have also said, there is nothing to suggest that there have been previous harvests and I do not take that possibility into account. The Crown disputes Mr Sheehan’s evidence that he would only have made $10,000 and, given the absence of supporting evidence, I do not place any particular weight on it. Nonetheless I do take into account that, due to Police intervention, Mr Sheehan has not in fact made any profit from his offending at all.
[32] Secondly, I record my view that while the cultivation in which Mr Sheehan engaged must necessarily be viewed as a low level commercial operation it was not a particularly sophisticated one. The plants were outdoors. There were no hydroponics. And I accept Mr Sheehan’s evidence that substantial alterations to the property were not made for cultivation purposes. Again this is in fairly marked
contrast to Cooper J’s findings of fact in Brazendale.16
[33] In terms of future sentencing (and without predetermining that matter), my present assessment of Mr Sheehan’s offending would place it at the middle part of Terewi band two.17 After any relevant uplifts and discounts, and absent any allowance for forfeiture, an end sentence would be likely to be in the range of two and three years imprisonment. Thus the prospect of an instrument forfeiture order
would necessarily give rise to the possibility of home detention.
14 See the brief discussion of likely sentence range below at [33].
15 Brazendale (supra): conviction and discharge; Elliot (supra): 9 months home detention (although
imprisonment likely were it not for the ill health of E’s wife) and R v Sharp & Rolfe HC Rotorua CRI
2010-063-004641, CRI 2010-063-005866, 22 July 2011: 8 months home detention (Sharp), 9 months supervision (Rolfe). All three cases related to cannabis offending.
16 Supra at [33] and [34].
17 R v Terewi [1999] 3 NZLR 62 (CA).
[34] There are decisions under the Proceeds of Crime Act 1991 that would suggest that forfeiture of an interest in property valued at approximately $250,000 as a response to Class C offending on Mr Sheehan’s comparatively modest scale was regarded as disproportionate and therefore unduly harsh.18 Under the earlier legislation, however, forfeiture orders did not, in the ordinary course, affect sentence. That this is a highly material difference is obvious and has been recently noted by the Court of Appeal in Brazendale.19
[35] The statutory recognition of the relationship between forfeiture and sentencing, together with the Court of Appeal’s decision in Elliot, seem to me to signal that the CPRA ought not to be applied in an undiscriminating way. While forfeiture is intended by Parliament to be something of a blunt instrument, the strongly deterrent object of the legislation can in my view still be achieved by adopting a slightly more nuanced approach than has been possible in the past.
[36] On that basis, and after taking all of the relevant s 149N matters into account, I am of the view that a partial forfeiture order in relation to 70 per cent (approximately $175,000) of Mr Sheehan’s $247,500 interest in the property should be made. Even taking account of the protection that is to be afforded to Ms Harrison’s interest, I consider that forfeiture of any more than that would, in the particular circumstances of Mr Sheehan’s case, be disproportionate and unduly harsh.
[37] By consent, Mr Sheehan and Ms Harrison are also to be given first option to repurchase the property from the Official Assignee.
[38] I would be grateful if counsel could attempt to agree and advise the Court as to the appropriate form of the orders required to give effect to the forfeiture of the property but recognising and giving effect to:
(a) Ms Harrison’s 50 per cent interest;
(b) Mr Sheehan’s residual 15 per cent interest; and
18 See for example Solicitor-General v Moss HC Auckland CIV-2009-470-320, 5 May 2010.
19 NZCA [2011] 494 at [39].
(c) the buy-back option.
[39] The present value of the property in terms of s 142N(4) will be $495,000.
Rebecca Ellis J
0
3
0