Moloney v Attorney-General of Victoria, Director of Public Prosecutions (No 2)

[2010] VCC 1323

IN THE COUNTY COURT OF VICTORIA Revised

Not Restricted

AT MELBOURNE

CIVIL DIVISION

Case No. CI-08-03670

ROBERT GERARD MOLONEY	Applicant
v
ATTORNEY-GENERAL OF VICTORIA	First Respondent
and
DIRECTOR OF PUBLIC PROSECUTIONS FOR VICTORIA	Second Respondent
and
STATE OF VICTORIA	Third Respondent

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JUDGE:	HIS HONOUR JUDGE SACCARDO
WHERE HELD:	Melbourne
DATE OF HEARING:	15 and 16 April 2010, 19 May 2010
DATE OF JUDGMENT:	8 September 2010
CASE MAY BE CITED AS:	Moloney v Attorney-General of Victoria, DPP & Anor (No 2)
MEDIUM NEUTRAL CITATION:	[2010] VCC 1323

REASONS FOR JUDGMENT

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Catchwords: Confiscation Act 1997 – breach of duty of disclosure – undertaking as to damages – enquiry as to damages.

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APPEARANCES:	Counsel	Solicitors
For the Applicant	Ms F I O’Brien QC with	Davies Moloney
Ms E A Bennett
For the Second and Third	Mr S G O’Bryan SC with	Solicitor for Office of Public
Respondents	Ms L De Ferrari	Prosecutions
HIS HONOUR:

1          In this matter in which I delivered Reasons for Judgment on 19 May 2010, Mr Moloney now seeks an enquiry as to damages in accordance with the undertaking as to damages which was provided on 9 September 2008[1] in the process of securing a restraining order[2] pursuant to of the Confiscation Act 1997 (“the Act”) in respect of Mr Moloney’s property at 71 Mathiesons Lane, Nirranda.[3] Should I find that such damages are payable, the sum claimed by Mr Moloney is $320,000, being the value of the property as assessed by a Valuation undertaken by the Valuer-General. The application made by Mr Moloney is opposed by the respondents.

[1]             The undertaking was given by the second respondent on behalf of the third respondent and was in the

[2]             usual form.

[3]             “the Restraining Order”

2          It is generally agreed between the parties that in deciding this matter I should apply the following principles of law, namely:

(i)	A failure to make full disclosure in response to which the Court decides to discharge an injunction does not preclude the making of a new application for the same injunction which the Court may grant;[4]
(ii)	The onus is upon Mr Moloney to show that the loss claimed would not have been sustained but for granting of the injunction;[5]
(iii)	The loss claimed must be directly caused by the wrongly obtained injunction;[6]
(iv)	Effect should be given to the undertaking unless special circumstances exist.[7]
(v)	Special circumstances which may result in the undertaking not being enforced include conduct by the respondent to the injunction such as would render the enforcement of the undertaking inequitable;[8]
(vi)	Account is to be taken of all matters that bear upon the justice or injustice of enforcing the undertaking;[9]
(vii)	Unreasonable delay can be a relevant circumstance which acts as a disqualifying factor in respect to the making of an award for damages;[10]

[4]             “The Property”

[5]             Hayden v Teplitzky (1997) 74 FCR 7

[6]             Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1981) 146 CLR 249

[7]             Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (supra) Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (supra)

[8]             McCleary v Commonwealth Director of Public Prosecutions (1998) 157 ALR 301

[9]             F Hoffmann-La Roche & Co AG v Secretary for Trade and Industry [1975] AC 295

[10]           McCleary v Commonwealth Director of Public Prosecutions (supra)

3          Further, I am satisfied, given that the undertaking as to damages has its origins in equity, that in dealing with the issue of causation I should adopt the approach endorsed by the High Court in European Bank Ltd v Robb Evans of Rob Evans & Associates,[11] namely:

[11] [2010] HCA 6 (10 March 2010)

(i)

that there is little to be gained from an examination of the authorities dealing with causation of damage in contract, tort and other situations; the court is better advised to look at the purpose which the undertaking as to damages is to serve and to identify the causal connection or standard of causal connection which is most appropriate to that purpose;[12]

(ii)

that in a proceeding of an equitable nature, it is generally proper to adopt a view which is just and equitable or fair and reasonable in all the circumstances, rather than to apply a rigid rule. However the view that the damages should be those which flow directly from the injunction and which could have been foreseen when the injunction was granted, is one which will be just and equitable in the circumstances of most cases.[13]

[12]           European Bank Ltd v Robb Evans of Rob Evans & Associates (supra) where the Court adopted the statement of Mason J in Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (supra)

[13]           European Bank Ltd v Robb Evans of Rob Evans & Associates (supra) where the Court adopted the

Does delay by Mr Moloney in bringing this Application render the Enforcement of the Undertaking Inequitable?

4          The time line relevant in this matter is as follows:

(i)	Mr Moloney was charged with seven offences which formed the basis of the application for the restraining order on 10 April 2008;
(ii)	On 1 August 2008, four of the charges laid against Mr Moloney which involved cultivate a narcotic plant - cannabis; traffic cannabis - a commercial quantity; cultivate a narcotic plant - cannabis; traffic a drug of dependence - cannabis, were withdrawn;
(iii)	The restraining order was made on 9 September 2008. The undertaking as to damages was also given on that day;
(iv)	On 19 November 2008, Mr Moloney entered a plea of “guilty” to the three charges which were still proceeding, namely, cultivate a commercial quantity of cannabis; possess a drug of dependence - cannabis; and possess a prohibited weapon without exemption - crossbow. By reason of that plea, the property was automatically forfeited sixty days later, on 18 January 2009, pursuant to the operation of s.35(1) of the Act;
(v)	On 22 September 2009, a declaration pursuant to s.36(1) of the Act was made that the property had been forfeited to the Attorney-General of Victoria by his Honour Judge Parsons;
(vi)	On 28 September 2009, Mr Moloney was sentenced by her Honour Judge Campton;
(vii)	On 20 November 2009, the Certificate of Title of the property was amended so as to remove the Restraining Order and register the Attorney-General of Victoria as the sole proprietor of the property;

statement by Aickin J in Ansett Transport Industries (Operations) Pty Ltd v Commonwealth [1977]
HCA 71.

5          In his affidavit in support of this application, Mr Moloney deposed:

• That he first became aware that his property had been restrained in late September-October 2008, at which time he said that he –

“… felt a sense of great hopelessness about what I could do about

what appeared to be happening to me.”[14]

[14]           paragraph 12 of the affidavit sworn 30 November 2009

• That during 2008 –

“… My then solicitor, Caroline Howe, did advise me that family members could make what she described as an ‘exclusion order’ if they had an interest in the property. I was unaware at that time that any assistance that my family had given me in relation to the property could form the basis of such an interest. I therefore did not pursue the making of such an application as I believed it was hopeless.”[15]

• That on or about 1 October 2009, he was approached by a friend who advised him –

“… that I should see a solicitor about this forfeiture. I advised him that I had been told that there was nothing I could do. He insisted that I obtain a second opinion and further advice of counsel.”[16]

[15]           paragraph 23 of the affidavit sworn 30 November 2009

[16]           paragraph 18 of the affidavit sworn 30 November 2009

6          I am of the view that any trauma experienced by Mr Moloney when he first became aware that the property had been restrained clearly arose by reason of the commission by him of the Schedule 2 offence in respect of which he had entered a plea of guilty, and not by reason of any knowledge on his part as to the irregularity in the process by which the restraining order had been obtained. In these circumstances, I am of the opinion that no weight should be given to any feeling of hopelessness experienced by Mr Moloney as to what was occurring to him at this time as explaining or excusing any delay on his behalf in seeking to overturn the restraining order.

7          I am of the opinion however, that in the absence of any knowledge as to the deficiency in the material which supported the restraining order, the earliest time at which any criticism could be levelled against Mr Moloney in respect of his delay in bringing this application commences with the date upon which he knew, or ought to have known, of the deficiency in the material which supported the making of the order.

8          In turn, when considering the issue of prejudice suffered by the respondents by reason of any delay on the part of Mr Moloney, the relevance of any such delay needs to be considered in the context of the date upon which any right of action which the Act provided to the Director Of Public Prosecutions for Victoria (“the DPP”) in respect of the property, was lost.

9          The time by which an order under the Act might have been sought by the DPP with respect to the property (without the necessity to obtain leave of the Court) expired six months after Mr Moloney’s conviction.[17] Accordingly, the DPP lost the right to take any action with respect to the property on 28 March 2009. In my opinion, any delay which occurred after this date, whilst not necessarily irrelevant, should be accorded much less significance when compared with the delay which occurred prior to that date, as the latter delay was not associated with the loss of any right of action by the DPP.

[17]           Section 58(3)

10        Given that as at April 2009 Mr Moloney was not aware of any deficiency in the material which supported the making of the restraining order, and that he had received advice from his solicitor that the right to make an application with respect to the restraining order lay with the members of his family and not with him,[18] I am of the opinion that it is difficult to criticize any failure by Mr Moloney to initiate a process which challenged the restraining order prior to April 2009.

[18]           Which advice was not unreasonable given the circumstances of the Schedule 2 offence upon which the restraining order was based.

11        Whilst it may be appropriate to be somewhat critical of the failure of Mr Moloney to acquaint himself of his legal rights and to commence the present application without any delay after April 2009, it is appropriate to balance against that criticism the following matters:

(i)	Whilst at no time during the relevant period in which a further application for a restraining order or an application for a pecuniary penalty order could have been sought was Mr Moloney aware of the deficiency in the material which had supported the making of the restraining order, the DPP had corporate knowledge of those matters and could have taken steps to remedy the situation or to further protect any potential interest which it sought in the property;
(ii)	The effect of the making of the restraining order coupled with Mr Moloney’s conviction has been to allow the wrongful transfer of title in the property to the third respondent;
(iii)	If the order sought by Mr Moloney is made in his favour, the net result of the order will be to restore the position in which the parties would have been in but for the wrongful transfer of the property, in that the third respondent will retain the property and will merely account to Mr Moloney for its value in accordance with the Valuation of the property undertaken by the Valuer-General;
(iv)	The rights of Mr Moloney and the obligations of the DPP as prescribed by the Act are not easily identified and involve issues of considerable complexity for lawyers and even more so for non-lawyers such as Mr Moloney.

12        In these circumstances, I am satisfied that it is not appropriate to characterise any delay on behalf of Mr Moloney in this matter as being unreasonable such that it would render the enforcement of the undertaking as inequitable or would disentitle Mr Moloney to the making of an award of damages.

The Causal Relationship between the Loss of the Property and the Injunction

13        I do not accept the submission made by Mr O’Bryan SC on behalf of the respondents that the effect of a restraining order made under the Act is akin to that of a Mareva injunction. Whilst it is correct to say that the primary function of the restraining order was to restrain disposal of the property, the making of the order in circumstances in which Mr Moloney had already agreed to plead guilty to the charge which supported the order (namely cultivate a commercial quantity of cannabis), initiated and established the process by which the property became the subject of an automatic forfeiture order under s.35 of the Act, upon Mr Moloney’s eventual conviction.

14        In these circumstances,

(i)	I am of the opinion that statements by other courts as to the passive nature of a Mareva injunction have little relevance in the circumstances of the present case as it could not be said that the effect of the restraining order was merely to restrain any dealing in the property;
(ii)	I am satisfied that the loss by Mr Moloney of the property was a directly caused by the wrongful making of the restraining order.

15        Notwithstanding this finding, in considering the issue as to whether the damages which are sought by reason of the breach of the duty of disclosure which I have found to have occurred in this instance flow directly from the making of the restraining order, I must consider whether Mr Moloney has established on the balance of probabilities that, but for the making of the restraining order, the property would not have been confiscated.[19]

[19]           Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (supra)

16        It is submitted on behalf of the respondents that I should not be satisfied that Mr Moloney has made out his case that the loss by him of the property occurred by reason of the wrongful making of the restraining order. In this regard, it is put:

(i)	that had the restraining order been set aside, the respondents would have been entitled to make a further application for a restraining order, which application would have invariably succeeded; or alternatively:
(ii)	that it was inevitable upon Mr Moloney’s conviction, that the property would have been sold to satisfy a pecuniary penalty order made with respect to the property.

17        It is the respondent’s position that, in the presence of the ability of the DPP or its proper officer to exercise the right to make further applications under the Act with respect to the property, Mr Moloney has not satisfied the onus upon him to establish that he would have retained his interest in the property but for the making of the restraining order.

The Relevance of the entitlement of the DPP to make an Application for a further Restraining Order – Would an Application for a new Restraining Order have led to the making of the Order?

18 It is submitted on behalf of the respondents that had the restraining order been set aside, on the balance of probabilities an application for a new order would have been made under one or other of the provisions of s.16(2), namely s.16(2)(a) or alternatively s.16 (2)(b) or s.16 (2)(c) or s.16(2)d), and that in these circumstances, it was inevitable that a restraining order would have been made and the property would have been forfeited.

19 I am satisfied that, in the event that the restraining order had been set aside by reason of the non-disclosure which supported it, the DPP possessed a discretion to apply for a fresh restraining order,[20] and that had it elected to do so, each of the above alternatives were available to it.[21]

[20]           Hayden v Teplitzky (1997) 74 FCR 7

[21]           Director of Public Prosecutions for Victoria v Ali (2009) 23 VR 203

20        I am of the opinion however that the position put on behalf of the respondents, namely, that:

(i)	the DDP would necessarily have exercised its right to make a fresh application for a restraining order; and further
(ii)	had it done so, an order which resulted in the loss by Mr Moloney of property would have been made;

and that accordingly, Mr Moloney has not satisfied the onus upon him to establish that he would have retained his interest in the property but for the making of the restraining order, does not necessarily follow and warrants careful scrutiny.

Analysis as to the Probability of the Outcome of an Application for a Restraining Order under s.16 (2)(b) or s.16(2)(c) or s.16(2)d) of the Act if such an application had been made

21        In my Reasons for Judgment delivered on 19 May 2010, I found that:

• Section 16(4) imposed upon the applicant for the restraining order, an obligation to inform the Court of relevant matters and that in this case those matters included the fact that there was no commerciality involved in the charges which were proceeding against Mr Moloney.

• The provisions of s.18(1)(c) entitled the Court, when considering whether it should grant a fresh restraining order, to take into account the lack of commerciality in this instance and, in all probability, depending upon when the fresh application was made, the fact that the property had not been acquired with any proceeds of crime[22] when deciding whether there were reasonable grounds which justified the making of the restraining order.

[22]           That the property had not been acquired by reason of the proceeds of crime was raised with her Honour Judge Campton in the hearing before her on 19 November 2008: see Exhibit MC-4 to the affidavit of Jane Warren sworn 21 September 2009. Accordingly, this fact was known to the DPP at that time at the latest, and if known it should have been brought to the attention of the Court when a further application was made.

22        Given that the provisions of s.18(1)(c) apply equally to an application for a restraining order under s.16(2)(b), s.16(2)(c) or s.16(2)(d), it follows from those reasons that, at any time at which an application for a new restraining order was made pursuant to any of those sub-sections of the Act, the provisions of s.18(c) required the court to which such an application was made to weigh the totality of relevant evidence available to it when deciding whether there were reasonable grounds for making the order sought.

23        In these circumstances, I do not accept that, had the DPP chosen to make application for a fresh restraining order, the probable result of an application under s.16(2)(b) or s.16(2)(c) or s.16(2)(d), would have been the granting of a restraining order in circumstances in which the Court would have been informed of the absence of any commerciality in the charges.

Analysis as to the probability of the outcome of an Application for a Restraining Order under s.16(2)(a) of the Act if such an application had been made

24 I am satisfied that, if the provisions of s.16(2)(a) had been relied upon in making a fresh application for a restraining order:

(i) the Court would have been required to grant a restraining order if it was satisfied that “a member of the police force suspected on reasonable

grounds that the property is ‘tainted property’ in relation to a Schedule 2

offence”;[23] and further:

(ii)     that in the circumstances of the present case, a court would have been so satisfied, given that the crop the subject of the charges brought against Mr Moloney had been cultivated on the property.

[23]           This is so by reason of the operation of s.18(2) of Legislation Act 1984

25 This being so, I accept the submission made on behalf of the respondents that had an application for a restraining order been made under s.16(2)(a), it was inevitable that a restraining order would have been made under s.18(2) .

26 Should s.16(2)(a) have been employed as the route by which a restraining order was sought, an application for an order for civil forfeiture of the property may have been made by the DPP under s.37. Upon such an application, the Court is required, pursuant to the provisions of s.38, to make the order assuming the timing provisions of s.38 are met.

27 Recourse by the DPP to s.37 is discretionary however,[24] and s.38(2) provides a mechanism by which a court may exclude either a particular property or a particular interest in a property from the operation of a civil forfeiture order in circumstances in which it is satisfied “that otherwise hardship may reasonably be likely to be caused to any person by the order”.[25]

[24] The employment of the word “may” in the section clearly makes this so: see s.40 of the Interpretation

[25]           S.38(2)

28        It was put by Mr O’Bryan SC that the provisions of s.38(2) would have entitled Mr Moloney, upon the making of an application for a civil forfeiture, to apply to the Court to have the property excluded from the order on the grounds of hardship; but that in the absence of such an application, an order for forfeiture would invariably follow as the result of an application for forfeiture under s.37.

29        Whilst I accept this submission, given:

(i)	the discretion which existed in the DPP not to apply for a civil forfeiture order;
(ii)	the entitlement of Mr Moloney to make an application under s.38(2) and the likely material upon which any such application would have been based; namely, that there was no commerciality associated with the offence of which Mr Moloney had been convicted and depending upon when the application was made, the fact that the property had not been acquired with any proceeds of crime;
(iii)	the absence of any evidence adduced by the respondents that the DPP would have made an application for a civil forfeiture order in the circumstances of the present case, or even that it was its general practice to do so;

I do not accept that the loss by Mr Moloney of his title to the property was the probable result of an application for such a restraining order under s.16(2)(a) had such an application been made.

Analysis of the Relevance of the Entitlement of the DPP to Apply for a
Pecuniary Penalty Order if such an application had been made

30        Section 58 entitles the DPP to apply for a pecuniary penalty order with respect to a person convicted of a Schedule 2 offence. Upon the making of an application for a pecuniary penalty order, s.68(2) entitles the DPP to make application for an order that the Court treat as benefits derived by a defendant in relation to an offence, all property in which the defendant had an interest at the time at which the application was first made regardless of whether any benefits were actually derived in relation to the offence.[26]

[26]           Section 68(3)(a)

31        It is clear that both s.58 and s.68(2) give to the DPP a discretion[27] as to –

[27]           the language employed by s.58 and s.68 in employing the word “may” is clearly permissive: see s.40 of the Interpretation of Legislation Act 1984

(i)	whether it will make an application for a pecuniary penalty order; and
(ii)	whether, in the circumstances in which it has exercised that discretion, it will then make an application for the provisions of s.68(2) to apply to such an order.

32        Whilst it was submitted on behalf of the respondents that I should assume that the DPP “would discharge his obligations to enforce the Act fully in accordance with its objects no matter how harsh it is,”[28] having regard to the language employed by s.58 and s.68(2) (which is clearly permissive), it can be hardly said that either section imposes upon the DPP an obligation to make an application under those sections.

[28]           T 247

33        In the absence of any evidence adduced by the respondents as to any practice which exists on the part of the DPP in making applications under s.58 and or s.68 or that it would have made such applications in the present case, when considered in the context of the fact that, at the time at which any such applications would have been made there was no issue that the offence being relied upon:

• did not contain any aspect of commerciality; and

• was not one in which it was alleged that the property involved had been acquired with any proceeds of crime;

I am of the opinion that it is a matter of mere speculation as to whether any such applications would have been made.

Finding as to the relevance of the entitlement of the DPP to make further application under the Act with respect to the Property had the Restraining Order been Set Aside

34        It is clear that had the restraining order been set aside by reason of the failure to make appropriate disclosure, a discretion existed in the DPP or its proper officer to –

(i)	make no further application for a new restraining order; or alternatively
(ii)	make an application for a further restraining order relying upon the mechanism established by s.16(2)(a); or alternatively
(iii)	make an application for a further a restraining order relying upon the provisions of s.16(2)(b), or alternatively, s.16(2)(c), or alternatively, s.16(2)(d);
(iv)	make an application for a pecuniary penalty order under s.58;
(v)	make an application under s.68 that the Court treat the property as a benefit derived by a defendant in relation to an offence,

35        Given:

(i)	the factual circumstances of Mr Moloney’s Schedule 2 offence;
(ii)	the circumstances which pertained to the setting aside of the restraining order;
(iii)	the absence of any evidence adduced by the respondents as to the usual or likely practice adopted by the DPP in making applications for restraining orders or pecuniary penalty orders

doubt exists in my mind as to whether:

ƒ the DPP would indeed have made a fresh application for a restraining

order, and if a fresh application for a restraining order been made, whether the application would have been made under s.16(2)(a) in preference to s.16(2)(b) and or s.16(2)(c) and or s.16(2)(d);[29]

[29]           I group these alternatives together by reason of the fact that in deciding the outcome of an application made under any one of them, the Court would take a similar approach.

ƒ the DPP would have made an application for a pecuniary penalty order under s.58 or an application under s.68(2) to have the property treated as a benefit derived fin relation to the offence.

36        In the presence of this doubt, and in the absence of any evidence adduced by the respondents on the issue, when regard is had to –

(i)	the discretion vested in the Court to refuse an order if any further application had been made under the provisions of s.16(2)(b) and or (c) and or (d);
(ii)	the discretion vested in the Court pursuant to s.38(2) to make an order to exclude the property from the operation of a civil forfeiture order, if any further application had been made under the provisions of s.16(2)(a);
(iii)	the discretion which existed in the DPP not to apply for a pecuniary penalty order under s.58 or for an order under s.68(2);

I am of the opinion that the question as to whether any further application would have been made under the Act which would have resulted in Mr Moloney being deprived of the property is no more than mere speculation and as such, that it does not impact upon the causal relationship which I am satisfied has been established between the wrongful making of the restraining order and the loss of the property.[30] .

[30]           Whilst the onus is upon Mr Moloney to satisfy me of the causal relationship between the restraining order and his loss of the property, as I am satisfied as to that relationship, the absence of any evidence by the DPP as to the course which it would have taken with respect to the making of either:

Conclusions

37        I am satisfied that, had the restraining order been set aside by reason of the failure by Mr Harris to make full disclosure when seeking the order, a number of options were available to the DPP for the purpose of seeking a further order in relation to the property. When I take into account:

(i)	the uncertainty as to whether the DPP would have availed himself of any of those options, and if he did;
(ii)	the discretion available to the Court with respect to the making of an order which deprived Mr Moloney of his title to the property;

the uncertainty which exists as to whether a further order would have been made which resulted in Mr Moloney being deprived of the property is such that it does not, in my opinion, undermine the causal nexus established by Mr Moloney between the making of the restraining order and the loss by him of the property.

38        In the circumstances, I am satisfied that Mr Moloney is entitled to the relief sought by him in the form of damages.

39        I will hear the parties as to the precise order which is sought in favour of Mr Moloney and also upon the question of costs.

- - -

(i) a further application for a restraining order; or
(ii) a pecuniary penalty order;

results in the question as to whether any of those processes would have been initiated, and if they
had been initiated their outcome remaining speculative.