SLESSOR v COMMISSIONER OF POLICE [2023] NZCA 612

SLESSOR v COMMISSIONER OF POLICE [2023] NZCA 612 [1 December 2023]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA67/2023[2023] NZCA 612BETWEEN KIRSTIN MARJORY SLESSORAppellantAND COMMISSIONER OF POLICERespondentHearing: 30 August 2023Court: Courtney, Whata and Downs JJCounsel: NTC Batts for AppellantS M Earl and R M Gibbs for RespondentJudgment: 1 December 2023 at 11 amJUDGMENT OF THE COURTA The application to adduce further evidence is declined.B The appeal is dismissed.____________________________________________________________________REASONS OF THE COURT(Given by Downs J)The appeal[1] The High Court made an $84,000 profit forfeiture order against Kirstin Slessorafter she unlawfully benefitted from the manufacture and supply ofmethamphetamine.1 The Court held that $28,778 in cash seized in 2007 could be used1 Commissioner of Police v Slessor [2022] NZHC 3511.to partially satisfy the profit forfeiture order. For convenience, we refer to this asforfeiture of the cash.[2] Ms Slessor appeals forfeiture of the cash. She contends that police illegalityin connection with the cash engages the Latin maxim, ex turpi causa non oritur actio(no cause of action should arise from illegal acts), or, as it is now known, theillegality principle, and this principle affords a defence to forfeiture of the cash.The respondent contends the illegality principle is incompatible with theCriminal Proceeds (Recovery) Act 2009 — the statute by which the Judge forfeitedthe cash — and in any event, is no barrier to forfeiture on the circumstances of thecase.Background[3] On 23 November 2007, police pursued a car which stopped near Ms Slessor'shome. The driver ran into her home. Ms Slessor came out of her home, went to thecar, retrieved a toilet bag, and attempted to hide that bag from police. A search of thebag revealed:(a) Six snaplock bags, containing 24.7 grams of methamphetamine.(b) One ecstasy tablet and one tablet of benzylpiperazine.(c) Cash in excess of $30,000, which we call the cash.[4] Ms Slessor acknowledged removing the bag from the car but denied knowingwhat was inside.[5] Ms Slessor's home was also searched. Police found numerous snaplock bags,containers with residual amounts of methamphetamine, electronic scales, itemsconsistent with the supply of methamphetamine, 135 tabs of LSD, and 48 grams ofcannabis.[6] Ms Slessor was charged with offences contrary to the Misuse of Drugs Act1975. She contested the admissibility of the prosecution's evidence, asserting herarrest had been unlawful; likewise, the search of her home. The District Court upheldthe first contention, rejected the second, and concluded all of the evidence wasadmissible.2[7] Ms Slessor ultimately pleaded guilty to two charges of possessingmethamphetamine for the purpose of supply; one charge of supplyingmethamphetamine; and one of charge of possessing LSD for the purpose of supply.[8] The summary of facts in relation to the offending ended with these narrations:An order is sought from the Court for the destruction of all utensils, containersand items seized in relation to the packaging, sale and supply of the drugsfound.An order is also sought from the Court for the forfeiture of all the moniesseized from the Accused.[9] Ms Slessor was sentenced on 19 May 2011 to a term of home detention andcommunity work.3 Forfeiture of the cash was overlooked. However, police retainedthe cash which, at some point, had been deposited to a trust account.[10] On or about 27 May 2015, $1,312 was deducted by the Ministry of Justice tomeet Ms Slessor's outstanding fines. An associated police record says:1. This report relates to a request for a trust account payment in the amountof $30,090.00.2. CIRCUMSTANCESThis request to make a trust account payment comes about as a result ofthe recent audit of trust account deposits from 2002 through to 2011 asper the national directive.I have back tracked the receipts to exhibit or file number and in myopinion we are required to:-Return this money to the person it was seized from-Forfeit this money through to the crown account-OtherFile # 071124/4422 probably refers.Files narrative shows $30,090.00 cash.Has unpaid fines of $1312.00 outstanding with courts.IRD are investigating further as to whether or not they can seize themoney (which they cannot take).2 R v Slessor DC Auckland CRI-2007-090-11368, 1 March 2011 at [92].3 R v Slessor DC Auckland CRI-2009-090-10950, 19 May 2011.I have reviewed the circumstances around this payment and it's seizureand I believe in the circumstances it would be appropriate for you toapprove the trust account payment as per the trust account paymentrequest form attached.[11] Ms Slessor made no request for the cash to be returned. She says this wasbecause:After a few years I sort of forgot about the cash. I did think about itoccasionally, but I had no idea who I could contact to ask about it. I was prettymuch just waiting for the police to contact me. Otherwise, with my drugaddiction and trying to look after my kids and everything else I had going onI had very little capacity to try and chase down the money, especially when Ihad no idea where to begin.[12] More time passed without activity. Then, in September and October 2020,police considered either returning the cash to Ms Slessor or referring it to"the Asset Recovery Unit", a reference to possible action under the Criminal Proceeds(Recovery) Act.[13] On 3 October 2020, an officer visited Ms Slessor's home to discuss the possiblereturn of the cash. Two days later, Ms Slessor sent police an email asking what sheneeded to do to facilitate its return. On 14 October 2020, police replied saying it was"most likely" the cash was going to be returned, but they would need bank accountdetails and other information. Ms Slessor provided those details and soughtclarification in November 2020 why the cash had not been returned.[14] The answer to that question turns on events earlier the same year.On 21 April 2020, Ms Slessor and Maurice Rogers were arrested in relation to thealleged manufacture and supply of methamphetamine. Ms Slessor was found atMr Rogers' home. Searches of it and Ms Slessor's home revealed cash and itemsconsistent with the manufacture and supply of methamphetamine, including acetone,digital scales, caustic soda, a "tick list", and articles bearing small amounts ofephedrine, pseudoephedrine, and methamphetamine.[15] Ms Slessor was again charged with offences contrary to the Misuse of DrugsAct. She later pleaded guilty to a representative charge of manufacturingmethamphetamine (with Mr Rogers) between 25 October 2019 and 21 April 2020; arepresentative charge of supplying that drug between 27 December 2019 and21 April 2020, two charges of theft, and one of possessing methamphetamine on21 April 2020, the day of her arrest.[16] On 13 August 2021, Ms Slessor received a sentence of 10 months' homedetention. The sentencing Judge concluded Ms Slessor had helped manufactureapproximately 164 grams of methamphetamine and supplied a little under 20 gramsof that drug.[17] On 24 April 2022, the Commissioner of Police filed an application seekingrestraining and forfeiture orders over Ms Slessor's property, including the cash.The case in the High Court[18] Gordon J concluded Ms Slessor had unlawfully benefitted from significantcriminal activity. More particularly, the Judge found that from the manufacture andsupply of methamphetamine, Ms Slessor had benefitted to the value of $84,000.The Judge made a profit forfeiture order in that amount.[19] This left what should happen to the cash. Ms Slessor testified the cash camefrom an innocent source, namely, a family friend, to help finance Ms Slessor'sFrench Bulldog breeding business. Ms Slessor also said the cash had been in thetoilet bag in the car for safekeeping only. Gordon J did not accept Ms Slessor'stestimony. She concluded the cash "was derived from the offending in respect ofwhich Ms Slessor was prosecuted at the time",4 that is, drug dealing.[20] Ms Slessor argued police embarked upon a deliberate course of conduct to keepthe cash "safely tucked away" in their trust account. The Judge rejected thatsubmission, finding forfeiture "was simply overlooked at the sentencing".5[21] The Judge rejected an allied submission that the illegality principle provided adefence to, or prevented, forfeiture of the cash. The Judge considered that argumentinconsistent with the decision of the Supreme Court in Marwood v Commissioner of4 Commissioner of Police v Slessor, above n 1, at [96].5 At [90].Police. The Judge also considered it significant that the cash was derived from drugdealing, hence the "benefits [of] significant criminal offending".6[22] The Judge, therefore, forfeited the cash.The illegality principle[23] As the illegality principle is at the heart of Ms Slessor's appeal, we saysomething about it before outlining her case and that of the respondent.[24] Put broadly, the illegality principle operates to preclude or deny a remedy to alitigant when that litigant has committed an unlawful act or acts. Various rationalesfor the illegality principle have been identified, including the need to maintain acoherent legal system, founded on notions of integrity. The decision of the CanadianSupreme Court in Hall v Hebert provides an example of this rationale:7A more satisfactory explanation for [the case law], I would venture, is that toallow recovery in these cases would be to allow recovery for what is illegal.It would put the courts in the position of saying that the same conduct is bothlegal, in the sense of being capable of rectification by the court, and illegal. Itwould, in short, introduce an inconsistency in the law. It is particularlyimportant in this context that we bear in mind that the law must aspire to be aunified institution, the parts of which – contract, tort, the criminal law – mustbe in essential harmony. For the courts to punish conduct with the one handwhile rewarding it with the other, would be to "create an intolerable fissure inthe law's conceptually seamless web". We thus see that the concern, put at itsmost fundamental, is with the integrity of the legal system.[25] This statement was approved by the Australian High Court in Miller v Miller,in which the majority observed that "the central policy consideration is thecoherence of the law".8[26] The leading New Zealand decision on the illegality principle isLeason v Attorney-General.9 In Leason, this Court noted that the illegality principlehad been invoked "only infrequently" in this country.10 One such invocation — cited6 At [92], citing Marwood v Commissioner of Police [2016] NZSC 139, [2017] 1 NZLR 260 at [48].7 Hall v Hebert [1993] 2 SCR 159 at 176 (citations omitted).8 Miller v Miller [2011] HCA 9 at [15].9 Leason v Attorney-General [2013] NZCA 509, [2014] 2 NZLR 224.10 At [105].by both Mr Batts on behalf of Ms Slessor and Ms Earl on behalf of the respondent —is R v Collis.11[27] In Collis, police found cannabis and $103,000 cash during a search of thedefendant's home. The defendant was found guilty of possessing that drug for supplyand given a three-and-a-half-year term of imprisonment. The cash was produced asan exhibit at trial. The defendant denied knowledge of the cash. He later applied tothe District Court for an order that the cash be returned to him. He testified in thatCourt that he had obtained the cash through drug dealing. A charge of selling cannabiswas laid because of this evidence but dismissed for what are recorded as"technical reasons".12[28] The District Court held that the cash belonged to the defendant and should bereturned to him. The cash could not be forfeited under s 32(3) of the Misuse of DrugsAct because the defendant had not received any money "in the course of or consequentupon" the offence for which he had been convicted — possessing cannabis for thepurpose of supply, not supplying or selling cannabis.[29] The Crown appealed to this Court. It argued that the illegality principleprevented the District Court from returning the cash to the defendant. The appeal wasdismissed, albeit by a majority. Two points were considered important. First, whilethe cash had been improperly obtained (by drug dealing), police "no longer [had] anyright to hold it".13 Second, to have upheld a refusal to return the cash would result inits "confiscation or forfeiture" despite any statutory power to do so.14 Casey Jconsidered the second point "fundamental".15 So too Hardie-Boys J.16[30] The most significant case on the illegality principle is perhaps Patel v Mirza, adecision of the Supreme Court of the United Kingdom.17 The facts are unusual.Mr Patel paid (a lot of) money to Mr Mirza on the basis the latter would use that money11 R v Collis [1990] 2 NZLR 287 (CA).12 At 290.13 At 293.14 At 293.15 At 293.16 Wylie J dissented.17 Patel v Mirza [2016] UKSC 42, [2017] AC 467.to bet on share prices, relying on inside information. The agreement contravened aprohibition on insider trading, but Mr Mirza never placed the bet as the insideinformation did not eventuate. Mr Patel sued for repayment of the money. The trialJudge dismissed his claim relying on the illegality principle. The Court of Appealallowed Mr Patel's appeal. The Supreme Court upheld that determination, but adopteda new framework for the illegality principle identified by Lord Toulson:18[120] The essential rationale of the illegality doctrine is that it would becontrary to the public interest to enforce a claim if to do so would be harmfulto the integrity of the legal system (or, possibly, certain aspects of publicmorality, the boundaries of which have never been made entirely clear andwhich do not arise for consideration in this case). In assessing whether thepublic interest would be harmed in that way, it is necessary (a) to consider theunderlying purpose of the prohibition which has been transgressed andwhether that purpose will be enhanced by denial of the claim, (b) to considerany other relevant public policy on which the denial of the claim may have animpact and (c) to consider whether denial of the claim would be aproportionate response to the illegality, bearing in mind that punishment is amatter for the criminal courts. Within that framework, various factors may berelevant, but it would be a mistake to suggest that the court is free to decide acase in an undisciplined way. The public interest is best served by a principledand transparent assessment of the considerations identified, rather by than theapplication of a formal approach capable of producing results which mayappear arbitrary, unjust or disproportionate.[31] We consider the approach in Patel is helpful, especially by its placement ofproportionality at the heart of the inquiry.19 As with Lord Toulson, we consider thisapproach provides a principled and transparent assessment of the considerationsrelevant to the application of the illegality principle.A précis of the parties' casesMs Slessor's case[32] Mr Batts contends the Judge was wrong to order forfeiture of the cash because:(a) Police retention of the cash became unlawful during 2015, as on orabout 27 May 2015, police decided not to return the cash to Ms Slessorand not to pursue its forfeiture. Thereafter, retention of the cash18 Patel v Mirza, above n 17 (emphasis added).19 While the context is, of course, different, we note that s 30 of the Evidence Act 2006 permitsexclusion of improperly obtained evidence only when exclusion of that evidence is "proportionateto the impropriety".contravened s 21 of the New Zealand Bill of Rights Act 1990, whichprotects against unreasonable search and seizure.(b) The illegality principle is compatible with the Criminal Proceeds(Recovery) Act. Section 47 of that Act permits the High Court toamend, of its own volition, an application for a civil forfeiture order,and the Court could do so applying the illegality principle, therebyexcluding property from the prospect of forfeiture when, for example,it had been unlawfully retained by police.(c) The illegality principle should have acted to prevent forfeiture as thecash was unlawfully retained for at least five years, and had it beenreturned to Ms Slessor, it would not have been available to satisfy theprofit forfeiture order. Mr Batts emphasises that in 2020, police toldMs Slessor the cash would "likely" be returned.[33] Mr Batts relies on Collis, and argues it supports the cash not being forfeited.[34] Mr Batts told us Ms Slessor was not arguing that the cash should be returnedto her; rather, she was arguing it should not have been forfeited. Mr Batts said if theappeal were allowed, it did not follow that the cash would need to be returned toMs Slessor.[35] Finally, Mr Batts asks us to receive further evidence on behalf of Ms Slessor,a single affidavit of John Burns dated 13 March 2023. In that affidavit, Mr Burns saysat "some point in 2007" he gave Ms Slessor $30,000 in cash to support herFrench Bulldog breeding business. Mr Burns says the cash was a loan, whichMs Slessor had since repaid, in cash.The respondent's case[36] Ms Earl contends the Judge was not wrong to order forfeiture of the cashbecause:(a) Forfeiture was overlooked when Ms Slessor was sentenced in 2011, andnothing has emerged to demonstrate Gordon J erred in reaching thisview.(b) Retention of the cash thereafter was not necessarily unlawful;Ms Slessor never asked for the cash to be returned. Furthermore, ifretention of the cash became unlawful, it did not follow that s 21 of theBill of Rights Act was necessarily breached, as it is concerned withunreasonable search and seizure, concepts different from the retentionof property lawfully seized.(c) The Criminal Proceeds (Recovery) Act leaves no room for theoperation of the illegality principle given the Act's purpose, itsexclusion of property (from forfeiture) on specific grounds, and theobservations of the Supreme Court in Marwood.[37] Ms Earl argues this is an obvious case for the forfeiture of property, as the cashrepresents the proceeds of drug dealing. Relatedly, Ms Earl opposes the reception ofMr Burns' evidence on grounds it is not fresh, credible, or cogent.Analysis[38] We make four preliminary points.[39] First, we consider it would be wholly artificial to approach the case on the basisthat police may retain the cash even if its forfeiture were quashed. To approach thingsin this way would perpetuate the very twilight zone Ms Slessor complains of, in whichthe cash remains in the possession of police, absent authorisation or forfeiture.Expressed another way, Ms Slessor is entitled to the return of the cash unless itsforfeiture is upheld. Whatever its source, a topic to which we return, the cash isMs Slessor's. Ms Earl very properly endorsed this position at the hearing. As she putit, if the appeal is allowed, the cash "must" be returned to Ms Slessor.[40] Second, we do not doubt forfeiture of the cash was overlooked at Ms Slessor'ssentencing in 2011. The summary of facts in relation to her offending identified thatforfeiture was sought (under s 32(3) of the Misuse of Drugs Act), and an applicationof that nature was consistent with the nature of the charges; the circumstancessurrounding the discovery of the cash; and its likely source. That Ms Slessor neversought return of the cash supports the conclusion forfeiture was overlooked. We didnot understand Mr Batts to argue otherwise, at least strongly.[41] Third, we find police retention of the cash became unlawful on or about27 May 2015, for the reason Mr Batts identifies: the police record reproduced at [10]implies police decided not to return the cash to Ms Slessor and not to pursue itsforfeiture, seemingly aware Ms Slessor was its owner.20 Materially, this is not a casein which police retained property that had been lost or abandoned, or in relation towhich there are questionable or competing claims of ownership.[42] However, for reasons that will become apparent, it is not necessary todetermine whether this behaviour contravened s 21 of the Bill of Rights Act.21 For themoment, it is sufficient to observe there may be conceptual differences between asearch for, and seizure of, property, under s 21; and the subsequent retention of thatproperty, at least when no illegality attaches to either discovery or seizure.We, therefore, offer no view on whether the unlawful retention of property by a stateactor, without more, necessarily contravenes s 21 of the Bill of Rights Act.[43] Fourth, Collis is the inverse of the situation at hand, and therefore of littleassistance. Ms Slessor seeks to defeat forfeiture of the cash relying on the illegalityprinciple, whereas in Collis, the Crown was seeking forfeiture in reliance on thatprinciple. Furthermore, Collis was decided before the inception of theCriminal Proceeds (Recovery) Act, to which we now turn.[44] The Act's purpose is set out in s 3:3 Purpose(1) The primary purpose of this Act is to establish a regime for the forfeitureof property—20 Mr Batts did not argue that depositing the cash to a police trust account amounted to conversionor was otherwise unlawful.21 Compare Bliss v Attorney-General HC Napier CP62/92, 6 June 2000 at [93]. The parties'submissions only touched on this issue.(a) that has been derived directly or indirectly from significantcriminal activity; or(b) that represents the value of a person's unlawfully derived income.(2) The criminal proceeds and instruments forfeiture regime establishedunder this Act proposes to—(a) eliminate the chance for persons to profit from undertaking orbeing associated with significant criminal activity; and(b) deter significant criminal activity; and(c) reduce the ability of criminals and persons associated with crimeor significant criminal activity to continue or expand criminalenterprise; and(d) deal with matters associated with foreign restraining orders andforeign forfeiture orders that arise in New Zealand.[45] Under Part 2 of the Act, the Commissioner of Police may apply to the Courtfor restraining and forfeiture orders of property. If the Court is satisfied the respondenthas unlawfully benefitted from significant criminal activity, it may make thoseorders.22 Under s 55 of the Act, a profit forfeiture order must specify the value of theunlawful benefit derived, the maximum recoverable amount, and the property to bedisposed of in consequence of the order. By s 56, property may be excluded from anorder when forfeiture would cause undue hardship. An order may also be amendedunder s 47:47 Amending application for civil forfeiture order(1) The High Court may amend an application for a civil forfeitureorder—(a) on the Court's own initiative; or(b) at the request of the Commissioner.(2) However, the Court must not amend an application for a civilforfeiture order to include additional property, proceeds, or benefitsunless the Court is satisfied that—(a) the additional property, proceeds, or benefits were not reasonablyable to be identified when the application for the civil forfeitureorder was made; or22 Criminal Proceeds (Recovery) Act 2009, ss 25 and 55.(b) the evidence necessary to support the application in relation to theadditional property, proceeds, or benefits only became availableafter the application for the civil forfeiture order was made.(3) If the Court amends an application under this section, the Court mustdirect the Commissioner to serve notice of the amendment on—(a) every person referred to in section 46; and(b) any person who the Commissioner has reason to believe mayhave an interest in any additional property included in theapplication by the amendment.[46] This brings us to Marwood. Mr Marwood was charged with cultivatingcannabis, supplying that drug, and theft of electricity, after police searched his homeunder warrant. The charges collapsed when the warrant was held to be unlawful andevidence from the search excluded as improperly obtained. The Commissioner thensought, under the Act, profit forfeiture orders against Mr Marwood, his partner and arelated trust arising out of the same alleged offending.[47] The High Court held the Act did not preclude the exclusion of improperlyobtained evidence, and excluded the evidence from the search, just as had occurred inthe criminal jurisdiction.23 The Commissioner successfully appealed to this Court.24Mr Marwood appealed unsuccessfully to the Supreme Court.25[48] The Supreme Court held that while it was open to exclude improperly obtainedevidence in civil cases, including those under the Act,26 the evidence had been wronglyexcluded by the High Court because:27(a) The Act sought to "eliminate the chance for persons to profit fromundertaking or being associated with significant criminal activity";28 to"deter significant criminal activity";29 and to "reduce the ability ofcriminals to continue or expand criminal enterprise".3023 Commissioner of Police v Marwood [2014] NZHC 1866.24 Commissioner of Police v Marwood [2015] NZCA 608, [2016] 2 NZLR 733.25 Marwood v Commissioner of Police, above n 6.26 At [35]–[37].27 At [52].28 Criminal Proceeds (Recovery) Act, s 3(2)(a).29 Section 3(2)(b).30 Section 3(2)(c).(b) Exclusion of the improperly obtained evidence was inconsistent withthese objectives and "public policy generally",31 as Mr Marwood hadunlawfully benefitted from significant criminal activity.(c) Mr Marwood's rights had been vindicated by the exclusion of theevidence in the criminal jurisdiction, as the police impropriety was notserious.32 Materially, police had not acted in bad faith.33[49] As observed, s 47 of the Act permits the High Court to amend, of its ownvolition, an application for a civil forfeiture order. That being so, we accept it isarguable that the illegality principle could be used in the manner contended for byMs Slessor, that is, to exclude from the prospect of forfeiture, through application ofs 47, property that had been unlawfully retained by police.[50] The argument would, as the respondent observes, confront Marwood andquestions of utility, as it is open to a Court to decline forfeiture on abuse of processgrounds.34 The argument would also confront, again as the respondent observes, s 56of the Act, which as noted, provides for the exclusion of property from forfeiture onthe ground of undue hardship. So, whether the illegality principle is compatible withthe Act or needed in this context is very much open to doubt.[51] What is not open to doubt is that the High Court was correct to order forfeitureof the cash, even if s 47 is potentially amenable to the illegality principle. We say thisbecause forfeiture was not contrary to the public interest. Indeed, to apply theillegality principle in this case would be contrary to the public interest, as a (wholly)disproportionate response to police illegality in retaining the cash. We make threepoints.[52] First, the case involves no bad faith on the part of police, and Mr Batts doesnot argue otherwise. The point is underscored by an important fact: Ms Slessor did31 Marwood v Commissioner of Police, above n 6, at [48].32 At [48]–[51].33 At [48]–[51].34 At [37].not seek return of the cash until police raised that possibility in October 2020, 13 yearsafter its seizure.[53] Second, the cash was unquestionably derived from or in connection withdrug dealing. Mr Burns was cross-examined before us. It is sufficient to record ourconclusion: Mr Burns' testimony was not credible, fresh, or cogent. It followsMs Slessor has no moral claim to the cash, which we consider is the real explanationfor her lack of activity in seeking its return.[54] Third, declining forfeiture would be quite disproportionate to the impropriety— the approach in Patel (and under s 30 of the Evidence Act). The police improprietywas modest, and as we have observed, absent bad faith. In short, the police did littlemore than fail to return the proceeds of serious criminal offending to someone whohad not hitherto asked for them.[55] Another feature supports our analysis: the Commissioner's claim to forfeitureof the cash is not reliant on the impropriety. Materially, under the Act, the cash couldbe forfeited irrespective of whether it had been retained by police. It follows there isno material linkage between the impropriety and forfeiture. Indeed, on this analysis,the illegality principle is not engaged.[56] We, therefore, consider it unnecessary to determine whether the illegalityprinciple provides a potential defence to forfeiture under the Criminal Proceeds(Recovery) Act. Even if it did, the principle would not provide Ms Slessor a defenceto forfeiture of the cash for the reasons we have identified.Result[57] The application to adduce further evidence is declined.[58] The appeal is dismissed.Solicitors:Molloy Hucker, Auckland for Appellant.Crown Solicitor, Auckland for Respondent.