The Queen v Crombie

[2006] NZCA 148

IN THE COURT OF APPEAL OF NEW ZEALAND

CA453/05

THE QUEEN

v

ANDREW CROMBIE

Hearing:21 June 2006

Court:William Young P, Wild and Heath JJ

Counsel:D R La Hood for Appellant

M D Downs for Crown
P S J Withnall for PSIS Limited

Judgment:29 June 2006 

JUDGMENT OF THE COURT

AThe appeal is dismissed.

BLeave to apply to this Court on matters as set out in paragraph [10] of this judgment is reserved.

REASONS

(Given by William Young P)

Introduction

[1] The appellant appeals against a judgment of Gendall J delivered on 26 October 2005 forfeiting to the Crown under s 15 of the Proceeds of Crime Act 1991 (the Act) the appellant’s property at 45 Parker Avenue, Levin, and his 2001 Ford Falcon motor vehicle.

Factual background

[2]       The appellant pleaded guilty to:

a)Four separate counts of conspiring with others to supply methamphetamine between 31 May and 30 June 2004;

b)One count of conspiring to import methamphetamine into New Zealand; and

c)11 counts of selling methamphetamine on 11 separate dates between 15 April and 25 June 2004.

He was found guilty by a jury of a further count of conspiracy to supply methamphetamine. 

[3]       He was sentenced on 17 June 2005.  The Judge considered that the offending was at the bottom of the top category in R v Arthur [2005] 3 NZLR 739 (CA). The turnover was substantial and must have involved hundreds of thousands of dollars in receipts. In an intercepted telephone discussion the appellant noted that he had in the preceding six months paid $180,000 to Australia (presumably by way of payment for drugs which were imported). The Judge regarded the appellant as a central figure in the drug dealing operation. A starting point of 10 years’ imprisonment was reduced to an effective sentence of nine years in light of the guilty pleas. In addition, the Judge fixed a minimum non-parole period of four and a half years’ imprisonment.

[4]       The combined value of the house and car is in the order of $150,000.  Both are subject to securities in favour of PSIS Ltd securing, as at the date of forfeiture, approximately $89,000.  The equity in the house and car (allowing for further interest) is therefore in the order of $50,000.

[5]       On this appeal it is common ground that both the house and car are “tainted property” for the purposes of the Act.  It is likewise common ground that each is susceptible to forfeiture given that the offending in question is “serious” for purposes of the Act.  It is, nonetheless, important that we record how each asset attained the status of tainted property.

[6]       The appellant’s initial equity in the house came from clean money (a superannuation payment from a former employer).  It may be that mortgage payments and other outgoings associated with it were paid from the proceeds of the appellant’s drug dealing activities (as the Judge concluded).  But whether this is so or not is of little moment.  What is important is that the house was the central meeting place of the conspirators.  There the methamphetamine was divided up, weighed, packaged and sold.  Installed in the house were a police radio frequency scanner and a closed-circuit television surveillance system. 

[7]       The car’s status as tainted property arose because it had been used for facilitating sales of methamphetamine in particular to pick up methamphetamine purchased from wholesalers, to make deliveries to purchasers and to transport the appellant and other conspirators to and from deals.

Section 15 of the Act

[8] Section 15 provides

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.

(2)       In considering whether or not to make an order under subsection (1) of this section in respect of particular property, the Court may have regard to—

(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 an 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.

…

The Judge’s approach to forfeiture

[9] The Judge concluded that the house and car were tainted property. He then set out s 15(2) of the Act and went on:

[14]     The use to which that property is ordinarily made is to be compared to the other uses, such as being involved in drug dealing offences. Obviously residential homes are ordinarily used for domestic accommodation, as are private motor vehicles. This criterion can be viewed on a sliding scale. At one end being where property is acquired and used solely for the purpose of offending, such as the renting of premises from which a “tinnie house” is operated, to the other end where the private home of a third party is used by an offender for the purpose of cultivating cannabis such as in Solicitor-General v Wong (1997) 14 CRNZ 624.

[15]      In the present case the home was obviously used by the respondent as his place of residence but it was also used to a very significant extent for the purpose of the offending. It was set up with all the trappings of drug dealing with surveillance and police communicating monitoring systems and the like. So, too, the motor vehicle was obviously used by the respondent for private purposes but it also played an integral part in his delivering, selling and obtaining methamphetamine. These factors I take into account in assessing the various weight to be given to the discretionary matters set out in subs (2). In the end, I have to make a global determination whether the Court’s discretion should be exercised to make forfeiture orders.

[16] Concerning “undue hardship”; “undue” indicates something more than the ordinary hardship arising out of the execution of the forfeiture order; Lyall v Solicitor-General [1977] 2 NZLR 641, because obviously some hardship or punishment arises to an offender whose property is forfeited. He or she loses it. That is the intention of or purpose of the legislation. In the present case the loss represents an equity in the home of about $34,500 with the motor vehicle at about $20,000. It would be a significant loss to the respondent and Mr Lithgow submitted on his behalf that it would disproportionate to the gravity of the offending so as to become “undue hardship”. Whilst a severe penalty imposed upon conviction, such as the sentence of imprisonment in this case, can bear on the gravity of the hardship an offender suffers, it is not itself a hardship arising from the forfeiture order; see Solicitor-General v Sanders (1994) 2 HRNZ 24 at 30.

[17]     In the present case the only person having an interest in the realty or the motor vehicle is the respondent. His former de facto partner has no interest in the home and whilst she may have originally been registered as a joint owner of the motor vehicle, it is accepted on behalf of the respondent that his former partner does not contend that a sufficient relationship to found a relationship property claim existed.

[18]     No pecuniary sanction was imposed upon the respondent upon conviction.  Although of course he suffers the punishment of the term of imprisonment he has faced no financial penalty.

[19]     The value of drugs and the extent of the operation, the length of ownership of the property, the extent to which it is connected with the commission of the offence, the utility of the property (now) to the offender, the fact that forfeiture is intended to be a deterrent both personal and general, and the likely consequences of forfeiture on any third party, are factors which I take into account. None of them weigh in favour of non-forfeiture. The respondent’s previous drug offence convictions indicate a blatant disregard for the law which continued in an escalating way.

[20]     I think the gravity of the offending is a significant matter pointing towards forfeiture and weighing all those discretionary considerations and such actions, I am clear in my mind that forfeiture of the realty and the motor vehicle is required.

The basis of the appeal

[10]     There were two primary arguments advanced by Mr La Hood for the appellant:

a)The forfeiture orders ought not to have been made:

b)Allowance should be made for the appellant’s son in relation to payments made by him to the financier of the car.

We do not need to address the second of these arguments as Mr Downs, for the Crown, undertook to ensure that the appellant’s son would be reimbursed for the payments made in the event that the forfeiture orders are upheld.  We reserve leave to apply to this Court should there be any difficulty in implementing this.  So the only point we need to address is whether we should set aside the forfeiture orders.

Should we set aside the forfeiture orders?

[11]      Mr La Hood argued that the Judge paid insufficient regard to the overall punitive effect of the prison sentence and forfeiture.  He contended that their combined effect results in a disproportionately severe treatment or punishment in terms of s 9 of the New Zealand Bill of Rights Act 1990.  He complained that the Judge, particularly in para [16] of his judgment, declined to look at the cumulative impact of the forfeiture and prison sentence.

[12]     In developing this argument Mr La Hood noted that the house had been acquired with clean money, that the appellant will be in his mid fifties by the time he is released and will by then have bleak employment prospects.  In light of this, the loss of the house will have an adverse impact on his ability to reintegrate into society.  The house itself was used as a home for himself and his former partner.  He noted that none of the appellant’s co-offenders had been subject to forfeiture orders.

[13]     The Act provides not only for forfeiture of property used in the commission of offences but also for forfeiture of the proceeds of offending and the imposition of pecuniary penalties which have a similar function or effect.  Orders which operate so as to strip from an offender any benefits derived from offending do not give rise to problems under s 9 of New Zealand Bill of Rights Act.  Nor do they provide a basis for legitimate complaints  as to the disparity between co-offenders.  Potentially more problematic, however, is the forfeiture of property which is used in the commission of offending.  Such property may be of very substantial value but have been utilised in the commission of offending of limited gravity.  One of the cases cited to us by Mr La Hood, Solicitor-General v Fisher HC WHA M4402 27 June 2004 Harrison J, involved such a situation.  Alternatively, the property may have played merely an incidental part in the offending so that its forfeiture may seem disproportionate.  Further, as between a group of offenders it may be something of an accident as to whose car or whose house is utilised for the purposes of the offending.  If an offender who receives the same prison sentence as the other offenders but who, in addition, has substantial assets forfeited may understandably feel that he or she has been treated unfairly. 

[14]      That there is a difference between forfeiting property used in the commission of offending on the one hand and, on the other, the forfeiture of the proceeds of offending or the imposition of a pecuniary penalty intended to have the same effect was recognised by this Court in R v Brough [1995] 1 NZLR 419 at 424:

It is our conclusion, having regard to the scheme of the Act, that as a general proposition, confiscation orders under the Act should not be taken into account when assessing sentencing, subject to two qualifications. First, there may be exceptional or unusual circumstances where orders made, particularly orders to forfeit valuable property used in the commission of an offence, may have a disproportionate or exceptional affect [sic] on the offender, sufficient for some regard to be had to it when imposing sentence. Secondly, recognising that one of the purposes of the sentence to be imposed is to deter others who may be minded to commit like offences, if forfeiture orders of property used in the commission of offences are particularly severe, some adjustment to the sentence may be appropriate because the deterrent effect of the forfeiture orders may lessen the need for the deterrent element in the sentence. But it is difficult to conceive of circumstances where orders to forfeit the proceeds of the offence or for a pecuniary penalty order reflecting the benefit derived from the commission of an offence, should have any relevance to an appropriate sentence. These reflect the offender's ill-gotten gains which, in accordance with the policy of the Act, and irrespective of sentencing for offences, the offender should be required to disgorge.

[15]     Although these remarks were addressed to the relevance of forfeiture orders to sentence, logic suggests that s 9 of New Zealand Bill of Rights Act may have a role to play when,  post-sentence, the Court is considering whether to forfeit property which was utilised in the underlying offending.  Indeed this was recognised by this Court in Cooksley-Mellish v Solicitor-General CA209/05 27 March 2006 at [34]. 

[16]     We emphasise that in order to engage in s 9 it will be necessary, in each case, to point to treatment or punishment that is “disproportionately severe”: a high threshold.  Further, the policy factors in favour of forfeiture of property utilised in the commission of offending are cogent.  This is apparent from the judgment of this Court in R v Lyall [1997] 2 NZLR 641 at 647:

We see nothing excessive in the forfeiture. It is not disproportionately severe treatment or punishment in terms of s 9 of the New Zealand Bill of Rights Act 1990. Black had for a long period chosen to trade in drugs from his property frequently and in a quite substantial way. He may, as is submitted, have been primarily motivated by a need to feed his homebake addiction and may have in that manner parted with his cannabis dealing profits but that cannot excuse his deliberate participation in the distribution of an addictive substance. Other choices were open to him. The policy of the Act is to strip an offender of his or her interests in the property used to commit the crime. The reason for committing those crimes will ordinarily be immaterial. The property was not bought using tainted money but it was largely dedicated by its owners to drug dealing. Those who establish drug houses and commit serious offences in or from them can normally expect to lose them unless there is gross or severe disproportion between the gravity of offending and the value of the property sought to be forfeited coupled with the other punishment inflicted on the offender. We have obtained some guidance on this question from the decision of the Court of Appeals for the Ninth Circuit in United States v Washer 817 F 2d 1409 (1987) in which it was held that only those forfeitures that in light of all the circumstances are grossly disproportionate to the offence committed are prohibited by the Eighth Amendment's ban on cruel and unusual punishment. Black's appeal against the forfeiture order is dismissed.

[17]     In this case,  the economic interest which was forfeited by the Judge is in the order of $50,000.  On any view of it, the benefits derived by the appellant as a result of his offending greatly exceed what will be lost to him by reason of the forfeiture orders.  In saying this, we are not to be taken as implying that the extent to which an offender benefits from offending sets an upper limit on the extent to which forfeiture orders may be made.  But where the economic impact of a forfeiture order is appreciably less than the benefits derived by the offender, we see no scope for the view that the order results in a disproportionate punishment for the purposes of s 9. 

[18]     That conclusion may leave unresolved a sense on the part of the appellant that the use of his house and his car have resulted in him receiving sanctions which, in their overall impact, are more severe for him vis à vis those imposed on his co‑offenders than the Judge’s assessments of relative culpability might be thought to justify.  To such a sense of grievance there are a number of answers:

a)A perfect calibration of court-ordered response to culpability cannot be achieved by any criminal justice system.  So some unevenness in result between co-offenders must be expected.

b)We do not know what, if any, gains were derived by the appellant’s co-offenders, nor what, if any, assets they had which could practicably be the subject of action under the Act; and

c)The Act proceeds on the basis that there is a need to deter those who might be inclined to permit property to be used for the purpose of committing offences and this need for deterrence itself warrants what might otherwise appear to be disparate outcomes between offenders whose culpability is otherwise broadly similar.

Conclusion

[19]     For the reasons given we consider that the circumstances of this case came nowhere near to engaging s 9 of New Zealand Bill of Rights Act and that the orders made by the Judge were consistent with the policies of the Act.  Accordingly the appeal is dismissed.

Solicitors:
Sladden, Cochrane & Co, Wellington for Appellant
Macalister Mazengarb, Wellington for PSIS Limited
Crown Law Office, Wellington