McMunn v DPP
[2009] VSC 44
•18 February 2009
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
CRIMINAL DIVISION
No. 1463 of 2005
IN THE MATTER of the Confiscation Act 1997
| CORNELIA MARIA McMUNN | Applicant |
| v | |
| DIRECTOR OF PUBLIC PROSECUTIONS FOR VICTORIA | Respondent |
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JUDGE: | HARPER J | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 24 SEPTEMBER 2008 | |
DATE OF JUDGMENT: | 18 FEBRUARY 2009 | |
CASE MAY BE CITED AS: | C McMUNN v DPP | |
MEDIUM NEUTRAL CITATION: | [2009] VSC 44 | |
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CONFISCATION OF PROPERTY – Restraint of “tainted property” – Application for exclusion order – Matrimonial home – Purchase price paid by the offender – Applicant the registered proprietor – Subsequent payment by the applicant to the offender of monies from sale of the applicant’s deceased mother’s estate – Claim for beneficial interest in half the property - Whether the applicant acquired her interest without knowing, and in circumstances such as not to arouse a reasonable suspicion, that the property was tainted – Offender’s history of conviction for obtaining financial advantage by deception - Confiscation Act 1997, ss.20 and 22.
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APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr C. Juebner | Randles Cooper & Co Pty Ltd |
| For the Respondent | Mr M. Derham QC with Mr S.K. McGregor | Stuart Ward, Acting Solicitor for Public Prosecutions |
HIS HONOUR:
The Confiscation Act 1997 came fully into operation on 1 July 1998. One of its purposes is to provide for the forfeiture and subsequent management of property which, because it has been purchased with funds acquired as the result of the commission of certain offences, is – to use the word employed by the Act – “tainted”. Some of the offences in question are enumerated in Schedule 2 of the Act. One such offence is obtaining a financial advantage by deception.
The applicant, Cornelia McMunn, was on 21 December 1998 registered as the sole proprietor of the land known as 3 Bendall Street Kensington. She remains so registered. But the only source of the money paid to the vendor came from a company, Interest Recount Corp Pty Ltd (“IRC”), owned and operated by her husband, John McMunn. Her vendor, therefore, received nothing from her.
The property was purchased as the matrimonial home. Both husband and wife gave evidence of their agreement that, as between themselves, each should have a half share in it, although only Mrs McMunn’s name would appear on the certificate of title. This is despite the fact that she did not contribute to the purchase price as received by the vendor. On 27 November 1998, some five weeks after settlement of the Bendall Street transaction, she did, however, provide an amount of $70,000 to her husband as her agreed contribution to the purchase price. I accept this evidence.
The contract to purchase 3 Bendall Street was signed, by John McMunn, on 15 August 1998. The purchase price was $320,000. A deposit of 10% was, as Mrs McMunn admits, paid by the company. The (adjusted) balance of $288,660.57 was, as she further admits, also paid by IRC. Mrs McMunn met the fees of the Titles Office ($882.00), and paid the stamp duty ($14,860.00). The company’s total contribution was therefore $320,660.57, while to this point Mrs McMunn provided a total of $15,742.00.
At the relevant times, IRC was engaged in a business which involved it, and therefore Mr McMunn as its owner and director, in obtaining a series of financial advantages by deception. On 5 May 2005, Mr McMunn was convicted of 16 such offences arising out of this business, together with a similar number of offences under the (Commonwealth) Crimes Act 1914. The effect, at least for present purposes, was that s.16 of the Confiscation Act was enlivened, and the present respondent, the Director of Public Prosecutions, was in a position to apply to the Court under that section for a restraining order over property in which John McMunn has an interest, or which is tainted in the sense described above – that is, that it was realised from the commission of an offence such as obtaining a financial advantage by deception.
The property at 3 Bendall Street appears to meet both descriptions. I am satisfied that Mr McMunn has an interest in it, or at least in part of it, and that it is tainted. The DPP has traced the purchase price for the property through IRC to the offences of which John McMunn has been convicted. I have no reason to doubt this evidence.
On 16 May 2005, Hollingworth J made a restraining order forbidding the disposal of the property or any interest in it. Mrs McMunn now seeks to have what she claims to be her interest excluded from the operation of the restraining order. Section 20 of the Act gives her that right. The Court may grant an application such as hers in a number of circumstances. One in particular is relevant here. Where the application is made by a person who has not been convicted of any relevant offence (which, in this case, means a person who is not John McMunn), it may be granted if the Court is not satisfied that the property is not tainted but is satisfied that the applicant acquired her interest after the commission of the offence or offences, but without knowing, and in circumstances such as not to arouse a reasonable suspicion, that the property was tainted.
A large number of issues were argued during the hearing of Mrs McMunn’s application. One seems to me to be crucial. Given my satisfaction that the property is tainted, the next question is whether Mrs McMunn has an interest in it. But she must have at least a bare legal title, even if not a beneficial interest, because she is the registered proprietor. In these circumstances, I must ask myself whether I am satisfied that she acquired her interest without knowing, and in circumstances such as not to arouse a reasonable suspicion, that the property was tainted. The application cannot be granted unless I am so satisfied: Confiscation Act 1997, s.22(b)(i)(C).
Mrs McMunn’s evidence is that she did not know, and had no reason to know, that either IRC or her husband was engaged in fraudulent or otherwise unlawful activities. What is more, she paid for what she asserts is her half share in the property. The funds which enabled her to do this came from the proceeds of sale of the previous matrimonial home. She had inherited this from her mother; and then it became hers alone. When it was sold, for $140,000, she proceeded in accordance with her agreement with her husband to give half the proceeds to him as the price of her half share in Bendall Street. The amount involved was therefore $70,000 – an amount which represented something in the order of a quarter of the total Bendall Street purchase price, including costs. Mrs McMunn has also assumed responsibility for all the outgoings. She has therefore provided consideration for what she claims is her half share (albeit that her contribution did not match half the purchase price) and, as the registered proprietor, is able to call in aid the indefeasibility provisions of the Transfer of Land Act 1958.
The property which Mrs McMunn inherited from her mother was situated at 41 Green Street Airport West. When she first gave evidence on the matter, which happened to be by an affidavit made on 13 September 2005, Mrs McMunn swore that the Airport West land was sold on the same day that 3 Bendall Street was purchased: 15 August 1998. She repeated this evidence in her next affidavit, sworn on 3 May 2007. But in fact the contract for the sale of the Green Street house was not signed until 3 October 1998. The sale price was $140,000.
Settlement of the Bendall Street purchase was effected on 22 October 1998, almost three weeks after the Green Street contract was signed. The latter transaction, in turn, was settled on 5 November 1998 a mere 32 days after the sale of the former matrimonial home. Twenty-two days later, on 27 November 1998, Mrs McMunn paid the $70,000 to her husband. He used it in his business.
On the basis of these facts, Mrs McMunn claims the right to an order excluding from the operation of the Confiscation Act that half of the Bendall Street property she says belongs to her. As respondent to the application, the DPP takes a very different position. He submits that she must have known, or at least suspected, that the business of IRC was illegitimate. First, there was her husband’s criminal record, all of which was admitted by him at the conclusion of his trial on the charges to which I referred in paragraph [5] above. He traded in dishonesty. His first conviction, for false pretences, was on 8 August 1967, when he was 24 years old. His second, again for false pretences (three counts), was a year later, on 18 August 1968. On 17 December 1969 he was convicted of one count of stealing. Similar convictions (two counts) were recorded on 11 September 1972, followed on 3 November that year by convictions on seven counts of embezzlement. The September and November convictions were both followed by sentences of imprisonment.
John and Cornelia McMunn were married in February 1975. Then, on 3 July 1975, Mr McMunn was convicted of being concerned in the management of a company within five years of being convicted of an offence involving dishonesty. Under cross-examination in this proceeding, Mrs McMunn said that she was not aware, at the time of the marriage, of her husband’s police record; but, she said, she became aware of it a short time afterwards. At some stage, she heard it read in court.
She had a number of opportunities to listen to the full presentment, because the convictions continued. On 11 December 1978, the County Court dismissed an appeal against two of four convictions recorded on 16 June that year for obtaining a financial advantage by deception; the appeal was otherwise upheld. On 23 April 1987, Mr McMunn was convicted in the County Court on one count of obtaining property by deception. Almost five years later, on 20 February 1992, he was convicted of 43 (sic) counts of obtaining property by deception, two counts of forgery, one count of attempting to obtain a financial advantage by deception, one count of performing the functions of a financial broker without a licence, and one count of breaching a suspended sentence (that of 23 April 1987). On this occasion, he was given a total effective sentence of six years and nine months’ imprisonment, with a non-parole period of 4 years.
Further convictions were recorded against Mr McMunn on 28 October 1994. He was then sentenced to a total effective term of imprisonment of 18 months following his being found guilty on four counts of imposing on the Commonwealth. He was also ordered to pay reparations in the sum of $71,775.48.
John McMunn was released in June 1995. Time spent in pre-sentence detention presumably explain what would otherwise appear to be foreshortened periods of incarceration.
It is in this general context necessary to examine in more detail the provisions of s.22(b)(i)(C) of the Confiscation Act. Its effect is to provide for certain applications made under s.20 of the Act. An application may be made under that section for an order excluding property from the operation of a restraining order made against that property pursuant to s.18. Where a person other than the person who has been convicted of the triggering offence or offences makes the application, the court may in certain circumstances grant the application. Such an order may be made, for example, if the court is not satisfied that the property in which the applicant claims an interest is not tainted property but is satisfied that each of certain other specified pre-conditions has been made out. One of these pre-conditions is that, where the applicant acquired her interest after the commission of the offence, she did so without knowing, and in circumstances such as not to arouse a reasonable suspicion, that the property was tainted property.
I cannot be satisfied that Mrs McMunn acquired her interest in the Bendall Street property in circumstances such as not to arouse a reasonable suspicion that the property was tainted. No person dealing with Mr McMunn and knowing of his criminal history as at the end of 1994 could sensibly rely on his honesty in relation to any issue or dealing of any financial magnitude, especially if it was financially opportune for him to be dishonest.
The financial dealing that involved the purchase of the Bendall Street home was one of some magnitude. Yet it was one that he could and did finance within three years of his release from prison and without resort to a bank or other source of funds. According to Mrs McMunn, she was informed by her husband that this was possible because “he would be getting about $400,000 from the sale of software”.[1] She did not deal with the payment of the reparations the subject of the October 1994 proceedings.
[1]Affidavit of Cornelia Maria McMunn sworn 23 January 2008, para.8.
There is no evidence to suggest that this software ever actually existed, still less that Mr McMunn developed it himself. Indeed, if it existed, there is no evidence about how he came to be in a position to sell it: its provenance is something that, in her affidavit, Mrs McMunn ignores altogether, just as she says nothing to clarify the obvious query about the ability of IRC to continue in business without what on its face would seem to be the software employed in its business. If she is telling the truth about what she was told, and if that which appears in her affidavit was all she was told, then her husband’s account ought to have aroused a reasonable suspicion about the existence of the software and, if it existed, whether it was honestly acquired. She might have explored the issue with her husband in order to allay her suspicion; but if she did, this is another example of her affidavit being silent on a very important question.
In these circumstances, I cannot be satisfied that Mrs McMunn acquired her interest in the Bendall Street home in circumstances such as “not to arouse a reasonable suspicion that the property was tainted property”.[2]
[2]Confiscation Act 1997, s.22(b)(i)(C).
There are further reasons for disquiet. First among them is the decision to have her registered as the sole proprietor of Bendall Street. Mrs McMunn says that it was put in her name alone because “I was unwilling to abandon the security of the Airport West property which was in my name alone unless I had the same security at Bendall Street.”[3] By this she presumably means that she was unwilling to change from a position in which she was the sole registered proprietor to one in which she was not. But she was the sole registered proprietor of a property in which her husband had no interest, and which was worth only a fraction of the residence at Bendall Street. This has since altered to the extent that (as she sees it) she now has a half share in a property worth more than twice that of Green Street and the purchase price of which was initially provided entirely by her husband. As between husband and wife, and by comparison with Green Street, she gains nothing from having the Bendall Street title in her name alone, while Mr McMunn runs the risk that his wife will sell from under him to a purchaser for value without notice.
[3]Affidavit of Cornelia Maria McMunn sworn 13 September 2005, para.6
That is the position in which Mr and Mrs McMunn find themselves as a result of her being the only registered proprietor – although, on any view, she provided the minority of the purchase price for a property a half share in which is worth more than the entire value of the land she once owned outright. When she was the sole proprietor of the Green Street land, the relevant certificate of title reflected the true position.
Now it does not. It does not reveal Mr McMunn’s beneficial interest in Bendall Street. Nor does the affidavit material to which Mrs McMunn has sworn reveal the true reasons why. No doubt her name appears on the title so as to protect her position as joint proprietor with her husband. But it does not appear alone – and therefore without his – in order to give her the same security at Bendall Street as she had at Green Street. Her interest (or security) in Bendall Street would not be diminished were her husband’s name to appear beside hers. Rather, as both she and Mr McMunn conceded in their oral evidence in this case, she is the sole registered proprietor so as better to enable her husband to escape the clutches of his creditors.
That he was prepared to do this could not have increased her faith in his honesty. That she was prepared to fudge the truth in her affidavit material can only increase my doubts about her credibility, and decrease any satisfaction I might otherwise have had that she acquired her interest in the Bendall Street land in circumstances such as not to arouse a reasonable suspicion that it was tainted property.
Her affidavit material is unsatisfactory for other reasons. She swore on several occasions[4] that Green Street was sold on 15 August, the same day on which (as she swore in her affidavit of 13 September 2005[5]) she signed the contract for the purchase of Bendall Street. But, as later evidence conclusively revealed, the contract for the sale of Green Street was signed not on 15 August but on 3 October 1998; and it was not Mrs McMunn who signed the contract for the purchase of Bendall Street. It was her husband.
[4]Affidavits of Cornelia Maria McMunn sworn respectively on 13 September 2005 (para. 3) and 3 May 2007 (para.8).
[5]At para. 3.
Mrs McMunn swore in her affidavit of 3 May 2007[6] that she and her husband maintained separate bank accounts, and generally kept their accounts separate, “throughout” their marriage. This, as she also swore in her 3 May affidavit, was at her insistence. Yet, in her affidavit of 23 January 2008[7], she deposes that the finances of husband and wife were joint until “the early 1980’s [when] both John and I were made bankrupt.” There is no explanation for the discrepancy.
[6]At para. 10.
[7]At para. 4
It is worth re-iterating at this point that an applicant who seeks an order under Part 2 of the Confiscation Act excluding the applicant’s interest in tainted property from the operation of a restraining order must satisfy a court of a number of things. One is that he or she acquired the interest without knowing, and in circumstances such as not to arouse a reasonable suspicion, that the property was tainted. It follows that the application may well be fatally compromised by any carelessness, let alone mendacity, in putting forward the evidence in support of the application. In swearing her affidavits, Mrs McMunn was, at the least, careless. For this reason alone, I have been unable to be satisfied that the necessary elements of a successful application have been made out.
The application would therefore have been dismissed even were I not satisfied that no reasonable suspicion attended the acquisition by Mr McMunn of the interest in software put forward by his wife as the source of the funds used by him to pay the vendor for the Bendall Street home.
Much argument was had, during the course of the hearing before me, about the equitable principles which, on certain views of the case, might have been applicable. Given the views to which I have come, those arguments are irrelevant. Also irrelevant, on the position I have adopted, is the question whether the other pre-conditions for a successful application for an exclusion order, as these pre-conditions are laid down in s.22(b) of the Confiscation Act, have been met.
The application must be dismissed.
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