SOLICITOR-GENERAL OF NEW ZEALAND V SPIJKERBOSCH HC ROT CIV 2007-463-999

SOLICITOR-GENERAL OF NEW ZEALAND V SPIJKERBOSCH HC ROT CIV 2007-463-999 10 July 2009IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY CIV 2007-463-999BETWEEN SOLICITOR-GENERAL OF NEW ZEALAND Applicant AND MARIA ANNE SPIJKERBOSCH Respondent Hearing: 10 July 2009 Counsel: A F Pilditch for Applicant N J Utting for Respondent Judgment: 10 July 2009(ORAL) JUDGMENT OF HEATH JSolicitors: Crown Solicitor, Rotorua Counsel: N Utting, RotoruaIntroduction[1] Ms Spijkerbosch pleaded guilty to one representative charge of supplying the Class A controlled drug, Methamphetamine and one charge of cultivating the Class C controlled drug cannabis. The offending was detected during the electronic phase of a covert surveillance operation known as "Avalanche". The offending occurred during the period between 24 October 2006 and 12 December 2006. [2] Ms Spijkerbosch was sentenced on 30 May 2008, to 12 months' home detention. In reaching that sentence, Rodney Hansen J took a starting point of five years imprisonment to reflect the overall offending but, as I read his sentencing remarks, reduced that starting point to three and a half years to reflect what he saw as the comparative culpability of Ms Spijkerbosch to her co-offender, Mr Tuuta. [3] That comparison is confirmed by the starting point of five years imprisonment subsequently taken for Mr Tuuta's sentencing by Stevens J. I take the view that that recognises that Ms Spijkerbosch bore a 30% responsibility for the offending and Mr Tuuta, 70%. [4] The Solicitor-General seeks a forfeiture order under the Proceeds of Crime Act 1991. In consequence of Mrs Spijkerbosch's convictions on those charges, he asks the Court to order forfeiture of a property situated at 1629 State Highway 30, Horohoru, near Rotorua, from which much of the offending took place. [5] Separately, the Crown seeks forfeiture of a sum of $5000 cash that was seized during the execution of a search warrant at the property on termination of the surveillance operation. The sentencing Judge was asked to make that order but declined to do so. It appears that the Judge mistakenly understood that the cash in issue was covered by the Proceeds of Crime Act application. However, that was not the case. Forfeiture is sought in respect of that money under s 32(3) of the Misuse of Drugs Act 1975.[6] Ms Spijkerbosch opposes the forfeiture applications on the grounds that the property was used primarily as a dwelling and that it would cause undue hardship to herself and her family if the property was forfeited. [7] On the $5000 application, she opposes forfeiture on the grounds that that sum did not represent proceeds of drug offending. [8] ASB Bank Ltd holds a mortgage over the subject property. It seeks relief to the extent of its mortgage. Clearly such protection must be given.The Proceeds of Crime Act application(a) The facts[9] I find that Ms Spijkerbosch dealt in Methamphetamine, in conjunction with Mr Tuuta. I am satisfied that the assessment of comparative culpability arising from the sentencing remarks of Rodney Hansen and Stevens JJ is appropriate. [10] The dealing that took place both at and away from the subject property was significant. Cannabis was cultivated at the property also. [11] While Mr Tuuta and Ms Spijkerbosch operated in a manner equivalent to a commercial partnership, Mr Tuuta was the more dominant personality. Indeed, Ms Spijkerbosch received considerable credit on sentencing for personal circumstances, arising out of what was termed an "abusive" relationship. [12] For the purpose of sentencing, the Crown alleged that a quantity of Methamphetamine (conservatively estimated at 50gms) was dealt with by the two offenders. The Crown also asserted that Ms Spijkerbosch and Mr Tuuta sold cannabis, something that is supported by notes found at the property when the search warrant was executed on termination of the operation. The notes were in Ms Spijkerbosch's handwriting.[13] No Methamphetamine or cannabis was located at Mr Tuuta's property at Rotoiti. I infer that Mr Tuuta's dominant influence in the enterprise was the reason why much of the offending took place from Ms Spijkerbosch's home. [14] The property that the Solicitor-General seeks to have confiscated is presently valued at something in the range of $170,000 to $210,000. The variation depends on whether forced or market sale values are used. It is also dependent on the state of the property market that has been in significant decline this year.(b) The law[15] Section 15(1) of the Proceeds of Crimes Act provides that a Court "may" make a forfeiture order if satisfied the property is "tainted property" as defined. That term includes a property at which serious offending is undertaken, even though proceeds of crime are not located there. [16] It is clear and not disputed that Ms Spijkerbosch was guilty of "serious offending" and that her property is tainted for that reason. The degree of taint has been the subject of debate but I am satisfied that it was used for a good deal of the drug related activity on which Ms Spijkerbosch was sentenced. [17] Section 15(2) of the Act sets out the factors to which the Court must direct its attention on a forfeiture application. Section 15(2) provides:15 Forfeiture orders (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. .[18] The relevant factor for present purposes is whether, in terms of s 15(2)(b), any "undue hardship" is reasonably likely to be caused to Ms Spijkerbosch if an order were made. In R v Dunsmuir [1996] 2 NZLR 1 (CA) at 6, the Court of Appeal made it clear that forfeiture of property used to facilitate a crime should be seen as an aspect of general deterrence. Therefore, even though Draconian in character, the legislation should be given full effect. As the Court observed, usually innocent parties can be protected through the means of ss 17 and 18 of the Act. [19] The term "undue hardship" has been interpreted as requiring something more than ordinary hardship arising as a necessary consequence of forfeiture of property. Forfeitures that are "grossly disproportionate" to the gravity of the offending will be "undue". In Lyall v Solicitor-General [1997] 2 NZLR 641 (CA) at 647, the Court of Appeal said: 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. .[20] Section 16(1) of the Act provides that where a forfeiture order is made against property "the property shall vest absolutely in the Crown to the extent of the interest specified in the order". [21] I am satisfied that the discretionary nature of the power to make an order (s 15(1)), the ability to carve out aspects of the interest to protect persons to whom "undue hardship" would otherwise result (s 15(2)(b)) and the power to vest in the Crown only that interest in the property specified in the order (s 16(1)) together provide jurisdiction to make an order for partial forfeiture, where appropriate. Thatis particularly so in a case where there is no jurisdiction to make a pecuniary penalty order because proceeds of crime are not involved: see s 25(1) of the Act.(c) Analysis[22] Ms Spijkerbosch played a lesser role in the criminal enterprise that led to her detection, arrest and conviction. The extent of her role has already been discussed. [23] The question is whether forfeiture of a property of a value that could be up to $210,000 in today's depressed market is grossly disproportionate to the gravity of her offending. In my view, total forfeiture would be grossly disproportionate because Ms Spijkerbosch was significantly less culpable than her co-offender and it is more likely that her residence was used because of his domination over her. [24] Having said that, I consider some element of forfeiture is required to reflect the serious nature of Ms Spijkerbosch's offending. In my view, justice can be done by forfeiture of a fixed percentage of a nominal value that I will assess today and deferring the commencement of the order until early next year to allow time for the market to recover. [25] The existing restraining order can stay in place meantime and can expire when the forfeiture order is sealed. [26] Using a nominal value of $190,000, and taking out $90,000 to reflect the existing amount owing on the mortgage for which ASB Bank must be protected, I arrive at 40% of the net value to be forfeited. I have chosen that percentage, rather than 30%, to reflect the likelihood that Ms Spijkerbosch will be advantaged by the delay before sale and will have occupancy of the property meantime.The Misuse of Drugs Act application[27] The application for forfeiture of the $5000 is made under s 32(3) of the Misuse of Drugs Act which provides:32 Forfeiture If, on the conviction of any person for an offence against section 6 of this Act, the Judge or District Court Judge is satisfied that money found in the possession of that person was received by that person in the course of or consequent upon the commission of that offence, or was in the possession of that person for the purpose of facilitating the commission of an offence against that section, the Judge or District Court Judge may, in addition to any other penalty imposed pursuant to this Act, order that that money be forfeited to the Crown. .[28] Ms Spijkerbosch's evidence is that that sum was not the proceeds of drug sales. Her position is set out fully in her affidavit as follows:25. The Crown are also seeking an order relating to the $5000 found at my address when the Police executed the search warrant. I also oppose that application. The money is not the proceeds of drug sales. It is money that I had kept at my house as a sort of "rainy day fund". I had always been told to keep some money aside. I explained this to the Police in my statement to them, both at the start of my statement and also further into the statement when I was admitting my involvement with Tuuta and selling. 26. On 2 November 2006 I deposited $25,000 into my bank account. This was a gift from my father following some medical treatment for my mother. I will have him write a letter to confirm that. Attached and marked "D" is a copy of the deposit receipt. 27. On 3 November 2006 I transferred $20,000 of that money into a serious saver account. $1800 was paid onto my visa card. The balance was taken out by me from ATM money machines. 28. From the $20,000 in the savings account I withdrew two amounts to lend to Tuuta totalling around $9000. He was repaying me as and when he could, in cash. Repayments from him were some of the $5000 that the Police found.[29] I cannot accept that explanation. Indeed, I acknowledge that Ms Spijkerbosch's recollection was unclear when she gave oral evidence today. [30] The fact that the money was found in $100, $50 and $20 denominations divided into five equal amounts of $1000 each, is consistent with the way in which money is found when drug dealing is involved. Further, there is no evidence to support the notion of moneys being withdrawn from the savings account to which she refers in her affidavit.[31] On balance, I am satisfied to the required standard that the $5000 represented the proceeds of drug offending and should be forfeited under the Misuse of Drugs Act.Result[32] For the reasons given, I make the following orders: a) I make a forfeiture order in respect of the land and buildings situated at 1629 State Highway 30, Horohoro, Rotorua District, described in Certificate of Title SA59D/708 as Lot 1 deposited plan South Auckland 74432. b) That order shall lie in Court unsealed until 1 February 2010. I intend that the existing restraining order will continue in force and will expire on sealing of that order. c) The Solicitor-General shall account to the ASB Bank to the full extent of its mortgage debt on sale. He shall also account to Ms Spijkerbosch as to 60% of the net proceeds of sale, after deduction of all costs of realisation and actual sale; including costs incurred by the Official Assignee. d) The sum of $5000 is forfeited under the Misuse of Drugs Act. [33] Costs shall lie where they fall. [34] Leave is reserved for the parties to apply if any difficulty arises in relation to the structure of the orders I have made or as to the terms on which ultimately it will be sealed. [35] While I have expressed the intention that the restraining order will expire when the forfeiture order is sealed, Mr Pilditch has properly pointed out that the present restraining order will expire six months after it was made and will requirerenewal. Obviously, any renewal should be on the basis that that order expires after six months from its date or on sealing of the forfeiture order, whichever is the earlier. [36] I thank counsel for their assistance. ______________________ P R Heath J