Australian Competition and Consumer Commission v Jutsen

Federal Court of Australia|2012-06-05|Before: Jagot J

THE COURT ORDERS THAT:

Paragraph 1 of the Notice of Motion filed on 6 July 2010 be dismissed. THE COURT DECLARES THAT:
By withdrawing $35,000 from the ANZ (being the Australia & New Zealand Banking Group) Account BSB 012-226 No. 1816-78186 in the name of 'Jutsen Laulhati' on 28 May 2010 in circumstances in which: (a) on 20 May 2010 the Federal Court of Australia had ordered that the first respondent be restrained from operating that account by making withdrawals or transfers from that account other than amounts reasonably necessary for the first respondent's ordinary living expenses; (b) the first respondent had been aware of the terms of that order from the time it was made; and (c) the withdrawal of $35,000 in one day was not reasonably necessary for the first respondent's ordinary living expenses; the first respondent was in contempt of the Federal Court of Australia. THE COURT DIRECTS THAT:
The first respondent is to notify the applicant within 14 days if she proposes to adduce evidence on penalty. In the absence of such notification, the applicant is to file written submissions on penalty within 21 days from the date of this order and the first respondent is to file any written submissions on penalty within 35 days from the date of this order. Penalty will thereafter be determined on the basis of the written submissions.
In the event that the first respondent gives the notification that she proposes to adduce evidence on penalty, list the matter for a directions hearing at 9.30 am on 26 June 2012.
Paragraphs 3 and 4 of the Notice of Motion filed on 6 July 2010 be adjourned for directions on 26 June 2012 at 9.30 a.m.
The applicant is to notify the first respondent of these orders by forwarding a copy of these orders by email to tedditudes@gmail.com by 5 p.m. on 6 June 2012.
These orders may be entered forthwith. Note: Settlement and entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 529 of 2010

BETWEEN: AUSTRALIAN COMPETITION & CONSUMER COMMISSION

REASONS FOR JUDGMENT 1 This is a notice of motion filed by the applicant, the Australian Competition and Consumer Commission (ACCC), on 6 July 2010. The ACCC seeks declarations that by certain specified conduct the first respondent, Lualhati Jutsen, be found to be in contempt of court. 2 When the matter was called for hearing this morning there was no appearance by Ms Jutsen. The matter was called outside the Court and Ms Jutsen did not appear. There had been communications by email from Ms Jutsen to the Court prior to the hearing indicating that she is overseas for various personal reasons. From those email communications Ms Jutsen was aware of the hearing date, and she was informed to the effect that if she wished to have the hearing date vacated she would need to make a formal application to do so. No such formal application was received by me before the matter was called for hearing this morning. Accordingly, and consistent with the position adopted by the ACCC, I proceeded to hear the notice of motion, at least insofar as it sought declarations that Ms Jutsen be found to be in contempt of court, in her absence. 3 At the outset of the hearing the ACCC also sought leave to rely on an amended statement of charge of the alleged contempts by Ms Jutsen. The written submissions of Mr Brennan of counsel filed in support of the notice of motion explain the circumstances in which the ACCC seeks leave to amend the statement of charge. In short, the ACCC seeks to amend the statement of charge so as to ensure its accuracy and consistency as between the charges and the evidence now available. It is also apparent that Ms Jutsen has been on notice of the proposed amendments to the statement of charge since well before this hearing. Consistent with the submission made by the ACCC I am satisfied that it is appropriate that the ACCC be given leave to amend to ensure the accuracy of the charge. I cannot see any basis upon which the amendment would in any way have caused or can cause prejudice to Ms Jutsen. 4 Accordingly, the charges of contempt made by the ACCC against Ms Jutsen are as set out in the amended statement of charge of contempts by the first respondent, as filed in Court on 5 June 2012. Those charges are set out below: 1. On 14 May 2010 the Federal Court of Australia (Yates J) ordered: "Until further or other order, the respondents be restrained, whether by themselves, their servants, agents or otherwise howsoever, from operating the following bank account: (a) Australia & New Zealand Banking Group account BSB 012-226 No. 1816-78186 in the name of "Jutsen Laulhati". By making withdrawals or transfers from the said account." (14 May order) 2. The first respondent was aware of the terms of the 14 May order before either of the matters alleged in paragraphs 3 or 4. 3. On 15 May 2010 at around 10:22am, the first respondent operated the bank account Australia & New Zealand Banking Group account BSB 012-226 No. 1816-78186 in the name of 'Jutsen Laulhati' (ANZ Account) by making a withdrawal of $1,000. 4. On 15 May 2010 at around 10:23am, the first respondent operated the ANZ Account by making a withdrawal of $5,000. 5. On 20 May 2010 the Federal Court of Australia (Bennett J) ordered by consent: "On an interim basis until further order of the court and without admissions the respondents be restrained, whether by themselves, their servants, agents or otherwise howsoever, from operating the following bank account: (a) Australia & New Zealand Banking Group account BSB 012-226 No. 1816-78186 in the name "Jutsen Laulhati". By making withdrawals or transfers from the said account, other than amounts reasonably necessary for the first respondent's ordinary living expenses." (20 May order) 6. The first respondent was aware of the terms of the 20 May order from the time that it was made. 7. On 28 May 2010 the first respondent operated the ANZ account by making withdrawals totalling $35,000. 8. The withdrawal from the ANZ account of $35,000 on 28 May 2010 was not reasonably necessary for the first respondent's ordinary living expenses. Charge 1 9. By reason of paragraphs 1 to 4 the first respondent committed contempt of this Court. Charge 2 10. By reason of paragraphs 5 to 8 the first respondent committed contempt of this Court. 5 It will be apparent from the statement of charge that the alleged contempts relate to two orders of the Court. The first is the order of Yates J made on 14 May 2010; the second is the order of Bennett J made on 20 May 2010. The ACCC, consistent with authority, accepts that in proceedings for contempt of court the charges must be proved beyond reasonable doubt: Witham v Holloway (1995) 183 CLR 525 at 534.

CHARGE 1 6 In relation to the first charge, the relevant orders of Yates J made on 14 May 2010 were made ex parte. Yates J made Order 3 as follows: 3. The applicant have leave to serve the application, supporting affidavit of Annabel Anderson affirmed 14 May 2010 (excluding its exhibits) and these orders on the first respondent by, in the first instance, sending a copy of those documents to tedditudes@gmail.com by 7 pm on 14 May 2010. 7 Yates J also made Order 12 as follows: 12. Until further or other order, the respondents be restrained, whether by themselves, their servants, agents or otherwise howsoever, from operating the following bank account: (a) Australia and New Zealand Banking Group Account BSB 012-226 No 1816-78186 in the name of "Jutsen Lualhati". by making withdrawals or transfers from the said account. 8 In respect of the orders as recorded above, there is evidence from the solicitor for the ACCC, Richard Flitcroft, by way of an affidavit of 5 July 2010. In that affidavit Mr Flitcroft deposes to a conversation which he had with Ms Jutsen on 14 May 2010 at approximately 6.50 pm. Mr Flitcroft sets out the conversation which he had as follows: [Mr Flitcroft] said: "Is this Teddi?" Ms Jutsen said: "Yes it is". [Mr Flitcroft] said: "I'm after David Scanlon's number - I was wondering if you would be able to give it to me?" Ms Jutsen said: "Who is this?" [Mr Flitcroft] said: "This is Richard Flitcroft from Corrs Chambers Westgarth, we're solicitors who are acting for the ACCC. This afternoon we obtained orders from the Federal Court of Australia which restrain you in engaging in certain conduct. Those orders require me to serve those documents on you by email by 7.00pm this evening. I have done so. The purpose of my calling is to also explain those orders to you and to tell you that we have to arrange for personal service and I was wondering if you would be happy for me to arrange for process servers, Wise McGrath, to be in touch with you to make a time convenient to you". Ms Jutsen said: "How did you get my number?" [Mr Flitcroft] said: "I got your number as a result of the ACCC's investigations". Ms Jutsen said: "Who has complained?" [Mr Flitcroft] said: "I do not have to disclose that information and no one has to complain". Ms Jutsen said: "Who is the initiating person behind the orders?" [Mr Flitcroft] said: "The ACCC". Ms Jutsen said: "On what basis is the ACCC seeking the orders?" [Mr Flitcroft] said: "I twill be apparent when you read the application and orders that have been sent to you, but in brief the ACCC alleges that the conduct involved in the TV one Express scheme is a pyramid scheme". Ms Jutsen said: "Is that what you call it?" [Mr Flitcroft] said: "No sorry, the TVI express scheme". Ms Jutsen said: "Well obviously you don't understand the concept". 9 The ACCC submits that I should infer and otherwise be satisfied beyond reasonable doubt that Ms Jutsen knew of the contents of the orders of Yates J of 14 May 2010 before she made the impugned withdrawals on 15 May 2010. 10 The ANZ Bank has produced documents under subpoena which show two withdrawals on 15 May 2010 from the ANZ account referred to in Order 12(a) of the orders of Yates J, one withdrawal at around 10.22 am of the sum of $1,000 and one withdrawal at around 10.23 am of the sum of $5,000. On the evidence the ACCC submits, and I accept that I should be satisfied beyond reasonable doubt, that these withdrawals were made by Ms Jutsen. There is evidence of the opening of the account on 8 February 2010 in the sole name of Ms Jutsen and with Ms Jutsen as the sole authorised signatory to that account. There is evidence supporting the inference that it was Ms Jutsen who opened this account, including records of the ANZ Bank to the effect that customer identification processes had been completed for all signatories, the sole authorised signatory being Ms Jutsen. 11 In addition and consistent with the conversation between Mr Flitcroft and Ms Jutsen as set out in Mr Flitcroft's affidavit, there is evidence that the orders of Yates J were served in accordance with Order 3 of his Honour's orders, that is, by sending a copy of the documents referred to in that order, which included the orders themselves, to an email address before 7 pm on 14 May 2010. However, it is also apparent on the evidence that Ms Jutsen was not personally served with the orders of Yates J until 11.49 am on 15 May 2010; that is, slightly over an hour after the withdrawals in question were made. In oral submissions, the ACCC accepted that I should not find charge 1 proved beyond reasonable doubt unless satisfied to the same standard of proof (that is, beyond reasonable doubt) that Ms Jutsen knew of the content of the orders of Yates J before she made the withdrawals in question on 15 May 2010. In its written submissions the ACCC submitted that I should be so satisfied. The ACCC said that: Shortly before 7.00pm on 14 May 2010 [Ms Jutsen] was told by Richard Flitcroft, the solicitor for the ACCC, that she had been served and that personal service would be effected shortly; that service was to an email account she used to conduct her business - being the operation of the pyramid selling scheme the subject of the proceedings; and the two withdrawals on 15 May 2010 constituted a radical change in Ms Jutsen's use of the account. In the months before that day she used the account to receive subscriptions to the Scheme, to transfer funds offshore and pay for expenses while travelling. The AUSTRAC records of international transfers between the ANZ Account and a Hong Kong account entitled "V2 Group" are in evidence. Substantial cash withdrawals on a Saturday morning at branches close to her home were inconsistent with all previous use of the account. 12 Although I accept all of the evidence which the ACCC has adduced as summarised above, I am not satisfied beyond reasonable doubt that Ms Jutsen knew of the content of the relevant orders before the withdrawals were made on 15 May 2010. The order was made ex parte. Although there is evidence that the order was sent as required to the email account used by Ms Jutsen for the running of her business and of the telephone conversation between Mr Flitcroft and Ms Jutsen on the evening of 14 May 2010, when I take that evidence with the evidence of what was described as a radical change in her use of the account, I am unable to reach the requisite standard of satisfaction beyond reasonable doubt that Ms Jutsen knew of the content of the orders. There is no suggestion in the evidence of Mr Flitcroft's conversation with Ms Jutsen that he indicated to her the content of the orders, at least insofar as they affected the ANZ Bank account. Although it is said that there was a radical change in her use of the account, it is difficult to analyse account documents over a particular space of time in order to ascertain patterns of usage which would be a sufficient evidentiary basis in order to be satisfied that a change was so noticeable or marked as to support the inference of knowledge on the part of Ms Jutsen. 13 Accordingly, at least insofar as the first charge is concerned, I am not satisfied beyond reasonable doubt that the contempt has been proved.

CHARGE 2 14 The second charge is based on an order made by Bennett J on 20 May 2010. Order 5 is the relevant part of her Honour's orders. That order is in these terms: 5. The respondents be restrained, whether by themselves, their servants, agents or otherwise howsoever, from operating the following bank account: (a) Australia and New Zealand Banking Group Account BSB 012-226 No 1816-78186 in the name of "Jutsen Lualhati". by making withdrawals or transfers from the said account, other than amounts reasonably necessary for the first respondent's ordinary living expenses. 15 The circumstances in which this order was made, amongst the other orders made on 20 May 2010, are entirely different from those of the orders made by Yates J. The order was made by consent following discussions between counsel then appearing for Ms Jutsen, instructed by Baker & McKenzie Solicitors, and counsel for the ACCC. The transcript of the hearing before Bennett J on 20 May 2010 is in evidence. There is also in evidence the fact that counsel for Ms Jutsen appearing on 20 May 2010 indicated specifically to the Court the form of the orders as negotiated by agreement between Ms Jutsen's counsel and counsel for the ACCC. Further, it was made plain in the hearing before Bennett J that the orders as made on that day were without prejudice to the rights of both parties to seek a variation of the interlocutory orders as made by Yates J. 16 In addition, later in the proceeding there was read in evidence before Nicholas J in the hearing on 1 June 2010 an affidavit from Ms Jutsen's then solicitor, Hamish Cockburn sworn on 1 June 2010. In that affidavit Mr Cockburn deposed to the fact that he is a solicitor employed by McLachlan Thorpe Partners who had recently taken instructions to act on behalf of all three respondents in this proceeding, which of course included the first respondent, Ms Jutsen. According to Mr Cockburn, the partner responsible for the matter, Mr Andrew Thorpe, first took instructions from the respondents on Friday 28 May 2010 and from reading the file of the former solicitors for Ms Jutsen, that is Baker & McKenzie Solicitors, Mr Cockburn understood that the proceeding was next listed before Bennett J on 20 May 2010. Mr Cockburn recalls accurately that on that date, by which time the respondents were represented and appeared, orders were made by consent which varied the orders made by Yates J but still imposed certain restraints on the respondents. 17 Mr Cockburn also gave evidence in that affidavit that he had received instructions from the respondents in relation to their respective financial circumstances, and he gave evidence based on his information and belief provided by the individual respondents. In respect of Ms Jutsen, Mr Cockburn said that neither Ms Jutsen nor any corporation or entity or person she controls has any significant savings, shares or source of income except the income from the business which was the subject of the proceeding. Mr Cockburn also recorded that Ms Jutsen's living expenses "exceed $2,000 per week" comprising expenses for ordinary living matters including food, phone, internet, school fees, electricity and rent and miscellaneous expenses. 18 According to Mr Cockburn, Ms Jutsen was also liable to immediately pay certain special expenses comprising school fees of $3,000, winter clothing $2,500, car servicing $1,800 and martial arts classes $840. There are no references to any other special expenses which were apparently anticipated at the time of Mr Cockburn's affidavit. Otherwise Mr Cockburn's affidavit notes that the monies referred to in an affidavit of Molly Choucair, an investigator from the ACCC, which were said to have been transferred internationally were most likely monies which had been reinvested into Ms Jutsen's business. Mr Cockburn had been informed by Ms Jutsen that she reinvested any monies earned in the business back into business products supplied by her business, and that the monies in the ANZ account "do not represent an available or alternate source of funds for living expenses". 19 The ACCC relies on the decision in Mead v Mead (2007) 235 ALR 197; [2007] HCA 25 to support its position that Ms Jutsen must have known about the terms of the order of 20 May 2010, even though there is no evidence that she was in court at the time the order was made. In Mead v Mead the trial judge had concluded that a party to proceedings knew of and indeed understood the meaning of the order that had been made in that case (a freezing order) because the facts and circumstances of the case compelled that inference to be drawn in circumstances where the party's own solicitors were in court and had been involved in the negotiation and drafting of the orders in question. At [13] Gleeson CJ, with whom Hayne, Callinan, Heydon and Crennan JJ agreed, said that the Full Court of the Family Court was incorrect to find that the trial judge had erred in drawing the inference of knowledge of the contents of the order, because: In the present case all that Cohen J did was to point to the incontrovertible fact that he was dealing with the question of inferences to be drawn from the events and circumstances of the case in the absence of any countervailing evidence that might have been given by the respondent or her solicitor. It was a fact he could hardly have ignored. He simply pointed to the fact that the evidence upon which he had to decide the case was that adduced by the present appellant and he then asked himself legitimately what was the inference to be drawn in that state of affairs. 20 In relation to the second charge I am satisfied beyond reasonable doubt that Ms Jutsen knew of the orders as made by Bennett J and their content. As the ACCC submitted the terms of the second order were proposed by Ms Jutsen's counsel as instructed by her solicitors. The inference is open and indeed should be drawn that her counsel did not propose the orders other than on instructions from Ms Jutsen. Further, the operation and application of the second order was clear. That is, and as the ACCC submitted, if at the point in time that a withdrawal or transfer was made it was of an amount then reasonably necessary for Ms Jutsen's ordinary living expenses it was not enjoined. If a withdrawal was of an amount which at that point in time was not reasonably necessary it was enjoined. The order focused on the amount of any withdrawal and whether that amount was reasonably necessary for Ms Jutsen's ordinary living expenses. For these reasons I am satisfied beyond reasonable doubt that Ms Jutsen knew of the existence and of the content of the second order as made by Bennett J on 20 May 2010. 21 The ACCC has drawn my attention to the fact that the second orders were not personally served on Ms Jutsen. The Federal Court Rules as in force at the time provided in O 37 r 2(2) that where a person is bound by an order, the order shall not be enforced by committal of the person bound or by sequestration of the property of the person bound unless the order or a certified or office copy thereof is served personally on the officer. However, as the ACCC also pointed out, O 37 r 2(5)(b) relevantly provides that: Where a person liable to committal or sequestration of his property by way of enforcement of a judgment or order has notice of the judgment or order: … (b) by being notified of the terms of the judgment or order whether by telephone, telegram or otherwise, the judgment or order may be enforced by committal of that person or by sequestration of his property notwithstanding that service has not been effected in accordance with this rule. 22 In Australian Securities Commission v Macleod (1993) 40 FCR 155 Drummond J dealt with the equivalent provisions, noting that if a person has notice of the order then the order may be enforced notwithstanding the lack of personal service irrespective of the Court having made or not made any order to dispense with service under the rule. His Honour said (at 159) that the court has a discretion whether or not to permit the enforcement of a judgment or order in circumstances where there has not been personal service but the person has been notified of the terms of the judgment or order. Drummond J also said that this discretion was not one that could only be exercised if special circumstances exist to excuse the non-compliance with the requirements for personal service (at 160). 23 On the evidence to which I have referred, I am satisfied beyond reasonable doubt that Ms Jutsen was on notice of the terms of the orders of Bennett J by reason of the combination of circumstances identified in these reasons above. 24 There is evidence that on 28 May 2010 $35,000 was withdrawn from the ANZ account in six transactions conducted at five separate ANZ branches across the north shore of Sydney. The evidence establishes that it is Ms Jutsen who made each of the withdrawals by a combination of circumstances, including: - (i) the use of a particular Visa card, (ii) the fact that Ms Jutsen is the relevant signatory on the account, and (iii) video footage combined with identification evidence from Ms Choucair who had interviewed and was otherwise cross-examined by Ms Jutsen. In addition, a relevant circumstance is that on Wednesday 26 May 2010 before the withdrawals took place Ms Jutsen's solicitors had been served with a proposed notice of motion by the ACCC which disclosed that the ACCC was preparing to approach the court for a variation of the orders, the intention being to ensure that while the respondents remained free to operate any accounts they had with deposit taking institutions -the ACCC having become aware of at least one additional account in the meantime (being an account with the Resource Credit Union) - they wished to "ensure that the balance of those accounts remain preserved to the value of payments made into those accounts" from the scheme in question. The ACCC accordingly submits that an apprehension of the expansion of the scope of the freezing orders may be inferred to have given Ms Jutsen a motive to move the funds from the ANZ account. 25 According to the ACCC, in consequence, the only real issue is whether or not the total amount withdrawn, that is the $35,000, could in any way fall within the exception from the order as "amounts reasonably necessary for the first respondent's ordinary living expenses". The ACCC submitted that the amount in question of $35,000 was evidence to the contrary, but in addition, there is: - (i) the evidence from Ms Jutsen's former solicitor that her ordinary living expenses were about $2000 a week, which could be inferred not to be an understatement, (ii) the fact that the ANZ account had not previously been used for domestic purposes, the transactions on that account being predominantly of a business nature in conducting the scheme the subject of the proceedings and the evidence from her former solicitor Mr Cockburn that the international transfers were reinvestments in her business (that is, in the scheme), and (iii) the evidence that Ms Jutsen maintained separate accounts at the Commonwealth Bank and the Resources Credit Union which she ordinarily used for domestic purposes and both accounts were in credit as at the time immediately before the withdrawals from the ANZ account on 28 May 2010. In other words, as the ACCC put it, there was no need for any withdrawal from the ANZ account. 26 On the evidence I am satisfied beyond reasonable doubt that the withdrawals totalling $35,000 and the various transactions were made by Ms Jutsen and were not amounts reasonably necessary for her ordinary living expenses. I accept that the combination of evidence to which the ACCC referred in its submissions is capable of and indeed satisfies me beyond reasonable doubt of that fact. 27 It follows that Ms Jutsen contravened Order 5 of the orders made on 20 May 2010 in withdrawing the sum of $35,000 in the various transactions. In this regard the contempt as charged in charge 2 has been proved beyond reasonable doubt. 28 There is one other observation I should make. The ACCC relied on a form of Jones v Dunkel inference to support its case on both charges 1 and 2, and in doing so relied on the decision in Jones v Australian Competition and Consumer Commission (2010) 189 FCR 390; [2010] FCAFC 136 (Jones v ACCC) and in particular on the observations of the High Court in RPS v The Queen (2000) 199 CLR 620; [2000] HCA 3 at [26]-[29], where it was said (at [27]): By contrast, however, it will seldom, if ever, be reasonable to conclude that an accused in a criminal trial would be expected to give evidence. The most that can be said in criminal matters is that there are some cases in which evidence (or an explanation) contradicting an apparently damning inference to be drawn from proven facts could come only from the accused. In the absence of such evidence or explanation, the jury may more readily draw the conclusion which the prosecution seeks. 29 The ACCC submits that the present case is one in which there is the apparently damning inference in relation to the withdrawals, and that evidence to explain to the contrary could only have come from Ms Jutsen - that is, evidence of the lack of knowledge of the terms of the order referred to in charge 1, and of either lack of knowledge and/or the amounts being for ordinary living expenses as referred to in charge 2. 30 I have not relied upon that submission or the principle underlying it in drawing my conclusion that charge 2 has been proved beyond reasonable doubt, and I did not rely on the inference otherwise in relation to my conclusions about charge 1. The Jones v Dunkel inference as explained by the Full Court in Jones v ACCC at [20] is authority for the proposition that an unexplained refusal by a party to give evidence or to call witnesses or to lead other evidence may, in appropriate circumstances, entitle the tribunal of fact to draw an inference that the uncalled evidence would not have assisted that party's case. The concern I have is that the present matter is proceeding ex parte, but in substance the lack of evidence from Ms Jutsen, at least in one sense, is not unexplained; it is explained by her absence and the apparent fact that she is overseas, a fact which the ACCC does not, at least for present purposes, appear to dispute. It is those circumstances which have caused me not to rely upon what might be described as the exception to the otherwise ordinary principle that in criminal proceedings, and by analogy in these proceedings where the criminal standard of proof applies, it is not appropriate to rely upon a Jones v Dunkel inference, and it has not been necessary for me to do so in order to reach the conclusion that charge 2 has been proved beyond reasonable doubt. 31 Orders will be made accordingly. I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot.

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