Elliot v R
[2011] NZCA 386
•11 August 2011
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| IN THE COURT OF APPEAL OF NEW ZEALAND |
| CA631/2010 [2011] NZCA 386 |
| BETWEEN RODNEY GEORGE ELLIOT |
| AND THE QUEEN |
| Hearing: 2 May 2011 |
| Court: Wild, Venning and Courtney JJ |
| Counsel: J Krebs for Appellant |
| Judgment: 11 August 2011 at 12.30 pm |
JUDGMENT OF THE COURT
A The appeal is allowed.
BThe order for forfeiture is set aside and the resulting sentence of supervision quashed.
CThe issue of forfeiture is to be considered again by the High Court and the appellant is to be re-sentenced by that Court.
REASONS OF THE COURT
(Given by Venning J)
Introduction
The appellant, Mr Elliot, pleaded guilty to charges relating to the cultivation and sale of the Class C controlled drug cannabis. As part of the sentencing process Heath J made an order under s 142N of the Sentencing Act 2002 for the forfeiture of the appellant’s property at 42 Moana Road, Okitu, Gisborne.[1] The Judge then sentenced the appellant to a term of supervision for one year. Without the forfeiture order the Judge would have imposed a sentence of two years six months’ imprisonment.
[1] R v Elliot HC Gisborne CRI-2009-016-3799, 19 August 2010.
The appellant appeals against his sentence, in particular against the forfeiture order. The appellant says the Judge was wrong when he concluded that the provisions of the Sentencing Act, and s 142N(1) in particular, did not enable forfeiture of part of the property. He argues there was jurisdiction to forfeit part only of the property and that such an order was appropriate in this case. The appellant acknowledges that if the appeal is allowed that would lead to him being re-sentenced with the likelihood a term of imprisonment would be imposed.
In the alternative the appellant argues that if the Judge was correct, and it was not possible to forfeit part of the property, then the forfeiture order should not have been made as it caused him undue hardship.
The Crown submits that the Judge could not order forfeiture of part only of the property as it was held in one title and that, in this case, the forfeiture of the entire property did not result in undue hardship to the appellant.
The issues
This appeal raises the following issues:
(a)Is there jurisdiction to forfeit part only of the property?
(b)If there is, how is the order to be implemented?
(c)If there is no jurisdiction to forfeit part only of the property, was it open to the Judge to forfeit?
Background
On the termination of a covert drug investigation police executed a search warrant at 42 Moana Road. During the search of the property they located an indoor (hydroponic) cannabis growing area at the rear of a garage on the property. It was divided into two separate rooms. One was for plants in the process of growing while the other was used to facilitate flowering. The appellant owned the property. When interviewed by the police the appellant acknowledged he was responsible for the indoor growing operation. He said that he had been growing cannabis in the garage for some three years. He subsequently pleaded guilty to the charges and was remanded to the High Court for sentence, as the District Court declined jurisdiction.
A disputed fact hearing was held to determine the size and profitability of the cannabis growing operation. Heath J found, for the purposes of the forfeiture application and sentence, the annual yield to be $30,000 per annum, leading to a total yield of something in the vicinity of $90,000 over the three years of the appellant’s operation.
The property was valued at approximately $485,000. The appellant had owned it since 1988. He had acquired it from legitimate sources.
The forfeiture decision
Heath J concluded that s 142N(1) of the Sentencing Act did not permit the Court to make a forfeiture order in respect of part of the Moana Road property.[2] As the property was held in one title he considered it to be indivisible so that it had to be forfeited entirely or not at all.[3]Section 142N(3) did not provide a jurisdictional basis for relief in favour of an offender. That provision was directed at providing relief to third parties by declaring the nature, extent and value of the interest of, for example, a mortgagee or joint owner of the property to be forfeited.[4]
[2] At [69].
[3] Citing R v Dunsmuir [1996] 2 NZLR 1 (CA) at 6–7.
[4] At [69].
Heath J then went on to consider whether to make a forfeiture order in respect of the entire property under s 142N(1). He accepted that under s 142N(2) the Court could consider any undue hardship caused to the appellant but considered that in the circumstances of the present case he could not justifiably refuse a forfeiture order on that basis.[5] The Judge noted that while the result was harsh the appellant would receive the advantage of a benign sentence.
[5] At [73].
The Judge considered Parliament intended the forfeiture to be part of the sentencing process. The harshness of any penalty suffered through forfeiture could be ameliorated by the reduction of an otherwise appropriate sentence.[6]
[6] At [69] citing the Criminal Proceeds (Recovery) Bill 2007 (81-1) (explanatory note) at 4‑5.
Significantly for the present appeal the Judge noted that:[7]
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 [53] 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.
Forfeiture of part
[7] At [73].
The principal legal issue raised by this appeal is whether s 142N of the Sentencing Act provides jurisdiction for the Court to order that part of a property that is an instrument of crime held in one title be forfeited to the Crown.
Heath J found that the Court did not have jurisdiction to forfeit part of the property. The options were to either forfeit the whole property to the Crown (without recognising any interest on behalf of the offender) or to refuse forfeiture.
Proceeds of Crime Act 1991
To put this issue in context, and to inform consideration of s 142N, it is necessary to consider the former Proceeds of Crime Act 1991 and decisions of this Court under that Act. Section 15(1) of that Act provided:
15 Forfeiture orders
(1)On the hearing of an application for a forfeiture order in respect of a person's conviction of a serious offence, the Court may, if it is satisfied that property specified in the application is tainted property in respect of the offence, order that such of the property as is specified by the Court is forfeited to the Crown.
(Emphasis added.)
“Tainted property” was relevantly defined as:[8]
(i)property used to commit, or to facilitate the commission of, the [serious] offence; or
(ii) proceeds of the offence; …
[8] Proceeds of Crime Act 1991, s 2.
The issue raised on this appeal was directly considered by this Court in relation to s 15(1) of the former Act in R v Dunsmuir.[9] Mr Dunsmuir had used his house property, which was held in one title, for cultivating cannabis. The High Court had made an order forfeiting the entire property to the Crown.
[9] R v Dunsmuir [1996] 2 NZLR 1 (CA).
On appeal it was argued on behalf of Mr Dunsmuir that the order for forfeiture should not have been in respect of the whole property, but in respect only of a portion of it.
The Court considered that argument raised an issue of jurisdiction. The Court’s reasoning on the point was as follows:[10]
Jurisdiction
Section 15(1) says that the Court "may" order the forfeiture "of such of the property as is specified by the Court". The word "may" clearly allows the Court a discretion. The Court must first be satisfied that the property specified in the application is "tainted property", but it may limit its order to such of the property as it specifies in the order. Thus if there are a number of items of tainted property in respect of the offence, such as various houses and vehicles, the Court is not bound to forfeit every item. The words "such of the property" clearly enable some items only to be selected for forfeiture. They do not, in their ordinary meaning, authorise the forfeiture in part of a particular item.
"Property" is defined in s 2 as meaning real or personal property of any description, whether in New Zealand or elsewhere, and whether tangible or intangible, and as including an interest in any such property. Thus a mere interest, such as that of a lessee, can be subject to forfeiture. That does not suggest, however, that part of an interest can be forfeited, or that the Court can by its order create a new interest which can be forfeited. It is the property or interest in property used to commit the offence which becomes "tainted property". The Court may order the forfeiture of such of the property as it specifies in the order. There is no reason to go beyond the ordinary meaning of the words "'such of the property", and to read them as if they continued "or such part thereof as is specified by the Court".
(Emphasis added.)
[10] At 3.
The Court rejected an argument that s 15(5) which provided:
Where a Court makes a forfeiture order, the Court may give such directions as are necessary and convenient for giving effect to the order.
enabled forfeiture in part.[11] Section 15(5) was only an incidental power, which did not enlarge the power to make the order.
[11] At 3‑4.
The Court then went on to consider the decision of the New South Wales Court of Criminal Appeal in R v Bolger as follows:[12]
Counsel for the Solicitor-General referred us to R v Bolger (1989) 16 NSWLR 115, which was an appeal from an order for forfeiture of a drug offender's interest in a motor vehicle to the extent of a monetary amount. The section in the New South Wales statute empowering the Court to order forfeiture does not contain the words in the New Zealand statute "such of the property as is specified". A subsection empowers the Court to specify in the order "the extent of the estate, interest or rights in the property that are affected by the order". The next following section provides that where a forfeiture order is made, the property vests in the Crown "to the extent of the estate, interest or rights (if any) specified in the forfeiture order". The Court of Appeal held there was no power to order forfeiture of a part of the offender's interest, or of the interest to the extent of a monetary sum. Hope JA at p 117 held that the statute did not authorise the creation of an interest, but merely the forfeiture of an existing interest. Allan J, who delivered the principal judgment, discussed the later sections which protect the interests of innocent parties, in a manner broadly similar to our ss 17 and 18. He then returned to the forfeiture section, and said (at p 124):
"What is forfeited is the tainted property. It is the manifest intention of the legislation that it reach the whole of the offender's interest in the property. True it is that 'property' is defined as including any estate or interest in property and any other chose in action and any other right. But that means the whole of the relevant estate, interest, chose in action or right. Section 5(4) speaks of 'the estate, interest or rights' forfeited — not of any fraction of such estate, interests or rights. If the tainted property, for example, was a car used in or in connection with the commission of the offence, the offender owns it and no one else has any interest in it, it is the car which is to be forfeited if an order is made. An order cannot be made for forfeiture of one half of his interest as owner in the car. Nor can a forfeiture order be made for forfeiting his interest in the car to the extent of a monetary sum."
Despite some differences in the respective statutes, the reasoning in R v Bolger supports the conclusion which in our view accords best with the language of the New Zealand statute. We conclude that s 15 does not empower the Court to forfeit part only of an item of tainted property or part only of the offender's interest in an item of property. The Court has power to order forfeiture of some items but not others, but it cannot by its order create some new item or some new interest.
[12] R v Bolger (1989) 41 A Crim R 222 (NSWCCA) at 5‑6.
In short, in Dunsmuir this Court concluded that the wording of s 15(1) did not authorise the Court to forfeit part of an interest in property or to create a new interest which could be forfeited. In coming to that conclusion the Court considered itself bound by the words of s 15(1) of the former Act. It said there was no reason to go beyond the ordinary meaning of the words “such of the property” and to read them as if they continued “or such part thereof as is specified by the Court”.
Both Heath J in the case under appeal and Cooper J in R v Brazendale[13] considered that the constraints identified by this Court in Dunsmuir still applied. It was a case of all or nothing.
[13] R v Brazendale HC Auckland CRI-2009-092-17133, 20 August 2010.
Dunsmuir was decided on 4 March 1996. In the later decision of Lyall v Solicitor-General[14] this Court again referred to the issue raised in Dunsmuir. In Lyall legal title to the property was held in the name of Mr Glover, a Christchurch accountant. He held the property on trust for Mr Lyall and Mr Black in respective two-thirds and one-third shares. Although legal title vested in the trustee, the case proceeded as though Mr Lyall and Mr Black held the fee simple as tenants in common in those shares.
[14] Lyall v Solicitor-General [1997] 2 NZLR 641 (CA).
The Crown sought forfeiture of the property following Mr Black’s conviction for selling cannabis at the property. There was evidence Mr Lyall had also been involved in drug dealing but the forfeiture application did not relate to or rely on his offending. For the purposes of the application he was regarded as a third party with an interest in the property.
On appeal the Court confirmed that, as a result of Mr Black’s offending in relation to part of the property, s 15(1) applied and a forfeiture order could be made in respect of the entire property (even though Mr Black only held a one-third share). The Court made the following observation regarding the ability to forfeit part of an interest in property:[15]
Before leaving s 15 we record our view that a legislative amendment is desirable to empower a Court to forfeit part of an offender's interest in a property or part of its value where the interest is incapable of division in any other way (like the farm in R v McCormick). We have some concerns about the consequences of the decision in R v Dunsmuir [1996] 2 NZLR 1 in so far as it held that such power is not available. Legislative correction may avoid the entire refusal of a Crown application on the basis of severe disproportionality. As will be seen, this remark is particularly pertinent to Lyall's application, and to that we now turn.
[15] At 647.
While confirming forfeiture of the entire property, the Court noted Mr Lyall’s two-thirds interest in the property. The forfeiture of the entire property would defeat that interest unless it could be provided for under s 18 (the third party relief provision). The Court then concluded:[16]
Lyall's equity in respect of which he seeks relief has a value of about $80,000. There is in our view a severe disproportion between Lyall's involvement and the value of the interest he will lose if relief is not granted. Unfortunately, the same difficulty with the statute which we have noted in s 15 is present in s 18. It requires the Court to make an order concerning "the applicant's interest in the property". Subsection (2) enables the Court to refuse to make such an order but does not authorise partial relief. ...
[16] At 649.
The Court referred to the New South Wales Court of Criminal Appeal decision of R v Bolger and went on to say:[17]
This Court in Dunsmuir was not prepared to take a different position even though our s 15, unlike our s 18, contains reference to forfeiture of "such of the property as is specified by the Court". Consistently with these decisions we must hold that in s 18 "the applicant's interest" means the whole of the interest.
We would, if the power existed, have been prepared to order forfeiture of a portion of Lyall's interest but, left with a choice of all or nothing, we think all is too severe, particularly as Lyall has already been punished by imprisonment for his own serious offences. ...
[17] At 649.
The Court then granted Mr Lyall relief by declaring that he had a two-thirds interest in the property and ordering the Crown pay him an amount equal to this interest. It concluded:[18]
We understand there may be other practical problems in the operation of the Proceeds of Crime Act. It seems to us to be in need of a comprehensive review, possibly by means of a reference to the Law Commission.
[18] At 650.
Again, in R v Spellacey, this Court cited Dunsmuir and confirmed that under s 15(1) it is the whole of the property or the whole of the offender’s interest in the property which is forfeited, not merely part.[19]
The position in New South Wales
[19] R v Spellacey CA128/00, 10 August 2000 at [36].
We briefly refer to the position under the equivalent legislation in New South Wales, under which Bolger (on which this Court relied in Dunsmuir) was decided. Bolger was decided under the Crimes (Confiscation of Profits) Act 1985 (NSW) which provided that “the court may order that the property is forfeited to the State”.[20] The New South Wales Court of Criminal Appeal held:[21]
It is the manifest intention of the legislation that it reach the whole of the offender’s interest in the property. True it is that “property” is defined as including any estate or interest in property and any other chose in action and any other right. But that means the whole of the relevant estate, interest, chose in action or right. Section 5(4) speaks of “the estate, interest or rights” forfeited – not any fraction of such estate, interests or rights. If the tainted property, for example, was a car used in or in connection with the commission of the offence, the offender owns it and no one else has any interest in it, it is the car which is to be forfeited if an order is made. An order cannot be made for forfeiture of one half of his interest as owner in the car. Nor can a forfeiture order be made for forfeiting his interest in the car to the extent of a monetary sum. What the court can do under s 5(4) is to specify the extent of “the estate, interest or rights in the property” that are forfeited. Forfeiture of a sum of money is not forfeiture of an estate, interest or right in the property.
[20] Crimes (Confiscation of Profits) Act 1985 (NSW), s 5(1).
[21] At 231.
The Crimes (Confiscation of Profits) Act 1985 was repealed and replaced by the Confiscation of Proceeds of Crime Act 1989 (NSW). The analogous provision was to a similar effect (in that it empowered forfeiture of “the property” only).[22] In R v Galek, decided under the latter Act, the New South Wales Court of Criminal Appeal confirmed the “all or nothing” approach adopted in Bolger.[23] Allen J referred to this as “the Draconic choice which the legislature sees fit to give”.[24] Hunt CJ observed:[25]
This is a Draconian statute, and the operation of what may be called its “all or nothing” interpretation will produce in this case a consequence which is either one of horrendous hardship which, in my view, would be disproportionate to the nature of the offence which was committed, or none at all.
[22] Confiscation of Proceeds of Crime Act 1989 (NSW), s 18(1).
[23]R v Galek (1993) 70 A Crim R 252 (NSWCCA) at 253‑254 and 258 per Allen J and 259 per Hunt CJ.
[24] At 258.
[25] At 259.
A discussion paper and later report of the New South Wales Law Reform Commission in 1996 recommended the Confiscation of Proceeds of Crime Act be amended to allow for the making of partial confiscation orders, citing Bolger and Galek.[26] The Act has not been so amended.
The Criminal Proceeds (Recovery) Act 2009 and s 142N Sentencing Act
[26]Law Reform Commission Sentencing (NSWLRC DP33, 1996) at [10.56]‑[10.57] and Sentencing (NSWLRC R79, 1996) at [13.21]‑[13.22].
The Proceeds of Crime Act was repealed and replaced by the Criminal Proceeds (Recovery) Act 2009 and ss 142A‑142Q of the Sentencing Act on 1 December 2009. Read together, the Criminal Proceeds (Recovery) Act and the amendments to the Sentencing Act create a new regime for the forfeiture of the proceeds of crime and property used to facilitate criminal activity. The Criminal Proceeds (Recovery) Act deals with cases in which no conviction has yet been entered while the Sentencing Act provisions are triggered on conviction and apply as part of the sentencing process. The Law and Order Committee reporting on the Criminal Proceeds (Recovery) Bill stated that the major change proposed by the Bill was “that a criminal conviction would no longer be required for property representing the proceeds of crime or the value of unlawfully derived income to be confiscated”.[27]
[27] Criminal Proceeds (Recovery) Bill 2007 (81-2) (select committee report) at 1.
The explanatory note to the Bill identified its policy objectives as the confiscation of property from persons who had engaged in or profited from significant criminal activity, reduction of the rewards from crime for the person concerned, reduction of the attraction of crime for potential offenders and the reduction of resources that could potentially be used for criminal activity.[28]
[28] Criminal Proceeds (Recovery) Bill 2007 (81-1) (explanatory note) at 1.
The explanatory note went on to explain that in relation to conviction based proceedings:[29]
As such property may have been lawfully acquired, instrument forfeiture is limited to situations where there has been a conviction and will be considered by the court as part of the sentencing process. This avoids the possibility of someone being, in effect, more severely punished for an offence simply because he or she owns a substantial asset that was used to facilitate the offending.
[29] At 4‑5.
Parliament also moved from the concept of “tainted property” to that of an “instrument of crime”. An instrument of crime is defined as:[30]
instrument of crime—
(a)means property used (wholly or in part) to commit, or to facilitate the commission of, a qualifying instrument forfeiture offence; and
...
(c)in relation to any property referred to in paragraphs (a) ... the proceeds of any disposition of that property or any other property into which that property is converted, after the commission of the qualifying instrument forfeiture offence, except to the extent provided otherwise by any order of a court under this Act or the Criminal Proceeds (Recovery) Act 2009, excluding any severable interest or granting relief
[30] Sentencing Act 2002, s 4.
Of note is the fact that Parliament has made it clear that even if the property has only been used in part for the purposes of crime, the entire property is an instrument of crime and may be subject to forfeiture.
Section 142N provides for instrument forfeiture orders:
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; 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, 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.
The principal difference between the former s 15(1), of the Proceeds of Crime Act and s 142N(1) of the Sentencing Act is the addition of the words “or any part of it” (“it” being the property that is an instrument of crime). The additional words are similar to the phrase “or such part thereof” which was identified by this Court in Dunsmuir as the wording which would have enabled forfeiture of part of the property.
If the wording now in s 142N(1) had been present in s 15(1) it seems clear that this Court in Dunsmuir would have considered there was jurisdiction to order forfeiture of part of the property despite the fact the property was held in one title. Parliament must be taken to have intended to address the issue raised by this Court in Dunsmuir (and other cases) by the amendment and the inclusion of this wording. We conclude that the Court may now order that the instrument of crime (defined as property used wholly or in part to commit or facilitate the commission of the offence), or any part of it, may be ordered to be forfeited by the Court under s 142N(1) even where the instrument of crime is land held in one title.
We are fortified in this conclusion by the observation of this Court in the case of Cooksley-Mellish v Solicitor-General of New Zealand[31] in relation to the Criminal Proceeds and Instruments Bill[32] (later withdrawn and replaced with the Criminal Proceeds (Recovery) Bill). The relevant clause in the former Bill also included the words “or any part of it specified by the court”.[33] The Court stated:[34]
The Court [in Lyall] commented (at 647) that the inability under the Act to forfeit part of an offender’s interest in property, unless legislatively corrected, could lead to the entire refusal of a Crown application on the basis of severe disproportionality. We note that the Criminal Proceeds and Instruments Bill would, if enacted, remove that defect.
(Emphasis added.)
[31] Cooksley-Mellish v Solicitor-General of New Zealand CA209/05, 27 March 2006.
[32] Criminal Proceeds and Instruments Bill 2005 (279-1).
[33] Criminal Proceeds and Instruments Bill 2005 (279-1), cl 191.
[34] At [34].
We conclude there was jurisdiction to order forfeiture of part only of the property at 42 Moana Road in this case. That finding is sufficient, in the context of this case, to allow the appeal. However, because the High Court raised the difficulty of implementing the order as a further reason against such an interpretation, we also address that issue.
How is the order to be implemented?
In both the decision under appeal and in Brazendale the High Court considered that difficulties with implementation of the order supported the conclusion that it was not possible to forfeit part of the property. Heath J considered that s 142N(1) did not permit a specified monetary interest to be retained by an offender. In Brazendale, Cooper J noted there was no mechanism provided by which an order could be made which had the effect of partitioning in some way a property held in one title and owned in fee simple by the offender.[35] He referred to s 70(1) of the Criminal Proceeds (Recovery) Act which provides that the property to which the instrument forfeiture order relates “vests in the Crown absolutely”.
[35] R v Brazendale HC Auckland CRI-2009-092-17133, 20 August 2010 at [22].
There is an inter-relationship between the provisions for instrument forfeiture orders in the Sentencing Act and the implementation of those orders by the provisions of the Criminal Proceeds (Recovery) Act. Section 70 of the Criminal Proceeds (Recovery) Act provides:
70 Effect of instrument forfeiture order
(1)An instrument forfeiture order made under section 142N of the Sentencing Act 2002 must specify the property to which the instrument forfeiture order relates and that the property—
(a) vests in the Crown absolutely; and
(b) is in the custody and control of the Official Assignee.
(2)If any property that is land is vested in the Crown absolutely as a consequence of an instrument forfeiture order made under subsection (1), an interest recorded on the title to the land that is not affected by the instrument forfeiture order is not extinguished.
As Cooper J observed in Brazendale on the making of a forfeiture order the property vests in the Crown absolutely. Further, s 85 of the Criminal Proceeds (Recovery) Act provides for the discharge of the instrument forfeiture order under the control of the Official Assignee:
85 Discharge of instrument forfeiture order by Official Assignee
If a court makes an instrument forfeiture order, the Official Assignee must, as soon as practicable after the expiry of the relevant appeal period (defined in section 73(3)), dispose of the property specified in the order and apply the money resulting from the disposal as follows:
(a)first, by paying the costs recoverable by the Official Assignee under section 87:
(b)secondly, by paying to the Legal Services Agency the amount (if any) payable by way of legal aid granted to the former interest holder (less any contributions paid by the former interest holder):
(c)thirdly, by paying any outstanding fines and sentences of reparation imposed on the former interest holder:
(d) fourthly, by paying any remaining money to the Crown.
The Official Assignee is required to dispose of the forfeited property and to apply the proceeds in accordance with s 85. The section does not expressly provide for recognition of an offender’s interest. None of this is new. Largely equivalent provisions were in the former Proceeds of Crime Act.
We consider the effect of s 70 of the Criminal Proceeds (Recovery) Act 2009 is clear where, as in this case, the property is in one title. Section 70 requires the order to vest the whole property in the Crown absolutely, and to provide that the Official Assignee has custody and control of it. That is so even if only part of the property is forfeited to the Crown. The vesting of the property in the Crown and the passing of control of it to the Official Assignee are the first steps in implementing the forfeiture order. We favour this interpretation because we consider Parliament intended to avoid the practical difficulties likely to confront the Crown in attempting to enforce an order which vested in the Crown only that part of the property ordered to be forfeited to the Crown.
We consider s 142N(3) and/or (5) are the provisions which enable the Court to give practical effect to an order forfeiting to the Crown part only of a property which is an instrument of crime. Section 142N(3) in particular, can be applied to give effect to any person’s (including but not limited to the offender’s) interest in the property to be forfeited. In Dunsmuir this Court accepted that the earlier equivalent to s 142N(5) could have been applied to give practical effect to an order for partial forfeiture if there had been jurisdiction for forfeiture of part.[36]
[36] At 3–4.
For the assistance of parties to similar cases, we propose to set out one form that orders under s142N could follow in this case to recognise the various interests and give effect to the forfeiture. We note that Heath J indicated he would make an order confirming an agreed $20,000 interest of Mr Elliot's partner, Ms Christie, in the property under the Property (Relationships) Act 1976.[37] If, in this case the Court determined that, after taking account of Ms Christie’s interest, a one-half interest in 42 Moana Road ought to be forfeited to the Crown (and we are not to be taken as suggesting that is the appropriate order), it could make an instrument forfeiture order under s 142N in the following terms (we indicate the relevant provision in parentheses after each term, but do not suggest this need be done when the Court is making an order):
(a)this order relates to 42 Moana Road, Okitu, Gisborne registered in the name of Rodney George Elliot (the property) (s 70(1));
(b)the Court considers the present value of the property to be $485,000 (s 142N(4));
(c)Ms Christie has an interest in the property to the value of $20,000 (s142N(3)(a));
(d)one-half of Rodney George Elliot’s interest in the property is forfeited to the Crown (s 142N(1));
(e)the property is vested in the Crown absolutely and is to be in the custody and control of the Official Assignee (s 70(1));
(f)after repayment of the monies secured by the BNZ mortgage and payment of the $20,000 to Ms Christie, the Crown is to account to Rodney George Elliot for one-half of the monies paid to it by the Official Assignee pursuant to s 85(d) of the Criminal Proceeds (Recovery) Act 2009 (s 142N(3)(b)).
[37] At [66]–[68] and [76].
These suggested orders do not declare the nature, extent, and value of Mr Elliot's interest in the property in terms of s 142N(3)(a). Any declaration in those terms appears to us unnecessary in this case and therefore inappropriate. We note the subsection provides only that the Court "may, if it considers it appropriate to do so" make a declaration in the terms set out in s 142N(3)(a) and (b).
Also, Heath J considered that no formal order under s 142N(3) protecting the BNZ's interest as mortgagee of the property was required, given s 70(2) protects instruments recorded on the title which are not affected by the forfeiture.[38] We agree.
[38] At [65].
Finally we observe that section 142N(5) empowers the Court to give any other directions necessary or convenient for giving effect to the order. The Court could, for instance, give any directions necessary to give effect to an order forfeiting to the Crown only part of a property contained in more than one title. There may also be cases where the Court is minded to direct that the offender or the offender's family be given first option or some other opportunity to buy the property back from the Crown. Such directions may be appropriate where the property is of great sentimental value (for example, where it has been in the family for generations) and the family knew nothing of the offending.
To summarise, s 142N(1) authorises a partial forfeiture of the property which was an instrument of crime. While the property vests entirely in the Crown under s 70, the offender’s interest in the property is recognized by fixing his interest in it, either as a specified part interest or as a fixed dollar amount. Section 142N(3) and/or (5) can then be invoked to make whatever orders may be appropriate to give effect to that direction.
Conclusion
It follows that we are satisfied that in this case it was open to the Judge to make an order for the partial forfeiture of the property. Given the Judge’s comment that he would have been minded to do so if there was jurisdiction, the appeal must be allowed. It is unnecessary to consider whether in the circumstances of this case the forfeiture of the entire property caused undue hardship.
Result/orders
The order for forfeiture is set aside. The sentence of supervision is quashed. The issue of forfeiture is to be considered again. The appellant is to be re-sentenced following the outcome of that process.
Solicitors:
Langley Twigg, Napier, for Appellant
Crown Law Office, Wellington, for Respondent
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