Komljenovic v Director of Public Prosecutions

No judgment structure available for this case.

IN THE COUNTY COURT OF VICTORIA

AT MELBOURNE

COMMON LAW DIVISION

Revised
Not Restricted
Suitable for Publication

CONFISCATION LIST

Case No. CI-15-04157

IN THE MATTER of the Confiscation Act 1997 (Vic)

and

IN THE MATTER of property in respect of which a police officer suspects on reasonable grounds was not lawfully acquired

IVO KOMLJENOVIC (as Executor of the Estate of Lucy Komljenovic, the Deceased)

and

Applicant

THE DIRECTOR OF PUBLIC PROSECUTIONS for Victoria

Respondent

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JUDGE:	Millane
WHERE HELD:	Melbourne
DATE OF HEARING:	7 and 14 December 2017
DATE OF EVIDENTIARY RULING/ REASONS FOR RULING/DECISION ON APPLICATION:	8 December 2017 and 5 February 2018
CASE MAY BE CITED AS:	Komljenovic v DPP
MEDIUM NEUTRAL CITATION:	[2018] VCC 44

JUDGMENT
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Subject: Application for Exclusion Order

Catchwords: Confiscation – Application for exclusion of personal property from unexplained wealth forfeiture – No opportunity for cross-examination of the Deceased before she died – Respondent’s application to exclude Deceased’s affidavit evidence under section 135(a) of the Evidence Act 2008 – Probative value of Deceased’s affidavit evidence substantially outweighed by the danger that the evidence might be unfairly prejudicial to the Respondent – Whether subject property lawful acquired by the Executor under the Confiscation Act 1997 by operation of law - Application to exclude dismissed.
Legislation Cited: Confiscation Act 1997 (Vic); Evidence Act 2008 (Vic); Administration and Probate Act 1958 (Vic).
Cases Cited:Leybourne v Permanent Custodians Limited [2010] NSWCA 78; Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2009] NSWSC 769; Matthews v SPI Electricity Pty Ltd & Ors (Ruling No 31) [2013] VSC 575; Jones v Dunkel [1959] 101 CLR 298; Nadarajamoorthy v Moreton [2003] VSC 283; Bakerland Pty Ltd v Coleridge [2002] NSWCA 30; Longhurst v Hunt [2004] NSWCA 267; R v Suti [2002] NSWCA 509; Woolley v Clarke [1822] 5 B & ALD 744; 106 ER 1363; Lees v O’Dea (No 2) [2014] FCA 1082.

Ruling: Application to exclude dismissed.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr M. Symons	Stary Norton Halphen
For the Defendant	Mr T. Gyorrfy QC	Office of Public Prosecutions

HER HONOUR:

Introduction

1 By application filed on 1 September 2015 the Director of Public Prosecutions (the DPP) applied for an order under section 40F(2) of the Confiscation Act 1997 (the Act) for an unexplained wealth restraining order in respect of property, in this case, two amounts of cash: $337,700 AUD and $3,662 USD (the Property).[1]
[1] Court Book (CB) 277-278.

2 The application was supported by an affidavit sworn by John Kevin O’Dwyer on 31 August 2015 to which a number of documents were exhibited (the O’Dwyer affidavit).[2]
[2] CB 40-55.

3 The Property was seized from premises situated at 49 Royal Avenue, Essendon North in the State of Victoria (the Essendon North premises) on 14 October 2014. At the relevant time the Essendon North premises was said to be the residence of Lucy Komljenovic and her husband, Ratko Komljenovic, and owned by her daughter and David Komljenovic’s sister, Marie Kosorog.

4 Among other things, the O’Dwyer affidavit filed in support of the making of an order for an unexplained wealth restraining order, tells us that, Lucy Komljenovic’s son, David Komljenovic, had been the subject of a criminal investigation conducted over an eight month period in 2014. Prior to his arrest, David Komljenovic had been seen at the Essendon North premises. On being arrested shortly after leaving the Essendon North premises, David Komljenovic was found to be in possession of a quantity of heroin. He was charged on 15 October 2014 with drug and firearm offences.

5 Search warrants were executed at the Essendon North premises, on 14 October 2014. Police located a green shopping bag in a laundry cupboard containing $337,700 AUD in cash in bundled $100 notes, and a further $3,662 USD in cash.

6 In support of the application for an unexplained wealth restraining order, it was stated that Police suspected that the Property seized was not lawfully acquired because it was money derived from drug trafficking by David Komljenovic. The DPP made no similar assertion about further amounts of cash comprising $19,130 AUD and $500 USD found in other rooms of the Essendon North premises.

7 Marie Kosorog was also arrested. In the course of an interview on 15 October 2014, Marie Kosorog claimed that the cash found at the Essendon North premises was her savings. Whilst through the answers given it was indicated that Marie Kosorog knew that she had “heaps” of money stored, Marie Kosorog could not quantify the amount of cash, nor could she identify the location/s at which it had been stored. The latter, evidently because her mother had hidden the cash without disclosing to Marie Kosorog its whereabouts. She was not, however, said to have been surprised by the amount, when Police asked if there had been $325,000 in the laundry.

8 On 23 October 2014 Police met with Marie Kosorog during a visit to her mother, Lucy Komljenovic, at the Royal Melbourne Hospital. Marie Kosorog refused to sign a document acknowledging the cash seized and her ownership of the Essendon North premises, according to Police, because she had been shocked to learn the amount of the cash seized.

9 On 4 December 2014 Marie Kosorog informed Police that the Property seized was her mother’s savings and belonged to her mother, Lucy Komljenovic.

10 On 11 December 2014, a request for statements from both Lucy and Ratko Komljenovic was sent to Marie Kosorog’s solicitor, Patrick Dwyer. Police also attended the Royal Melbourne Hospital on 16 December 2014. They were informed through a nurse that Lucy Komljenovic, did not want to speak to Police.

11 By email dated 19 December 2014, Police received notification from Patrick Dwyer that the Property seized belonged to his client, Lucy Komljenovic, who was in palliative care, and too unwell to be interviewed or to make a statement.

12 On 15 September 2015, subject to the State of Victoria giving the usual undertaking as to damages, His Honour Judge Murphy made an unexplained wealth restraining order in the following terms:

THE COURT ORDERS THAT:

1. Pursuant to section 40I(3) of the Confiscation Act 1997, no person shall dispose of or otherwise deal with the property specified below or any interest in that property:

a) $337,700 AUD cash

b) $3,662 USD cash

seized by Victoria Police from premises situated at 49 Royal Avenue, Essendon North, in the State of Victoria, on 14 October 2014.

2. …

3. …

AND THE COURT DECLARES pursuant to section 40D(2) of the Confiscation Act 1997 that the property specified in paragraph 1 of this order is restrained to preserve the property so that the property will be available to satisfy unexplained wealth forfeiture of property that may occur under Division 2 of Part 4A of the Confiscation Act 1997.

13 Pursuant to section 40ZA(1) of the Act, on 5 April 2016, the Property was forfeited to the Minister on the expiry of six months after the making of the unexplained wealth restraining order. Pursuant to section 40ZB(3), Her Honour Judge Cohen declared the Property to be forfeited to the Attorney-General, as the Minister responsible for the administration of the Act. On 5 April 2016, orders were made for service of a copy of the order on Lucy Komljenovic of 49 Royal Avenue, Essendon North, and on her solicitors, Patrick W. Dwyer, within seven days of the date of the order.

14 By application filed on 26 April 2016, Lucy Komljenovic sought leave to make application under section 40ZC of the Act for an order under section 40ZD of the Act excluding the Property from unexplained wealth forfeiture (the Exclusion application). [3]

[3] It was common ground that Version 073 of the Act applied to the Exclusion application.

15 Leave was granted by Her Honour Judge Cohen on 10 May 2016. Lucy Komljenovic was ordered to file any material in support of the Exclusion application on or before 4 PM on 5 July 2016. The Exclusion application was otherwise adjourned for further mention on 19 July 2016.

16 Lucy Komljenovic and her son David Komljenovic each swore an affidavit in support of the Exclusion application on 11 July 2016.

The Exclusion application

17 Lucy Komljenovic died on 11 January 2017. Probate of Lucy Komljenovic’s Will was granted on 4 July 2017 to another son, Ivo Komljenovic, (the Executor).

18 By order made on 22 August 2017, the Exclusion application was amended to state that the Executor now brings the Exclusion application as Executor of the Estate of Lucy Komljenovic (the Deceased).

19 The Exclusion application was listed for a two day hearing commencing from 6 December 2017. Orders were made for the filing of additional affidavit material; for the DPP (the respondent) to serve notice of grounds of opposition by 1 November 2017; and for the filing and service of written submissions by the applicant by 15 November 2017, and by the respondent by 22 November 2017.

20 Each party filed further material.

21 The Executor (the applicant) filed: written submissions dated 17 November 2017 (the applicant’s submissions); an affidavit sworn on 6 December 2017 by Nicole Spicer, a solicitor employed by the applicant’s solicitors, Stary Norton Halphen (the Spicer affidavit); written submissions dated 6 December 2017 in reply to evidentiary issues raised by the respondent (the applicant’s reply submissions); and, following notification of the ruling on the evidentiary issue, a further written submission dated 13 December 2017, in reply to the respondent’s submissions (the further written submission).

22 The Spicer affidavit relevantly exhibits copy correspondence sent by Ms Spicer to the respondent’s solicitor consisting of:

· A letter dated 12 July 2016, addressed to the respondent’s solicitor;[4]
[4] The Spicer affidavit, Exhibit "NS-1".

· An email dated 27 November 2017, addressed to the respondent’s solicitor, to which Ms Spicer attached a Notice to Produce, also dated 27 November 2017, seeking production for inspection of the following documents:[5]
[5] Ibid, Exhibit "NS-2".

1. Colour photographs or colour photocopies of all of the $100 notes comprising $337,700 in total seized under warrant from 49 Royal Ave, Essendon North on 14 october (sic) 2014, and referred to in the affidavit of John Kevin O’Dwyer sworn 31.08.2015 and filed in this proceeding.

2. Any reports/memorandum/results of fingerprinting and/or drug testing of the currency notes referred to in (1) above;

· An email dated 28 November 2017 addressed to the respondent’s solicitor.[6]

[6] Ibid, Exhibit "NS-3".

23 The applicant also relied on an affidavit sworn on behalf of the respondent on 23 October 2017 by an employee of Crown Melbourne Limited, Michelle Louise Fielding.

24 An application for leave to file an affidavit sworn by the applicant was refused by a Judge of this Court on 23 November 2017.

25 Additional material filed by the respondent included: a Notice of Grounds of Opposition to the Application made under section 40ZC of the Act, dated 1 November 2017 (the Grounds of Opposition document); an Objections List to the applicant’s affidavits, dated 17 November 2017 (the Objections document); written submissions, dated 28 November 2017; and an affidavit sworn on 7 December 2017 by the solicitor with the care and conduct of this matter on behalf of the respondent, Jonathan Ward (the Ward affidavit).

26 The Ward affidavit relevantly exhibits copy correspondence forwarded by Mr Ward to Ms Spicer and various file notes made by him consisting of:

· Letter dated 22 August 2016, addressed to Ms Spicer;[7]
[7] The Ward affidavit, Exhibit "JW-1".

· Mr Ward’s File Note dated 30 August 2016;[8]
[8] Ibid, Exhibit "JW-2".

· Mr Ward’s File Note dated 20 October 2016;[9]

· Letter dated 10 January 2017, addressed to Ms Spicer.[10]

[9] Ibid, Exhibit "JW-3".

[10] Ibid, Exhibit "JW-4".

27 Mr Symons of counsel appeared on behalf of the applicant. Mr Gyorffy QC appeared on behalf of the respondent.

Exclusion under the Act

28 The Property remains subject to forfeiture to the State unless otherwise excluded in accordance with the requirements of section 40ZD of the Act. Prior to her death, section 40ZD of the Act empowered the Court to make an order excluding Lucy Komljenovic’s interest in the Property from the operation of the unexplained wealth restraining order, if the Court was satisfied that the Property was lawfully acquired by Lucy Komljenovic. The interest in the Property was presumed not to have been lawfully acquired unless Lucy Komljenovic proved otherwise. Section 132 of the Act required that the Exclusion application be determined on the balance of probabilities.

29 Section 40G of the Act sets out various matters Lucy Komljenovic was required to prove to satisfy the Court that the Property was lawfully acquired. Section 40T of the Act contains the evidentiary requirements for the making of an Exclusion order. This provision required Lucy Komljenovic to provide documentary evidence of any transactions alleged by the applicant to have occurred that would support the claim that the Property was lawfully acquired.

30 Section 40T(2) of the Act confers a discretion on the Court to accept evidence other than documentary evidence, if that other evidence is provided in addition to documentary evidence of, in this case, any transaction that would support the claim that each of the sums of money comprising the Property was lawfully acquired; or if the Court is satisfied that it is not reasonable to expect documentary evidence to exist because of the nature of the transfer of the Property, the function of time or any other reason. The applicant now relies on the exercise of this discretion. I will explain how in due course.

31 The Exclusion application was mounted on two bases. The first being that under section 40ZD(1) of the Act, the applicant is able to show that following Lucy Komljenovic’s death the Property forfeited was lawfully acquired by him as the Executor of the Deceased’s Estate. This was designated the ‘principal basis’ for the Exclusion application. The ‘secondary basis’ was that the applicant stands in the shoes of the Deceased and is able to show that the Property forfeited was lawfully acquired by the Deceased.

32 The hearing of the application commenced on 7 December 2017.

33 By agreement, the application was heard in two parts. The Court was asked to rule on an application made by the respondent under section 135 of the Evidence Act 2008 (the UEA) to exclude the Deceased’s affidavit evidence, prior to hearing the substantive application for exclusion. If the respondent’s application to exclude affidavit evidence was successful, it was agreed that this would restrict the basis for the Exclusion application, to the principal basis.

34 The respondent’s submissions addressed both the evidentiary issue and the substantive application. The respondent’s application to exclude the Deceased’s affidavit evidence was supported by the Ward affidavit.

35 The applicant’s reply submission was supported by the Spicer affidavit. This further submission was handed to the Court on the second day of hearing, on 14 December 2017.

36 My reasons for ruling the Deceased’s affidavit evidence irrelevant and inadmissible as to part; and for exercising my discretion to exclude the otherwise relevant affidavit evidence of the Deceased; and for dismissing the Exclusion application based on the principal basis, are contained in the paragraphs that follow.

The application to exclude evidence

The Deceased’s affidavit in support
37 Questions of relevance and admissibility of some or all of Deceased’s affidavit were initially addressed by the respondent in the respondent’s submissions, and by the applicant in the applicant’s reply submission.

38 The affidavit states that it was read to Lucy Komljenovic prior to swearing on 11 July 2016. The affidavit contains numerous handwritten corrections/additions initialled by the Deceased, and the witness, Ms Spicer. Omitting the formal parts, paragraphs 1 to 16 (including the handwritten corrections/additions (in italics)) state:

1. I am the applicant in this matter and I make this affidavit in support of my application to exclude my monies in the sum of $330,700 AUD and ~~$3062 in US~~ $200 - $300 US dollars from unexplained wealth forfeiture.

2. I am 82 years old. I live permanently at Arcadia aged care centre as I require 24 hour care. I have been living here for about one year so far. (On 29 June one year finished). I have suffered from cancer and I am now very ill. I have difficulties with walking and movement. I need oxygen all the time and I often struggle to breathe, especially during the night and in the morning. I need the oxygen machine all the time.

3. My first operation for cancer was in about 2010. I have had several operations most recently I had my thyroid glands removed a few weeks ago. I have again a cancer in that area. Also on the lung and the liver.

4. My first language is Croatian but I speak English well enough to communicate and I can understand things said to me in English. Not everything but if you explain then I understand.

5. I have given my instructions for this affidavit to my solicitor and she will read it to me so that I can swear it as I am not confident in reading in English. I also cant (sic) see properly. I need an operation on my eyes.

6. The contents of this affidavit are true and accurate to the best of my knowledge. My memory is not always very strong with exact dates however I have tried to be as accurate as possible.

7. The main part of the money which was taken from my house came from my deceased parents. My father died in 2003 and my mum died 10 months later. My dad had a property in ~~Bosnia~~ Zagreb, Croatia and when he knew that he was terminally ill he sold the property so that he could give his children some money before he passed away.

8. I was given a sum of $200,000 from my mum and dad from the sale of the property in ~~Bosnia~~ Zagreb, Croatia. I received this money some time before my dad died. I don’t remember the exact time but I think it was early 2000’s.

9. My dad’s name was Ivo Matijevich and my mum’s name was Sophia Matijevich.

10. Mum and dad were living in Zagreb at that time. Dad was sick and he knew he would die and ~~he was sorting out his financial affairs~~ he wanted to give me a gift before he died. Over there if people have something they give it to their children before they pass away.

11. My dad said to me he would give me the money here. The transaction took place at my home. The person who was buying the property was in Australia and I understood that he was travelling to ~~Bosnia~~ Europe to live there. He gave the money for the purchase of my dad’s property to me here in Australia, at my home. While this transaction took place my dad was on the telephone. My dad wanted confirmation that the purchaser had paid the full purchase price for the property and I told him once the purchase money have (sic) been given to me by the man. I think he sold his house in Australia. I do not know the name of the purchaser of the property. I forget his name. The purchaser counted the money before he gave it to me and I watched. I told my dad on the telephone how much money there was and he told me that it was okay. He paid mostly in hundred dollars notes (sic) and some 50s. [Included in the money seized was also some old German Marks and American money, this was my money from travelling not from my parents].

12. Soon after I first got the money from my parents my son David asked me for a loan of $20,000 to go to the casino. I said no at first because I don’t approve of the casino. He came back a month later and asked again for a loan of $20,000. He said he wanted to buy a car. He came back with a large sum of money which he told me he had won at the casino and gave it to me. It was over $100,000. I gave some to my daughter, paid some bills and my husband bought a car. I kept the rest of the money at home. ~~I don’t trust the banks~~. I feel safer looking after my money myself, because I never know when I need it and maybe I cant (sic) go in to the bank.

13. The money which was seized by the police came from my original $200,000 as well as what was left from the money which David had given me that one time from his big win at the casino. He also gave some more from his winnings some other times.

14. I am supposed to pay a $550,000 deposit to stay here at Arcadia. I haven’t been able to pay it because my money was seized. As a consequence the weekly fee, that has to be paid is much higher. The $550,000 might be more now because I haven’t paid it yet.

15. I did not tell people where I kept my money. I kept it in a bag in the cupboard. I just hung it in the wardrobe on a ~~illegible~~ wire hook for the clothes. It was in the big cupboard in the laundry. My husband did not know the details of how much money I had where I kept it. My children also did not know the amount of money I had as I did not discuss the amount with them. They didn’t ask me and I didn’t tell them. Although they did know that I had received money from my parents and that I kept my savings at home.

16. There was other money taken by the police. It was money I had given to my daughter Maree.

39 In summary, as to the primary issue of whether the Property was lawfully acquired by the Deceased, the allegations of fact made in the Deceased’s affidavit, as amended, include that:

· The main part of the Property came from $200,000 realised on the sale of a property of the Deceased’s terminally ill father, Ivo Matijevich, owned in Zagreb, Croatia. This sum was gifted to the Deceased by her father;

· The Deceased thought she received the money in the early 2000s, sometime before her father died in 2003;

· The transaction took place at the Deceased’s home. The purchaser counted the money before giving it to the Deceased in mostly one hundred dollar and some fifty dollar notes. The Deceased’s father was present during the transaction by telephone. On being advised by the Deceased of the sum counted, the Deceased’s father confirmed the amount paid was correct;

· The purchaser, whose name was either not known, or was forgotten by the Deceased, was in Australia. The Deceased thought the purchaser had sold his house in Australia, and was travelling to Europe;

· Soon after the transaction, the Deceased refused a request from her son, David Komljenovic for a $20,000 loan to go to the casino;

· A month later the Deceased loaned $20,000 to David Komljenovic, for the purchase of a car;

· David Komljenovic subsequently gave the Deceased over $100,000 he said had been won at the casino;

· Some of the money was given to Deceased’s daughter, some bills were paid, and the Deceased’s husband purchased a car;

· The rest of the money was kept by the Deceased at home;

· The money, that is the Property seized (other than the foreign currency which came from the Deceased’s travels) came from a number of sources: from the original $200,000; from what was left of the money given to the Deceased by David Komljenovic from the one “big win at the casino”; and from some further winnings at other times; and

· The Deceased kept her money in a bag in the cupboard. She hung the bag in the wardrobe or cupboard on a wire hook for clothes in the laundry.

40 Notably, paragraph 1 of the Deceased’s affidavit, without more, amends the claim for exclusion of the USD currency from $3,662 to $200 to $300 USD.

The Grounds of Opposition document

41 The respondent asserts a failure under section 40ZD of the Act to adduce evidence in support of the Exclusion application that is capable of satisfying the Court that the Property was lawfully acquired by the Deceased. The Grounds of Opposition document relevantly relates deficiencies in the evidence adduced by the Deceased to the requirements imposed by sections 40G and 40T of the Act:

…

2. Specifically, it is the Respondent’s position that:

a) pursuant to s 40G(1)(b), “property acquired by a person other than for sufficient consideration or on the distribution of the estate of a deceased person is taken to have been lawfully acquired only if the person from whom it was acquired or the deceased person (as the case may be) lawfully acquired the property”. In this regard, the Applicant has failed to prove:

i. the property alleged to be owned by the Applicant’s father in Zagreb, Croatia (“the Croatian property”) existed, and was owned by the Applicant’s father;

ii. the Croatian property was lawfully acquired by the Applicant’s father;

iii. the legal framework of land transfer between a vendor and a purchaser under the laws of Croatia at the time of the alleged sale of the Croatian property;

iv. there was a transaction involving the sale of the Croatian property;

v. the Australian cash initially came from the sale of the Croatian property;

vi. the alleged sale of the Croatian property was lawful.

b) pursuant to s 40G(1)(c), “property acquired by person as a prize or as the proceeds of any form of gambling is taken to have been lawfully acquired only if any money or other item of value used by the person for the purposes of entering the prize draw for the purposes of the gambling (as the case may be) was lawfully acquired”. In this regard, the Applicant has failed to prove that:

i. in so far as funds provided (sic) to her by her son, David Komljenovic, that the source of funds provided by David Komljenovic were lawfully acquired by him;

ii. in so far as the funds provided to her by her son, David Komljenovic, which arose from gambling winnings, that the gambling was funded with lawfully acquired funds;

c) pursuant to s 40G(1)(f) (as it was per Version 73), “property acquired by person that is derived property is not property lawfully acquired unless –

i. the property was acquired for sufficient consideration; and

ii. the person acquired the property without knowing, and in circumstances such as not to arouse reasonable suspicion, that the property was derived property.”

In this regard, the Applicant has failed to prove that:

i. she acquired a portion of the seized cash from David Komljenovic’s alleged gambling winnings for sufficient consideration and without knowing, and in circumstances as not to arouse a reasonable suspicion, that the property was derived property.

d) the Applicant has failed to establish that she acquired the American cash and that the said acquisition was lawful.

3. S 40ZD(3) of the Act provides that the evidentiary requirements set out in s 40T apply to a hearing of an application for an exclusion order under s 40ZD. S 40T requires the Applicant to provide documentary evidence of any transactions alleged by her to have occurred that would support the claim that the seized cash was lawfully acquired by the Applicant.

4. The Applicant has not produced any documentary evidence in respect of:

a) the acquisition and sale of the Croatian property;

b) establishing that her son’s gambling activities were funded with lawfully acquired funds (sic);

c) how she acquired the American cash.

5. It is the Respondent’s position that the Applicant has not produced adequate documentary evidence in respect of the alleged gambling winnings derived by her son, David Komljenovic.

The UEA

42 Section 55 of the UEA tells us that evidence that is relevant in a proceeding is evidence that, if it were accepted, could rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceeding. Relevant evidence is admissible unless otherwise excluded.

43 Part 3.2 of the UEA contains provisions relating to the hearsay rule. It is not contested that the Deceased’s affidavit evidence of acquisition of the Property is hearsay. Under section 59 of the UEA the Deceased’s affidavit is written evidence containing a previous representation made by the Deceased to prove the existence of a fact that the Deceased intended to assert by the representation (an asserted fact). In this case the asserted fact is that the Property seized by police was lawfully acquired by the Deceased.

44 Section 62 of the UEA allows admission of “First-hand” hearsay of an asserted fact in certain circumstances. Section 62(2) of the UEA relevantly provides that “a person has personal knowledge of an asserted fact if his or her knowledge of the fact was, or might reasonably be supposed to have been, based on something that the person saw, heard or otherwise perceived, other than a previous representation made by another person about the fact”.

45 Section 63 of the UEA makes provision for the admission of hearsay evidence in civil proceedings where the person who made a previous representation is not available to give evidence about an asserted fact subject to the evidence meeting the requirements of section 63(2) of the UEA.

46 Clause 4(1)(a) of Part 2 of the Dictionary to the UEA relevantly provides that a person is unavailable to give evidence about a fact if, as in this case, that person is dead. To obtain the benefit of this exception the applicant was obliged under section 67 of the UEA to give reasonable notice in writing to the respondent of his intention to adduce this evidence.

The Objections document

47 Among other things, the Objections document, notified the respondent’s objection to all or part of the Deceased’s affidavit.

48 The respondent objects to the admissibility of the whole of paragraphs 2, 3 and 14, and to part of paragraph 5 of the Deceased’s affidavit, on the grounds of relevance. The respondent otherwise objects to the whole of the Deceased’s affidavit on the basis that, as required by section 67 of the UEA, the applicant had not given reasonable notice in writing of his intention to adduce evidence under section 67(2).

49 That said, it appears that notice was given by the applicant shortly prior to the commencement of the hearing. At hearing, the respondent did not rely on non-compliance with the notice requirement.

Section 55 – relevant and admissible evidence

50 As mentioned, the respondent submits that paragraphs 2, 3 and 14 and part of paragraph 5 of the Deceased’s affidavit are irrelevant. This is not, so the submission went, a hardship application made under section 40C(4) of the Act. Accordingly, matters addressing the state of the Deceased’s health and need for eye surgery; her competence; the need for money to cover nursing home expenses, would not, if accepted, “rationally affect (directly or indirectly) the assessment of the probability of” the lawful acquisition of the Property by the Deceased.

51 In response, the applicant submits as follows.

52 The handwritten addition to paragraph 5 that the Deceased cannot see properly and needs an eye operation is relevant to the circumstances of the swearing of the Deceased’s affidavit. I agree. It is relevant and admissible (unless otherwise excluded) on the basis that it relates to the reasons for the affidavit being read to the deponent prior to swearing.

53 Paragraph 14 “is relevant to considering the probative value to be accorded to the affidavit as a whole in circumstances in which the counterfactual originally put to the Court on the restraining application was that the money was not Lucy Komljenovic’s.”[11] This submission was not further explained at hearing. I was not satisfied that paragraph 14, which dwells on the Deceased’s concern that seizure of the Property had caused her hardship in meeting a requirement that she pay a deposit to her aged care facility, is relevant.

[11] Applicant’s reply submissions, paragraph 16(c).

54 Paragraph 2, and possibly paragraph 3, is relevant to an acceptance of the Deceased’s evidence as a whole under section 40T(2)(b) of the Act; and to a related submission by the applicant, later withdrawn during the course of the hearing. The latter involved a submission based on an alleged failure by the respondent to avoid procedural prejudice by acting to ensure that Lucy Komljenovic was cross-examined before her death. It was asserted that respondent’s conduct in this regard was a factor in assessing the weight afforded any prejudice found to exist under section 135 of the UEA, due to procedural considerations.

Documentary evidence - section 40T(2)(b) of the Act

55 As earlier mentioned section, 40T(2)(b) of the Act confers a discretion on the Court to accept evidence, in this case, other than documentary evidence of any transactions alleged by the Deceased to support her claim that the Property was lawfully acquired by her.

56 The position advanced by the applicant at hearing was that there was no documentary evidence of the transactions to support the Deceased’s claim of lawful acquisition of the Property. However, to avoid the requirement imposed by section 40T(1) of the Act, the applicant is required by section 40T(2)(b) of the Act to satisfy the Court that it is not reasonable to expect documentary evidence to exist by reference to one or other of the circumstances identified in the provision.

57 The Deceased’s affidavit does not specifically address the requirements of section 40T of the Act, or the reason or reasons, if any, for failing to adduce any or all of the documentary evidence required by section 40T(1) of the Act.

58 The applicant, nonetheless, now submits that the affidavit evidence, particularly the evidence in paragraph 2 of the Deceased’s affidavit, is relevant to establishing that it is not reasonable to expect documentary evidence of any transaction evidencing lawful acquisition of the Property to exist due to the effluxion of time. The applicant submits that the affidavit evidence is admissible on the basis that it could, if accepted, rationally affect the assessment of the probability of lawful acquisition of the Property by the Deceased.

59 In the circumstances described, I was satisfied that the evidence of the deponent’s age, her health and medical needs, and so on, as articulated in paragraphs 2 and 3 of the Deceased’s affidavit was relevant and admissible (unless otherwise excluded) on the basis that it could, if accepted, rationally affect (albeit indirectly) the assessment of the probability of lawful acquisition of the Property by the Deceased. That said, had the Exclusion application proceeded to hearing on the either bases, the finding that the evidence contained in paragraphs 2 and 3 of the Deceased’s affidavit is relevant and admissible does not relieve the applicant of the obligation to satisfy the requirements of section 40T(2)(b) of the Act. In short, the admissibility of this evidence should not be seen as indicating that the Deceased’s affidavit evidence, when viewed as a whole, is likely capable of establishing to the required standard that it was not reasonable to expect documentary evidence to exist of any of the transactions relating to the acquisition of the Property because of the function of time.

60 My reasons for so concluding are more fully explained in the following paragraphs.

The Spicer affidavit

61 As mentioned, the Spicer affidavit sworn on 6 December 2017, exhibits copy correspondence and emails addressed by her to Mr Ward on 12 July 2016, 27 November 2017 and 28 November 2017.

62 The letter dated 12 July 2016 alerts Mr Ward to Lucy Komljenovic’s poor health, and suggests that special arrangements may be needed if the respondent proposes to cross-examine Ms Spicer’s client. Ms Spicer offers to obtain a formal medical opinion from the treating practitioner, as to her client’s medical condition and prognosis, if the respondent requires this.

63 As is apparent from the Spicer affidavit, Mr Ward responded to the notice requiring his client to produce for inspection documents and information relating to the banknotes seized by police. By email dated 28 November 2017, Mr Ward advised Ms Spicer that: “police inform me that no photographs of the individual notes were ever taken, nor were serial numbers of the notes recorded. The seized monies were banked into a police authorised bank account as per usual police procedures”.[12] I will address the applicant’s further submission concerning the failure to retain or record the serial numbers of the banknotes seized by police on 14 October 2014, in due course.

The Ward affidavit

[12] The Spicer affidavit, Exhibit "NS-3".

64 The Spicer affidavit is deficient in that it neglects to mention Mr Ward’s response to the matters raised in her letter dated 12 July 2016; or to mention the further exchanges in the ensuing months concerning the respondent’s request for production of documents under section 40T of the Act, and for cross-examination of the Deceased. The Ward affidavit and exhibits, however, address these omissions. Among other things, this material confirms that:

· By letter dated 22 August 2016 Mr Ward reminded Ms Spicer of her client’s obligation to meet the evidentiary requirements imposed by section 40T of the Act, pursuant to which production of the following categories of document was requested:

1. All documents in relation to Lucy Komljenovic’s application and admission to Arcadia aged care Centre, including the arrangements made for payment of the deposit and details of her assets disclosed to Arcadia.

2. Documents in relation to the alleged sale of Lucy Komljenovic’s father’s property in Zagreb, including contracts, correspondence in relation to the sale, the provision of money to Mrs Komljenovic and arrangements for payment of the purchase price and any receipt of the monies allegedly handed over by the purchaser.

3. Any documents showing disclosure by Lucy Komljenovic to Centrelink of the subject cash held by her. In this respect, I attach a copy of the Department of Human Services certificate in relation to Lucy Komljenovic obtained by Police dated 17 February 2015. I note that there appears no record of disclosure of the cash on the current Centrelink records[13].
[13] The Ward affidavit, Exhibit “JW-1”.

· By the same letter, Mr Ward indicated: firstly, that both Lucy Komljenovic and David Komljenovic were required for cross-examination for the final hearing; secondly, agreement with the proposal that special arrangements be made for cross-examination of Lucy Komljenovic, with the suggestion that this be convened at the hospital room at Arcadia for the purpose of video recording the cross-examination; thirdly, that in the event that Lucy Komljenovic was not physically competent to participate in a special hearing, the respondent required a formal medical report detailing this opinion; fourthly, that the respondent required a response to the request for documents prior to setting a date for cross-examination of Lucy Komljenovic; and, lastly, a suggestion that the directions hearing date be adjourned for a suitable period to enable Ms Spicer’s client to respond to the request for documents.

· On 30 August 2016, the directions hearing was adjourned for further mention on 25 October 2016. According to the file note produced by Mr Ward[14] this was to allow a number of steps to be taken. Ms Spicer was to have her client medically assessed; Mr Ward was to forward Crown documents obtained by police to Ms Spicer; and, Ms Spicer was to obtain her client’s response to what Mr Ward understood was a request made by Ms Spicer to Lucy Komljenovic for instructions on the documents request made by the respondent.
[14] The Ward affidavit, Exhibit “JW-2”.

· On 20 October 2016, Ms Spicer sought agreement to adjourn for further a month to allow her to obtain documents and a medical assessment. According to the file note made by Mr Ward, on this occasion Ms Spicer agreed with his observation that after the expiration of this further period, the matter would have to be set down for hearing[15].
[15] The Ward affidavit, Exhibit “JW-3”.

· On 25 October 2016 the proceeding was adjourned to 29 November 2016.

· Consent orders were made at a directions hearing on 29 November 2016. Among other things, the Exclusion application was set down for trial on 23 March 2017. In keeping with his affidavit, and the file note made by Mr Ward, on this occasion, no submission was made or further discussion entered into with him regarding any special hearing for cross-examination of Lucy Komljenovic.

· By letter dated 10 January 2017, Mr Ward served a copy of one of two affidavits on which the respondent intended to rely at hearing of the Exclusion application on 23 and 24 March 2017. The letter again confirmed that the respondent required the attendance of Lucy Komljenovic and David Komljenovic for cross-examination[16].

[16] The Ward affidavit, Exhibit “JW-4”.

65 The applicant submits that the content of the Deceased’s affidavit provides a basis for inferring that, the effluxion of time explains the failure to adduce any documentary evidence, and it can be relied on to counter the expectation that documentary evidence exists of, particularly, the acquisition and sale of the Croatian property. Having regard to the content of the Deceased’s affidavit, not to mention the matters addressed by the Spicer and Ward affidavits, I was not satisfied that the basis from which to draw this inference was made out.

66 Firstly, it is unlikely that by her affidavit the Deceased intended to specifically invoke, or to address the exercise of the Court’s discretion under section 40T(2)(b) of the Act, to accept evidence other than the documentary evidence she was required by section 40T(1) of the Act to adduce.

67 As she deposed, the Deceased was an elderly, very sick woman living in a permanent aged care facility when she swore her affidavit. However, the Deceased’s circumstances, as described by her; the statement that the Deceased’s memory was “not always very strong with exact dates”;[17] and the Deceased’s professed inability to provide more detailed information about, for example, the purchaser’s identity,[18] do not constitute an adequate basis from which to infer that documentary evidence relating to the acquisition and sale of the Croatian property, was no longer available due to the passage of time.

[17] Paragraph 6 of the Deceased’s affidavit.

[18] Paragraph 11 of the Deceased’s affidavit.

68 Secondly, the Spicer affidavit is silent on what, if any, instructions were received from the Deceased in response to Ms Spicer’s request for instructions on the documents request made by the respondent in Mr Ward’s letter dated 22 August 2016, and on what, if any, steps were taken to ascertain the existence of documentary evidence supporting the claim of lawful acquisition of any of the Property, before Ms Spicer consented to the fixing of a trial date at the final directions hearing on 29 November 2016.

69 The respondent’s objection to the relevance and admissibility of paragraph 14 is upheld.

Section 135 of the UEA – discretionary exclusion of otherwise admissible evidence

70 Part 3.11 of the UEA contains discretionary and mandatory exclusion provisions. Section 135 of the UEA confers a general discretion on the Court to refuse to admit evidence if its probative value is substantially outweighed by the danger that the evidence might –

a) be unfairly prejudicial to a party; or

b) be misleading or confusing; or

c) cause or result in undue waste of time; or

d) unnecessarily demean the deceased in a criminal proceeding for a homicide offence.

71 The provision allows for the exclusion of evidence that is relevant but found to be insufficiently probative when considered against the danger that it might give rise to any one or more of the concerns articulated in section 135 (a) to (d) of the UEA inclusive.

72 The UEA dictionary defines the “probative value” of evidence to mean the extent to which the evidence could rationally affect the assessment of the probability of the existence of a fact in issue.

73 In summary, in the application of section 135 of the UEA, a court is obliged to assess the probative value of the relevant and admissible evidence, determine whether, on balance, there is a danger that, if admitted, the evidence might give rise to any of the consequences outlined in the provision; and weigh that danger against the probative value of the evidence to determine whether the danger identified substantially outweighs the probative value of the evidence.

74 The respondent submits that, to the extent that any part or parts of the Deceased’s affidavit are admissible, these should be excluded in the exercise of the discretion conferred by section 135(a) of the UEA.

75 Both parties agree that the evidence contained in the Deceased’s affidavit is the only admissible evidence available to prove that the Property was lawfully acquired by the Deceased. The respondent submits that the prejudice visited upon the respondent in not being able to cross-examine the now Deceased deponent is a serious impediment to ascertaining the truth of the allegation of lawful acquisition of the Property.

76 The prejudice, so the submission went, is in the use to which the untested evidence can be put in the context of this case, where there is no way of checking and verifying that the alleged transactions occurred.

77 As I understood the submissions made at hearing, the applicant concedes that, in this case, the inability to cross-examine the Deceased is prejudicial to the respondent,[19] but not such that the probative value of the affidavit evidence is substantially outweighed by the danger that the evidence might be unfairly prejudicial.

[19] Transcript (TN) 29-40 and 64.

78 The respondent, in turn, concedes that to establish unfair prejudice it must do more than establish the loss of the opportunity to cross-examine the now Deceased witness.[20]

Probative value

[20] See for example, Leybourne v Permanent Custodians Limited [2010] NSWCA 78 [82] and Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2009] NSWSC 769 [38].

79 As J Forrest J explained when called upon to rule on an application to exclude expert evidence under section 135 (a) of the UEA:[21]

.. it is not enough for a court merely to form an impression of the probative value of [evidence] there must be a systematic analysis of the impugned body of evidence sufficient to reach at least a preliminary view as to its “quality and frailties”. However, this assessment must necessarily take place within the limits imposed by the nature of the evidence and the time at which the application is made.

[21]Matthewsv SPI Electricity Pty Ltd & Ors (Ruling No 31) [2013] VSC 575, [162].

80 The applicant submits that, because the Deceased’s affidavit evidence constitutes the only evidence of the circumstances under which the Deceased came into possession of the Property it is of considerable probative value. And, further, that this factor should weigh heavily in favour of non-exclusion when determining whether the probative value of the affidavit evidence is substantially outweighed by the danger that the evidence might be unfairly prejudicial to the respondent.

81 I accept that the evidence of the Deceased is probative evidence. The extent to which the evidence could rationally affect the assessment of the probability that the Property was lawfully acquired by the Deceased, is, however, a different matter.

82 As my discussion of the submissions on unfair prejudice shows in due course, the respondent has identified, in some detail, deficiencies (frailties if you like) in the Deceased’s affidavit evidence on the critical issue of lawful acquisition of the Property. Whilst the applicant concedes that there are deficiencies in the Deceased’s affidavit evidence, the applicant submits that these deficiencies do not affect the probative value of the evidence, rather they are matters that can be taken into account by the Court on hearing the Exclusion application. I disagree. The quality of the Deceased’s evidence is a factor to be taken into account when assessing the probative value of the evidence for the purpose of determining whether the discretion to exclude ought be exercised.

83 In this regard, the applicant cannot rely on the unexplained absence of documentary evidence to improve the quality of the Deceased’s affidavit evidence. On the contrary, the absence of documentary evidence, and the failure of the evidence, as it stands, to explain the alleged non-existence of the documentary evidence required by section 40T(1) of the Act lends weight to the respondent’s claim that, the inability to cross-examine is, in the manner alleged, unfairly prejudicial to the respondent.

84 The applicant further submits that the failure of the respondent to produce the banknotes; or copies of the banknotes; or a record of their serial numbers, in response to the notice to produce served in November 2017, provides a basis for inferring under Jones v Dunkel,[22] that this evidence would not have assisted the respondent in this application.

[22] (1959) 101 CLR 298, 320.

85 According to the applicant, an adverse inference, if drawn, and the respondent’s failure to produce the bank notes, or information relating to the serial numbers as requested, support the applicant’s submission that the Deceased’s affidavit evidence is of considerable probative value.[23]

[23] Applicant’s reply submissions, paragraphs 10-15 inclusive.

86 The reasons advanced for drawing an adverse inference are set out in the applicant’s reply submissions. It is convenient to set these out as expressed:

a. according to the orders made by his Honour Judge Murphy on 15 September 2015, orders were made that “no person shall dispose of or otherwise deal with the property specified below or any interest in that property: (a) 337,700 AUD cash”. Given the wording of the order, it may be inferred that the property must have remained as cash until that date. It may further be inferred that the property must have remained as cash upon that date as in the period after the seizure of the property on 14 October 2014 (which time the Unexplained Wealth provisions in the Confiscation Act 1997 (Vic) had not yet been enacted, and well before they had commenced) the Chief Commissioner of Police was liable to come under an obligation to return the seized property to the person from whose position it was seized: Confiscation Act 1997 (Vic) s 97

b. Senior Constable Phillips was informed by Ms Bridie Kelly, Solicitor, of the practice of Patrick W. Dwyer on 19 December 2014 that she had “instructions that the money seized belongs to Lucy Komljenovic. I also have instructions that Mrs Komljenovic is currently is [sic] palliative care and is too unwell to undergo the stress of a police interview / statement.” (Affidavit of O Dwyer, Exhibit “JOD-5”). Of course, at that time the Unexplained Wealth provisions in the Confiscation Act 1997 (Vic) were yet to commence. Yet, the circumstances of Ms Komljenovic’s health and her interest in the property was well known to the police. While the police could not have been expected to know that Ms Komljenovic would give evidence that she had received the property many years earlier, the police were undoubtedly alive to the prospect that an elderly woman in palliative care may be unable to produce evidence satisfying the requirements of the (not yet in force) s 40T of the Confiscation Act 1997 (Vic). Converting the money bites payment into a police bank account was always liable, if proper records were not made of the serial numbers of the notes deposited, to have effect of destroying some if not all of the limited evidence available to Ms Komljenovic about the age of the transactions by which she would later say that she received the property.

c. had the age of the banknotes be known, and had they been consistent with Ms Komljenovic’s evidence (i.e., because all the $100 notes were printed in 1998 and 1999), that fact would have had considerable probative value given the absence of any other evidence.

d. the Respondent’s failure to produce the notes, copies of the notes, or a record of their serial numbers provides good grounds for the drawing of an inference that the evidence which has not been produced would not have assisted the Respondent: JonesvDunkel (1959) 101 CLR 298, 320.

e. for instance, the “suspected unlawful activity” described at O’Dwyer’s affidavit at [55] was to the effect that during the police surveillance period, David Komljenovic “often attended the Essendon address at night between 8 PM and 10 PM for periods of less than 30 minutes. Police suspect KOMLJENOVIC was using the Essendon address as a ‘safe-house’ to store drugs and to safely secure… cash earnings from his drug trafficking.” Such a suspicion would be supported by new banknotes, but the absence of any new banknotes from the bundles contributing to the $337,700 would support the Applicant’s case.

87 The respondent submits, and I accept, that the circumstances in which an adverse inference could be drawn are not present in this case.

88 What was seized was cash not, for example, a particular item of property such as a car.

89 The best method of meeting the obligation to preserve cash, particularly, the amount of cash seized on this occasion, was to do as Police did, and place the cash in a bank account where it would earn interest. Once banked the money became a chose in action.

90 On the making of the unexplained wealth restraining order on 15 September 2015,[24] pursuant to section 40C(7) of the Act the respondent gave an undertaking to abide by any order of the Court as to damages sustained by any person who has an interest in the Property “if the Court is satisfied that the said person was not involved in any unlawful activity in connection with the acquisition and or use of that property, or any interest in that property, and that the said damages have been sustained by reason of this order in circumstances where the State ought to pay such damages.”

[24] At which hearing, it is noted that Lucy Komljenovic was represented by counsel.

91 The banking of the cash and the undertaking given acted to preserve the right to claim back the money, as well as the interest earned, and acted to protect Lucy Komljenovic from damage sustained by reason of the making of the order, should she subsequently establish lawful acquisition.

92 The money banked was forfeited to the Minister on 5 April 2016.

93 The issue as to the availability of the subject cash, or any record kept of serial numbers of the notes seized, arose more than three years after the cash was seized (and nearly 18 months after it had been forfeited), when, on 23 November 2017, a Judge of this Court refused the applicant’s application to file a further affidavit, and apparently queried whether the serial numbers of the notes might provide some proof in this case.

94 Without indicating when, or the actual amounts involved, the Deceased’s evidence is that some money was spent from, and other monies were added to, the monies she alleges were gifted by her father via monies received from the purchaser of the Croatian property. It follows that, even had the notes been retained, or a record kept of the serial numbers, it could not be assumed that evidence of the age of the notes could prove that some or all of the money came from the Croatian property transaction alleged.

95 Two passages from the decision of the High Court in Jones v Dunkel were cited as indicating the underlying rationale for the drawing of an adverse inference. The first is a passage from the decision of Justice Windeyer, where he said:

“... as Hegedus had not been called, there was no opportunity of testing [the evidence] by cross-examination. Then, I think, his Honour should, when the juryman asked his question, have given an answer in accord with the general principles are stated in Wigmore on Evidence … as follows: “The failure to bring before the tribunal some circumstance, document, or witness, when either the party himself or his opponent claims that the facts would thereby be elucidated, serves to indicate, as the most natural inference, that the party fears to do so, and this fear is some evidence that the circumstance or document or witness, if brought, would have exposed facts unfavourable to the party. ..”[25].

[25] (1959) 101 CLR 320-321.

96 The second is a passage from the decision of Justice Menzies, where he said:

“… In my opinion a proper direction in the circumstances should have made three things clear: (i) that the absence of the defendant Hedegus as a witness cannot be used to make up any deficiency of evidence: (ii) that evidence which might have been contradicted by the defendant can be unaccepted the more readily if the defendant fails to give evidence; (iii) that where an inference is open from facts proved by direct evidence and the question is whether it should be drawn, the circumstance that the defendant disputing it might have proved the contrary had he chosen to give evidence is properly to be taken into account as a circumstance in favour of drawing the inference…”[26].

[26] Ibid, 312.

97 I was also taken to a more recent application of the principle expressed in Jones v Dunkel by His Honour Justice Bongiorno in NadarajamoorthyvMoreton[27], where His Honour relevantly explained:

13. From the evidence of other eye witnesses, there is every likelihood that Mr Rammanan was an eye witness to the event on 13 July 2001. In a jury trial a Judge may well have given a direction to the jury in accordance with Jonesv Dunkel [2] to the effect that they may draw the inference from the failure to call a witness that had that witness been called he would not have assisted the prosecution case. A Magistrate acting as the tribunal of fact, as in this case, was bound to instruct himself as if you were jury, although that instruction need not be articulated in his reasons for judgment. However, the law does not require that a jury or a Magistrate draw any particular inference. Nor can the inference be any more than that the evidence of the witness would not have assisted the case. It would be impermissible to draw an inference that the witness would have necessarily contradicted the prosecution case.

[27] [2003] VSC 283, [13].

98 In present case, I accept that the fact that the Property was banked, and subsequently forfeited in April 2016, and the further fact that the information was not sought by the applicant until a couple of weeks before the application proceeded to hearing in December 2017, sufficiently explains why the respondent is now unable to produce this information. In short, the circumstances of this case do not support an inference that the failure to keep and adduce this evidence when called upon to do so reflects a fear that it would have exposed the respondent to facts unfavourable to the respondent.

Unfair prejudice

99 The concession made by the applicant that, in the circumstances of this case, procedural unfairness arises from an inability to test the evidence, acknowledges the now widely accepted view that procedural considerations may constitute unfair prejudice for the purposes of the UEA, in particular section 135.[28]

[28] See, for example, Bakerland Pty Ltd V Coleridge [2002] NSWCA 30, [54]-[55]; Longhurst v Hunt [2004] NSWCA 267, [45]-[49]; and R v Suti [2002] NSWCA 509, [126]-[127].

100 The respondent identifies the following factors as relevant to determining the unfairly prejudicial effect of the inability to cross-examine:[29]
[29] Paragraph 19, the respondent’s submissions.

a) The issues to which the evidence relates;

b) The probative value of the evidence when not cross-examined on;

c) The importance of the evidence, given the absence of other facts relevant to the issue to be determined;

d) The possible significance of cross-examination in the circumstances;

e) Whether or not the dangers of unfair prejudice may be eliminated or significantly reduced by some other means than exclusion (sic); and

f) The ability of the court in the absence of cross-examination and seeing the demeanour of the witness when giving evidence to determine the weight to be given to the evidence.

101 The unfairly prejudicial effect, so the respondent submits, stems from:[30]
[30] CB: 261-267, paragraphs 20-22, the respondent’s submissions.

20. … The failure to identify the person alleged to have handed over $200,000 to Mrs Komljenovic, the absence of any paperwork such as receipts for the payment, the inability to trace the payment, the failure to clearly identify the date on which the transaction occurred, the failure to identify the property alleged to be the subject of the sale, the failure to produce documents evidencing the alleged transfer of ownership of the property all prejudice the ability of the Respondent to effectively challenge the evidence of Mrs Komljenovic.

21. There is simply no capacity to seek out alternative sources of evidence. There is nothing that the court could do short of excluding the evidence to redress the procedural unfairness caused to the Respondent.

22. In the circumstances of this case the only way the evidence could be tested is through cross-examination and observations of the manner in which the evidence was given.

102 At hearing, the respondent noted various assertions made in the Deceased’s affidavit it submits require testing if the Court is to determine the weight to be given the only evidence of lawful acquisition of the Property. These include cross-examination in respect to: the handwritten amendments made prior to swearing the Deceased’s affidavit; what appear to be, at best, unclear or, at worst, contradictory statements; the source of the Deceased’s information about the sale of the Croatian property; and cross-examination in respect to the address of the Croatian property, and the identity of the purchaser. Examples to which the respondent referred include[31]:
[31] TN 17-19.

· The amendments made to the location of the property from “Bosnia” to “Zagreb, Croatia”,[32] and to the destination of the purchaser from “Bosnia” to Ëurope”.[33]
[32] The Deceased's affidavit, paragraphs 7 and 8.
[33] Ibid, paragraph 11.

· The unclear and, absent an explanation, potentially contradictory statements made about to whom the Deceased’s father intended to give money before he passed away – “he sold the property so that he could give his children some money before he passed away”[34] and “he wanted to give me a gift before he died”.[35]
[34] Ibid, paragraph 7.
[35] Ibid, paragraph 10.

· The absence of information about an address for either the Deceased’s parents or the Croatian property – “My dad had a property in ~~Bosnia~~ Zagreb, Croatia and when he knew he was terminally ill he sold the property..”,[36] and “Mum and Dad were living in Zagreb at the time”.[37]
[36] Ibid, paragraph 7.
[37] Ibid, paragraph 10.

· The absence of information identifying the purchaser, and the unclear and, absent an explanation, the potentially contradictory statements about the Deceased’s knowledge of the purchaser’s identity – “I do not know the name of the purchaser of the property. I forget his name”.[38]

· The lack of clarity over the amounts of money mentioned. For instance, other than saying it is over $100,000 there is no indication of the exact amount received from the son to whom the Deceased deposes she loaned $20,000 to purchase a car, nor is there any indication of the amount advanced to her daughter, or used to pay bills, or advanced to the Deceased’s husband, also for the purchase of a car.[39]

[38] Ibid, paragraph 11.

[39] Ibid, paragraph 12.

103 At hearing the respondent also relied on the inability to cross-examine the Deceased on other materials, such as Centrelink records containing disclosures made about the Deceased’s assets for receipt of an Aged Pension in the period commencing from 2007.

104 The Centrelink documentation is found in the analysis of the financial circumstances of the Deceased and her husband contained in a report dated 10 August 2015. The report was prepared by a financial investigator with the Criminal Proceeds Squad, Victoria Police.[40]

[40] The O’Dwyer affidavit, Exhibit ‘JOD-6’, CB 178-196.

105 The Property was not among the assets disclosed in the Centrelink documents. In this regard, the respondent relies on the fact that, without cross-examination on the making of a prior inconsistent statement, the respondent cannot test the credit of the Deceased, who may, or may not have been able to provide a satisfactory explanation.

106 As mentioned, the applicant concedes deficiencies in the affidavit evidence but, nonetheless, contests the extent of the prejudicial effect of the inability to cross-examine the Deceased witness. The applicant submits as follows.

107 Firstly, that both parties are prejudiced by the inability to cross-examine the Deceased on the making of a prior inconsistent statement. In the applicant’s case, the prejudice involves the loss of an opportunity to explain the circumstances of non-disclosure.

108 Case law, nonetheless, tells us that, whilst the inconsistent statement contained in the Centrelink documentation may not of itself give rise to unfair prejudice, it may, as in the present case, be relevant on the issue of whether the danger of unfair prejudice exists.[41]

[41] See Tim BarrPty Ltd v Narui Gold Coast Pty Ltd [2009] NSWSC 769, [35].

109 Secondly, that the conduct of the respondent is relevant to determining the extent of prejudicial effect of the inability to cross-examine the Deceased witness.

110 As mentioned, the applicant initially sought to establish a failure by the respondent to take steps to ensure that the Deceased was cross-examined prior her death, and that this is a factor that should be taken into account in determining whether the admission of the evidence is unfairly prejudicial. The withdrawal of this submission by the applicant, was, in all the circumstances, appropriate. None of the material before the Court justifies a finding that tardiness by the respondent was a relevant consideration in determining the extent to which the respondent was prejudiced due to the loss of an opportunity to cross-examine the witness.

Is the probative value substantially outweighed by the danger that the evidence might be unfairly prejudicial to the respondent?

111 Where, as in this case, documentary evidence has not been adduced by the applicant, the respondent submits that, absent an opportunity to cross-examine the Deceased, it has no way of testing (and the Court has no way of adequately assessing) the probative value of evidence that asserts lawful acquisition of the Property. In these circumstances, the respondent submits that the danger that the untested evidence might be unfairly prejudicial to the respondent is real. I agree.

112 The respondent submits, and I accept, that there is no step the Court could take short of excluding the evidence to redress the procedural unfairness caused to the respondent.

113 The respondent further submits that the Court should find that this danger substantially outweighs the probative value of affidavit evidence as it stands. Based on my preliminary view of the affidavit evidence’s qualities and frailties, I agree.

114 Obviously, not every case where the opportunity to cross-examine a witness is not available calls for the exercise of the discretion to exclude otherwise admissible evidence. However, in this case, the respondent submits, and I accept, that the absence of cross-examination, and an opportunity to assess the demeanour of the now Deceased witness, presents a serious obstacle to the Court’s proper evaluation of the probative value of the Deceased’s evidence.

115 In my view, as it stands, the evidence is insufficiently probative of the issue central to the success of the Exclusion application when considered against the danger that it might be unfairly prejudicial to the respondent.

116 Accordingly, the Deceased’s affidavit evidence is excluded pursuant to section 135(a) of the UEA.

The substantive application for exclusion of the Property – Principal basis

117 Section 3 of the Act defines ‘property’ to mean “real or personal property of every description, whether situated within or outside Victoria and whether tangible or intangible, and includes any interest in any such real or personal property”.

118 Part 4A of the Act contains the provisions relating to the making of unexplained wealth restraining and forfeiture orders. An unexplained wealth restraining order acts to preserve the property or interest in property, the subject of an unexplained wealth restraining order, so that the property or interest is available to satisfy forfeiture of unexplained wealth.[42]

[42] See sections 40C(1) and 40D(1) of the Act, and sections 40ZA to 40ZD of the Act inclusive.

119 The Exclusion application is made by the applicant on the basis that the Property (now forfeited) was lawfully acquired by him on the death of the Deceased, as the Executor of her estate. Long-standing authority establishes that, from the date of death, the Deceased’s personal property vested in the Executor, who derives his title to the property from her Will.[43] Section 13 of the Administration and Probate Act 1958 (Vic) (the AP Act) similarly provides for real estate to vest in the executor/s following a grant of probate of a Will.

[43] See Woolley v Clarke (1822) 5 B & ALD 744; 106 ER 1363, 1363-1364.

120 The AP Act further tells us that the Executor is the personal representative of the Deceased’s estate.[44] As such, he is subject to the duties, rights and obligations contained in Part 1, Division 4, Subdivision 2 of the AP Act. For instance, as personal representative, if lawfully required to do so, the Executor is obliged, and can be compelled, to exhibit on oath an inventory and account of the real and personal estate of the Deceased.[45]

[44] Section 5 of the Act.

[45] Section 28(1) of the Act.

121 Section 29 of the AP Act relevantly provides that, other than in the limited circumstances described in the section, on the death of any person, all causes of action subsisting against or vested in the deceased shall survive against or (as the case may be) for the benefit of the deceased’s estate. It is common ground that, as a person who claimed to have had an interest in the property immediately prior to forfeiture, the Deceased’s cause of action survived her death.

122 Any person claiming an interest in property, the subject of an unexplained wealth restraining order may apply for an exclusion order under section 40R of the Act. As mentioned, the Property was forfeited to the Minister under section 40ZA of the Act before the making of the Deceased’s Exclusion application. As a result, the Deceased’s Exclusion application was made under sections 40ZC and 40ZD of the Act. Irrespective of whether the application for exclusion was made before, or after forfeiture of the Property, the Deceased was required to satisfy the Court that the Property had been lawfully acquired.[46]

[46] Sections 40S and 40ZD of the Act respectively.

123 As earlier mentioned, following a grant of probate, by order of the Court on 22 August 2017, the Exclusion application was amended to state that the Executor brought the Exclusion application as executor of the Deceased’s estate. In short, the Executor brings the Exclusion application as the personal representative of the Deceased’s estate.

124 Section 40G of the Act has already been mentioned in passing. Broadly speaking, section 40G of the Act establishes criteria for determining whether or not property has been lawfully acquired where particular circumstances apply.

125 For instance, section 40G(1)(a) of the Act deals with the circumstance where a person has acquired property “for sufficient consideration that has otherwise been lawfully acquired”. The provision stipulates that property is taken to be lawfully acquired only if the consideration given for the property by the person was lawfully acquired.

126 It is common ground that section 40G(1)(b) of the Act is of particular relevance to an application where, as in this case, the application is made by the Executor. For convenience paragraph (b) is repeated below:

…

(b) property acquired by a person other than for sufficient consideration or on the distribution of the estate of a deceased person is taken to have been lawfully acquired only if the person from whom it was acquired or the deceased person (as the case may be) lawfully acquired the property;

….

127 Accordingly, under section 40G(1)(b) of the Act, the recipient of property by way of a gift, or as the beneficiary of an estate of a deceased person on the distribution of the estate, will not establish lawful acquisition of property unless the person from whom the gift or bequest was acquired lawfully acquired the property.

128 Section 40G(2) of the Act, however, confirms that section 40G(1) does not limit the criteria for determining, for the purposes of Part 4A of the Act, whether or not the property has been lawfully acquired.

129 The applicant submits that he acquired the Property in circumstances other than those specifically addressed by section 40G(1) of the Act. Further that, as a penal statute, the Act is to be interpreted in favour of the subject, and there is a presumption that clear words would have been used had the Act intended to affect automatic forfeiture.[47]

[47] Applicant's further submissions, [24]-[25]

130 The applicant submits that, as a consequence of his appointment as Executor of the Deceased’s estate, the Court may not impose any test of whether the forfeited Property was lawfully acquired other than to ask whether the applicant was duly appointed as Executor. No issue has been raised about the appointment of the Executor, accordingly, (so the submission goes), the property of the Deceased has vested in him, and was acquired by operation of law.

131 The respondent submits that the argument advanced on behalf of the applicant is misconceived. I agree. The basis of the respondent’s submission in this regard is conveniently summarised in its written submissions, dated 28 November 2017[48]:
[48] CB: 261 – 267.

34. First, as the applicant concedes, the property was forfeited to the Minister on 5 April 2016. It therefore was not in the possession or power of the deceased at the time of her death. It could not form part of the estate.

35. Second, accepting that the executor could step into the shoes of the deceased for the purpose of continuing the application for exclusion from forfeiture, until such application succeeds the executor has no right to the property. The property cannot pass from the Minister to the executor without order of the Court under the Confiscation Act.

36. Third, s 40G(1)(b) the executor only acquires the deceased’s property for distribution in the estate if the deceased lawfully acquired it. In other words, the executor acquires such interest as the deceased had in the restrained property. The fact of probate or administration does not create a different interest to what the deceased had. At the time of the death the deceased had no interest in the property other than a right to apply to have it returned under the provisions of the Confiscation Act if she could bring herself within the exclusion provisions.

132 The applicant disputes that forfeiture of the Property had the effect for which the respondent contends citing the following reasons (omitting footnotes):

a. orders of the Court made on 22 August 2017 made allowance for the fact of Lucy Komljenovic’s death by naming her executor as the Applicant;

b. an applicant (sic) under s 40ZC(1) of the Act may only be brought by a person “who claims to have had an interest” in the forfeited property, immediately prior to the time at which it was forfeited;

c. it may be presumed that the Court in permitting the substitution of the Applicant for Lucy Komljenovic assumed that the cause of action survived;

d. s 40ZC(2) create a mechanism whereby the forfeiture itself may, at least for the 60 days after the order giving effect to the forfeiture is made, be regarded as a fiction as a suitable qualified applicant may apply for exclusion from the forfeiture;

e. in considering the effect of death, the legislature made special provision in s 40G(1)(b) in the case of a beneficiary to say that such an applicant must show that the deceased lawfully acquired the property. However, as already noted, the absence of an equivalent rule for executors supports a construction that an executor brings an application on his or her own behalf to protect his or her own interest in the property (even if that interest is contingent upon property being excluded from forfeiture); and

f. it is unreasonable and contrary to the language of the legislation for an executor who is permitted to bring an application to be required to prove anything other than his or her own lawful acquisition (albeit contingent) of the property. To do so would impose a hurdle which is not present in the clear language of the legislation, and may have the effect of arbitrarily denying an executor property which according to law should be theirs for want of proof of how the deceased lawfully acquired the property.

133 The applicant’s argument is fundamentally flawed. It is based on unsustainable propositions. The first of these is that the forfeited Property formed part of the Deceased’s estate at the time of her death.

134 The real and personal property of an estate vests in the personal representative of the estate at the time of the Deceased’s death, as does the power to call in real and personal property (including choses in action), pay a deceased’s debts and expenses and deal with an estate’s property subject to certain obligations.

135 At hearing, the respondent produced the decision in Lees v O’Dea (No 2).[49] Among other things, this decision confirms that prior to distribution of an estate, neither the legal or beneficial ownership in the property of the estate vests in a beneficiary. The nature of the beneficiary’s interest in the property of an estate is that of a chose in action. It is the right to have the estate administered in accordance with the duties of the executors, and “(t)he interest carries with it an expectation that the assets would pass to the named beneficiary upon completion of the administration subject to the assets being realised to meet any outstanding liabilities and to defray the costs of administration”[50].

[49] [2014] FCA 1082

[50] Ibid [24].

136 As the decision in Lees confirms, in the ordinary course of events, the vesting of the property of an estate is a temporary measure for the period during which an estate is administered by the estate’s personal representative, in this case, the Executor. An executor must ultimately distribute the estate in accordance with the terms of the Will.

137 The respondent submits, and I accept, that, irrespective of whether the Property was an asset of the Estate at the time of death, the Executor could not apply the assets of the estate for his own use or benefit. Moreover, where as in this case, the Property has been forfeited, until an order for exclusion is made, the Executor has no right to the forfeited Property.

138 The applicant’s further proposition that, when drafting section 40G(1)(b) of the Act, the legislature overlooked the position of an executor, is also unsustainable. There is no proper basis for asserting that the failure of section 40G(1)(b) of the Act to expressly address the position of an executor supports a construction of the legislation to the effect that an executor brings an exclusion application on his or her own behalf to protect his or her own interest in property of the estate (albeit an interest contingent of the subject Property being excluded from forfeiture). On the contrary, the legislation, as drafted, recognises the distinction between a person who acquires property in their own right and the personal representative for the time being of an estate.

139 In summary, the vesting of the chose in action in the Executor amounted to the vesting of such interest as the Deceased had at the time of her death, that being the right to the return of the Property subject to proof of lawful acquisition. The vesting of the Deceased’s personal property in the Executor could not, and did not, in this case, create a different or better interest in the Property in the Executor.

140 Accordingly, the substantive application is dismissed. I will hear from the parties as to the making of appropriate orders.

Citations

Komljenovic v Director of Public Prosecutions [2018] VCC 44

Cases Citing This Decision

0

Cases Cited

9

Statutory Material Cited

0

Leybourne v Permanent Custodians Ltd [2010] NSWCA 78

Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2009] NSWSC 769

Matthews v SPI Electricity Pty Ltd (Ruling No 31) [2013] VSC 575

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[2018] VCC 44

5 February 2018