HER HONOUR: These are proceedings commenced by the New South Wales Crime Commission against Mr Geoffrey Hayward following his pleading guilty to and being sentenced for a number of drug offences and related offences. The current form of process is the amended summons filed 23 February 2017. By notice of motion filed 22 March 2018, the Commission moves the court for summary judgment pursuant to r 13.1 of the Uniform Civil Procedure Rules 2005 (NSW) on the two outstanding claims for relief in the proceedings.
Before turning to the precise relief sought, it is appropriate to summarise the circumstances in which Mr Hayward was sentenced. The agreed facts record that Mr Hayward was engaged in what the police characterised as a joint criminal enterprise with Ms Barbara Jackson which involved their manufacturing methamphetamine from premises owned by Mr Hayward in Mudgee. An undercover operative became involved in the police investigation and, on a number of occasions, purchased the product of Mr Hayward's and Ms Jackson's manufacturing. Over the course of a period of about four months, the undercover operative made purchases in exchange for cash sums (provided to her by police) totalling $27,900. On each occasion the substance she purchased was analysed. It was of a relatively poor quality as methamphetamine goes, ranging in purity of between six and nine per cent. Police also had Mr Hayward's premises under surveillance during that period and obtained video footage recording the manufacturing.
In due course, Mr Hayward pleaded guilty to an offence of manufacturing not less than the commercial quantity of methamphetamine (the total amount the subject of the charge being 337.62 grams), supplying a prohibited drug, possession of proceeds of crime (being the sum of $27,900 cash to which I have already referred) and possession of an unlicensed firearm. He was sentenced by Judge Charteris SC to an aggregate sentence of five years and three months with a non-parole period of three years and six months. The non-parole period expires on 25 September 2018.
Two orders are sought today. It is convenient first to deal with the Commission's application for an order under s 27 of the Criminal Assets Recovery Act 1990 (NSW). The Commission seeks an order that the defendant pay to the treasurer an amount of $27,900 reflecting the cash paid by the undercover operative either to Mr Hayward or to his co-offender, Ms Jackson. The provisions of the Act are quite prescriptive as to the orders the Court must make in applications of that kind. Section 27(2) provides that the Court must make a proceeds assessment order if the Court finds it to be more probable than not that the person against whom the order is sought was at any time not more than six years before the making of the application for the order engaged in a serious crime related activity involving an indictable quantity, or a serious crime related activity involving an offence punishable by imprisonment for five years or more. Mr Hayward's circumstances satisfy each of those requirements.
Mr Hayward submitted, not unreasonably from a layman's point of view, that the Court should have regard to the fact that the amount of $27,900 sought to be recovered from him alone was received for the benefit of both him and his co-offender, Ms Jackson. Unfortunately for Mr Hayward, that approach is not permitted by the Act.
Section 28 explains the manner in which the Court must assess a proceeds assessment order, requiring the court to have regard to the money or the value of any interest in property other than money directly or indirectly acquired by the defendant or another person at the request or direction of the defendant because of the illegal activity or activities. Taking those words alone, it might be thought that the Court is permitted and indeed required to undertake some sort of evaluative assessment as to the actual benefit or proceeds obtained by a defendant to an application for an order under s 27. However, reading s 28 as a whole, that does not appear to be the case. Specifically, subs 4 provides that:
"In making an assessment as provided by this section, none of the following amounts are to be subtracted:
….
(b) the value of any proceeds derived as agent for or otherwise on behalf of some other person (whether or not any of the proceeds are received by that person)."
An example is given in the notes to the Act of a case where a defendant is paid money for drugs in the course of a "controlled buy" but was merely acting as an agent or messenger for some other person. The note specifies that, in calculating the proceeds derived by the defendant in such a case, the amount given to the other person is not to be subtracted and the full amount is considered to have been derived by the defendant. Accordingly, notwithstanding the fact that the cash amounts paid by the undercover operative were evidently shared between the defendant and his co-offender, the Act clearly contemplates that I should order the whole amount to be paid by the defendant to the treasurer as part of the proceeds assessment order.
For those reasons I am satisfied that I am required to make the order sought pursuant to the Criminal Assets Recovery Act.
The second application raises more difficult questions. The application is for an order under the Confiscation of Proceeds of Crime Act 1989, s 13(2)(a) for an order forfeiting "tainted property". The application relates to the proceeds of sale of Mr Hayward's former home, being the premises at which the methamphetamine was manufactured by him and his co-offender.
The applicant acquired that property solely in his own name following the breakdown of a long-term relationship with a former partner who is the mother of his two adult children. Previously, the property had been used by them effectively as a weekender. Upon the end of that relationship the defendant borrowed funds to pay out his ex-partner as a result of which he had a mortgage in respect of the premises in the order of $30,000. He was during that period living on a disability pension and was making the mortgage payments in the sum of $75 a week from his disability pension. This information I am presently reciting is derived partly from the transcript of his examination pursuant to the summons in these proceedings and partly from information he has provided today.
The mortgage payments evidently fell into arrears upon the defendant's arrest and incarceration, following which the bank sold the property as mortgagee in possession. The proceeds of sale are in the order of some $57,000. The Crime Commission seeks the forfeiture of that entire sum as tainted property.
Mr Bhalla, who appears for the Crime Commission, traced through the relevant provisions of the legislation and I am satisfied that the property is tainted property within the meaning of the Act.
Section 18 is the section pursuant to which forfeiture is sought. That section requires the court before making a forfeiture order to have regard to two mandatory considerations having regard to information before the court. The first is the use that is ordinarily or had been intended to be made of the property. The second is any hardship that may reasonably be likely to arise, whether on the part of the defedant or any other person, following the making of the order.
Mr Bhalla helpfully drew my attention to a decision of the Court of Criminal Appeal in Zahrooni v R; Director of Public Prosecutions v Zahrooni [2010] NSWCCA 252. That was a case in which the Court heard both an application for leave to appeal against sentence by an offender and an appeal by the Director of Public Prosecutions against the refusal of a confiscation order by the sentencing judge. The main judgment was written by Simpson J, as her Honour then was. Relevantly for present purposes, her Honour expressed the view, with which Hoeben and RA Hulme JJ agreed, that the legislation requires the Court to take into consideration the two circumstances, that is ordinary use and hardship, having regard to "information before the court". Her Honour rejected a ground of appeal which complained that there was no evidence before the judge on which inferences could be drawn as to hardship.
That is relevant in the present case because Mr Hayward represents himself. Today was the first return of the Commission's notice of motion seeking summary judgment. At the outset of the hearing, I asked Mr Hayward whether he had had an opportunity to obtain legal advice. He had not, owing to his present circumstances and the fact that Legal Aid is not granted for proceedings under this legislation. In the manner in which the hearing proceeded, ultimately Mr Hayward was content to explain the circumstances that would give rise to any inference as to hardship by making a statement over the AVL without being required to take an oath or affirmation. Noting the decision in Zahrooni, the Commission very fairly did not object to that course.
Separately, I note that the decision in Zahrooni also addressed the issue of hardship. Justice Simpson said at [60]:
With respect to grounds 3, 4 and 5 (which he argued together, as interrelated) senior counsel for the DPP made a number of points. Firstly, he noted that it was the intention of the legislature that a forfeiture order would cause some measure of hardship. That submission is supported by authority: R v Lake (1989) 44 A Crim R 63 at 66. However, in my view, the primary purpose of the legislation is to deprive offenders of the proceeds of crime, and thereby to operate as a disincentive or deterrent additional to that created by the penalties prescribed and imposed - to make crime unrewarding and unproductive. That is the purpose of the inclusion of paras (b), (c) and (d) in the definition of "tainted property". The property caught by para (a) of the definition is in a different category: it catches property that is used in or in connection with the commission of crime, but is not the proceeds of crime. There is no doubt that the vehicle the subject of the application comes within that definition. But a proper exercise of discretion conferred by s 18, where para (a) of the definition is invoked, also requires a consideration of the extent to which the property was used in or in connection with the commission of the crime. This, too, is supported by the decision in Lake, and the earlier decision of this Court in R v Bolger (1989) 16 NSWLR 115, to which, in Lake, reference was made. Questions of proportionality must be considered. Here, although the judge made no reference to it, it is a reasonable inference that the vehicle was used incidentally in the commission of the crime: it facilitated transport, but there is not the slightest reason to think that its principal purpose was drug dealing. That, in my opinion, is a relevant consideration and is consistent with s 18(1)(b)(i).
Mr Bhalla also drew my attention to the decision of the Court of Criminal Appeal in R v Wealand [2002] NSWCCA 471. The main judgment in that case was given by Kirby J, with whom Spigelman CJ and Sully J agreed. Mr Bhalla relied on that judgment for the extracts from the decisions of Taylor and Lake set out at [28]-[29] as follows:
The forfeiture provisions of the Act are designed to cause a measure of hardship. In Taylor v Attorney-General for the State of South Australia (1991) 55 SASR 462, Debelle J said this, speaking of Parliament's intention with respect to an Act in similar terms: (at 473)
"Parliament has provided no guidelines as to how a court should exercise its discretion. It has adopted the process of forfeiture as a means of providing an additional deterrent to those minded to commit offences including drug offences. The clear intention of the Act is that, in addition to penalties which will be ordered in the ordinary course, not only will any ill-gotten gains be recoverable but, in addition, what is used in connection with the commission of the offence will be liable to forfeiture."
In the context of that objective, how is hardship to be assessed? Kirby P, in R v Lake (supra), made the following distinction: (at 66/67)
"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 s5(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 ineffectiveness in every case."
Mr Bhalla accepted that the section requires the Court to consider the proportionality of the proposed forfeiture to the offence committed and relied on the example set out at [30] and [31] of the judgment in Wealand, drawn from the decision in R v Bolger, which offers a comparison between, for example, the loss of a very valuable tract of bushland which was unused by the offender other than for the growing of one single cannabis plant with, by contrast, the circumstance where the offence was that of supplying a huge quantity of heroin. One thing that emerges from those two decisions is that the Court must have regard to any inference properly drawn as to hardship in the context of the use of the relevant tainted property. It is clear enough that those considerations may often overlap.
In the present case, the evidence at the examination of the defendant plainly establishes that the property at Mudgee was the exclusive place at which the methamphetamine was manufactured. It also, however, establishes that the property was not used exclusively for that purpose. On the contrary, the property was the defendant's home and also, at some earlier point of time, the home of a friend of the defendant. The fact that the mortgage fell into arrears as a result of the defendant's arrest and incarceration means that that home is no longer available to him and that his equity has been converted into cash, the proceeds of which sit safely in a trust account readily accessible by the Crime Commission for enforcement of the payment to be ordered under the Criminal Assets Recovery Act.
The hardship, in my view, is manifest. Upon his release on parole, if he is granted parole in September of this year, the defendant will have gone from being a man who owned his own home and was satisfying the mortgage repayments to being a man with, if both orders sought by the Commission are made, not a red cent to his name. There is a question of coherence in the law in considering this issue. The objects of the Crimes (Sentencing Procedure) Act specify both punishment and rehabilitation as purposes of sentencing. The objects of the Confiscation and Proceeds of Crime Act are stated in s 3 of that Act and, it may be accepted, include the object of providing for the forfeiture of property used in connection with the commission of offences. The objects of that Act also include depriving persons of the proceeds of and benefits derived from the commission of offences, and there is some resonance between those objects and the objects of the Criminal Assets Recovery Act.
In my respectful opinion, to maintain coherence in the law, the Court must be astute to the risk of tension between the deliberate hardship of confiscation legislation and the objects of sentencing, which include the object of rehabilitation of offenders.
The operation of the orders sought by the commission in the present case, if made, would mean that the defendant would have been deprived of the whole of the proceeds of the offences committed by him notwithstanding the fact that those proceeds may be taken to have been spent or otherwise dispersed prior to his arrest, those proceeds, as I have already noted, being enforceable against proceeds of sale of his property sitting in a controlled trust account. Separately, the orders would then deprive him of the entire equity in his home and leave him ready to be released from jail needing to make a new life for himself with nothing to his name. That, I think, may readily be assessed to amount to hardship within the meaning of s 18 of the Confiscation of Proceeds of Crime Act.
The use that was intended to have been made of the property, although it was also used for the manufacture of methylamphetamine, was that it was to be the defendant's home. Apart from his two adult children with the woman from whom he separated when he bought the property, he has four younger children of ages ranging from a toddler up to thirteen. Three of those children are currently in the care of DoCS. The defendant was in the process of attempting to have them returned to his care at the time of his arrest. Plainly, his arrest for these very serious offences will pose a hurdle in the pursuit of that object, but he will be of no assistance whatsoever to those young children if he is released from jail with no access to any means whatsoever to re-establish a lawful existence. As the defendant himself put it, "if you own nothing, there's no incentive not to do it again".
The circumstances I have recited have persuaded me that, notwithstanding the fact that I plainly have authority to make the forfeiture order sought, I should decline to do so in the circumstances of this case. In reaching that conclusion, I have had regard to the fact that the payment order in the sum of $27,900 will in all likelihood be deducted from the funds currently held by the plaintiff before the balance may be released to the defendant, so that there will be something in the order of about $30,000 left to his name from what used to be, evidently, a relatively valuable asset.
I have had regard, as I am required to do, to the proportionality and the very serious offences with which he is charged, but I have also had regard to the fact that he has been duly punished for those offences. The objects of the Confiscation of Proceeds of Crime Act have in my assessment duly been met by the fact that the defendant has well and truly been deprived of the benefit of those offences and then some.
For those reasons I decline to make the order sought in prayer 5A of the amended summons. The purpose of the legislation under consideration in this judgment has been discussed, but it is not a purpose of that legislation to inflict such hardship on offenders as to leave them in a position where rehabilitation upon release from custody is a virtual impossibility.
It remains to consider the question of costs. The plaintiff submitted that, if the Court were to make orders of the kind I have indicated I propose to make, the appropriate order should be that the defendant should pay the Commission's costs of the payment order. It was further noted that the defendant is not entitled to an order that the plaintiff pay his costs in respect of the failed application for a forfeiture order, since he is not legally represented. The fact of his not being legally represented is serendipitous for the Commission. The proceedings have been determined with a measure of efficiency owing to that fact and the sensible approach taken by the Commission in bringing forward an application for summary judgment. In effect, the result of the proceedings has been a win each way on the two principal issues brought forward for determination today. I consider that the appropriate order is that there be no order as to costs.
For those reasons, I propose to grant the relief sought in order 6 in the summons. I assess the amount to be paid to the treasurer pursuant to that order in the sum of $27,900. I decline to make order 5A in the summons and I make no order as to costs.
[2]
ORDERS
The following orders were entered on 26 April 2018:
1. Pursuant to s 27 of the Criminal Assets Recovery Act 1990 ("the Act"), the defendant, Geoffrey Ronald Hayward pay to the Treasurer the amount of $27,900 (being the value of proceeds derived by Geoffrey Ronald Hayward form the illegal activities of Geoffrey Ronald Hayward that took place not more than six years before the making of the application under s 27 of the Act.
2. Pursuant to s 28C(11) of the Act the NSW Trustee and Guardian pay the Treasurer the amount of $27,900 from the funds that are subject to the control of the NSW Trustee and Guardian (being net proceeds of sale of Lot 8 in Deposited Plan 700395 at Mudgee, Parish of Kerr, County of Wellington) to discharge the debt created by Order 1.
3. Pursuant to s 28C(11) of the Act the NSW Trustee and Guardian pay the balance of the funds referred to in Order 2 to the defendant.
[3]
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Decision last updated: 07 May 2018