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[2013] VSC 67
General information, not legal advice.
Supreme Court of Victoria
2013-02-27
J FORREST J
Original judgment source is linked above.
CRIMINAL LAW - Confiscation - Forfeiture application - "tainted property" - Whether the property was used in commission of offence - Knowledge - Whether defendant was likely to know that the property was to be used in commission of offence - Hardship - Whether civil forfeiture of property would be likely to cause hardship to the defendant - Confiscation Act 1997 (Vic), ss 3, 20, 24, 37, 38.
1 On 30 November 2005 the Victoria Police conducted a search of a property at Myrniong jointly owned by the defendant, Mr Leslie Kinealy, with his then partner Ms Debbie Tennent. The raid resulted in the discovery of a cannabis crop in its embryonic stage. The property had been let for some months by Mr Kinealy and Ms Tennent to Mr Frank Panzera. Mr Panzera was subsequently charged and convicted in October 2008 of the offence of attempting to cultivate a commercial quantity of cannabis and a related offence of trafficking in a commercial quantity of cannabis.
2 There is no evidence that Mr Kinealy played any role in the cultivation of the crop. He has not been charged with any offence related to Mr Panzera's activities. However, the property has since September 2006 been the subject of a restraining order under the Confiscation Act 1997 (Vic),[1] and now the Director of Public Prosecutions[2] is seeking a Civil Forfeiture Order,[3] meaning that if granted, his interest in the property will be forfeited to the State.
3 The position in relation to Ms Tennent is both bizarre and unfortunate. Whilst there is evidence that Mr Kinealy was aware that the property was being used for the cultivation of cannabis, there is not a skerrick of evidence that Ms Tennent had any knowledge of what was going on. She, however, has since 2006 taken no active role in attempting to be excluded from the restraining order or by asserting that a CFO will cause her undue hardship. Provided that I am satisfied that the appropriate procedural steps have been complied with, then a CFO must be made. This is, I consider, an unfair and unintended consequence of this legislation which, I accept, is necessarily draconian.
4 Accordingly, the issues of controversy at the trial related solely to Mr Kinealy and were:
(a) the adjournment of the trial (which was refused);
(b) whether the property was tainted property within the meaning of the Act;
(c) whether Mr Kinealy had knowledge that the property was to be used or intended to be used in connection with Mr Panzera's attempted cultivation of a commercial quantity of cannabis; and
(d) if he is liable to a CFO, whether Mr Kinealy should, by reason of hardship, be excluded from the effects of such an order.
5 This matter has a long and somewhat complex procedural history which, because of events at the commencement of the trial, I shall summarise briefly.
6 The initial interim restraining order in relation to the property was made by Mandie J on 1 September 2006 pursuant to s 16(2) of the Act which permits the DPP to apply for such an order in respect of a property if a member of the police force suspects on reasonable grounds that the property is tainted property in relation to the Schedule 2 offence (with which Mr Panzera was charged). A restraining order pursuant to s 15(3)(a) was made by King J on 14 September 2006.
7 On 4 October 2006, Mr Kinealy and Ms Tennent filed applications for exclusion of property under s 20 of the Act. On 12 October 2006, the DPP sought a CFO against both.
8 The exclusion applications of Mr Kinealy and Ms Tennent and the DPP's application for a CFO were adjourned until the determination of the charges against Mr Panzera. Following Mr Panzera's conviction on 8 October 2008 and sentence in February 2009, the DPP reactivated the exclusion applications and the CFO, which were then adjourned to August 2010.
9 There were then further delays owing to difficulties in locating Ms Tennent. By November 2010, the attempts to locate Ms Tennent had proved fruitless and Sifris J dismissed her exclusion application with costs.
10 Following two further adjournments, a trial date for Mr Kinealy's application for exclusion was fixed for 14 September 2011. However, as a result of an application by Mr Kinealy who appeared in person, it was ordered that Mr Kinealy's solicitors have leave to file and serve a notice ceasing to act and the trial date of 14 September was vacated. The trial was then re-listed for hearing on 19 July 2012.
11 On that day, Mr Kinealy did not have representation. Again, he sought an adjournment so he could obtain representation.
12 In the course of the hearing, Mr Kinealy said as follows:
Yes. But I don't feel confident that I'll get the money up in the one month and be back here. I would like three months and then I'm 100% sure that I'll be here because of a settlement of property going through, which is 90 days.[4]
13 I made it clear to Mr Kinealy that as I was going to deal with both his exclusion application and the CFO at the one time, if he wished, he would need to file an affidavit setting out any hardship he might suffer if he lost his exclusion application:
HIS HONOUR: Applying for the - what Mr O'Bryan's brought to your attention is this, that if I decide to determine the forfeiture application at the same time, which I'm minded to do because I think this has all got to be finalised one way or another, you will need to put on an affidavit, that is a two or three page affidavit setting out your financial situation and how the sale of the house and you being deprived of the house would affect you. That's not a difficult process. There's been a year - - -
MR KINEALY: Well, Paul Horvath said that's going to cost us $25,000 - - -
HIS HONOUR: - - - you - look, don't try and talk me out of giving you the adjournment. There's been a year now that you've had in which to address this matter. And it simply can't be permitted to go on. Having said that, you should be given another opportunity to obtain legal representation and advice about it, otherwise you'll have to appear for yourself.[5]
14 On the question of fixing of the trial date, I said as follows:
HIS HONOUR: Yes. Now, Mr Kinealy, 13 November? Now that gives you nearly, well, over three months to get organised. Nearly four months. It must go on on that date. Whether you're represented or not.[6]
15 I then adjourned the trial for a period of approximately four months, which was an adequate period of time to permit Mr Kinealy to obtain further legal advice and to find legal representation. By this time he had already been represented on this application by three different firms of solicitors.
16 I ordered that any further affidavit material he proposed to rely upon was to be filed by 22 October 2012 and his exclusion application was to be heard at the same time as the CFO against himself and Ms Tennent under s 37(1) of the Act. No affidavit was filed.
17 When the trial came on in November last year, some six years had elapsed since the initial exclusion and civil forfeiture applications were originally made. Mr Kinealy was represented by counsel, but solely for the purpose of seeking a further adjournment. Counsel said another affidavit of Mr Kinealy needed to be filed. No details of the contents of the putative affidavit were provided.[7]
18 After hearing the submissions of counsel for a further adjournment (which, not surprisingly, was opposed by the DPP), I determined that enough was enough. Senior counsel for the DPP sensibly did not oppose my suggestion that Mr Kinealy be permitted to give additional evidence on the hardship issue, notwithstanding his failure to provide an affidavit relevant to it.
19 Simply put, it was not in the interests of justice to have this matter adjourned again, particularly given that the substantive matters of this application have been known to Mr Kinealy since 2006 and there are only so many costs orders a court can make.
20 Consequently, I refused Mr Kinealy's application and gave counsel leave to withdraw. Mr Kinealy then conducted his own case.
21 The property is located at 539 Myrniong-Greendale Road, and was purchased by Mr Kinealy and Ms Tennent in April 1991.
22 It has a house, a "granny flat" and a garage and is approximately five acres in size with a creek running through the centre.[8] The property is on two separate titles. Lot 1 is just less than one hectare in size and a three-bedroom house is situated upon it. Mr Panzera used the master bedroom for the cultivation of the cannabis crop. Lot 2 has the granny flat and garage on it. Hydroponic equipment was located in the garage. The driveway to the house from the road traverses Lot 2.
23 The property was leased to Mr Panzera and his wife from approximately July or August 2005. For a period of approximately four or five months rent was paid regularly into Mr Kinealy's bank account.
24 Mr Kinealy gave evidence that around the time of the commencement of the lease he showed Mr Panzera around the property. I will return to that meeting later.
25 On 2 October 2009, Mr Panzera was presented in the County Court on six counts, four of which he pleaded guilty to and are not relevant to this proceeding. The other two upon which he was found guilty were: one count of trafficking in a drug of dependence not being less than a commercial quantity, and one count of attempting to cultivate a narcotic plant namely cannabis in a quantity not less than a commercial quantity.[9] The trial judge, his Honour Judge Wood, in his reasons for sentence noted that there was one issue for the jury:
The issue for the jury's determination was whether the quantity of cannabis L was not less than a commercial quantity.[10]
26 His Honour then set out the circumstances of Mr Panzera's offending:
In early 2005 police commenced Operation Goopy, which was aimed at a drug trafficking ring operation in the Werribee and Melton areas. Utilising undercover operatives, surveillance telephone intercepts, and forensic analysis, the investigation culminated on 9 February 2006 with the arrest of yourself and one Terry Fava.
During this period Fava conducted an illicit trade in cannabis from his hydroponic equipment stores in Melton and Werribee. You grew cannabis and supplied cannabis seedlings to Fava who, in turn, sold them through his stores. At the time you lived with your wife and daughter and stepdaughter in a semi-rural property at 539 Myrniong-Greendale Road, Myrniong. This was a rented property.
You supplied or agreed to supply Fava 140 cannabis seedlings between 22 July 2005 and 9 February 2006. Some of these seedlings were sold by Fava to an undercover policeman. The Crown case is that 41 of the seedlings were provided to the undercover operative by you, through Fava, on 22 July 2005. This transaction was not disputed at the trial.
Subsequently the Crown evidence through the undercover operative and telephone intercepts was that you supplied, on 19 August 2005, 25 seedlings, and three days later, on 22 August 2005, a further 40 seedlings, again through Fava, to the undercover operative. Unlike the first transaction where the undercover operative positively identified you, the Crown case against you in respect of the latter two transactions rested heavily on the inference that you were the supplier, this inference being based upon telephone intercepts during which time your voice was identified, and the subsequent collection of these plants by the undercover operative.
Between October 2005 and January 2006 eight further telephone calls were intercepted and monitored between Fava and yourself, during which time orders were placed and the progress of your crop was discussed. These discussions related to the order and delivery of 13 seedlings on 27 October 2005, 18 seedlings on 10 November 2005, and three seedlings in early February 2006.
Thus it was the Crown's case that during the period alleged you supplied Fava with 140 plants.
One hundred plants or more constitute a commercial quantity of cannabis L for the purposes of the Drugs, Poisons and Controlled Substances Act 1981.
On 30 November 2005 police executed a search warrant at your Myrniong home where they found hydroponic cannabis growing in the master bedroom comprising 102 seedlings.
A search of a shed revealed a hydroponic set up in the final stages of preparation. No cultivation had occurred at that place at that time.[11]
27 Of the 102 plants taken from the property, 66 did not have roots however the botanist opined that they had been newly propagated and were to be regarded as plants.[12]
28 The offence of attempting to cultivate a commercial quantity of cannabis engages the provisions of the Act.[13]
Was the property in question "tainted property" for the purposes of s 3 of the Confiscation Act 1997 (Vic)?
**tainted property, in relation to an offence, means - **
Was used, or was intended by the defendant to be used in, or in connection with, the commission of the offence.
30 The short point then is whether the property was used or intended to be used by Mr Panzera in connection with the cultivation of the cannabis crop.
We have found the analyses by the respective courts illuminating, and they disclose a high degree of unanimity of approach. We would respectfully adopt the following propositions which emerge from those authorities:
Very often, the decisive issue will be whether the relevant property can be said to have been "used", since "use" is (by definition) employment for a purpose. Once it is concluded that the offender "used" the property at or around the time of the commission of the offence, it will usually follow that there was the requisite connection between the use of the property and the commission of the offence. Put differently, if the offender (or some other person) "employed or made use of" the property for a purpose associated with the offending, then it would follow that the property was "used in connection with the commission" of the offence.
The importance of the "use" question is illustrated by cases in which the requisite connection was found to exist between the use of the property and the commission of the offence, as follows:
Express statutory provision apart, the mere fact that an act is done in or on a particular property will ordinarily not suffice to bring that property within the definition. That is because, as a matter of ordinary language, this could not be characterised as a "use" of the property. In their joint judgment in White, French CJ and Crennan and Bell JJ said:
On the face of it, the mere doing of an act in or on a property in connection with the commission of a confiscation offence, does not necessarily fit comfortably within the concept of use applied to property. The relevant ordinary meaning of the verb "use" is to [m]ake use of [a thing], esp. for a particular end or purpose; utilise, turn to account.
It is only when the property, or some feature or attribute of it, has been turned to advantage by the offender, or enlisted to the offender's purpose, that it will be possible to say that the property has been "used". In King, for example, the offending took place on board a boat but it was held that the boat was no more than the location of the offending. The boat had not been "employed" for any purpose related to the offending. In Garner, by contrast, the court held that the offender had used a houseboat to provide the intended victims with "a pleasurable environment and exciting activities", such that the boat became "an efficient tool of seduction".[16]
Whether there has been a relevant use will depend upon the property in question and the precise way it was used. As the same property can be put to different uses, the determination of whether there is a connection between the particular use of the property and the commission of the offence will involve questions of fact and degree that need to be determined in a commonsense manner.[17]
The Court concluded by emphasising that each case must be treated on its own facts in determining whether there is sufficient connection with the commission of an offence. It is a matter of the fact and degree:
At one end of the spectrum are cases where the property is deployed in an instrumental sense to commit the offence. An obvious example is the weapon that is used to inflict an injury. Land can be used to cause death or injury, such as where a domestic pool is used to drown the victim. Another example is where a beam in a ceiling of a house is used to support a rope for the purpose of hanging the victim. A further example is where the victim is thrown off a second floor balcony. These are examples of cases where an attribute or feature of the property is actively used in the commission of the offence.
At the other end of the spectrum are cases where the property is merely the passive location at which the offence is committed. An example is where a discussion takes place in the offender's home which constitutes a conspiracy to commit an offence at another location. Another example is where, during dinner in the family home, a domestic dispute erupts spontaneously which leads to one person reaching across the table and assaulting another person. These are examples of cases where an offence is committed at the property (the home) but there is no relevant connection between the use of the property and the commission of the offence.
There will, of course, be cases along this spectrum where the question whether the requisite connection exists (between the use of the property and the commission of the offence) will be a matter of difficulty. Those cases will require a close examination of the nature of the property, its precise use, the nature of the offence that was committed and the manner, if any, in which the property was used in connection with the commission of the offence. The more passive the use of the property and the more incidental its role, the less likely it is that the requisite connection will be found to exist. [18]
32 In Taylor v Attorney-General (SA),[19] the South Australian Court of Criminal Appeal was concerned with the forfeiture of a dwelling allegedly used in connection with the selling of cannabis. Debelle J, when considering the meaning of the words "used in connection with" in the South Australian legislation[20] noted:
It is not, I think, correct to qualify the expression by requiring a substantial connection. That is to introduce an epithet which the draftsman has not used. As I have said, it will always be a question of fact and degree in every case whether there has been, on any sensible meaning of the expression, use of the property in connection with the commission of the offence. Whether property is used in connection with the commission of the offence it will be liable to forfeiture. The use of property in connection with the commission of the offence attracts the jurisdiction of the court: whether the order for forfeiture should be made is a matter in the exercise of the discretion of the court, and, in its exercise of the discretion, the court can have regard to the extent to which the use might have been merely incidental.[21]
33 The Court of Appeal in Chalmers also referred to a decision of the Full Court of the South Australian Supreme Court in a cannabis growing case:
In George, the Full Court of the South Australian Supreme Court was concerned with land on which was situated a shed in which cannabis plants had been grown hydroponically. Doyle CJ (with whom White J agreed) held that the composite expression "used ... in connection with the commission of an offence" involved practical considerations and matters of degree, such that each case would turn on its own facts. His Honour held that the composite expression did not require a causal connection between the property and the offence. Nor was it necessary that the property be something which was essential or necessary for, or made a unique contribution to, the commission of the offence. His Honour concluded as follows:
As a matter of ordinary language, and bearing in mind that the word defined is "instrument", I consider that the definition refers to a use of property that facilitates, assists or contributes to the commission of an offence. That is a starting point, not a conclusion. The use of the property must be sufficiently significant (I realise that this is question begging) to warrant a conclusion (especially when the property is the place where the offence is committed) that the property is used in connection with the commission of the offence. This invites attention to the role that the property plays in the commission of the offence, to the extent to which the property is so used, and to how much of the property, or what part of it, is used. I doubt whether one can usefully go any further than that.
Doyle CJ held that the land was used in connection with the commission of the offence of producing cannabis. It could be inferred that the offender had chosen the shed "as a suitable place to grow the cannabis". The use of the land "facilitated and contributed to the commission of the offence. It was not just the place where the offence was committed". (Vanstone J dissented, holding that the property was merely the place where the crime occurred.)[22]
34 In my opinion, the facts of this case are nowhere near a "borderline" case such as Debelle J described in Taylor, where his Honour gave the example of a motor vehicle used in connection with an offence and are more akin to the examples referred to by the Court of Appeal in Chalmers.[23]
35 Put simply, absent the property the cannabis seedlings could not have been cultivated. The master bedroom contained a hydroponic cannabis set-up, which included grow lights, power transformations, plant nutrients, a power timer, a charcoal filter and grow tubs. In addition, there were 102 cannabis seedlings within this set up. This is plainly not a "tenuous or remote" relationship to the land.[24]
36 There is, however, an argument advanced by Mr Kinealy as to whether both Lots 1 and 2 constitute "tainted property", given that the cannabis seedlings were grown in the master bedroom of the house located on Lot 1. Mr Kinealy submits that Lot 2 falls outside the definition. As previously mentioned, a granny flat and garage are found on Lot 2, and the driveway to the house also traverses this Lot.
37 The DPP contends that the property at Lot 2 is also tainted by the cultivation of cannabis on Lot 1 owing to:
An analysis of the position of the relevant Lots [which] identifies, its use is incidental, and thus ancillary, to the use of Lot 1 by providing the only access to and the opportunity to use Lot 1 for the impugned purpose and therefore falls within the definition of "tainted property" as contemplated by s 3 of the Confiscation Act 1997 (Vic)...Furthermore, there is no evidence that the two Lots were not treated as the same property for the purposes of Panzera's tenancy.
38 In Re George,[25] Lee J considered whether one Lot (Lot 5) was used directly or in connection with the production of cannabis, given it housed a drying tent for harvested marijuana that had been grown on the directly adjoining Lot (Lot 6). Lot 5 was also the base camp through which tools, equipment, and other materials were carried onto the adjoining lot, where the cultivation on an increasingly large scale was carried out over a period of several months. The Court found Lot 5 to fall within the definition of tainted property, as it was "used in connection with" the commission of the offence of production of Lot 6.[26] The court found it relevant, amongst other factors, that the only access to Lot 6 was through Lot 5, and that Lot 5 appeared to be the base from which and through which the unlawful activity on Lot 6 was carried out.[27]
39 The words "used in connection with" are broad-reaching and may be contrasted to a requirement such as "used in the commission of". Lot 2, though not used directly in the commission of the offence of attempting to cultivate a commercial quantity of cannabis, has a connection to the offence that is neither tenuous nor remote. Lot 2 provides access to the house on Lot 1, the shed on Lot 2 was used to store hydroponic equipment, and it is clear that Lots 1 and 2 were treated as a single property for the purposes of Mr Panzera's tenancy.
40 In my opinion both lots were used in connection with the commission of the Schedule 2 offence and are tainted property. Therefore, Mr Kinealy has an interest in tainted property.
The knowledge of Mr Kinealy and the burden of proof
41 Failure of the tainted property point is not fatal to Mr Kinealy's exclusion application. An exclusion order may be granted by the Court under s 24(b) of the Act over tainted property:
Determination of exclusion application - restraining order - civil forfeiture
On an application under section 20, where the restraining order has been made in relation to a Schedule 2 offence for the purposes of civil forfeiture -
...
(b) the court may make an order excluding the property from the operation of the restraining order if the court is not satisfied that the property in which the applicant claims an interest is not tainted property but is satisfied that -
(i) the applicant was not, in any way, involved in the commission of the Schedule 2 offence; and
(ii) where the applicant acquired the interest before the commission, or alleged commission, of the Schedule 2 offence, the applicant did not know that the property would be, or was intended to be, used in, or in connection with, the commission of the Schedule 2 offence
42 I mentioned earlier there is no evidence that Mr Kinealy played any role in the cultivation of the crop. He has not been charged with any offence related to Mr Panzera's activities. Therefore, he satisfies the first limb of s 24(b), notwithstanding the reluctance of counsel for the DPP to abandon a contrary position.
43 However, the second limb (s 24(b)(ii)) requires Mr Kinealy to establish that he had no knowledge that the property was used in connection with the attempt to cultivate a commercial quantity of cannabis.
44 It is worth noting at the outset that in an application under s 20 of the Act, the onus is on Mr Kinealy to satisfy the Court on the balance of probabilities that he had no knowledge that the property was used in connection with the offence.
45 The Court of Appeal in Le v Director of Public Prosecutions (Vic)[28] considered the requirements of s 22(b).[29] In that case, an application for an exclusion order was made by the wife of a person convicted of trafficking in a commercial quantity of cannabis. The cannabis plants were hydroponically cultivated in two bedrooms and in the garage of the family home shared by the accused, his wife and his children. Nettle JA, with whom Maxwell P and Eames JA agreed, said:
...it is necessary to bear two things steadily in mind. First, for the purposes of the law relating to involvement in a criminal offence, knowledge includes wilful blindness and "wilful blindness" includes a the actions of a person who deliberately refrains from making inquiries because he or she prefers not to have the result, or who otherwise wilfully shuts his or her eyes for fear that they may learn the truth. The point is made in Giorgianni v The Queen and reiterated in Bahri Kural v The Queen and was restated in Pereira v Director of Public Prosecutions (Cth):
...a combination of suspicious circumstances and failure to make inquiry may sustain an inference of knowledge of the actual or likely exercise of the relevant matter. In a case where a jury is invited to draw such an inference, a failure to make inquiry may sometimes, as a matter of lawyer's shorthand, be referred to as wilful blindness...[30]
46 Returning now to the facts of this case. Mr Kinealy's viva voce evidence was that he believed Mr Panzera was only growing a small number of plants for personal use, and could not believe he had as many as 102 seedlings - which constituted a commercial quantity.[31]
47 In the affidavit filed on 3 February 2011, Mr Kinealy said of his knowledge of Mr Panzera's activities on the property:
I was not aware that Frank was on Temazepam for pain relief nor that he couldn't afford the Temazepam. I was also not aware that he self-medicated with cannabis so that he could sleep at night.[32]
48 There is no mention in the affidavit of any knowledge that Mr Panzera was growing the seedlings for a purpose other than self-medication. In fact, the intercepted conversations between Mr Fava and Mr Kinealy demonstrate a sophisticated knowledge of both the intricacies of cannabis cultivation and Mr Panzera's use of the property. In particular, the DPP relies on a telephone conversation recorded between Mr Kinealy and Mr Fava on 30 November 2005 to show that Mr Kinealy had knowledge of the cultivation of cannabis on the property. In evidence, Mr Kinealy conceded that shortly after the raid Mr Panzera visited the hydroponic business operated by Mr Kinealy and Mr Fava in Melton and spoke to Mr Kinealy and told him about being caught with 102 "babies".[33] He agreed that he then spoke by telephone to Mr Fava and that, with one exception, parts of the telephone conversation were as follows:
KINEALY:---Ah, Frankie got a visit today. Uh?
FAVA:---Frankie?
KINEALY:---Yeah
FAVA:---Which Frank
KINEALY:---Up the farm
FAVA:---Yeah, from who?
KINEALY:---From the CIB city
FAVA:---Aw, what for?
KINEALY:---Hundred and two babies
FAVA:---What, they went and raided it?
KINEALY:---Yeah
...
KINEALY:---I said to him, "You can rent the joint,
FAVA:---Mm
KINEALY:---As long as you don't do any more than four nine up there" [Disputed]
FAVA:---Mm
KINEALY:---I said "Definitely not to go anywhere near a hundred", "No, No, No, No".
It was accepted that the reference to "Frankie" was to Mr Panzera and "babies" was to cannabis seedlings. However, there was a real issue as to the transcribed words "four nine".
49 Counsel for the DPP argued that the words used were "forty nine", thus establishing that Mr Kinealy was well aware that a significant number of "babies" were under cultivation. Mr Kinealy said that the words used were "four or nine" and no adverse inference should be drawn:
I don't think I'd get in trouble with four or nine plants.[34]
50 I have listened to the conversation on several occasions and accept that it is difficult to discern with any confidence what was exactly said by Mr Kinealy. However, the context and the application of common sense make Mr Kinealy's version implausible.
51 The evidence in his affidavit concerning Mr Panzera's intended use of the cannabis was false. His statement of his belief that Mr Panzera was "self-medicated with cannabis so that he could sleep at night"[35] was intended to deceive. I readily infer from his conversation with Mr Fava and his knowledge of the property that he could have been under no misapprehension as to the likely use that Mr Panzera was intending to make of the property, particularly given the hydroponic set up found there. His suggestion that he used the words "four or nine" makes no sense at all.
52 Further, there are two other matters that cause me to reject Mr Kinealy's account, namely:
(a) In his affidavit of 3 February 2011, he stated that he opened the Werribee Hydroponic Superstore in 1995 and by 2005 "together with a partner I opened another hydroponic shop".[36] He did not disclose in the affidavit that the partner in Melton Hydroponics (which had commenced operations in April 2005) was, in fact, Mr Fava - who was convicted of trafficking a substantial amount of cannabis.[37] Whilst it would be wrong to attribute Mr Fava's activities and knowledge to Mr Kinealy, it is clear from the telephone intercepts of his conversations with Mr Fava that he accumulated considerable knowledge of the use of hydroponics and the growing of cannabis;
(b) In the same affidavit there is reference to discussions with Mr Panzera concerning the rental of the property. Not a word is said about a discussion with Mr Panzera concerning the cultivation of cannabis. Before me, he said that he discussed with Mr Panzera the growing of cannabis on the property;[38] but only on the basis that it would be for Mr Panzera's personal use.
53 I conclude that Mr Kinealy probably knew that there was a real prospect that Mr Panzera was endeavouring to grow a significant cannabis crop. He may have hoped Mr Panzera would not grow a commercial quantity and prayed that he would not get caught. He wilfully ignored the reality of what was going on at the property. Ultimately, I am not persuaded that Mr Kinealy did not know that Mr Panzera was using the property for growing a commercial quantity of cannabis.
56 Section 38(2) reads as follows:
Determination of application for civil forfeiture order
...
(2) The court may exclude particular property from the operation of a civil forfeiture order if satisfied that otherwise hardship may reasonably be likely to be caused to any person by the order.
57 It cannot be doubted that the forfeiture provisions of the Act are designed to cause a measure of hardship. In Lake v R the Court said:
In considering hardship, it is necessary to bear in mind that, of necessity, in achieving its objects, the Act will cause a measure of hardship in the deprivation of property. Indeed that is its intention. It is not that kind of hardship, therefore, that can give rise to the relief under s 5(1)(b)(ii). The provision for relief on that ground must not be so interpreted as to frustrate the achieving of the purpose of Parliament in enacting the exceptional provisions of the Act. Something more than ordinary hardship in the operation of the Act is therefore meant. Otherwise the Act would have, within it, the seeds of its own [in]effectiveness in every case."[41]
58 However, "hardship" is not to be determined solely on the effect of a CFO upon its intended subject. The Court of Criminal Appeal of New South Wales in R v Wealand[42] held that a relevant factor when considering hardship is the proportionality to the offence committed.[43] Kirby J cited R v Bolger[44] as an authority for this principle, in which it was said:
The loss of the value of the forfeited property, if a forfeiture order is made, could be hardship which is disproportionate to the offence which was committed. Would the court order forfeiture of a very valuable tract of bushland which was unused by the offender other than for the growing of one single cannabis plant?
...
Relevant hardship, however, the hardship which would follow the making of a forfeiture order, must be assessed in comparison with the offence which was committed. Hardship which well might deter the court from making a forfeiture order where the offence was growing one cannabis plant might well not deter the court where the offence was that of supplying a huge quantity of heroin. [45]
59 In this state in R v Winand,[46] the Court of Criminal Appeal observed that the following considerations, though not exhaustive, are relevant to the consideration of whether the property should be excluded from the operation of a CFO:
...the value of the subject property, the nature and gravity of the offence, the use made of the property, the degree of the offender's involvement, the offender's antecedents, the value of any other property confiscated and the penalty in posed, the nature of the offender'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 ownership of 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, the interest of innocent parties in the property and the extent (if any) to which the retention of the property might bear on the offender's rehabilitation.[47]
60 With these factors in mind, I turn to Mr Kinealy's situation. He is 49 years of age and now lives rent-free with his current partner, Ms Maine. He has two children from his relationship with Ms Tennent; Stacey-Lee, who is 25,[48] and Jake, who is 18. Neither are dependent upon him.
61 The evidence concerning Mr Kinealy's financial and employment status is unsatisfactorily vague and incomplete. As far as I can tell, his assets over the past seven years comprise:
(a) a property, at 74 Walls Road, Werribee. This property has now been repossessed by the Bank. It suffered extensive fire damage in April 2012;
(b) a car (the make and value of which are not apparent);
(c) $20,000 loaned by a Mr George Teprazof for the purposes of paying Mr Kinealy's legal fees, though it must be said that the circumstances surrounding this loan are extremely ill defined;[49] and
(d) his interest in the property as a joint proprietor, which is unencumbered and now valued at $219,000.
62 With regard to his employment status and income, the following:
(a) Mr Kinealy has been "increasingly less employed"[50] since 2006 after the raids on his hydroponics businesses;
(b) at present his sole source of income is the $200 per week rent he derives from the Myrniong/Greendale road property;
(c) Mr Kinealy was the recipient of benefits from Centrelink, however these appear to have ceased. He appears to rely upon the support of his partner Ms Main for accommodation and sustenance.
63 However, of more significance in determining this issue, are the factors beyond those relevant to his personal circumstances:
(a) Mr Kinealy has not been charged with, nor is there evidence to suggest that he committed, the offence of attempting to cultivate a narcotic plant namely cannabis in a quantity less than a commercial quantity;
(b) Mr Kinealy has not been charged with, nor is there evidence to suggest that he committed, the offence of trafficking in a drug of dependence not being less than a commercial quantity;
(c) there is no evidence to suggest that Mr Kinealy was an accomplice in the cultivation of the cannabis crop; and
(d) there is no evidence before the Court to suggest Mr Kinealy aided and abetted or conspired with Mr Panzera to cultivate the cannabis crop.
64 Mr Kinealy did not set up the room, organise the cultivation or supervise its operation. He was not involved in any plan to sell the crop. To this should be added that there is no evidence that the property was acquired with the proceeds of the sale of illicit substances, or that it has been used in the past by Mr Kinealy for the cultivation of drugs. The extent to which it can be said that Mr Kinealy was involved with the relevant Schedule 2 offence is that he knew Mr Panzera was attempting to cultivate the cannabis seedlings and failed to take any steps to prevent that enterprise.
65 Counsel for the DPP referred to DPP v Ali (No 2),[51] in which a hardship exclusion was rejected by the Court of Appeal. Mr Ali, the sole proprietor of a property in rural Victoria, allowed three men, who were later convicted and sentenced to terms of imprisonment for various counts of conspiracy to traffic a drug of dependence, to use his property (the family home consisting of a dwelling and an adjacent garage) for the purpose of manufacturing illegal drugs, a "meth lab". Mr Ali and his family were not living at the property at the time of the offence. If one stopped there then it is uncannily similar to this case, however that was not the basis for the court rejecting the hardship claim. The facts in Ali are light years away from this case. Mr Ali was charged with trafficking. Though acquitted by direction, Hargrave J outlined the "very strong" evidence of Mr Ali's involvement in the criminal activity: unchallenged evidence and video footage of Mr Ali assisting his co-accused in work on the drug laboratories at the property. The footage demonstrated that Mr Ali was involved in the set up of the laboratory, assisted his co-accused in its concealment, and was present in the laboratory whilst the drugs were being manufactured.
66 His Honour concluded, having reviewed the evidence, "that Mr Ali well knew that an illegal drug manufacturing operation was taking place at his property, and that he gave some assistance in the establishment of conduct of that operation."[52] It was the extent of Mr Ali's knowledge of and involvement in the criminal conduct which was of sufficient gravity to prevent an order excluding the property from the operation of the forfeiture order on the basis of hardship; the Court held this to be inconsistent with the objects of the Act.[53]
67 If a CFO is made, then Mr Kinealy at the age of 49 forfeits his only real asset. He has very limited income. His employment prospects are dim. He had no involvement in the cultivation of the crop or in any plans to dispose of it. I do not see how such an order could have any true deterrent effect. Indeed, in my view it would be tantamount to punishment for a crime with which Mr Kinealy was not charged. Notwithstanding his unsatisfactory evidence on most issues, this is a case where the circumstances are such that I am satisfied that the hardship exception is made out.
69 Regrettably, I am bound to make a CFO against Ms Tennent, despite there being not a scintilla of evidence that she knew what was going on at the property. The Act imposes a positive obligation on a party to take part in a proceeding once a restraining order has been made over a property in which that person has an interest. Numerous attempts have been made by the DPP to get Ms Tennent's attention. I have made orders for substituted service. I am satisfied that the service requirements of s 37 have been met.[55] I am also satisfied that 30 days have elapsed since notice was given to Ms Tennent. Sifris J dismissed Ms Tennent's application for an exclusion order on 9 November 2010. There is no pending application under s 20.
70 Notwithstanding my firm view that a CFO against her interest in the property is an extraordinarily harsh result, there is no other option. The legislation compels the making of the order.
(a) Mr Kinealy's exclusion application under s 24(b) of the Act is dismissed.
(b) Mr Kinealy's application for exclusion from a CFO under s 38(2) of the Act is allowed and his interest in the property is excluded from the operation of the CFO.
(c) Regrettably, a CFO must be made against Ms Tennent's interest in the property - leading to the extraordinary result that if the CFO is taken out, the State and Mr Kinealy are joint owners of the property.
[1] "the Act". The Act was subsequently amended in 2010. The references in these reasons relate to the Act, as in force, in 2005 - the relevant time.
[4] T 22 of the hearing of 19 July 2012.
[5] T 20-21 of the hearing of 19 July 2012.
[6] T 25 of the hearing of 19 July 2012.
[7] T 3 of the hearing of 14 November 2012.
[9] Sections 71AA and 72A of the Drugs, Poisons and Controlled Substances Act 1981 (Vic).
[10] R v Panzera, Frank [2009] VCC 0195 [1].
[11] R v Panzera, Frank [2009] VCC 0195 [7]-[15].
[12] Affidavit of Anthony Beach dated 29 August 2006 [28].
[15] (2011) 215 A Crim R 275 ("Chalmers"), cited with approval by the Court of Appeal in DPP v Moran [2012] VSCA 154 [22].
[19] (1991) 55 SASR 462 ("Taylor").
[20] Section 4 of the Crimes (Confiscation of Profits) Act 1986 (SA).
[21] (1991) 55 SASR 462,472.
[22] (2011) 215 A Crim R 275, 293.
[24] Director of Public Prosecutions (WA) v White [2010] WASCA 47; (2010) 41 WAR 249 [33].
[29] The equivalent to s 24(b) of the Act at the relevant time.
[31] T 107 of the hearing of 14 November 2012.
[32] Affidavit of Leslie Paul Kinealy dated 3 February 2011 [11].
[33] T 103, T 107 of the hearing of 14 November 2012.
[34] T 115 of the hearing of 14 November 2012.
[35] Affidavit of Leslie Paul Kinealy dated 3 February 2011 [11].
[36] "the Melton Hydroponics in Naughton Drive, Melton", Ibid [7].
[37] T 118 of the hearing of 14 November 2012.
[38] T 106 of the hearing of 14 November 2012.
[39] Section 37 of the Confiscation Act 1997 (Vic).
[40] DPP v Ali (No 2) [2010] VSC 503 [20].
[41] Lake v R (1989) 44 A Crim R 63, 66-7.
[45] [2002] NSWCCA 471; (2002) 136 A Crim R 159, 164-5.
[48] Note there is a discrepancy on the age of the daughter; Mr Kinealy's viva voce evidence is that she is 25 years old, however his affidavit sworn 3 February 2010 states that she was born in 1997.
[52] DPP v Ali (No 2) [2010] VSC 503 [107]; see also [109].
[54] Section 38(1) of the Confiscation Act 1997 (Vic), DPP v Ali (No 2) [2010] VSC 503.
[55] Affidavits of Mr Johnny Tu of 7 August 2012 and Detective Beach of 23 August 2012.
Kinealy
DPP [2013] VSC 67
(1991) 55 SASR 462
(2010) 41 WAR 249
(1989) 16 NSWLR 115