Director of Public Prosecutions v Belmonte No. Scgrg-95-2443 Judgment No. S6706

[1998] SASC 6706

DIRECTOR OF PUBLIC PROSECUTIONS V BELMONTE

Application

LANDER J

This is an application to vary a restraining order made pursuant to s6 of the Crimes (Confiscation of Profits) Act 1986.

On the 24 November 1995 the plaintiff made application to this Court for a restraining order prohibiting the defendant Lorenzo Belmonte from dealing until further order with his interest in:

a)A property situated at Section 57 of the Hundred of Allen, Alawoona in the State of South Australia and being the whole of the land comprised and described in Certificate of Title Register Book Volume 1221 Folio 18 and a property situated at Section 58 of the Hundred of Allen, Alawoona in the said State and by the whole of the land comprised and described in Certificate of Title Register Book Volume 1168 Folio 15.

b)A property situate at Lots 1 and 2 Hayles Road, Evanston South in the State of South Australia and being the whole of the land comprised and described in Certificate of Title Register Book 5283 Folio 729.

c)An International 384 Tractor, a SAME Mini Taurus Tractor and a Massey Ferguson 1105 Tractor.

The application was supported by an affidavit sworn by a police officer who deposed that on Friday 27 October 1995 Lorenzo Belmonte had been arrested and charged that on 27 October 1995 at Alawoona he took part in the production of a prohibited substance, namely cannabis.

It was asserted that the properties upon which the cannabis had been grown were the properties referred to in paragraph 1 of the application.

The affidavit also exhibited certified copies of the register books from the Lands Title Office in relation to both properties.  The Alawoona properties were held on perpetual lease by Lorenzo Belmonte, Virginia Belmonte and Carmelo Belmonte.  Virginia Belmonte is the wife of the defendant and Carmelo Belmonte, his son.  The properties are not subject to any encumbrance.

The property situated at Hayles Road was owned by Lorenzo Belmonte and Virginia Belmonte.

On 15 December 1995, Williams J made orders pursuant to the Crimes (Confiscation of Property) Act prohibiting Lorenzo Belmonte from dealing in any way with his interest in the two pieces of land at Alawoona and the property situated at Hayles Road, Evanston South.  He also prohibited Lorenzo Belmonte from dealing in any way with his interest in the tractors.

The order required service of the order upon Virginia Belmonte and Carmelo Belmonte.

At some time after the making of that order Carmelo Belmonte was also charged with the same offence.

On 17 March 1997, Lorenzo Belmonte applied for an order discharging or varying the order made by Williams J:

“...so that the said property [referring to Hayles Road] the subject of the order can be accessed as necessary to satisfy the continuing legal costs of the defendant and his son, Carmelo Belmonte in the defence of the criminal proceedings before the District Court and in these proceedings, including such costs of Counsel for the defendant and his said son and the costs of his solicitor, without the further order of this Court.”

In support of that application Lorenzo Belmonte swore an affidavit in which he said that he and his son Carmelo and six other defendants had been jointly charged with the production of cannabis.  He and his son intended to plead not guilty and to defend the charge.  The trial in the District Court at that stage was set down for hearing on 5 May 1997 and was listed to take between four and five weeks.

He said that he had been advised by his solicitor that he and his son ought to have separate representation and to that end his solicitor Mr D P Waye had retained Mr P N Waye as counsel for himself and Mr M J Waye as counsel for Carmelo Belmonte.

He deposed that he had been advised that the total of counsel fees for Mr P N Waye and Mr M J Waye and the solicitor’s fee of Mr D P Waye would total $70,000.  He said that he had no other funds to meet the costs apart from the equity in the properties the subject of the restraining order.  He said that he and his son were indebted to the Commonwealth Bank in the sum of $44,154 and that the Hayles Road property was security for that amount.  He said that he had been advised that the property was valued at $180,000 “for a quick sale”.

He said that his income was an invalid pension of $290 per fortnight.  He said that his son had made a gross profit farming the Alawoona property of $21,000.

The application was successful and on 4 April 1997 Williams J varied his earlier order.

In particular he varied the order relating to the property situate at Lots 1 and 2 Hayles Road to allow Lorenzo Belmonte and his wife to mortgage or sell the property and pay any moneys received from such mortgage or sale to the credit of the trust account of D P Waye, solicitor.  He made consequential orders in relation to the further dissipation of those funds.

Mrs Belmonte has not been charged with any offences.  She did not file any affidavits in relation to that application.  It was assumed tacitly that she would agree to the mortgage of her interest in the property.

The Hayles Road property was offered as security for a mortgage to Adelaide Finance Company.  The sum of $80,000 was borrowed.  That sum was used to repay the amount owing to the Commonwealth Bank by Mr Lorenzo Belmonte and Mr Carmelo Belmonte.  The balance of the money was paid to the trust account of Mr D P Waye.

The matter proceeded to trial.  I am told that after the completion of the voir dire the matter was adjourned.  I am not sure why the matter did not proceed immediately after the voir dire hearing.  As I understand it Mr P N Waye appeared for Mr Lorenzo Belmonte and Mr M J Waye for Mr Carmelo Belmonte.

On 23 December 1997, Lorenzo Belmonte made a further application to the Court in the following terms:

“1.That the order of the Honourable Justice Williams made on the 15th day of December, 1995 prohibiting the defendant from dealing with the property referred to in paragraphs 1. (a) and (b), namely the property situate at Sections 57 and 58 Hundred of Alawoona in the said State, be discharged or varied so that the said property subject of the order can be accessed as necessary to satisfy the continuing legal costs of the defendant and his son, Carmelo Belmonte, in the defence of the proceedings before the District Court and that the proceeds of sale of the said property be disbursed as follows:-

(i)$29,000 to the trust account of D P Waye.

(ii)The balance to the Crown Solicitor to be held in trust until the finalisation of this action.”

That application was supported by an affidavit of Lorenzo Belmonte in which he deposed to his personal circumstances and the acquisition of various pieces of property over a number of years.

He said that the property at Hayles Road was purchased jointly by himself and his wife in 1984 for $137,000.  He and his wife reside in the house on that property.  It is subject to a mortgage to Adelaide Finance Company of $80,000 and would be subject to a further mortgage if the application was granted for a further sum of $29,000 to finance his legal expenses in relation to the further trial.

He said that the property at Alawoona was purchased jointly by himself, his wife and his son in 1992, for $100,000, initially by borrowings from the Commonwealth Bank and from Citibank but these borrowings were repaid when he and his wife sold another property which they then owned.  That property was farmed by his son.  His son Carmelo had borrowed $30,000 from the Commonwealth Bank to finance the acquisition of the tractors.

A further affidavit was filed in which Mr Belmonte said that he was repaying the mortgage of $80,000 on the Hayles Road property, which had been raised partly to fund legal expenses and partly to repay the Commonwealth Bank, at the rate of $733 per month.  He said that he was repaying that out of benefits which he and his wife received from the Department of Social Security in the sum of $584 per fortnight.

In that further affidavit he sought an order varying the order of Williams J of 15 December 1995 so as to be permitted to sell the properties at Alawoona and from the proceeds of sale to pay the sum of $29,000 to the trust account of Mr Waye.

He said that he had applied for and been refused legal aid upon the basis that the Alawoona property was unencumbered.

More recently the defendant has filed a further application seeking a variation of the restraining order in the following terms:

“1.That the restraining order made by the Honourable Justice Williams on 15 December 1995 (“the original order”) and varied by order of His Honour on 4 April 1997 (“the variation order”) be further varied to provide:

a)That both of the properties situate at Section 57 Hundred of Allen, Alawoona in the State of South Australia being the whole of the land comprised and described in Crown Lease Perpetual No. 1222 Register Book Volume 1221 Folio 18 and at Section 58 Hundred of Allen, Alawoona in the State of South Australia being the whole of the land comprised and described in Crown Lease Perpetual No. 1168 Register Book Volume 1176 Folio 15 be sold and the proceeds, after deduction of the costs of sale, be paid into the trust account of Messers Donaldson Walsh Solicitors of 320 King William Street, Adelaide;

b)That an amount of one third of the net proceeds of the sale of the abovementioned properties be forthwith disbursed to Virginia Mafalda Belmonte in satisfaction of her equity in the said properties;

c)That the remaining proceeds of the sale of the abovementioned properties be next applied to meet the reasonable legal costs of this application and of the defence of the applicants of the charges referred to in these proceedings;

d)That the balance of the proceeds remain in the said trust account pending further order of the Court.

2.If the sale price for the Section 58 property is less than $50,000.00 and if the sale price for the Section 57 property is less than $120,000.00 then the defendant shall obtain the prior written consent of the plaintiff in relation to the nominated sale price of the property before executing and exchanging any contract and failing agreement as to same, the question of sale price shall be referred to the Court.”

The first variation to the original order of Williams J allowed the defendant and his wife to mortgage the properties at Hayles Road, Evanston South.  It follows from this that the defendant’s wife was in effect contributing moneys to his defence because the equity in the property would have been reduced by the amount of the increase in the mortgage.  Therefore the equity available to her had been reduced by the sum of at least half the difference between the mortgage taken through the Adelaide Finance Company of $80,000 and the amount already owing on the property to the Commonwealth Bank of $44,000.  In rearranging his affairs in that way he disadvantaged his wife to the extent of nearly $20,000, representing half the reduction in the equity, and advantaged his son by just over $20,000 by discharging his and his son’s liabilities to the Commonwealth Bank.

Virginia Belmonte has filed an affidavit in respect of the present application.  She said that she was aware that her husband had arranged for re-financing of the properties at Hayles Road to enable him to pay legal fees owing to his solicitor for the defence of himself and their son.  She said at that time she did not obtain independent legal advice and it was not explained to her how the re-financing would work.  She said that all she knew was that she was required to sign the papers which were presented to her.  She received no part of the amount borrowed at that time.  The effect of the re-financing was to increase the then mortgage on the property from $43,000 to $80,000.  Her equity was therefore reduced by one half of the difference between those amounts.

She says in her affidavit that whilst she is resigned to the loss of that equity in relation to the Hayles property she is not prepared to consent to a further contribution of her equity in the properties being used to fund her husband’s and son’s defence.  She says she is agreeable to her husband and son selling one or both of the properties at Alawoona provided that she receives her share of the proceeds.  She is not prepared to put any further equity towards payment of legal fees for her husband and her son.

The plaintiff did not seek to cross examine Mrs Belmonte.

I have no reason to disbelieve Mrs Belmonte.  I can well understand why it is that she is not prepared to contribute further funds for the defence of her husband and her son.  She is on a pension of $292 per fortnight.  She and her husband are obliged to pay $763 per month to discharge the mortgage taken partly for the purpose of paying legal costs.  After paying the interest on the mortgage each month there is less than $400 available each month to support both her husband and herself.  Out of that money they have to pay all of the utilities on the house property and any other outgoings and clothe and feed themselves.

If her husband is convicted of this crime he will most likely be imprisoned.  In those circumstances she could not pay the mortgage and the house in which she lives would have to be sold.  Moreover, if her husband is convicted of this crime there is a real risk that one or both of the lots at Alawoona will be forfeited to the Crown under the Criminal Assets Confiscation Act.  That, of course, will not affect her share but she will be left with one third of a share of forfeited property.  The property must be likely to depreciate in value by reason of that.  Furthermore, her son is charged with this offence and if he was convicted then two thirds of the interest in the Alawoona properties may be forfeited to the Crown.

I am prepared to accept Mrs Belmonte’s assertion that she is not prepared to contribute further funds out of these properties towards the legal costs of her husband and her son.  I also accept her assertion that she has no other assets.

Carmelo Belmonte says, in an affidavit sworn by him on 28 May 1998, that he has substantial debts.  He owes his parents $25,000, the Commonwealth Bank at Salisbury $33,000 and he has a myriad of creditors of smaller amounts totalling about $15,000.

He has no assets apart from his interest in the Alawoona property and in the tractors.

The defendant has filed a further affidavit.  He confirms that his sole income is an invalid pension of $292.00 per fortnight.  He has a liability of $80,000 in respect of the mortgage on the property at Hayles Road.  In respect of that mortgage he is repaying interest at the rate of $733 per month.  He says that except for some motor vehicles and household furniture and effects, he has no other property apart from the property the subject of the restraining order.  Of those motor vehicles, one is worthless, another owned by him is valued at $2,000 and one which is in the joint names of himself, his wife and his son is valued at $4,000.

He said that his wife does not agree to the sale of the house at Hayles Road, Evanston South.  In those circumstances he seeks an order for the sale of the property at Alawoona to enable him to fund his defence and his son’s defence.

I am satisfied because it is not challenged that Mr Lorenzo Belmonte has no other source of funds available to him except whatever is available to him by selling or mortgaging the properties at Alawoona and Hayles Road.  I am also satisfied that Mr Carmelo Belmonte has no other source of funds.  In making that finding for the moment I except Mrs Belmonte, who the plaintiff argues is indeed a source of funds.

The Crown does not oppose an order for the sale of the property but claims that Virginia Belmonte ought to contribute to the legal costs in the same proportion as her husband and son.

She is a person, it is argued, who can provide her husband with a source of funds that could reasonably be applied towards legal costs.

The Crown’s argument requires an examination of s20 of the Criminal Assets Confiscation Act (1996).  That section provides:

“20   (1)    A restraining order may -

(a)confer on the Administrator powers relating to the getting in, management or control of property subject to the order;

(b)make any other provision for management or control of the property;

(c)provide for payment of specified expenditure or expenditure of a specified kind (other than the Administrator’s remuneration) out of the property subject to the order;

(d)allow the owner of the property subject to the order to use the property in a manner and to an extent specified by the court as a security for raising money;

(e)make any other provision about the property subject to the order that may be necessary or desirable in the circumstances.

(2)Property subject to a restraining order may only be applied towards legal costs on the following conditions-

(a)the court must be satisfied that-

(i)it is unlikely a person other than the person who wants the property applied toward legal costs could (assuming the property were not forfeited) establish a lawful claim to the property; and

(ii)the person who wants the property applied towards legal costs has no other source of funds (within or outside the State) that could reasonably be applied towards legal costs; and

(b)the court may only authorise application of property towards the payment of legal costs on a reasonable basis approved by the court.

(3)Before the court allows property subject to a restraining order to be applied towards legal costs or other private expenditure, the court must allow the Attorney-General an opportunity to appear and be heard on the matter.”  

Before I proceed I should say that the Attorney-General who has been served by the plaintiff with this application did not seek to appear and be heard on the matter.

It is submitted by the Director that Mrs Virginia Belmonte is a person who could provide a source of funds which could reasonably be applied towards legal costs.

It was submitted by the plaintiff that Mrs Belmonte’s position was analogous to that of a spouse or a partner in a Dietrich application.  In those applications, it was submitted, a spouse or a partner should contribute or be called upon to contribute to the legal costs likely to be incurred by an accused in his or her defence.  In particular the plaintiff relied upon the decision of this Court in R v Rich and Another (1997) 68 SASR 390.

The argument presented was that all spouses or partners are a source of funds within the meaning of s20 and therefore if those parties are not prepared to contribute to the accused’s legal expenses then the property the subject of the restraining order cannot be applied towards legal costs.

I have considerable difficulty with that submission.

Section 20 provides that any property subject to a restraining order can only be applied towards legal costs if the Court is satisfied that the two conditions in s20(2) are met.

The first condition is expressed in neutral terms such that at the end of the day the Court must be satisfied that it is unlikely that any other person other than the person seeking to have the property applied towards legal costs could establish a lawful claim to the property.

The second condition imposes an evidential onus upon the person who wants the property applied towards legal costs to satisfy the Court that he or she has no other source of funds.  If the party who wants the property applied towards legal costs does not satisfy the Court that there is no other source of funds then that party, if he or she is to be successful, would  have to establish that it was not reasonable to apply that source of funds towards legal costs. 

Clearly an applicant must satisfy the Court that there are no other assets that could reasonably be applied towards legal costs.  In some circumstances the applicant would have to establish that there was no other person who would be prepared to finance the applicant’s legal costs.  A person, in my opinion, could be a source of funds.

I do not, however, accept that all spouses and all partners of persons who are charged with criminal offences are by definition a source of funds.  Some may be so classified but others may not.  Whether they are a source of funds is a question for determination of the Court upon the evidence before it.  In making a determination whether they would or would not be a source of funds, the Court would have to have regard to their expressions of their intentions.  Of course, as Mr Jensen argued, the expression of their intention will not necessarily conclude the matter.  A party may claim that he or she is not prepared to contribute towards their spouse’s or partner’s defence and that claim may be rejected by the Court.  Their claim may be inconsistent with the objective evidence which would suggest that they would, in truth, be a source of funds.

I reject, however, the submission that all spouses and all partners are by reason of their marital relationship or any other relationship, a source of funds.

It is not appropriate in modern day society, if it ever was appropriate, to subjugate the rights of a wife to the interests of a husband.  Nor, would it be appropriate in reverse.  The wife of an accused person has separate rights and sometimes quite separate obligations to that of a husband.  She cannot, simply by her marital relationship, be considered to be a source of funds.  Nor can a husband necessarily be considered to be a source of funds when his wife is charged with a criminal offence.  To assume that a spouse or a partner is necessarily a source of funds is, in my opinion, to fail to recognise their individual rights and obligations.  I therefore reject the proposition advanced by the plaintiff that Mrs Belmonte by reason of her marital relationship is a source of funds for her husband.

I do not think that what I have said is inconsistent with the decision in R v Rich and Anor (supra).  In that case the Court of Criminal Appeal affirmed a decision of a judge of the District Court in relation to a Dietrich application where that judge determined, notwithstanding the protestations of a female partner, that she would make funds available to assist the applicant in his defence.

In affirming that decision the Court of Criminal Appeal made it clear that neither it nor the learned Judge adopted the Legal Services Commission’s policy of treating the assets of an applicant’s spouse as being generally available to fund an applicant’s legal costs. 

In R v Rich and Anor (supra) the learned Trial Judge, after having heard and seen the witnesses decided, upon the facts, that the partner of the person charged would have agreed to make a loan to assist him in his defence.

That is not the case here.  I have already found that Mrs Belmonte, whose evidence on this matter was not challenged, will not contribute any further sums towards the defence of her husband or her son.  In those circumstances she is not, in my opinion, a source of funds within the meaning of s20.

I am satisfied that it is unlikely a person other than Lorenzo Belmonte could establish a lawful claim to his interest in the property.  I am also satisfied for the reasons given that Lorenzo Belmonte has no other source of funds that could reasonably be applied towards legal costs.  In those circumstances the property, the subject of the restraining order, can be applied towards his legal costs. 

I therefore believe it appropriate that the order of Williams J made on 15 December 1995 be further varied to allow for the sale of lots 57 and 58 at Alawoona.

That is not the end of the matter.  The defendant has retained senior and junior counsel for his defence and for the defence of his son.  Previously he and his son had been represented by the same solicitor but represented by separate counsel.

The defendant is now represented by different solicitors and by different counsel.  The advice given to him by his solicitors and both senior and junior counsel is that there is no apparent conflict of interest between him and his son and both could be represented by the same legal practitioners.

It is proposed therefore that the defendant and his son be represented by senior and junior counsel at the trial.  I am advised that the trial is a factually complex one.  So much is conceded by the plaintiff.  It is expected to go for three or four weeks.  Senior counsel for the defendant hopes that it will finish within three weeks.

Ms Vanstone QC has advised me that in her opinion the matter is fit for senior counsel.  I am prepared to act upon that assertion.  I am not in a position to make an assessment of the complexity of the trial myself.  I accept therefore the assurance of senior counsel that the case warrants retaining both senior and junior counsel. 

In those circumstances it would be appropriate to authorise the proceeds of the property to be used towards the payment of legal costs including senior and junior counsel.

I am advised that senior counsel intends to charge at the rate of $2,000 per day and junior counsel at the rate of $1,000 per day.  The solicitor will charge at an hourly rate of $150.  The solicitor does not expect to attend the hearing other than when requested by counsel to do so.  It is anticipated that she may be involved in about twenty-five hours work.  Counsel will need access to the transcript which will cost about $450 per day.  Assuming a three week trial the total costs would be near $60,000. 

The plaintiff argued that the proposed counsel fees were not fees “on a reasonable basis” and so could not be approved by the Court under s20(2)(b). 

In particular it was submitted that a counsel fee of $2,000 per day for senior counsel was too high.  It was argued that I should not authorise counsel fees at any greater rate than that which are authorised by the Legal Services Commission under its Criminal Law Costs Scale.  The Commission allows a fee of $1500 for senior counsel on brief and for the first day and for each subsequent day a fee of $900.  For junior counsel it will allow a fee on brief of $1,000 and for the first day and for each subsequent day a fee of $600.

I had occasion to consider that submission in DPP v Petropoulos (Unreported, 25 March 1998, Lander J, Judgment No. S6601). I rejected that submission in that matter for a number of reasons, one of which was that the fees then allowed by the Legal Services Commission could not be described as costs which were fixed on a ‘reasonable basis’.

It was put to me, on this application, that because the costs payable by the Legal Services Commission of South Australia have increased it would now be appropriate to adopt the Criminal Law Costs Scale issued by the Commission as the scale of costs for the purpose of s20(2)(b), being a scale which is on “a reasonable basis”.

In my opinion the argument should be rejected and for the reasons which I rejected the same argument in DPP v Petropoulos (supra).  I said in that matter:

“On the other hand Mr Kavanagh, who appeared for the first defendant, argued that the only appropriate rate for approval by the Court under s20(2)(b) was that contained in the Supreme Court scale of costs which appears in the Fourth Schedule to the Rule of Court; which rate is presently in the order of $125 per hour.  He said that this Court could not fix any other fees which this Court could describe as reasonable except the fees provided for in the Supreme Court scale of costs.

I do not agree with either argument.  If the Attorney-General and the plaintiff are correct in their contention that the only fees which could fit the description of ‘reasonable basis’ were those contained in the guidelines to costs in criminal cases issued by the Legal Services Commission of South Australia it would have been easy enough for Parliament to say so.  If Parliament wanted to ensure that no costs, except those costs which were equivalent to the costs which would be payable by the Legal Services Commission of South Australia, could be approved by the Court as coming within the description of legal costs on a reasonable basis then Parliament would have said so.  In any event I do not think that the fees which are encompassed in the guidelines to costs in criminal cases could be described as legal costs on a reasonable basis.  That is because the very guideline itself contemplates that whatever the appropriate rate the practitioner will only be paid 80 per cent of that rate.”

The other reasons for rejecting the plaintiff’s argument in DPP v Petropoulos (supra) are still relevant, in my opinion, for rejecting the argument again in this application.

The plaintiff very fairly provided me with the Supreme Court Guide to Counsel Fees, which was last issued on 1 August 1994.  That guide provides for a daily trial fee for senior counsel in a range of $1,350 to $2,500.  The daily trial fee for junior counsel is in the range $650 to $1,350.

The fees which are proposed to be charged by counsel are in the mid range of both ranges.  The proposed fees appear to me to be not inappropriate having regard to the fact that the case warrants senior counsel. 

In my opinion, therefore, the proceeds of the application of the Alawoona property can be used towards the payment of legal costs on the basis that senior counsel charges at the rate of $2,000 per day and junior counsel at the rate of $1,000 per day.  The solicitor’s fee is not inappropriate.  It would be necessary for counsel to have access to the transcript.

For all of those reasons the restraining order made by Williams J on 15 December 1995 as varied by his further order on 4 April 1997 should be further varied to provide:

(1). That the property situated at Section 57 Hundred of Allen, Alawoona in the State of South Australia being the whole of the land comprised and described in Ground Lease Perpetual Number 1222 Register Book Volume 1221 Folio 18 and at Section 58 Hundred of Allen, Alawoona in the State of South Australia being the whole of the land comprised and described in Ground Lease Perpetual Number 1168 Register Book Volume 1176 Folio 15 be sold and the proceeds after deduction of the costs of sale be paid into the trust account of Messrs Donaldson Walsh, Solicitors, 320 King William Street, Adelaide.

(2)That an amount of one third of the net proceeds of the sale of the above mentioned properties be disbursed by those solicitors to Virginia Mafalda Belmonte in satisfaction of her interest in the said properties.

(3)That the remaining proceeds of the sale of those properties be next applied to meet the reasonable legal costs of this application and of the defence of the applicants of the charge referred to in these proceedings. 

(4)That any remaining proceeds of the sale be held in the said trust account for Lorenzo Belmonte and Carmelo Belmonte in equal shares pending further order of the Court.

It will be necessary to make consequential orders in relation to a reserve price and for liberty to apply.  I shall hear the parties as to the orders.

I shall also hear the parties in relation to the costs of this application.