Franchina v The State of Western Australia
[2014] WASC 463
•8 DECEMBER 2014
FRANCHINA -v- THE STATE OF WESTERN AUSTRALIA [2014] WASC 463
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2014] WASC 463 | |
| 08/12/2014 | |||
| Case No: | CPCA:74/2013 | 1 DECEMBER 2014 | |
| Coram: | MITCHELL J | 1/12/14 | |
| 12 | Judgment Part: | 1 of 1 | |
| Result: | Application granted in part | ||
| B | |||
| PDF Version |
| Parties: | GIUSEPPE FRANCHINA MARIA ANTONIA FRANCHINA in her own capacity and as trustee for JCM Trust and the JCM Franchina Superannuation Fund CARMELO FRANCHINA GIUSEPPE ITALIANO in his own capacity and as trustee for G & M Italiano Family Trust JACVN PTY LTD as trustee for C & N Franchina Family Trust THE STATE OF WESTERN AUSTRALIA |
Catchwords: | Criminal law Confiscation of property Application for variation to freezing order to make provision for legal expenses Turns on own facts |
Legislation: | Nil |
Case References: | Director of Public Prosecutions (WA) v Mansfield [2006] WASC 225; (2006) 170 A Crim R 521 Mansfield v Director of Public Prosecutions (WA) [2006] HCA 38; (2006) 226 CLR 486 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- First Plaintiff
MARIA ANTONIA FRANCHINA in her own capacity and as trustee for JCM Trust and the JCM Franchina Superannuation Fund
Second Plaintiff
CARMELO FRANCHINA
Third Plaintiff
GIUSEPPE ITALIANO in his own capacity and as trustee for G & M Italiano Family Trust
Fourth Plaintiff
JACVN PTY LTD as trustee for C & N Franchina Family Trust
Fifth Plaintiff
AND
THE STATE OF WESTERN AUSTRALIA
Defendant
Catchwords:
Criminal law - Confiscation of property - Application for variation to freezing order to make provision for legal expenses - Turns on own facts
Legislation:
Nil
Result:
Application granted in part
Category: B
Representation:
Counsel:
First Plaintiff : Mr P D Yovich
Second Plaintiff : No appearance
Third Plaintiff : No appearance
Fourth Plaintiff : No appearance
Fifth Plaintiff : No appearance
Defendant : Mr T Staples
Solicitors:
First Plaintiff : Dwyer Durack
Second Plaintiff : Wilson & Atkinson
Third Plaintiff : Wilson & Atkinson
Fourth Plaintiff : Wilson & Atkinson
Fifth Plaintiff : Wilson & Atkinson
Defendant : Director of Public Prosecutions (WA)
Case(s) referred to in judgment(s):
Director of Public Prosecutions (WA) v Mansfield [2006] WASC 225; (2006) 170 A Crim R 521
Mansfield v Director of Public Prosecutions (WA) [2006] HCA 38; (2006) 226 CLR 486
- MITCHELL J:
(This judgment was delivered extemporaneously on 1 December 2014 and has been edited from the transcript.)
Factual and procedural background
1 The first plaintiff has, by a chamber summons dated 17 June 2014, applied for orders that he be authorised to withdraw certain sums of money from a bank account which is subject to a freezing order made by this court under the Criminal Property Confiscation Act 2000 (WA) (CPC Act).
2 He seeks to have those funds released for the purposes of repaying loans made to enable him to meet his legal expenses, to pay legal expenses which he has already incurred and to meet future legal expenses. The relevant legal expenses have or will be incurred in connection with criminal proceedings which the first plaintiff is currently facing, and in connection with the present proceedings under the CPC Act.
3 The freezing order covers property including bank accounts of the JCM Franchina Superannuation Fund to which the first and second plaintiffs are sole beneficiaries. The first plaintiff seeks to release the funds from either or both of those accounts. The second plaintiff consents to the use of the funds in the bank accounts for the purposes proposed by the first plaintiff.
4 The basis for the freezing order is that the first plaintiff has been charged with an offence under the Misuse of Drugs Act 1981 (WA) (MD Act). If he is convicted of that offence, then it is likely that he will be declared a drug trafficker under the provisions of that Act. It is common ground between the first plaintiff and the State that I have power to vary the freezing order to exempt funds on condition that those funds are used to pay legal expenses.1 It is also common ground that I should make orders making some provision for the first plaintiff's legal expenses. The first plaintiff and the State are, however, in dispute about the provision which should be made for that purpose and the terms on which it should be made.
5 The criminal proceedings which the first plaintiff is facing involve one charge of possession of a prohibited drug, namely cannabis, with intent to sell or supply to another contrary to s 6(1)(a) of the MD Act. I am informed that there are five other co-accused for this charge, and while there was, at one point, some prospect that the charges against the first plaintiff might be dealt with separately, it now appears that all matters are to be tried together. The criminal matter is listed for a trial listing conference in the District Court on 20 February 2015, and it is anticipated that the trial dates will be allocated later next year. I am advised that the State alleges that the amount of cannabis involved was some 14 kg.
6 Therefore, the charge which the first plaintiff is facing under the MD Act is of a nature which would make it likely that the first plaintiff will be declared to be a drug trafficker2 if he is convicted. The making of such a declaration would have the consequence that all property which the first plaintiff owned or effectively controlled at the time the declaration was made, and all property which he gave away before the declaration was made, would be confiscated.3
7 Of course, that confiscation would be imposed in addition to the substantial penalty which the first plaintiff could anticipate receiving which, given the amount of cannabis involved, would seem inevitably to include a substantial term of imprisonment.
8 It is anticipated that the trial will be heard in the District Court over 15 days. Counsel engaged by the first plaintiff's solicitors in the criminal matter has indicated his willingness to charge at the relevant scale rate which, prior to 30 June 2014, was $363 per hour and since 1 July 2014 is $385 per hour (both figures being inclusive of GST).
9 The main outstanding issue in the confiscation proceedings is the hearing of the first plaintiff's objection to the freezing order and a number of freezing notices. It has been agreed between the first plaintiff and the State that the first plaintiff's objection will not be heard or determined prior to the conclusion of his criminal proceedings. A significant aspect of the confiscation proceedings was resolved on 6 October 2014, when Corboy J set aside the freezing notices and freezing order to the extent required to uphold objections of the second to fifth plaintiffs.
10 The property which remains frozen includes the first plaintiff's interest in real and personal property, shares, cash and funds in various bank accounts. I have not been advised as to the precise value of the plaintiff's frozen property, but I am told that it clearly exceeds $1 million, and the papers before me would seem to indicate that that is a conservative estimate.
Past legal costs
11 The legal costs in the confiscation proceedings to date paid by the plaintiff to his solicitors amount to $17,873.78. The amount of costs to date in the criminal proceedings paid by the plaintiff to his solicitors is $30,233.55. The total amount of legal costs paid to date by the plaintiff to his solicitors in respect of both the criminal and confiscation matters amounts to $48,116.33. Those amounts were paid under a costs agreement under which senior practitioners in the firm of solicitors were entitled to charge at slightly above the scale rate.
12 However, I note that there was a significant discount of the fees incurred in the criminal property confiscation proceedings. A bill of $16,000 was reduced by approximately $4,000 to reflect a total of $12,000 for that bill. The extent of that discounting would appear to accommodate, or cover, any excess which would result from charging in excess of the scale. I propose to deal with the matter on the basis that for practical purposes the amounts incurred by the first plaintiff in the past were charged at, or at about, scale rates. The amounts paid by the plaintiff were from funds borrowed by the plaintiff from family and friends.
13 In addition to the amounts which he has paid, the plaintiff has incurred a liability to pay his solicitors a total of $67,235.96 in unbilled legal expenses in both matters. In the criminal matter, the unbilled amount is $1,181. In the confiscation matter, the unbilled amount is $66,054. In respect of past legal expenses, the plaintiff's solicitors have prepared draft bills of costs incurred to date.
14 The State submits that the information contained in these bills is not sufficiently detailed to enable the court to make an assessment of the reasonableness of the legal costs incurred to date. In relation to the criminal proceedings, I do not accept that submission. The total costs incurred to date in the criminal proceedings of about $31,000 appear to me to be a reasonable amount, given that the first plaintiff has been charged with a very serious criminal offence involving a large number of co-offenders, which has been listed for a trial estimated by the State to run for approximately three weeks.
15 In relation, however, to the confiscation proceedings, I agree that the bills which generally describe items by terms such as 'correspondence', 'telephone', 'conferral' and 'court document', are not such as to enable me to form any view of the extent to which the costs incurred were incurred in doing work that was reasonably required for the defence of the confiscation proceedings.
16 The State submits that I should refer the draft bills to a registrar of this court for an inquiry and report on the reasonableness of the costs incurred to date. Such a process was contemplated by Blaxell J in Mansfield [41]. The first plaintiff submits that any savings which will be produced by undertaking that inquiry process will likely be outweighed by the costs of undertaking the process itself.
17 While I have some sympathy for that submission, it does appear to be necessary for me to be satisfied that the costs charged were reasonably incurred. The costs incurred to date in the confiscation proceedings are substantial, amounting to approximately $84,000. While I accept it may well be that those costs were reasonably incurred, the information before me is simply insufficient to enable me to make any assessment as to that matter. Therefore, I do accept the State's submission that I should refer the question of the costs incurred to date in the confiscation proceedings and the reasonableness of those costs to a registrar for report under s 50 of the Supreme Court Act 1935 (WA).
18 The State also submits I should only allow for costs incurred in the confiscation proceedings to the date when the plaintiff indicated that he would not seek to have his objection determined until after the conclusion of the criminal proceedings. I am told that was in April 2014. In a context where there was certainly activity in the proceedings as a whole involving other plaintiffs, it does seem to me that it was reasonable for the first plaintiff to incur costs after that date in keeping abreast of other parties' objections and the manner in which they were being dealt with. The reasonableness of the costs incurred since April 2014, whatever date it might be, will be a matter which the registrar on inquiry can assess.
Future legal costs - confiscation proceedings
19 As to future costs in the confiscation proceedings, the first plaintiff has claimed $5,000. The State submits that this amount should be refused on the basis that the first plaintiff does not wish to have his objection heard and determined prior to the conclusion of the criminal proceedings. The first plaintiff's solicitor has deposed that although the first plaintiff does not foresee any reason to incur further fees, she receives correspondence from the other plaintiffs which she is required to read.
20 It might be thought that as the objections of the other plaintiffs have now been at least largely resolved, there is no need for this requirement to continue. However, I do accept the submission that is put by Mr Yovich that although the plaintiff seeks to have his objections determined only after the criminal proceedings are resolved, it may be reasonably anticipated that there will be some ongoing expenses associated with the proceedings, including with seeking the release of frozen funds. Given the modest amount sought, I am prepared to allow this aspect of the plaintiff's application.
21 It is unnecessary at this stage to resolve the question of whether the plaintiff's solicitor briefing counsel in the confiscation proceedings is reasonably justified. The involvement of counsel should not, in my view, be required while the confiscation proceedings are effectively on hold pending the outcome of the proceedings. But there may be other matters on which counsel was appropriately briefed and I would leave the resolution of that question to the report from a registrar.
Future costs - criminal proceedings
22 The State submits that I should be satisfied that the first plaintiff would not otherwise have legal representation in the criminal proceedings before releasing frozen property for the purposes of paying legal costs incurred in those proceedings. The State says that this requires that I be satisfied both that legal aid will not be available for the trial, and that the plaintiff is unable to borrow any further funds.
23 The State contends that while the first plaintiff has made an application for legal aid which has been refused, the first plaintiff did not inform Legal Aid that his property was frozen when making that application. It does appear, however, from the application annexed to the affidavit of Ms Kenny, that the Legal Aid Commission was, in fact, advised that property was frozen at the point when that application was made.
24 However, the State points to a policy of the Legal Aid Commission to the effect that assets subject to a freezing notice are not considered when determining whether an applicant qualifies financially for legal aid. The policy is reflected in letters from the director of Legal Aid to the Office of the Director of Public Prosecutions dated 7 and 13 March 2006, although there is no evidence before me as to whether that policy is maintained by the Legal Aid Commission in 2014.
25 The State therefore contends I should adjourn proceedings to enable the first plaintiff to seek a review of the decision to refuse to grant him legal aid, and to advise the Legal Aid Commission that frozen property is not available for his legal expenses.
26 Some support for the State's contention might be thought to be found in the decision of Blaxell J in Mansfield. In the course of declining to make funds available to Mr Mansfield, Blaxell J observed that:
In my view, when striking a balance between the public interest in preserving the funds and Mr Mansfield's interest in obtaining legal representation, I need to be satisfied at the very least that he will not have legal representation if provision is not made [45].
27 However, in my view, this comment needs to be understood in the context in which it was made. Mr Mansfield was subject to three indictments, wished to brief interstate senior counsel for the trials and estimated his legal expenses in the trial as being in excess of $1 million.4 He had engaged separate solicitors for criminal and civil proceedings. Justice Blaxell described the quality of the representation as high and, at least as regards the civil proceedings, 'relatively intense in nature'. Mr Mansfield was not willing to explain how he had come to arrange for that representation.5 Further, the amount of frozen property in Mansfield would not have been sufficient to cover the estimated legal expenses.
28 In that context, it was understandable that Blaxell J saw the balance to be struck between the interest of the defendant, Mr Mansfield, in having recourse to his assets for a criminal defence and preserving assets for possible future confiscation as demanding that Mr Mansfield would not otherwise have legal representation before property was released.
29 The present case is to be contrasted with Mansfield in at least two respects. Firstly, the assets subject to the freezing order and the freezing notices in this case are significant. They include a range of property and shares. The individual bank account from which the release of funds is principally sought has a balance of some $319,000. It appears to be clear that there is no real prospect of the frozen property being mostly or entirely depleted by future legal expenses.
30 Secondly, the amount of the money sought to be used by the first plaintiff for his legal expenses is much more modest than that sought by Mr Mansfield. Counsel and solicitors have agreed to charge the first plaintiff at the scale rate. Paragraphs 6 and 7 of the affidavit of Stephen John Butcher, sworn 26 November 2014, set out the estimated costs for a 15-day trial involving eight days' preparation by counsel, who is a local barrister engaged by the first plaintiff's solicitors.
31 In my view, the estimates are reasonable, having regard to the nature of the proceedings, both in terms of their seriousness and likely complexity. Although I do not have very much detail about the issues to be raised in the criminal proceedings, it is clear that a significant amount of legal work will be required for a 15-day trial involving six accused. On the estimates which are given in paragraphs 6 and 7 of Mr Butcher's affidavit, there will still be a significant amount of property available for confiscation in the event that the plaintiff's objections are dismissed.
32 A concern which the courts have expressed in this context is that a person seeking legal representation would obtain the most expensive lawyers in the realisation that the assets which are the subject of restraint might well be used for the purpose of providing a legal defence in order to avoid forfeiture to the State. The concern, identified by the High Court in Mansfield,6 is that 'exempted funds are not misused, whether by overservicing or overcharging or other abuse'.
33 The estimates of future legal expenses in the criminal matter which have been provided by the first plaintiff's solicitors and counsel do not suggest that there will be overservicing, overcharging or other abuse. These estimates appear to be reasonable estimates, reflecting the time required for a trial of the kind contemplated and scale rates.
34 It must also be recalled that the first plaintiff is facing very serious charges which may lead to his incarceration and confiscation of all of his property. He is presumed to be innocent of that charge and any other offence of which he has not yet been convicted. Given the serious nature of the charge and the very serious consequences of a conviction of that charge, the first plaintiff should be given a reasonable opportunity to defend that charge. There is an obvious potential for injustice where the State is able to charge the first plaintiff with a serious criminal offence and then, by the issue of notices under the CPC Act, deprive him of the financial resources to defend himself against that charge.
35 The competing public interest in the preservation of potentially confiscable property for the public benefit may, in some circumstances, demand that the accused's property remain frozen and that they be confined to utilising the legal resources made available to them by the Legal Aid Commission. However, in my view, that result is not required in every case and that result is not demanded by the circumstances of the present case.
36 Where the contemplated legal cost of his proposed defence is only a relatively small proportion of the frozen property and is by no means an extravagant claim, the balance of competing interests which Blaxell J referred to in Mansfield does not demand that the first plaintiff resort only to legal aid. Any concern that the first plaintiff will seek out the 'most expensive lawyers', or that those lawyers will overservice or overcharge, can be accommodated by conditions.
37 Those conditions, in this case, should limit the charge-out rate to that provided for by the relevant scale, and place a ceiling on the total amount that may be expended in terms of the amounts which are referred to at pars 6 and 7 of Mr Butcher's affidavit. I also propose to give both parties liberty to apply for a variation of those orders and to require that the first plaintiff provide the Director of Public Prosecutions (DPP) with regular updates as to work performed.
38 If for some reason the trial does not proceed, or proceeds for a substantially shorter period of time, then the DPP or the State can apply for a variation of the orders to reduce the funds to be released. On the other hand, if it turns out that the criminal trial runs for longer than anticipated, the first plaintiff will then be in a position to apply for a further release of frozen property to the extent that the amount estimated has been exceeded.
39 I also propose to confine in the orders the release of the funds in respect of costs not yet paid by the plaintiff to payments made to the first plaintiff's solicitors in response to a rendered bill.
40 I am therefore minded to exempt funds standing to the credit of the relevant account on the conditions which I have described. I do not accept that in the circumstances of the present case, the first plaintiff should be required to demonstrate that legal aid is not obtainable and that money to pay for his defence cannot be borrowed. I am also of the view that it would not be appropriate in all the circumstances of this case to confine the amount which the first plaintiff is able to pay his legal representatives to that provided for by the legal aid scale.
41 For these reasons, I would allow the application in part.
1Mansfield v Director of Public Prosecutions (WA) [2006] HCA 38; (2006) 226 CLR 486; Director of Public Prosecutions (WA) v Mansfield [2006] WASC 225; (2006) 170 A Crim R 521 [20] - [21].
2 Under s 32A of the MD Act.
3 Under s 8 of the CPC Act.
4Mansfield [28].
5Mansfield [31].
6Mansfield v Director of Public Prosecutions (WA) [2006] HCA 38; (2006) 226 CLR 486 [54].
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