Global Custodians Ltd v Mesh

THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION YOUNG J

2539/98 - GLOBAL CUSTODIANS LTD v MESH 3156/99 - GLOBAL CUSTODIANS LTD v MESH

1 HIS HONOUR: In each of these matters I am hearing a notice of motion in virtually identical form which seeks essentially the following order: "The third defendant, Mr Hari Bhagat be found guilty of contempt of this Court for attempting by way of threats and intimidation to deter and obstruct Mr Arch and Mrs Norma Greenlees and Mr Jack and Mrs Jessie Speight from continuing to consent to being joined as Plaintiffs in these proceedings and to induce them to withdraw that consent." 2 The background of the motions is that the third defendant organised a fighting fund to mount litigation against the plaintiff and others in respect of the administration of funds known as the "Estate Mortgage Investment Funds". There are about 15 actions commenced by the third defendant making those challenges. 3 The present actions are a counter-attack by the present plaintiff. The first two defendants are trustees of the Estate Mortgage Fighting Trust Fund. The plaintiff considers that because of an assignment it says it has taken from Mr and Mrs Greenlees and Mr and Mrs Speight, it is entitled to inspect the books of the Estate Mortgage Fighting Trust Fund. 4 In a judgment which I gave on 25 June 1999 I held that without at least the joinder of the Greenlees and the Speights, the action by Global Custodians Limited should fail. There is currently an application for amendment in proceedings 2539/98 to add these parties. This, Mr Bhagat is strenuously resisting. 5 There is no doubt at all that on 30 July 1999, Mr Bhagat wrote three letters each in virtually identical form, addressed to: (a) Mr Jack Speight; (b) Mrs Jessee [sic] Speight; and (c) Mrs Norma Greenlees. On 2 August 1999, he wrote an identical letter to Mr Archie Greenlees. The letters, which were each marked in capitals "WITHOUT PREJUDICE" read, omitting formal parts, as follows: "1. I have been advised by the process server who served you the Summons in the above proceedings that you informed him that the Solicitors, Holding Redlich, will be paying all your legal costs. 2. You may not be aware that it will amount to professional misconduct if Holding Redlich pays your costs. 3. Global Custodians Ltd is a wholly owned entity of Royal and Sun Alliance Assurance Australia Ltd which is a public company. A public company is legally not permitted to finance legal actions of private individuals. 4. You are not only required to pay your own legal costs but also damages that may be awarded to me and my costs in the event I am successful. 5. I will commence further proceedings against you without further notice if I find that your costs are being paid by Holding Redlich or Global Custodians Ltd or any of its related or associated entities. 6. You have been induced into consenting to be joined as a Plaintiff in proceedings No. 2539/1998 and in commencing proceedings No. 3156/1999. I am confident neither Holding Redlich nor Global Custodians Ltd or its related entities and associates will confirm in writing any assurances that they may have given to you of meeting all your legal costs. 7. I therefore give you an opportunity to realise your folly and do the following to save yourself, as a pensioner, from depleting your hard earned money into paying damages and costs: (a) Write to Global Custodians Ltd with a copy addressed to me advising them that you withdraw your consent to be joined as a Plaintiff in proceedings No. 2539/1998 and do not wish to continue to be a Plaintiff in proceedings No. 3354/1999. (b) Inform me what valuable consideration you received from Global Custodians Ltd for making the Deed of Assignment. 8. I will, on receipt of a copy of your letter and information, seek leave to delete you as a Defendant in proceedings No. 3354/1999 provided I receive a copy of your letter addressed to Global Custodians Ltd and information as set out in paragraph 7 above not later than 5 pm on 20 August 1999. If you fail to do so and, at a later date Damages and Indemnity Costs are awarded to me, do not come crying to me to save you from selling your house to meet the orders of the Court. 9. No-one is above the law and no-one can save you if you transgress the law. In receiving payment of your costs from either Holding Redlich or Global Custodians Ltd you will be transgressing the law. 10. If you decide not to send the letter as set out in paragraph 7 then I require you to provide me with, not later than 5pm on 20 August 1999, a letter that you will be meeting your own legal costs from your own funds and are not receiving free legal aid either from Holding Redlich or Global Custodians Ltd or its related entities or associates, failing which I may commence proceedings against you without further notice. Please also note that if you do not inform me of the valuable consideration you received from Global Custodians Ltd for making the Deed of Assignment, then I will subpoena you to give evidence. You will be required to attend Court and pay your own legal costs and give evidence on oath. If you give false evidence on oath I will seek leave to commence criminal proceedings against you without further notice." 6 The plaintiff says that each of those letters was a contempt of court and rely on the passage in Halsbury's Laws of Australia [105-145]. Essentially the author of that paragraph sets out, with reference to authority, that conduct calculated to deter a party from prosecuting proceedings which produces a real risk of a person being inhibited in his or her desire to obtain the adjudication of a court is a contempt of court. The existence of that risk is to be determined objectively: Willshire-Smith v Votino Bros Pty Ltd (1993) 41 FCR 496 at 505. The same passage is also authority for the proposition that it is irrelevant whether the intention to bring pressure on the litigant succeeds or not. It is also irrelevant whether the threat had the intended effect: Smith v Lakeman (1856) 26 LJ Ch 305, 306. 7 The plaintiff says that the letters were plainly a threat to dissuade a party or a witness from being involved in the proceedings. 8 It would appear just looking at the letters, that they may well be in that category. 9 Mr Bhagat said in his submissions that: (1) the letters were without prejudice and thus under s 131 of the Evidence Act 1995 should not be considered by the Court; (2) the letters were sent to settle proceedings and to save the Court's time; (3) he was justified in bringing the matters referred to in the letters to the attention of the Speights and the Greenlees; (4) there was no intention to undermine justice; (5) the letters were private letters; (6) the letters were to assist justice; (7) it is not contempt to apply pressure to a person about to be involved in litigation; (8) the threat, if it be a threat, was not accompanied by any unlawful conduct; (9) the charge was not proved beyond reasonable doubt; and (10) even if there was a contempt, it was a technical contempt. 10 Merely marking a letter "without prejudice" does not give it magical status: In re Daintrey; Ex parte Holt [1893] 2 QB 116; Bentley v Nelson [1963] WAR 89. 11 There was no dispute between Mr Bhagat and Mr and Mrs Greenlees in any court prior to the writing of the letter to them. There was no attempt in the letters to "settle proceedings". It was an attempt to prevent the recipients of the letters joining with the present plaintiff. In any event, as Mr Lindsay SC who appeared with Mr Margo for the plaintiff puts, one cannot have a threat "without prejudice". 12 Accordingly, the argument based on s 131 of the Evidence Act 1995 does not assist the third defendant. 13 As to the second and third matters, Mr Bhagat says that he was merely pointing out that maintenance and champerty are both torts and crimes. To the extent to which this is true (cf Clyne v NSW Bar Association (1960) 104 CLR 186), it would not seem to be a matter which would be of any assistance to Mr and Mrs Greenlees or Mr and Mrs Speight to know. 14 The submissions made by Mr Bhagat which I have numbered 5 and 6 are in the same category. 15 As to proposition 4, that there was no intention to undermine justice, this may be correct. There may very well not have been a subjective intention to undermine justice. However, objectively, which is the test, I cannot see how the letters could be regarded by an objective observer as other than letters intended to put pressure on Mr and Mrs Greenlees and Mr and Mrs Speight not to join in with the plaintiff. 16 This brings me to point No 7, that it is not a contempt merely to apply pressure to a potential plaintiff. 17 It is certainly the case that there is a distinction between private persuasion of a potential party and public persuasion or denunciation. In the former case, the persuasion may not be a contempt of court. However, as Lord Simon said in Attorney General v Times Newspapers Ltd [1974] AC 273, 319: "The justification for private pressure on a litigant might be such a common interest that fair, reasonable and moderate personal representations would be appropriate. … a genuine, unofficious and paramount concern for the real welfare of the litigant would, in my view, be sufficient."

Lord Diplock took a wider view. The views of the various members of the House of Lords in that case were reviewed by Hunt J in Commercial Bank of Australia Ltd v Preston [1981] 2 NSWLR 554 though in the context of public statements. 18 As far as I am aware, there is no Australian case dealing with how far a private letter to a potential party in litigation should be considered if it applies pressure, even fair, reasonable and moderate pressure not to commence litigation. 19 It is quite clear that a letter sent to a litigant threatening that if she gave evidence the fact that she had had an illegitimate child or the full truth of her marriage would be exposed can be a contempt of court; see Re B [1965] Ch 1112 and Re Mulock (1864) 3 Sw & Tr 599; 164 ER 1407. 20 It seems to me that although the law is in a rather confused state, on one side of the line it is not contempt to give advice to a potential litigant that he or she would be better off not going to law for the predominant purpose of benefiting the potential litigant rather than the writer of the letter. On the other hand, it is quite clear that a statement that if another person does go to law the consequence will be that the writer of the letter will produce material which will damage the addressee is a contempt. However, a letter written by, say, a father to a daughter to the effect that he would advise the daughter not to commence proceedings against a third party because if she did the probabilities would be that the third party would produce incriminating material would probably not be a contempt of court because it was written in the interests of the daughter, not for the benefit of the father. 21 In the instant case, the content of the letters went far beyond paternal advice to the Speights and the Greenlees. The letters stated that a very heavy financial burden borne by them if they joined with the plaintiff. It will be remembered, because this is relevant to the question of intention, that paragraph 7 of the letters says: "I therefore give you an opportunity to realise your folly and do the following to save yourself, as a pensioner, from depleting your hard earned money into paying damages and costs". The threat is emphasised in paragraph 8 where Mr Bhagat says: "If you fail to do so and, at a later date damages and indemnity costs are awarded to me, do not come crying to me to save you from selling your house to meet the orders of the Court". 22 These letters were not fatherly advice. They do not fall into the category, as do some of the cases reviewed in Attorney General v Times Newspapers, where there might be some legitimate public interest in exposing certain facts. This, to me, is a threat to potential parties that they may well lose their home if they commence litigation or join with the plaintiff in the current litigation. Such a threat would, if the appropriate mens rea be demonstrated, to my mind constitute a contempt of court. 23 Point 8, that the threat was not accompanied by unlawful conduct is to my mind irrelevant. 24 It is certainly true in point 9 that the charge needs to be proved beyond reasonable doubt. As to this, the sending of the letters is admitted so there is no doubt at all about that aspect of the matter. I have already held that the letters were impermissible threats. Accordingly the only matter that I need to consider as to whether it has been proved beyond reasonable doubt is whether Mr Bhagat had the requisite state of mind. 25 The law is that "Any kind of threat made to a party either for the purpose of deterring him or calculated (in the sense of likely or having an inherent tendency) to have that effect" is regarded as a contempt of court. Accordingly, one must look to see whether a statement is: (a) actually intended; (b) made for a particular purpose; or (c) having an inherent tendency to effect the purpose: Commercial Bank of Australia Ltd v Preston [1981] 2 NSWLR 554, 558. 26 I could not be satisfied beyond a reasonable doubt that Mr Bhagat actually intended the letters to have the effect of dissuading the Greenlees and Speights to join with Global as parties. It may just be that his strong views in the righteousness of his cause may have meant that he genuinely believed that he was assisting the course of justice in dissuading the Greenlees and the Speights from a path of folly. Whether that be so or not, there is no doubt at all that the letters must have been calculated so to dissuade in the sense used by the authorities. Accordingly, in my view all the elements of a contempt of court have been made out. 27 I should note that the matter of intent was also reviewed in the Federal Court by Gray J in Gregory v Philip Morris Ltd (1987) 74 ALR 300. At 308, after discussing some, but not by any means all, the major cases, his Honour said: "…it must be proved beyond reasonable doubt that the alleged contemnor had some appreciation that the person threatened was a potential witness and some intention to dissuade the potential witness from giving evidence, or from giving truthful evidence. The requirement of intention may perhaps be satisfied by reckless disregard of the likely effect of such a threat".

If that is the test, and in some respects it seems a stronger test than is justified by the authorities, then in the instant case a threat to a potential party that he might lose his home if he was foolish enough to commence proceedings would seem to me to be within the meaning of intention as laid down by Gray J's test. 28 Point 10. As to whether the contempt is "technical" or not, no threat to a witness can in any relevant sense be merely "technical". However, what is covered by this submission is caught up in my remarks on the proper order to be made. 29 Accordingly, I find the contempt proved. 30 The next question is, what should be done about it? 31 These days, the Court is probably not so tender about matters of contempt as it was in an earlier age, especially when the contempt is directed towards a judicial officer. However, so far as parties and witnesses are concerned, the Court must be careful to make sure that there is freedom to be involved in court proceedings and to give evidence in court proceedings without being subjected to threats. 32 However, in the instant case the plaintiff does not actually seek any punitive order apart from an order for costs. It seeks an injunction to prevent further threats, but not threats so much to Messrs Greenlees and Speight and their wives, but rather to persons generally who are involved in the litigation. 33 The evidence shows that there have been a series of letters written particularly to the junior solicitor who is handling the day to day aspects of the work needed to be put into the case on behalf of the plaintiff. She has been reported to the senior partners of her firm for unprofessional conduct, she has been threatened with being reported to the Law Society for unprofessional conduct, and letters have been written to the police suggesting there is a conspiracy involving that lady, the supervising partner in her firm and others. None of that has, on the surface anyhow, affected the solicitor concerned, but doubtless receipt of that intimation and the preliminary investigation of the complaints by the authorities before they were pre-emptorily dismissed was not a pleasant experience and not something to which a solicitor should be subjected. 34 Mr Lindsay SC and Mr Margo have referred me to two decisions which they say support the making of an injunction that restrains Mr Bhagat from making any further threats against people connected with the plaintiff in and about the proceedings. They referred me to Commonwealth Trading Bank v Inglis (1974) 131 CLR 311 and Ebert v Venvil [1999] 3 WLR 670. The former case merely says that there is no inherent power in a court to prevent a person initiating litigation in that court. There is, of course, provision under s 84 of the Supreme Court Act 1970 for such an order to be made under statute. The Court has power to make orders in existing proceedings. In fact I have exercised this power to a degree by making orders that motions will only be heard after they are certified. 35 In Ebert's case, an English Court of Appeal headed by Lord Woolf MR held that the High Court had not been sufficiently referred to authority when making its decision and that the High Court's decision should not be followed. Even if that analysis of Inglis' case is right, it is not a course that I can take in NSW. 36 In my view, it would not be an appropriate use of the Court's power over contempt to prevent a party from commencing litigation as a consequence of him having threatened a person who intended to commence or join in litigation against him. 37 Had there been an apology by Mr Bhagat or any signs of regret I could have been disposed to simply make a finding of contempt and order Mr Bhagat to pay the costs of the motions. However, no such apology is proffered: indeed, Mr Bhagat still justifies what he did. 38 There is also no indication from Mr Bhagat that he will cease collateral attacks on people who are involved in the litigation on the other side. 39 It seems to me in those circumstances that I must either impose some penalty by way of fine which may be suspended if an appropriate undertaking is given to the Court, or alternatively, grant an injunction. The latter appears to be the better course. 40 Accordingly:

(1) I find that the third defendant, by sending to Arch and Norma Greenlees and Jack and Jessie Speight letters dated respectively 2 August 1999 and 30 July 1999, is guilty of a contempt of Court.

(2) The Court orders that, apart from the transmission of formal letters and court documents addressed to a party or its solicitors opposing the third defendant in any litigation, the third defendant is, until further order, by himself, his servants or agents, restrained from sending or communicating, by letter, facsimile, or e-mail, or any other means, any communication to any person who is on the opposite side to the third defendant in any litigation from time to time pending in this Court, or any officer or employee of such party, or any barrister or solicitor for such party, or any partner or employee of any such barrister or solicitor, or any person who has, or has intimated to the third defendant that he or she intends to make an affidavit in any such litigation on behalf of any party opposing the third defendant, without the prior leave of the Court.

(3) Order that the third defendant pay the costs of the motions.

(4) Liberty to apply on three days' notice. ****************

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