A Newfoundland and Labrador Supreme Court judge has rejected a government request to force two people to answer questions under oath in relation to the house of assembly spending scandal.

In court documents, the provincial government has alleged that two more people could be civilly liable for defrauding taxpayers in relation to the scandal.

Lawyers for the province filed an application to compel Robert Hand and Christina Serna to answer questions under oath before deciding whether to launch a court action against them.

Chief Justice David Orsborn turned down the application Wednesday morning.

Hand and Serna are the children of John Hand, who pleaded guilty to fraud over $5,000, paying kickbacks to a government official and breach of probation. In early 2011, John Hand was sentenced to three years in jail for those crimes.

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Businessman John Hand - pictured in a 2010 file photo - pleaded guilty to three charges connected to Newfoundland and Labrador's constituency spending scandal.

The younger Hand and Serna were involved with the three companies — JAS Enterprises, Zodiac Agencies and Cedar Scents International — that bilked taxpayers of millions.

The province’s court filings allege that the younger Hand and Serna were part of the fraud, at least to some degree.

"The intended plaintiff does believe that the intended defendant and others participated in a fraud on the government of Newfoundland and Labrador," the applications filed against both Hand and Serna note.

But because of "the complete lack of reliable or complete records" of the businesses in question, the government says it is "unable to determine the role and responsibility of the intended defendant in the extensive fraud."

Hand’s children appear on corporate records as directors of JAS Enterprises. And according to court documents filed by the province, the duo had signing authority for business undertakings of Zodiac Agencies and Cedar Scents.

Lawyers for the government wanted to question the two under oath before deciding whether to launch civil court action against them.

"We know they were involved in some way" in the companies, lawyer Robert Andrews of Ottenheimer Baker, which is handling the civil action for the province, told the court Wednesday.

"The question is whether they were involved in the fraud."

Hand and Serna declined to give statements to police investigators during the spending scandal probe, Andrews told the court.

John Hand has maintained that his children had nothing to do with the fraud he committed against taxpayers.

Andrews acknowledged that "could be true."

But the government wants to speak with them to confirm it.

"Did these people control these companies?" he asked the court.

"Are they the ones we should be pursuing?"

The government’s court filings allege that the younger Hand and Serna received some or all of their vehicle payments from monies paid by the government to the companies in question.

The province contended that means the duo was "well aware" of the undertakings of the businesses, and not merely an "innocent bystander" to their father’s fraudulent activities.

Chief Justice David Orsborn rejected the government’s application, noting the "extreme nature" of the order. "I’m not persuaded it’s absolutely necessary," Orsborn said.

That effectively means the province would have to file civil action to compel Hand and Serna to answer questions under oath.

Father’s conviction

According to the agreed statement of facts in John Hand’s fraud and bribery case, Hand’s daughter delivered envelopes containing kickback money to Bill Murray. Murray was the then-house of assembly bureaucrat also convicted in the scandal.

But John Hand stressed that his daughter did not know what was in the envelopes.

The three companies received payments totalling nearly $2.7 million from the provincial government.

Police investigators could only find $360,000 worth of product — mainly trinkets like rings and low-value novelty items — provided to the house of assembly.

The agreed statement of facts in John Hand’s case indicated there might have been as much as $2.3 million in fraudulent invoices, although that number was put in question because of the lack of a paper trail.

As part of his sentence, the court ordered John Hand to pay $450,000 in restitution.

The province later sued him, and won a judgment for the full $2.3 million.

Auditor General John Noseworthy uncovered the spending scandal in 2006. Subsequent police investigations led to the jailing of four MHAs from across the political spectrum, along with the convictions of Murray and John Hand.

The scandal led to a sweeping overhaul of the house of assembly, following a judicial review of the system that permitted the scandal to happen.