Baker v Paul

Judgment 1Three notices of motion were before the court for committal for contempt, the striking out of pleadings and the costs of the producing party under a subpoena.

2Anthony Christopher Paul, the first defendant, was charged with contempt of court for causing Tony Paul Media Pty Ltd, the third defendant, to breach an order made by Rein J on 16 September 2010. Tony Paul Media was charged with contempt for breaching the order. 3There was a faint suggestion that the charges were not in proper form and should fail because of an observation of Young JA in Sigalla v TZ Limited [2011] NSWCA 334 at [18]: "The charge against Mr Sigalla was that he "caused ... ZMS Investments Pty Limited, to enter into a contract for the sale of the Property ... and therefore was involved in the breach of the Orders." That would not appear to be a charge in accordance with the principles that I have set out." 4But the charge in that case alleged that Mr Sigalla was involved in the breach of orders by ZMS Investments whereas he was invovled in a separate breach. 5As his Honour said at [14]: "It is trite law that where there is an injunction against X, only X will comit a contempt by disobeying the injunction as opposed to a different contempt for obstructing the process of the court: Wellesley (Lord) v Mornington (Earl) (1848) 11 Beav 180 at 181; 50 ER 785 at 786. The non-party to the original proceedings who knows of the order and assists in the breach of the order and thereby obstructs the process of the court is liable to be punished for that offence against the court, not for a breach of the original order: the Wellesley case at Beav 183; ER 787 and the Newspaper Publishing case [Attorney-General v Newspaper Publishing plc [1988] Ch 333] at 367." 6Here the charge against Mr Paul was the different charge of causing Tony Paul Media to breach the injunction. It did not suffer the vice of the charge in Sigalla. 7The orders made by Rein J on 16 September 2010 were as follows: "Upon the Plaintiffs by their Counsel giving to the Court the usual undertaking as to damages, the Court:- 1.Orders that Tony Paul Media Pty Ltd (ACN: 125 840 799) be joined as third defendant to these proceedings. 2.Orders that the operation of the orders of Slattery J. of 1 September 2010, extended by Rein J. on 13 September 2010, be extended until further order of the Court. 3.Orders that the third defendant, by itself, its employees, servants and agents be restrained until further order of the Court, from withdrawing or otherwise dealing with the monies held standing in St. George Bank Ltd's account no. 112-879 473710029 so as to reduce the balance of the account below the sum of $37,837.74." 8Slattery J made a freezing order on 1 September 2010 against Mr Paul and the second defendant, then called Association Media Pty Ltd, but since called ACN: 129 258 546 Pty Ltd. His Honour ordered that they not remove from Australia or in any way dispose of, deal with, or diminish the value of any of their assets in Australia up to the unencumbered value of $72,820.80. There were exceptions. Paragraph 11 provided that: "This order does not prohibit you from: (a)paying your ordinary living expenses; (b)paying your reasonable legal expenses; (c)dealing with or disposing of any of your assets in the ordinary and proper course of your business, including paying business expenses bona fide and properly incurred." 9There was a further exception, irrelevant for present purposes. 10Mr Paul was the sole director and secretary of Tony Paul Media. He caused monies to be withdrawn from its account with St George, the subject of the third order of Rein J on 16 September 2010. Mr Paul said he thought the exceptions in the freezing order of 1 September 2010 applied to that bank account. 11Mr Paul was cross-examined about other incidents. For example, on 24 August 2010 the solicitors for the plaintiffs, Kenneth James Baker and KJB Media Pty Ltd, wrote to him stating they were aware that withdrawals had been made from various bank accounts of ACN Pty Ltd and requiring an undertaking from him not to withdraw or further deal with monies from any of the company bank accounts. Mr Paul put this letter in evidence. 12Mr Paul said that on 24 August 2010 someone had accessed a bank account using an account number and a password that were not his. On 25 August 2010 he went to the bank and was advised to transfer funds from existing bank accounts into the new bank account with St George the subject of the order of 16 September 2010. 13As this was not the subject of the charges, the matter could only go to credit. 14I did not form an adverse view of Mr Paul's credit. For example, he had said that the first time he saw the order of 16 September 2010 was when he received correspondence from the solicitors for Mr Baker and KJB Media on 19 October 2011. He was shown a letter of 9 March 2011 from the solicitors for Mr Baker and KJB Media to his solicitors which stated that further orders were made on 16 September 2010 restraining Tony Paul Media from reducing the balance of the St George account below $37,837.74 until further order of the court. 15It was put to Mr Paul that he knew full well shortly after 9 March 2011 the substance or the content of the order made by the court on 16 September 2010 to which he unreservedly agreed. 16Mr Paul's credit was also bolstered by his evidence about the withdrawals from the St George account. He explained each of them in one of his affidavits and produced a spreadsheet setting them out. He swore that each of them fell within the exceptions to the freezing order of 1 September 2010. He was not cross-examined upon this assertion. 17In examination in chief, Mr Paul said he had omitted reference to $600 withdrawn on 1 December 2010 and on 28 February 2011 an amount of $800.00 should have been $700.00 so that the final total of withdrawals used for fees should be $11,610.86 rather than $11,010.86. 18Whether the contempts of which Mr Paul and Tony Paul Media were charged are criminal or civil, the charges must be proved beyond reasonable doubt (Witham v Holloway [1995] HCA 3; (1995) 183 CLR 525 at 534). If there is a reasonable doubt about the alleged breaches, the charges fail. 19If Mr Paul acted in deliberate defiance of the orders of 16 September 2010, the breaches constitute criminal contempt as wilful disobedience, unless the breaches were casual, accidental or unintentional (Australasian Meat Industry Employees' Union v Mudginberri Station Pty Ltd [1986] HCA 46; (1986) 161 CLR 98 at 108, 113). 20It is an essential element of the offence that the contemnor knows that what is being done is inconsistent with the terms of the injunction. As Eveleigh LJ said in Z Ltd v A-Z and AA-LL [1982] 1 QB 558 at 581, knowledge is an essential ingredient in proving the contempt. 21That means that if the party charged has an honest and reasonable, but mistaken belief as to what it is that is enjoined, he will lack the necessary element of knowledge that what is being done is inconsistent with the terms of the injunction. As Young JA said in Sigalla at [28]: "... it was necessary for the prosecutor to prove beyond reasonable doubt that Mr Sigalla intended to prevent or impede the purpose of the injunction. In this connection, if the evidence shows that he had an honest, but mistaken, belief as to the meaning or operation of the injunction which, if correct, would mean that his conduct could not be an interference with its operation, then there is the lack of mens rea necessary to put him in contempt (see CCOM at 532)." 22In CCOM Pty Ltd v Jiejing Pty Ltd [1992] FCA 325; (1992) 36 FCR 524 at 532, Drummond J said this: "There will be room for genuine doubt about what the court's purpose is if the construction of an undertaking is not so clear as to admit of only one interpretation, and the stranger accused of being in contempt by reason of conduct that interferes with the operation of the undertaking has acted in accordance with any interpretation of the undertaking that is reasonably open in a way which would invovle no interference with its operation, as so interpreted. That is so, as Lord Oliver said, because there would be a want of the necessary mens rea. And if a stranger, in fact, interferes with the operation of an undertaking given in an action between A and B, but does so in the honest but mistaken belief that the undertaking has a particular meaning which, if correct, would mean that his conduct could not be an interference with this operation, then there is equally a lack of the mens rea necessary to put him in contempt. This is so, in my view, no matter how unreasonable the stranger's mistaken belief is, so long as it is a belief that is honestly held." 23In my view, Mr Paul held the mistaken belief that the exceptions in the freezing order of 1 September 2010 applied to the third order of 16 September 2010. 24The extension until further order of the freezing order made on 1 September 2010 supports this mistaken belief. That extension included the exceptions. What Mr Paul did was to interpret the third order in conjunction with the second order so that he thought that the exceptions in the second order applied as well to the third order. He did not interpret the third order as a separate injunction divorced from the extension of the freezing order. 25That mistaken view was reasonably open to him and honestly held. The solicitors for Mr Baker and KJB Media understood the orders of 16 September 2010 in the same vein. In their letter of 9 March 2011 they said: "It was then necessary for the Plaintiffs to apply for further Orders from the Court by Consent on 16 September 2010 when the Third Defendant was joined into the proceedings and the operation of the freezing Orders was extended to the Third Defendant." 26That he held the mistaken belief is corroborated by the fact that all the drawings that were made from the St George account fell within the exceptions. 27The charge of contempt of court against Mr Paul must be dismissed. And since Mr Paul is the organ by which Tony Paul Media operates, the charge of contempt against it must also be dismissed. 28The notice of motion is dismissed with costs.