Cohrs v The Director of Public Prosecutions for Victoria
[2022] VSC 695
•11 November 2022
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
CONFISCATION AND PROCEEDS OF CRIME LIST
S ECI 2019 00687
IN THE MATTER of the Confiscation Act 1997
and
IN THE MATTER of an accused, PAUL ANTHONY COHRS
BETWEEN:
| LEANNE ROSE COHRS | Applicant |
| v | |
| THE DIRECTOR OF PUBLIC PROSECUTIONS FOR VICTORIA | Respondent |
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JUDGE: | KEOGH J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 7 November 2022 |
DATE OF RULING: | 11 November 2022 |
CASE MAY BE CITED AS: | Cohrs v The Director of Public Prosecutions for Victoria |
MEDIUM NEUTRAL CITATION: | [2022] VSC 695 |
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CRIMINAL LAW — Restraining order — Exclusion application — Confiscation Act 1997 (Vic) ss 21(1), 26.
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APPEARANCES: | Counsel | Solicitors |
| For the Applicant | M Buchanan, Solicitor | Reign Legal |
| For the Respondent | Dr P Vout KC | Office of Public Prosecutions |
| For the Accused | No appearance | |
| For the Interested Parties JM Cohrs and JA Cohrs | L Anderson, Solicitor | Maloney Anderson Legal |
S Cohrs | N Taylor, Solicitor | Galbally & O’Bryan |
HIS HONOUR:
The accused, Paul Cohrs, is alleged to have shot and fatally wounded his brother, Raymond Cohrs, and his mother, Bette Schulz. The accused is charged in Victoria with the murder of Bette Schulz. There is a current proceeding in the Criminal Trial Division of this Court in relation to that murder charge.
Orders made in this proceeding under s 18 of the Confiscation Act 1997 (Vic) (‘Act’) restrain one half of the net proceeds of sale of two properties (‘Swan Hill properties’) that were registered in the names of the accused and Raymond Cohrs as tenants in common in equal shares. The restrained funds represent the legal interest of the accused in the Swan Hill properties.
The applicant, Leanne Cohrs, is the estranged wife of the accused. She has applied under s 20 of the Act for an exclusion order in respect of what she claims is her interest in the proceeds of sale of the Swan Hill properties arising from the marriage. The applicant has applied under s 21(1) of the Act for an order releasing to her 50% of the funds currently restrained.
The respondent made an earlier application to the same effect, and consents to the applicant’s application. The respondent submitted that in the alternative an order releasing the funds should be made under s 26 of the Act.
The application is opposed by Julie Maree Cohrs, who was married to Raymond Cohrs, and Julie Ann Cohrs, who was Paul and Raymond Cohrs’ sister (‘interested parties’). The interested parties and other persons have made claims against the accused for loss of dependency and/or personal injury as a result of the death of Raymond Cohrs and Bette Schulz (‘personal injury claims’). They argue that the applicant has not established an interest in the restrained funds, or alternatively if the application is granted the assets of the accused that would otherwise be available to satisfy the claims against him would be dissipated, and the Court should not in those circumstances exercise the discretion to make the orders sought.
The application was not opposed by the accused or by Stephen Cohrs who also has a claim against the accused.
For the reasons that follow I conclude that the application to release the funds should be granted.
Marriage history and background
The applicant married the accused in 1978. They separated in 2018 after the accused was arrested and held in custody on the charge of murdering Bette Schulz.
The applicant and the accused have three adult children.
The accused and Raymond Cohrs operated businesses and owned assets in partnership and via various corporate entities (‘Cohrs Group’). Before Raymond Cohrs’ death he and the accused were in dispute about their joint business interests and assets. That dispute was the subject of proceeding S ECI 2016 01206 in the Commercial Division of this Court.
After Raymond Cohrs’ death, receivers and managers (‘receivers’) were appointed in respect of the Cohrs Group. The assets of the Cohrs Group have been realised. Subject to the retention of amounts for purposes that are not currently relevant, the receivers will pay into Court the 50% interest of the accused in the Cohrs Group assets, being an amount in the vicinity of $2 million.
The receivership and management has been terminated by order of Riordan J on 29 September 2022. As a result, payments that were being made by the receivers from the Cohrs Family Trust to the estate of Raymond Cohrs and to the applicant, each in the sum of $1,800 per week, have ceased.
In an affidavit filed in this proceeding the applicant set out what she said was her very significant financial and non-financial contribution throughout her marriage to the accused. This included, in addition to her role as parent and homemaker, extensive work on properties owned by her and the accused, and work performed to the benefit of businesses within the Cohrs Group. The applicant also set out details of her significant ill health, inability to work and limited means. The applicant stated that she has no capital assets from the marriage available to her other than a modest motor vehicle, no other assets of significance, and no source of income apart from the payments of $1,800 per week made to her by the receivers that have now ceased.
The applicant has applied against the accused for final property division orders under the Family Law Act 1975 (Cth). That application was issued by the applicant in the Family Court of Australia. In 2021 the application was cross-vested to this Court. Julie Maree Cohrs is named as second defendant to the application. The receivers are named as the third to ninth defendants.
There has been no progress with the family law proceeding. An issue in the proceeding is identification of the matrimonial pool of assets, particularly having regard to the personal injury claims against the accused.
Confiscation proceeding
The respondent applied for orders restraining the interest of the accused in the Swan Hill properties in February 2019. Restraining orders made under s 18 of the Act on that ex parte application were subsequently varied to allow for the sale of the Swan Hill properties and for 50% of the net proceeds of sale, being an amount of approximately $490,000, to be held on trust by Asset Confiscation Operations, Department of Justice and Community Safety (‘ACO’) until further order.
The restraining order included a declaration pursuant to s 15(3)(a) of the Act that the Swan Hill properties were restrained to satisfy any orders for restitution or compensation that may be made under the Sentencing Act 1991.
In March 2019 the applicant applied under s 20 of the Act for an order excluding her interest in the Swan Hill properties from the restraining order. In May 2019 that application was stayed by order of Moore J until the charge against the accused of murder of Bette Schulz was finally determined or withdrawn.
In September 2021 the respondent applied under s 21(1) of the Act for an order excluding 50% of the ACO funds from the proceeds of sale of the Swan Hill properties from the restraining order, and for that amount to be paid by ACO to the applicant. That application was adjourned to allow for mediation of the family law proceeding and of the personal injury claims. The respondent’s application has not yet been determined.
Mediation of the disputes resulted in heads of agreement between all relevant parties, save for the accused. The heads of agreement provide for division between the applicant and the personal injury claimants against the accused of the net funds realised by the receivers from sale of the Cohrs Group assets, the funds held by ACO, and other assets. In round terms the applicant was to receive an amount equal to 55% of the net total for distribution. The amounts to be paid to the applicant included half the funds held by ACO.
The amount estimated in the heads of agreement to be available for distribution to interested parties and the other persons with personal injuries claims against the accused was about $850,000.
In the absence of the accused’s agreement, the heads of agreement were not resolved into a final settlement. The personal injury claimants agreed that Julie Maree Cohrs’ claim should proceed to trial. The particulars filed for that claim exceed the total amount estimated to be available for distribution to the personal injuries claimants. It was intended that, subject to Julie Maree Cohrs’ claim being successfully prosecuted, all claims, including those of Leanne Cohrs, could be finally resolved in accordance with the heads of agreement.
For reasons set out in my ruling delivered on 19 August 2022, the trial of the Julie Maree Cohrs claim against the accused has not been able to proceed.[1]
[1]Cohrs v Cohrs [2022] VSC 474.
The Act
The Act defines interest, in relation to property, to mean:
(a) a legal or equitable estate or interest in the property; or
(b) a right, power or privilege over, or in connection with, the property;[2]
The definition of interest is deliberately broad and captures a lesser interest than a legal or equitable estate.[3]
[2]Confiscation Act 1997 (Vic) s 3 (definition of ‘interest’).
[3]DPP v Twenty Fourth Trengganu Pty Ltd (2011) 31 VR 439, 447 [33]–[34] (Hargrave AJA); Taleb v DPP [2014] VSC 285, [77]–[80] (Croucher J).
The applicant relies primarily on s 21(1) of the Act, which relevantly provides:
(a) if the court is satisfied that the property in which the applicant claims an interest—
(i) is not tainted property; and
(ii) will not be required to satisfy any purpose for which the restraining order was made—
the court may make an order excluding the applicant's interest in the property from the operation of the restraining order; or
(b) if the applicant is a person other than the accused and—
…
(ii) the court is satisfied as specified in paragraph (a)(i) but not satisfied as specified in paragraph (a)(ii), the court may make an order excluding the applicant's interest in the property from the operation of the restraining order if satisfied that—
(A) the applicant's interest in the property was not subject to the effective control of the accused on the earlier of the date that the accused was charged with the Schedule 1 offence or the date that the restraining order was made in relation to the property; and
(B) where the applicant acquired the interest from the accused, directly or indirectly, that it was acquired for sufficient consideration.
In the alternative, the applicant relied on s 26(1) of the Act:
The court may, when it makes a restraining order or at any later time, make such orders in relation to the property to which the restraining order relates as it considers just.
An application under s 26 may be made by a person who has an interest in the property restrained.
Analysis
There has been no suggestion the Swan Hill properties, or the funds held by ACO, are within the definition of tainted property in the Act. There is no allegation the properties were used or intended to be used by the accused in connection with the offences that he is charged with, or that the properties were related to the alleged offences in any other relevant way.
The applicant does not argue s 21(1)(a)(ii) is satisfied. On the current evidence the available property of the accused, together with the ACO funds, will be insufficient to satisfy the claims against him arising from the criminal charges he faces.
The interested parties did not put the matters in s 21(1)(b)(ii) in issue. However, I must be satisfied about these matters to make the order sought under s 21(1).
In Caruana v DPP,[4] Kyrou J said, in relation to the issue of effective control:
94. Whether a person has the effective control of property involves an examination of that person’s actual practical exercise, or capacity to exercise, rights over the property, such as the right to possess, use, sell, lease, mortgage, make fundamental improvements to, and exclude others from the possession of, the property in question.
95. Substantial control of possession may be a relevant factor in determining whether effective control exists in a particular case. However, where the relevant interest is an ownership interest, substantial control of the right to use or possess property, which remains subject to the owner’s right to demand possession and to sell or otherwise dispose of the property for the owner’s own benefit, is insufficient to constitute effective control of that property.
[4][2011] VSC 658 (citations omitted).
There is no evidence that would enable me to conclude the applicant’s interest in the property was not subject to the effective control of the accused. There is nothing to indicate the accused’s right to deal with the Swan Hill properties as registered proprietor was subject at the relevant time to any right of the applicant to demand possession, sell or otherwise dispose of the properties for her own benefit.
The interest of the accused in the ACO fund arises from her substantial contribution to the marriage described in summary terms in paragraph 13 above. The applicant did not in any sense acquire her interest in the Swan Hill properties or in the funds now held by ACO from the accused.
Given that I am not satisfied about the matter in s 21(1)(b)(ii)(A) of the Act I am unable to make the order sought in favour of the applicant under that provision.
However, for the following reasons, I conclude the order should be made pursuant to the discretion in s 26(1) of the Act.
First, s 26(1) gives the Court a broad power that can be used in an appropriate case to ameliorate what may otherwise be an arbitrary and harsh outcome resulting from the application of the provisions of the Act.[5]
[5]JR Mokbel Pty Ltd v Director of Public Prosecutions [2007] VSC 119, [78] (Hargrave J).
Second, the applicant’s evidence strongly supports the level of her contribution to a 40-year marriage. That evidence goes to the applicant’s contribution to the acquisition, improvement and maintenance of properties and businesses in the Cohrs Group. The evidence supports the applicant’s interest in assets acquired during the period of the marriage that were registered in the name of the accused. While the evidence may not provide a sufficient basis for a conclusion about the extent of the applicant’s equitable interest in the Swan Hill properties, it does support a conclusion that the applicant has an interest (as that term is more broadly defined in the Act) in funds held in trust as a result of the realisation of properties registered in the name of the accused during the period of the marriage. This includes the ACO funds.
Third, the applicant’s interest in the ACO funds is not contested by the respondent or the accused.
Fourth, while the interested parties do put in issue the applicant’s interest in the funds, they have not filed any evidence contesting that matter. While this application was only recently issued by the applicant, an identical application was made by the respondent in September 2021.
Fifth, the terms of the heads of agreement demonstrate a level of acknowledgement of the applicant’s interest in funds currently held in the name of the accused from the sale of assets. If put into effect the heads of agreement would result in 50% of the ACO funds being paid to the applicant. Further, the heads of agreement would result in the applicant being paid, from funds held by ACO and by the receivers, an amount estimated to exceed $1 million. Funds accumulated from sale of assets by the receivers are to be paid into Court, and will only be available for distribution by further order of the Court.
Sixth, it is important to keep in mind that the applicant’s entitlement does not arise from any claims she has against the accused, but reflects her personal interest in assets accumulated during the period of the marriage. The applicant has not had the use or benefit of most of those assets for over four years.
Seventh, the only evidence on this application is that the applicant suffers serious ill health, is unable to work, has virtually no independent financial means, and has incurred a considerable debt for legal fees. The applicant is no longer receiving weekly payments of $1,800 from the Cohrs Family Trust.
Eighth, while the accused may have been in effective control of the Swan Hill properties, that matter would appear to be totally unrelated to the charges of murder he now faces. The inability of the applicant to satisfy that requirement of s 21 of the Act does not weigh heavily on consideration of a just outcome in accordance with s 26 of the Act.
Ninth, very significant legal costs have been incurred by the applicant, and the personal injury claimants in the related proceedings in this Court. The limited pool of funds available as a result of the sale of assets held in the accused’s name already appears to be insufficient to meet the various claims. The interested parties’ suggestion that the applicant’s interest in the ACO funds be the subject of an application for interim distribution in the family law proceedings, which could properly be contested by them, would almost certainly result in further significant costs being incurred, and the pool of available funds being further dissipated. That is not a sensible or just outcome for any of the parties.
I conclude the application should be allowed under s 26(1) of the Act. I will hear from the parties as to the appropriate form of orders.
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