Gap Constructions Pty Ltd v Vigar Pty Limited

Supreme Court of NSW|2011-08-26|Before: Einstein J, Mr P

The notice of motion 1There is before the Court a notice of motion filed by the first, second and third defendants seeking orders that : (1)The respondents to this motion be found guilty of contempt. (2)The first respondent be punished by sequestration or fine or both. (3)The second respondent be punished by committal to a correctional centre or fine or both or otherwise in accordance with the Crimes (Sentencing Procedure) Act 1999 (NSW) . (4)An order under UCPR 40.7(4), to the extent necessary, permitting enforcement by committal or sequestration of the orders referred to in the statements of charge annexed to this Notice of Motion, without service having been effected in accordance with UCPR 40.7(1)-(3). (5)In the alternative, an order under UCPR 40.7(5), to the extent necessary, dispensing with service under UCPR 40.7(1)-(3). (6)The respondents pay the costs of this application on the indemnity basis or in the alternative on the ordinary basis. (7)Leave to assess costs forthwith. (8)Such further or other order as the Court deem fit.

Interim preservation consent orders 6The orders the subject of this contempt motion were made, regarding the defendants' claim, in the Court's interim preservation jurisdiction. The consent regime was agreed after a half day interlocutory hearing on 4 July 2011 before Ward J. This consent regime, which was an evolution of the orders made by White J on 27 June 2011, involved all parties providing some protection for the others' claims.

The applicants' case 7As is plainly apparent, the substantive complaint raised on behalf of the applicants is that the plaintiffs have repeatedly failed to comply with the Court's orders and "without the benefit of that information, the applicants have not traced the monies or restrained or sought other remedies from third parties who may have knowingly received misappropriated monies."

The importance of compliance with the Court's orders 8In Bydand Holdings Pty Ltd v Pineland Property Holdings Pty Ltd [2009] NSWSC 584, I set out a consideration of the Courts general jurisdiction to find a person guilty of contempt of court. A number of authorities were there set out. They are relevant for present purposes. They included the following observations : [46] In Registrar of the Court of Appeal v Maniam (No 2) (1992) 26 NSWLR 309 Kirby P (as he then was) said this: A conviction of contempt of Court is a conviction of an offence, criminal in nature. Punishment of the convicted contemnor must therefore take into account the considerations normally applicable to the punishment of crime and apt to uphold the purpose of this jurisdiction, viz, the undisturbed and orderly administration of justice in the Courts according to law. Thus, in determining the punishment which is apt to the circumstances which have led to a conviction of contempt, it is appropriate to bear in mind the purposes of punishing the contemnor; deterring the contemnor and others in the future from committing like contempts; and denouncing the conduct concerned in an approximately emphatic way: see Director of Public Prosecutions v John Fairfax& Sons Ltd (1987) 8 NSWLR 732 at 741. In this jurisdiction, contempt is a common law offence for which there is therefore no maximum penalty in this Court: R v Dunbabin; Ex parte Williams (1935) 53 CLR 434 at 442. Any limits which are imposed upon the Court's powers derive from the purposes stated above and the limitations expressed in the Tenth Article of the Bill of Rights 1688 which restrains the imposition of cruel or unusual punishments or "excessive fines": see Smith v R (1991) 25 NSWLR 1, noted (1991) 65 ALJ 695 (at 314). [47] More recently Campbell J in NCR Australia Pty Ltd v Credit Connection Pty Ltd [2005] NSWSC 1118 had occasion to examine a number of parameters concerning inter alia the range of possible types of penalty and the standard of proof: "The Range of Possible Types of Penalty 20 Part 55 rule 13 Supreme Court Rules 1970 provides: (1) Where the contemnor is not a corporation, the Court may punish contempt by committal to a correctional centre or fine or both. ... (3) The Court may make an order for punishment on terms, including a suspension of punishment or a suspension of punishment in case the contemnor gives security in such manner and in such sum as the Court may approve for good behaviour and performs the terms of the security." The provisions of Part 55 rule 13 declare the Court's inherent power to punish for contempt but do not exhaust it: Registrar of the Court of Appeal v Maniam (No 2) (1992) 26 NSWLR 309. 21 The expression "contempt of Court" covers a family of different types of legal wrong, all of which have an element in them of interfering with the administration of justice in the Courts. Some types of contempt of Court, such as interfering with witnesses, have always been recognised as crimes. Others, such as disobedience to Court orders made in civil proceedings, are not in themselves criminal, though some aspects of the criminal law can become applicable to them. That Part 55 rule 13 confers on the Court a power to punish contempt by imprisonment does not determine the question of whether it would be in accordance with principle to impose a sentence of imprisonment for the particular type of contempt arising from disobedience to Court orders made in civil proceedings. 22 One strand in the historical development of the power of the equity Court to punish for a disobedience of its orders has been to impose a sentence of imprisonment of indefinite duration, as a means of persuading the person bound by the order to comply with it. That justification for imprisonment is not available in the present case, where the Mareva order has been broken in ways which are incapable of remedy. 23 The history of the law of contempt concerning breach of orders in civil proceedings shows a fitful recognition of another strand, whereby punishment can be imposed even in relation to breaches of order which are incapable of remedy. Since the decisions of the High Court in Australasian Meat Industry Employees' Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98 and Witham v Holloway (1995) 183 CLR 525 it has been clear that punishment can be imposed for a breach of order made in civil proceedings even if the breach is incapable of remedy. The justification for the punishment in those circumstances is that it is a means of vindicating the Court's authority. In particular, imprisonment has been imposed as a sanction for breach of Mareva orders: Australian Securities and Investments Commission v Michalik and others [2004] NSWSC 1259; (2004) 52 ACSR 115. As Palmer J said in Australian Securities and Investments Commission v Michalik and others [2004] NSWSC 1259; (2004) 52 ACSR 115 at [32]: "... in punishing a contempt, a Court of equity acts no differently from a Court of common law. The distinction between common law and equity in this context is meaningless. In punishing for contempt, a judge of the Supreme Court is vindicating the authority of the Court itself, regardless of the Division in which the judge happens to be sitting." 24 Punishment of someone for contempt should take into account the same principles as are applicable to punishment for crime: Registrar of the Court of Appeal v Maniam (No 2) (1992) 26 NSWLR 309 at 314. That includes the sentencing principles contained in the Crimes (Sentencing Procedure) Act 1999 : A-G for NSW v Whiley (1993) 31 NSWLR 314 at 321 (in relation to its predecessor, the Sentencing Act 1989 ); Principal Registrar of the Supreme Court of New South Wales v Jando (2001) 53 NSWLR 527 at 536-537; Ryan v Wright (No 2) [2004] NSWSC 1019 at [18] per Gzell J; Australian Securities and Investments Commission v Michalik and others (No 2) [2004] NSWSC 1260; (2004) 62 NSWLR 335 at 343, [38]. (An appeal relating to Ryan v Wright (No.2) was taken, but on guilt, not penalty, and was dismissed: Wright v Ryan [2005] NSWCA 368.) 25 In principle, a contempt of Court could be punished by anything within the range of penalties that can be imposed for a crime, pursuant to the Crimes (Sentencing Procedure) Act 1999 . That range consists of imprisonment (section 5) periodic detention (section 6), home detention, (section 7) community service orders (section 8) good behaviour bonds (section 9), dismissal of the charge accompanied by either a good behaviour bond or a condition that the offender participate in an intervention programme (section 10), deferral of sentence (section 11), suspended sentence (section 12), fine (section 14), or the making of a non association or a place restriction order (section 17A). 26 Sections 6 and 7 make clear that penalties of periodic detention, and home detention, respectively, can be imposed only by " a Court that has sentenced an offender to imprisonment ... ". Thus, if a sentence of imprisonment has not actually been imposed on a particular offender, it is not open to the Court to impose penalties of periodic detention or home detention on that offender. Standard of Proof of Facts Relevant to Sentence 27 When a Judge is finding facts for the purpose of a sentence concerning crime, a fact which will be used in a way which is detrimental to the offender must be proved beyond reasonable doubt, while a fact which will be used in a way which will be advantageous to the offender can be proved on the balance of probabilities: R v Olbrich (1999) 199 CLR 270 at 281, approving R v Storey [1998] 1 VR 359 at 369. In Witham v Holloway (1995) 183 CLR 525 the High Court held that a contempt could be found proved only if it was established beyond reasonable doubt. The reason was that the punitive nature of the proceedings brought with it the criminal standard of proof. Consistently with that principle, the standard of proof used in deciding factual matters for the purpose of imposing a sentence for contempt of Court should be the same as is used in imposing a sentence in criminal matters." [48] These observations are adopted in the approach taken to the current application. [49] Palmer J in Australian Securities and Investments Commission v Michalik [2004] NSWSC 1259 [noted by Campbell J] listed as appropriate factors for consideration the following matters: "i) the seriousness of the contempt proved; ii) whether the contemnor was aware of the consequences to himself of what he proposed to do; iii) the actual or potential consequences of the contempt on the proceedings in which the contempt was committed; iv) whether the contempt was committed in the context of a proceeding alleging crime or conduct seriously prejudicial to the public interest: see, for example, Von Doussa v Owens (No 3) (1982) 31 SASR 116; v) the reason or motive for the contempt; vi) whether the contemnor has received, or sought to receive, a benefit or gain from the contempt; vii) whether there has been any expression of genuine contrition by the contemnor; viii) the character and antecedents of the contemnor; ix) what punishment is required to deter the contemnor and others of like mind from similar disobedience to the orders of the Court; x) what punishment is required to express the Court's denunciation of the contempt" 9The most common basis for orders for information is to make a freezing order effective: Biscoe P, Mareva and Anton Pillar Orders: Freezing and Search Orders , LexisNexis Butterworths, Sydney, 2005, at [3.3], approved by Moore J in Universal Music Australia v Sharman License Holdings [2005] FCA 1587. However it is an "entirely legitimate exercise by a [party], which has established a prima facie case that it has been deprived of its property by ...[another party], to endeavour to trace those funds with a view to recovering them" by obtaining orders for information: Royal Australasian College of Physicians v Yadam [2006] NSWSC 1463 (Brereton J) at [17], approved in DCT v AES Services [2009] VSC 527 at [23] (J Forrest J). 10It is this latter purpose which was the stated objective of the orders. The orders sought basic information for purposes of tracing: (1)Recipient . Where information is sought from third parties , "the tracing element, I think, comes into play in the context of establishing with some precision the immediate source of the funds" (emphasis added); this is to "enable the [applicant] to determine what, if any, further steps it wishes to take in respect of the ... assets identified by that exercise": DCT v AES Services [2009] VSC 527 at [28] (J Forrest J). By the same reasoning, where information is sought from the payer , the tracing element comes into play in the context of establishing with some precision the immediate recipient of the funds. (2)Person or entity with obligation to pay . If a third party benefited from misappropriated monies by having its obligations met, it is relevant to the tracing exercise that the third party be identified (as required by the orders), rather than a list of entities, any one of whom may have had the obligation. (3)Reasons for transaction. The reasons for the transaction are of course relevant to tracing: Barnes v Addy (1874) LR 9 Ch App 244. 11This information was required in respect of: (1)specific payments out of an account of Bega Group Pty Limited totalling approximately $400,000, $300,000 of which was paid to Albatross Developments (Australia) Pty Limited ("Bega Group Pty Ltd Payments"); and (2)each of the payments from that $300,000, that is, each of the payments referred to in Annexure B to the affidavit of Napolean Tsanis sworn 30 June 2011 (and, if several payments are grouped together in Annexure B, each of the payments) ("Albatross Developments (Australia) Pty Ltd Payments"). 12Mr Bega and Mr Tsanis deposed that Mr Bega authorised Mr Tsanis to make each of the Bega Group Pty Ltd Payments and that the directions to Mr Tsanis to make each of the Albatross Developments (Australia) Pty Ltd Payments were given either by Peter Bega or his sons Aidan or Matthew.

The plaintiffs' failure to comply with the orders 13The applicants put forward the following factual outline in their written submissions. 14After the orders of White J on 27 June 2011, an affidavit of Mr Tsanis sworn 30 June 2011 was served. No affidavit of Peter Bega had been served, and the content provided by Mr Tsanis substantively failed to meet the requirements of paragraph 9 of the orders. Various failures were advised immediately, on 1 July 2011. 15Consent orders on 4 July 2011 permitted an extension of time to comply and made clear that disclosure was required not only in respect of the approximately $400,000 paid out of the account of Bega Group Pty Limited, but also in respect of the $300,000 transferred to Albatross Developments (Australia) Pty Limited. 16An affidavit of Peter Bega sworn 6 July 2011 was served, but again failed to address obvious requirements of the orders including those that had been expressly notified by letter on 1 July 2011. Again, requirements of the orders were set out in a letter and failures notified forthwith. 17A notice of motion for committal, sequestration or fine for contempt was prepared and shown to the plaintiffs' legal representatives before Court on 18 July 2011 and the applicants gave the respondents the option of the motion for committal, sequestration or fine for contempt to be filed in Court and directions made for evidence and hearing of that motion or alternatively an extension of time to comply. 18The plaintiffs' legal representatives immediately took instructions then notified that the plaintiffs elected for the extension of time alternative. Orders were made accordingly, by consent, by Hammerschlag J. In addition to having been shown the motion for committal, sequestration or fine for contempt immediately prior to obtaining instructions, the plaintiffs' counsel indicated on the record that the consent position was to avoid the alternative of a contempt motion. Yet no further affidavit was served in the period of the extension. 19The applicants also submit that in addition to the omissions in disclosure, the information provided was misleading. 20For example, Mr Bega deposed that each of the Albatross Developments (Australia) Pty Ltd Payments was made for expenses of the "Bega Group of companies" which he listed, however there is no company "Aidenmat Pty Ltd" despite being listed by Mr Bega in his 6 July 2011 affidavit. Further, there is no company "Map Nominees Pty Ltd" associated with Mr Bega, despite being listed by Mr Bega in his 6 July 2011 affidavit as one of the "Bega group of companies". This was revealed by searches on 3 August 2011. 21Further, despite deposing only that payments were made only for the "Bega Group of companies", later affidavits confirm that this was false, that is, other entities' invoices such as those of "Solarus" were paid with the allegedly misappropriated monies. 22The careless description means it may only be guessed that this means Solarus Projects Pty Limited. However, importantly, on any view payments to or for the benefit of Solarus Projects Pty Limited were not disclosed as required by the orders. The references to payments being for the Bega Group of companies were either positively misleading as to recipient entities or alternatively failed to disclose them.

After expiry of orders 23As to the evidence served after expiry of the orders, albeit in purported compliance with the orders, the applicants submitted that even if served in time, the affidavits would still be incomplete, for example in respect of entities whose obligations were paid out of the allegedly misappropriated monies. 24When Mr Tsanis' draft affidavit dated 6 August 2011 was served, it was served with a claim for costs of the motion for contempt if further pressed. The applicants complained of the ongoing failures, which the respondents ignored, when still pressing for the contempt motion to be withdrawn, despite continued late and insufficient compliance as expressly notified. Further details were again provided by affidavit of Mr Tsanis sworn 8 August 2011, indicating that different entities than earlier advised had had their obligations met from the allegedly misappropriated funds, yet there remained an abject failure to inform which entities' invoices or other obligations had been paid. 25Subpoenas were served on 9 August 2011, following which 2 further affidavits were served, sworn 16 August 2011, providing more information as to entities whose invoices were allegedly paid, but still being incomplete. The affidavits were served with a warning on costs, if the contempt motion was not withdrawn. 26Relying on the above outline, the applicants put their case for contempt in the following terms.

Knowledge of information 27Mr Bega and Mr Tsanis deposed that Mr Bega authorised Mr Tsanis to make each of the Bega Group Pty Ltd Payments and that the directions to Mr Tsanis to make each of the Albatross Developments (Australia) Pty Ltd Payments were given either by Peter Bega or his son's Aidan or Matthew. The orders sought information in the respondents' respective knowledge. It is not to the point that other means may have been able to be used to obtain information, or even that the applicants may be in possession of some of the information; that is "irrelevant. [The Court's] task is to ensure that there has been compliance with the orders made by the Court, not to determine the level of knowledge of" the applicants: DCT v AES Services [2009] VSC 527 at [36] (J Forrest J). 28Mr Tsanis has been director of Albatross Developments (Australia) Pty Limited since its incorporation on 21 December 2010 and director of Gap Constructions Pty Limited since 5 July 2011. 29Mr Peter Bega has been sole director and secretary of Gap Constructions Pty Limited since 10 May 2011 and joint director with Mr Napoleon Tsanis since 5 July 2011, director of Peter Bega & Associates Pty Limited since 13 January 1989 and its secretary since 3 July 2006, being its sole director and secretary since 2006, director of Solarus Projects Pty Limited since 11 February 2009 and director and secretary of Aidanmat Holdings Pty Limited since 3 September 2009. 30Knowledge of a company's officers may be attributed to the company: see, generally, Entwells v National and General Insurance (1991) 6 WAR 68; Krakowski v Eurolynx Properties (1995) 183 CLR 563 at 582-5; Brambles Holdings v Carey (1976) 15 SASR 270 at 275-276 per Bray CJ. 31Indeed, there is "abundant authority for the proposition that when one is looking to see what is the knowledge of a company one looks to see what is the knowledge of its directors and controlling officers": Duncan-Strelec v Tate [2008] NSWSC 1145 at [28] (Young CJ in Eq, as his Honour then was). 32Mr Peter Bega was a director of the Gap Constructions Pty Limited from 27 June 2011 until 21 July 2011 inclusive. 33Mr Napoleon Tsanis became a director of Gap Constructions Pty Limited after the date of the Initial Orders but before 21 July 2011. 34In Duncan-Strelec v Tate [2008] NSWSC 1145, there was a change in the controlling mind of a company after consent orders were made but before the time of the alleged contempt. Young CJ in Eq (as his Honour then was) referred to Beach Petroleum NL v Johnson (1993) 11 ACSR 103 (von Doussa J), particularly at 109 and 117, and said at [28]-[29] "as von Doussa J and others have analysed, once the company has knowledge of a serious matter by a director, then it is not likely to be inferred that that knowledge has somehow become lost or forgotten. ... The subject matter of the litigation in this Court was, in the words of von Doussa J at [22.36] very important to the financial wellbeing of the company and not likely to have been forgotten."

Knowledge of orders 35Despite rules requiring service of an order, it remains nevertheless "a question of fact in each case whether a respondent knew exactly what he was to do or what he was not to do": Re Intex Consultants [1986] 2 Qd R 99 at 107-108. 36As recognised in, for example, LGM v CAM (2006) 35 Fam LR 124 at [26], there is no principle that facts resolved by inference (sometimes commonly and appropriately similarly described as circumstantial evidence) cannot result in a finding of fact beyond reasonable doubt. 37Knowledge of orders may be inferred: LGM v CAM (2006) 35 Fam LR 124. Knowledge of a matter may be more readily inferred where no innocent explanation is offered. In Duncan-Strelec v Tate [2008] NSWSC 1145, Young CJ in Eq inferred that a corporation retained knowledge of consent orders after a change in control, taking into account at [29]-[30] that the "making of an injunction ... was a very serious matter and one which, without some form of denial, the Court must infer was known to all the persons who were involved in the running of the company", and "the Court is more ready to infer" knowledge when "there is no evidence put at all as to an innocent explanation", even though "it is a quasi-criminal matter and that the prosecution must prove its case".

Wilful disobedience 38Lying behind punishment for a contempt which involves wilful disobedience to a Court order, is the very substantial purpose of disciplining the defendant and vindicating the authority of the Court: Australasian Meat Industry Employees Union v Mudginberri Station (1986) 161 CLR 98 at 112-113. 39A deliberate commission or omission which is in breach of an injunctive order will constitute wilful disobedience unless it be casual, accidental or unintentional: Australasian Meat Industry Employees Union v Mudginberri Station (1986) 161 CLR 98 at 112-113. The respondents' actions in failing to provide information, contrary to terms of the Court's orders, were deliberate actions, taken with knowledge of the orders and with either intentional disregard of them or alternatively in careless neglect of the obligations binding the respondents and they are therefore guilty of contempt.

The plaintiffs' response 40Bearing in mind the significance of the contempt of court orders sought by the defendants, it is appropriate to set out the plaintiffs' contentions, albeit that the general background has already been identified. This is necessary to understand the respondents' view of the facts.

Orders - 27 June 2011 - White J 41On 27 June 2011 White J, ordered by consent, at order 9, that: "The plaintiffs' must serve upon the defendants by 30 June 2011 at 5pm an affidavit setting out their knowledge as to the reasons for each of the following transactions referred to in the bank statements of Bega Group Pty Limited, and of the recipient of the monies referred to." 42In response thereto Mr Tsanis' affidavit sworn 30 June 2011 was served by email at 4.30pm on 30 June 2011. Mr Tsanis was at all material times a director of Albatross (Australia) Pty Limited, incorporated in December 2010 to undertake administration services of Mr Bega's companies which was the same role Bega Group had been incorporated for. 43Mr Tsanis' affidavit sworn 30 June 2011 deposed as to the 'reasons for the transactions' as well as 'the recipient of monies' for each of the transactions required as well as volunteering further information concerning the 'payments by Albatross'. In substance Mr Tsanis' affidavit satisfied order 9 made by White J on 27 June 2011. 44That Mr Peter Bega did not depose a further and or separate affidavit is, it was submitted is inconsequential in so far as there can be no real suggestion that Mr Tsanis' was not an appropriate deponent of the information required or lacked authority in that regard. To that end MrTsanis' has also been a director of Gap Constructions Pty Limited since 5 July 2011. 45The applicants being dissatisfied with the specificity of the information complained, inter alia, for the first time raising a wish for information concerning ' the entity whose obligation was paid and the dates of payment '.

Orders - 4 July 2011 - Ward J 46On 4 July 2011 Ward J, ordered by consent, at orders 5 and 6, that:- (1)"The plaintiffs' must serve upon the defendants by 5 July 2011 at 5pm an affidavit setting out their knowledge as to the person or entity with the obligation (if any) to make the following payments referred to in the bank statements of Bega Group Pty Limited. (2)"The plaintiffs' must serve upon the defendants by 5 July 2011 at 5pm an affidavit setting out their knowledge as to the recipient of each of the payments from an account of Albatross Developments (Australia) Pty Ltd referred to in Annexure B to the Affidavit of Tsanis sworn 30 June 2011the purpose of each of the payments and which person of entity had an obligation to make the payment referred to." 47In response thereto Mr Bega affidavit sworn 6 July 2011 was served under cover of correspondence and by email 6 July 2011 to the corporate structure and nature of payments made as well as companies for whom the payments were made. 48It was submitted that insofar as there might be said to be any incomplete compliance with orders 5 and 6 made by Ward J on 4 July 2011 such incomplete compliance related primarily to the specificity of the information sought by or on behalf of the applicants which the respondent considered had been satisfied. 49The applicants again being dissatisfied with the specificity of the information complained.

Orders - 18 July 2011 - Hammerschlag J 50On 18 July 2011 Hammerschlag J, ordered by consent, at order 1, that:- "By consent and without admission, the time for compliance with paragraphs 4, 5 and 6 of orders made in these proceedings on 4 July 2011, including paragraph 9 of orders made in these proceedings on 27 June 2011, is extended until 5pm on 21 July 2011." 51Insofar as the respondents were required, and have as of August 2011, made further affidavits addressing those orders, the respondents apologised to the Court for the delay which was in part attributable to Mr Tsanis being overseas from 23 July 2011 to 6 August 2011 and in part attributable to being unable to finalise the further proposed affidavit during that period which was thereafter served in draft on 6 August 2011

Respondent further evidence 52The respondents served the further affidavits of Mr Bega and Mr Tsanis both sworn 16 August 2011 in respect of which, it is submitted, without any admission as to the completeness of previous compliance, there can be no question fully and substantially discharges the orders of the Court relevant to this application. 53In respect of the applicants submissions that the information provided was misleading the Court should note that on 9 August 2011 the applicants legal representatives caused to be issued Subpoena for the Production of Documents to Aidanmat Holdings Pty Limited as well as Map Nominees (Australia) Pty Limited which the respondents admit were partially misdescribed in the Bega affidavit of 6 July 2011 but submit that such misdescription was deminimus and certainly not misleading especially upon consideration of Mr Bosganas knowledge of the Gap Group of Companies. 54In respect of the applicants submissions that information provided was false, it was submitted, with respect that is incorrect insofar as 'Solarus' was well known to Bosganas as Solarus Projects Pty Limited and was also known to be within the Bega Group of companies.

A close analysis of the factual situation 55To decide this issue, it is once again necessary to look closely at the facts. 56As indicated earlier, the dispute arises out of orders made by White J on 27 June 2011. 57Order 9 provided that: The plaintiffs must serve on the defendants by 30 June 2011 at 5pm an affidavit setting out their knowledge as to the reasons for each of the following transactions, referred to in the bank statement of Bega Group Pty Limited, and of the recipient of the monies refereed to 58Mr Tsanis swore an affidavit on 30 June 2011 in purported compliance with the Court's orders. 59It is unnecessary to set out the annexures in their entirety, because the detail provided in the annexures can be understood from the first few entries. The beginning of the annexures were as follows:

Annexure A Date Amount Reason 28/03/2010 $ 3,300.00 O'Neal partners, legal fees 08/11/2010 $ 5,000.00 O'Neal partners, legal fees 02/12/2010 $ 7,150.00 Ken Hicks & Associates Development managers associated the Palmer Street Development

Summary of payments by Albatross Developments Australia Description Amount External Consultants $ 180,500.00 Joseph Haggar $ 30,800.00 Legals $ 2,954.00 Office Expenses & Administration $ 13,208.00 Telephones $ 1,993.00 Management fees $ 35,650.00 Rent $ 16,282.00 Fees & Charges relating to entities $ 18,554.00 $ 299,941.00

60Following this affidavit, on 1 July 2011, the respondents' solicitors were notified by the applicants' solicitors of the inadequacy of the affidavit filed by Mr Tsanis in purported compliance with the Court's orders of 27 June 2011. 61The respondents' solicitors were notified in sufficient particularity of the deficiencies with a view to correcting them. 62The salient part of the 1 July 2011 letter reads: Order in paragraph 9: no affidavit from Peter Bega (1)The affidavit of Mr Tsanis, if taken at face value, indicates that transactions have been made at the direction of the second plaintiff, Mr Peter Bega. Mr Peter Bega was required to provide an affidavit by 30 June setting out his knowledge of the recipient and purpose in respect of each transaction. He has failed to do so. You have not sought to explain that failure. Order in paragraph 9: insufficient information on purpose, in particular the entity whose obligation was paid and dates of payment (2)The order in paragraph 9 required the plaintiffs to provide affidavits identifying the recipient of monies and purpose, for each transaction. (3)Insofar as the extent of the information provided as to purpose, a principal failure is the failure to identify the entity whose obligation was paid. We provide more detail below. (4)Annexure B. The inadequacy of the material provided is illustrated by the information provided in respect of the sum of $180,000. This was disbursed from $300,000 allegedly held to "pay expenses" of what is loosely described as "Mr Bega's companies") (para 3), "Mr Bega's group of companies" (para 2) or "companies in Bega umbrella" (Annexure A), at the direction of Peter Bega, Aiden Bega or Matthew Bega, who are variously directors of different companies associated with the Bega family. It seems that Mr Tsanis suggests that Albatross Developments (Australia) Pty Limited (ACN 147 968 705) did not hold these monies beneficially, although there is some suggestion of an entitlement to pay employees of Albatross. The only descriptor for the sum of $180,000 is "EXTERNAL CONSULTANTS" (Annexure B). There is no description of the recipient beneficially of those monies or the purpose of these transactions. (5)Taking Mr Tsanis' affidavit at face value, the orders require Mr Peter Bega to depose his knowledge as to the following (in addition to his knowledge regarding the matters deposed to by Mr Tsanis): (a)$180,000: who are these so-described "external consultants", what are the amounts paid to them, what was the purpose of each transaction, and which of "Mr Bega's companies" or which entity in "Mr Bega's group of companies" or under the "Bega umbrella" had the obligation to pay; (b)$30,800: what was the purpose of each of the payments to Joseph Haggar totalling $30,800, and which of "Mr Bega's companies" or which entity in "Mr Bega's group of companies" or under the "Bega umbrella" had the obligation to pay; (c)$2,594: to whom were the "legals" of $2,954 paid, and which of Mr Bega's companies" or which entity in "Mr Bega's group of companies" or under the "Bega umbrella" had the obligation to pay. (d)$13,208: to whom were the "office expenses and administration" of $13,208 paid, and which of Mr Bega's companies" or which entity in "Mr Bega's group of companies" or under the "Bega umbrella" had the obligation to pay. (e)$35,650: to whom were the "management fees" of $35,650 paid, and which of Mr Bega's companies" or which entity in "Mr Bega's group of companies" or under the "Bega umbrella" had the obligation to pay. (f)$16,282: to whom was the "rent" of $16,282 paid, and which of Mr Bega's companies" or which entity in "Mr Bega's group of companies" or under the "Bega umbrella" had the obligation to pay. (g)$18,554: to whom was the "fees & charges relating to entities" of $18,554 paid, and which of Mr Bega's companies" or which entity in "Mr Bega's group of companies" or under the "Bega umbrella" had the obligation to pay. (6)Annexure A. We note that the payments in Annexure A do not state the purpose of the payments. The orders require Mr Peter Bega to depose to his knowledge as to the following (in addition to this knowledge regarding the matters deposed to by Mr Tsanis): (a)$3,300, $5,000 and $5,000: for which of Mr Bega's companies" or which entity in "Mr Bega's group of companies" or under the "Bega umbrella" were these legal fees paid; (b)$7,150: what was the purpose of this transaction, and for which of Mr Bega's companies" or which entity in "Mr Bega's group of companies" or under the "Bega umbrella; (c)$10,000: to which companies in liquidation did this payment relate; (d)$1,500, $6,500 and $16,000: the purpose, including which entity had an obligation to make the payment; the descriptor "monthly payment" is not a statement of the purpose of the payment; and (e)$5,284: which entity had an obligation to make the payment? 63In short, the applicant's complaint can be summarised by paragraph 2: The order in paragraph 9 required the plaintiffs to provide affidavits identifying the recipient of monies and purpose, for each transaction 64Clearly this was not sufficiently provided by Mr Tsanis in his 30 June affidavit. 65Due to this failure, consent orders were made by Ward J on 4 July 2011, to the relevant orders were: 4. The time for the plaintiffs to serve on the defendants affidavits in accordance with paragraph 9 of the orders made in these proceedings on 27 June 2011 is extended until 5pm on 5 July 2011. 5. The plaintiffs must serve on the defendants by 5 July 2011 at 5pm an affidavit setting out their knowledge as to the person or entity with the obligation (if any) to make the following payments referred to in the bank statements of Bega Group Pty Limited": Date Amount Date Amount 28/10/2010 $ 3,300.00 15/12/2010 $ 6,500.00 08/11/2010 $ 5,000.00 15/12/2010 $ 16,100.00 02/12/2010 $ 7,150.00 20/12/2010 $ 2,005.50 13/12/2010 $ 10,000.00 22/12/2010 $ 2,005.50 12/12/2010 $ 45,000.00 23/12/2010 $ 300,000.00 15/12/2010 $ 1,500.00 06/01/2011 $ 5,000.00 15/12/2010 $ 5,284.00

The plaintiffs must serve on the defendants by 5 July 2011 at 5pm an affidavit setting out their knowledge as to recipient of each of the payments from an account of Albatross Developments (Australia) Pty Limited referred to in Annexure B to the affidavit of Napolean Tsanis sworn 30 June 2011 (and, if several payments are grouped together in Annexure B, each of the payments), the purpose of each of the payments and which person or entity had an obligation to make the payment referred to. 66These orders permitted an extension of time to comply and made clear that disclosure was required not only in respect of the approximately $400,000 paid out of the account of Bega Group Pty Limited, but also in respect of the $300,000 transferred to Albatross Developments (Australia) Pty Limited. 67In response to Ward J's orders, the respondents filed an affidavit of Peter Bega of 6 July 2011. Importantly, the annexures to Mr Bega's affidavit were identical to those of Mr Tsanis' 30 June affidavit, except that in paragraph 3 of Mr Bega's affidavit, the deponent explained that the listed expenses related to the Bega Group of Companies. In these circumstances, the new evidence did not in anyway further assist the applicants in understanding where the monies went and did not give further effect to the Court's orders. 68The respondents were immediately notified of this failure by a letter from the applicants' solicitors of 6 July 2011. The applicants again spelled out the shortcoming in the affidavit at paragraphs 3 onwards: We note that the consent Orders required service of affidavit(s) setting out the plaintiffs' respective knowledge of: (1)in respect of each of the payments referred to in Annexure A to Mr Tsanis' affidavit sworn 30 June 2011, the: (a)recipient; (b)reasons for the transaction; and (c)person or entity with the obligation (if any) to make the payment; and (2)in respect of each of the payments from an account of Albatross referred to in Annexure B to Mr Tsanis' affidavit sworn 30 June 2011 (and, if serval payments are grouped together in Annexure B, in respect of each of the payments), the: (a)Recipient; (b)Reasons for the transaction; and (c)Person or entity with the obligation (if any) to make the payment; and The affidavits served by your clients clearly do not include the required content. For example: A. there has been no attempt to separately deal with the transactions grouped together in any line item in Annexure B; B. the recipient has not been set out for each payment eg "external consultants" is not identification of the recipient(s); C. the reasons/purpose have not been identified for each transaction eg deposing that a payment is to a particular "consultant" is merely to identify the recipient; it does not set out the reasons/purpose of the transaction/payment; and D. the particular entity with the obligation to pay has not been set out for each transaction; an affidavit deposing that obligations fell upon one of several companies does not meet this obligation. Please advise by 12pm on Thursday 7 July 2011 whether your clients request an extension of time to comply with the Consent Orders and a draft consent order, so we can obtain instructions. Our clients reserve their rights in respect of non-compliance with the Court's request. 69In substance, the applicant's complaint was identical to its previous complaint. 70In light of these failures, the applicants prepared and furnished a notice of motion for committal, sequestration or fine. 71On 18 July 2011, in avoidance of the above notice of motion, the respondents agreed to consent orders without admission before Hammerschlag J. Further evidence in compliance with these orders was to be served by 21 July 2011. 72Very importantly, no further evidence was served by the respondents until 6 August 2011. More than two weeks after the time for service had expired. 73The affidavits served after the time for service had expired, still do not comply with the orders made by Hammerschlag J on 18 July 2011. The applicants identified areas of these affidavits which fail to clearly identify which entity received the monies from the Bega Group account.

Conclusion as to contempt 74Mr Bega gave evidence that he did not understand that his evidence did not meet the Court's orders. The Court does not accept this proposition. 75In cross-examination, Mr Bega and his solicitor, Mr Stevens, explained that the objections raised by the applicants' solicitors were communicated to Mr Bega and Mr Tsanis. The plaintiffs must have appreciated the gaps in their affidavits and what information was required for them to comply. Despite this knowledge, they decided not to comply. 76Mr Bega's evidence in cross-examination was: Q. Sir, you were aware when orders were made on 27 June that the applicant's to this motion wanted to try and trace where the $400,000 went that had been paid out of Bega Group. You knew that the applicants wanted to know that information, didn't you? A. Yes. Q. In fact, the orders on 27 June had been explained to you by your solicitors, hadn't they? A. Yes. Q. And again, the orders on 4 July were explained to you by your solicitors on or about that day, weren't they? A. Yes. Q. The orders of 18 July were also explained to you on or about that date by your solicitors weren't they? A. No, no they weren't. I was overseas at the time. Q. When do you say that you were informed of the terms of the orders made on 18 July? A. To the best of my recollection it would have with a telephone conference with my lawyers whilst I was overseas. Q. That day? A. Perhaps, perhaps that day. Thereafter. Close enough to it. My lawyers are fairly diligent in that area. Let's assume that was the case. Q. But you'd be sure that day or the day after? A. Correct, yes. [Transcript page 22, lines 20 - 45] Q. The orders also required didn't they, to your knowledge, to identify the persons or entity with the obligation to pay. You knew that didn't you? A. Yeah we've made a mistake in that area. If for the sake of completeness, we had to provide to you the A C N number, the shareholders, the directors, et cetera, we would have been more than happy to do that. There is no issue. What was important for the sake of complying with the orders and based on my understanding, is that if we had nominated a particular dollar value, that we weren't saying it was going somewhere else. That we had to be very sure as to where it went so we weren't misleading. Now the simple fact of the matter is that I've, if we haven't put in the A C N number, the directors details, if that's an error, it's an error it's an error I can quickly correct, very quickly correct. But it would be very wrong to suggest that your client was unaware because if you look at the proceedings and the defence, your client is claiming $100,000 per month for specialty advisory services for exactly administering where these payments went to. [Transcript page 24, lines 30 - 45] 77It is significant that the final orders for compliance were made by Hammerschlag J on 18 July, with evidence to be served by 21 July, yet not evidence was forthcoming until 6 August. 78This shows a wilful disregard for the Court's orders and a finding of contempt in respect of both plaintiffs is appropriate. 79The contempt charge has been proven beyond a reasonable doubt. In all of the circumstances it is appropriate for the Court to closely consider whether a custodial sentence or some other approach should be entertained. 80The Court fixes Thursday 8 September 2011 at 3.00pm as the date for submissions on sentence. The parties are to exchange written submissions and forward them to my associate by Tuesday 6 September 2011 at 4.00pm.

Amendments 30 August 2011 - (1) In paragraphs 18, 73 and 77: replaced "White J" with "Hammerschlag J".(2) In paragraph 50 and heading to paragraph 15: replaced "White J" with "Hammerschlag J"(3) In paragraph 71: replaced "White J" with "Hammerschlag J".(4) In paragraph 65 and 67: replaced "White J" with "Ward J".(5) In paragraph 46 and heading to paragraph 46 and in paragraph 48: replaced "White J" with "Ward J". Amended paragraphs: 18, 46, 48, 50, 65, 67, 71, 73, 77 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 30 August 2011

(2006) 35 Fam LR 124

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