Fitts v Froome

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

3299/01 - FITTS & ANOR v LINDSAY FROOME and CRAIG FROOME T/AS FROOME CONSULTING & ANOR

JUDGMENT HIS HONOUR: 1 By notice of motion filed on 2 August 2001 in accordance with a direction made by Palmer J on that day pursuant to Part 55 rule 11(1) of the Supreme Court Rules, the Registrar in Equity has applied for orders that Mr Craig Froome, Mr Lindsay Froome and Froome Consulting Pty Ltd be punished for contempt of Court in that they failed to comply with certain orders made on 24 July 2001. The application is supported by an affidavit of Senior Deputy Registrar Robinson sworn on 21 September 2001.

2 The Registrar's application in relation to Mr C. Froome and Mr L. Froome was heard by me on 17 October 2001 when Mr D. Cowan instructed by the Crown Solicitor appeared for the Registrar as applicant and Mr T. Moore instructed by Hovan & Co appeared for Mr C. Froome and Mr L. Froome. Mr C. Froome pleaded guilty to the charge of contempt while Mr L. Froome pleaded not guilty.

3 The orders of the Court to which the charges relate were made by Registrar Berecry on 24 July 2001 and entered that day. The orders were as follows: "1. The Defendants lodge the sum of $200,000.00 with the Supreme Court by 5pm on 31st July 2001. 2. The Defendants file and serve an affidavit conforming with the terms covered by Order 3 of Santow, J of 19 June 2001 by 5pm on 31st July 2001."

4 These orders were made in accordance with short minutes in which they were expressed to be orders by consent. The short minutes carried the signatures of counsel for the plaintiffs, Mr and Mrs Fitts, and counsel for the defendants, being all of the present respondents. Order 2 set out above refers to the following order made by Santow J on 19 June 2001 and entered that day: "3. On or before 11.00am on 20 June 2001, the Respondents serve upon the applicants solicitor in affidavit a full account identifying all monies, debentures, shares, properties and investments in which the sums originally deposited by the applicants in the said National Australia Bank Account styled CBA Family Trust and numbered 082-637496399755 and any monies accrued from dealing monies so originally deposited are presently contained and that such statement of account be by way of affidavit."

5 I should say something at this point about the operation of the orders. The Registrar's notice of motion names "Lindsay Froome & Craig Froome t/as Froome Consulting" as the first respondent/defendant and "Froome Consulting Pty Ltd" as the second respondent/defendant, thus continuing a classification adopted in the plaintiffs' summons of 28 June 2001 and carried through into the orders of 24 July 2001. It will be noted that those orders command action by the "Defendants" as a plurality of persons, just as Santow J's Order 3 of 19 June 2001 commanded action by the "Respondents" as a plurality of persons.

6 It must follow that, if any of the three had lodged the sum of $200,000 as required, Order 1 of 24 July 2001 would have been satisfied. It would likewise have been satisfied if several of them had lodged separate sums totalling $200,000. In the case of Order 2 of 24 July 2001, however, it would not be sufficient for one to file and serve an affidavit deposing to lack of relevant knowledge on the part of that deponent. While that might constitute compliance by the deponent alone, it would not be sufficient to cause the order to be satisfied with respect to the other two.

7 None of the three respondents has lodged the sum of $200,000 (or any smaller sum) with the Court. Non-compliance with order 1 is therefore clear. As to Order 2, it is clear that none of the three respondents had, by 5 pm on 31 July 2001, filed and served an affidavit satisfying the requirements of the order, although it must be said that material contained in affidavits filed subsequently does go some way towards satisfying those requirements, even though some of that material may be contradicted.

8 I turn now to an element the importance of which in cases of this kind is emphasised by the Court of Appeal in Amalgamated Television Services Pty Ltd v Marsden [2001] NSWCA 32, namely, the alleged contemnor's knowledge of the content and meaning of the orders of the Court. Service of the orders of 24 July 2001 on Mr L. Froome was proved by an affidavit of Mr Ali Oner affirmed on 27 July 2001. Although there is not annexed to that affidavit a copy of the orders, the deponent says that, on 25 July 2001, he effected personal service on Mr L. Froome of a letter from Ms Majkus, the solicitor for the plaintiffs in these proceedings, which letter commences: "I enclose by way of personal service sealed copy of the Orders made in the Supreme Court today."

9 Given that the letter is dated 24 July 2001 there can be no doubt that the orders which were represented as having accompanied the letter were the relevant orders. In any event, it was made clear at the hearing before me that Mr L. Froome did not dispute service. Indeed, he conceded in cross-examination both service of the orders upon him and an understanding of their meaning and importance: "Q. Now, you were later served with a sealed copy of the consent orders made on 24 July this year, correct? A. Yes.

Q. You know that they are the orders, the subject of the charge of contempt, and you recall being served with those, don't you? A. They were the second lot of papers, yes.

Q. And you read those consent orders when you were served? A. Yes.

Q. You saw that they required you among others to pay $200,000 into court by 30 July this year? A. Yes.

Q. 31st if it was not 30 July, do you agree? A. Yes.

Q. You understood that that was an order of the court ordering you to do that? A. Yes.

Q. And you understood when you read that document that if breached, that is if you didn't do what the order required you to do, you could be in very serious trouble? A. Yes.

Q. Including, in contempt of court? A. Right."

10 A question ventilated by Mr Moore on behalf of Mr L. Froome is whether Mr L. Froome in truth consented to the making of the orders represented by the short minutes as consent orders and, if he did not, whether he was bound to comply with them. Mr Cowan submitted that this is an irrelevant consideration. He relied upon the following passage in the judgment of Romer LJ in Hadkinson v Hadkinson [1952] P 285: "It is the plain and unqualified obligation of every person against, or in respect of whom, an order is made by a court of competent jurisdiction, to obey it unless and until that order is discharged. The uncompromising nature of this obligation is shown by the fact that it extends even to cases where the person affected by an order believes it to be irregular or even void. 'A party who knows of an order, whether null and void, regular or irregular, cannot be permitted to disobey it … It would be most dangerous to hold the suitors, or their solicitors, could themselves judge whether an order was null and void - whether it was regular or irregular. That they should come to the court and not take upon themselves to determine such a question: that the course of a party knowing of an order, which was null and irregular and who might be affected by it was plain. He should apply to the court that it might be discharged. As long as it existed it must not be disobeyed.' (Per Lord Cottenham LC in Chuck v Cremer (1846) Cooper temp. Cottenham 205, 338.) Such being the nature of this obligation, two consequences will, in general, follow from its breach. The first is that anyone who disobeys an order of the court … is in contempt and may be punished by committal or attachment or otherwise."

11 This passage was said by the Privy Council in Isaacs v Robertson [1985] 1 AC 97 to say "all that needs to be said upon this topic". An order of a superior court of record cannot be a nullity and is effective until set aside, discharged or stayed. If a person becomes subject to such an order in circumstances where the person believes that the order was made by the court without jurisdiction or upon some wrong basis or false premise (including, for example, a misapprehension by the relevant judicial officer that the person concerned consented to its being made) or that compliance with the order will be of no utility or should otherwise not be required, it is not for that person simply to disregard the order on the basis of such a belief. The correct and only course, short of obedience to the order, is to seek through appropriate legal process to have it discharged, set aside or stayed. In Chapman v Saunders [2001] FCA 4, a case involving a subpoena, the Full Federal Court (Beaumont and Heerey JJ) put the matter thus: "In our view the evidence compelled a conclusion that the respondent had committed a contempt of court by deliberately disobeying the order of von Doussa J.

The respondent made no application to set aside the Subpoena, or to appeal against the order of von Doussa J. As long as that order stood the appellants were entitled to have it respected and obeyed. There was no obligation on the appellants, in the application before O'Loughlin J, to show that enforcement of the order would be necessary or useful for them in the conduct of the litigation, or to explain why they had not obtained the issue of the subpoena at an earlier date, or why they had not take similar action against someone else." Reference may also be made to the decisions of the High Court in Camerson v Cole (1943) 68 CLR 571 and Jackson v Sterling Industries Ltd (1987) 162 CLR 612.

12 Mr L. Froome was in no way excused from obedience with the orders of 24 July 2001, even if he did not consent to their making. Once he received notice of them, his legal duty to obey them was clear and unambiguous. Had he though that there were grounds to challenge the orders, he should have set about that process in the correct way.

13 I should also refer briefly to the fact that, on the evidence, Mr L. Froome did not take an active part in the activities which gave rise to the making of the orders of 24 July 2001, being the activities of investment advising and placement carried on by either or both of Mr C. Froome and Froome Consulting Pty Ltd. Mr L. Froome is, on his own admission, the sole shareholder and sole director of Froome Consulting Pty Ltd, but it appears that he took on those roles as a favour to Mr C. Froome who labours under legal disabilities which prevent his acting as a company director.

14 Mr L. Froome, when served with the orders, raised with Mr C. Froome the need to comply and received certain assurances that all would be put right. But that, of course, in no way diminished his personal and separate responsibility. The orders operated upon him. He could not avoid or evade their impact by saying it was all to do with his brother and was not his business. To have taken such an attitude was irresponsible.

15 My findings are as follows: 1. Mr L. Froome failed to comply with Order 1 made by this Court in these proceedings on 24 July 2001 in that he did not, by 5 pm on 31 July 2001 or at any time thereafter, lodge the sum of $200,000 with the Court. 2. Mr L. Froome failed to comply with Order 2 made by this Court in these proceedings on 24 July 2001 in that he did not, by 5 pm on 31 July 2001, file and serve an affidavit as described in that order. I also find, however, that Mr L. Froome did, by affidavits subsequently filed and served, record and communicate a quantity of the information required by the order, insofar as it lay within his knowledge.

16 Mr L. Froome is accordingly guilty of contempt of court as charged by the Registrar in Equity. Having regard to the decision of the High Court in Witham v Holloway (1995) 183 CLR 525, I record that all relevant matters have been proved beyond reasonable doubt.

17 Each of Mr C. Froome and Mr L. Froome is adjudged guilty of contempt of court and I shall hear submissions on punishment at a time I shall now appoint with counsel.

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