Advan Investments Pty Ltd v Dean Gleeson Motor Sales Pty Ltd [2003] VSC 201

Supreme Court of Victoria|2003-06-13|Before: GILLARD J.

CONTEMPT OF COURT - Alleged breach of injunction - Elements of proof - Casual or inadvertent and unintentional breach - Court declining to exercise jurisdiction - Charges dismissed - Indemnity costs payable by party bringing proceeding.

This is the return of two summonses issued in the proceeding by the plaintiff seeking orders that the first and second defendants be punished for contempt of court, and that they pay the plaintiff's costs of the contempt proceeding.

On 21 June 2002 the plaintiff, Advan Investments Pty Ltd ("Advan Investments"), issued a writ in this court against Dean Gleeson Motors Pty Ltd ("the company"), Dean Gleeson ("Mr Gleeson"), and Melinda Gleeson ("Mrs Gleeson"). Advan Investments is a company incorporated in South Australia. The defendant company carries on the business of buying and selling motor vehicles and boats for reward in this State. Mr Gleeson is and was the sole director of the company.

Mrs Gleeson, his wife, is joined in the proceeding because she evidently owns a number of properties, and it is alleged that certain moneys owing to Advan Investments by the company and/or Mr Gleeson have been used to pay mortgage instalments in respect of the properties in her name.

Advan Investments alleged that it entered into three agreements with either or both the defendants during the period from June 1998 to March 2001 to carry on the business of importing, buying and reselling motor vehicles and boats as a joint venture. It is alleged that the businesses were carried out for a period of time. Advan Investments alleges that the company and/or Mr Gleeson breached the various agreements.

Advan Investments claims damages in the order of some $770,000 against the company and Mr Gleeson, and seeks an order for restitution against Mrs Gleeson in respect of moneys allegedly owing to it which have been used to reduce or discharge mortgages on the properties in her name.

On the same day Advan Investments made an ex parte application for a Mareva injunction.

On 24 June 2002 Osborn J granted orders restraining the three defendants from removing or dealing with their assets. Provision was made for the company and Mr Gleeson to continue with their businesses, but subject to complying with a requirement to disclose details of transactions. Paragraph 4 of the order authenticated by the Judge provided -

"4. Notwithstanding the order contained in paragraph 1, the first and second defendants shall be at liberty to continue to buy and sell motor vehicles and boats in the ordinary course of their business, save that they must, within 24 hours of the purchase or sale of a boat or a motor vehicle, inform the plaintiff's solicitor in writing of the following:

(a) the amount and source of funds used to purchase the said motor vehicle or boat;

(b) the name and other contact details of the vendor and the amount paid to the vendor for the motor vehicle or boat purchased by the first or second defendant;

(c) the name and other contact details of the purchaser and the amount paid by the purchasers for the motor vehicle or boat;

(d) the account into which the proceeds of the sale of a motor vehicle or boat is deposited or otherwise placed."

Paragraph 5 of the order required each defendant within seven days to swear and deliver an affidavit disclosing, inter alia, the nature, extent, value and whereabouts of their assets.

Although the orders were interlocutory and made ex parte, they were expressed to continue until further order. Express liberty to apply was granted to the defendants to vary or discharge the order upon giving 24 hours' notice of intention to do so. No application has been made by or on behalf of the defendants to vary or discharge the orders made. True copies of the orders were served on the company and Mr Gleeson on 24 June 2002.

On 1 July 2002 Mr Gleeson swore and delivered two affidavits in purported compliance with the obligations under the orders made, setting out the assets of the company and himself. Commencing on 4 July 2002, Mr Gleeson forwarded to the plaintiff's solicitors by facsimile details of the purchases and sales of motor vehicles by the company and himself, in compliance with paragraph 4 of the order.

The plaintiff's solicitors engaged the services of a licensed inquiry agent who made observations of the motor vehicles present at the place of business of the company and Mr Gleeson during July/August 2002. As a result of these observations and the comparison of them with the information provided by the company and Mr Gleeson, the opinion was formed that both the company and Mr Gleeson were not complying with paragraph 4 of the orders made by Osborn J.

The plaintiff's solicitors did not contact the company, Mr Gleeson or their solicitor to inform them of the perceived discrepancies in the reporting procedure or, indeed, to seek any explanation. This was despite the fact that the solicitors for the parties were in regular contact at that time.

On 16 September 2002 the plaintiff's solicitors issued two summonses: one against the company and the other against Mr Gleeson, seeking orders that both be dealt with for contempt of court. Each summons alleged that 13 separate transactions were conducted by the company and Mr Gleeson, in breach of paragraph 4 of the orders of Osborn J, and that they failed to give the necessary information to the plaintiff's solicitors.

In support of the summonses, Advan Investments filed two affidavits: one sworn by Vanessa Louise Filippin on 16 September 2002, a solicitor in the employ of the plaintiff's solicitors, and Ross McDonald, the licensed inquiry agent, sworn the same day. The summonses came on in the Practice Court and Beach J, on 26 September 2002, gave directions concerning the filing of affidavit material and referred the matter to the Listing Master to fix a hearing date.

As a result of the directions given, affidavits were sworn by Mr Gleeson on 22 October 2002, and a solicitor acting for the company and Mr Gleeson, Stephen Peter Byrne, on 23 October 2002. The plaintiff filed a further affidavit by Vanessa Filippin, sworn 27 November 2002, but did not contest or challenge the affidavit of Mr Gleeson and set out the correspondence between the solicitors which led to the contempt proceeding.

The plaintiff's solicitors also subpoenaed documents from various sources in order to establish its case, and no doubt to test the statements made by Mr Gleeson in his affidavit. Whilst the defendant's solicitor was aware that the documents had been produced to the Prothonotary, the defendants were not apprised of the particular documents that were to be relied upon at the hearing of the two contempt summonses.

They came on before me on 12 May 2003, by which time the plaintiff's advisers had considered the allegations of failure to comply with paragraph 4 of the order and the evidence in support, and informed the court that many of the charges would not be proceeded with. I granted an adjournment on that date to enable the two defendants to consider the balance of the charges brought against them, and I also ordered the plaintiff's advisers to identify the documents which would be relied upon by the plaintiff in proof of its case.

On 16 May 2003 Vanessa Filippin swore another affidavit in which she identified the documents produced by Roads Corporation upon which the plaintiff sought to rely. As a result of the amendments to the two summonses there were, all told, five charges left. Four of the charges were common to both the company and Mr Gleeson. They were in the summonses when issued. The fifth charge is an additional charge brought against the company. The summons against the company was amended to add the charge. Bearing in mind the purpose of a contempt proceeding in respect of a failure to comply with an order made in a civil proceeding in this court, and the fact that Mr Gleeson is the sole director of the company and its alter ego, it seems to me unnecessary to have two summonses against the two defendants raising precisely the same issues.

It is convenient to set out in summary form the common charges brought against Mr Gleeson and the company. Dealing with the charges brought against Mr Gleeson, they are -

1. (Para 6 of summons) That in breach of paragraph 4 of the orders made by Osborn J on 24 June 2002, Mr Gleeson failed to inform the plaintiff's solicitors within 24 hours or at all, in respect of the purchase or sale by the first or second defendant of a red Holden Camira, registration No. ORF-116, of the details of the transaction as required by the order.

2. (Para 9) That in breach of paragraph 4 of the orders made by Osborn J on 24 June 2002, Mr Gleeson failed to inform the plaintiff's solicitors within 24 hours or at all, in respect of a purchase by the first or second defendant of a white Nissan Pulsar, registration No. EAP-631, of the details of the transaction as required by the order.

3. (Para 10) That in breach of paragraph 4 of the orders made by Justice Osborn on 24 June 2002, Mr Gleeson failed to inform the plaintiff's solicitors within 24 hours or at all, in respect of the purchase by the first or second defendant of a white BMW sedan, registration No. FCB-151, of the details of the transaction as required by the order.

4. (Para 11) That in breach of paragraph 4 of the orders made by Osborn J on 24 June 2002, Mr Gleeson failed to inform the plaintiff's solicitors within 24 hours or at all, in respect of the purchase by the first or second defendant of a dark blue Honda, registration No. EWZ-086, of the details of the transaction as required by the order.

Paragraph 5 of the orders obliged each defendant within seven days of service of the order to serve on the plaintiff's solicitors an affidavit disclosing with full particularity the nature, value and whereabouts of their assets. The additional charge, which was brought only against the company was -

5. (Para 2) That in breach of paragraph 5 of the orders made by Osborn J on 24 June 2002, the company failed to include in the affidavit filed in purported compliance with paragraph 5 of the orders made by Osborn J on 24 June 2002 a light blue Ford sedan, registration No. NLU-029.

The charge brought against the company, being the additional charge, was in fact a new charge. The original charge was that there was a breach of paragraph 4 of the orders made, by the company allegedly failing within 24 hours to give the necessary details of the transaction involving that vehicle.

It was only after Mr Gleeson had filed his affidavit of 22 October 2002 that it was appreciated by the plaintiff's advisers that he had failed to disclose in the company's affidavit of assets this particular vehicle. Mr Gleeson stated that the omission was accidental and unintentional and he regretted the omission.

I interpolate to observe that the value of the vehicle was of the order of $2,000.

On the sale of that vehicle compliance with paragraph 4 occurred, namely, details were given of the transaction. Advan Investments amended the original charge to an entirely new allegation of contempt, even though the omission had been identified and the car had been sold.

The main purpose of civil contempt, namely, coercion to enforce an order, did not exist and it was not the type of infringement which merited punishment as a contempt of court; at most, it was a trifling breach.

The general rule is that the failure to comply with an injunction in a civil proceeding is a civil contempt. However, it can be converted into a criminal contempt where the disobedience or breach involves deliberate defiance "or as it is sometimes said, if it is contumacious". See Witham v Holloway.[1]

In that case at p.531, Brennan, Dean, Toohey and Gaudron JJ observed that the basis of the distinction between civil and criminal is that civil contempt proceedings are brought to remedy or coerce the recalcitrant party to comply with the order, whereas criminal contempt is concerned with the public interest, namely, vindicating judicial authority and maintaining the integrity of judicial process.

In Australian Consolidated Press v Morgan,[2] Windeyer J at p.498 described a proceeding for civil contempt as being:

"Used primarily to compel obedience rather than to punish disobedience."

However, in some cases, because of the nature of the civil contempt, it is treated as a criminal contempt and deserves severe punishment.

The party which brings a proceeding for contempt bears the onus of proof and must satisfy the elements of the charge of contempt beyond reasonable doubt, see Witham v Holloway.[3]

In order to prove a civil contempt of court involving a breach of an order of the court, the plaintiff has to prove the following:

(i) that an order was made by the court;

(ii) that the terms of the order are clear, unambiguous and capable of compliance;

(iii) that the order was served on the alleged contemnor or excused in the circumstances, or service dispensed with pursuant to the Rules of Court;

(iv) that the alleged contemnor has knowledge of the terms of the order;

(v) that the alleged contemnor has breached the terms of the order.

It is necessary for the plaintiff to prove each element beyond reasonable doubt. In accordance with the principles of the criminal law, in proving element (v) it must be proven that the act or omission which constituted the breach of the order was deliberate and voluntary.

Where the allegation is a failure to comply with the order, it may be difficult to prove that the omission to do something was deliberate and voluntary. However, it is trite to observe that this will depend upon all the circumstances.

Whether it is necessary to prove any further fact depends upon the terms of the order. As a general proposition, it is unnecessary to prove that the contemnor committed the breach with an intention to disobey the order. In Knight v Clifton,[4] Sachs LJ said:

"When an injunction prohibits an act, that prohibition is absolute and it is not to be related to intent unless otherwise stated on the face of the order."

The same observation may be made where an injunction requires something to be done. It must be obeyed. As a general proposition, unless stated on the face of the order, it is unnecessary to prove disobedience with intent to disobey the order, see Stancombe v Trowbridge Bridge UDC,[5] Heatons Transport Ltd v Transport and General Workers Union[6] and McNair Anderson & Associates v Hinch.[7]

If the disobedience was "casual or accidental and unintentional", this is relevant to penalty and also whether the court should exercise the contempt jurisdiction. See Re Perkins; Mesto v Galpin.[8]

In Heatons Transport case,[9] Lord Wilberforce, speaking for the House, said -

"It is also the reasonable view (the views of Warrington J in the Stancombe's case) because the party in whose favour an order has been made is entitled to have it enforced, and also the effective administration of justice normally requires some penalty for disobedience to an order of the court if a disobedience is more than casual or accidental."

The question arises whether a casual or accidental and unintentional breach of an order is a defence to a charge of contempt.

In considering that issue, I emphasise I am dealing with an individual, Mr Gleeson, and a one-man company controlled and operated by him. He is in effect the company. I am not dealing with a company which is held responsible for the acts of its employees.

The phrase "casual or accidental and unintentional" was used by Warrington J in the Stancombe case. His Lordship was considering a Rule of Court which dealt with contempt and the question arose as to proof of wilful disobedience of the Order. The Rule relevantly provided -

"Any Judgment or Order against a corporation wifully disobeyed may by leave of the court ... "

"I think the expression `wilfully' in Order 42 r.31, is intended to include only such casual or accidental and unintentional acts as are referred to in Fairclough v Manchester Ship Canal Co."

The cases which have discussed the phrase are English or are concerned with the English law. I refer to Steiner Products Ltd v Willy Steiner Ltd[11] Re the Agreement of Mileage Conference Group of the Tyre Manufacturers Conference Ltd;[12] Knight v Clifton;[13] and Australian Meat Industry Employees Union v Mudginberri Station Pty Ltd.[14]

The English law as at 1903 was discussed by the High Court in the Mudginberri case, and the Court had to consider the English principles insofar as they applied to Federal jurisdiction. The court was concerned with the power in England in 1903 to impose a fine in the case of breach of an order which was more than casual, accidental or unintentional. It is necessary to bear this in mind when considering what the High Court said. The High Court, after considering the English cases, said this at p.113 -

"It follows that a deliberate commission or omission which is in breach of an injunctive order or an undertaking will constitute such wilful disobedience unless it be casual, accidental or unintentional."

The English position is summarised in a leading Text, "Contempt of Court" by C.J. Miller (3rd Edition), where the learned author says at p.657 -

"A series of modern cases has confirmed that given the requisite knowledge of the order, a civil contempt will usually require no more than proof of an intentional act or a bare omission which is in breach of it. The obligation to comply with the order is in this sense strict. An intention to disobey it is unnecessary and any additional element of mens rea is relevant only as to the penalty to be imposed. Nonetheless, it seems that liability for civil contempt (and not simply one which is deserving of punishment) will be negated where the act alleged constituted a contempt is itself accidental and unintentional."

In my opinion, save for the last sentence, what the learned author says is the law in this State. The last sentence reflects the English Rules of Court. In my opinion, it would not be a defence to a contempt proceeding to show that the disobedience came about by some casual or accidental and unintentional act. Putting it around the other way, it is not part of the prosecution's proof once the matter is raised to establish that the breaching act or omission was something that was not casual or accidental and was intentional. However, in my opinion if the evidence revealed that the breach was casual or accidental and unintentional, that would be relevant to whether or not this court should exercise its contempt jurisdiction and, on any view, is relevant to the question of penalty if the court comes to the view that it should exercise the jurisdiction.

In Re Perkins, supra, the Court of Appeal was considering the question of the contempt jurisdiction and, at p.512, Brooking JA, speaking for the court, said -

"It is well accepted that although the court is satisfied that a contempt has been committed, it may decline to make any order, in which case it will often describe itself as declining to exercise the jurisdiction to deal with contempts summarily. It can probably be said that most commonly the question whether this should be done has arisen in relation to the publication of statements said to have the tendency to prejudice the fair trial of proceedings. In this connection the expression `technical contempts' has been coined."

His Honour went on to refer to what Fullagar J said in Davis v Bailey,[15] and then stated that the observations made by Fullagar J, applied not only to contempt proceedings dealing with a report which had a tendency to prejudice the fair trial of proceedings, but also they also applied generally to any contempt proceeding.

It is appropriate to repeat what Fullagar J said in relation to what may be described as a slight infringement. His Honour said -

"In others again the court has, I think, taken the view that the tendency to prejudice is there, but that it is only slight, and that not merely ought it not to punish but it ought not to hold guilty of contempt a person who was innocent of any wrongful intent and innocent of gross negligence."

Brooking JA, at p.514, summarised the position when he said -

"But when called upon to exercise the summary jurisdiction in contempt the judge does have what appears to be a unique discretion at common law: he may in his discretion decline to adjudge the respondent guilty of contempt, that is, decline to convict, notwithstanding that, as judge of the facts and the law, he is satisfied that a contempt has been committed."

In my view, in the exercise of a discretion, this court may refuse to exercise its contempt jurisdiction and thereby dismiss the proceeding. If the court was of the view that the charge was trivial or minor and lacked substance, or was casual or inadvertent and unintentional, even though technically established, it could decline to exercise the jurisdiction. As I have said, it would be relevant to the question of penalty that the breach was nothing more than a casual or accidental and unintentional breach.

In my opinion, the plaintiff must establish that the contemnor had knowledge of the terms of the order and that he deliberately committed an act or omitted to do some act which had the effect of breaching the order. Unless the terms of the order require otherwise, the plaintiff does not have to prove that the act or omission constituting the breach was accompanied by an intention to deliberately breach the order.

At the outset, it is necessary to determine what paragraph 4 of the order required the company and Mr Gleeson to do. Upon receipt of the orders and the court documents, Mr Gleeson engaged a solicitor on behalf of the company and himself, to advise on what he had to do. The solicitor prepared a pro forma concerning transactions, which the two defendants were to complete. The solicitor, Mr Stephen Byrne, sent a copy to the plaintiff's solicitors for consideration and comment. The plaintiff's solicitors did not respond and thereafter the company and Mr Gleeson forwarded the information required by paragraph 4 to the plaintiff's solicitors, basically in the form of the pro forma. They were justified in proceeding on the assumption that the plaintiff's solicitors had agreed.

The plaintiff's solicitor requested Mr Byrne to provide more information later as to the identity of the motor vehicles the subject of the transactions. In particular, request was made to provide the chassis and engine numbers and registration numbers. Mr Byrne responded by informing the plaintiff's solicitors that the order did not require that to be done. It will be necessary to trace through the correspondence later.

Two issues arose as to the application of paragraph 4, namely, when did the 24 hours' period obliging the provision of the information of the transaction commence; and secondly, what details were required to be given? Paragraph 4 does not expressly state what details had to be given concerning each motor vehicle or boat, and secondly, it did not define the phrase, "the purchase or sale of a boat or motor vehicle".

Nevertheless, it is implicit, in order to give effect to the paragraph, that the motor vehicle or boat, the subject of any transaction, be identified in some way.

In my view it was a matter for the company and Mr Gleeson to provide sufficient information to enable a particular motor vehicle or boat to be identified. This could be by one of a variety of descriptions. In my view, they were not obliged to provide information of chassis and engine numbers or indeed registration numbers, although one might expect that registration numbers would be given as a very convenient method of identification. In fact, registration numbers were given except in cases where there were no registration plates.

The more important question concerns the time when the obligation arose to give the details of the transaction. The moment in time when that obligation arose was within 24 hours of the purchase or sale. In my opinion the sale or purchase, according to paragraph 4, could not come about until in the case of the purchase the amount of money was paid to the vendor and, in relation to a sale, until the amount was paid by the purchaser.

This is made clear by paragraph 4(b) and (c), reinforced by the provisions of paragraph 4(d), which required information as to where the proceeds of the sale of the vehicle or boat were deposited or otherwise placed. In my opinion, on a fair reading of the order, the obligation to give notice within 24 hours commenced at the time when money was paid or received as the case may be.

Mr Nugent of counsel, who appeared for Advan Investments, in argument raised the question when the obligation arose, if money did not change hands. When the obligation arises does depend on the circumstances and, if money did not change hands, the obligation would arise on the completion of the sale or purchase. But if money did change hands, then full compliance with the order could not occur until the money was paid or received, as the case may be. At that moment in time, the 24 hours period commenced.

I am satisfied beyond reasonable doubt that Advan Investments has proven that an order was made by the court which was in operation at all relevant times and that the terms of the order were clear, unambiguous and capable of compliance.

I am also satisfied that the order was served on both the company and Mr Gleeson. I rely upon the affidavit of service of Glen William Traeger sworn 26 February 2003. Also, in his affidavit sworn 22 October 2002, Mr Gleeson stated that he recalls that on or about 24 June he was served with a number of documents including, "a copy general form of order." His affidavit went on to state that he retained Mr Byrne who attended upon him, and discussed with him the terms of the order and what he had to do.

Mr Pirrie of counsel, on behalf of the defendants, at one point submitted that there were doubts whether the full terms of the order were served upon the company and Mr Gleeson. He produced a bundle of documents which were delivered to his instructing solicitor in February this year. The documents which were sent by facsimile transmission omitted a number of pages of the copy orders. These documents were in purported compliance of a request to produce all documents served on the defendants.

However, in my opinion the issue is whether or not the documents were served on 24 June 2002, and in my opinion the evidence establishes that beyond reasonable doubt. Indeed, Mr Pirrie did not seek to call his instructing solicitor to suggest that when he received the copy orders very soon after service on 24 June 2002 they were incomplete.

I am also satisfied beyond reasonable doubt that Mr Gleeson had knowledge of the terms of paragraphs 4 and 5 of the orders. Whilst he said he had some difficulty understanding them and their effect, nevertheless it is clear from his affidavit that he discussed the terms with his solicitor that the latter prepared responses to the requirements of paragraphs 4 and 5, affidavits of assets were sworn and filed and a procedure was put in place for the company and Mr Gleeson to give the necessary information to the plaintiff's solicitors. Mr Gleeson and the company had the necessary knowledge of the terms of the orders. See Sun Newspapers Pty Ltd v Birsbane TV[16] and Madeira v Roggette Pty Ltd (No. 2).[17]

It is convenient to deal with each charge separately:

1. Red Holden Camira - QRF-116. Advan Investments proved by production of documents concerning registration from the Roads Corporation that on 26 July 2002 a company called Grand Prix, which carries on business at 1/385 Warrigal Road, Cheltenham, sold a vehicle to the company, and on 27 July 2002 the company sold the vehicle to Mr Stanislav Havkin. The evidence revealed that no notice was given of this transaction to the plaintiff's solicitors.

In his affidavit sworn 22 October 2002 Mr Gleeson swore that the vehicle was not purchased by either the company or himself, nor were the proceeds of the sale paid to the company or himself. He stated the car was on loan from Grand Prix, who had purchased the vehicle and to whom the proceeds of sale were paid. He stated that although the sale occurred on his car lot and it passed through his licence, neither he nor the company had any interest in the vehicle. He went on to state that selling other licensed motor car traders' vehicles is a common practice in the used car sale industry.

After service of Mr Gleeson's affidavit, the plaintiff's solicitor subpoenaed documents from a number of sources in order to check Mr Gleeson's version of transactions involving a number of vehicles which were the subject of the original charges. I am satisfied that a subpoena was directed to Grand Prix to produce the documents.

Ms Filippin, the solicitor acting for the plaintiff, had subpoenaed Grand Prix to produce documents but was uncertain whether she had received any documents. It was put to her that the documents were sent to her at her office rather than to the court in compliance with the subpoena. She was uncertain whether she did receive any documents because her file was not in court. Request was made that the documents be produced, but the request was declined.

It is clear, however, that Ms Filippin could have followed up the queries, if any, raised by any of the documents, and if the documents were not produced then she could have enforced the subpoena.

Mr Gleeson was cross-examined in relation to this transaction. He informed the court that Grand Prix carried on business in a yard very close to his own; that the vehicle was displayed on his car lot because of insufficient space at Grand Prix's premises; that when the sale occurred a representative of Grand Prix was present because the purchaser was Russian, and the persons involved with Grand Prix spoke Russian.

I am not satisfied beyond reasonable doubt that the company or Mr Gleeson sold the motor vehicle within the meaning of paragraph 4 of the order. On the contrary, the company and Mr Gleeson did not in my view sell the car, and I rely on the evidence that he gave before the court and the fact that no contradictory evidence was called. In my view the "sale of a motor vehicle" within the meaning of paragraph 4 means a sale by Mr Gleeson or his company, of a vehicle or boat owned by it. It follows that this charge is dismissed.

2. White Nissan Pulsar - EAP-631. The plaintiffs proved by documents obtained from the Roads Corporation that on 19 August 2002 the registration of a vehicle was transferred into the name of the company. On that date the vendor was Edwards Motor Company of Beaumaris and it transferred the vehicle to the company. Notice was not given of this transaction until 15 October 2002. It is alleged the company and Mr Gleeson breached the order by failing to give the notice within the 24 hour period.

In his affidavit sworn 22 October 2002, Mr Gleeson swore that the vehicle was at all times owned by Edwards Motor Company, held by him on consignment and did not become the property of the company or himself until he had paid for it. Ms Filippin filed a subpoena directed to Edwards Motor Company and the company forwarded documents to the plaintiff's solicitors, who in turn, on 18 December 2002, forwarded the documents to the court.

Ms Filippin was able to peruse the documents. One of the documents was a tax invoice which was dated 19 August 2002. This revealed a sale to the company, but it was a condition of the terms of the sale that the property remained in the vendor until the vehicle supplied had been paid for in full. Another document revealed that Edwards Motor Company paid into its bank on 17 October 2002 a cheque for the vehicle. In his later affidavit Mr Gleeson confirmed those facts.

In my opinion, on a proper interpretation of paragraph 4, the obligation to give notice of the details of the transaction arose when the sale was completed by the payment of money. Notice was given. I am not satisfied that the company or Mr Gleeson breached the order. On the contrary, I am satisfied they did not. This charge should also be dismissed.

3. White BMW - FCB-151. The plaintiff proved, according to the Roads Corporation documents, that this car was registered in the name of the company on 16 August 2002. Notice was not given until 30 August 2002. The complaint is that the company and Mr Gleeson were 13 days late in their reporting obligations.

Mr Gleeson, in his affidavit sworn 12 June 2003, stated the vehicle was actually purchased on 30 August 2002 when the company paid the purchase price. He exhibited a copy of the company's bank statement which showed that on 29 August the company withdrew $7,300. The company and Mr Gleeson were obliged within 24 hours of the sale being effected, namely, by payment of the price, to give details, and the details were given on 30 August 2002.

There was compliance with paragraph 4 of the order. The plaintiffs failed to prove this charge and it is dismissed.

4. Dark Blue Honda - EWZ-086. The plaintiffs have proved that the vehicle was registered in the name of the company by a transfer dated 23 September 2002. Notice was not given until 27 September 2002. In his affidavit sworn 22 October 2002, Mr Gleeson swore that the vehicle was owned by Dutton Wholesale and held by him on consignment until purchased by the company. Ms Filippin, on behalf of the plaintiff, subpoenaed documents from Dutton Wholesale. The documents were forwarded to the Prothonotary on 10 December 2002 and subsequently inspected.

The documents contain an invoice of sale to Mr Gleeson dated 23 September 2002 and the Dutton Wholesale daily cash banking summary dated 1 October 2002. This revealed that Dutton Wholesale banked on 1 October 2002 the cheque for $4,000 from Mr Gleeson for the purchase. Mr Gleeson gave evidence that he in fact handed over the cheque on 27 September 2002.

The plaintiff has not proven that the company or Mr Gleeson breached the order in respect to this transaction. The evidence shows that it did not, and that he and the company complied with the order and gave the details within time. That charge is also dismissed.

5. Light Blue Ford Sedan - NLU-029. The original charge was that the company and Mr Gleeson had breached the obligation to give details of a transaction. After Mr Gleeson had sworn his affidavit of 22 October 2002 and it was delivered to the plaintiff's solicitors, it was appreciated that he had failed, when swearing the affidavit on behalf of the company as to assets, to comply with the provisions of paragraph 5 of the order in that he omitted to reveal this vehicle as an asset of the company.

The evidence also established that observations were made in July/August 2002 of the company's premises by the licensed inquiry agent, and that those observations revealed the vehicle was on the premises from time to time. In his first affidavit Mr Gleeson stated that the vehicle had always been in the company's stock prior to the filing of the contempt proceedings, that it was sold on 15 October and notice was given of the details of the transaction in accordance with paragraph 4.

It was this revelation which caused the plaintiff's solicitors to amend the charge by alleging a completely different charge, namely, a failure to reveal the vehicle as an asset. When Mr Gleeson swore his affidavit the charge against the company and himself was a breach of paragraph 4. After the charge had been deleted in respect of himself and a new charge alleged against the company, Mr Gleeson responded in his affidavit of 12 June 2003 to the new charge against the company.

He stated at the time when he prepared the two affidavits of assets he undertook a stocktake and it was his belief that the motor vehicle was not on the premises at that time because works were being performed on it. In his rush to complete the task of preparing the list of assets, he inadvertently overlooked and forgot the vehicle. He noted that once the vehicle was received back in stock and was sold, the details were given to the plaintiff's solicitors in accordance with paragraph 4 of the order.

He gave evidence that the omission was accidental, inadvertent and certainly not intentional, and that throughout he had been concerned to comply with the orders of the court. The court was informed that the value of the vehicle was in the order of $2,000. The plaintiff has proven beyond reasonable doubt a technical breach of the order. I accept the evidence of Mr Gleeson that it was an accidental omission. It was accidental, inadvertent and not intentional.

Whilst I note that there is a feeling of distrust and disquiet in the plaintiff's camp concerning the conduct and behaviour of the company and Mr Gleeson, and whilst I appreciate that the plaintiff has provided a substantial sum of money to the first and second defendants and is very concerned about their conduct, nevertheless I am quite satisfied that bearing in mind the value of the vehicle in question, this was a trivial breach and should not have been the subject of any contempt proceeding.

I decline to exercise the contempt jurisdiction of the court. I refer to what was said by the Court of Appeal in the Re Perkins case, supra.

When the fact of this omission came to the notice of the plaintiff's advisers long after the issue of the contempt proceeding, a careful appraisal should have been made of the situation. The main object of civil contempt proceedings was not applicable. The vehicle had been revealed. By then the vehicle had been sold and the details of the transaction had been given. To overcome the omission in the original affidavit was simple: a request for an additional affidavit. This was not done, and I am not surprised because it would have been a waste of time and money.

Further, as I said, when the motor vehicle was sold, the details were given. It was a minor breach of the order. The amount of money was only $2,000. It could not be said that Mr Gleeson or the company set out to gain an advantage of any substance. In my opinion the charge should not have been laid. On any view the breach was not deserving of any punishment, it was trivial. I decline to exercise my jurisdiction to deal with this as a contempt.

It follows that the plaintiff has not established any of the charges against the company or Mr Gleeson and the two summonses are dismissed.

As the defendants have been successful, they are entitled to the costs of the contempt proceedings. Mr Pirrie, on behalf of the defendants, submits that this is a case where costs should be paid on a full indemnity basis. He submits that the contempt proceeding had been brought for an ulterior purpose and not for the purposes of coercing the defendants to comply with the orders or as punishment for a serious and deliberate flouting of the court's authority.

He submits the proceedings have been brought to bring pressure upon the defendants in the overall proceeding. He emphasised the trivial nature of most of the charges, that the proceeding was commenced in haste without any notice being given to the defendants of the proposed charges or an opportunity to explain, that after receiving the affidavit of Mr Gleeson, further investigation revealed there was no substance in relation to nine out of the 14 charges, and that, if the documents were closely perused, it would have been appreciated there was no substance in any of the charges.

Further, charges have been dismissed; the majority not on the basis of a failure to prove breach beyond doubt, but because in fact there was no breach. He submitted that the charge against the company was farcical. There is much force in what Mr Pirrie has put to the court.

Any charge of contempt of court against a person or company is serious. Court orders are made and must be obeyed to the letter. To allege that a litigant has failed to comply with an order and to bring proceedings that he or it should be punished for breach are indeed serious matters.

Contempt proceedings should not be brought for an ulterior purpose. In civil proceedings where there is an alleged breach of an order, the main purpose for bringing a contempt proceeding is coercive or remedial. There may be another purpose. In the case of deliberate refusal to obey an order, contempt proceedings are appropriate to uphold the rule of law and to vindicate judicial authority, by the imposition of a penalty, i.e. punishment The contempt jurisdiction fulfils a dual purpose, namely, enforcement of the order and punishment, in an appropriate case, for disobedience. Once this occurs, the question arises whether the circumstances warrant some form of punishment. Care must be exercised before bringing the proceeding and careful consideration must be given to the continuation of the proceeding after the coercive function has been satisfied.

The issue and continuation of the proceeding usually produces compliance so that the coercive function is satisfied. The enforcement of a court order by the remedy of contempt is indeed drastic, bearing in mind that the penalty includes imprisonment, and in my opinion contempt proceedings to enforce an order should be a remedy of last resort. As a general rule, the coercive function of the proceeding should only be employed when there are no other effective means of doing so. The cases support that proposition. See, by way of example, Danchevsky v Danchevsky.[18] In Ansah v Ansah[19] Ormrod LJ, at p.144 said -

"Breach of ... an injunction is, perhaps unfortunately, called contempt of court, the conventional remedy for which is a summons for committal. But the real purpose of bringing the matter back to the court, in most cases, is not so much to punish the disobedience as to secure compliance with the injunction in the future. It will often be wiser to bring the matter before the court again for further direction before applying for a committal order. Committal orders are remedies of last resort; in family cases they should be the very last." (Emphasis added).

It must be steadily borne in mind that contempt proceedings are serious and must not be issued without serious and careful appraisal of the facts. The jurisdiction is not available for a litigant to punish the other litigant or seek to gain an advantage.

If the coercive function is satisfied, punishment for disobedience to a court order should, as a general rule, be confined to intentional breaches which are serious. This will depend upon the degree of culpability of the contemnor and whether there is any element of contumacy.

The power to order costs is found in s.24(1) of the Supreme Court Act 1986. The sub-section gives the court a wide discretion. It does not state any criterion to guide the court in the exercise of its discretion, but the discretion is to be exercised judicially and in accordance with Order 63 of the Rules of Court. Order 63 empowers the court to make an order that the unsuccessful party pay the costs on a solicitor/client basis or on any other basis as the court may direct.

Even though the court is given power to award costs on a different basis, the general rule is that the costs should be paid on a party/party basis. This is made clear by the terms of Rule 63.3.1 which provides -

"63.3.1. Except as provided by these rules or any order of the court, costs shall be taxed on a party/party basis."

There has been much criticism over the years of the general rule because there is a fair point to be made that a successful party seeking justice or a party improperly sued, should not be out of pocket. But the fact is the party/party basis has been the general rule now for well over 100 years. Accordingly, one commences with the proposition that the general rule applies and should only be departed from for good cause.

The general approach was expressed by Nathan J in Bass Shire Council v King, unreported decision delivered 15 August 1994, in these terms -

"It is undoubtedly a principle of law that costs follow the event on a party/party basis, but the courts are free to depart from that principle if confronted with circumstances where the conduct of one or other of the parties ... would warrant the ordering of costs on an indemnity basis. There must be special circumstances which lift the case out of the ordinary."

Quoted with approval by the Court of Appeal in Spencer v. Dowling.[20]

Over the past 20 years the courts in this country have become more prepared to make orders on a different basis when cause is shown. These orders are made where there is evidence of some inappropriate conduct on the part of a party. See, by way of example, Australian Guarantee Corporation v De Jager.[21]

In Colgate Palmolive v Cussens,[22] Sheppard J, after considering the principles, observed that the categories in which the discretion may be exercised are not closed. At p.233-44 His Honour listed a number of examples of cases where costs have been ordered on a different basis. His Honour referred to a proceeding commenced or continued for some ulterior motive or in wilful disregard of known facts, or the making of allegations which should have never been made, as instances of cases where costs have been ordered on a full indemnity basis.

As I have already stated, contempt proceedings should not be brought except in the clearest cases and where the circumstances demand that the contempt proceeding be brought to achieve obedience or to impose a penalty where the circumstances demanded punishment.

A contempt proceeding should not be brought for an ulterior purpose but, more importantly, should not be brought for what may be described as trivial breaches of an order.

In my view, although the plaintiff and its advisers were extremely suspicious of the conduct of the company and Mr Gleeson, and of his honesty, nevertheless, the proceedings should not have been brought until the charges had been carefully considered and careful thought had been given to the question of proof.

In July 2002 the plaintiff's advisers employed a licensed inquiry agent to make observations of the company's car yard. This was done over a period of 11 days between 16 July 2002 and 26 August 2002. By comparing the observations made by the inquiry agent and the details which were given by the company and Mr Gleeson, it was thought that he had failed to give details of transactions. It was on that basis that the two summonses were issued. In my view, this was not a sufficient, satisfactory or adequate basis.

In my opinion the plaintiff's advisers should have raised the alleged discrepancies with the defendants' solicitors. As things turned out, the explanation which was given by Mr Gleeson in his affidavit of 22 October 2002 resulted in some nine charges being dropped after further consideration was given to documents subpoenaed to check what he had stated. The balance of the original charges were found to be without substance.

The summonses were issued without any notice being given to the plaintiff or Mr Gleeson of the charges, nor was any attempt made to seek their response to the alleged discrepancies. The affidavit sworn by Mr Gleeson on 22 October answered at least nine of the 14 queries, which resulted in nine charges being dropped. When the plaintiff's solicitors subpoenaed documents and perused them, a perusal of the documents, together with the first affidavit of Mr Gleeson, must have raised considerable doubts about the remaining charges. Nevertheless the plaintiff pressed on and deleted a charge against the company and added a new one.

A proper analysis of the factual position should have led to the conclusion that there was doubt about most, if not all, of the balance of the charges. The charge in relation to the failure to comply with paragraph 5 by the company was, in my view, trivial. There was no attempt to cover up that transaction and full details were given of it.

There is another matter which is of concern. A perusal of the correspondence leading up to the issue of the summonses reveals that no warning was given of the charges, and no explanation was sought. It appears that the proceedings were instituted because the company and Mr Gleeson refused to comply with the request by the plaintiff's solicitors to give details of chassis, engine and registration numbers of the motor vehicles.

The conduct of the defendants' solicitor Mr Stephen Byrne was proper and appropriate throughout. He produced a pro forma which he forwarded to the plaintiff's solicitors for consideration as to the means by which the information would be given of each transaction. The plaintiff's solicitors ignored his request for their comments. The pro forma procedure was adopted.

On 16 July 2002, in a long letter, the plaintiff's solicitors raised a number of queries which were responded to by a long and detailed letter from Mr Byrne on 13 August 2002. He pointed out that under the terms of the order, his clients were not required to give information. However, he made the following offer -

"Our client does not mean to put your client to unnecessary inconvenience and is eager to oblige your client within the context of the court orders your client currently enjoys. In these circumstances our client does not mean to see your client issue an application. So if any part of answers 3-10 is unclear or requires our client's attention, please advise."

A reference to answers "3-10" is a reference to points made in his letter in response to the requests by the plaintiff's solicitor.

Mr Byrne also went on to point out that he was impressing upon his clients the importance of complying with the orders. This letter had been preceded by a threat by the plaintiff's solicitors that unless they received a response to their letter of 16 July, they would be seeking instructions to refer the defendants' non-compliance with the orders to the Supreme Court of Victoria.

By facsimile dated 16 August 2002, Ms Filippin suggested that the most convenient way to identify each motor vehicle was to provide the chassis number, engine number and registration details. A request was made to do so. It was also noted that no registration details were supplied in relation to a few vehicles, and requested that they be provided as soon as possible.

By facsimile dated 30 August 2002, Ms Filippin requested Mr Byrne to respond to the facsimile dated 16 August 2002.

Without notice to the defendants or their solicitor, on 17 September 2002 the plaintiff's solicitors served the contempt summonses. In her affidavit sworn 27 November 2002, Ms Filippin, after tracing through the correspondence, then went on to swear as follows -

"13. As I did not receive a response to that facsimile (i.e. 16 August) on 30 August 2002 I caused to be forwarded to Mr Byrne a further facsimile requesting, inter alia, that he respond to my facsimile dated 16 August 2002 ... to date I have not received a response from Mr Byrne to that facsimile.

14. Consequently summonses for contempt were filed and served upon the defendants personally." (Emphasis added).

A fair reading of paragraphs 13 and 14 leads to the conclusion that the summonses for contempt were primarily issued because of the failure to respond to the facsimile of 16 August which pressed Mr Byrne to provide additional details and also details of a few transactions.

The court asked Ms Filippin what was the object of these contempt proceedings, pointing out that the usual object of civil contempt proceedings is coercive or remedial, and she stated that she was not in a position to answer that question because of client privilege.

In my opinion this is a case where full indemnity costs should be paid by the plaintiff. I say that for a number of reasons -

* The proceeding was instituted without notice to the defendants for an explanation as to the alleged charges of contempt.

* The evidence relied upon at the institution of the proceedings was tenuous at best. The presence and removal of motor vehicles at a car yard observed over a period, and a check against the details provided was not a firm basis for the charges. If this matter had been the subject of a criminal investigation, information would have been sought from Mr Gleeson before the institution of any charges. If a request had been made, the information provided in his affidavit would have been provided, and the likely outcome would have been no proceeding.

* There were 13 charges brought against the company and Mr Gleeson. The charges related to the same matters. After Mr Gleeson had sworn his affidavit on 22 October 2002, and after the plaintiff's solicitors had examined subpoenaed documents, the charges were reduced to four common charges and one new additional charge against the company.

* When one closely analyses the four common charges, they all turn on what paragraph 4 of the order of Osborn J meant, and in my view it was clear by reference to the subparagraphs what the order required Mr Gleeson and the company to do. That interpretation meant there was no substance in the charges when the facts were considered.

* In my opinion the charge against the company of failing to reveal one asset of little value in the overall context of the case was trivial and was easily remedied by the plaintiff's requesting the defendant to serve another affidavit. There was no suggestion in my view of dishonesty on the part of the defendants in the failure to reveal this; the charge should not have been brought. Once it was revealed, in October 2002, mature reflection would have led to the conclusion that the breach was minor and not the stuff of a contempt charge.

* After the subpoenaed documents had been inspected and considered in the light of the affidavit of Mr Gleeson these steps should have led the plaintiff to conclude there was no substance in any of the remaining charges.

* In my opinion the conduct in instituting the proceedings and continuing them was inappropriate.

Contempt proceedings are serious. These proceedings should not have been instituted. They were instituted on suspicion. Having received information in the month of October and viewing documents thereafter, a careful appraisal of the facts and the charges should have resulted in the proceeding being discontinued.

The plaintiff has failed and both summonses are to be dismissed. Subject to submissions by counsel, I propose to make the following orders -

(i) That the plaintiff's summons, filed 16 September 2002 (as amended) against the first defendant Dean Gleeson Motor Sales Pty Ltd is dismissed.

(ii) That the plaintiff's summons, filed 16 September 2002 (as amended) against the second defendant Dean Gleeson is dismissed.

(iii) That the plaintiff pay the costs, including reserved costs, of the first and second defendants of the plaintiff's summonses on a full indemnity basis.

---

At a glance

Court

Decision date

Before

Source

Judgment (181 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (6)