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[2005] VSC 421
General information, not legal advice.
Supreme Court of Victoria
2005-10-19
Morris J
Original judgment source is linked above.
DISCOVERY - Forfeiture order - Property owned by company - Company corporate vehicle for respondents - Property allegedly tainted as it was used for cultivation of cannabis - Documents subject to discovery relate to purchase of the property, bank statements and company financial records - Whether court has jurisdiction to order discovery - Confiscation Act 1997
1 The Director of Public Prosecutions for Victoria has applied to the Court under s.32 of the Confiscation Act 1997 for a forfeiture order in respect of land at 75 Yellow Gum Boulevard, Sunbury, Victoria ("the property"). The property is owned by the third respondent, R. & A. Thomas Constructions Proprietary Limited ("the company"), which is the corporate vehicle of the first and second respondents, Robert Brian Thomas and Jeanine Rhonda Thomas. The Director relies upon the fact that the first respondent was convicted in the Magistrates' Court at Melbourne on 4 March 2005 of the offence of cultivating a drug of dependence, namely, cannabis L. This is an offence which is a "forfeiture offence" within the meaning of the Confiscation Act.
2 The evidence is that each of the first and second respondents own half the issued shares in the company and that each is a director and secretary.
3 A restraining order over the property was granted by his Honour Judge Fagan of the County Court of Victoria on 28 April 2004 for the purpose of satisfying any forfeiture order that may be made.
4 The Director alleges that the property is tainted within the meaning of s.3 of the Confiscation Act 1997 as it was used for the cultivation of cannabis between
7 June 2003 and 14 November 2003.
5 The second respondent and the company have given notice that they intend to apply under ss.45 and 49 of the Act for an order excluding their interest in the property from any forfeiture order. The grounds they intend to rely upon include grounds that, by reason of their direct and indirect financial contributions to the purchase of the property, they are part-owners of the property subject to the application of relevant laws. In particular, they say that the third respondent is the legal and beneficial owner and titleholder of the land; and the second respondent is the owner of 50 per cent of the issued shares in the company. The application by the second respondent and the company is supported by an affidavit of Jeanine Rhonda Thomas sworn 22 September 2005. In that affidavit Ms Thomas maintains that, as a 50 per cent shareholder and a director, she has participated in the conduct of the affairs of the company and has not acted merely as a rubber stamp for her husband.
6 The parties agree that the dispute should be referred to the Listing Master to enable it to be fixed for hearing before the Court. They also agree on a number of procedural issues in relation to the conduct of the proceeding. There is, however, one procedural issue upon which they do not agree, and which requires a decision today. The Director seeks an order that the second and third respondents make discovery of certain documents referred to in a schedule and that the Director be then permitted to inspect these discovered documents. The documents listed in the schedule can generally be described as documents consisting of or relating to: the purchase of the subject property; the financing of the purchase of the subject property; bank statements; and company financial records.
7 Counsel for the respondents submitted that the Court does not have power to make an order requiring the respondents to discover documents. For the reasons which follow, I do not accept that submission.
8 Section 133 of the Confiscation Act provides:
"1. Proceedings on an application under this Act are civil in nature except as otherwise provided by this Act.
2. Despite sub-section (1) the rules regulating the practice and procedure of a Court in civil proceedings do not apply to a proceeding on an application under this Act."
9 The effect of s.133(2) of the Act is that Chapter 1 of the Supreme Court Rules, which relate to general civil procedure, do not apply to the proceeding. The civil procedure rules include, of course, Order 29 which relates to the discovery and inspection of documents.
10 However, this is a proceeding to which Chapter 6 of the Supreme Court Rules apply, being rules that relate to criminal procedure. This is ironic, given that the Act states that proceedings under the Confiscation Act are civil in nature. Notwithstanding this irony, it is clear that Chapter 6 of the Supreme Court Rules applies as Order 6 of that chapter specifically relates to proceedings in the Court under the Confiscation Act 1997. (See Rule 6.02(1)).
11 The chapter 6 rules deal with issues such as the notice that must be given of an application; service of the application; filing and directions; and evidence. Order 6.09(3) provides:
"After an application or notice of an application has been filed a judge may give directions for the hearing of the application, including directions for the production to the Court of any transcript of proceedings relating to a conviction relied upon in the application."
12 Order 6.11 sets out various provisions in relation to evidence and, in essence, provides that evidence on the hearing of an application may be by affidavit and shall be by affidavit if the Court so directs.
13 The question to be determined depends upon the scope of the power that a Judge of the Court has to "give directions for the hearing of the application". The concept of giving directions in relation to the hearing of a proceeding is a broad one and, in my opinion, there is no reason why it should receive a narrow construction: compare Herald and Weekly Times Pty Ltd v Victorian Civil and Administrative Tribunal [2005] VSC 188, per Hansen J. The power to give directions should be construed so as to enable a Judge to direct parties to carry out particular procedural steps that may be necessary or desirable to give effect to the just resolution of the proceeding. This power includes the power to direct the discovery of documents relevant to the dispute that are in the possession of a party.
14 In the present case, an issue that may be in dispute is the credibility of the claim made by the second respondent that she has participated in the affairs of the company and is not merely a rubber stamp of the first respondent. There may also be questions about whether the property is "tainted property" by reason of the origins of the money that has been used to purchase the property. In my opinion, any dispute about these issues would be better resolved if the respondents were required to discover the documents set out in the proposed order.
15 I was referred to a decision of Beach J in Equuscorp Proprietary Limited v. Malcolm [2001] VSCA 308. That case concerned the circumstances in which a notice to produce could be served. In the course of his decision Beach J said, at paragraph 28:
"In my opinion the Court has inherent jurisdiction to require a party to litigation to produce any document in his possession relevant to the litigation, including any application in the litigation prior to the trial of the litigation or the hearing of any application in the litigation."
16 Although the present matter does not concern a Notice to Produce, that principle is relevant to what is within the scope of the making of a direction. It would be odd if a Judge of the Court did not have power to make a direction about a particular matter, yet the same outcome could be achieved by issuing a Notice to Produce directed at the respondents. Certainly, by making a direction, it enables documents to be discovered and inspected before the date of the hearing, which is a far more convenient method of conducting the litigation.
17 As to the detail of the documents that need be discovered, if they exist, I note that the Director no longer persists with paragraph 3(b) of the proposed schedule. However, reviewing the other paragraphs, I am satisfied that the documents referred to are likely to be relevant. I am also satisfied that it is not unfair nor unjust to require any of the named documents that exist to be discovered.
DPP
Thomas [2005] VSC 421