Factual Background
2 I shall set out some detail of the procedural history of these matters because the extent to which the respondents were aware of the Mareva injunction is, in my view, of some importance. [Although there were two Mareva injunctions, I shall refer to them in the singular because they were relevantly identical.] On 18 July 1996 the Commissioner sued each of the respondents in the Supreme Court of Western Australia, in separate proceedings. I shall refer to them as respondents, although they were defendants at that stage. Each proceeding was initiated by a writ of summons to which was annexed a statement of claim. In each proceeding the Commissioner claimed income tax in respect of the years ended 30 June 1995 and 30 June 1996, together with additional tax and interest pursuant to ss 207 and 207A of the Income Tax Assessment Act 1936 (Cth) ("the Act"). The amount claimed from Mr Hickey was $161,419.66 plus additional tax and interest on virtually the whole of that amount from 19 July 1996. The amount claimed against Ms Horne was $223,110.86 plus, again, interest on virtually the whole of that amount from 19 July 1996. All of the assessments were default assessments, made under s 167 of the Act. On the same date, in each proceeding, the Commissioner applied ex parte to a judge in chambers for a Mareva injunction. An affidavit filed on behalf of the Commissioner in support of that application (Exhibit A1 in these proceedings) disclosed the following facts. First, that between 7 September 1994 and 12 April 1996 the respondents had caused funds totalling $826,081.00 to be transferred from Western Australia to two bank accounts in New Zealand in the name of "J. Hickey and H. Horne". Two of the transactions were for cash cheques amounting to $19,980 and one transaction was for $30,000. But the balance of the funds, being a total of $776,101.00, was transferred in ninety-three separate cash transactions of amounts being less than $10,000. The Financial Transaction Reports Act 1988 (Cth) requires cash transactions of more than $10,000 to be reported to a body called Austrac which is the Commonwealth agency responsible for the administration of that Act. The activity by which large amounts of money are transferred in separate amounts of less than $10,000 is known as "structuring". The respondents used over forty different branches in Western Australia to make these transfers. In one week, in July 1995, the respondents transferred over $100,000 to their New Zealand bank account by ten transactions from nine branches (one branch was used twice) of five different banks. Most of the moneys transferred to New Zealand were, at the direction of the respondents, subsequently transferred to other countries, but some of the moneys found their way back to Australia. The Commissioner became aware of these matters. By 3 May 1996 the Commissioner had served final notices on each of the respondents requiring them to lodge income tax returns for the year ended 30 June 1995. No such returns had been lodged by the time the writs were issued. During May and June 1996 there had been further contact between the Commissioner and the respondents, and he also had contact with their accountants. On 30 May 1996 the Commissioner had issued a notice under s 264 of the Act to Mr Hickey requiring him to attend before an officer of the Commissioner, to give evidence and produce documents on 7 June 1996. Mr Hickey attended on that date but otherwise did not comply with that requirement. On or about 4 July 1996, shortly before the assessments were issued, the Commissioner obtained a search warrant to search premises then owned and occupied by the respondents at Herne Hill. During the course of the execution of that search warrant, a copy of a passbook in Mr Hickey's name was obtained, showing a deposit of $89,917.00 by him on 27 June 1996. On the same day as the execution of the search warrant, Mr Hickey transferred $89,500 from that account to his solicitors in Melbourne. A week later the Commissioner used his powers under s 218 of the Act to retrieve some $61,560 of that amount from those solicitors, Messrs Melasecca Zayler. In late May and early June 1996 the respondents had applied for and obtained approval for a loan of $150,000 from Westpac Banking Corporation. Security for that loan was to be by way of mortgage over the Herne Hill property and an apartment owned by them. Those were their only real estate assets. There was evidence which indicated that arrangements had been so made that at settlement of that transaction some $100,020.00 was to be transferred telegraphically to New Zealand, $30,045.00 was to be transferred to Messrs Melasecca Zayler and $19,935.00 was to be transferred to the bank account of Parmelia & Associates Pty Ltd ("Parmelia"), being the company which acted as trustee for the Hickey-Horne Family Trust. As it turned out, the moneys were not advanced. Had they been advanced, there would have been no realisable equity in those two properties for a judgment creditor. Those, in summary, were the circumstances in which the Commissioner applied ex parte for a Mareva injunction. On 19 July 1996, Ipp J granted the Mareva injunction. The relevant part of his Honour's orders in the proceedings against Mr Hickey (which was identical, save for gender references, in the proceedings against Ms Horne) reads as follows:
"1. Until further order the Defendant be restrained and an injunction is hereby granted restraining him, whether by himself, his servants or agents or howsoever otherwise from removing, or causing, or permitting to be removed from the State of Western Australia, or selling, charging, mortgaging, encumbering or otherwise dealing with or disposing of, or causing or permitting to be sold, charged, mortgaged, encumbered or otherwise dealt with or disposed of, all or any of his assets or property (whether owned or held jointly with any other person or otherwise) or any assets or property hereafter acquired by him or by him jointly with any other person, including (but without limiting the generality of the foregoing) all real and personal property, cash and monies or either of them deposited on account with any bank, building society or other lending or financial institution on term or at call, without the prior written consent in writing of the Plaintiff or the Plaintiff's Solicitor, PROVIDED THAT this order shall not prevent the Defendant from paying:
(a) ordinary living expenses up to an amount of $300.00 per week; and
(b) legal costs reasonably incurred in these proceedings up to an amount of $5,000.00."
3 Again on 19 July 1996, the Commissioner's solicitor forwarded a letter to each of the respondents enclosing a copy of the respective writs of summons. Those letters were individually addressed, but in identical terms. The last paragraph of each letter read:
"I advise that orders were obtained from the Supreme Court on Friday 19 July 1996 pursuant to the Plaintiff's application for a mareva injunction preventing Mr Hickey and Ms Horne from dealing with their assets or property except as specified in the Orders of his Honour Mr Justice Ipp. I enclose, by way of service, a copy of the Orders."
4 As appears from the above, each letter also enclosed a copy of Ipp J's orders of 19 July 1996.
5 The applicant's evidence was that on 19 July 1996 each of the respondents was served personally with the respective writ of summons and a copy of Ipp J's orders of 19 July 1996. At the hearing of these motions this was conceded by both respondents (T22-23).
6 However, when so served, the copies of the Mareva injunction were not endorsed with the warning required by Order 46 Rule 4(5) of the Rules of the Supreme Court of Western Australia. That sub-rule is as follows:
"(5) Where an order requires a person or body corporate to abstain from doing an act there must be indorsed on the copy of the order served under this Rule a memorandum in the words or to the effect following -
"If you the within-named A.B. (or A.B. Ltd.) disobey this judgment (or order), you (or the said A.B. Ltd) will be liable to process of execution for the purpose of compelling you to obey the same"."
7 There is evidence that the respondents retained Messrs Melasecca Zayler and that firm's Perth agents to act for them in relation to these Supreme Court actions. On 22 July 1996 Messrs Melasecca Zayler wrote to the Commissioner's solicitor. The heading of that letter refers specifically to the two Supreme Court actions. The first three paragraphs of that letter read as follows:
"We advise that we act for James Lindsay Hickey and Heather Margaret Horne in the above actions.
We note that as a result of these proceedings a Mareva injunction has been ordered against each of our respective clients.
Our clients are thereby exposed to the requirements of that order. Our clients have requested us to assist them in complying with the orders."
8 Paragraph 3 of the orders made by Ipp J on 19 July 1996 required each respondent to make discovery on oath to the Commissioner, within seven days of service, of all property including all real and personal property, cash, moneys deposited on account with any bank, building society or other lending or financial institution on term or at call which each respondent was entitled to operate (whether jointly with another person or not) or were operated on the respondents' behalf. On 29 July 1996 each of the respondents swore and filed an affidavit setting out particulars of their assets and liabilities.
9 The Commissioner then applied to a judge in chambers for leave to cross-examine the respondents on their affidavits of assets and liabilities. The Commissioner also applied for the Mareva injunction to be varied so as to extend to assets or property whether situate in Western Australia or outside the State. That chamber summons came before Ipp J on 22 August 1996. Each of the respondents was represented by counsel who opposed the application. His Honour declined to make an order that Mr Hickey be cross-examined upon his affidavit, but did order that Ms Horne be cross-examined on her affidavit. His Honour also varied the Mareva injunction which he had granted on 19 July 1996 against Ms Horne, to make it clear that it applied to assets both in and out of the jurisdiction. He varied the injunction against Mr Hickey to make it plain that as against him it was to be limited to assets within the jurisdiction only. His Honour published reasons for his decision. In short, the orders made on 22 August 1996 reflect the evidence that, at that stage, Mr Hickey had sufficient assets within the jurisdiction to satisfy the Commissioner's claim while Ms Horne did not. Ms Horne's counsel applied to Ipp J for leave to appeal against his Honour's decision. His Honour declined to grant leave but postponed the time for her attendance before the Registrar for cross-examination, for a period of fourteen days.
10 On 5 September 1996 Ms Horne's solicitors filed a notice of motion, returnable before the Full Court of the Supreme Court of Western Australia, seeking leave to appeal against Ipp J's decision of 22 August 1996. At about the same time the Commissioner applied for summary judgment against the respondents in both actions. On 10 September 1996 Ms Horne's solicitors applied to a judge in chambers for a stay of the orders made by Ipp J on 22 August 1996. On 12 September 1996 Walsh J dismissed that application. On 14 October 1996 each of the respondents caused separate but relevantly identical applications to be filed in this Court under s 39B of the Judiciary Act 1903 (Cth) and the Administrative Decisions (Judicial Review) Act 1977 (Cth) seeking declarations that the Commissioner's notices of assessment were invalid or void and an injunction restraining the Commissioner from relying upon or enforcing the notices of assessment. On 16 October 1996 the solicitors for the respondents filed identical chamber summonses seeking orders that each of the Supreme Court actions be transferred to this Court pursuant to s 5(1) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (WA).
11 On 30 October 1996 the Commissioner's chamber summonses for summary judgment and the respondents' applications to transfer the proceedings to this Court came before Wallwork J for hearing. His Honour ordered that both actions be transferred to this Court. He did not make any orders in relation to the application for summary judgment. Shortly after the transfer of proceedings, orders were made by consent that the hearing of both applications (as they by then had become) be expedited. On 24 March 1997 (shortly before the date upon which both applications were listed for hearing), judgment was entered by consent in favour of the Commissioner against Mr Hickey in the sum of $152,721.85, together with interest on that sum at the rate of 19.5% per annum from 22 March 1997. On the same date, and again by consent, a similar judgment was entered against Ms Horne in favour of the Commissioner save that the principal part of the judgment in her case was $222,281.85. On 28 April 1997 Mr Hickey and Ms Horne were personally served with a copy of each of the respective Mareva injunctions, on each of which documents appeared warnings which included the warning required by Order 46 Rule 4(5), referred to above. Order 37 Rule 2(3) of the Federal Court Rules provides for a corresponding warning which refers not to execution, but to imprisonment or sequestration of property. Neither respondent raised the question of whether the copies served on that date, by reason of the fact that the applications had by then been transferred to this Court, should have borne the notice required by Order 37 Rule 2(3) or whether they did in fact bear such a notice. The Commissioner's case was conducted on the basis that the documents served on 28 April 1997 contained only the warnings required by the Supreme Court Rules. The respondents pleaded guilty to the contempt charges on the basis that they were properly served with the respective copies of the Mareva injunctions as from 28 April 1997. Shortly before senior counsel for the Commissioner closed his case, counsel for each of the respondents expressly acknowledged that their respective clients were served with a copy of Ipp J's orders and that they were endorsed with all the warnings required. In those circumstances, I do not think that it is necessary for me to consider whether those documents should have borne a notice complying with Order 37 Rule 2(3). Another reason why where is no such need to consider the point is that as will be seen below, it is quite clear, on the evidence before the Court, that at all relevant times each of the respondents had notice of Ipp J's orders. In those circumstances, Order 37 Rule 2(5) applies and those orders may be enforced regardless of whether service was in accordance with Order 37 Rule 2. Nevertheless, I propose to take into account the facts relating to warning and the like when I consider any mitigating factors. Neither of the Mareva injunctions made against Mr Hickey and Ms Horne has been discharged or otherwise varied, apart from the amendments made on 22 August 1996. On 3 July 1997 a sequestration order in bankruptcy was made in respect of the estate of Ms Horne and on 29 September 1997 such an order was made in respect of the estate of Mr Hickey. Both orders were in consequence of a petition lodged by the respective debtor. On 6 November 1997 senior counsel for the applicant examined Ms Horne, pursuant to s 81 of the Bankruptcy Act 1966 (Cth). On 6 November 1997 and 12 November 1997 he similarly examined Mr Hickey. Copies of the transcripts of those examinations are in evidence in respect of the motions before the Court. Much of that evidence relates to the expenditure made by the respondents since the Mareva injunction was granted. On 27 October 1998 the Commissioner caused notices of motion to be filed for orders that each respondent be found guilty of contempt in connection with this proceeding by disobeying the order made by Ipp J on 19 July 1997 in that:
"… the Respondent did on diverse occasions deal with or dispose of certain of his [her] assets or property comprising cash and monies:
a) in excess of an amount of $300 per week for ordinary living expenses; and/or
b) in excess of an amount of $5,000 for legal costs reasonably incurred in these proceedings,
full particulars of which conduct are set out in the statement of charge annexed hereto and marked "B"."
12 The statement of charge in each case recited the relevant portion of Ipp J's order. The applicant charged that each respondent was guilty of contempt by disobeying that order and listed some 59 (in the case of Mr Hickey) periods during which, or occasions on which, he disobeyed that order and (in the case of Ms Horne) lists some 31 periods during which she disobeyed that order. The Commissioner acknowledged at the hearing of the motions that Ms Horne had not spent in excess of $5,000 for legal costs as alleged in paragraph b) above. At the hearing of these motions, separate counsel appeared for each respondent. Counsel told the Court that their clients pleaded guilty to having been in contempt of court, but not to the extent set out in the respective particulars of charge. Their counsel submitted that when I assessed the penal consequences flowing from such contempt I should not take into account:
(a) payments made before 28 April 1997, being the date when copies of the Mareva injunctions were served bearing the endorsement referred to above;
(b) any payments made by Parmelia to third parties whenever made, and any cash withdrawals or transfers from Parmelia's bank account to any account maintained by the respondents or either of them which occurred before 28 April 1997; and
(c) (in Ms Horne's case) any payments made by using a Visa credit card account. Counsel for Mr Hickey did not press this particular argument, but I propose to consider it in his case also.
Jurisdiction
13 On behalf of the Commissioner it was contended that although the Mareva injunction was granted by the Supreme Court of Western Australia, it is to be treated as if it were an order made by this Court. The Commissioner relied upon s 11(3) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) and the decision of Branson J in Abrook v Patterson (1995) 136 ALR 753 at 756.
14 Neither respondent contended that this Court lacked jurisdiction or power to make the orders sought in these motions. However, of course, the Court is required to satisfy itself that it has jurisdiction and power to make such orders.
15 Section 11(3) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) provides as follows:
"Where a proceeding is transferred or removed to a court (in this sub-section referred to as the "transferee court" from another court (in this sub-section referred to as the "transferor court") the transferee court shall deal with the proceeding as if, subject to any order of the transferee court, the steps that had been taken for the purposes of the proceeding in the transferor court (including the making of an order), or similar steps, had been taken in the transferee court."
16 When one reads s 5(1) of that Act, which corresponds with the State provision under which these proceedings were cross-vested to this Court, it seems to me that this Court quite clearly had jurisdiction to hear the proceedings which comprise what have now become the two principal applications in this Court. They were (and still are) the relevant "proceedings" for the purposes of s 11(3). In my opinion, s 11(3) operates to confer power on this Court to deal with those proceedings as if the Mareva injunction granted by Ipp J (as subsequently varied) had been made in this Court. It was clearly a step taken for the purposes of the proceedings in the Supreme Court. I respectfully agree with what Branson J said in Abrook at 756.