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- State of Queensland v Statham[2016] QSC 189
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State of Queensland v Statham[2016] QSC 189
State of Queensland v Statham[2016] QSC 189
SUPREME COURT OF QUEENSLAND
CITATION: | State of Queensland v Statham [2016] QSC 189 |
PARTIES: | STATE OF QUEENSLAND (applicant) v CARL RICHARD STATHAM (respondent) |
FILE NO/S: | SC No 11652 of 2011 |
DIVISION: | Trial Division |
PROCEEDING: | Application |
DELIVERED ON: | 1 September 2016 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 29 March 2016 and 20 May 2016 |
JUDGE: | Bond J |
ORDER: | The orders of the Court are that: 1.Pursuant to ss 146(2), 151 and 153 of the Criminal Proceeds Confiscation Act 2002 (Qld), the following property of the respondent is forfeited to, and vests in, the applicant: a.The respondent’s interest in real property located at 26 Rowbotham Road, Westbrook, described as Lot 2, Registered Plan 147196, County of Aubigny, Parish of Westbrook registered in the name of Carl Richard Statham, title reference number 15297070. b.The sum of $31,700, being the value of cash seized by police on 12 October 2011. c.The sum of $48,550, being the value of cash seized by police on 31 May 2012. 2. Pursuant to s 153(3) of the Criminal Proceeds Confiscation Act 2002 (Qld), the Public Trustee of Queensland (“Public Trustee”) is directed, as soon as is reasonably practicable, to sell the real property referred to in Order 1(a) above. 3. Pursuant to s 153(3) of the Criminal Proceeds Confiscation Act 2002 (Qld), upon the giving of 7 days’ notice in writing to the lawful occupant(s), the Public Trustee or an authorised agent may access the real property referred to in Order 1(a) above. 4. Upon the sale of the real property referred to in Order 1(a) above, the Public Trustee must apply the sale proceeds of the real property in the following order: a.First, in discharge of all registered and statutory encumbrances over the real property. b. Second, in payment of fees or charges payable to the Public Trustee under s 223 of the Criminal Proceeds Confiscation Act 2002 (Qld). c.Third, in payment of expenses incurred by the Public Trustee in disposing of the property. d.Fourth, in discharge of the statutory charge to Legal Aid Queensland pursuant to s 229 of the Criminal Proceeds Confiscation Act 2002 (Qld). e.Fifth, in payment of the balance to the consolidated fund. 5. The respondent must pay the applicant’s costs of the application to be assessed on the standard basis. |
CATCHWORDS: | CRIMINAL LAW – PROCEDURE – CONFISCATION OF PROCEEDS OF CRIME AND RELATED MATTERS – FORFEITURE OR CONFISCATION – PROCEEDS OF CRIME, TAINTED PROPERTY OR CONFISCABLE PROPERTY Criminal Proceeds Confiscation Act 2002 (Qld), s 104, s 146, s 151, s 153 Land Titles Act 1994 (Qld), s 184 Commissioner of the Australian Federal Police v Hart [2016] QCA 215, cited Director of Public Prosecutions (Cth) v Jeffrey (1992) 58 A Crim R 310, cited Elkateb v Lawindi (1997) 42 NSWLR 396, cited R v Galek (1993) 70 A Crim R 252, considered Taylor v Attorney General (South Australia) (1991) 55 SASR 462, cited |
COUNSEL: | P T Chiverall (Sol) for the applicant L Ackermann for the respondent |
SOLICITORS: | Director of Public Prosecutions (Qld) for the applicant Fisher Dore Lawyers for the respondent |
Introduction
- This is an application by the State of Queensland (“the State”) for a forfeiture order pursuant to s 146 of the Criminal Proceeds Confiscation Act 2002 (Qld) (“the Act”). The State seeks the forfeiture of cash and real property owned by the respondent on the ground that those items of property are tainted property within the meaning of the Act.
- The items of property owned by the respondent and the subject of the State’s application are:
- the respondent’s interest in real property located at 26 Rowbotham Road, Westbrook (“the Westbrook property”);
- the sum of $31,700, being the value of cash seized by police on 12 October 2011; and
- the sum of $48,550, being the value of cash seized by police on 31 May 2012.
- The Westbrook property comprised 6.43ha of land, on which a house was constructed. The respondent had been registered proprietor since 1999.
- Pursuant to s 151 of the Act, a Court may make a forfeiture order in relation to particular property if:
- the relevant respondent is convicted of a “confiscation offence”: s 151(1)(a);
- the conviction is the basis for the application for the forfeiture order against the property: s 151(1)(b);
- the Court is satisfied the property, or an interest in the property, is tainted property: s 151(1)(c); and
- the Court, having regard to the discretionary considerations identified in s 151(2), considers it appropriate to make the order: s 151(1)(d).
- The State concedes that it has the evidentiary burden to satisfy the court of the matters set out in s 151, including the discretionary considerations in s 151(2).
- For the reasons that follow, I am satisfied that the conditions of s 151 have been met and that it is appropriate to make the forfeiture order sought by the State.
Offences that form the basis of the State’s application
- There are two groups of offending by the respondent that the State submits are confiscation offences that form the basis for the State’s application for the forfeiture order against the respondent’s property. I will identify them in the order in which they occurred.
- On 24 November 2014 the respondent pleaded guilty to all of the counts contained in Supreme Court Indictment 708 of 2014 (“the 2010/2011 offending”), namely, that between 31 May 2010 and 13 October 2011 the respondent committed:
- one count of trafficking in dangerous drugs (cannabis);
- one count of producing a dangerous drug in excess of 500g (cannabis); and
- one count of possessing a dangerous drug in excess of 500g (cannabis).
- On 18 November 2014 the respondent pleaded guilty to the following counts contained in Supreme Court Indictment 178 of 2013, that on 31 May 2012 the respondent committed:
- one count of possessing dangerous drugs (cannabis);
- one count of possessing relevant substances (hypophosphorous acid, pseudoephedrine and iodine); and
- one count of possessing anything in connection with producing a dangerous drug.
- The respondent pleaded not guilty to the remaining counts on the 2013 indictment, namely, that between 2 November 2011 and 1 June 2012 the respondent committed:
- one count of trafficking in dangerous drugs (methylamphetamine); and
- one count of producing a dangerous drug in excess of 2g (methylamphetamine).
- The respondent was tried on those counts and found not guilty, but was found guilty of one count of possessing dangerous drugs in excess of 2g (methylamphetamine) (together, with the counts outlined at [9] above, “the 2012 offending”).
- The location of the 2010/2011 offending and the 2012 offending was the house on the Westbrook property which was, at those times, the respondent’s residence.
- In relation to the 2010/2011 offending, the house on the Westbrook property contained a sophisticated hydroponic cannabis operation. The police, when attending at the property, located a significant quantity of cannabis plants in various stages of development, plant material in various stages of preparation for distribution and a significant quantity of production equipment. The police also located and seized $31,700 in cash, the value of which is the subject of the State’s forfeiture application.
- In relation to the 2012 offending, the house on the Westbrook property contained a laboratory and equipment to produce a “very large quantity of methylamphetamine”. The police, when attending at the property, located two plastic bags and 75 seeds of cannabis weighing 450g and a quantity of methylamphetamine with a calculated pure weight of 185g and an estimated street value of approximately $250,000. The sentencing judge considered that in relation to the methylamphetamine the respondent’s criminal complicity was that he acted at least as a “warehouseman to facilitate its commercial exploitation by others”. The police also located and seized $48,550 in cash, the value of which is also the subject of the State’s forfeiture application.
- An offence is a confiscation offence if it is a serious criminal offence: s 99 of the Act. An offence is a serious criminal offence if it is an indictable offence for which the maximum penalty is at least five years imprisonment: ss 100 and 17 of the Act. Each of the offences identified at [8], [9] and [11] above are indictable offences that carry a maximum penalty of more than five years imprisonment.
- Accordingly, the offences that form the basis of the State’s application against the respondent’s property are confiscation offences within the meaning of the Act. The requirements of s 151(1)(a) and (b) are satisfied.
- The State also identified an additional group of offending that, while not a basis for its forfeiture application[1], was relevant to the exercise of my discretion in considering whether it is appropriate to make the forfeiture order. Those offences are that in 1999 the respondent was convicted on his own plea of guilty of four indictable drug related offences. The respondent was sentenced to seven years’ imprisonment, with a recommendation for parole eligibility after two and a half years. The offending was carried on from two locations – a property formerly owned by the respondent and the Westbrook property. The Westbrook property was the locality of a “sophisticated indoor operation” that produced cannabis. The property formerly owned by the respondent was forfeited to the State, the Westbrook property was not. I will return to the significance of this offending below.
Tainted property
- I now turn to consider whether the property the subject of the State’s application is “tainted property” within the meaning of the Act, so that the requirements of s 151(1)(c) are satisfied.
- The relevant provisions of the Act are as follows:
104Meaning of tainted property
(1)Tainted property, for a confiscation offence, means–
(a) property used, or intended to be used, by a person in, or in connection with, the commission of the offence; or
…
(c)property or other benefit derived by a person from a commission of the offence; or
…
(2) Property mentioned in subsection (1)(a) includes property the use of which is, or the intended use of which would be, all or part of the confiscation offence.
…
153Making forfeiture order
…
(3)The court must presume that particular property is tainted property if–
(a) at the hearing of the application, evidence is presented that the property was in the person’s possession in the time of, or immediately after, the commission of the offence concerned; and
(b)no evidence is presented tending to show that the property is not tainted property.
- In relation to the monies confiscated by the police, the State submitted, and I accept, that the presumption that the monies in the possession of the respondent is tainted was not displaced by the evidence before me. I am satisfied that the monies in the possession of the respondent was property used, or intended to be used, in connection with the commission of the offence: s 104(1) of the Act. The State also submitted, and I am also satisfied, that the monies were property derived from the commission of the confiscation offences identified above: s 104(1)(c) of the Act.
- In relation to the respondent’s interest as registered proprietor of the Westbrook property, the State’s primary submission was that, pursuant to s 104(1)(a), the property was used in, or in connection with, the commission of the offence.
- On the evidence before me, it is undoubtedly the case that the 2010/2011 offending and the 2012 offending occurred at the Westbrook property. The words “in connection with” are of considerable width: Elkateb v Lawindi (1997) 42 NSWLR 396. In Director of Public Prosecutions (Cth) v Jeffrey (1992) 58 A Crim R 310, Hunt CJ considered that the words used in the context of the Commonwealth Act required “a substantial connection between the activity in question and the use of the property”,[2] he added (at 316 to 317):
[I]t is not sufficient for there to be a mere accidental or incidental connection. The unlawful activity must be related to, or dependent upon, or could not have committed without, or have resulted directly from, the use of the property.
- The use of the Westbrook property by the respondent was in connection with the commission of the offences. The facts to which I have adverted at [12] to [14] above reveal that the connection between the commission of the offences and the Westbrook property was not merely accidental or incidental, but was sufficiently significant to warrant the conclusion that the property was used in connection with the commission of the offences. The respondent’s interest in the Westbrook property as registered proprietor is therefore tainted property within the meaning of the Act.
- I raised with the parties the question whether, as a matter of law, the whole of an interest in property is held as “tainted property” even if only a portion of the relevant property in which the interest was held was connected to the commission of the offending. Here, this question became relevant as the evidence established that the residence on the property, and not the surrounding land, was the part of the property used in connection with the commission of the confiscation offences.
- In subsequent written submissions the State submitted, and I accept, that my question must be answered in the affirmative. The important consideration is whether the interest held by the offender was used in, or in connection with, the commission of the confiscation offence. The concept of connection is, as I have already mentioned, sufficiently broad to apply even if only a portion of the property was used. This view is also supported by the worked example 1 in schedule 1 of the Act which is made relevant by operation of s 7(3) of the Act.
- I do observe, however, that the proportion of the property which was used in the commission of the offending and the proportion of the property which was not used may be a factor that the court may have regard to in determining whether it is appropriate to make a forfeiture order in the circumstances.
Exercise of discretion
- Section 151(2) provides that in determining whether it is appropriate to make the forfeiture order, I may have regard to:
- any hardship that may reasonably be expected to be caused to anyone by the order;
- the use that is ordinarily made, or was intended to be made, of the property;
- the seriousness of the offences concerned; and
- anything else that I consider appropriate.
- Courts have considered it appropriate to take into account the following factors as relevant to the determination of whether a forfeiture order should be made[3]:
- the value of the property;
- the nature and gravity of the offences;
- the use made of the property;
- the degree of the respondent’s involvement;
- the respondent’s antecedents;
- the value of any other property confiscated and the penalty imposed;
- the nature of the respondent’s interest in the property;
- the value of the drugs involved or the size of the crop;
- whether the property was acquired with the proceeds of the sale of drugs;
- the utility of the property to the offender;
- the length of the respondent’s ownership of the property;
- the interest of innocent parties in the property;
- the extent to which the property was connected with the commission of the offence;
- the fact that forfeiture is intended as a deterrent; and
- the extent (if any) to which the retention of the property might bear on the respondent’s rehabilitation.
- The respondent does not resist the making of a forfeiture order in relation to the sums of monies located and seized by police. He does however submit that it is inappropriate to make the forfeiture order in respect of the Westbrook property on the basis that it would cause him hardship. Relevantly, he submits that he is a mature man of 66 years of age and that upon his release from custody he will be without any real prospects of employment, will receive no family support and will have no source of income except for social security payments from Centrelink.
- The evidence reveals the following relevant considerations:
- The market value of the Westbrook property is $550,000 (inclusive of an irrigation license). The respective apportionment is $390,000 for the land and $160,000 for the improvements (principal of which would seem to have been the house).
- The Westbrook property is subject to a registered security in favour of St George Bank[4]. In his affidavit the respondent estimated that he owed approximately $158,000 to $159,000 on that mortgage. That means his equity in the property would be about $390,000. Essentially that is the value which he would lose in the event I made the order sought by the State.
- The monthly loan repayments for the property have been made by a combination of rent paid by the tenant residing at the property as supplemented by payments made by the respondent’s sister. The respondent’s receipt of financial assistance from his sister is inconsistent with his affidavit evidence where he deposed to the fact that he does not receive financial support from anyone. When asked about this inconsistency, the respondent stressed that upon his release he does not intend to seek his sister’s financial support. How he would finance the loan payments from social security payments is unclear.
- The use that the respondent intends to make of the property on his release is significant to his hardship argument. The respondent gave inconsistent answers when asked whether it was his intention to sell the Westbrook property or to live in the property following his release. In cross examination the respondent said that he would sell the property and pay out the mortgage to eliminate the mortgage as a source of financial pressure. He then said that he intends to live in the property upon his release on parole. When asked about this apparent inconsistency, he said that he would sell the Westbrook property and then use the proceeds to purchase a different property. Without the proceeds from the sale of the property he would be unable to purchase a different property at his age.
- The evidence reveals that the respondent has a longstanding tendency to revert to illegal conduct when he is in financial difficulty. I observe:
- The respondent first commenced growing and selling cannabis for commercial gain in 1999 (the offending referred to at [17] above) after being released from prison for unrelated offences. The commencement of his drug related offending was primarily motivated by the financial difficulty that he found himself in on his release from prison.
- Following the respondent’s release from prison in 2002 he again found himself in financial difficulty. He deposed to the primary source of his financial difficulty being a property settlement with his long-term partner. That settlement involved him refinancing his mortgage over the Westbrook property and paying his former partner $80,000. The respondent’s solution to his outstanding loan repayments was to recommence his drug related offending (the 2010/2011 offending).
- The respondent accepted that there is a real possibility that he would face similar financial pressure on his release. He also accepted that when he had been under financial pressure in the past he had turned to unlawful activity involving drugs as a solution to those problems.
- Subject to one reservation, I would think it is plainly appropriate to make the forfeiture order sought by the State. The most significant matters justifying that conclusion are:
- The rationale for forfeiture of property under the Act is to act as a deterrent to the offender and the community at large. It is designed to remove the financial gain and increase the financial loss associated with illegal activity. Important express objects of the Act include depriving persons of tainted property.
- The respondent has repeatedly used the Westbrook property as a facility to produce and store dangerous drugs. The use of the property was integral to the crimes committed.
- The respondent’s offending was serious. The quantities of drugs seized were large. The offences relating to the production of cannabis were commercial in nature and revealed a high level of sophistication in the production process.
- The respondent used $41,000 of the proceeds obtained from the 1999 offending to pay down on the loan facility. There was evidence before me that he had also intended to use the proceeds from the confiscation offending to pay down on his mortgage.
- The respondent’s tendency to revert to breaking the law when subject to financial difficulty detracts from any thought that retention of the home might be needed to assist his rehabilitation.
- The reservation I have derived from the fact that the residence on the property, and not the surrounding land, was the part of the property used in connection with the commission of the confiscation offences. It will be recalled the property was 6.43ha in size. If the equity the respondent will forfeit will be of the order of $390,000, that $390,000 should be regarded as apportionable as between the land value and the house value on the basis of about $390,000 is to $160,000, giving a split of about $276,545 to about $113,455, the smaller figure being the proportionate value of his equity in the part of the property which he in fact used in the commission of the offending.
- Unfortunately the Act does not give me power to order the forfeiture of only part of the respondent’s interest in tainted property, the forfeiture must be all or nothing: cf R v Galek (1993) 70 A Crim R 252 per Allen J at 258 and Hunt CJ (with whom Mathews J agreed) at 259. Nor does the Act empower me to make a forfeiture order which might permit me to order forfeiture conditioned on an obligation to return some part of the proceeds of sale of the property forfeited. (In this regard, the absence of any power to condition the forfeiture order in s 151 compares starkly with the express power to condition restraining orders which appears in ss 124 to 126 and 130). Either an order is made which will forfeit the full amount of the respondent’s interest in the tainted property, or no order is made at all.
- The result is that I am faced with a choice similar to that which was faced by the Court in Galek. Do I make an order which authorises a forfeiture of property which creates an outcome disproportionate to the extent to which the property was used in the manner I have explained? Galek makes clear that I can regard that as hardship which I am permitted to take into account in the exercise of my discretion. Or do I make no order at all, in which case, despite the extensive unlawful use which the respondent made of the house on the Westbrook property, the respondent suffers no forfeiture of any part of the property.
- In this case I think that the matters I refer to in [31] above justify the disproportionate outcome. I think that conscientious implementation of the objects expressed in s 4 of the Act, suggests the “all” rather than “nothing” option is the appropriate choice in the present case. In reaching this conclusion I am conscious that it would be erroneous to regard the objects provision of the Act as dictating a conclusion in favour of forfeiture in all cases in which a discretion is to be exercised and I have not so regarded it[5].
Provision for the registered mortgagee
- The effect of an order under s 151 of the Act is that the property the subject of the order (in this case, the respondent’s interest in the Westbrook property) is forfeited to, and vests in the State absolutely.
- The respondent’s interest in the Westbrook property is the interest held by a registered proprietor under the Land Titles Act 1994 (Qld) of land which is subject to a registered mortgage under that Act. Section 184(1) of the Land Titles Act provides that a registered proprietor of an interest in a lot holds the interest subject to registered interests under the lot but free from all other interests.
- I think that the proper construction of the Act is that a forfeiture order made under the Act in respect of an interest held by a registered proprietor of land which is the subject of a registered interest is intended to vest in the State the interest held by the registered proprietor, namely the interest which is subject to registered interests affecting the land. That means the property which vests in the State is subject to the pre-existing registered interests.
- Although the registered mortgagee was notified of the State’s application, the registered mortgagee did not appear to oppose the order or seek any modification of its terms. The order proposed by the State was formulated so as to apply the sale proceeds from the property in a manner that provided for the discharge of the registered mortgagee’s interest in the property.
Conclusion
- The orders of the Court are that:
- Pursuant to ss 146(2), 151 and 153 of the Criminal Proceeds Confiscation Act 2002 (Qld), the following property of the respondent is forfeited to, and vests in, the applicant:
- The respondent’s interest in real property located at 26 Rowbotham Road, Westbrook, described as Lot 2, Registered Plan 147196, County of Aubigny, Parish of Westbrook registered in the name of Carl Richard Statham, title reference number 15297070.
- The sum of $31,700, being the value of cash seized by police on 12 October 2011.
- The sum of $48,550, being the value of cash seized by police on 31 May 2012.
- Pursuant to s 153(3) of the Criminal Proceeds Confiscation Act 2002 (Qld), the Public Trustee of Queensland (“Public Trustee”) is directed, as soon as is reasonably practicable, to sell the real property referred to in Order 1(a) above.
- Pursuant to s 153(3) of the Criminal Proceeds Confiscation Act 2002 (Qld), upon the giving of 7 days’ notice in writing to the lawful occupant(s), the Public Trustee or an authorised agent may access the real property referred to in Order 1(a) above.
- Upon the sale of the real property referred to in Order 1(a) above, the Public Trustee must apply the sale proceeds of the real property in the following order:
- First, in discharge of all registered and statutory encumbrances over the real property.
- Second, in payment of fees or charges payable to the Public Trustee under s 223 of the Criminal Proceeds Confiscation Act 2002 (Qld).
- Third, in payment of expenses incurred by the Public Trustee in disposing of the property.
- Fourth, in discharge of the statutory charge to Legal Aid Queensland pursuant to s 229 of the Criminal Proceeds Confiscation Act 2002 (Qld).
- Fifth, in payment of the balance to the consolidated fund.
- The respondent must pay the applicant’s costs of the application to be assessed on the standard basis.
Footnotes
[1] Under s 146(4) of the Act, the State requires the leave of the Court to bring a forfeiture application that is brought outside of six months of the person’s conviction. In this case no such application for leave was sought.
[2] See also, R v Ward [1989] 1 Qd R 194 at 199 per Carter J (with whom Kneipp and Demack JJ agreed).
[3] See, for example, Taylor v Attorney General (South Australia) (1991) 55 SASR 462 at 474 per Debelle J; R v Winand (1994) 73 A Crim R 497 at 500 to 501; R v Lake (1989) 44 A Crim R 63 at 68 to 69 per Kirby P; R v Rintel (1991) 3 WAR 527 at 537; Re George [1992] 2 Qd R 351 per Lee J; R v Anderson (1992) 61 A Crim R 382 at 387 to 388 per Williams J.
[4] The Bank had been notified of the State’s application and did not appear before me to oppose the order sought by the State.
[5] Cf Commissioner of the Australian Federal Police v Hart [2016] QCA 215 per Peter Lyons J (with whom Douglas J agreed) at [885].