SOLICITOR-GENERAL V KEEFE HC NAP CIV 2009-441-000608

SOLICITOR-GENERAL V KEEFE HC NAP CIV 2009-441-000608 26 May 2011IN THE HIGH COURT OF NEW ZEALANDNAPIER REGISTRYCIV 2009-441-000608IN THE MATTER OF an application under section 8 of theProceeds of Crime Act 1991BETWEEN THE SOLICITOR-GENERAL OF NEWZEALANDApplicantAND DELWYN ISMALIA KEEFEFirst RespondentAND THE EXECUTORS OF THE ESTATE OFJAN MIENSE MOLENAARSecond RespondentHearing: 8 February and 14 April 2011Appearances: N M Graham for ApplicantN Levy for First RespondentCounsel for Second Respondent, Maddison Molenaar and CreedenceJohnston excused attendance at hearingJudgment: 26 May 2011 at 11:30 AMJUDGMENT OF WHITE JThis judgment was delivered by me on 26 May 2011 at 11.30 ampursuant to Rule 11.5 of the High Court Rules.Registrar/Deputy RegistrarDate: .Counsel: P Davey, PO Box 1811 Shortland Street, Auckland 1140N Levy, PO Box 10 909 The Terrace, Wellington 6143Solicitors: Elvidge & Partners, PO Box 609, Napier 4140Carlile Dowling, PO Box 6021, Napier 4142Public Trust, PO Box 30 743, Lower Hutt 5040[1] This is an application by the Solicitor-General for the Crown under the Proceeds of Crime Act 1991 (the Act) for orders under ss 8(1)(a) and 15 of the Act that, subject to the exclusion of the interest of Maddison Molenaar, the son of the late Mr Jan Molenaar, under s 18 of the Act, the following be forfeited to the Crown:(a) The property situated at 41 Chaucer Road, Hospital Hill, Napier legally described in Certificate of Title HB138/196 and registered in the name of Jan Miense Molenaar (deceased);(b) Cash totalling NZ$15,000 and A$5,000 (since converted to NZ$6,044) found at the property on or about 7 May 2009; and(c) Monies totalling $19,605.04, currently held by the Official Assignee pursuant to a restraining order made in the High Court at Napier on 24 September 2009 and subsequently extended, which were formerly contained within Kiwibank account numbers 38-9004-0760390-00 and 38-9004-0760390-03.[2] There is no application for a pecuniary penalty order under s 8(1)(b) of the Act.[3] The application for the forfeiture order is made on the grounds that:(a) Ms Keefe has been convicted on indictment of serious offences;(b) The property situated at 41 Chaucer Road, Hospital Hill, Napier is―tainted property as Ms Keefe used the property in the commission of the serious offences; and(c) The cash found at the property on 7 May 2009 and the monies held by the Official Assignee are ―tainted property in that they represent proceeds of the serious offences.[4] The serious offences of which Ms Keefe was convicted in 2009 were:(a) Selling the class C controlled drug cannabis to people over 18 years of age between 1 April 2004 and 7 May 2009 in breach of s 6(1)(e) and (2)(c) of the Misuse of Drugs Act 1975 for which the maximum penalty is eight years' imprisonment;(b) Offering to sell cannabis to a person aged over 18 on 7 May 2009 in breach of s (6)(1)(e) and (2)(c) of the Misuse of Drugs Act 1975 for which the maximum penalty is eight years' imprisonment; and(c) Having cannabis in her possession on 7 May 2009 for the purpose of selling it in breach of s 6(1)(f) and (2)(c) of the Misuse of Drugs Act 1975 for which the maximum penalty is eight years' imprisonment.[5] Although the Proceeds of Crime Act 1991 was repealed on 1 December 2009, it remains applicable to this proceeding which was brought before the Criminal Proceeds (Recovery) Act 2009 came into force.[6] The application is opposed by Ms Keefe, who claims to be entitled to the property and the monies as part of the estate of the late Mr Molenaar under the provisions of the Administration Act 1969, on the grounds that forfeiture of the property would be grossly disproportionate in the circumstances of this case, and that the monies do not constitute ―tainted property in terms of the Act. Ms Keefe'sclaim in the estate of Mr Molenaar is under the Administration Act because he died intestate. Under s 77 of the Administration Act Ms Keefe, who was living in a de facto relationship with Mr Molenaar at the date of his death, would be entitled to $155,000 and one third of the residue of the estate. Having decided in accordance with s 61(3)(c) of the Property (Relationships) Act 1976 to inherit under the Administration Act, Ms Keefe has not made a claim for division of relationship property against Mr Molenaar's estate under the Property (Relationships) Act.[7] There is no dispute that the following interests should be excluded from any forfeiture orders made by the Court:(a) The interest of Maddison Molenaar, the son of the late Mr Molenaar by a previous partner, who is entitled to two thirds of the residue ofhis father's estate under s 77 of the Administration Act 1969.(b) Any interest of Creedence Johnston, Ms Keefe's daughter, followingdetermination of her claim under the Family Protection Act 1955.[8] Counsel for the Public Trustee, Maddison Molenaar and Creedence Johnston were excused attendance at the hearing of the application for the forfeiture orders: minute of 7 February 2011.[9] The issues in this case are whether the monies constitute ―tainted property interms of s 2(1) of the Act and whether the criteria in s 15(2) of the Act warrant forfeiture, in particular whether forfeiture of the property would be disproportionate to the offending. The second issue involves determining the gravity of the offending, the economic benefits derived by the offender and the value of the cannabis cultivated on the property.[10] The onus of proof is on the Crown and the standard of proof is the balance of probabilities: s 85 of the Act.Factual background[11] The factual background is to be found in:(a) the summary of facts to which Ms Keefe pleaded guilty;(b) the findings of fact made by Wild J on 13 November 2009 following a disputed facts hearing on 14 October 2009 and set out in his sentencing notes of 15 December 2009 when Ms Keefe was sentenced to concurrent terms of imprisonment of two years and three months for the three offences;(c) the judgment of the Court of Appeal dated 13 August 2010 dismissing an appeal against the sentence imposed by Wild J;(d) the affidavit evidence filed in support of and in opposition to the present application; and(e) the evidence taken before me on 8 February 2011.[12] The starting point is to set out the findings of fact made by Wild J following the disputed facts hearing. They are conveniently summarised in his sentencing notes as follows:[4] About eleven years ago you began living with the late Mr Jan Molenaar in the house he owned at 41 Chaucer Road here in Napier. The two of you lived in a de facto relationship until Mr Molenaar shot himself dead on 8 May 2009.[5] About five years ago you and Mr Molenaar began operating a cannabis dealing operation from 41 Chaucer Road. The division of tasks was as follows:Mr Molenaar grew the cannabis. He did that in a bedroom in the house which he had converted into a growing room. It was a typical indoor growing set up, with plastic sheeting, artificial lighting and so on. At any one time there were up to four or five mature plants, and smaller plants being grown as replacements.Mr Molenaar also did the preparation and packaging of the cannabis for sale. He prepared the cannabis tinnies rolled in tinfoil, enough cannabis to make perhaps 2 or 3 cannabis joints or cigarettes. He also packaged half ounces and ounce quantities of cannabis in plastic bags. I have referred to it as a ―cannabisdealing operation for the reason that Mr Manning pointed out that it was not just tinnies, it was half ounces, and ounces being sold as well.Door sales from 41 Chaucer Rd were conducted by both of you, by whoever was most handy to the door when a caller knocked.You had responsibility for deliveries to customers. You made these―cannabis drops, if I can call them that, in your car, delivering tocustomers at their homes or meeting them at prearranged locations such as the beach, or restaurants or supermarket carparks.Mr Molenaar was the ‗cashier'. I think perhaps he is betterdescribed as the ‗banker'. You handed the cash you received fromcustomers to Mr Molenaar. He secured this cash. You did not know where he did that. Tinnies were sold for $20, ounces for $300 and half ounces for $150.[6] When the Police executed a search warrant at your Chaucer Road home at 9.30 am on the morning of 7 May, they found the following:Approximately 24 cannabis plants growing in the growing room. These were at differing stages of growth and maturity, ranging up to 40 cm in height. Eleven of the plants were cannabis seedlings, apparently grown from seed. Three were small (6 cm tall) cannabis plants, which appeared to have been cloned from a mother plant.In a set of dresser drawers in the growing room, what is best described as a cannabis preparation kit: 10 cannabis tinnies; four rolls of aluminium foil; snaplock bags containing approximately one ounce of cannabis head, empty snaplock bags and a set of Salter scales.In the basement garage, a wooden box containing 16 snaplock bags, each of those bags containing approximately one ounce of cannabis bud material.In the top of the hot water cylinder cupboard in the kitchen, seven further snaplock bags, each also containing one ounce of cannabis.In a strong room in the basement garage, $15,000 New Zealand cash and $5,000 Australian cash.[7] In the disputed facts hearing I conducted on 19 October, you attempted to minimise your involvement in the cannabis operation being conducted from the home you shared with Mr Molenaar. For example, you maintained that you only made deliveries of cannabis to customers because Mr Molenaar directed you to. Your implication to me was that you were under some sort of duress or threat. I reject that Ms Keefe. In particular I reject your implication that you were an unwilling participant. There was no suggestion of that in the lengthy videotaped interview you had with Detective Lee on 20 May this year. There was no suggestion of any reluctance on your part in the statement made to the Police by your daughter on 12 May. She was 18 at the time she made that statement; about 13 or 14 at the time you started taking her in the car when you made the cannabis deliveries around the town.[8] A further indication of your willing involvement in the cannabis operation is that you told Detective Lee on 20 May that the $5,000 Australian cash was spending money for you on a trip you were to makelast May, to attend your brother's 40th birthday in Australia. You readily admitted to the Detective that that money came from the sale of cannabis. In other words, you were happy to enjoy the monetary benefits of the cannabis operation.[9] Despite your continued assertion that you hated and resented being involved in the cannabis operation, I find that you were very much involved, and freely and willingly so.[10] In the course of the disputed facts hearing, you also sought to convey that the cannabis operation was a very limited one, and did not operate continuously. I reject these points. I find that you and Mr Molenaar conducted the cannabis operation continuously over the five years or so, from the time you started taking your daughter on cannabis deliveries in 2004 up until the events of last May brought it toan abrupt halt. One indication of that is what the Police found in your home when they executed the search warrant. I refer to the number of plants, the amounts of cannabis found in your home, and to the substantial sums of cash found, which you accepted were the proceeds of the cannabis operation. These things are also the best indicators of the size of the operation.[11] Another indication of the frequency of the operation is the calls that were received on 7 May this year – the morning the Police executed the search warrant. First, at 7.22 am that morning you received a text message from your friend Stacey inquiring about cannabis. You sent herin response a text that said ―Hi Stacey Del here my mate has halves 140. You told Detective Lee that that message referred to Mr Molenaarand to the availability of half ounces of cannabis for $140. You told him that that was a discount for your friend, from the normal sale price of $150 per half ounce. That, Ms Keefe, is the basis for the second charge on which I am sentencing you, offering to sell cannabis.[12] Secondly, in your interview with the Detective you accepted that aneighbour had sent a text message that morning to Mr Molenaar's mobile phone inquiring ―Are you home. Mr Molenaar was out walkingyour dog at the time. You initially told Detective Lee that after reading that message you closed the phone up. When pressed by the Detective,you agreed that you had sent, on Mr Molenaar's phone, a reply text to that neighbour saying that you were home. The neighbour subsequently arrived at your home while the Police officers executing the warrant were in the kitchen with you.[13] A still further indication of your knowledge of and involvement in the cannabis operation is the action you took when you saw and heard the Police coming to the house. From a cabinet basket beside one ofyour drawers you grabbed what you described as ―the box of ouncesand ran down the stairs with it and put it in the basement garage. That was the box with 16 packaged ounces of cannabis in it. That was clearly an ineffective attempt by you, in the panic of the moment, to remove thatconsiderable amount of cannabis out of harm's way.[14] To summarise, I sentence you on the basis that you were actively and willingly involved with Mr Molenaar in running a cannabis growing and selling operation from your home at 41 Chaucer Rd over the five years up to 7 May this year. And I sentence you also on the basis that what the Police found when they executed a search warrant at your home on the morning of 7 May is an accurate indication of the size of the operation.[13] In summary Wild J sentenced Ms Keefe on the basis of his findings that she was a willing participant in a significant cannabis operation conducted from the property at 41 Chaucer Road, Napier over the five year period from 2004 until May 2009 and that she was happy to enjoy the monetary benefits of the cannabis operation. Door sales were conducted by both the late Mr Molenaar and Ms Keefe who also had responsibility for deliveries to customers. Cash received fromcustomers was handed by Ms Keefe to the late Mr Molenaar. The size of the operation was indicated by the number of plants, the amounts of cannabis found in the home and the substantial sums of cash found. These findings were accepted by the Court of Appeal: Keefe v R.1[14] The affidavit and oral evidence for the Police adduced at the hearing before me on 8 February 2011 established that:(a) The total value of the cannabis located in the property at 41 Chaucer Road on the day it was searched was between $77,950 and $131,750.(b) With indoor cultivation of the cannabis plants, repeat growth cycles could be obtained in a year so that there was a constant supply of cannabis.(c) The cannabis was sold by the late Mr Molenaar and Ms Keefe for $20 a tinnie, $300 an ounce and $150 for half an ounce.(d) The cash totalling NZ$15,000 and A$5,000 found at the property was the proceeds from the sale of cannabis.(e) The total sum of $74,283.02 located in the Kiwibank accounts belonging to the late Mr Molenaar comprised $17,363.16 from cashpayments ―likely to be the proceeds of cannabis sales, $48,425.43 from deposits that originated from legitimate sources and $8,494.43 as net interest deposits earned on these funds. Apportioning the interest between the amounts from the proceeds of cannabis sales and legitimate sources gave interest of $2,241.88 on the sum of $17,363.16 making a total of $19,605.04 in the Kiwibank accounts which can be attributed to an illicit source.[15] Ms Keefe did not in the end dispute that the cash found in the property was the proceeds of the sale of cannabis. Instead it was submitted on her behalf that the1 Keefe v R [2010] NZCA 366.Court could not infer that each bank note in the house was the proceeds of offences by Ms Keefe rather than by the late Mr Molenaar. This submission is addressed later in the judgment.[16] Ms Keefe did dispute that the balance in the Kiwibank accounts was the proceeds of cannabis sales. She gave evidence that the deposits in those accounts included rental payments of $250 per week which she claimed to have made to the late Mr Molenaar for the property. Mr Mahy, a forensic accountant employed by the Police, acknowledged in cross-examination that there were cash withdrawals fromMs Keefe's bank account sufficient to pay rent to the late Mr Molenaar on a regularbasis and that, if it were found that she had done so, it would be necessary to deduct the amounts involved from the sum of $17,363.16. In re-examination, however, Mr Mahy pointed out that Ms Keefe's cash withdrawals from her account did not consist of normal set amounts of $250 per week and that it was not possible to trace her cash withdrawals into the Kiwibank accounts. It was also not possible to trace her cash contributions to living expenses over the five year period.[17] Under cross-examination at the hearing before me Ms Keefe was referred to her evidence at the disputed facts hearing where the following exchange is recorded:Who paid for food and other outgoings? I did. Do u know now roughly what a week or fortnights worth of food/outgoings wd be? I paid for food, phone and power, roughly abt a fortnight was $300. Did Jan contribute to food and outgoings, power etc? I paid those. Did u contribute to thet house at all? Rates, insurance etc? No.[18] Ms Keefe confirmed in cross-examination that she contributed to the food, phone and power, but could not remember saying that she had not contributed to the house expenditure, ―rates, insurance etc. She also acknowledged in cross- examination and in response to my questions that while the late Mr Molenaar owned the property it was treated as their family home. She and the late Mr Molenaar had been living together for some 11 years prior to May 2009 and in a de facto relationship for at least the last three years.[19] I do not accept Ms Keefe's claim that the $17,363.16 in the Kiwibank accounts included rent paid by her to the late Mr Molenaar. My reasons for not accepting her evidence are:(a) It is inherently unlikely that she would have paid rent for the family home when she was living in a relationship with the late Mr Molenaar and they were together sharing the income from their significant cannabis operation.(b) At the disputed facts hearing she acknowledged that she had not contributed to the household expenditure, ―rates, insurances, etc. If she had been paying rent, she would have said so then.(c) Her subsequent evidence that she had been paying rent to the late Mr Molenaar was not only inconsistent with her earlier evidence but also lacked veracity when she was cross-examined about it and claimed not to remember what she had said previously.[20] The Crown has therefore proved on the balance of probabilities that the $17,363.16 in the Kiwibank accounts was the proceeds of cannabis sales. The submission for Ms Keefe that the Court could not infer that these proceeds were the proceeds of offences by Ms Keefe rather than Mr Molenaar is considered later in the judgment.[21] I now set out the relevant statutory provisions and case law before summarising the submissions for the parties.Relevant statutory provisions[22] The relevant provisions of the Act are as follows:2. Interpretation(1) In this Act, unless the context otherwise requires,—.....Interest, in relation to property, means—(a) A legal or equitable estate or interest in the property; or(b) A right, power, or privilege in connection with the property:.....Property means real or personal property of any description, whether situated in New Zealand or elsewhere and whether tangible or intangible; and includes an interest in any such real or personal property:.....Serious offence means an offence punishable by imprisonment for a term of 5 years or more:Tainted property,—(a) in relation to a serious offence, means—(i) property used to commit, or to facilitate the commission of, the offence; or(ii) proceeds of the offence; and(b) when used without reference to a particular offence, means tainted property in relation to any serious offence;.....8 Application for confiscation order(1) Where a person is convicted on indictment of a serious offence, the Solicitor-General may, at any time before the expiration of the relevant application period, apply to the appropriate Court for one or both of the following orders:(a) A forfeiture order against property that is tainted property in respect of the offence:(b) A pecuniary penalty order against the person in respect of benefits derived by the person from the commission of the offence......(3) An application may be made under this section in relation to one or more serious offences.14 Procedure on application(1) Where an application for a confiscation order is made in respect of a person's conviction of a serious offence, the Court may, in determining the application, take into account—(a) Any evidence given in the proceedings taken against that person for the offence, including (but without limiting the generality of the foregoing)—(i) Any documents, exhibits, or other things connected with the proceedings that the Court considers relevant:(ii) Any note or transcript of the evidence admitted in the proceedings:(b) Any sanction imposed pursuant to the person's conviction (whether imposed on sentence or prescribed by law), being a sanction in the nature of a pecuniary penalty or forfeiture of property......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.(3) A Court that makes a forfeiture order against property 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 the property; and(b) Declare that the forfeiture order may, to the extent to which it relates to the interest, be discharged pursuant to section 22 of this Act.(4) Where the Court orders that property (other than money) is forfeited to the Crown, the Court shall specify in the order the amount that it considers to be the value of the property at the time the order is made.(5) Where a Court makes a forfeiture order, the Court may give such directions as are necessary and convenient for giving effect to the order.(6) Without limiting the generality of subsection (5) of this section, where a Court makes a forfeiture order against any property title to which is passed by registration on a register maintained pursuant to any New Zealand enactment, the Court may direct an officer of the Court to do anything reasonably necessary to obtain possession of any document required to effect the transfer of the property, and for that purpose may, by warrant, authorise any such officer to enter and search any place or thing and seize any such document......85 Standard of proofSubject to section 13 of this Act, any question of fact to be determined by a Court or a Judge on an application under this Act is to be determined on the balance of probabilities.Legal principles[23] Consideration of an application for a forfeiture order under s 15(1) of the Act involves three steps:(a) a person's conviction of a ―serious offence as defined in s 2(1);(b) the Court being ―satisfied that property specified in the application is ―tainted property as defined in s 2(1); and(c) the Court exercising its discretion to make the order.[24] Step two is a pre-requisite to the exercise of the discretion in step three.[25] As far as the exercise of the Court's discretion is concerned, a number ofprinciples are well-established:(a) A forfeiture order is an additional penalty provided by Parliament as a deterrent. The offender is sentenced for his or her crime, and in addition any of his or her property used to commit or to facilitate the crime is liable to forfeiture. If this is draconian, that appears to be the intention of the legislation: R v Dunsmuir.2(b) Those who commit serious drug related offences in or from their properties 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: Lyall v Solicitor-General3 and Solicitor- General v Anaru.4(c) The fact that the property had been acquired by previous honest endeavours and that the offences were discovered before the criminal had enjoyed much of their intended fruits is not a sufficient reason why forfeiture should not be ordered: R v Dunsmuir at 7.(d) When considering the ―use of the property under s 15(2)(a), thefocus should be on the ―predominant or ―significant use of the property: Lyall v Solicitor-General at 646 and Solicitor-General v Anaru at [21].(e) In considering ―hardship under s 15 (2)(b), it needs to be recognisedthat there will always be some hardship to an offender and sometimes to a third party when a forfeiture order is made. The fact that some more hardship will be caused stems from the operation of the Act and is to be expected: Lyall at 646 and Anaru at [22]. The question iswhether that hardship is ―undue.(f) The issues of forfeiture may give rise to the question of disproportionality under s 9 of the New Zealand Bill of Rights Act. In2R v Dunsmuir [1996] 2 NZLR 1 (CA) at 6.3Lyall v Solicitor-General [1997] 2 NZLR 641 (CA) at 647.4 Solicitor-General v Anaru CA 52/06, 12 August 2006 at [27].R v Crombie5 William Young P giving the judgment of the Court of Appeal said:[13] ... 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....[16] We emphasise that in order to engage in s 9 it will be necessary, in each case, to point to a treatment orpunishment that is ―disproportionately severe: a highthreshold. Further, the policy factors in favour of forfeiture of property utilised in the commission of offending are cogent....[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 which forfeiture orders may be made. But where the economic impact of the 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.(g) There is always an overlap between disproportionality and undue hardship under s 15(2)(b): Stanton v Solicitor-General.6 A useful non exclusive list of factors that should be weighed include –(i) the value of the property;(ii) the nature of the offender's interest;(iii) the value of the drugs involved;5 R v Crombie CA 453/05, 29 June 2006.6 Stanton v Solicitor-General CA 117/07, 9 October 2007 at [16].(iv) whether the property was acquired with the proceeds of sale of drugs;(v) the utility of the property to the offender;(vi) the length of ownership;(vii) the extent to which the property is connected with the commission of the offence;(viii) the fact that the forfeiture provisions are intended as a deterrent to drug dealers; and(ix) the interests of innocent third parties.(h) The question the Judge should ask is whether the forfeiture of the present equity in the property is disproportionate to the appellant'soffending: Stanton at [23].(i) The property does not have to be purchased for the purpose of the offending: Lyall at 644-645.(j) The reasons for committing the crime are ordinarily immaterial:Lyall at 647.(k) To determine the economic benefits derived by the offender as a result of the offending, it is necessary to assess the value and scale of the cannabis operation and the ultimate yield of the plants found on the property: R v Dunsmuir at 6-7, Solicitor-General v Loftus7 andSolicitor-General v Anaru at [26].Submissions for the Crown[26] For the Crown, Ms Graham submitted that:7 Solicitor-General v Loftus HC Auckland CIV-2003-404-3085, 5 May 2005 at [38].(a) Forfeiture of the property at 41 Chaucer Road to the Crown ought to be ordered because the property had been used for the cultivation of cannabis and any hardship to Ms Keefe was not disproportionate to the gravity of her offending in that the value of the cannabis over the five year period exceeded the value of the property.(b) The cash found in the property and the balance of the Kiwibank accounts were the proceeds of Ms Keefe's offences because theyincluded sales from a ―joint enterprise over the five year period. The fact that the late Mr Molenaar had not been charged with an offence and the fact that Ms Keefe had not been charged with being a party to his offending did not mean that the cash and bank balances wereoutside the definition of ―tainted property. Ms Keefe wasresponsible for all sales from the joint enterprise.Submissions for Ms Keefe[27] For Ms Keefe, Ms Levy submitted that:(a) Forfeiture of the property at 41 Chaucer Road would be disproportionate to the hardship caused to Ms Keefe whose interest in the property arose from her share in the estate of the late Mr Molenaar under the Administration Act 1969. Forfeiture would be disproportionate because:(i) There was no suggestion that the property was acquired from the proceeds of the sale of drugs.(ii) The property had little connection with the bulk of Ms Keefe'soffending which was selling and not cultivating the cannabis or possessing it for supply.(iii) As Ms Keefe worked in full-time employment for most of the five year period her contributions to the household were fargreater than her involvement in the cannabis operation. She took out personal loans to help with renovations and to help make ends meet.(iv) The potential value of the cannabis found at the house was only relevant to how Ms Keefe could have benefited in the past from the sales she had been convicted of.(v) The Court cannot take into account projected profits from the cannabis at the property because the forfeiture application is not based on a cultivation or possession for sale charge. There is therefore a known discrepancy between the possiblepersonal gains from Ms Keefe's offending and her presentinterest in the home. She gained nothing except a few groceries, but stands to lose almost everything.(vi) It is the very personal factor of the loss of her partner in tragic and unforeseeable circumstances and the aftermath of hisbehaviour that makes forfeiture of Ms Keefe's home such anundue hardship in this case. This is a case where general deterrence to drug dealers can bow to true personal tragedy:Jarden v R.8(vii) Already the consequences of Ms Keefe's acquiescence inMr Molenaar's cannabis operation are significantlydisproportionate to her offending. She continues to live in a town where she is known as the partner of the man who killed a Police Officer. She no longer has that partner to continue a family life with in the home they shared together for 11 years. All that is left to her from the carnage of the siege is that family home.8 Jarden v R [2008] NZSC 69, [2008] 3 NZLR 612 at [12]-[14].(viii) There has been no allowance for grief or compassion over Mr Molenaar's death in sentencing Ms Keefe. The obviouspunitive effect of a forfeiture order on top of the sentence served and suffering endured by Ms Keefe means that forfeiture would be a hardship both undue and grossly disproportionate in the circumstances of this case.(b) Even if there are funds in Mr Molenaar's bank accounts which theCourt believes on the balance of probabilities are the proceeds of the sale of the cannabis grown by Mr Molenaar, the Court cannot be satisfied on the balance of probabilities that those funds are the proceeds of sales by Ms Keefe. It is impossible to conclude that the monies in the bank accounts or any particular portion of them areproceeds of Ms Keefe's offending when she was working fulltime andMr Molenaar was at home all day and making door sales: Bromby v Solicitor-General.9 The Court simply has no jurisdiction to orderforfeiture of the proceeds of Mr Molenaar's offending.(c) Even if a limited proportion of sales can be safely linked to Ms Keefe on the balance of probabilities, it is impossible to be satisfied that the proceeds of those sales are in the bank or in the house in cash form. An apportionment based on a guess at who sold the most cannabis should not be permitted because proof of the link between the property (proceeds) and the defined offence is an integral part of the ability to order forfeiture. The Act does not allow ―tracing of thecash into the bank accounts as ―tainted property: Solicitor-General v Hurley.10Tainted property[28] It is convenient to start with the issue whether the cash found in the propertyand the Kiwibank balances are ―tainted property.9 Bromby v Solicitor-General [2007] NZCA 440 at [15]-[19].10 Solicitor-General v Hurley HC Hamilton CIV-2003-419-1661, 22 March 2004.[29] Under s 15(1) of the Act an order of forfeiture may only be made if the Court is ―satisfied that:.... property specified in the application is tainted property in respect of the offence.(Emphasis added)[30] There are two points to be noted:(a) The Court must be ―satisfied on the balance of probabilities that as amatter of fact the property is ―tainted property in respect of theoffence: s 85; and(b) The reference to ―the offence is a reference back to the earlier words in the provision, namely ―a person's conviction of a serious offence.[31] The need to link the ―tainted property to the ―serious offence is reinforced by the definition of ―tainted property in s 2(1) of the Act which defines ―tainted property ―in relation to a serious offence as meaning for present purposes:(b) Proceeds of the offence.[32] As Ms Levy submitted, in Bromby v Solicitor-General the Court of Appealemphasised that in order to be ―tainted property the proceeds must be proceeds ofthe offence. In the judgment of the Court delivered by Ellen France J it was said:[17] For the purposes of this appeal, the Solicitor-General accepts that the Proceeds of Crime Act requires the property to be tainted in relation to a specific serious offence of which the offender has been convicted. That follows from s 15(1) of the Proceeds of Crime Act which allows forforfeiture if the relevant property is tainted property ―in respect of the[serious] offence (our emphasis). ―Tainted property in relation to a serious offence means, relevantly, ―proceeds of the offence (s 2(1)(a)) (ouremphasis).[18] By contrast, the Misuse of Drugs Act provides for forfeiture where the Judge is satisfied that the money was, relevantly, in the possession of thatperson ―for the purpose of facilitating the commission of an offence(s 32(3)) (our emphasis).[33] This is consistent with the purpose of forfeiture orders which target property which is specifically linked to a given course of offending as opposed to pecuniarypenalty orders which target benefits received as an indirect result of criminality: R v Brough.11[34] In the present case the relevant ―serious offence for which Ms Keefe wasconvicted was the offence under s 6(1)(e) of the Misuse of Drugs Act 1975 which provides:(1) ....no person shall -.....(e) Sell, or offer to sell, any Class C controlled drug to a person of or over 18 years of age .....[35] For a person to commit an offence under this provision, the person must sell the controlled drug to another person. There must be a sale, or offer to sell, by the person charged with the offence to another person. Unless there is a sale, or offer to sell, by the person charged with the offence there will be no offence under s 6(1)(e).[36] A person may be a party to a sale by another person under s 6(1)(e), but in order to be convicted of the offence of being a party to such a sale the person would need to be charged with being a party to the offence: ss 66 and 343 of the Crimes Act 1961 and Adams on Criminal Law.12[37] In the present case Ms Keefe was not charged with an offence of being a party to any sales of cannabis by the late Mr Molenaar. The charges against her were limited to her own sales.[38] This means that the question in the present case is whether the cash found inthe house and the Kiwibank balances were the ―proceeds of Ms Keefe's ―serious offence in respect of which she was convicted, that is the sales by her in the five year period.[39] When the question is formulated in this way it can be seen that the Courtcannot be ―satisfied on the balance of probabilities that the total amount of the cash11 R v Brough [1995] 1 NZLR (CA) 419 at 423.12 Sir Bruce Robertson (ed) Adams on Criminal Law (looseleaf ed, Brookers) at [CA 66.10] and[CA343.01].in the house and the Kiwibank balances were the proceeds of the sales of cannabis made by Ms Keefe rather than those made by the late Mr Molenaar. There is no evidence before the Court linking or limiting the cash and the bank balances solely to the sales by Ms Keefe. On the contrary, the evidence before the Court relating to the cannabis enterprise operated by the late Mr Molenaar and Ms Keefe establishes that the proceeds would have been from sales made by them both over the five year period.[40] The argument for the Crown that the existence of a ―joint enterprise meant that Ms Keefe's ―serious offence was in respect of all the sales does not withstandclose scrutiny. Ms Keefe might have been charged with offences such as cultivating cannabis or supplying or possessing cannabis for supply or being a party to sales of cannabis by the late Mr Molenaar, but she was not. In terms of the relevant provisions of the Act interpreted and applied in accordance with the decision of the Court of Appeal in Bromby, the cash and bank balances are therefore ―tainted property only to the extent that they comprised the proceeds of Ms Keefe's sales ofcannabis over the five year period.[41] While the Crown adopted an ―all or nothing approach on the basis of its―joint enterprise submission and did not seek an apportionment of the cash and bank balances, it is, as the Court of Appeal pointed out in Lyall v Solicitor-General at 646 in a judgment delivered by Blanchard J, always open to the Court to:look at the realities of the situation in determining what property interest has been tainted.[42] Adopting that approach here, where Mr Mahy has already apportioned the bank balances and the interest on them between legitimate and illegitimate sources, I am satisfied on the balance of probabilities that at least half of the cash and the bank balances were proceeds of cannabis sales by Ms Keefe. The evidence established that, while both she and Mr Molenaar made the door sales, she was responsible for deliveries to customers. On the basis of this evidence a finding that at least half the cash and bank balances were proceeds of her sales does not involve speculation orguesswork. Nor does this finding involve tracing ―tainted property which has beensold or realised: cf Solicitor-General v Hurley at [10]-[11] and Solicitor-General v Machirus.13[43] I am therefore prepared to make an order under s 15(1) of the Act in respect of half of the cash and bank balances.Forfeiture of house property[44] Ms Keefe did not dispute that:(a) By virtue of the extended definitions of ―property and ―interest ins 2(1) of the Proceeds of Crime Act 1991 and the provisions of theAdministration Act 1969 she had an ―interest in the property at 41 Chaucer Road which was capable of being the subject of an order for forfeiture under s 8(1)(a); and(b) The property at 41 Chaucer Road was ―tainted property as defined in s 2(1) of the Act because it had been used by her in the commission of her serious offences.[45] As already noted, Ms Keefe opposed the order sought in respect of the property at 41 Chaucer Road on the grounds that forfeiture of the property would be grossly disproportionate in the circumstances of this case. It is convenient toconsider the submissions for Ms Keefe which relate to the Court's discretion unders 15(1) of the Act in the context of the discretionary criteria in s 15(2).The use of the property[46] Although there was no evidence that the property was purchased by the late Mr Molenaar from the proceeds of the sale of drugs or for the purpose of cannabis cultivation, during the time the late Mr Molenaar and Ms Keefe lived in the house on the property as their family home, the commercial cultivation of cannabis in the house and the sale of cannabis from the house became predominant or significant13 Solicitor-General v Machirus HC Christchurch CIV-2005-409-000177, 28 June 2007 at [25].uses of the property. I do not accept the submission for Ms Keefe that the property had little connection with the bulk of her offending. On the contrary, Ms Keefe was responsible for door sales and deliveries to customers of cannabis grown on the property. The use of the property for the commercial cultivation of cannabis was an integral part of her offending over the five year period. This criterion therefore favours forfeiture.Undue hardship[47] There is no dispute that Ms Keefe's interest in the property arises through herinterest in the estate of the late Mr Molenaar and that under s 77 of the Administration Act 1969 she would be entitled to $155,000 and one third of the residue of the estate on his intestacy.[48] The estate of the late Mr Molenaar will include the house property valued at $215,000 without a forced sale and the cash and bank balances totalling $95,237.02. If the interests in the estate of Maddison Molenaar and Creedence Johnston are excluded and a forfeiture order is made in respect of the remaining interests of Ms Keefe in the house property and half the cash and bank balances, the amount in the estate available for distribution to Ms Keefe would be substantially reduced and might well be extinguished.[49] The question is whether this outcome would be ―disproportionately severeand cause her ―undue hardship. I consider this question on the basis of the principles mentioned above at [25] and counsel's submissions above at [27](a).[50] Applying those principles, I do not consider that a forfeiture order of theproperty would be ―disproportionately severe essentially because the value of the cannabis sold by Ms Keefe over the five year period substantially exceeded the value of her interest in the property. The gravity of Ms Keefe's offending and theeconomic benefits she derived from it justify forfeiture. Ms Keefe sold cannabis as part of a significant commercial cannabis operation and she shared in the proceeds from the operation which, on the basis of the total value of the cannabis found on the property on 7 May 2009 of between $77,950 and $131,750, meant that she and thelate Mr Molenaar would have received in excess of $400,000 to $650,000 over the five year period. These figures are conservative because the evidence established that repeat growth cycles would have resulted in greater production and income each year.[51] I do not accept the submission for Ms Keefe that any contributions she may have made to the household from her own income and personal loans meant that forfeiture of her interest in the property was not justified. Ms Keefe gave evidence that she had taken out loans over the five year period totalling some $16,500 for a car, furniture, the kitchen, and other unidentified purposes. The amounts involved were minimal compared to the income from the cannabis operation which she and the late Mr Molenaar shared. Her interest in the value of the cannabis which she sold over the five year period meant that any other contributions which she may have made were insignificant and do not make forfeiture a disproportionate outcome.[52] I have also given careful consideration to Ms Levy's submission forMs Keefe relating to the nature and circumstances of Ms Keefe's offences and her personal position and circumstances, but I do not consider that the impact on Ms Keefe of forfeiture creates ―undue hardship sufficient to constitute gross or severe disproportionality. I accept the submission for the Crown that there is nobasis for taking into account Ms Levy's submissions relating to Ms Keefe which were appropriate on sentencing. While Ms Keefe has experienced personal suffering as a result of the actions of the late Mr Molenaar and her own involvement in their significant cannabis operation, I do not consider that her personal circumstances lead to a finding of ―undue hardship any more than they were seen as mitigating factors when she was sentenced. The nature of Ms Keefe's offending and her personal circumstances are therefore not sufficiently compelling to make forfeiture disproportionate.Result[53] The application by the Solicitor-General is granted to the extent that, subject to the exclusion of the interests of Maddison Molenaar and Creedence Johnston (if any) in the estate of the late Mr Molenaar, the remaining interests of Ms Keefe in theproperty at 41 Chaucer Road, Napier, valued at $215,000, and half the cash found in the property on 7 May 2009 (that is $10,522) and half the monies held by the Official Assignee (that is $9,802.52) are to be forfeited to the Crown.[54] As the order of the Court will need to comply with the provisions of s 15(3) and (4) of the Act, and as further directions may be necessary under s 15(5) of the Act, including possible directions relating to the sale of the property and the costs of other parties in the administration of the estate, counsel for all parties, including counsel for the Public Trustee, Maddison Molenaar and Creedence Johnston, are to consult and settle the terms of the order of the Court. Leave is reserved to the parties to refer any issue relating to the terms of the order to the Court for determination and to seek any further directions that may be required.Costs[55] Although Ms Keefe has achieved a small measure of success in respect of the cash and bank balances, her involvement in the commission of the serious offence in respect of which the forfeiture order was sought means that she is not entitled to any order for costs: s 88(c) of the Act.[56] The Crown did not seek an order for costs against Ms Keefe either on this application for forfeiture or in respect of the applications for the restraining order and its extension.__________________________D J White J