Commissioner of Police v Wine Investment Services

Case •

[2023] NSWSC 971

•

18 August 2023

No judgment structure available for this case.

Supreme Court


New South Wales

  • Amendment notes
Medium Neutral Citation: Commissioner of Police v Wine Investment Services [2023] NSWSC 971
Hearing dates: 16 June 2023
Date of orders: 14 July 2023
Decision date: 18 August 2023
Jurisdiction:Common Law
Before: Lonergan J
Decision:

(1) The Director of Public Prosecutions is joined as the 80th defendant to the proceedings.

(2) The making of any declarations or orders in relation to the lawful entitlement of the 66th defendant and the 79th defendant to the wine as sought under the fifth further amended summons is stayed until the conclusion of the trial of R v David Anthony James in the District Court of NSW 2017/298368.

(3) The proceedings are otherwise listed for further directions before Lonergan J on Thursday 3 August at 9:30am.

Catchwords:

CRIMINAL LAW – return of seized property – LEPRA s 219 – related criminal proceedings not yet determined – question over “lawful entitlement” – intervention by DPP – temporary stay in respect of certain defendants

Legislation Cited:

Confiscation of Proceeds of Crime Act 1989 (NSW)

Evidence Act 1995 (NSW)

Law Enforcement (Power and Responsibilities) Act 2002 (NSW)

Supreme Court Act 1970 (NSW)

Cases Cited:

Carolan v State of New South Wales and Anor [2013] NSWSC 1593

Carolan v State of New South Wales [2014] NSWSC 1566

Commissioner of Police v Pecover [2014] NSWSC 1427

Kovalev v Minister for Immigration and Multicultural Affairs (1999) 100 FCR 323; [1999] FCA 557

Lou v IAG Limited t/as NRMA Insurance (2019) 101 NSWLR 606; [2019] NSWCA 319

Re Great Eastern Cleaning Services Pty Ltd [1978] 2 NSWLR 278

Category:Procedural rulings
Parties: Director of Public Prosecutions (NSW) (Applicant)
Commissioner of Police (NSW) Police Force (Plaintiff)
Wine Investment Services Pty Limited (Defendant)
Plus 78 other named parties
Representation:

Counsel:
T Epstein (Applicant)
J Baird (66th and 79th Defendants)

Solicitors:
Crown Solicitor for New South Wales (Applicant)
Makinson d’Apice Lawyers (Plaintiff)
Allsop Glover Lawyers (66th and 79th Defendants)
File Number(s): 2021/00309824
Publication restriction: Nil

JUDGMENT

  1. On 14 July 2023, I made orders in response to a notice of motion filed on 23 May 2023, joining the Director of Public Prosecutions (“DPP”) as a defendant to the proceedings and providing a temporary stay of proceedings in respect of the 66th and 79th defendants, Irene James (“Mrs James”) and Shelteo Pty Ltd (“Shelteo”), a company of which Mrs James was until November 2022 the sole director and shareholder. The application was opposed by those defendants.

  2. These proceedings, commenced in October 2021 by Summons, concern entitlement to 2,364 bottles of wine seized by NSW Police in July 2016. This wine was found in a location said to have been used by Mrs James’s son, David James, (“David”), to hide this wine in order to frustrate attempts by the liquidators of the companies and businesses conducted by David, to trace and account for the wine.

  3. David is facing trial in the Sydney District Court, commencing on 4 September 2023, for fraud and related criminal charges, concerning at least in part, his conduct in relation to the first defendant, Wine Investment Services Pty Limited (“WIS”), a business he apparently conducted and controlled.

  4. In May 2023 Mrs James and Shelteo filed a Cross-claim and Cross-summons seeking orders in their favour regarding entitlement to some of the wine in issue. At this time the DPP gave notice that it would seek to be joined to the proceedings because the orders sought by Mrs James and Shelteo have the potential to prejudice the criminal trial if this Court made orders inconsistent with the Crown case in those criminal proceedings. To provide further context, the DPP advised that in July 2022 David’s legal representatives (who are the same as Mrs James and Shelteo’s representatives in these proceedings), sought to have the hearing of his criminal proceedings vacated on two bases, one of which was that these “parallel civil proceedings” sought a declaration inconsistent with the Crown case against David, arguing that the trial had to await the outcome of the civil proceedings.

  5. Contrary to what seems to have been an earlier position taken by the prosecuting authorities, the DPP approached this Court in May 2023 for the first time alerting it to the fact that the criminal proceedings were not yet over, and the potential for these proceedings to interfere in a negative way with the criminal proceedings.

  6. For the reasons that follow I made the orders sought by the DPP.

Factual Background

  1. The following background is taken from a statement to police of Shaun Fraser, a chartered accountant and registered liquidator with McGrathNicol, the liquidator appointed in October 2013 to WIS, and the affidavit of Ms McGrath, solicitor, that was filed with the Summons at the commencement of the proceedings.

  2. WIS operated a wine business which specialised in storing wine for collectors and investors. WIS would store wine in return for a monthly fee for storage. Insurance (purportedly) and services were provided by WIS including selling and purchasing wine for clients.

  3. In about August 2013, WIS collapsed and was placed into receivership.

  4. ASIC records indicate that as at October 2013 the sole director of WIS was Jessica Anne James, the grandmother of David. She had in fact died in mid-2012. It appears that the reality was that David operated the business and did all the work, perhaps with the occasional assistance of his brother Murray.

  5. WIS was a wholly owned subsidiary of Rugana Trading (in liquidation) and was linked to a number of other companies associated with or controlled by David.

  6. On or around October 2014, a wine adjudication process was accepted and formalised in the Equity Division of this Court to determine inventory and ownership of wine held by WIS for WIS customers. During this process, it became clear that approximately 34,000 bottles of vintage wine remained unaccounted for, or missing.

  7. In August 2015, the liquidators notified the police about missing wine. The report indicated that the records suggested that the total amount of wine in the possession of WIS to be in excess of 500,000 bottles, but that just under 200,000 were recovered.

  8. Following investigation, on 4 July 2016, police located and seized 11 pallets containing 2,796 bottles of wine.

  9. The investigators and liquidators were unable to identify clear ownership of the wine seized due to gaps in the records maintained by WIS.

  10. Police have retained possession of the wine (noting that it is stored at Cellarit Wine Storage Pty Ltd) (“CWS”) pending determination of rightful ownership.

History of these proceedings

  1. NSW Police filed a Summons in October 2021 seeking orders under s 219(2)(d) of the Law Enforcement Powers and Responsibilities Act 2002 (NSW) (“LEPRA”) for forfeiture to the Crown of “wine for which no owner has been located” and some ancillary orders. The wine was identified to be 2,364 bottles of wine seized in July 2016. The proceedings were initially commenced only against WIS.

  2. The affidavit filed in support of the Summons sworn by Ms McGrath, solicitor, deposed to the history behind the seizure of the wine based on what she had been told by Detective Courcoulos, including that the seized wine was by that time stored at CWS at a cost of $1,500 per month. The affidavit concluded:

“4.   David James has since been charged with offences relating to theft of the wine. The Hearing is due to commence sometime in October 2021. The wine is being held as an exhibit in these proceedings.

5.   The plaintiff has sought guidance from the Director of Public Prosecutions (DPP) as to retention of the wine as an exhibit pending the criminal trial. The DPP consider it a matter for the plaintiff however suggested the following conditions should be met if a decision is made to dispose of the wine:

(i)    Each bottle should be individually and collectively photographed with good quality, clear images.

(ii)    An expert should be engaged to value the wine both individually and as a whole.

(iii)    Any such disposal should be discussed with McGrathNicol, the Court appointed received of WIS, before disposing of the wine; and

(iv)    The defence should be advised of the intention to dispose of the wine.

6.   In relation to sub-paragraphs (i), (iii) and (iv) of this affidavit, I am instructed by Detective Chief Inspector Courcoulos that the plaintiff performed those tasks.

7.   In relation to sub-paragraph (ii), the plaintiff engaged Scott Witt of CWS to provide a valuation certificate. Annexed hereto and marked "G" is a copy of the valuation certificate dated 9 April 2021.

8.   On 28 June 2021, the plaintiff wrote to approximately 306 'potential wine owners' identified in the 'Master Schedule of Missing Wine Stock' (Master Schedule) provided by McGrathNicol informing them of the plaintiff's intention pursuant to s219 LEPRA and asking if they wished to be heard in relation to the matter. Annexed hereto and marked "H" is a copy of the pro forma correspondence sent to all potential wine owners.

9.   As at the time and date of filing this Affidavit, the plaintiff has received149 responses from persons identified in the Master Schedule confirming they wish to be heard in the proceedings. Exhibited to me at the time of swearing this affidavit and marked EXHIBIT 1 is a spreadsheet summarising the potential wine owners who responded to the plaintiff's correspondence dated 28 June 2021 confirming they wish to be heard.

10.   From 11 February 2021 to 9 July 2021, the plaintiff has spent approximately $13,760.10 in storage fees. This amount will continue to increase.

11.   To date, the plaintiff has been unable to identify the rightful owners of the wine stored at CWS.”

  1. At no time did the plaintiff update this Court with the fact that the criminal proceedings against David, concerning, potentially the wine the subject of its Summons, had not proceeded in October 2021.

  2. Sections 218 and 219 appear in Part 17 of the LEPRA which deals with property in police custody, and provides for the return of seized things and for disposal of property on application to court:

218   Return of seized things

(1)  A police officer who, in exercising a function conferred by or under this Act, seizes a thing or has custody of other property to which this Division applies must return the thing to the owner or person who had lawful possession of the thing before it was seized or came into custody if the officer is satisfied that—

(a)  its retention as evidence is not required, and

(b)  it is lawful for the person to have possession of the thing.

(2) This section is subject to any order made under section 219.

219   Disposal of property on application to court

(1)  A court may, on application by any person, make an order that property to which this Division applies—

(a)  be delivered to the person who appears to be lawfully entitled to the property, or

(b)  if that person cannot be ascertained, be dealt with as the court thinks fit.

(2)  In determining an application the court may do any one or more of the following things—

(a)  adjust rights to property as between people who appear to be lawfully entitled to the same property or the same or different parts of property (including adjusting rights by extinguishing, whether in whole or in part, any interests in the property of such persons),

(b)  make a finding or order as to the ownership and delivery of property,

(c)  make a finding or order as to the liability for and payment of expenses incurred in keeping property in police custody,

(d)  order, if the person who is lawfully entitled to the property cannot be ascertained, that the property be forfeited to the Crown,

(e)  make any necessary incidental or ancillary orders.

(3)  Property ordered to be forfeited to the Crown—

(a)  in the case of money, is to be paid to the Treasurer for payment into the Consolidated Fund, or

(b)  in any other case, may be sold by or on behalf of the Commissioner at public auction and the proceeds of sale are to be paid to the Treasurer for payment into the Consolidated Fund.

(4)  If the property is not money or is not fit or suitable for sale, or fails to sell at public auction, it is to be disposed of in accordance with the directions of the Commissioner.

(5)  An order under subsection (2)(a) that provides for the extinguishment, whether in whole or in part, of any interest in property operates to extinguish the interest according to its tenor.

  1. As observed by Adamson J (as her Honour then was) in Commissioner of Police v Pecover [2014] NSWSC 1427 (“Pecover”) at [19] and [33]:

“[19] Part 17 of LEPRA provides for property in police custody. Division 1 deals with confiscated knives and other dangerous articles and implements. Division 2 deals with other property. It relevantly applies to property that is in police custody in connection with an offence, whether or not proceedings for the offence have been commenced: s 216(1)(a) of LEPRA. Section 218 relevantly provides that a police officer who seizes property must return it to the owner or person who had lawful possession of the thing before it was seized if the police officer is satisfied that it is lawful for the person to have possession of the thing…”

. . .

“[33] The effect of s 218 is that the obligation of a police officer to return property that has been seized arises only if the police officer is satisfied that it is lawful for the person from whom it was seized to have possession of it. If the police officer is not so satisfied, then there is no obligation to return it unless an order for its return is made under s 219. An application under s 219 can be made by "any person". It follows that either the putative owner or the relevant police officer can apply for orders in relation to the property. Where there is no application by the putative owner, the police officer may apply for an order under s 219 so that the status of the property can be determined and either it can be returned, or forfeited to the Crown and thereafter destroyed or sold.”

  1. The issue for determination is whether this Court is satisfied, on the balance of probabilities, that the defendant(s) is/are a person who appears to be lawfully entitled to the property: Carolan v State of New South Wales [2014] NSWSC 1566 at [2].

  2. On 10 November 2021, Registrar Jones directed the plaintiff to serve the proceedings on any person who had notified it of an interest in the wine.

  3. An Amended Summons was filed in December 2021 naming as additional defendants the various persons, superannuation funds and companies who had asserted potential claims to the wine. The Registrar made some further directions on 17 December 2021 requiring interested persons to serve their evidence upon the plaintiff’s solicitors by 1 April 2022.

  4. On 2 May 2022 the plaintiff’s solicitor appeared before me seeking a 3 day hearing with no real plan other than to require the Court to survey the evidence such as it was, and make orders. Nothing at all was said about the status of the criminal proceedings against David. A number of defendants indicated they needed more time to serve their evidence.

  5. On 6 May 2022 a Further Amended Summons was filed noting 78 named defendants of which 60 were “active”. On 25 May 2022 the plaintiff was ordered to organise the defendants’ claims into identified categories, and provide the evidence it had received to the Court in an organised and reviewable format.

  6. In September 2022 Allsop Glover Lawyers agitated certain matters in correspondence with the solicitor for the plaintiff. Directions were sought on behalf of Mrs James on 23 September 2022 about failure to respond on the part of the plaintiff’s solicitor, although the content and nature of the agitation between those parties was not disclosed at that time.

  7. On 6 November 2022, a Second Further Amended Summons was filed that included as alternative and additional forms of relief, ss 219(2)(a) and 219(2)(d) of the LEPRA.

  8. On 13 December 2022 a further adjustment to the relief sought was made in the Third Further Amended Summons to allow for, in the alternative, adjustment of rights to the wine between defendants under s 219(2)(b) of the LEPRA.

  9. In the context of case management hearings between May 2022 and May 2023, most of the defendants it seems have been patiently and cooperatively providing affidavit and other evidence in support of the claims they have regarding their missing wine, liaising and cooperating about appropriate approaches to different categories of claim – uncontested, contested, and complex and requiring adjudication, as well as considering and debating between them potential approaches to the claims over the wine. I understand in that context, proposals for practical resolutions of some of the competing claims had been made, but until the February 2023 notice of motion filed by Allsop Glover on behalf of Mrs James, I had not seen evidence of those proposals.

  10. Despite Allsop Glover having appeared at directions hearings for Mrs James on and from 12 May 2022 (if not before), it was not until 7 February 2023 that she and Shelteo (of which Mrs James was, until November 2022, the sole director and shareholder) filed a notice of motion seeking orders that Shelteo be added as 79th defendant and for leave to file a Cross-claim/Cross-summons claiming particular relief in their favour and, by extension, pressing the Court to make orders in the nature of final declarations of legal ownership of the wine. Mrs James, via her solicitor’s affidavit, asserted that she had evidence that WIS in fact had held wine on her personal behalf since 2013. She listed 370 bottles of wine from the wine seized by NSW Police to which she claimed she was entitled, and about which she claimed the liquidators of WIS had been notified at the relevant time.

  11. Mrs James also asserted that given the findings of Justice Black in 2014 in proceedings in the Equity Division of this Court, and because the liquidators of WIS through their counsel conceded that the evidence tendered in those proceedings disclosed that the records of WIS were “imperfect”, it was not possible to match a particular bottle of wine held by the liquidator with any particular investor. Mrs James asserted that there were complicating issues of other proceedings in this Court (2019/255935) involving another liquidator and other companies with which David was associated, and that by virtue of other proceedings and deeds of assignment, Shelteo has right, title and interest in all of the wine where there is no competing claim by any other defendant, noting WIS has not asserted any claim and has taken no part in these proceedings. Shelteo and Mrs James asserted that in the circumstances, there can be no order under s 219(1)(a) and so declarations and orders must be confined to s 219(1)(b) of the LEPRA.

  12. I attempted to provide an early date for the notice of motion to be heard by me but the parties did not cooperate in providing a suitable date in March or April and so the hearing of the motion was fixed before another judge for 5 May 2023 as I was unavailable.

  13. On 5 May 2023 Chen J made orders adding Shelteo as 79th defendant, and granting leave to Mrs James and Shelteo to file the Cross-claim/Cross-summons in the form of the draft annexed to Mr Allsop’s 13 February 2023 affidavit. However the transcript reveals that not only was leave to file the Cross-summons/Cross-claim sought, but Chen J was pressed to automatically make a declaration under s 219(1)(b) (in effect, implementing agreements discussed between the defendants) that those identified parties are the “lawful owners” of the specified bottles of wine to the exclusion of “any claim by any other person or entity”.

  14. It is difficult to ignore the suspicion that this step was pressed in order to achieve declaratory orders that would undermine, or at least, interfere with the upcoming criminal case against David, given the very specific nature and form of the declaration sought.

  1. Justice Chen very properly confined his orders to the filing of the Cross-summons, given that no party opposed that step, and the adding of Shelteo as an additional defendant. Evidence later filed suggested that by then the director of Shelteo was another son of Mrs James, she having retired from that position in November 2022.

  2. As his Honour indicated, this Court has a responsibility to assess the evidence available and determine whether it is a proper exercise of the Court’s power to make orders under the various alternative approaches in s 219, or, if the evidence fails to appropriately satisfy it, order that the property be forfeited to the Crown. It is not a matter of simply “entering consent orders”.

  3. To that end, the plaintiff’s consent is somewhat immaterial to the Court’s role, and is certainly not determinative. The position is akin to proceedings involving the exercise of the supervisory jurisdiction of this Court under s 69 of the Supreme Court Act 1970 (NSW); see: Kovalev v Minister for Immigration and Multicultural Affairs (1999) 100 FCR 323; [1999] FCA 557 at [7] to [18] and Lou v IAG Limited t/as NRMA Insurance (2019) 101 NSWLR 606; [2019] NSWCA 319 at [44].

The DPP’s notice of motion

  1. It was against this background that Ms Epstein of counsel sought leave to appear for the Director on 5 May 2023 and to explain her position in light of the recent agitation by “individuals and entities associated with the accused”, David James, and the potential for orders to be made in these proceedings that have implications for the criminal case.

  2. In accordance with directions made by Chen J on 5 May 2023, the notice of motion and affidavits in support (of Mr Muddle and Ms Moir) as well as helpful and succinct written submissions were filed on 23 May 2023. Affidavits and submissions in reply on behalf of Mrs James and Shelteo were filed on 8 and 9 June 2023.

  3. At the hearing on 16 June 2023 the affidavits of Mr Muddle and Ms Moir were read for the applicant and the affidavits of Mr Allsop and Mrs James sworn 8 and 9 June 2023 respectively, were read in opposition. Those respondents also relied upon an email of 20 March 2023 from the solicitors for the Commissioner indicating consent to certain proposed orders, and pars [5] to [11] of Ms McGrath’s October 2021 affidavit filed in support of the initial Summons.

  4. Mr Muddle is the Managing Solicitor of the unit responsible for the prosecution of David. His affidavit explains the Director’s concern that the Crown case is underpinned by an allegation that David was not entitled to the wine the subject of these proceedings and nor are his family members. If this Court makes orders and/or declarations to the contrary (based on the limited and untested evidence filed), these orders could be used to undermine the Crown case.

  5. I interpolate that given the application made by David’s solicitors Allsop Glover in July 2022, this concern is valid. I stress that it was not until preparation for the hearing on 16 June 2023 that I was first made aware that these proceedings I have been case managing for 12 months were deployed in that way in an effort to stymie or delay David’s criminal proceedings in July 2022.

  6. Ms Moir is the DPP solicitor with the conduct of David’s trial. Her affidavit exhibited a company search from 2021 showing that Mrs James was the sole director and shareholder of Shelteo at that time. Also exhibited were the indictment for David and the Crown Case Statement, the index to the brief of evidence, two statements of Mrs James, a statement of Mr Fraser the liquidator of WIS and the affidavit of Richard Allsop solicitor deployed in support of the application to adjourn the criminal trial in July 2022. Ms Moir outlined that the Crown had opposed the application in July 2022 to defer the trial but it was granted because of David’s asserted inability to afford legal representation.

  7. The material appended to Ms Moir’s affidavit persuades me that there is a significant and unresolved question mark over the “lawful entitlement” to the wine the subject of the proceedings, including issues of credibility that are contained in and likely will be canvassed by evidence led at the criminal trial of David. These issues have a potential bearing on any approach the Court takes to the s 219 application.

The Submissions of the Director

  1. Ms Epstein submitted that the Crown case is that David transferred in excess of 5,000 bottles of valuable wine from the possession of WIS to his garage with a value in excess of $5 million and that this wine belonged to WIS at that time, and that he did not deliver up or notify the liquidators when appointed, of the significant stock of wine stored in his garage. Further, it is alleged that he sold a large amount of wine belonging to WIS through Bartercard, a business-to-business trading organisation, after appointment of the liquidators.

  2. The Director seeks to be joined in order to seek a temporary stay in respect of the orders sought by 66th and 79th defendants, and also to make submissions to the Court as to the appropriate orders to be made in respect of those defendants.

  3. As set out in the affidavit of David Muddle dated 19 May 2023, the Director has concerns about the implications of the current proceedings for the criminal trial. In particular, as the Crown case is premised upon an allegation that David had no entitlement to the wine, there is a possibility that any orders made by this Court to the effect that Mrs James or Shelteo had an entitlement to the wine could be used to undermine the Crown case in circumstances where Mrs James and Shelteo are related to or associated with David.

  4. As to the second point, there is considerable evidence in the prosecution brief of evidence relevant to the orders sought by Mrs James and Shelteo. At trial, the Crown will rely upon evidence about the movement, dealings with, and seizure of the wine by the police that is the subject of the present proceedings. There is also a possibility that Mrs James will be called as a witness. That evidence is likely to be relevant to the orders sought in respect of Mrs James and Shelteo, and the Director considers that evidence should be considered by this Court in determining whether it thinks it fit to make the orders sought, pursuant to the requirements of s 219(1)(b) of the LEPRA.

  5. Further, the Director's policy upon conviction is to pursue orders confiscating the proceeds of crime pursuant to the Confiscation of Proceeds of Crime Act 1989 (NSW). There are sound policy reasons underlying that practice: the policy is in part pursued in order to prevent unjust enrichment, to deter crime by reducing its profitability, and to put criminal derived assets to the use and benefit of society. The Director should not be foreclosed the possibility of making such an application by reason of this Court making orders before the criminal trial, without the benefit of the evidence adduced in the criminal trial.

  6. In Re Great Eastern Cleaning Services Pty Ltd [1978] 2 NSWLR 278, Needham J considered an application by the Commissioner of Taxation to join proceedings commenced by Great Eastern Cleaning Services Pty Ltd (Great Eastern) seeking to be restored to the register. Great Eastern had been struck off the register, with the result that it was dissolved. Unaware of the fact that the company's name had been struck off, the directors continued to carry on the company's business as if it still existed, and in the course of carrying on business, incurred tax liabilities.

  7. The company having been dissolved, the Commissioner of Taxation commenced proceedings against the individual who had in effect been operating the company, for the tax liability. When the application for restoration to the register came on for hearing, the Commissioner sought to be joined as a respondent on the basis that if orders were made restoring the company to the registry, the claim against the individual would fail.

  8. In determining whether the discretion should be exercised to restore a company's name to the register, the Court was required to take into account what effect such an order could have, not only on the applicant, but on other persons (including the Commissioner). The Commissioner was in a position to put forward matters relevant to the exercise of that discretion, and no other party had shown interest in putting forward such matters. Accordingly, Needham J found that the Commissioner was "a person whose joinder as a party (was) necessary" to the determination of all matters in dispute in the proceedings and ordered that the Commissioner be joined.

  9. The case is analogous to the present. The Director has an interest in ensuring that this Court has before it all evidence relevant to determining the orders sought by Mrs James and Shelteo, due to its legal right to seek confiscation orders. Further, the orders sought in these proceedings may affect the Director's ability to run the criminal trial.

  10. This Court also has an interest in ensuring that it has available to it all relevant evidence to determine the matters in dispute. In circumstances where the Commissioner of Police has indicated an intention to consent to the orders in respect of Mrs James, and the Commissioner's position with respect to the orders sought by Shelteo is unclear, the Director should be joined so as to provide the Court with all relevant evidence.

  11. Further, in circumstances where there is potential prejudice to the criminal trial and the delay before the conclusion of those proceedings is not significant, the dictates of justice weigh in favour of delaying the adjudication of the claims brought by Mrs James and Shelteo until the resolution of the criminal trial, so as to enable the Court to assess those claims by reference to the evidence in the criminal trial.

The Fundamental problems with the submissions of Mrs James and Shelteo

  1. Mr Baird of counsel placed reliance on the agreement reached between various parties in these proceedings as to what should occur with “approximately half of the wine” and pressed the relief sought in his clients’ Cross-summons as if somehow this was determinative of the position. It is not. As already made clear, agreement between the Commissioner and some of the defendants as to what they think may be an appropriate division of the wine does not decide s 219 proceedings. It is up to the Court to make the necessary findings of either lawful ownership, or on some other basis available under s 219.

  2. Mr Baird submitted that the Director does not have any interest separate from that of the plaintiff Commissioner of Police in the wine “sufficient to justify its addition to these proceedings as a separate party”, submitting that their interests are “the same”.

  3. This submission is wrong. The Commissioner has invoked this Court’s civil jurisdiction in circumstances where a police officer formed the view that he was unable to know who had “lawful possession” of the wine prior to seizure, and so has sought a s 219 order via solicitors, Makinson d’Apice.

  4. The Director has a different consideration, including that depending on further evidence made available in the prosecution of David, the Director may have a basis to argue for a competing right to some of the wine, including confiscation of it under the relevant Act, or to contest the claim by Mrs James or Shelteo, or to pose arguments for consideration by this Court as to the credibility of Mrs James and/or the validity of her claims. I reject the submission that there is no valid basis for joinder. Clearly the Director’s rights may be affected.

  5. In respect of the temporary stay issue, Mr Baird continued to elevate to a level somehow binding on the Court, the agreement reached between the parties about some of the wine. I again emphasise that this approach is misconceived for the reasons I have already stated.

  6. Granted, Mrs James has now, (late), filed some evidence in support of her claim to some of the wine. But that would need to be examined and evaluated at the time when a judge is appointed to carry out the necessary examination of that and the other evidence filed by the other defendants. There is no reason that her evidence must be accepted per se, or in preference to other evidence.

  7. Mr Baird seems to proceed on the basis that the question of “lawful entitlement” to the wine is now no longer a question in the proceedings, and presses in support, previous (possibly misguided or repeated out of context) statements made by other solicitors representing the Crown on other occasions in different contexts. He also calls to his aid other submissions or concessions made in other proceedings and in other contexts, by other lawyers.

  8. It is a matter for this Court to determine what orders under s 219 should be made based on the evidence and evaluating the alternative forms of relief sought in the Fifth Amended Summons, and, to the extent thought to be relevant, the Cross-summons. I doubt the Cross-summons was either appropriate or necessary given the relief sought in the Fifth Amended Summons provided alternative bases to proceed. The role of the Cross-summons appears to me to be nothing more than an attempt to hijack the proceedings and force an outcome, rather than to plead an issue.

  9. Mr Baird submitted that an order for “delivery up of the wine as proposed” in his clients’ proposed “consent orders” does not determine any issue in the criminal proceedings or have any impact on them at all, by reason of s 91 of the Evidence Act 1995 (NSW).

  10. This submission is misplaced. A declaration in the form sought by his clients has a different role and status than the remonstration against tender of judgments or fact findings in other proceedings being deployed as final determinations, which is the purpose of s 91. Further, Mr Baird (and Mr Allsop via his June 2022 affidavit deployed in the criminal proceedings) sought to argue the opposite as a basis for adjourning the criminal proceedings in July 2022. This change of position by them has not been explained. Most significantly, the Director is not asserting any judgment or decision of another Court will be tendered by it in these proceedings; simply that evidence given in the criminal proceedings is likely to be relevant to matters this Court needs to consider under s 219.

  11. Mr Baird submitted that the stay sought by the Director was in effect seeking “to stay performance of the agreement of the making of order 2 as sought”. This submission is misconceived. There is no agreement that binds or dictates an outcome to this Court. There is no determination. There is no order. There is nothing more than a proposed way forward to assist the Court when it makes the necessary examination of the evidence and determinations of the issues under s 219. The Court’s task, yet to be performed, includes the option, in the absence of an appropriate degree of satisfaction being reached by the Court, for a determination that there cannot be any finding that would allow distribution of the wine and that it all needs to be forfeited. Obviously this is not an outcome the parties would welcome, but these are all matters for the trial judge, not the parties. As observed by Adamson J in Pecover at [34] to [35]:

“[34] Section 219 must be construed by reference to its purpose. As Johnson J said in Carolan v State of New South Wales [2013] NSWSC 1593 at [6]:

It has been said that an application under s 219 LEPRA does not involve ordinary litigation, but has, as one of its objects, the protection of police who have in their possession property, with the provision designed to resolve a situation where the police entertain a doubt as to whether the person applying for the delivery of the property does in fact have lawful title to the property: Commissioner of Police v Bennett (McInerney J, Supreme Court of New South Wales, 17 October (1991) 9 Petty Sessions Review 4311 at 4314; Fantakis v Commissioner of Police [2013] NSWSC 685 at [44].

[35] An order may be made to deliver the property to a person who appears to be lawfully entitled to it. If such a person is not ascertained then the Court determines what happens to the property. If there is someone who claims to be lawfully entitled to it, that person (or someone claiming through that person) has the onus of establishing lawful entitlement: Carolan at [7]. To determine who bears the onus by reference to the identity of who happens to be the applicant (the plaintiff in the Local Court), whether a police officer or the person claiming to be entitled to possession, would be irrational. Legislation ought be construed rationally and in accordance with its purpose.”

  1. Mr Baird submitted that Mrs James needs to have access to and sell the subject wine to fund the defence of her son, as if this were a basis to disallow the Director’s application for joinder and the temporary stay. This submission too proceeds on a mistaken basis. It cannot be assumed that Mrs James’s claim to the wine will succeed. It may, but it may not. To submit that the Court should refuse the Director’s application because it is somehow assumed that to allow it is delaying Mrs James’s access to “her asset”, is not an accurate reflection of the situation. All she has currently is an untested claim.

Decision

  1. The issue of “lawful entitlement” to the wine is one of the issues before this Court on the Commissioner’s application. The filing of the proceedings may be thought to be premature, given criminal proceedings that concern at least part of the wine, were not completed at the time the proceedings were commenced in this Court, but it is understandable why the Director may take the view that an application to stay the whole of the proceedings is over-reach in circumstances where there may be legitimate entitlements held by persons unrelated to David and his companies and dealings.

  2. It is clear to me however that the Director does have a proper basis to be joined for the reasons outlined in Ms Epstein’s submissions. The Court should have the assistance of the Director and, if appropriate, access to evidence obtained at that trial to assist it in making the necessary determinations under s 219.

  3. The temporary stay of proceedings in respect of Mrs James and Shelteo is appropriate in circumstances where the evidence suggests that there are live issues over whether wine claimed by Mrs James was truly hers and held by her son David on her behalf at WIS or via associated arrangements or companies. Shelteo’s claim to the wine remains somewhat opaque at this stage, subject to further elucidation. It may be that those issues will be determined in this Court in favour of Mrs James, but to the extent that determination of them has the potential to undermine or interfere with the criminal prosecution of David, this Court should accede to the temporary stay. The dictates of justice weigh in favour of delaying decisions affecting the claims brought by Mrs James and Shelteo in this Court, both to allow for assessment with the assistance of any other relevant evidence, and to ensure orders or declarations made do not affect live issues in criminal proceedings yet to be heard.

Orders

  1. The following orders were made on 14 July 2023:

  1. The Director of Public Prosecutions is joined as the 80th defendant to the proceedings.

  2. The making of any declarations or orders in relation to the lawful entitlement of the 66th defendant and the 79th defendant to the wine as sought under the fifth further amended summons is stayed until the conclusion of the trial of R v David Anthony James in the District Court of NSW 2017/298368.

  3. The proceedings are otherwise listed for further directions before Lonergan J on Thursday 3 August at 9:30am.

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Amendments

22 August 2023 - Par 1; line 5: removed the words "is currently" and replaced with "was until November 2022".

Decision last updated: 22 August 2023

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Cases Citing This Decision

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Cases Cited

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Statutory Material Cited

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Carolan v State of New South Wales [2013] NSWSC 1593
Carolan v State of New South Wales [2014] NSWSC 1566
Commissioner of Police v Pecover [2014] NSWSC 1427