Solicitor-General v Hertnon HC Palmerston North CRI 2007-454-25
[2010] NZHC 871
•31 May 2010
IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY
CRI-2007-454-25
IN THE MATTER OF an application pursuant to the Proceeds of
Crime Act 1991
BETWEEN THE SOLICITOR-GENERAL OF NEW ZEALAND
Applicant
ANDGARY BRIAN HERTNON Respondent
ANDLINDA CORDEROY HERTNON Third Party
Hearing: 13 May 2010
Appearances: B Vanderkolk for the applicant
L Watson for the respondent
Judgment: 31 May 2010 at 3pm
JUDGMENT OF MALLON J
Introduction
[1] This case concerns whether 20 hectares of land should be forfeited to the Crown as “tainted property” because cannabis was grown on part of the land. The Crown seeks a forfeiture order. Mr and Mrs Hertnon oppose the order on the grounds of undue hardship and that forfeiture would be disproportionate to the
offending.
THE SOLICITOR-GENERAL OF NEW ZEALAND V HERTNON HC PMN CRI-2007-454-25 31 May 2010
[2] The land is owned by two trusts, the Hertnon Family Trust and the Hill Family Trust. Mr and Mrs Hertnon are the trustees of the Herton Family Trust. Mr and Mrs Hill are the trustees of the Hill Family Trust. The land was purchased by them on 13 February 1998. The purchase price was $285,000. A valuation obtained in 2007 put the property’s value then at $600,000. Its most recent RV is
$830,000.
[3] The evidence is that the purchasers intended to establish a permanent residence on the property and a centre for healing/a rural haven which would be substantially self-sufficient. However things did not go as planned. The purchasers became involved in a dispute with the former owner over the conditions of sale under which the former owner was to carry out some improvements. As well, the arrangements between the two family trust purchasers became embroiled in dispute and litigation.
[4] On 30 March 2007, pursuant to a search warrant, the police located
503 cannabis plants on the property. The police also located cannabis leaf weighing approximately 14.5 kgs. Mr Hertnon was in the process of constructing a shed to dry the cannabis when the police arrived. Another person was tending to the plants but absconded and was not subsequently located.
[5] Mr Hertnon was charged with cultivating cannabis, together with another person or persons unknown, between October 2006 and 30 March 2007. This charge related to the cannabis plants. He was also charged with having cannabis in his possession for the purposes of supply in relation to the cannabis leaf. He pleaded guilty to the charges. On 18 December 2009 Mr Hertnon was sentenced to
12 months’ home detention and 200 hours community work. This sentence was lighter than what the sentencing Judge would otherwise have passed on the basis of the scale of the cannabis operation, because of what the Judge described as “very unusual factors personal to [Mr Hertnon]”.
[6] The forfeiture order is sought under the Proceeds of Crime Act 1991.[1] Under this Act a Court “may” order forfeiture of “tainted property”.[2] Tainted property for the purposes of a forfeiture application means (so far as is relevant here) “property used to commit, or to facilitate the commission of” a “serious offence”.[3] A “serious offence” means an offence punishable by imprisonment for a term of 5 years or more.[4] Here it is accepted the 20 hectare property is “tainted property”. The question is whether I should exercise my discretion to make the order.
Discretionary factors
[1] Although this Act has been replaced by the Criminal Proceeds (Recovery) Act 2009, by s 172 of the 2009 Act the 1991 Act continues in respect of completing any proceeding commenced under the 1991 Act. Here the proceeding was commenced by way of an application for a restraining order in 2007.
[2] Section 15(1).
[3] Section 2 (definition of “tainted property”).
[4] Section 2 (definition of “serious offence”).
[7] The Act sets out four factors that the Court may have regard to in deciding whether or not to make the order. They are as follows:[5]
[5] Section 15(2).
(a) The use that is ordinarily made, or was intended to be made, of the property; and
(b) Any undue hardship that is reasonably likely to be caused to any person by the operation of such and order; and
(c) The nature and extent of the offender’s interest in the property (if any), and the nature and extent of any other person’s interest in it (if any); and
(d) In addition to the matter referred to in section 14(1)(b) of this Act, any other matter relating to the nature and circumstances of the offence or the offender, including the gravity of the offence.
[8] As to the first of these, Adams on Criminal Law – Sentencing, provides a useful summary of what may be relevant here, as follows:[6]
[6] Bruce Robertson (ed) Adams on Criminal Law- Sentencing (looseleaf ed, Thomson Reuters) at PC15.05(1).
This will include consideration of the extent to which the property was used for the offending, compared to the other uses to which it was put. A useful contrast can be drawn in this respect between property which is primarily
used for the purposes of offending, and property whose use for offending is largely ancillary or incidental. Lyall v Solicitor-General [1997] 2 NZLR
641; (1997) 15 CRNZ 1 (CA) provides an example at one extreme. The house that was the subject of the forfeiture application was used primarily
for the purposes of drug dealing. It was heavily fortified and no one lived there. In those circumstances, the Court had no difficulty in regarding a forfeiture order as appropriate. By contract, in Solicitor-General v Loftus
5/5/05, Ellen France J, HC Auckland CIV-2003-404-3085, where for a two month period the respondent permitted a bedroom in his house to be used as
a clandestine laboratory, the Court concluded that when the short duration of the offending was considered alongside its use as the respondent’s home for twelve years, the use of the property for manufacturing methamphetamine
could not be said to be its ordinary use and its forfeiture was inappropriate.
[9] The Crown says that the land was just land with scrub and regenerating bush and without any services to the property. It says that at the time of the offending the principal use was to cultivate and store cannabis and that there does not appear to be any other active use. However, on the evidence before me, that is because the land was beset with the difficulties with the former owner and then as between the purchasers. The property had been owned for nearly 10 years by this time. There is no evidence that the property was purchased for the commission of the offence. There is no evidence that the property was used to grow cannabis at any time before the crop found in March 2007. Mr Hertnon’s explanation was that as a result of the financial and other stress he was under he agreed to allow the land to be used to grown cannabis. His wife was not aware that cannabis was being grown on the property until close to the time of the search and even then was unaware of its scale and there is no suggestion that the Hills had any knowledge of the cannabis. The circumstances here are closer to the Loftus case than the Lyall case. This factor points against a forfeiture order.
[10] The next factor is whether any undue hardship is reasonably likely to be caused to any person by the order. Here the submissions for the Crown emphasise the size and value of the crop and the absence of any apparent other use for the property. The submissions for Mr Hertnon emphasise that this is Mr Hertnon’s only asset and that, due to his age and health difficulties, he has no realistic prospect of earning an income that would enable him to purchase another property. The submissions for Mr Hertnon also refer to Mr Hertnon’s evidence that he had grown the cannabis for two others, that they and not he were going to sell the cannabis, and that he was only to earn $30,000 from the sale of the cannabis.
[11] Mr Hertnon was sentenced on the basis of a then police estimate that the value of the crop was between $546,000 and $875,000. The police have revised their estimate upwards in evidence submitted in support of this application, but at the end of the day these are just estimates and it was not established that Mr Hertnon alone would be making anything like this sort of cash from the crop, even if there might be some scepticism that his payment was to be as low as $30,000. Furthermore, Mr Hertnon in fact made no money from the crop. I accept the Crown’s point that forfeiture can still be ordered even where no profit is in fact made from the offending, but the absence of any benefit in fact derived from the property is the absence of a factor that, if present, would point more strongly in favour of forfeiture.
[12] Apart from the profits that Mr Hertnon might have earned from the offending, also relevant here is what Mr Hertnon will lose if the property is forfeited. The first point here is that, although Mr Hertnon says that the property is his “tutangawaewae” (or “place to stand tall”), it seems that if the property is not forfeited, it will still be sold, possibly via a mortgagee sale. The property is Mr and Mrs Hertnon’s only asset. Mr Hertnon is 47 years old and a sickness beneficiary. Mr Hertnon (and his co-owners) have owned the land for a long time. The evidence is that Mr Hertnon has put considerable time and energy into the property, although unfortunately this has mostly been directed at dealing with disputes in relation it. I accept that there will be hardship to Mr and Mrs Hertnon if the property is forfeited. This hardship would not necessarily be “undue” if the only comparison was with the value of the crop but that is not the only relevant factor.
[13] I do not have precise figures of Mr Hertnon’s equity in the property. There are amounts owing to the National Bank and the ASB bank and rates are in default. In very rough terms, there might be $300,000 to $400,000 equity in the property of which Mr and Mrs Hertnon’s trust would have a half share. Even if there is considerably less equity realised, Mr Hertnon’s share of that realised equity will likely be of an amount that is significant to Mr Hertnon, and Mrs Hertnon
(Mr Hertnon’s wife of 18 years). Like Stanton v Solicitor-General,[7] and Cooksley-
Mellis v Solicitor-General,[8] if Mr Hertnon’s asset is forfeited it is unlikely that he will be able to re-establish himself. This factor points against forfeiture.
[7] Stanton v Solicitor-General [2007] NZCA 434 at [26].
[8] Cooksley-Mellis v Solicitor-General CA209/95, 27 March 2006 at [32].
[14] The next factor is the nature and extent of any other person’s interest in the property. This is a neutral factor in the present case. Mr and Mrs Hill do not oppose the forfeiture providing their interests are protected. Mrs Hertnon opposes the forfeiture order, but if it is granted seeks an order that her interest is not forfeited. In both cases the Court could protect their interests from forfeiture.
[15] The last factor is any other matter relating to the nature and circumstances of the offence or the offender including the gravity of the offence. Again, Adams on Criminal Law - Sentencing, provides a useful summary of what may be considered here:[9]
This is a catch-all that enables the Court to consider any other matter relating to the offence or the offender. As was noted in R v Dunsmuir [1996] 2
NZLR 1; (1996) 13 CRNZ 668 (CA) and in Lyall v Solicitor-General [1997]
2 NZLR 641; (1997) 15 CRNZ 1 (CA), this includes consideration of the gravity of the offence, and in particular whether the forfeiture order, when combined with any earlier sentence imposed, would have a disproportionate impact upon the offender beyond the deterrent element contemplated by the legislation itself.
[9] At PC15.05(4).
[16] Here the circumstances of the offending were relatively serious given the size of the crop and its potential yield. Whatever Mr Hertnon’s precise role in that, he had at least allowed his property to be used for a large crop, he was actively involved in building the shed to dry the cannabis when the police searched the property, and he intended to profit from his involvement.
[17] Against that are Mr Hertnon’s personal circumstances. Mr Hertnon’s personal circumstances were such that the sentencing Judge considered a sentence of home detention and community work was appropriate. A forfeiture of Mr Hertnon’s only asset, which he has owned for a number of years and in which he has invested considerable time and energy, would be very substantial punishment over and above
the sentence already passed upon him. Mr Hertnon at 47 years old was a first offender. He describes his experience in jail (between his guilty plea and sentencing) as a “low and dark period” for him and “very stressful”. His wife describes these events as “just horrific for all of us”. Having seen and heard from Mr Hertnon I have no reason to doubt these sentiments and to think that the whole process has served its deterrent purpose in relation to Mr Hertnon as the offender. In my view a forfeiture order would have a disproportionate impact of Mr and Mrs Hertnon in comparison with the gravity of the offending and taking into account the sentence already passed on Mr Hertnon.
Result
[18] Overall I am satisfied that I should not exercise my discretion to order forfeiture. Accordingly, the forfeiture order is declined.
“Mallon J”
Solicitors:
B Vanderkolk & Associates, Palmerston North, ph: 06 355 5790, [email protected]
Leo Watson, Solicitor, Paekakariki, Kapiti Coast, Photograph 04 904 4194, [email protected]