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[2008] FCA 68
Federal Court of Australia
2008-02-14
Kiefel J, Siopis J
Original judgment source is linked above.
REASONS FOR JUDGMENT 1 On 28 February 2005 Kiefel J made orders on the application of the applicant (ACCC) restraining the first respondent, Mr Bon Levi, from offering and entering into franchise agreements in respect of a number of businesses associated with Mr Levi. The ACCC claims that Mr Levi breached those orders and on 13 June 2007 commenced a proceeding in this Court alleging contempt of court by Mr Levi. 2 By a notice of motion filed on 30 October 2007, Mr Levi seeks to stay the further prosecution of the contempt proceeding against him on the grounds that he is indigent and through no fault of his own is unable to obtain legal representation to defend the allegations made against him in that proceeding. He relies upon the principle in Dietrich v The Queen (1992) 177 CLR 292 (Dietrich). 3 There are two main issues, namely: 1 whether Mr Levi has established that he is indigent and that through no fault of his own he is unable to obtain legal representation; and 2 whether the Dietrich principle applies to a proceeding for contempt of court. 4 Mr Levi relied upon three affidavits filed on 30 October 2007, 17 January 2008 and 25 January 2008 respectively. Mr Levi was cross‑examined. The ACCC relied upon the affidavits of Mr Guy Timothy Launder and Ms Cherry Kay Roza. They were not cross‑examined. Has Mr Levi shown he is indigent? 5 I turn to the first question. Mr Levi deposed that he was bankrupt and was "employed as a marketing consultant by Australian Massage Trust, trading as Bikini Girls Massage". He said that he was paid $500 cash per week. In addition, Mr Levi said he was, until October 2007, provided with rent free accommodation at the back of the Bikini Girls' premises at Applecross. He said that he subsequently moved to a house in Sanctuary Waters and pays $110 per week in rent. His other weekly outgoings are $150 for food, $90 for entertainment and $150 for family. Mr Levi said that his wife, Mrs Susan Heelan, lives in Queensland and works as a nurse in the Gold Coast. He said that he has sent her monies on a regular basis to assist with living expenses and to enable her to fly to meet him from time to time in Melbourne or Perth. He also said that his employment with the massage business had caused him to travel four times since October 2006. His reasonable expenses in respect of that travel were paid by the Australian Massage Trust. Mr Levi deposed that he was unable to afford legal representation to defend the contempt of court proceeding. 6 Mr Levi said that he had made a number of attempts to obtain legal representation for the contempt proceeding. He had made unsuccessful applications to each of Legal Aid Queensland and Legal Aid Western Australia for legal assistance in respect of the contempt proceeding. He has also written to a number of private lawyers as to whether they would be prepared to act for him pro bono. In each of the letters that he wrote requesting assistance from the private lawyers, he said that in his view, the trial was likely to last two weeks. None of the lawyers responded favourably to Mr Levi. 7 Mr Levi said the he was employed by the Australian Massage Trust that conducted the Bikini Girls massage business from a number of locations in the Perth metropolitan area. 8 Mr Levi admitted that he was the appointor of the Australian Massage Trust. The object of the Trust is to trade as "Bikini Girls Massage". The sequestration order in respect of Mr Levi was made on 27 September 2006. The Australian Massage Trust Deed records that Mr Levi signed the Trust Deed as appointor on 1 August 2006. One of the two trustees of the Australian Massage Trust is Mr Michael Coyne who resides in Melbourne. The other trustee is Mr Levi's wife, Mrs Heelan. Mr Levi is also named in the Trust Deed as the beneficiary of the trust on behalf of his grandson. 9 Mr Levi is also the appointor of the Prestige Auto Trust. One schedule to the Prestige Auto Trust Deed records that the trust was established on 1 October 2006. A second schedule to the Trust Deed stated that as of 14 August 2007, there were three motor vehicles held by trust. These were a Chevrolet Corvette V8 ‑ registration number 1CLO 652, a blue Mercedes‑Benz ‑ registration number 1ALZ 262 and a pink panel van - registration number 1BNO 490. 10 Mr Launder deposed that he had carried out an investigation into the affairs of Mr Levi. He annexed to his affidavit copies of a number of documents which he had obtained in the course of his investigations. One of these documents is the lease of the premises at 901 Canning Highway, Applecross from which the Bikini Girls massage business operates in Applecross. The lease was entered into on the 16 September 2006 and is signed by Mr Levi as the lessee. There was an assignment of the lease by Mr Levi on 14 June 2007 to himself and his wife jointly. Further Mr Launder exhibited correspondence between Mr Levi and the managing agents of the leased property which demonstrated that it was Mr Levi who had dealt with the managing agents in respect of the leased premises. 11 Mr Launder also annexed to his affidavit, an application for the registration of a business name "Bikini Girls Massage and Sauna" with the Western Australian Department of Consumer and Employment Protection in respect of a business to be carried out at 901 Canning Highway, Applecross. This document records that the application was made by Mr Levi on 31 October 2006, and he described himself as the person who would or did carry on the business. Subsequently, Mr Levi filed a notice of cessation of the use of that name with effect from 4 May 2007. However, Mr Launder also annexed an application for registration of a business name "Bikini Girls Massage" in respect of a business to be carried out at 901 Canning Highway, Applecross and at Shop 4, 1251 Hay Street, West Perth. The commencement date of the business was shown to be 4 May 2007. The applicant for the business name was recorded as Cherry Kay Roza. 12 Mr Launder also annexed to his affidavit correspondence which shows that it was Mr Levi who dealt with Ms Tan, acting as agent for the landlord, in respect of the lease of the premises at 1251 Hay Street, West Perth, from which a Bikini Girls massage business was conducted. 13 Inquiries by Mr Launder also revealed that it was Mr Levi who on 8 November 2006 made a "Planning Approval Application" to the City of Melville in respect of the Bikini Girls massage business which is conducted from the Applecross premises. Mr Launder also annexed a number of letters demonstrating that it was Mr Levi who corresponded with the City of Melville in respect of this planning approval application. 14 Ms Cherry Roza deposed that she worked as a masseuse at the Bikini Girls business at Applecross for about a year between June 2006 and July 2007. Ms Roza deposed that: During the whole time that I worked at Bikini Girls, Bon was in charge of the business and made all of the decisions about the business. He was in charge of the day‑to‑day running of the business and told me and the other girls what to do. 15 Ms Roza also deposed that Mr Levi handled all the expenses of the business and paid them all in cash and that she never saw Mr Levi with a bankcard or credit card. Mr Levi also drafted the brochures and flyers for the Bikini Girls businesses and paid to have them printed at a place either in the City or in Victoria Park. Mr Levi set the prices for the massages. A 40 minute massage cost the client $66. The masseuse would get $22 of that sum and Mr Levi would keep $44. The clients had to pay cash as there were no credit card or EFTPOS facilities available on the premises. Ms Roza said that: When the client paid the girls, we were instructed by Bon to put the money in an envelope and put it in a drawer or, later, a cash box that was screwed to the table. We had to put all the money we received for the massage, the $66, into the drawer and Bon would sort out our payment at the end of the night.
16 Ms Roza also deposed that the masseuses were required to keep a day sheet of the massages that they had carried out. These day sheets were then handed to Mr Levi who glued them into a record book at the end of the day. Ms Roza also said that she estimated that during the time that she worked at Bikini Girls she did about ten massages a day and that when the other girls were working there they would also have done about ten massages a day. Ms Roza said that initially she was the only girl at Bikini Girls in Applecross and was doing about 15 massages a day and that she made about $2,000 in her first week. 17 Ms Roza said that it was hard to estimate how much money went through the business as it could vary a lot. However, she says that she remembers the business "made about $7,000 per week" when she first started. She knew this because she used to count the money for Mr Levi at the end of the day and from her own earnings. However, there were other times when the earnings could be as little as $3,000 a week and there may have been times when it was even less. 18 Mr Levi said in cross‑examination that he had no reason to doubt that the weekly takings of the business for two weeks in April 2007 recorded in a document shown to him, was an accurate reflection of the trading position of the business for the weeks in question. These sums were, after the deduction of the masseuses' payments, $3,894 and $4,652 respectively. Further, in proceedings taken against him by the City of Melville, he described the business as "reasonably successful". 19 Ms Roza also said that Mr Levi had told her that he had sold a partnership in the Bikini Girls business to Mr Colin Burton. 20 Mr Launder annexed a number of receipts issued to Mr Burton by Mr Levi in respect of monies paid by Mr Burton for a share in the Bikini Girls businesses conducted from three different locations. The receipts show that Mr Colin Burton agreed to purchase a 25% share in the Bikini Girls business at Applecross for $28,000, a 25% share in the Bikini Girls business at West Perth for $30,800. There is also an agreement showing that Mr Burton agreed to pay $66,000 for a 25% share of the Bikini Girls business to be conducted at Northbridge, and a receipt for the payment of $55,200 of the agreed sum. 21 Ms Roza also said that Mr Levi would go to the Raffles Hotel most nights. She said that she had seen Mr Levi spend a great deal of money at the Raffles Hotel on the occasions when she had accompanied him to the Raffles Hotel, which was about once a week. Ms Roza said that Mr Levi used to carry a wad of folded cash in his pocket and would show it around at the Raffles. There were occasions when he would buy drinks for everyone, especially when he had had a few drinks. Ms Roza said that she had seen Mr Levi spend over $1,000 in one night and had seen him spend over $300 in a single "shout" a number of times. 22 Ms Roza also said that in May 2007 Mr Levi told her he had purchased a Chevrolet Corvette motorcar. Mr Launder annexed the contract for the sale of the Chevrolet Corvette convertible, for the price of $34,000, signed by Mr Levi. The price was paid to the seller, All American Classic Cars, by direct transfer from the bank account of Mrs Heelan. 23 Further, Mr Launder annexed a letter from Mrs Heelan to the Court in response to the issue of a subpoena. In the letter Mrs Heelan states that she was the trustee of the Australian Massage Trust, and that a personal bank account in her name is used by the Australian Massage Trust pending the opening of its account. Mrs Heelan produced bank statements for that account pursuant to a subpoena. The documents show that the bank account was opened on 13 September 2006 and that during the period 13 March 2007 to 20 November 2007 a total amount of $180,722.70 was paid into that account. Further, in a letter to the Australian Government Solicitor received on 10 December 2007, Mrs Heelan advised that she was not involved in the operation of the Bikini Girls business and that the receipts and invoices of the business, if any, were not in her possession, power or control. 24 I do not accept Mr Levi's evidence that his status is that of an arms‑length employee of the Australian Massage Trust carrying out the limited function of marketing consultant for a salary of $500 cash per week. First, Mr Levi did not depose to the circumstances of the entry into any employment agreement with the trustees of the Australian Massage Trust, nor did he call Mr Coyne or Mrs Heelan to give evidence on this, or any other, matter. Second, Mr Levi did not produce any employment, pay or tax records kept by either himself or the Australian Massage Trust which evidenced the status of Mr Levi as an employee earning $500 cash per week as a marketing consultant. Third, and significantly, that claim is contrary to the evidence of Mr Launder and Ms Roza ‑ neither of whom was cross‑examined, and whose evidence I accept in preference to that of Mr Levi. The evidence of Mr Launder and Ms Roza demonstrates, and I find, that it is Mr Levi, and not the trustees, who is, and has always been, in control of all aspects of the Bikini Girls massage business since its inception, that his functions are not confined to being a marketing consultant, that it is he who controls, and has always controlled, the receipts, use and the disposal of all the monies earned by the business. 25 It follows that I do not accept the evidence of Mr Levi that it is Mr Burton who is in control of the books and records of the business. Aside from this evidence being contrary to the unchallenged evidence of Mr Launder and Ms Roza, this evidence is also at odds with Mr Levi's evidence that Mr Burton requested Mr Levi to write a letter to the Court for Mr Burton to sign, responding to the subpoena issued to produce documents relating to the Bikini Girls business. 26 It also follows that I do not accept Mr Levi's assertion that it is Mrs Heelan and Mr Coyne, the trustees of the Australian Massage Trust, who control the operations of the Bikini Girls massage business. Aside from this assertion being contrary to the unchallenged evidence of Ms Roza and Mr Launder, such an assertion is contrary to the statements of Mrs Heelan in her letter exhibited to Mr Launder's affidavit that she "was not involved in the operation of the Bikini Girls business and that the receipts and invoices of the business, if any, were not in her possession, power or control". The assertion is also at odds with Mr Levi's evidence that Mr Coyne requested him to write a letter to the Court for Mr Coyne to sign in response to the issue of a subpoena to Mr Coyne requiring him to produce documents relating to the affairs of the Australian Massage Trust. 27 In making these findings I have placed no weight on the letter of Mr Coyne dated 24 October 2007 which is annexed to Mr Levi's affidavit sworn on 29 October 2007, and a letter from Mrs Heelan dated 27 August 2007 which is annexed to Mr Levi's affidavit sworn on 18 January 2007. These are both self‑serving letters which purport to create the false impression that there is an arms‑length relationship between the trustees and Mr Levi in relation to his status as marketing consultant with the Australian Massage Trust.
28 Accordingly, I find that Mr Levi has failed to establish that he is an employee of the Australian Massage Trust earning $500 per week, which is the basis of his claim that he is indigent and through no fault of his own, unable to afford legal representation in respect of the contempt proceeding. Does the Dietrich principle apply to contempt proceedings? 29 As to the second issue, Mr Levi submitted that I should decline to follow the decision of Lander J in the case of Australian Securities and Investment Commission v Reid (No 2) [2006] FCA 700 which determined that the Dietrich principle did not apply to contempt proceedings in the Federal Court. It is unnecessary for me to consider this question because of the factual findings I have made that Mr Levi has failed to establish his claim that he is indigent. 30 I dismiss Mr Levi's notice of motion with costs. I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis.
Associate: Dated: 14 February 2008 Counsel for the Applicant: Mr M Brady
Solicitor for the Applicant: Australian Government Solicitor
Date of Judgment: 14 February 2008
Australian Competition and Consumer Commission
Bon Levi
(1992) 177 CLR 292