Regina v Wealand

Application for Forfeiture 10 Under s13(2) of the Confiscation of Proceeds of Crime Act 1989, where a person has been convicted of a "drug trafficking offence" (as defined in s4), an application may be made for a forfeiture order against property that is "tainted in respect of the offence". "Tainted property" is defined to include property "used in or in connection with the commission of a serious offence" (s4). A "serious offence" includes an offence that may be prosecuted on indictment (s7). 11 Mr Wealand, therefore, had been convicted of serious drug offences. The Crown then made application for an order of forfeiture of the unit, 1/30 Fitzmaurice Street, Wagga Wagga. It also sought the forfeiture of the hydroponic and other equipment within the unit. Mr Wealand did not resist the latter. However, he opposed the forfeiture of the home unit. 12 The power of the Court to order the forfeiture of tainted property is set out in s18 of the Act. That section, relevantly, is in these terms: "s18 Forfeiture orders (1) If a person has been convicted of a serious offence and an application is made to a court under section 13(1)(a) or (2) in relation to specified property and: (a) the court is satisfied that the property is tainted property in relation to the offence, and (b) the court has taken into consideration (having regard to information before the court): (i) the use that is ordinarily or had been intended to be made of the property, and (ii) any hardship that may reasonably be likely to arise (whether on the part of that or any other person) following the making of the order; the court may order that the property is forfeited to the State. (2) In considering any hardship that may be likely to arise on the part of a person convicted of a serious offence, the court shall not take into account the sentence imposed in respect of the offence. (3) If the court orders that property (other than money) is forfeited to the State, the court shall specify in the order the amount that it considers to be the value of the property at the time when the order is made." 13 There was no question that the property was tainted property. The issue on the application was the ordinary or intended use of the property and any hardship that may attend the making of a forfeiture order.

The Intended Use of the Property 14 Mr Wealand gave evidence on sentence. He also gave evidence on the forfeiture application. On both occasions he was cross examined in respect of his assets. He produced his bank records. 15 Mr Wealand was born in March 1955. He is aged 47 years. He had no criminal record before his conviction for these offences. He and his wife established a florist business in Wagga Wagga in 1988. They sold the business in 1997. Instead of reducing the mortgage on their home, they purchased in July 1998, on advice from their accountant, the unit above the newsagency, 1/30 Fitzmaurice Street, Wagga Wagga. They then spent the sum of $10,000 renovating the unit. The unit was placed in the hands of Raine and Horne, Real Estate Agents. A letter from that firm confirmed that between July and November 1998, it had attempted to find a tenant, without success. It was after November 1998 that Mr Wealand began using the property to cultivate cannabis. His Honour found that the property had been purchased as an investment property. He also found that there was no evidence that the unit, or other assets of Mr Wealand or his wife, had been purchased with the proceeds of the cultivation or supply of cannabis.

Hardship 16 Mr Wealand described in detail his present circumstances. I need not repeat that detail. It is enough to say that there was evidence which, if accepted, was capable of suggesting significant hardship. 17 First, Mr Wealand's adult step-son was disabled. He had suffered brain damage at birth. He had also had certain difficulties at school which had given rise to a court case. He required long-term psychiatric care. He suffered from depression. He had attempted suicide. His behaviour was disturbed. That behaviour had had a profound effect upon the family, and especially Mr Wealand's wife, who had herself become ill. 18 Secondly, following his arrest, Mr Wealand lost his job as a bus driver. Although he had lived in Wagga Wagga all his life, he felt obliged to move elsewhere. He and his wife sold their home. They purchased a home in Tuross Heads, with a view to offering accommodation as a Bed and Breakfast. Their return on that business, however, had been extremely modest. They had survived financially, partly with the assistance of a pension received by Mr Wealand's step-son, and partly through an allowance received by Mrs Wealand to assist in the establishment of the business. 19 Mr Wealand gave evidence of other property interests. Before his arrest, a home had been purchased for his step-son at Trevor Street, Wagga Wagga. The home was valued at $130,000. The mortgage was $110,000. After his arrest, Mr Wealand's step-son moved back home. He now lives at Tuross Heads. At the time of the application before his Honour, the property in Wagga Wagga was rented. There was a shortfall between the rent and the mortgage payment. Mr Wealand gave evidence that he had hoped to rationalise his assets, and specifically, to sell the home unit above the newsagency in order to reduce the mortgage on Tuross Heads. The picture which emerged was of a family struggling to make ends meet. His Honour's Judgment 20 Having heard the application, his Honour gave a ruling. He refused to order forfeiture, indicating that he would provide his reasons later. On 8 February 2002 his Honour published his reasons. 21 In his judgment, Woods ADCJ described the circumstances leading to Mr Wealand's arrest. He identified the offences for which he had been convicted. He described the circumstances in which the home unit had been purchased as an investment. His Honour referred to the substantial mortgage still owing at Tuross Heads. His Honour then said this: "Now that the defendant is sentenced to a term of imprisonment there may be difficulty in his wife running the bed and breakfast business and keeping up payments to the Bank. There is no evidence before me to suggest that any of these assets were themselves purchased with the proceeds of their cultivation and supply of cannabis, the only evidence being that what they made so far in the few sales referred to above had barely covered their costs. The defendant has been sentenced to a term of imprisonment for the offences, so on the evidence before me I must consider that the viability of his and his wife's attempts to set up a new business in another town may be seriously affected. It is not enough to say that they are well off they have two houses albeit with a substantial mortgage and the overdraft one must always have rehabilitation and the ability to turn their life around in mind. So when considering the greater picture of their ability to rehabilitate and make a new life I must carefully consider the extra difficulty such a forfeiture could mean to people who are in their 40's with a difficult grown up son, who have not had any prior involvement with the law, have pleaded guilty and have expressed a desire to rehabilitate and make a fresh start. So without in any way down rating the need for such legislation as the Confiscation of Proceeds of Crime Act I find that this case is one where it is open to me to exercise a discretion not to order forfeiture because of hardship. The application for forfeiture of the property being Unit 1, 30 Fitzmaurice Street, Wagga Wagga, is dismissed."

The Grounds of Appeal 22 The Crown suggested four errors: · First, that his Honour had breached s18(2) of the Act. · Secondly, that his Honour had given too much weight to the asserted impact of forfeiture on the rehabilitation of Mr Wealand and his wife. · Thirdly, that his Honour had failed to give sufficient weight to the objective facts of the offence. · Fourthly, that his Honour had failed adequately to consider other financial resources available to the respondent. 23 Section 92(4) of the Act provides to the Director of Public Prosecutions a right of appeal against a refusal by a court to make a forfeiture order. The section provides that "the Court of Criminal Appeal may, in its discretion, make such order as could have been made in the first instance". 24 The appeal is not a re-hearing. To succeed on this appeal, the Crown must demonstrate error. It is not enough that this Court may come to a different view on the facts (R v Lake (1989) 44 A Crim R 63, per Kirby P at 66; R v Galek (1993) 70 A Crim R 252, per Hunt CJ at CL at 258). 25 The second, third and fourth grounds are, in truth, an invitation to this Court to view the facts differently from the way in which they were viewed by his Honour. There was evidence capable of supporting the view his Honour formed. That view was not so plainly unreasonable and unjust that we should infer that his Honour was in error in failing properly to exercise the discretion he had (House v The King (1936) 55 CLR 499 at 505). 26 Returning to the first ground, it is convenient to repeat the words in the judgment which were said, in particular, to offend s18(2) of the Act. They were as follows: "Now that the defendant is sentenced to a term of imprisonment there may be difficulty in his wife running the bed and breakfast business and keeping up payments to the Bank." 27 Before making a forfeiture order, the Court is required to consider any hardship "that may be reasonably likely to arise" from such an order. According to the section, the hardship may fall either upon the person convicted of the serious offence or "any other person" (s18(1)(b)(ii)). In respect of the person convicted, s18(2) operates. In considering the hardship that "may be likely to arise, the Court shall not take into account the sentence imposed in respect of the offence". A sentence involves the deprivation of liberty or other penalty imposed for breach of the criminal law. As such, it is a hardship deservedly imposed. However, it is irrelevant to an assessment of hardship under s18(1)(b)(ii) (cf R v Kalache [2000] NSWCCA 2, per Sully J, paras 43 to 77). 28 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." 29 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." 30 A relevant factor is proportionality to the offence committed. Allen J in R v Bolger (1989) 16 NSWLR 115, said this: (at 126) "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?" 31 His Honour added: (at 127) "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." 32 In Taylor v Attorney-General for the State of South Australia (supra), the appellant and his wife had pleaded guilty to nine counts of selling cannabis. The nine occasions were representative of many others in a period of fourteen months. The sales had been made from their family home (described as "a shack") where they lived with their child. The Crown sought a forfeiture order in respect of that home. Debelle J said this: (at 475) "The infinite variety of circumstances which might arise leads to a natural disinclination to suggest what other factors might affect the exercise of discretion. But, broadly speaking, in the exercise of its discretion, the court will have regard to the circumstances of the offence, the extent to which the property was connected with the commission of the offence, the seriousness of the offending, the value of the property in relation to the offence and the likely consequences of an order for forfeiture upon the offender and others who might be affected by the order." 33 His Honour reached the following view on the facts (King CJ and Millhouse J agreeing): (at 475) "In this case, the shack was the only house property of the appellant, his wife and nine year old child, a circumstance to which the learned judge did not advert when exercising his discretion. Forfeiture of the shack property will not only result in the loss of his only asset but also of his home and the home of his family. The circumstances of this offence do not warrant the imposition of such a heavy burden upon the appellant or his family in addition to the other penalties already imposed upon him." 34 Here, his Honour was obliged to assess the hardship that may be likely to arise concerning Mr Wealand and his family if a forfeiture order were made. Mr Wealand and his wife had incautiously invested in the home unit, rather than reduce the mortgage on their family home. Mrs Wealand, in Mr Wealand's absence, was left with a business which was marginal, which was also the family home. In that context, counsel for Mr Wealand made the following submission: "His Honour has simply had regard to the difficult financial and practical situation ... the respondent's wife and son would be placed in by virtue of the respondent's imprisonment, and the additional burden a forfeiture order would bring to both them and the respondent." 35 I agree with that submission. His Honour's judgment, read fairly, and as a whole, did not, in my view, breach s18(2) of the Act. He did not, in considering hardship, take into account the sentence imposed upon Mr Wealand. Rather, he considered the effect of forfeiting the unit in the context of the fragile economic circumstances of the Wealand family.

Order 36 The order I would propose is that the appeal be dismissed. **********

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