Knight v The Auditor-General for the State of Victoria
[2017] VSC 567
•22 September 2017
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
S CI 2016 00389
| JULIAN KNIGHT | Applicant |
| v | |
| THE AUDITOR-GENERAL FOR THE STATE OF VICTORIA | Respondent |
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JUDGE: | KEOGH J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers |
DATE OF JUDGMENT: | 22 September 2017 |
CASE MAY BE CITED AS: | Knight v The Auditor-General for the State of Victoria |
MEDIUM NEUTRAL CITATION: | [2017] VSC 567 |
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PRACTICE AND PROCEDURE – Vexatious litigant – Application for leave to commence an action against the Auditor General for the State of Victoria – Allegation that funds raised by Corrections Victoria and G4S Custodial Services from tobacco levies were not expended on the purposes for which they were imposed – Vexatious Proceedings Act 2014 (Vic) ss 29, 54, 55, 56, 58, 63, 91 – Audit Act 1994 (Vic) ss 3, 8 – Constitution Act 1975 (Vic) 94B(6).
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APPEARANCES: | Counsel | Solicitors |
| For the Applicant | N/A – application determined on the papers | |
| For the Respondent | N/A – application determined on the papers |
HIS HONOUR:
Introduction
Mr Knight is currently incarcerated at Port Phillip Prison (‘PPP’) in Truganina, Victoria, serving a sentence of life imprisonment for a number of murders he committed in 1987. Mr Knight has been declared a ‘vexatious litigant’ pursuant to ss 29 and 91 of the Vexatious Proceedings Act 2014 (Vic) (‘VP Act’) and is subject to a general litigation restraint order pursuant to ss 29 and 91 of the VP Act. As a result he requires the leave of a court or tribunal to commence a proceeding.[1]
[1]Attorney-General (Victoria) v Knight [2004] VSC 407 (19 October 2004); Attorney-General (Victoria) v Knight [2014] VSC 549 (16 October 2014); Attorney-General (Victoria) v Knight [2016] VSC 488 (30 August 2016).
By application filed 6 January 2016 Mr Knight seeks leave, pursuant to s 54 of the VP Act, to commence an action against the Auditor-General for the State of Victoria (the Auditor-General) seeking the following orders:
(a) an order in the nature of mandamus requiring the Auditor-General to undertake an audit of the Corrections Victoria tobacco levy fund;
(b) an order in the nature of mandamus requiring the Auditor-General to undertake an audit of the PPP tobacco levy account.
In an affidavit affirmed on 6 January 2016 and filed in support of this application, Mr Knight deposes:
(a) he smoked during the entire period of his incarceration up to the implementation of a smoking ban in all Victorian prisons on 1 July 2015;
(b) from August 1993 Corrections Victoria imposed a ‘tobacco levy’ on all cigarettes and tobacco sold to prisoners;
(c) from around mid 2004 the private operator of PPP, G4S Custodian Services Pty Ltd (‘G4S’), imposed its own levy on the sale of cigarettes and tobacco to prisoners at PPP;
(d) during 2012 he contributed over $900 to the PPP tobacco levy;
(e) he has made a number of requests of the Auditor-General to audit the Corrections Victoria and PPP tobacco levy accounts.
The material available to the Court relevant to this application is:
(a) affidavit of Mr Knight, affirmed 6 January 2016;
(b) Mr Knight' submissions, dated 27 May 2016;
(c) affidavit of Marco Bini, sworn 17 November 2016;
(d) submissions for the Auditor-General, dated 17 November 2016.
By letter dated 1 December 2016, addressed to this Court, Mr Knight advised that he did not intend to file any submissions in reply to the respondent’s 17 November submissions.
The above material enables me to determine this application in accordance with s 63(1) of the VP Act. I will determine the application without conducting an oral hearing. There are no exceptional circumstances which render it appropriate in the interests of justice that an oral hearing occur.
Legislative provisions
Vexatious Proceedings Act 2014 (Vic)
Mr Knight requires the leave of this Court in order to commence the proposed proceeding. Pursuant to s 55 of the Act the Court may grant leave only if satisfied that:
(a) the proceeding is not a vexatious proceeding; and
(b) there are reasonable grounds for the proceeding.
A ‘vexatious proceeding’ includes:
(a) a proceeding that is an abuse of the process of a court or tribunal;
(b)a proceeding commenced to harass or annoy, to cause delay or detriment, or for another wrongful purpose;
(c) a proceeding commenced or pursued without reasonable grounds;
(d)a proceeding conducted in a way so as to harass or annoy, cause delay or detriment, or to achieve another wrongful purpose.[2]
[2]Vexatious Proceedings Act 2014, s 3.
Mr Knight bears the onus of proving the proposed proceeding is not vexatious and that it has reasonable grounds.[3] The latter element requires that Mr Knight establish a ‘real or reasonable prospect’ that his claim for relief can succeed.[4]
[3]Knight v Thomas [2015] VSC 293 [25].
[4]Knight v Corrections Commissioner [2016] VSC 50 [97], [100].
Section 58 of the VP Act provides:
A Victorian court or tribunal may dismiss an application for leave to proceed made by a person if the Victorian court or tribunal is not satisfied that the application is materially different to a previous application made by the person.
Section 56(1) of the VP Act requires a person subject to a general litigation restraint order to disclose by affidavit the following details when making an application for leave to proceed:
(a) details of each application for leave to proceed made by the person;
(b)details of each application for leave to commence or continue a proceeding made by the person under section 21 of the Supreme Court Act 1986, as in force immediately before its repeal;
(c)details of each interlocutory application made or proceeding commenced or conducted by the person –
(i) that is a vexatious application or a vexatious proceeding; or
(ii)which has been stayed or dismissed on the basis of being made, commenced or conducted without merit;
(d) an explanation as to how the application for leave to proceed is materially different to each application referred to in paragraph (a), (b) or (c) (if any);
(e)all other facts material to the application, whether in support of or adverse to the application, that are known to the person.
Audit Act 1994 (Vic)
The position of Auditor-General is created by Part IV of the Constitution Act 1975 (Vic) (‘Constitution Act’). Pursuant to s 94B(6) of the Constitution Act, the Auditor-General ‘has complete discretion in the performance or exercise of his or her functions or powers’ and is not subject to direction.
Section 8 of the Audit Act 1994 (Vic) (Audit Act) provides:
(1)The financial statements of each authority must from time to time and at least once in each year be audited by the Auditor-General.
(2)The Auditor-General may dispense with all or any part of an audit of the financial statements of an authority in any year.
‘authority’ is defined in s 3 of the Audit Act as:
(a) a department;
(b) a public body;
(c)an entity (other than a department or public body) of which the State or a public body has control;
‘control’ is defined in s 3 of the Audit Act as:
in relation to an entity or company, has the same meaning as in the accounting standard that applies for the purpose of deciding whether a company has to prepare consolidated financial statements under the Corporations Act;
The purposes of the Audit Act are set out in s 1 and include the conduct of audits in the Victorian public sector and examination of bodies that receive public grants. The objectives of the Audit Act are set out in s 3A and are directed towards the financial statements and performance of the Victorian public sector and authorities. In particular sub-section 3A(1)(c) outlines the Audit Act’s objective of determining ‘whether financial benefits given by the State or an authority to nongovernment bodies are being applied economically, efficiently and effectively for the purposes for which they were given’. And sub-s 3A(2) provides that ‘[i]t is the Parliament's intention that, in pursuing these objectives, regard is had as to whether there has been any wastage of public resources or any lack of probity or financial prudence in the management or application of public resources.’
Mr Knight’s submissions
The affidavit filed by Mr Knight in support of his application for leave is brief. It refers to Mr Knight’s status as a declared vexatious litigant, and lists a number of applications to commence or continue proceedings which have been determined subsequent to the extension of the general litigation restraint order in October 2014. The listed applications number 11 in total. Mr Knight states that his present application differs from those listed in that it is ‘based on a different set of facts and a cause of action has not been pleaded before’. In written submissions Mr Knight gave more information in relation to applications for leave to proceed made by him, but did not explain how those applications were materially different to the current application.
By letter from this Court dated 19 April 2016, Mr Knight was invited to file any written submissions upon which he wished to rely in support of the application, in particular in relation to:
(a) the source of an individual’s power to call for an audit to be conducted by the Auditor-General;
(b) the source of the Auditor-General’s power to conduct the audit sought; and
(c) the purpose of seeking the audit.
Mr Knight’s submissions focus on the PPP tobacco levy account. He submits that he has contributed to the tobacco levy paid into that account, that the funds raised by G4S from the PPP tobacco levy were not expended on the purpose for which the levy was imposed, namely, to fund smoking cessation programs for prisoners, and that his purpose in seeking the audit is to have the respondent fulfil its statutory obligation to audit the PPP tobacco levy account for the sums of money raised by the G4S tobacco levy over a period of 11 years. Mr Knight added:
The plaintiff’s purpose in seeking the audit is to have [the Auditor-General] fulfil his statutory obligations with respect to G4S’s tobacco levy accounts, and to thus account for the vast sums of money raised by G4S’s tobacco levy over the 11 years the levy was imposed.
Mr Knight further submitted that he has ‘standing in the matter as he purchased cigarettes and tobacco from G4S at PPP during the period 19 June 2007 to 1 July 2015’ and that ‘any citizen may call on the [Auditor-General] to fulfil his statutory obligations or to otherwise exercise his statutory powers’. In addition, in his submissions and affidavit dated 6 January 2016, Mr Knight outlines the details of a series of requests he claims to have made to the Auditor General to conduct audits of the Corrections Victoria Tobacco Levy Account and of PPP’s tobacco levy account, each of which he says were refused. In his submissions Mr Knight extracts various sections of the Audit Act in their entirety but does not explain the relevance of those provisions to his application.
Analysis
Section 56(1) of the VP Act
The Auditor-General submits that Mr Knight has failed to comply with the requirements of s 56(1) of the VP Act by not providing details of previous applications, in particular applications that are directly relevant to the current application. The Auditor-General identified Knight v Thomas[5] as one such application. I accept the submission that Mr Knight does not sufficiently disclose details of previous applications in his affidavit or submissions as required by s 56(1) of the VP Act. However, I am satisfied that the current application is materially different to each of Mr Knight’s previous applications because it involves application by Mr Knight to have the Auditor-General audit the Corrections Victoria tobacco levy fund and the PPP tobacco levy account. In the circumstances I will not dismiss the application pursuant to s 58 of the VP Act.
[5][2015] VSC 283.
The Auditor-General submitted that:
It is not open to the Court to grant leave to the proposed proceeding pursuant to s 55 of the VP Act because:
(i) The Court could not be satisfied that the proposed proceeding is not a vexatious proceeding as required by s 55(a) because the proceeding would be foredoomed to fail, and thus an abuse of process and a vexatious proceeding as defined by the VP Act; and
(ii) The court could not be satisfied that there are reasonable grounds for the proceeding.
The Auditor-General further argues that both of Knight’s applications are
foredoomed to fail…because the writ of mandamus will only issue to compel the performance of a statutory duty (see, eg, Cuming Campbell Investments Pty Ltd v Collector of Imposts (1983) 60 CLR 741, 755) and there is no statutory duty on the Auditor-General to perform audits as described in the two proposed orders.
Mr Knight seeks an order in the nature of mandamus requiring the Auditor-General to undertake an audit of the Corrections Victoria tobacco levy fund. Section 8(1) of the Audit Act provides that ‘the financial statements of each authority must from time to time and at least once in each year be audited by the Auditor-General’. Corrections Victoria is an ‘authority’ as defined by the Audit Act and is therefore required by the Act to be audited. The Auditor-General submits that:
…although the Auditor-General must audit the financial statements of the Department of Justice, including its business unit Corrections Victoria, from time to time, the Auditor-General is not required to audit at particular times, nor to audit every part of the Department’s financial statements at any time.
Section 94B(6) of the Constitution Act 1975 establishes that the Auditor-General has ‘complete discretion in the performance or exercise of his or her functions or powers’ and is not subject to direction. Section 8(2) of the Audit Act provides that the ‘Auditor-General may dispense with all or any part of an audit of the financial statements of an authority in any year’. The Auditor-General submits first, there is nothing in the Audit Act that limits the complete discretion of the Auditor-General granted by the Constitution Act. Secondly, s 8(2) of the Audit Act gives the Auditor-General discretion to choose which parts of the financial statements of an authority to audit. Drawing on the affidavit of Marco Bini, the Executive Director of Governance Legal and Strategy in the Victorian Auditor-General’s Office, the Auditor-General submits that:
The Auditor-General applies standards of materiality and risk to the determination of which audits are to be conducted…It is entirely open to the Auditor-General not to audit…Corrections Tobacco Levy Fund if an assessment is made that it is an account which does not reach a materiality threshold.
I agree with the submission of the Auditor-General that relevant provisions of the Constitution Act and the Audit Act give the Auditor-General discretion to choose when to conduct an audit of the Department of Justice and to determine which individual accounts operated by the department to audit. The Auditor-General is not subject to a legal duty to audit the account identified by Mr Knight, that is, the Corrections Victoria tobacco levy fund. For these reasons, Mr Knight’s application for an order in the nature of mandamus requiring the Auditor-General to undertake an audit of the Corrections Victoria tobacco levy fund is without merit.
Mr Knight seeks an order in the nature of mandamus requiring the Auditor-General to undertake an audit of the PPP tobacco levy account. In addition to the above arguments, the Auditor-General submits that the private operator of PPP, G4S, is not an authority within the meaning of the Audit Act and therefore there is no statutory power in the Auditor-General to conduct an audit of the financial statements of G4S. The Auditor-General relies on Mr Bini’s affidavit which states that:
the Auditor-General does not consider G4S or PPP to be an ‘authority’ within the meaning of the Act because it is not a department, a public body or an entity of which the State or a public body has ‘control’ within the meaning of the Act.
‘Control’ is defined in the Audit Act as having the same meaning as in the accounting standard that applies for the purpose of deciding whether a company has to prepare consolidated financial statements under the Corporations Act 2001 (Cth). Mr Bini identifies that standard in his affidavit as Australian Accounting Standards Board Standard No 10 ‘Consolidated Financial Statements’. He explains that the principle of control is defined:
…in the context of whether an investor has control over an investee, including when it has power over the other, when it has exposure or rights, to variable returns from its involvement with the investee and when it has the ability to use its power over the investee to affect the amount of the investment returns.
I agree with the submissions of the Auditor-General that within this meaning G4S is a corporation which is not controlled by the State or a public body. For this reason, in addition to those previously stated, Mr Knight’s application for an order in the nature of mandamus requiring the Auditor-General to undertake an audit of the PPP tobacco levy account is without merit.
Mr Knight submitted that his purpose in seeking an order that the Auditor-General audit the G4S tobacco levy account was to ‘…account for the vast sums of money raised by G4S’s tobacco levy over the 11 years it was imposed.’ In Knight v Secretary to the Department of Justice,[6] McMillan J found that the decision to impose a levy on tobacco and cigarettes between 1993 and 2004 was ultra vires because there was no evidence to establish that the decision had been made by an authorised decision maker. In his letter to the Auditor-General dated 6 January 2013 Mr Knight states that as a result of McMillan J’s decision he was entitled to ‘repayment of the levy [he] paid’, arguing that:
In order that a complete restitution can be made …I request your office conduct an audit of the Corrections Victoria Tobacco Levy Fund from its inception in August 1993 to May 2004 (i.e. the period covered by the Supreme Court Decision).
[6][2012] VSC 613.
The Auditor-General submits that the ‘intention to issue a claim for “restitution” – is a purpose which is not open to the applicant’. Subsequent to the decision in Knight v Secretary to the Department of Justice,[7] the Corrections Act 1993 (Vic) was amended by the introduction of s 112C,[8] which provides:
A charge or additional charge imposed or purporting to be imposed by or on behalf of the Director-General or the Secretary to the Department of Justice of a Governor on or after 24 March 1993 and before 8 April 2004 for the purchase, in a prison, of tobacco products, was, and is taken always to have been, validly imposed.
[7]Ibid.
[8]Corrections Further Amendment Act 2013.
In 2014, in proceedings in the Federal Court, Mr Knight unsuccessfully challenged the validity of s 112C.[9] Subsequently, in an application issued in this Court, Mr Knight sought leave to commence a proceeding for an injunction ordering the Governor of PPP to repay revenue collected via the PPP tobacco levy in the period since his arrival at that prison in 2007.[10] In determining to refuse that application, Zammit J concluded that Mr Knight had identified no legal or equitable right to such a repayment.[11] I agree with the submission of the Attorney-General that the purpose relied upon by Mr Knight in seeking to have the Auditor-General audit the G4S tobacco levy account is a purpose which is not open to him.
[9]Knight v State of Victoria (2014) 221 FCR 561.
[10]Knight v Thomas [2015] VSC 283.
[11]Ibid [56]-[58].
Conclusion
For the above reasons, I conclude that Mr Knight has not discharged the onus of establishing that the proposed proceeding is not a vexatious proceeding and that there are reasonable grounds for the proposed proceeding. The application to commence a proceeding is dismissed.
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