Solicitors:
H W M Stitt (Direct Brief - Applicant on Interlocutory Process)
Gillis Delaney (Respondent on Interlocutory Process)
File Number(s): 2015/326742
[2]
Judgment - ex tempore
By interlocutory application filed on 15 March 2017, which I have marked MFI 1, the Applicant, ABCD Corporation Pty Ltd ("ABCD") seeks orders that a timetable made on 10 March 2017 be varied to accommodate certain orders which it seeks. There may be unsatisfactory aspects of that application, since it is not entirely clear whether it is seeking simply a variation to a timetable, or substantive orders, but that will emerge in due course. A preliminary question has arisen, as to whether ABCD should be permitted to file that interlocutory application, in circumstances that a question has arisen whether ABCD, by its directors Mr Minus or Ms Minasian, is in contempt of court, either by way of interference with the administration of justice or, possibly, by way of interference with the performance of a court-appointed receiver's duties.
I should first refer, briefly, to the applicable principles, then refer to their application in the particular case. I will do so briefly, because this matter has been listed this afternoon, has taken the whole of the afternoon, and there is limited time in which to deliver a judgment. There is also urgency in the matter, since what is sought is interlocutory relief, and delay may have difficulties, in respect of both parties, so far as any subsequent application for interlocutory relief is concerned. As it stands, as I have noted both yesterday, when the matter was listed before me, and today, before the matter commenced, the time which has been devoted to this application is time which could have been spent in dealing with the substantive issues, in circumstances where the availability of a judge to deal with the substantive issues in the course of next week is uncertain, and there have already been long delays in the bringing of this application, whether those delays are explicable or not.
I should make one further preliminary comment before turning to the substance of my judgment. It seems to me that there are several unfortunate aspects of this application, and that some of the difficulties that have arisen in this application and the events that gave rise to it reflect a failure properly to bring matters to the Court's attention, on the part of ABCD and Mr Minus, at various times. Mr Minus has a range of explanations for those failures, but they do not seem to me to address the substantive difficulty that the Court has exercised its discretion, at various times, with what can only be described, at best, as an incomplete understanding of matters of which Mr Minus had knowledge and did not bring to the Court's attention. In saying that, I, of course, do not express any view as to whether Mr Minus's conduct in that regard is justifiable, or not, which is not a question before me. I recognise, as I noted one moment ago, that Mr Minus explains that, at various times, he did not have copies of documents available to him or did not have legal advice available to him, and I will only deal with any question of fault in that regard if it becomes necessary to do so. It is, however, important to recognise the contribution of those matters to the events which followed.
The principles which are applicable in this case involve a combination of matters. First, there is a line of authorities to the effect that the Court should not hear an application by a person who is in contempt of court, although there is some difference of view as to whether that principle is mandatory or discretionary. I proceed on the basis that that requires at least a finding by the Court that it is satisfied as to the existence of a contempt of court, although the authorities also indicate that this is an issue of case management, and not an issue of a criminal charge, and that satisfaction would be on the balance of probabilities, but having regard to the seriousness of the application. The authorities include Young v Jackman (1986) 7 NSWLR 97; KP Cable Investments Pty Ltd v Meltglow Pty Ltd (28 February 1995); the decision of the Court of Appeal in Chamberlain Group Pty Ltd v Kids For Life Academy Pty Ltd [2015] NSWCA 241 at [17], where the Court summarised the relevant principle; and recent decisions of this Court in Malek Fahd Islamic School Ltd v Australian Federation of Islamic Councils Inc [2016] NSWSC 672 and Hanson Property Developments Pty Ltd [2016] NSWSC 1870, each of which contemplate the possibility that the principle may be one which involves the exercise of a discretion, rather than an absolute rule.
In this case, the question of contempt arises from three possible principles, first, the possibility that Mr Minus was in breach of an undertaking given to Brereton J on 25 October 2016, as Mr Marshall contends; or second, the possibility that ABCD, by its directors Mr Minus and Ms Minasian, took steps to prevent, or frustrate, the exercise of a power of sale conferred on a court-appointed receiver, which may amount to an interference with the administration of justice within the scope of the principles summarised by the Court of Appeal in Sigalla v TZ Ltd [2011] NSWCA 344 and Baker v Paul [2013] NSWCA 426. Mr Marshall submits that either or both of those contempts are established, at least on the balance of probabilities, so as to warrant declining leave to ABCD to file the interlocutory process.
The parties have led detailed affidavit evidence, including two affidavits of Mr Minus dated 16 March 2017 and 17 March 2017. An affidavit of Ms Minasian, Mr Minus's wife, dated 6 December 2016 was tendered in the respondents' case. The respondents also rely on affidavits of their solicitors, Mr Dale and Mr Perkis, dated 8 and 16 March 2017 which refer to the relevant documents.
I have summarised some of the background to the application in my earlier judgment In the matter of Australasian Barrister Chambers Pty Ltd (in liq) [2017] NSWCA 245 and I do not repeat that summary. I should note that, on 25 October 2016, Brereton J appointed Mr Sampson, the respondent in this application, as receiver of a property in issue in the application, and conferred a power of sale upon him. His Honour stayed that order to allow ABCD and Mr Minus an opportunity to pay out certain debts, expenses and costs. By the order made on 25 October 2016, and entered on 26 October 2016, Brereton J had also noted an undertaking of Mr Minus to the Court that he would not, "in the meantime, cause, permit or suffer the relevant assets to be transferred, encumbered or otherwise dealt with", and on that basis ordered the operation of the receiver's appointment to be stayed until 6 December 2016. On 6 December 2016, Brereton J declined to extend that stay, such that the receiver's appointment and the power of sale conferred on him in respect of the property took effect.
Mr Minus's evidence is that he did not understand the undertaking given on 25 October 2017 to extend beyond 6 December 2016, or at least he thought it was arguable that it did not. It seems to me that, on its proper construction, that undertaking must be read as extending only for the period in which the stay continued, and the language "in the meantime" must convey that result. That is consistent with the logic of the order, such that the undertaking was to protect the company's position until Mr Sampson's appointment as receiver became effective, after the stay lapsed. From that point, as I noted in my earlier judgment, the general law protected the company's position, so far as the appointment of receiver amounted to an injunction that required the delivery of the relevant property into the receiver's possession.
There is evidence led by Mr Minus in his affidavit, and by Ms Minasian in the affidavit that was tendered, and that appears to have been prepared for the hearing on 6 December 2016, although I have not been informed whether it was read on that occasion, that, on 10 October 2016, ABCD agreed to provide an oral lease for another entity, Dispute Resolution Associates, of which Mr Minus is the director, to occupy premises at suite 602, as to which the receiver has now been granted a power of sale. Ms Minasian's evidence of that matter amounts to an assertion of the grant of that oral lease, which does not descend to identify the detail of the lease. She also refers, in her affidavit, to her intention to sign a lease for the occupation of the premises with Dispute Resolution Associates, on specified terms, when this Court varies the orders made on 25 October 2016, allowing the premises to be encumbered by the lease. That variation never took place. At least on one view of Ms Minasian's evidence, she had the understanding that the written lease could not be signed, unless such a variation took place, although her evidence also plainly relies on the existence of an oral lease prior to that date, and prior to the undertaking given by Mr Minus to Brereton J and prior to the receiver's appointment becoming effective.
Mr Minus, for the first time in his affidavit sworn today, provides a detailed account of a conversation with Ms Minasian on 10 October 2016, which appears, on its face, to amount to an agreement as to the terms of a lease to be granted by ABCD to Dispute Resolution Associates, for a five year period, at a specified rent. He gives evidence that Ms Minasian agreed with that proposition and that is consistent with her assertion to that effect in her 6 December 2016 affidavit. Mr Minus was not cross-examined to suggest that that evidence was false, although leave to cross-examine was given and he was cross-examined as to other aspects of the proceedings. I note, for completeness, that a caveat subsequently lodged by Dispute Resolution Associates over the property held by ABCD over which the receiver has been granted a power of sale, does not refer to the existence of any oral lease said to have been granted in accordance with Mr Minus's and Ms Minasian's evidence, but to the terms of the written lease said to have been granted on 6 December 2016. I also note, for completeness, that the terms of that lease are somewhat different from the terms of the oral lease, so far as there is an increased rent specified for the second period, beyond that said to have been agreed in the oral lease. It does not seem to me that that difference is material for present purposes.
Mr Minus leads evidence of his intent on entry into the written lease, in a manner that seems to suggest that the grant of that lease was intended to avoid damage to the Dispute Resolution Associates' business, by loss of right of occupancy of the premises, implicitly if the premises were sold by a receiver. It is telling that Mr Minus's evidence of a conversation as to that matter occurs, in the chronology set out in his affidavit, immediately after service of the receiver's evidence in respect of the proceedings on 6 December 2016, and that the steps taken to prepare the lease took place immediately before the hearing before Brereton J on that date, and the lease was executed immediately after that hearing and immediately after the receiver was appointed. Mr Stitt, who appears for Mr Minus, frankly accepts that, at least to some extent, the intent of grant of the lease was to entrench, or at least reinforce, the rights claimed by Dispute Resolution Australia over the premises, although it appears the fact of the written lease was not disclosed to the receiver until later.
With that background, I am left to form a view, first, whether I can conclude on the balance of probabilities that the relevant events amounted to a breach of the undertaking given by Mr Minus to Brereton J, and recorded in the orders made on 25 October 2016. I am not satisfied that such a breach took place, because it seems to me that that undertaking ceased to have effect from 6 December 2016.
A further question arises then, as to whether I am satisfied that the relevant conduct amounted to interference with the receiver's powers, or with the Court's order that conferred a power of sale upon the receiver, such that it may be treated as a contempt in respect of interference with the administration of justice. I do not consider that I can conclude, on the balance of probabilities, that the conduct amounted to a contempt of court. First, it seems to me that, so far as knowledge is an essential element of a finding of contempt of court by way of interference with the administration of justice, it is not established on the balance of probabilities that either Mr Minus or Ms Minasian were directing their attention to frustrating the receiver's activities, as distinct from seeking to entrench, or at least record in writing, the rights which Dispute Resolution Australia claim to have. Second, it seems to me that, given the nature of this application, and the fact that Mr Minus was not cross-examined about the asserted conversation which involved the grant of an oral lease, I cannot conclude that that conversation did not take place, at least on the balance of probabilities. In those circumstances, I cannot conclude that anything done on or about 6 December 2016 had any ultimate impact upon events. As Mr Stitt submits, an equitable lease would have come into existence at an earlier point in time, if Mr Minus's evidence as to that conversation is to be accepted. In these circumstances, I cannot conclude, on the balance of probabilities, that anything done on or about 6 December 2016, after the point the receiver's appointment became effective, had any impact upon his ability to perform his office.
[3]
Costs
I should return, however, to a proposition that I noted in opening. It seems to me that aspects of the conduct of this application are unsatisfactory. It is unsatisfactory, in particular, that the suggested oral lease does not seem to have been drawn to Brereton J's attention. It is unsatisfactory also that the first evidence, at least in a properly admissible way, as to the existence of that suggested oral lease emerged in Mr Minus' affidavit evidence led today, in circumstances that it was not disclosed in the terms of the caveat, or in earlier evidence led by Mr Minus, and Ms Minasian's assertion of the existence of that lease was no more than a bare assertion. Notwithstanding that the receiver has not been successful in an application to prevent leave being granted to file the interlocutory process, it seems to me that there is no basis, as a preliminary matter, for an order for costs in favour of Ms Minasian or ABCD, where the result today reflects, in large part, evidence led only today, of matters which could fairly have been drawn to the attention of Brereton J some months ago, or disclosed in the caveat, or squarely disclosed in earlier correspondence with the receivers. However, that is only a preliminary view, and I will hear the parties if they seek to be heard further in respect of costs.
I had indicated a preliminary view that there should be no order as to costs on this application. Mr Stitt made careful and considered submissions in opposition to that course. Mr Stitt submits first, that although matters could have been disclosed earlier to Brereton J, Mr Minus had difficulties with legal representation, at the relevant time, and no criticism should be made of him for that non-disclosure. In dealing with the question of costs, it is not a matter of whether criticism should be made of Mr Minus, but whether the Court's discretion should be exercised, as it would ordinarily be, in favour of ABCD as the successful party in respect of the application for leave to file its interlocutory process. It seems to me that, here, without any need to determine whether there was any element of fault on the part of Mr Minus or ABCD in respect of its dealings with Brereton J, the difficulty is that clear disclosure, at an earlier point, of the existence of a lease, in the detail in which Mr Minus disclosed it in his affidavit today, may well have had a significant impact on the manner in which this issue proceeded. In particular, it would have exposed the issue, on which ABCD has ultimately been successful, that if that evidence is to be accepted, then nothing done by ABCD on 6 December 2016 had any impact upon events. That issue was not squarely disclosed, until Mr Minus led his further evidence, because the evidence led by Ms Minasian, by way of broad assertion, in her affidavit dated 6 December 2016, did not disclose the terms of the lease and the caveat lodged by ABCD also did not disclose the terms of the suggested earlier oral lease, but relied only on a written lease of 6 December.
In these circumstances, it seems to me that ABCD has been successful, largely, or possibly entirely, because of evidence that emerged for the first time in an affidavit today. Absent the existence of an earlier lease, it might well have been held that the events of 6 December did amount to a significant step intended to retard the receiver's conduct of the sale process. For those reasons, it seems to me that I should maintain the preliminary view that I indicated earlier, and there should be no order as to costs. I also do not accede to Mr Stitt's submission that costs should be Mr Minus's costs in the interlocutory application, because nothing that occurs in respect of the ultimate outcome of the interlocutory application will have an impact on the difficulties which I have identified in respect of the result today.
[4]
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Decision last updated: 02 June 2017