DE LUCA & MARTINELLI
[2016] FamCA 207
•5 April 2016
FAMILY COURT OF AUSTRALIA
| DE LUCA & MARTINELLI | [2016] FamCA 207 |
| FAMILY LAW – PRACTICE AND PROCEDURE – stay of proceedings – where the applicant seeks that the trial be vacated and the proceedings be stayed until the criminal proceedings are determined by South Australian Police – where the applicant’s concern is self-incrimination – where there is no criminal investigation pending – where consideration is given to the guidelines as set out in McMahon v Gould – where the application is dismissed. FAMILY LAW – EVIDENCE – certificate pursuant to section 128 of the Evidence Act 1995 (Cth) – where consideration is given as to whether it is in the interests of justice that the witness should be given a certificate – where a certificate is granted in respect of any evidence the applicant intends to give by way of affidavit, evidence in chief or under cross examination. |
Family Law Act 1975 (Cth) s 34, 75
Evidence Act 1995 (Cth) s 128
| McMahon & Gould (1982) 7 ACLR 202 Reid v Howard (1994) 184 CLR 1 Re K (1994) FLC 92-461 Schwaller-Schroeder & Schwaller-Schroeder [2012] FamCA 1121 Western Australia v Bond Corporation Holdings Ltd (1992) 37 FCR 150 X7 v Australian Crime Commission & Anor (2013) 298 ALR 570 |
| APPLICANT: | Ms De Luca |
| RESPONDENT: | Mr Martinelli |
| FILE NUMBER: | ADC | 388 | of | 2014 |
| DATE DELIVERED: | 5 April 2016 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Adelaide |
| JUDGMENT OF: | Berman J |
| HEARING DATE: | 22 March 2016 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Powell QC |
| SOLICITOR FOR THE APPLICANT: | Bambrick Legal |
| COUNSEL FOR THE RESPONDENT: | Mr Lindsay |
| SOLICITOR FOR THE RESPONDENT: | Diane Myers Pty Ltd |
UPON NOTING that all applications for final orders have been listed for final hearing commencing 4 July 2016 and that the parties have previously filed trial affidavits
Orders
The matter is listed for mention at 9.15am on 16 June 2016.
That by 4pm on 6 May 2016 the husband file and serve upon all other parties:
(a)an amended application (if required) setting out with precision the orders to be sought;
(b)any additional affidavits of evidence in chief of all witnesses including the applicant relied upon; and
(c)a financial statement that complies with Chapter 13 of the Family Law Rules.
That the husband pay all setting down and trial fees (if required) by 4pm on 6 May 2016.
That by 4pm on 17 June 2016 the wife file and serve upon all other parties:
(a)an amended response (if required) setting out with precision the orders to be sought;
(b)any additional affidavits of evidence in chief of all witnesses including the respondent relied upon;
(c)a financial statement that complies with Chapter 13 of the Family Law Rules.
That no party file any further material other than as provided by these orders without leave of the Court.
That prior to the commencement of the trial the parties determine whether there are to be any rulings required arising out of objections to evidence and such objections be referred to in the parties outline of case.
That the parties have liberty to approach the Registrar responsible for the management of the Court file to vary the obligations under these orders to ensure readiness for trial.
That the practitioners for the parties file and serve electronically to by 4pm on 29 June 2016 the following:
(a) a concise set of orders to be sought if different from those already filed;
(b)a list of applications and affidavits to be read out and if not the whole affidavit, the relevant paragraphs relied upon;
(c) a list of assets and liabilities;
(d) a list of objections to evidence upon which rulings are required; and
(e) a bullet point summary of argument in relation to the issues in dispute.
That each party provide to the Court at the commencement of the hearing a statement setting out the costs incurred to that date and from what source those funds have been paid and what costs are expected to be incurred until the completion of the hearing.
That the Application in a Case filed 15 March 2016 is dismissed.
That Ms De Luca is granted a certificate under section 128 of the Evidence Act 1995 (Cth) in respect of any evidence that she intends to give by way of affidavit, examination in chief or under cross examination in respect of the following matters:
(a)the allegation of the husband that the wife accessed funds from his business namely, Martinelli Pty Ltd without his approval, knowledge or consent;
(b)the matters raised in paragraphs 55 to 61 of the husband’s trial affidavit filed 28 January 2015; and
(c)the matters referred to in the affidavits of Ms B filed 28 January 2015, 20 March 2015 and 27 January 2016.
IT IS NOTED that publication of this judgment by this Court under the pseudonym De Luca & Martinelli has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT ADELAIDE |
FILE NUMBER: ADC 388 of 2014
| Ms De Luca |
Applicant
And
| Mr Martinelli |
Respondent
REASONS FOR JUDGMENT
INTRODUCTION
Ms De Luca (“the applicant”) and Mr Martinelli (“the respondent”) are unable to agree upon a division of their separate legal and equitable interests in property following the breakdown of their de facto relationship on 12 June 2013 after a period of cohabitation of about 13 years.
For a significant period during their cohabitation, the applicant worked for the respondent at his business.
The respondent filed an Initiating Application seeking orders for property settlement on 5 February 2014. As contained in an affidavit sworn 18 March 2015, the respondent alleged that significant sums of money had been misappropriated by the applicant and used for her own purposes without his knowledge, consent or acquiescence. By her affidavit in response, the applicant denied the allegation.
The particulars of the respondent’s allegations were contained in various affidavits of his bookkeeper, in particular on 28 January 2015, 20 March 2015 and 27 January 2016.
The applicant was the subject of a South Australian Police (“SAPOL”) investigation. The Court had previously listed the matter for final hearing on 17 August 2015. By application of 22 July 2015, the applicant sought orders that the August date be vacated and that the proceedings be stayed until the outcome of the pending investigation and a better understanding as to whether the applicant would be the subject of criminal charges. If so, it was the applicant’s position that the property settlement proceedings should be stayed or adjourned pending a definitive resolution of the criminal proceedings.
The applicant was successful in her application and the trial date was vacated and adjourned to a mention date later in 2015.
On 3 February 2016, I heard further argument as to whether the proceedings should be listed for trial. At that time neither the applicant nor the respondent could provide any better information as to the intention of the police. It was noted that seven months had passed and in circumstances where the applicant had not been charged and there was no better information, the Court was reluctant to grant a further adjournment without some better evidence of the future conduct of the criminal proceedings.
Accordingly, the matter was listed for trial on 4 July 2016 as a five day primary matter, but by way of an acknowledgement of the strong objection by the applicant’s counsel, I deferred making any order for trial directions and adjourned the matter to 4 March 2016 with a further order in the following terms:
That by 4pm on 26 February 2016 the husband do file and serve a further affidavit setting out the discussions that he had or will have with SAPOL in respect of the future conduct of current investigations and in particular directed to any indication as to whether a charge is to be laid and if so when that is likely to occur.
On 4 March 2016, the Court was advised that the applicant intended to file an application seeking a permanent stay of the proceedings and on that basis the proceedings were eventually listed for argument on 22 March 2016.
By affidavit of the respondent filed 29 February 2016, he discloses his involvement with the police prosecution. He reveals that both he and his bookkeeper have been interviewed by the police and that they have been provided with information and documents that also appear in affidavits filed in the proceedings. The respondent recites the content of a conversation with the detective tasked with the investigation with the effect that:
…at this time no charges will be laid and the investigation will be held or suspended for the time being.
But that:
…at the conclusion of the Family Court proceedings, the investigation will be reviewed to determine if any criminal charges should be instigated.
At the hearing and upon the joint application of counsel, I received as exhibit “1” in the proceedings correspondence from the investigating detective to the respondent. The email corroborates the short summary of his conversation with the detective, but the content of the document can reasonably be interpreted to confirm that as matters currently stand, the applicant is not at risk of prosecution. At this time the view of the detective is that:
We would struggle to convince a criminal court that her actions were illegal and without authority. Her position as being responsible for the finances also hinders our case to a degree.
It is not the current intention of SAPOL to lay any charges.
The only equivocation is to be found in the penultimate paragraph of the email:
At the conclusion of the Family Court matter the findings will be reviewed to determine if any criminal matter should be instigated. This will only be done if there is sufficient evidence contained within the Family Court judgment that would assist in supporting a criminal case and a determination is made that it would be in the public interest to pursue it further.
Whilst not conceded by either party, it is difficult to draw any conclusion other than it is highly unlikely that any criminal charge or charges will be laid against the applicant.
It is not controversial that there is not an ongoing criminal investigation. No charges have been laid or are likely to be laid. No other avenue of investigation is open to the police than the information that the respondent has provided to them, in particular by his own statement but as to the detail, by the evidence and accounting work undertaken by the respondent’s bookkeeper.
APPLICATION FOR STAY
As was foreshadowed, the applicant filed an application on 15 March 2016 seeking that the trial date be vacated and that the proceedings be stayed until such time as the criminal proceedings commenced by SAPOL have been determined.
Whilst I do not consider that the construct of paragraph 2 of the orders sought accurately reflects the status of the police investigations, the issue as to whether the proceedings should be stayed until some clear expression of intention by the police is obtained, is at least well understood.
Counsel for the applicant struggled to indicate to the Court what could reasonably be expected to emanate from the police that would remove any lingering or residual doubt. It could not be the case that the police would be obliged at the end of every fruitless investigation to make a declaration that a charge will never be laid irrespective of what further evidence may arise.
It is difficult to conceive of a greater level of certainty being provided to the applicant than that which is contained in the exhibited email. In her supporting affidavit, the applicant argues that there exists the possibility of a miscarriage of justice even if a certificate under s 128 of the Evidence Act 1995 (Cth) (“the Evidence Act”) is provided. She opines that if she is required to give her evidence she will disclose her defence to any proceedings that may be brought against her by SAPOL and that there is a risk of fabrication of further evidence by potential witnesses for the prosecution.
Further, she argues that a stay in the proceedings will cause no prejudice or disadvantage to the respondent given that he is currently employed and according to the applicant, is in receipt of a significant income.
There is no suggestion of any opportunity that would arise in the course of the current proceedings that would give rise to a fabrication of evidence by the respondent. The evidence surrounding the respondent’s assertion that monies have been misappropriated is to be found in the various reports of the bookkeeper as annexed to her affidavits.
The exhibited email provides a reasonable indication of the current state of the police investigation taking into account the most recent affidavit of the bookkeeper filed 27 January 2016.
It is difficult to understand the applicant’s argument that the respondent will suffer no prejudice because of his employment.
The circumstances of the parties are to a large degree irrelevant in this where it is reasonable for each of them to have the Court hear and determine their property settlement dispute in a timely fashion.
It is also conceded by the applicant that whilst a matter of focus and contention, the respondent’s assertion that the applicant has misappropriated office funds is not the entire focus of the proceedings, but rather, a minor aspect.
Counsel for the applicant conceded that there could be no complaint or objection if the Court determined that the proceedings would be undertaken by way of a partial property settlement hearing with the final hearing to be adjourned to a future date.
Counsel for the respondent argued that the proceedings should be heard to finality and not by way of partial order. He argues that the amount involved arising from the respondent’s allegations is not insignificant when considered against the remaining interests of each of the parties.
The accuracy of that observation remains to be seen and raises issues as to whether the respondent’s case will centre upon an add-back argument if the
Court finds that the monies have been utilised by the applicant, or whether the issue will find focus in assessing the contributions of the parties, or perhaps by regard to s 75(2)(o) of the Family Law Act 1975 (Cth) (“the Act”).
Irrespective of the position adopted by each of the parties, I consider that the argument is now one of narrow compass.
It is also of some relevance that in an early affidavit the respondent alleged the misuse of money by the applicant and she rejected the allegation and asserted that there was acquiescence on his part.
LEGAL PRINCIPLES
There is no suggestion that the Court does not have the power to grant a stay. Such an order is obviously sought by the applicant and there is no challenge to jurisdiction by the respondent. It is common ground that s 34 of the Act provides the power.
The essence of the applicant’s concern is the issue of self-incrimination.
In McMahon v Gould (1982) 7 ACLR 202, Wootten J said that in deciding whether to stay civil proceedings, the Court should consider whether there is a real and not merely notional danger of injustice in the criminal proceedings, and went on to list the relevant factors to determining this question at 206:
(a)Prima facie a plaintiff is entitled to have his action tried in the ordinary course of the procedure and business of the court (Rochfort v John Fairfax & Sons Ltd at 19);
(b)It is a grave matter to interfere with this entitlement by a stay of proceedings, which requires justification on proper grounds (ibid);
(c)The burden is on the defendant in a civil action to show that it is just and convenient that the plaintiff’s ordinary rights should be interfered with (Jefferson v Bhetchaat at 905);
(d)Neither an accused (ibid) nor the Crown (Rochfort v John Fairfax & Sons Ltd at 21) are entitled as of right to have a civil proceeding stayed because of a pending or possible criminal proceeding;
(e)The court’s task is one of “the balancing of justice between the parties”, (Jefferson Ltd v Bhetcha at 904) taking account of all relevant factors (ibid at 905);
(f)Each case must be judged on its own merits, and it would be wrong and undesirable to attempt to define in the abstract what are the relevant factors (ibid at 905);
(g)One factor is to take into account where there are pending or possible criminal proceedings is what is sometimes referred to as the accused’s “right of silence”, and the reason why that right, under the law as it stands, is a right of a defendant in a criminal proceedings (ibid at 904). I return to this subject below;
(h)However the so-called “right of silence” does not extend to give such a defendant as a matter of right the same protection in contemporaneous civil proceedings. The plaintiff in a civil action is not debarred from pursuing action in accordance with the normal rules merely because to do so would, or might, result in the defendant, if he wished to defend the action, having to disclose, in resisting an application for summary judgment, in the pleading of his defence, or by way of discovery or otherwise, what his defence is likely to be in the criminal proceedings (ibid at 904-905);
(i)The court should consider whether there is a real and not merely notional danger of injustice in the criminal proceedings (ibid at 905);
(j)In this regard factors which may be relevant include:-
(i)the possibility of publicity that might reach and influence jurors in the civil proceedings (ibid at 905);
(ii)the proximity of the criminal proceedings (ibid at 905);
(iii)the possibility of miscarriage of justice eg by disclosure of a defence enabling the fabrication of evidence by prosecution witnesses, or interference with defence witnesses (ibid at 905);
(iv)the burden on the defendant of preparing for both sets of proceedings concurrently (Beecee Group v Barton);
(v)whether the defendant has already disclosed his defence to the allegations (Caesar v Somner at 932; Re Saltergate Insurance Co Ltd at 736);
(vi)the conduct of the defendant, including his own invocation of civil process when its suited him (cf Re Saltergate Insurance Co Ltd at 735-6);
(k)The effect on the plaintiff must also be considered and weighed against the effect on the defendant. In this connection I suggest below that it would be relevant to consider the nature of the defendant’s obligation to the plaintiff;
(l)In an appropriate case the proceedings may be allowed to proceed to a certain stage, eg, setting down for trial, and then stayed (Beecee Group v Barton).
In Western Australia v Bond Corporation Holdings Ltd (1992) 37 FCR 150 French J referred with approval to the guidelines (not themselves intended to be comprehensive, exhaustive or prescriptive) excepting that each case turns on its own facts. His Honour said at 172:
Consistently with that statement the court will ordinarily allow proceedings in which its jurisdiction has been properly invoked to progress to trial and determination unless the legitimate interest of the parties and the administration of justice require otherwise. The judgment to be made is essentially normative and requires a balancing of factors of the kind referred to in the judgment of Wootten J.
The Full Court in Re K (1994) FLC 92-461 quoted with approval from McMahon v Gould (supra) and said:
So far as the “right of silence” and any wider question or potential prejudice in the party’s subsequent criminal proceedings are concerned, we consider that…it would be a rare case where that alone would justify an adjournment.
The applicant argues that despite their acceptance, the guidelines as set out in McMahon v Gould (supra) should not be followed in this case. Reference is made to Reid & Howard (1995) 184 CLR 1 where Deane J held:
“The privilege against self-incrimination is deeply ingrained in the common law.” It reflects a cardinal principle which lies at the heart of administration of the criminal law in this country. It can be, and has increasingly been, overridden or modified by the legislature. It can be waived by the person entitled to claim it. Otherwise, it is unqualified. In particular, it should not be modified by judicially devised exceptions or qualifications. Unless it appears that the insertion of potential incrimination is unsustainable, a claim to the benefit of the privilege cannot, in the absence of statutory warrant, properly be disregarded or overridden by the courts.
It is argued that following Reid & Howard (supra) there should be renewed emphasis given the privilege against incrimination. It is argued that in McMahon v Gould (supra) the privilege against self-incrimination was one of the factors to be considered.
The applicant refers to a more recent decision of X7 v Australian Crime Commission & Anor (2013) 248 CLR 92 as further support for the primacy of the privilege:
[28]Turning to the privilege against self-incrimination more generally, although this privilege has been described as “deep rooted” in the common law, over the years it has not lacked critics as “an unnecessary impediment to the detection and conviction of criminal offenders and as an obstacle to the judicial ascertainment of the truth.” Legislatures have, in different settings, abrogated or modified the privilege when public interest considerations have been elevated over, or balanced against, the interests of the individual so as to enable true facts to be ascertained. Long standing examples such as the compulsory public examination of a bankrupt, or of a company officer (when fraud is suspected), serve a public interest in disclosure of the facts on behalf of creditors and stakeholders which overcomes some of the common law’s traditional consideration for the individual. Because disclosures of a bankrupt on a compulsory examination can be used against him or her in other proceedings, a judge before whom such an examination is held will need to ensure the examiner does not cause “oppression, injustice, or … needless injury to the individual”, and to disallow questions which would constitute an abuse of process. In balancing public interest considerations and the interests of the individual, legislation abrogating the privilege will often contain, as in the case of the ACC Act “compensatory protection to the witness”, by providing that, subject to limited exceptions, compelled answers shall not be admissible in civil or criminal proceedings.
Reid & Howard (supra) must be considered in light of s 128 of the Evidence Act and in particular s 128(7):
In any proceedings in an Australian court:-
(a)evidence given by a person in respect of which a certificate under this section has been given; and
(b)evidence of any information, document or thing obtained as a direct or indirect consequence of the person having given evidence;
cannot be used against the person. However, this does not apply to a criminal proceeding in respect of the falsity of evidence.
In Schwaller-Schroeder & Schwaller-Schroeder [2012] FamCA 1121, the wife made an application for a certificate pursuant to s 128 of the Evidence Act in respect of prospective evidence to be contained in a financial statement and affidavit. Murphy J considered whether the s 128 certificate extended to evidence given ahead of trial. The affidavit material filed on behalf of both parties, but in particular the wife, indicated that alleged conduct on the part of the wife was to be the subject of criminal proceedings. The wife was charged with fraud. The conduct, subject of that charge, related to alleged action in respect of funds that might otherwise have been the subject of proceedings pursuant to s 79 of the Act in the Family Court. The Court was satisfied that those funds, and the criminal charges in relation to those funds, were seen to be integral to the s 79 proceedings.
In Schwaller-Schroeder (supra) his Honour found nothing that persuaded him that the proceedings currently on foot should be effectively stayed, or delayed, pending the resolution of the current criminal proceedings. He said at paragraph 14:
I take particular account of the following matters. These proceedings started some two and a half years ago. They started in the Federal Magistrates Court and there have been some consequent delays. Thirdly, there is no evidence before me as to how long the criminal proceedings might take to reach a resolution (I note that they are yet at the committal mention stage); the affidavit evidence reveals that a committal mention was to take place on 19 November 2012. I can, I think, take judicial notice of the fact that there is likely to be a significant delay before those proceedings are brought to a conclusion.
As noted, the alleged transactions are but only a part of the substantive issues before the Court. The importance of the respondent’s claim of misuse of money may be further diminished by the obvious need to exclude certain transactions upon the applicant’s explanation consistent with her response in paragraph 55-56 of the affidavit filed 18 July 2014 where she says:
…Measures were put in place to enable me to run the [business] during his absence and that is why he made me a co-signatory of his Office and Trust Account. I ran the [business] in his absence, and liaised with his clients. I also liaised with other [professionals] and arranged for outsourcing of … work at my discretion. At the time, the applicant made me the executor of his Will. I continued to run … portion of the business. I continued to grow the [business] and I successfully managed the Applicant’s [business] during his absence.
With respect to paragraph 46 of the said affidavit, the bookkeeper’s role was to audit the books and all the work that I had done, and prepare the BAS. I dispute the assertion that the Applicant carefully monitored his credit cards. He often ran out of available credit. When I received my compensation from my car accident, I paid the applicant’s NAB Visa card of almost $9,000, but within a short period of time, it was again drawn to its maximum limit. There were many occasions during the course of the relationship when he had no available credit and would then ask me to pay for items on my credit card, which I did. I dispute the assertion that “the Respondent accessed the firm’s funds as she saw fit and without seeking any approval”. That statement is a deliberate untruth. The Applicant received regular reports from the bookkeeper with respect of every aspect of the office expenses and he was fully aware of all such payments.
Furthermore, it is not yet certain whether the respondent’s argument will be founded in an argument seeking an “add-back” or by way of contribution of s 75(2) factors consideration.
The respondent has the right to have the action heard and determined. He has filed an affidavit which sets out the prejudice that is occasioned to him by further delay. In any event, the proceedings commenced now more than two years ago.
I also find that whilst there may have been more weight to the applicant’s argument if evidence established that she had been either charged or that a serious investigation was being undertaken by the police, in the circumstances as presented, it is reasonable to find that there is no investigation pending.
There is general acknowledgement that any evidence that might support the criminal investigation and subsequent charge is encapsulated in the material provided to the applicant and also the police. Against that background, the police have considered that there is insufficient evidence to support an investigation and subsequent criminal proceedings. The river is unlikely to rise above its source. It is difficult to imagine what else is likely to be put to the applicant under cross examination than that which is self-evident.
SECTION 128 CERTIFICATE
The applicant seeks an order that a certificate pursuant to s 128 of the Evidence Act issue if her stay application is unsuccessful. The provision of a certificate is not opposed by the respondent.
The test is whether it is in the “interests of justice” that a witness should be given a certificate.
Whilst it might be argued that a certificate does not provide complete protection in respect of self-incrimination, I consider that in the circumstances of this case and taking into account the following:-
(1)That the proceedings were listed for trial in the Federal Circuit Court of Australia and but for a transfer, the evidence would have been led and presumably the subject of response by the applicant in terms of her denial in paragraph 55 and 56 of her affidavit of 18 July 2014;
(2)That there is no pending investigation;
(3)That there are no extant criminal proceedings;
(4)That the totality of the matters alleged against the applicant are clearly contained in material well known to her;
(5)That s 128 of the Evidence Act provides protection not just in respect of the evidence to be led, but in respect of “evidence of any information, document or thing obtained as a direct or indirect consequence of the person having given evidence” (s 128(7)). The protection to the applicant is effectively absolute.
CONCLUSION
I propose to dismiss the application for a stay of the proceedings, but will issue an evidence certificate in respect of evidence that the applicant intends to lead or be the subject of cross examination confined to the respondent’s allegation that she misused funds drawn from the respondent’s office account for Martinelli Pty Ltd.
Trial directions will also be made noting that the parties are entitled to rely upon affidavit material filed in preparation of the trial listed for hearing in the Federal Circuit Court.
I certify that the preceding fifty (50) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Berman delivered on 5 April 2016.
Associate:
Date: 5 April 2016
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