Duhs v Pettett & Ors

[1] On 11 December 2009 I held that the first defendant, Mr Pettett, was in contempt of orders made in these proceedings.[1] The matter was adjourned for submissions and any further evidence relevant to punishment for this contempt. This judgment concerns that issue.

[2] It is convenient to mention first the contempt of paragraph 8.1 of the order of 16 July 2009, which was constituted by Mr Pettett's failure to inform the plaintiff's solicitors of his credit balance in an account with Heritage Building Society. As I discussed in my previous judgment, that came to light by Mr Pettett volunteering the information about the account. By the time of the previous hearing, the information had been provided and was conceded to be sufficient. This was an inadvertent breach.

[3] The more substantial contempt was that constituted by his failure to comply with paragraph 8.2 of that order. In essence he failed to disclose information concerning the disbursement of "the plaintiff's monies in the sum of $2,700,000 as deposited to Suncorp-Metway Limited account no. 330021210". In essence, Mr Pettett had argued that he was not in breach because the $2,700,000 paid to him, and deposited by him to that account, was from that point not "the plaintiff's monies". Rather, the funds had become his own monies because, so it was said, he had procured for the plaintiff investments in an equivalent amount for which he, Mr Pettett, had paid or would pay. I rejected that argument and held that the order of 16 July 2009, upon its proper interpretation, required the disclosure of information within Mr Pettett's knowledge about the passage of the funds, without this being limited to a time when the funds were in all respects the property of the plaintiff.[2]

[4] On 15 December 2009, Mr Pettett swore an affidavit which disclosed extensive material as to the disbursement of the monies. Exhibited to that affidavit were over 1,000 pages of documents on the subject. Nevertheless, when the matter came before me two days later, counsel for the plaintiff were critical of the affidavit, saying that Mr Pettett was still in breach by failing to disclose everything which was relevant. On that day I ordered the plaintiff to file by 12 February 2010 any further affidavit as to penalty and, in particular, as to the sufficiency or otherwise of that affidavit of Mr Pettett. No such affidavit has been filed or indeed sworn by the plaintiff.

[5] On 29 January 2010, Mr Pettett swore an affidavit, in which he disclosed some further details as to the disbursement of the funds. These were relatively unimportant details and I accept, as Mr Pettett swore in that affidavit, that they were omitted from his affidavit of 15 December 2009 by oversight.

[6] At the hearing on 19 February, counsel for the plaintiff first said that there would be no argument that Mr Pettett remained in breach of the order. Later however, he appeared to suggest that full details of the application of these funds, and in particular in connection with an investment at Rathdowney, were yet to be disclosed. Yet Mr Pettett was not cross-examined upon his affidavits. Nor is it apparent from those affidavits that there remains some default in compliance with the order of 16 July 2009. Accordingly, it is not established that Mr Pettett remains in contempt. Indeed, given the now unchallenged evidence of Mr Pettett that he has provided all of the information which he is able to provide, taken together with the lack of any evidence from the plaintiff as to the insufficiency of his compliance with the order and the apparently extensive information provided in the December affidavit, I find that more probably than not he has complied with the order.

[7] An important consideration is whether Mr Pettett's breach of the order was made knowingly. He has sworn that he misunderstood the effect of the order and what was meant by "plaintiff's monies". As I have said, that evidence has not been challenged by cross-examination. There is no evidence which is tendered to contradict it. Rather, I am asked to find that Mr Pettett could not have had this understanding of the order so that he must have known that he was disobeying it.

[8] Mr Pettett's evidence in that respect is not immediately compelling. Having regard to the apparent purpose of the order, it is not easy to accept it. But if he is to be punished for contempt upon the premise that he knew that he was in breach of the order, that fact needs to be established and, in my view, on the standard of beyond reasonable doubt. Clearly the elements of the contempt itself must be established according to that standard although such a contempt is described as a civil contempt: Witham v Holloway.[3] But this matter is not an element of the contempt. Rather, it is an aggravating circumstance relevant to penalty.[4] Prior to the enactment of s 132C of the Evidence Act 1977 (Qld), the effect of the majority of the Court of Appeal in of R v Morrison[5] had been that the standard of beyond reasonable doubt applied to the proof of an aggravating fact or circumstance relevant to the sentence in criminal proceedings. That view was based upon what was said by Deane, Toohey and Gaudron JJ in Anderson v The Queen[6] and the conclusions reached by Courts of Appeal in New South Wales, Victoria and Western Australia as cited by Williams J in Morrison.[7] The correctness of that view was confirmed by the High Court in R v Olbrich.[8] Section 132C now requires the application of the standard of the balance of probabilities, subject to the condition that the degree of satisfaction required varies according to the consequences, adverse to the person being sentenced, of finding the allegation to be true.[9] But s 132C applies "to any sentencing procedure in a criminal proceeding"[10], so it does not apply here. In my view the standard of beyond reasonable doubt should be applied, by analogy with the common law relating to punishment for criminal offences. But if, contrary to that view, it would be permissible to apply the civil standard of proof, it would be appropriate to do so consistently with the approach required for the sentencing of criminal offenders under , i.e. with a consideration of the consequences adverse to the person in contempt. On neither standard of proof would I be satisfied to reject Mr Pettett's evidence and to conclude that he knowingly breached the order.

[9] Accordingly, the question of penalty must now be considered upon the premises that this was a contempt resulting from inadvertence and a mistake as to the effect of the order and that the breach has now been remedied. The principal function of punishment for civil contempt is, as Muir J said in Hafele Australia Pty Ltd & Anor v Maggbury Pty Ltd & Anor[11], coercive rather than punitive. That purpose has been served by these proceedings. Of course that is not the only consideration. A court is concerned not only with remedying what has happened in the particular case but also with the public interest in the vindication of the court's authority: Australian Meat Industry Employees' Union & Ors v Mudginberri Station Pty Ltd.[12] But that consideration is not the primary purpose of the exercise of the court's powers to deal with contempt where the disobedience with the court's order is not deliberate or accompanied by public defiance.[13] In that respect, upon the factual premises which I have stated, this case is different from that of O'Shea & Ors v Remely, an unreported decision of Byrne SJA on 22 December 2009, on which the plaintiff's counsel heavily relied. Byrne SJA there sentenced the defendant to six months imprisonment, for refusing to answer questions put to him in the course of an enforcement hearing in civil proceedings.

[10] The defendant is a married man aged 67 years living with his wife and nine year old twin sons. He has no criminal convictions and no prior history of contempt. He was declared bankrupt on 19 December 2009 as a result of the plaintiff's judgment in these proceedings given on 7 July 2009. His bankruptcy makes an order by way of a fine inappropriate for there would be no apparent prospect of his paying a fine. He has apologised for his failure to comply with the court's order.

[11] In these circumstances I am not persuaded by the plaintiff's submission that Mr Pettett should be imprisoned. The primary purpose of these proceedings has been achieved. The case is relatively serious for the large amount of money which is involved. But Mr Pettett is now being dealt with for his breach of the orders of 16 July 2009. He is not being sentenced for a misappropriation (if any) of the plaintiff's funds.

[12] In all the circumstances there will be no penalty imposed. Subject to any further submission the first defendant should be ordered to pay the plaintiff's costs of the contempt proceedings, to be assessed upon the indemnity basis.

[1] Duhs v Pettett & Ors (No. 2) [2009] QSC 400.

[2] [2009] QSC 400 at [19].

[3] (1995) 183 CLR 525.

[4] Australian Meat Industry Employees' Union & Ors v Mudginberri Station Pty Ltd [1986] HCA 46; (1986) 161 CLR 98 at 108-9, 112.

[5] [1998] QCA 162; [1999] 1 Qd R 397.

[6] [1993] HCA 59; (1993) 177 CLR 520 at 536.

[7] [1998] QCA 162; [1999] 1 Qd R 397 at 408.

[8] [1999] HCA 54; (1999) 199 CLR 270 at 281.

[9] s 132C(4).

[10] s 132C(1).

[11] [2000] QCA 397 at [36].

[12] [1986] HCA 46; (1986) 161 CLR 98 at 108.