On 12 November 2018, the Victorian Court of Appeal (Maxwell P, Tate and Weinberg JJA) delivered the decision in Meskovski v DPP [2018] VSCA 293. In that case, the Court of Appeal considered the discretion to relieve from “undue hardship” under the Confiscation Act 1997.
Facts
Mr Meskovski had hydroponically cultivated cannabis at his home. At the time of the police search, the police seized 37kgs of plants, the air dried weight of which was calculated to be 5kgs. Although Mr Meskovski was initially charged with cultivating a commercial quantity of cannabis, he was ultimately convicted only of cultivation of cannabis simpliciter.
Notwithstanding the fact that the conviction did not relate to an automatic forfeiture (or Schedule 2) offence, the DPP applied for a civil forfeiture restraining order, which required the Court to be satisfied that a police officer had reasonable grounds to suspect that the property (i.e. the family home) was tainted in relation to a Schedule 2 (therefore the commercial quantity cultivation) offence.
The restraining order was made, and subsequently, the County Court made a civil forfeiture order in respect of the home and refused the hardship application made by Mr Meskovski.
Personal circumstances
As for the circumstances of Mr Meskovski and those of his offending, they can be summarised as follows:
- Mr Meskovski was first identified as having cultivated cannabis in a rented property. He was intended to be charged in relation to that cultivation, but before he was charged he commenced to cultivate cannabis at his home (which was the subject of the subsequent civil forfeiture order).
- Mr Meskovski had explained that he cultivated cannabis because he had a gambling problem and he was intending to use the money he received to recoup his gambling losses.
- Mr Meskovski was 65 years old. He had been married since 1979 and purchased the land on which the family home was subsequently built in 1986 for $30,000. The family home was built in 1989 and he and his wife had fully repaid the mortgage.
- Subsequently, in August 2006, Mr Meskovski and his wife refinanced the home to fund the acquisition of a restaurant which Mr Meskovski purchased.
- Mr Meskovski was retired, with the only source of his income being his pension.
- As for his assets, there was evidence that the property had a value $675,000, with his half share having a value of $337,500. The property remained subject to two mortgages, with a combined mortgage debt of approximately $250,000. Mr Meskovski had nominal funds in his bank accounts, a Mazda vehicle worth approximately $6,000, no other property of any real value and a CBA credit card. He remained indebted to the ANZ from the use of an earlier credit card in the sum of $7,000, which he was paying off at $20 per month.
- Mr Meskovski had spent approximately $100,000 on legal fees relating to his criminal proceedings, which had been drawn from moneys his wife had been provided with by her mother.
- Mr Meskovski’s wife had applied for an exclusion order and her half interest in the family home had been excluded in her favour in 2017.
- It was common ground that Mr Meskovski and his wife were dependent on Centrelink benefits and that almost their entire Centrelink income was spent paying the mortgage over the property.
The hardship discretion
The Confiscation Act 1997 contains two sections which enable the Court to ameliorate hardship in the context of civil forfeiture (but not automatic forfeiture): section 38(2) and section 45(1). As to those sections, the Court of Appeal observed (at [71]):
“Most importantly, s38(2) and s45(1) empower a judge to do two quite different things. Under s.38(2) a judge can exclude property, or a person’s particular interest in the property, from the operation of the civil forfeiture order. The discretion does not extend to permitting a judge to divide up the property or protect a portion of an interest in property from the effect of forfeiture. It is an, ‘all or nothing’ discretion, as Hargreaves J described it in Director of Public Prosecutions v Ali.”
And (at [72]):
“By contrast, the discretion conferred by s45(1) empowers a judge to require that a specified amount of money be paid to a person to prevent undue hardship; a ‘middle course’ as Hargreaves J described it.”
As to which of these discretions ought to be exercised, if any, the Court of Appeal noted (at [73]):
“The discretion under s.45(1) is thus an alternative discretion to s38(2). It is to be exercised, as Hargreaves J indicates, when the circumstances of the case reveal that, although a civil forfeiture order may be reasonably likely to cause undue hardship, there are other considerations that point against exercising the discretion under s38(2) to exclude the whole of the property, or the whole of an interest in the property, from forfeiture.”
The Court of Appeal noted that both discretions are enlivened by the same threshold test, namely that the civil forfeiture order would be reasonably likely to cause “undue hardship” to a person (at [76]).
The Court of Appeal rejected the argument that the discretion was required to be exercised upon the establishment of “undue hardship”. The Court found that, notwithstanding the existence of undue hardship, the Court had a discretion whether or not to alleviate it (at [80]-[81]).
The Court of Appeal agreed with the DPP’s submission that the recent introduction of the word “undue” before the word “hardship” in both sections 38(2) and 45(1) established a requirement of greater stringency than the requirement of hardship alone (at [94]-[95]). The Court observed (at [97]):
“The requirement that the hardship must be ‘undue’ introduces greater stringency in that it underscores that the ordinary consequences of deprivation of property are not sufficient for the exercise of the discretion.
As for the exercise of the discretion, having regard to the personal circumstances of Mr Meskovski, the Court of Appeal was not prepared to find that the trial judge had erred. In that regard, the Court of Appeal emphasised that Mr Meskovski’s personal circumstances had to be weighed against the gravity of the offending and that the judge correctly took into account the seriousness of the criminality of Mr Meskovski. A matter which weighed heavily against Mr Meskovski was the fact that he had initially intended to set up the hydroponic cultivation system in the rented property, but because they proved unsuitable by reason of their power supply, then deliberately chose to move those operations to his home which had an adequate power supply. Further, the fact that he had already been detected by police in relation to the cultivation in the rental property and was about to be charged with attempting to cultivate cannabis there had not deterred him from transferring the criminal enterprise to his own home (at [107]).
The Court also observed that the failure by Mr Meskovski to make a profit assumed no importance when the criminal operation was established with the intention of profitability (at [109]). Accordingly, the Court of Appeal concluded that, “we do not consider that the civil forfeiture order operates disproportionately to the nature and gravity of the offence” (at [110]).”
End note: Although the issue was not raised again in the appeal, in the County Court it had been argued on behalf of Mr Meskovski that the DPP was precluded from pressing the application for the civil forfeiture order in circumstances where Mr Meskovski had pleaded guilty to cultivating cannabis simpliciter. That argument was rejected by the County Court, as noted in footnote 23 of the reasons of the Court of Appeal.
