Solicitor-General v Hertnon HC Palmerston North CRI 2008-454-29

[2010] NZHC 1323

IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY

CRI-2008-454-29

BETWEEN  THE SOLICITOR-GENERAL OF NEW ZEALAND

Applicant

ANDGARY BRIAN HERTNON Respondent

ANDLINDA CORDEROY HERTNON Third Party

On the papers

Counsel:         Mr Murray for the applicant

Mr Watson for the third party

Judgment:      2 August 2010         at 10 am

JUDGMENT OF MALLON J (Costs)

[1]      The Crown sought a forfeiture order in respect of land in part owned by the Hertnon Family Trust, of which Mr and Mrs Hertnon were the trustees.   The forfeiture order was sought because the land was “tainted property” as defined in the Proceeds of Crimes Act 1991.  That was because part of the land had been used by Mr Hertnon to cultivate cannabis.   In a judgment delivered on 31 May 2010  I declined to exercise my discretion to order forfeiture.  Mrs Hertnon now seeks costs.

[2]      Costs have been sought by memorandum.  Probably they ought to have been sought via a formal application.   The Crown, while pointing this out, has been content to respond by memorandum.   I will therefore deal with the matter on the

basis of the memoranda filed.

THE SOLICITOR-GENERAL OF NEW ZEALAND V HERTNON HC PMN CRI-2008-454-29  2 August 2010

[3]      Section 88 of the Proceeds of Crimes Act confers a discretion to order costs against the Crown in these terms:

Where–

(a)       A person brings or appears in proceedings under this Act in order–

(i)       To prevent a forfeiture order or restraining order being made against property of the person; or

(ii)      To have property of the person excluded from a forfeiture order or restraining order; and

(b)       The person is successful in the proceedings; and

(c)      The Court is satisfied that the person was not involved in the commission of the offence in respect of which the order was sought or made,–

The Court may order the Crown to pay all the costs incurred by the person in connection with the proceedings or such part of those costs as the Court thinks fit.

[4]      Although  there  were  restraining  orders  in  place,  the  costs  sought  by

Mrs Hertnon relate to the application for forfeiture only.

[5]      On Mrs Hertnon’s behalf it is said that she was successful in opposing the application for forfeiture (s 88(a)(i)) and in having her property excluded from the restraining order (s 88(a)(ii)).   However, I consider her costs application only in relation to the latter (ie s 88(a)(ii)).  I do so because:

a)       Although my judgment on the application for forfeiture referred to opposition from Mr and Mrs Hertnon, the formal position, as per the court papers filed on their behalf, was that Mr Hertnon opposed the application for forfeiture and Mrs Hertnon applied for relief if a forfeiture order were made.

b)To the extent that Mrs Hertnon supported her husband’s opposition to the application, she was represented by the same counsel as her husband.   It is not apparent that she incurred costs in providing this support (as opposed to seeking to have her interest excluded) over and above the costs which her husband would have had to incur in any

event.  Mr Hertnon cannot recover costs (because the pre-condition in s 88(c) is not met in relation to him).   It would be inappropriate to award costs to Mrs Hertnon which would in effect meet Mr Hertnon’s costs.

[6]      Proceeding on the basis that Mrs Hertnon’s costs application relates to her appearance in the forfeiture proceedings in order to have her interest in the property excluded from the forfeiture order, the next question is whether she was “successful in the proceeding” (s 88(b)).  The Crown submits that she was not.  It says that her application was not argued or considered because no forfeiture was ordered.   It further says that “[p]rovided Mrs Hertnon’s non-involvement could be shown the Solicitor-General would not have opposed the Court protecting her interest by exclusion (and she would not have needed to argue for it and could not have been “successful”)”.

[7]      Mrs Hertnon’s involvement in the proceeding was as follows:

a)        She was named as a third party to the application for forfeiture.

b)On 10 May 2010 Mr Hertnon’s notice of opposition to the forfeiture application and Mrs Hertnon’s notice of application for relief were filed and served.

c)       On 11 May 2010 the Crown filed their submissions in support of the forfeiture application.   In respect of Mrs Hertnon’s applicaton the Crown simply submitted, with reference to the discretionary factors to be considered by the Court as to whether to order forfeiture, that “there are third party interests”.

d)At the hearing on 13 May 2010 counsel for Mr and Mrs Hertnon came prepared to make submissions dealing with Mrs Hertnon’s application for relief.   However the Crown advised at the outset of the hearing that it did not oppose the exclusion of Mrs Hertnon’s interest.

e)       At the hearing, counsel also presented unsigned briefs of evidence from Mr and Mrs Hertnon and a bundle of documents.  Mr and Mrs Hertnon were in attendance to give their evidence on oath and to formally produce the bundle.  Counsel for the Crown indicated that he wished to cross-examine Mr and Mrs Hertnon, but in the event cross- examined only Mr Hertnon.

[8]      It can be seen that Mrs Hertnon incurred costs before she knew that the exclusion of her interest was not opposed.   I consider that Mrs Hertnon was “successful in the proceedings”.  She appeared in proceedings to have her property excluded from a forfeiture order.  She was successful because no forfeiture order was made (all the property was excluded from forfeiture including her interest in the property).  Had I exercised my discretion in favour of forfeiture then she would have been successful in having her interest excluded on an unopposed basis.

[9]     The third question is whether I am satisfied that Mrs Hertnon had no involvement in the commission of the offence (s 88(c)).   I am satisfied as to this. Mrs Hertnon was initially charged, but the charges against her were withdrawn.  Her evidence at the hearing on the forfeiture application was that the first she became aware  of  the  cannabis  on  the  property  “would  have  been  24  hours  before [Mr Hertnon was arrested] that it was a couple of plants was what I was told and I’d been assured that they were going and I’d left it at that really”.   She was asked whether she could confirm that she knew nothing about the cultivation of cannabis on a commercial scale and she answered “absolutely”.   The Crown did not cross- examine her and I have no reason to doubt her evidence.

[10]     I therefore consider that the three conditions in s 88 are met.  It is therefore open to me to order that the Crown pay the costs incurred by Mrs Hertnon in connection with the proceedings or such part of those costs as I think fit.  The Crown submits that I should not order costs because the proceedings are criminal in nature and so costs do not necessarily follow the event.   However s 88 has set out the conditions that must be satisfied, and it does not set out any specific matters that must be considered in the exercise of the discretion if these three conditions are met. Here the Crown could have indicated from the outset that Mrs Hertnon’s interest

could be excluded.  It did not do so, and so Mrs Hertnon was required to incur costs. I can think of no reason why a costs order should not be made in her favour.

[11]     However the only costs that should be ordered are those that relate solely to the application for exclusion of Mrs Hertnon’s interest in the property.  I consider that the bundle of documents was as relevant to Mr Hertnon’s opposition to the forfeiture order as it was to Mrs Hertnon’s application.  I therefore do not order costs in respect of preparing the bundle.  As her counsel would have attended the hearing in any event, I do not order costs for the travel to the hearing, nor for the appearance at the hearing.  I consider that the only costs that should be ordered are those that relate solely to making Mrs Hertnon’s application and the preparation before the hearing on that application.   I therefore order the costs claimed for those items, namely $960 in respect of the application and $800 for pre-hearing preparation on the application, which is a total costs order of $1760.

Mallon J

Solicitors:

P Murray, Ben Vanderkolk & Associates, Palmerston North, email: [email protected]

L Watson, Solicitor, Paekakariki, [email protected]