[1986] HCA 46
Australian Consolidated Press Limited v Morgan (1965) 112 CLR 483 at 489
(2002) 54 NSWLR 146
Montgomery v Stewart (1967) 116 CLR 220
[2016] QSC 4
O'Shane v Harbour Radio Pty Ltd (2013) 85 NSWLR 698
Source
Original judgment source is linked above.
Catchwords
[1986] HCA 46
Australian Consolidated Press Limited v Morgan (1965) 112 CLR 483 at 489(2002) 54 NSWLR 146
Montgomery v Stewart (1967) 116 CLR 220[2016] QSC 4
O'Shane v Harbour Radio Pty Ltd (2013) 85 NSWLR 698
Judgment (26 paragraphs)
[1]
Background and issues
These proceedings relate to the estate of the late Frederick Goldspring (deceased), who died on 2 November 2014. They were commenced on 16 April 2015 by the first, second and third defendants, Peter Goldspring, Mark Goldspring and Marianne Goodchild (together the Executors), by summons seeking probate of the deceased's estate.
The plaintiffs, Katherine Jordan, Rhonda Thomas and Lynette Goldspring (together the Applicants), the Executors and the fourth defendant, Barry Goldspring, are the seven children of the deceased and his late wife, Nita, and beneficiaries under the deceased's will dated 25 June 2007.
On 4 May 2016, the Executors were granted probate in relation to the deceased's will and a codicil dated 3 June 2008.
By notice of motion filed on 30 September 2020 as amended on 16 October 2020 (Amended Motion), the Applicants seek orders that the Executors be found guilty of and are punished for contempt for failing to comply with court orders made in these proceedings by Lindsay J and Hallen J, that the grant of probate appointing the Executors dated 4 May 2016 be revoked and that a solicitor from Newcastle be appointed as the Administrator of the deceased's estate.
The proceedings and the orders sought by the Applicants' Amended Motion arise out of disputes between the Applicants and the Executors over the extent and administration of the deceased's estate. Amongst other things, issues arose about an informal testamentary document, the Applicants' contention that three motor vehicles (referred to as the "three vintage trucks") formed part of the deceased's estate and their concerns about the sufficiency of expense and income information provided by the Executors in relation to income and expenses relating to the "Lowes building".
The Amended Motion was listed for hearing on 1 November 2021. On 15 September 2021, the parties agreed that the contempt charges needed to be heard and determined prior to and separately from the balance of the orders sought, including the probate revocation claim. [1] Directions were made to that effect and the hearing on 1 and 2 November 2021 proceeded in relation to the contempt aspects of the Amended Motion only.
The Applicants' contempt charges relate to orders made by Lindsay J on 25 November 2019 and Hallen J on 24 June 2020. Although expressed in different terms (they are set out in full at [27] and [31] below), each of the orders obliged the Executors to serve accounts relating to their administration of the deceased's estate.
It is common ground that a form of accounts and documents were filed and served on behalf of the Executors in purported compliance with Lindsay J and Hallen J's orders. The Applicants' Amended Statements of Charge (annexed to the Amended Motion and set out in full at [65] and [112] below) allege that the documents served on the Applicants failed to comply with and are in breach of the orders in various respects.
The Executors contended that the contempt charges should be dismissed for reasons relating to the form and lack of utility in the charges dealing with Lindsay J's orders, the imprecision of the charges relating to Hallen J's orders and because the application amounts to an abuse of process. They also contended that the Amended Statements of Charge and evidence relied on by the Applicants do not establish breach and contempt of the court's orders. The Executors had foreshadowed filing their own notice of motion seeking dismissal or a stay of the Amended Motion but did not file a motion at the hearing and relied on their submissions.
The Applicants' claim is for civil contempt. It was common ground that the question of punishment (if any) would be dealt with at a later stage if the contempt charges were made out. There was also no dispute that the criminal standard of proof applied.
The fourth defendant, who appeared on the first day, was excused from attending the rest of the hearing. He is not an active party to the contempt application but wishes to be heard on the issue of costs.
[2]
The evidence
The Applicants read two affidavits of Michael Nolan, the solicitor for the Applicants, affirmed 27 May 2019 and 30 September 2020 and relied on the Exhibits to those affidavits. Mr Nolan was cross-examined.
Exhibit MN4 to Mr Nolan's affidavit of 30 September 2020 includes copies of the orders made by Lindsay J and Hallen J and some of the materials that had been received by the Applicants in response to those orders. The Applicants also relied on Exhibit A (a folder containing 255 pages of bank statements which the Applicants received from the Executors), Exhibit B [2] (invoices and other documents relating to legal fees which the Applicants received from the Executors), and Exhibit C (a spreadsheet prepared by Mr Nolan headed "legal expenses extracted from documents in the Folder (In Date Order)").
The Executors did not adduce any evidence. They indicated at the start of the hearing that they would make a forensic decision whether to call any evidence at the end of the Applicants case and then confirmed they would not be doing so (T2.32-34, T115.3-4).
The Executors took objection to large parts of Mr Nolan's affidavits and other affidavits sought to be read by the Applicants. Some of the objections were resolved by orders limiting the use of Mr Nolan's evidence pursuant to s 136 of the Evidence Act 1995 (NSW) (Evidence Act) to submission and reading parts of his evidence as background only. Some of the relevance objections were upheld on the basis that the evidence related to the three vintage trucks and access to documents produced in response to subpoenas issued by the Applicants in 2019 and 2020 in connection with the ownership of those trucks. I did not consider that evidence to be relevant to the question of whether the Executors were in contempt of Lindsay J and Hallen J's orders in circumstances where the Executors do not accept that the vintage trucks form part of the deceased's estate (T22.50-T23.1) and the Amended Statements of Charge do not allege any failure by the Executors to include them in the accounts in breach of the orders. For similar reasons, I upheld the Executors' objections to and did not read the affidavits of Robert Thomas affirmed 30 September 2020, Rhonda Thomas affirmed 30 September 2020 and Katherine Jordan affirmed 2 October 2020.
The Applicants' written submissions, and their oral submissions at times, also sought to traverse the issue of the Applicants' conduct in relation to the vintage trucks and whether the grant of probate to the Executors should be revoked: see for example, Applicants' Outline of Submissions at [15] - [36], [62] - [79] and T21.37-41. I do not accept the Applicants' submission that the contempt application raised an additional issue for determination of what property formed part of the deceased's estate (such as the vintage trucks) (T1.29-31) and have not taken those submissions into account on the question of whether the Executors are in contempt of the orders as charged.
During oral submissions, the Applicants' Counsel also referred to the failure of the Executors to "read" their evidence in relation to the "accounts" that had been filed and served in response to Lindsay J and Hallen J's orders (which accounts formed part of affidavits from John Rapson and were annexed to Mr Nolan's 30 September affidavit) as having the consequence that there was no evidence before the court of what accounts had been filed and had also put the Applicants at a disadvantage as they were unable to challenge, by way of cross-examination, the content or verification of the accounts (T96.36-37 - T97.41-47). Counsel for the Applicants submitted that, while they had "put [the first account] into evidence" and "read the evidence" (namely, Mr Nolan's affidavit), the Applicants were not giving but rather were responding to that evidence which was served on them by the Executors, and the orders made by the court to file the served accounts obliged the Executors to "read them onto the record as the evidence" (T96.9-11; T96.29-30).
If by that submission, the Applicants contended that the Executors were obliged to adduce evidence and make themselves available for cross-examination as part of the contempt application and that there was no evidence before the court of the material filed on behalf of the Executors in response to the orders, I reject that submission.
A civil contempt proceeding may not attract all the features of a criminal trial, such as the companion principle: Construction, Forestry, Mining and Energy Union v Boral Resources (Vic) Pty Ltd (2015) 256 CLR 375; [2015] HCA 21 at [37], [40], [47] and [59] (Boral). But, in my view, the Executors were not obliged to give evidence at the hearing of the contempt application and were entitled to make the decision not to read any of the affidavits they had filed and served during the course of the proceedings: Alpass v Hession [2017] VSC 748 at [63]; The Laws of Australia (2022, Thomson Reuters) at [10.11.1690].
The Applicants had been on notice since the directions hearing on 15 September 2021 that the Executors may not call any evidence, which was reinforced by the statement made by the Executors' Counsel at the start of the hearing (as noted at [15] above) before the Applicants opened their case, and it was the Applicants' onus to prove their contempt charges beyond reasonable doubt. The Statements of Charge and the evidence read at the hearing also identified the accounts that had been purportedly filed and served by the Executors in response to the orders.
Further, and as the Executors submitted, if the Applicants wished to challenge the contents and verification of the accounts that had been served by the Executors, or pursue a case that the Executors are in breach of their duties or, as an alternative to a finding of contempt, that "there are no proper accounts" (T118.43), there were other mechanisms available for them to do so, such as seeking directions for the cross-examination of the Executors after giving appropriate and meaningful notice of the points on which they are to be cross-examined: Hagan v Waterhouse [1983] 2 NSWLR 395 at 397 and the authorities cited at Ritchie's Uniform Civil Procedure New South Wales (loose-leaf, LexisNexis Australia) at [46.7.10].
[3]
Facts and summary of evidence
As noted above, the Executors commenced these proceedings by filing a summons for probate on 16 April 2015 and, on 4 May 2016, probate was granted to the Executors on the basis of the deceased's will and codicil.
The Inventory of Property admitted to probate disclosed (under the heading "Property owned solely by the deceased") assets valued at $2,398,993.60, of which $1,486,526.68 was identified as money held in seven bank accounts and share accounts, three with the National Australia Bank, two with the Greater Building Society, one in a cash management bank account with an account ending xx46 (Macquarie CM Account), and one in a Macquarie Bank Share Portfolio account, with the account number ending xx94 (Macquarie Share Account); $43,000 was in respect of three vehicles (which were not the three vintage trucks referred to in the Applicants' submissions); four loans totalling $244,466.60; and $625,000 related to a 50% share in a property located at Maitland NSW 2320.
On 28 May 2019, the Applicants filed a notice of motion in the proceedings seeking an order for accounts. The motion was not in evidence but Mr Nolan's 27 May 2019 affidavit, which appears to have been filed in support of the motion, refers to redacted bank statements relating to the deceased's estate that the Executors had produced to the Applicants and a failure by the Executors to disclose what happened to the net rental income amounts relating to the Lowe's Building as reasons why the Applicants, in their capacities as residuary beneficiaries, sought an order that the Executors serve and file accounts.
[4]
25 November 2019: Lindsay J orders
On 25 November 2019, Lindsay J made case management orders and directions which, amongst other things, noted that these proceedings and related proceedings (brought by the Applicants and numbered 2019/00197779) had been listed for hearing before him in November 2020 and that competing notices of motion had been filed in these proceedings which required further consideration at that hearing. The competing notices of motion were identified as the notice of motion filed on 28 May 2019 by the Applicants seeking an order for accounts and a notice of motion filed by the Executors seeking orders for the setting aside of various subpoenas issued by the Applicants (CB114).
The orders made by Lindsay J on 25 November 2019 included the following:
6. ORDER that the first, second and third defendants, no later than 3 February 2020, file and serve a statement of accounts (in common form) relating to their administration of the estate of the deceased.
7. RESERVE for further consideration whether any (and, if so, what) supplementary orders are required for the purpose of having the first, second and third defendants account for their dealings with property comprising estate property.
8. RESERVE to each party interested in the estate of the deceased liberty to apply for an order that order 6 of these orders be discharged or varied.
9. RESERVE to the plaintiffs and the fourth defendant liberty to apply to the Court for orders regarding subpoenas and notices to produce after their receipt of the statement of accounts required by these orders to be filed and served by the first, second and third defendants.
10. RESERVE all questions of costs, including all questions about who should bear the costs of the accounting process, and to what extent those costs should be borne.
11. ORDER that these orders be entered forthwith.
On 11 February 2020, Mr Nolan received an email from the solicitor for the Executors, Anthony Foate from Catalyst Legal, that attached, by way of service, an affidavit of John Rapson sworn 11 February 2020 that had been filed in the proceedings that day.
In his 11 February 2020 affidavit, Mr Rapson deposed that:
1. he is the external accountant engaged for the estate and instructed by the Executors to prepare financial statements and taxation returns for 30 June 2017 onwards;
2. he had sworn an earlier affidavit in the proceedings that enclosed copies of financial statements, taxation returns and Capital Gains Tax calculations prepared from source material for the estate;
3. in preparing these accounts, entries on the bank statements for the estate were coded into categories and entered into his practice's accounting software system; and
4. annexed to his affidavit and marked A were true copies of the individual entries posted into Mr Rapson's accounting system from which the financial statements in possession of the Applicants were generated, which he noted was the same process undertaken by his practice for all their accounting clients.
Annexure A to Mr Rapson's affidavit comprises three documents that are each headed "Detailed Account Transaction Report" that relate to the "Estate of Fred Goldspring" (First Accounts). The First Accounts included a transaction report relating to the period from 1 July 2016 to 30 June 2017, one for the period from 1 July 2017 to 30 June 2018, and one for the period from 1 July 2018 to 30 June 2019. Each transaction report includes transaction information under columns headed "Account code", "Account Name", "Date", "Type", "Transaction", "Reference", "Gross", "GST", "Net" and "GST Rate GST Name".
[5]
24 June 2020: Hallen J's orders
On 24 June 2020, Hallen J made the following orders and directions in these proceedings:
1. Orders that the first, second and third defendants by 4:00 p.m. on 24 July 2020, serve on all other parties a complete form of accounts in respect of the property comprised in the estate of the deceased, verified by affidavit, commencing from the date of death which account includes:
(a) the nature and value of the estate, by way of inventory of property;
(b) all monies (capital and income), received, but not limited to the settlement figures in respect to the sale of assets realised, contract notes for the sale of securities, and rent;
(c) any assets that have been reinvested;
(d) any monies disbursed by the Defendants, or any of them, or by any other person on his/her behalf;
(e) the dealings and transactions, including, but not limited to the transfer of unrealised assets;
(f) any assets transferred, including an in specie distribution;
(g) any assets that remain undistributed and unrealised;
(h) if any asset loss has occurred, the nature and value of that loss;
(i) any amounts expended on professional assistance such as a solicitor, accountant, valuer or real estate agent and any authority to pay the amounts so expended; and
(j) a reconciliation of the funds held as at the date of the filing of the accounts.
2. Directs that such accounts shall also specify:
(a) in respect of each payment, or receipt, the date and amount thereof;
(b) to whom the payment was made, or from whom the payment was received; and
(c) the purpose or account for, or to which, the account was paid, or received;
as the case may be.
3. Directs that any items of such account statement be numbered consecutively.
4. Directs that the first, second and third Defendants shall prepare a folder containing all invoices, receipts for disbursements, bank statements, deposit books, or documents evidencing electronic deposits or disbursements, bills for all professional work, receipts for any distributions to beneficiaries, including any assets transferred in-specie to a beneficiary and any additional receipts, or other evidence of transactions shown in the accounts, as may be appropriate.
5. Directs that the first, second and third Defendants provide to the Plaintiffs, by their legal representatives, a complete copy of the folder of documents prepared in accordance with the above paragraphs at the cost of the Plaintiffs.
6. Directs that the form of accounts be served in Word format upon the Plaintiff to enable the Plaintiffs to respond by acceptance or objection in regard to each item shown on the account.
7. Stands the matter over for further directions before the Succession List Judge on Monday, 24 August 2020.
Mr Nolan's evidence does not address whether Hallen J's orders were made by consent nor annexes any correspondence that led to the orders being made although it appeared to be common ground at the hearing that the orders were sought by the Applicants due to their concerns that the First Accounts were inadequate.
On 24 July 2020, Catalyst Legal sent an email to Mr Nolan that attached, by way of service, an affidavit of John Rapson sworn 24 July 2020 that had been filed that day in the proceedings. In his 24 July affidavit, Mr Rapson deposes that the schedule attached to his affidavit and marked A was "prepared by [him] in accordance with the orders of the Court made on 24 June 2020". Catalyst Legal's email noted that the annexure to Mr Rapson's affidavit was difficult to read in printed form and an Excel version would be sent under email. In cross-examination, Mr Nolan accepted that he received an Excel version of the annexure.
The schedule annexed to Mr Rapson's affidavit is a 19-page excel spreadsheet headed "Account Transactions, Estate of Fred Goldspring, For the period 1 November 2014 to 31 July 2020" (Rapson Spreadsheet). It records information about transactions under columns headed "Date", "Source", "Description", "Reference", "Debit", "Creditor", "Running Balance", "Gross" and "GST" that are listed in date order within groups or categories of transactions which are described, for example, as "Bank Fees and Charges", "Capital Contributed from Fred", "Distribution of Profit", "Ford Maverick", "Frederick Martin Goldspring", "Freds Greater Account", "Freds Greater Savings", "Insurance and Interest Received", "Mac Bank CMA". Under the column "Source", the information provided identified whether the transactions involved money spent, money received, a "bank transfer" or "Manual Journal".
According to Mr Nolan's evidence, the Rapson Spreadsheet contains 998 individual line items, excluding blank lines and headings. During cross-examination, Mr Nolan accepted that when he viewed the Rapson Spreadsheet on his computer there were unique numbers in the left column (also referred to as cell references) next to each individual line item that were in ascending order (T46.6-33). He also gave evidence that there were no numbers when the Rapson Spreadsheet was printed out and accepted that his complaint was really about this issue (T46.39-47).
On 19 August 2020, Mr Nolan received a folder of documents from Catalyst Legal under cover of a "with compliments slip". According to Mr Nolan's evidence, there were 385 pages of documents in the folder which were unpaginated, not cross-referenced to the transactions in the Rapson Spreadsheet and did not include the bank statements in relation to the deceased's estate.
On 21 August 2020, Catalyst Legal sent an email to Mr Nolan that attached bank statements in relation to six bank accounts relating to the deceased's estate; four of the accounts were with the National Australia Bank and two were with the Greater Building Society.
On 27 August 2020, Mr Nolan wrote to Catalyst Legal seeking the production of banks statements relating to two of the National Australia Bank accounts (for particular periods) and the Macquarie CM Account and Macquarie Share Accounts. The following day, Catalyst Legal emailed to Mr Nolan copies of the Macquarie CM Account bank statements he had requested, an email from one of the Executors that stated, in essence, that there were no more statements to produce for the National Australia Bank accounts, and a one-page document out that showed a nil balance for one of those accounts.
On 7 September 2020, Mr Nolan sent a letter to Catalyst Legal that referred to the listing before Hallen J that day at which the Applicants' Counsel had informed the court that they would be seeking leave to file a notice of motion for contempt arising from non-compliance with the orders made for the filing and service of estate accounts. Mr Nolan's letter refers to correspondence that deals with non-compliance with Hallen J's orders (some of which is not in evidence), asserts that the form of the estate accounts filed on 24 July 2020 were deficient in numerous respects, and states that the Executors would be provided one final opportunity to file and serve estate accounts in complete compliance with Hallen J's orders by 4.00 pm on 18 September 2020, failing which the Applicants would proceed forthwith to file a notice of motion for contempt.
The alleged deficiencies with the estate accounts identified in Mr Nolan's letter were as follows:
"1. The accounts are not verified by the executors as ordered.
2. The individual items in the [Rapson] [S]preadsheet … are not numbered consecutively as ordered [and are] … not in chronological order but are prepared by way of individual bank accounts and/or other heads of expense or other accounting headings. The Rapson Spreadsheet is unpaginated.
3. The Rapson Spreadsheet does not deal with the Macquarie Share Portfolio Account ... Accordingly, individual items of receipts and expenses referable to that account are not itemised or explained.
4. The folder of documents evidencing receipts of monies and expense items ('the Folder') consists of 385 unpaginated documents… [and] is not in chronological order, nor in any other logical order.
5. The Folder contains no cross-referencing to individual items in the Rapson Spreadsheet.
6. The Rapson Spreadsheet contains no cross-referencing to individual items in the Folder.
7. No authorities have been provided for the payment of amounts expended on professional assistance as ordered.
8. Account statements for National Australia Bank Account … numbered 86 to 99 and 101 onwards to the final statement including the date of account closure have not been provided, as ordered.
9. Account statements for Greater Building Society Account … have not been produced for the period from 1 January 2016 to date, as ordered.
10. Tax invoices from legal representatives for work undertaken on behalf of the estate have not been provided, as ordered."
On 8 September 2020, Mr Nolan received an email from Catalyst Legal attaching the "omitted" bank statements (those identified in Mr Nolan's 7 September letter) that had been received from the external accountant.
On 16 September 2020, Mr Nolan received four emails from Catalyst Legal attaching "Legal Invoices". According to Mr Nolan's evidence, the emails he received attached 392 pages of tax invoices issued by Catalyst Legal and Counsel engaged by them on behalf of the Executors (Exhibit B contains the documents received by Mr Nolan). Mr Nolan's evidence is that the tax invoices were not in date order and did not appear to be arranged in any logical order.
On 16 September 2020, Mr Nolan also received a letter from Catalyst Legal in reply to Mr Nolan's 7 September 2020 letter in which Catalyst Legal asserted that:
1. The accounts will be verified by the Executors, although Hallen J's orders simply required them to be verified.
2. The items in the Rapson Spreadsheet were consecutively numbered and while the items were not all in chronological order, that was done to enable "the items to be more readily assessed and … for your benefit".
3. The orders did not require the Rapson Spreadsheet to be paginated and that a "live copy by email" was provided to "simplify confirmation of what accounts, if any, are in dispute… in accordance with His Honour's suggestions".
4. There was no basis for the complaint regarding the Macquarie Share Account, referring to item number 675. Mr Nolan was asked to please enquire if there were any queries.
5. There was no requirement for the documents to be in a chronological order, in any order for cross-referencing but "to our mind… the documents are in the order in which they appear in the spreadsheet".
6. There was no basis for the remainder of the complaints, noting that the Executors were only required to produce what exists and that all the bank statements had been provided as had the tax invoices.
Pausing here, item 675 of the Rapson Spreadsheet refers to the receipt of money ($97,356.85) from Macquarie Bank on 5 April 2017 under the category "Mac Bank CMA" with a running balance at that date of $179,445.58.
Also on 16 September 2020, Mr Nolan received emails from Catalyst Legal that attached, by way of service, two affidavits. One was an affidavit of Mark Goldspring sworn 8 September 2020 in which he deposed that he was an Executor of the deceased's estate and that:
"The account of receipts and payments set out in the affidavit of John Rapson sworn 11 February 2020 contains a run and true account of my receipts and payments as executor from 1 July 2018 to 30 June 2019."
The other was an affidavit of Marianne Goodchild sworn 7 September 2020, who deposed that she was an Executor of the deceased's estate and that:
"The account of receipts and payments set out in the affidavit of John Rapson sworn 24 July 2020 contains a full and true account of my receipts and payments as executor from 1 November 2014 to 31 July 2020."
On 17 September 2020, Mr Nolan received an email from Catalyst Legal that attached, by way of service, an affidavit of Peter Goldspring sworn 16 September 2020 in which he deposed to being an Executor of the deceased's estate and that:
"The account of receipts and payments set out in the affidavit of John Rapson sworn 24 July 2020 contains a full and true account of my receipts and payments as executor from 1 November 2014 to 31 July 2020."
It is not clear on the evidence why the affidavit of Mark Goldspring purports to verify the accounts of receipts and payments set out in Mr Rapson's 11 February 2020 affidavit for the period 1 July 2018 to 30 June 2019 only (noting that this period does not reflect the period of the First Accounts), nor why he was not purporting to verify the Rapson Spreadsheet.
[6]
30 September 2020: motion for contempt
On 30 September 2020, the Applicants filed their notice of motion seeking orders that each of the Executors be found guilty of and punished for contempt, the grant of probate be revoked and for solicitors from Newcastle to be appointed as administrator of the deceased's estate. They also filed a Statement of Charge in relation to the contempt orders. That notice of motion was amended on 16 October 2020, with six Amended Statements of Charge also filed and which are the subject of this application. Three of the Amended Statements of Charge relate to Lindsay J's orders and three relate to Hallen J's orders. They are in the same terms, with the only difference being that each of the three charges identifies one of the three Executors as the Respondent.
The Applicants notice of motion was further amended on 6 April 2021 to seek an order for leave to issue subpoenas, which was granted by Kunc J on that day.
[7]
13 October 2021: further spreadsheet
During cross-examination, Mr Nolan gave evidence that on 13 October 2021, he received an email from Annabelle Dooley, Catalyst Legal, that attached, by way of service, a second and different spreadsheet of John Rapson headed "Account Transactions, Estate of Fred Goldspring for the period 1 July 2013 to 30 September 2020" (2021 Spreadsheet) (T49.22-25, T50.43-49, T52.25-27). The 2021 Spreadsheet lists the transactions referred to in the Rapson Spreadsheet in chronological order, commencing from 30 June 2014 and ending on 31 August 2020.
[8]
Legal principles
The Applicants' contempt motion relates to breaches of the court's orders, which fall within the traditional classification of a civil contempt: Witham v Holloway (1995) 183 CLR 525 at 530 (Witham).
The distinction between civil and criminal contempt has been subject to some criticism but has not been abolished, with the distinction recognised in New South Wales as having appellate consequences: Supreme Court Act 1970 (NSW), ss 101(5) and (6); Hearne v Street (2008) 235 CLR 125; [2008] HCA 36 at [20] (Hearne v Street); Pang v Bydand Holdings Pty Ltd [2011] NSWCA 69 at [72] and [166] (Pang v Bydand); NHB Enterprises Pty Ltd v Corry (No 7) [2021] NSWSC 741 at [203] (NHB Enterprises) and the cases there cited.
Civil contempt proceedings have been described as being remedial or coercive in nature, the main object of which is to seek to ensure compliance with the relevant obligation, whereas criminal contempt involves punitive proceedings that seek to punish for past breaches: Witham at 531; Hearne v Street at [133].
A party who has committed civil contempt by breach of a court order may be exposed to a fine or imprisonment if the charges are established: Supreme Court Rules 1970 (NSW), Part 55 r 13(1) (Supreme Court Rules). Such remedies can be seen to be coercive and remedial in the sense that they may incentivise compliance with court orders: Construction, Forestry, Mining and Energy Union v Grocon Constructors (Victoria) Pty Ltd [2014] VSCA 261 at [136] (Grocon); Dowling v Prothonotary of the Supreme Court of New South Wales [2018] NSWCA 340 at [40]-[41]; Re Jimmy's Recipe Pty Ltd [2020] NSWSC 93 at [69].
In NHB Enterprises, Bell P (as the Chief Justice then was) observed that there is an open question whether, in civil contempt proceedings to which the Evidence Act applies, the applicable standard is that specified in s 140 (which prescribes the civil standard of proof). His Honour observed that the weight of authority is in favour of the criminal standard applying to contempt proceedings and did not need to decide the question in that case. I have adopted the same approach for this application, noting that the parties did not contend otherwise.
The elements that need to be established in an application for civil contempt in relation to breach of a court order are set out in Bellerive Homes Pty Limited v FW Projects Pty Limited [2019] NSWSC 193 at [38] (Bellerive) and Eshow v Zaia [2020] NSWCA 10 at [17] and [18]. Relevantly, the party alleging contempt must establish, beyond reasonable doubt, that:
1. an order was made by a court;
2. the order was sufficiently clear such that one can be sure that the order was not complied with;
3. the alleged contemnor had knowledge of the terms of the order and, if required by the court rules, the order was served on the alleged contemnor or service was for some reason dispensed with; and
4. the alleged contemnor took a deliberate step which, even if not intended to, breached the order.
It is not necessary to establish that the alleged contemnor intended to breach the order but it must be demonstrated that the contempt involved a deliberate act that was not merely casual, accidental or unintentional: Mahaffy v Mahaffy [2018] NSWCA 42 at [92] (Mahaffy); Markisic v Commonwealth of Australia [2007] NSWCA 92 at [64] (Markisic).
There can be no finding of contempt for breach of a court order that is ambiguous: Mahaffy at [92] citing Australian Consolidated Press Limited v Morgan (1965) 112 CLR 483 at 489; [1965] HCA 21 (Morgan).
A person accused of contempt is entitled to know the substance of the charges brought against them. The Full Federal Court in lnghams Enterprises Pty Ltd v Timania Pty Ltd [2005] FCAFC 155 at [32] summarised the principles as follows (citations omitted):
"(a) appropriate safeguards must be applied to protect the rights of parties accused of contempt;
(b) parties accused of contempt are entitled to know the gist or substance of the charges against them;
(c) where there is a Statement of Charge, the gist or substance of the allegations must be contained within the Statement of Charge and any particulars, and any deficiency cannot be remedies [sic] by resort to affidavit evidence;
(d) amendments to charges will only be allowed to correct minor deficiencies, in circumstances where the accused suffers no prejudice;
(e) where amendments are allowed, accused parties must be given an opportunity to put anything they fairly wish to say as to the evidence, the law and the sentence as they pertain to the amended charges;
(f) parties accused of contempt are entitled to conduct their case on the basis that the only charge which they are required to meet is that which has been particularised against them; and,
(g) appellate courts should not speculate as to whether, if a charge had been properly drawn or amended, the evidence adduced would have been the same or the conduct of the accused party's case would have been unaltered."
In NHB Enterprises, Bell P referred (at [209] and [210]) to the procedural requirements for a contempt charge, citing with approval what had been said by Ward CJ in Eq and Simpson JA as follows:
"[209] In Furlong at [101], Ward CJ in Eq summarised the various procedural requirements to be satisfied on a hearing of a contempt charge, noting, with reference to Lane v Registrar of the Supreme Court of New South Wales (Equity Division) (1981) 148 CLR 245 at 257; [1981] HCA 35, that the charge must be distinctly stated and that the party bringing the charge of contempt will be held to the precise formulation of the charge. Her Honour referred to Construction, Forestry, Mining & Energy Union v BHP Steel (AIS) Pty Ltd [2001] FCA 1758 at [32], where Lee and Finn JJ said that "[u]nless and until an application is allowed to alter a particularised statement of charge, the accused is entitled to insist that he or she is only required to meet the charge as made". See also Mirus at [119]; and McDonnell v Novello [2006] NSWSC 1186 at [26].
[210] Further, in Mahaffy at [92], Simpson JA noted that a charge of contempt should specify the nature of the contempt by providing proper particulars, and that there can be no conviction for contempt by breach of an order which is ambiguous, there relying on Lewis v Ogden (1984) 153 CLR 682 at 693; [1984] HCA 26 and Morgan."
In NHB Enterprises, Bell P also reviewed several cases relating to breach of court orders, including Anderson v Hassett [2007] NSWSC 1310 (Anderson v Hassett) and Markisic.
In Anderson v Hassett, the plaintiff sought an order that the defendant executor be dealt with for contempt of court, for failing to produce to the court all the records of the administration of the estate. Brereton J (as his Honour then was) found the defendant guilty of civil contempt on the basis that he had in his possession documents covered by the court order which he did not produce. His Honour found that the breach was not "causal, accidental or unintentional" in the relevant sense (at [34]-[35]), and it did not matter that the defendant did not intend to defy the court orders (at [8]). His Honour rejected the plaintiff's submission that as the defendant had produced nothing in answer to the order, the contempt was thereby proved, referring to that approach as "plainly misconceived" because it overlooked the necessity to establish that there were, at the relevant time, in the defendant's possession, custody or power documents that fell within the terms of the order (at [17]). Having observed that the defendant's evidence was "surprisingly general and careless", Brereton J observed (at [30]):
"However, this is not a suit for breach of trust, but a proceeding for contempt, and the issue is whether the plaintiff has proved beyond reasonable doubt the elements of that contempt… it is insufficient to prove that (the defendant) has not produced documents in the four classes specified in the order to the court. The plaintiff must prove at least that such documents were at the relevant time in his possession, custody or power, and that their creation or receipt bore the requisite relationship to one or more of the four classes."
In Markisic, Campbell JA (at [61] and [64]) (with whom Handley AJA and Bell J agreed) observed that mere non-production of documents that are called for by a court order will be insufficient to establish there has been a contempt. His Honour stated that what needed to be established was that, at the date on which the documents were required to be produced, the alleged contemnor had documents that met the description called for by the order to produce and that the action or inaction said to constitute the breach was deliberate, and not casual, accidental or intentional.
[9]
Charges in relation to Lindsay J's orders
The Amended Statements of Charge in relation to Lindsay J's orders reads as follows:
"1. On 25 November 2019, Lindsay J made amongst other notations and orders, Orders 6 to 11 as follows in relation to the estate of Frederick Martin Goldspring ('the Estate').
6 ORDER that the first, second and third defendants, no later than 3 February 2020, file and serve a statement of accounts (in common form) relating to their administration of the estate of the deceased.
7. RESERVE for further consideration whether any (and, if so, what) supplementary orders are required for the purpose of having the first, second and third defendants account for their dealings with property comprising estate property.
8. RESERVE to each party interested in the estate of the deceased liberty to apply for an order that order 6 of these orders be discharged or varied.
9. RESERVE to the plaintiffs and the fourth defendant liberty to apply to the Court for orders regarding subpoenas and notices to produce after their receipt of the statement of accounts required by these orders to be filed and served by the first, second and third defendants.
10. RESERVE all questions of costs, including all questions about who should bear the costs of the accounting process, and to what extent those costs should be borne.
11. ORDER that these orders be entered forthwith.
2. On 11 February 2020, the Executors purported to file accounts in accordance with Order 6 made by Lindsay on 25 November 2020.
3. In breach of Order 6 made by Lindsay J on 25 November 2019, the form of accounts filed and served by the Executors on 11 February 2020:
(a) Were not in common form as they did not attach any receipts for income received and/or tax invoices for expenses paid on behalf of the Estate.
(b) Did not cover the period from the death of the Deceased on 2 November 2014 up to and including 30 June 2016, a period of 20 months.
(c) Did not cover the period from 1 July 2019 to 11 February 2020, a period of 7 months.
(d) Were not verified by the Executors."
[10]
Threshold issues: lack of utility and form of charges
The Executors raise two matters which they submitted warrants dismissal of the charges in relation to Lindsay J's orders.
First, they submitted that the charges ought be dismissed as the utility of the contempt charge is elusive because any failure to comply with Lindsay J's orders was dealt with by the orders made by Hallen J. They referred to the purpose of civil contempt proceedings as corrective and not punitive, and contended that the "correction" (to the extent any was required) was made by Hallen J's orders. They note that Lindsay J's orders reserved for consideration whether Order 6 ought to be discharged or varied, which the Executors contended is what occurred before Hallen J on 24 June 2020.
At the hearing the Executors stated that Hallen J's orders were clearly remedial, by implication discharged Lindsay J's orders, or at least, absolved the Executors of any obligation to comply with them, and the pursuit of a contempt charge that lacks utility is an abuse of process particularly where the purpose of finding of civil contempt is to provide a remedy for the contempt and punishment is secondary (T139.14-18, T139.33-36).
Second, and in relation to the form of the charges, the Executors submitted that if the matters referred to in [3(a) - (d)] of the Amended Statements of Charge are not cumulative, in the sense that the alleged contempt would only be made out if all four matters are established (which is their preferred construction), then there is duplicity in the form of the charge as the Applicants have not made an election as to what conduct they allege is in breach of Order 6 and gives rise to the contempt (T131.13-25).
Dealing with the second matter and the duplicity submission first, in NHB Enterprises, Bell P (as his Honour then was) observed at [261] that the rule against duplicity does not apply to a proceeding for contempt. His Honour (at [211]) noted the decision by Woolf LJ, as his Lordship then was, in Harmsworth v Harmsworth [1987] 1 WLR 1676 at 1686 (Harmsworth), which states:
"What is not required by the relevant rules is that the notice of the motion should be drafted as though it was an indictment in criminal proceedings. While a respondent is required to be given particulars of what is alleged to be the breach, the particulars do not need to be set out in the same way as separate counts have to be set out in an indictment, nor do they need to give the particulars that you would normally expect to be seen in a count in an indictment. Furthermore, in my view, rules of duplicity and other rules which are designed to ensure the fairness of a trial before a jury, do not apply to proceedings of a different nature which are brought in respect of an alleged contempt."
His Honour went on to observe, at [212], that the Harmsworth decision has been applied in Matthews v ASIC [2009] NSWCA 155 (Matthews v ASIC) at [45], O'Connor v Hough [2016] 2 Qd R 543; [2016] QSC 4 at [14] and referenced Wilcox J's statement in Concrete Constructions Pty Ltd v Plumbers and Gasfitters Employees' Union (No 2) (1987) 15 FCR 64 at 74 that "[t]he principle of duplicitous pleading has no place in the law of contempt".
It follows that I do not accept the Executors' submission that the charges are bad in form and should be dismissed for duplicity if the matters referred to [3(a) - (d)] are not cumulative.
I also do not consider that the matters referred to in [3(a) - (d)] of the Amended Statements of Charge are cumulative, as the Executors contend, or that there is any "latent duplicity" such as to give rise to uncertainty as to the charge of contempt that is to be met by the Executors: Matthews v ASIC at [167] (Basten JA). In my view, the charges make clear that there is one act that is alleged by the Applicants to constitute the breach of Order 6 of Lindsay J's orders, namely the filing and service of the First Accounts by the Executors on 11 February 2020, with the breach alleged to have arisen by reason of those accounts being deficient in four different ways.
While not drafted with the word "or" in between (a) - (d) of paragraph 3 of the Amended Statements of Charge, in my view, the matters referred to in those sub-paragraphs should be read like particulars of the asserted breach (similar to the approach in Montgomery v Stewart (1967) 116 CLR 220; [1967] HCA 11 as cited in Matthews v ASIC at [67] and [168]), rather than cumulative requirements or distinct elements that the Applicants have to prove in order to establish that Order 6 of Lindsay J's orders was breached. In other words, proof of the charge that Lindsay J's orders was breached by the filing and service of the First Accounts may be established by the Applicants proving that any one or more of the matters referred to in (a) - (d) was required by Lindsay J's orders and, as a result, his Honour's order was breached. That said, the seriousness of the breach and any finding of contempt may be affected by a finding that only some but not all of the matters referred to in the charges were required by Lindsay J's orders: Matthews v ASIC at [168].
In response to the Executors' submission that the charges should be dismissed for lack of utility, the Applicants argued that it was appropriate for this court to make a separate determination of the charges relating to Lindsay J's orders because Hallen J's orders did not expunge or vary the prior orders or excuse any breach and no judgment or punishment in respect of the alleged contempt of Lindsay J's orders had been given. They submitted that the relevant contempt, which was from 11 February 2020, continued and there was utility in a finding of contempt in relation to Lindsay J's orders as such a finding would be relevant to their further application for the revocation of probate and appointment of a replacement executor.
In support of their submission, the Applicants referred to the decision of Witness JA v Scott [2015] QCA 285 (Witness JA v Scott), a case in which the Queensland Court of Appeal upheld an appeal from a trial judge who found a witness to be in contempt for refusing to provide information in response to a question in 2014 in circumstances where the witness had been in contempt for refusing to provide information in 2013 and had been sentenced to imprisonment for that contempt. McMurdo JA (with whom Gotterson and Peter Lyons JJA agreed) observed that the court has a power to make several orders against a contemnor for a continuing contempt but held that the primary judge had erred in characterising the respondent's persistent failure to provide the information sought as a distinct instance of contempt for which the appellant should be further punished. Her Honour noted that the earlier judgment had determined an appropriate penalty for a continuing contempt which would not be purged. In those circumstances, her Honour held that the court could make no further order as there was no distinct contempt for the purposes of the Crime & Corruption Act 2001 (Qld): at [74].
McMurdo JA's reasons also record that if there was a distinct contempt by the failure to answer the question in 2014, her Honour would have accepted the submission that the 2014 contempt proceedings were an abuse of process as there was no proper purpose to be served in circumstances where the court had sentenced the appellant to a term of imprisonment in 2013 on the basis that his failure to answer the question would not be remedied: at [76]-[79].
By their terms, Hallen J's orders do not expressly discharge, vary or set aside Order 6 of Lindsay J's orders. However, in my view, there is force to the Executors' submission that Hallen J's orders were remedial and the two orders should not be read together to require the Executors to now comply with them both.
While I have no evidence of what was said to the court prior to Hallen J making his orders on 24 June 2020 or what his Honour said at the time he made them, it is common ground that they were made in the context of there being a dispute as to the adequacy of the First Accounts served by the Executors (T139.15). Having regard to the nature of the orders and the circumstances in which they were made, I accept the Executors' submission that Hallen J's orders are fairly to be construed as having been made in substitution for, rather than supplementary to, Lindsay J's orders with the consequence that the later orders impliedly terminated the operation of the earlier ones. In other words, once Hallen J's orders were made, there was no purpose to be served in requiring compliance with Order 6 of Lindsay J's orders. Testing it this way, if the Applicants had taken steps to seek to enforce Order 6 of Lindsay J's orders in July 2020 (or some other time after 24 June 2020, it seems inevitable that the application would have been met with the contention that there was no point in requiring the Executors to comply with Order 6 as they had been overtaken by the more detailed accounting regime contemplated by Hallen J's orders.
In that sense, I accept the Executors submission that there is no utility in pursuing the contempt charge to ensure compliance with the relevant obligation. However, I am not persuaded that the charges should be dismissed as lacking utility or because they amount to an abuse of process.
In Williams v Spautz (1992) 174 CLR 509; [1992] HCA 34, Mason CJ, Dawson, Toohey and McHugh JJ stated (at 528) that it is an abuse of process for a plaintiff to bring or threaten proceedings to obtain a collateral advantage, and not for the purpose which such proceedings exist or are designed for. Brennan J, in a separate judgment, stated as follows (at 535 and 537):
"There is no impropriety of purpose (whatever may be said of motive) when a plaintiff commences or maintains a proceeding desiring to obtain a result within the scope of the remedy, even though the plaintiff has an ulterior purpose - or motive - which will be fulfilled in consequence of obtaining the legal remedy which the proceeding is intended to produce. To amount to an abuse of process, the commencement or maintenance of the proceeding must be for a purpose which does not include - at least to any substantial extent - the obtaining of relief within the scope of the remedy.
….an abuse of process occurs when the only substantial intention of a plaintiff is to obtain an advantage or other benefit, to impose a burden or to create a situation that is not reasonably related to a verdict that might be returned or an order that might be made in the proceeding."
Further, the court should only exercise its power to stay proceedings permanently on the ground that they are an abuse of process in the most exceptional or extreme case, with the onus on the party alleging an abuse described as a heavy one: Hana v Shad Legal Services Pty Ltd [2021] NSWCA 258 at [44] citing O'Shane v Harbour Radio Pty Ltd (2013) 85 NSWLR 698; [2013] NSWCA 315 at [111] (Beazley P).
In my view, there is no improper purpose or abuse of process for the Applicants to bring contempt charges in circumstances where there has been no judgment or finding in relation to the contempt alleged by the Applicants in respect of Lindsay J's orders. Even accepting that Hallen J's orders were remedial, the 24 June orders did not have the effect of purging any prior breach or contempt by the Applicants. As Counsel for the Executors put it in oral submissions, there could have been a technical contempt if, for example, the Executors did not perform Lindsay J's orders on the day required and the other elements were proven (T139.4-6).
In my view, it is also not determinative of any abuse of process that there will be no remedy of utility available to the Applicants of a corrective or coercive nature and that they may wish to rely on a contempt finding in support of a revocation of probate.
As the authorities recognise, the civil contempt jurisdiction is primarily coercive but there may also be some punitive element to emphasise the importance of compliance with court orders: see for example, Anderson v Hassett (No 2) [2007] NSWSC 1444 at [2] - [3], a case in which Brereton J (as his Honour then was) imposed a fine of $1,500 on the contemnor who had produced documents during the course of the hearing such that there was no coercive purpose to be achieved by the imposition of any penalty.
It is also open to a court to make a finding of technical contempt, make a declaration of contempt without imposing any punishment, or decline to exercise the contempt jurisdiction for discretionary reasons even though the court may be satisfied that the contempt has been established: Grocon at [142] and [177]; Re Modern Woodcraft Pty Ltd (in liq) (1997) 75 FCR 245 at 253.
If the Applicants' ultimate purpose in bringing the contempt charge is to rely on the finding (if made) in relation to their revocation of probate claim, it does not follow that the contempt charge is brought for an improper or collateral purpose. Such a purpose depends on the contempt charge being proven, and bringing about a result for which the law provides, namely a finding that the executors are guilty of contempt of court: Rock v Henderson [2021] NSWCA 155 at [96] - [97] (Bell P).
In my view, a finding of contempt may also be a relevant factor to the court's consideration of the Applicants' separate application for the revocation of the grant of probate in this case. In that context, and particularly as the question of what "punishment" (if any) is sought and should be ordered is to be determined later (assuming the contempt charge is made out), I am not satisfied that the Applicants have established that the charges in relation to Lindsay J's orders should be summarily dismissed for lack of utility or an abuse of process in this case.
[11]
Have the Applicants established breach of order 6?
The Applicants submitted that breach of Lindsay J's Order 6 is established (as set out in [3] of the Amended Statement of Charge) because the evidence demonstrates that the date ranges of the First Accounts did not extend for the entire period of their administration of the estate (from the date of death up to 11 February 2020), the First Accounts contained no documents in the form of receipts in respect to income or tax invoices for expenses paid on behalf of the deceased's estate, and only one Executor purported to verify the First Accounts and that verification was limited to the period from 1 July 2018 to 30 June 2019 (referring to the affidavit of Mark Goldspring, at [44] above).
They submitted that the reference to "common form" in Order 6 was sufficiently clear as to oblige the Executors to provide documents that established each receipt and payment and for each of the Executors to verify the account on affidavit, in addition to providing details of all amounts paid and received during their administration of the deceased's estate. Reference was made to observations in authorities regarding orders requiring executors to file and serve accounts in common form, such as in Glazier v Australian Men's Health (No 2) [2001] NSWSC 6 at [18] and McLauchlan v Prince [2001] WASC 43 at [12] (McLauchlan v Prince). Reliance was also placed on Uniform Civil Procedure Rules 2005 (NSW), r 46.5(2), which provides that, unless the court otherwise orders, an accounting party must verify his or her account by affidavit.
The Applicants' written submissions also referred to an "obligation" contained in the Executors' affidavit sworn 10 April 2015 regarding the preparation, filing and passing of accounts which stated that that if probate was granted to them, the Executors would verify and file, or verify, file and pass accounts within 12 months of probate being granted. They also stated that the First Accounts were never filed with the Registrar of Probate for review, assessment and/or to be passed, and asserted that the First Accounts failed to comply with Order 6 of Lindsay J's orders, namely to "file and serve and if required pass, accounts in common form in respect of the Deceased's estate" (at [47] and [50]). There are two issues with that submission, which I do not accept.
First, the Executors' affidavit sworn 10 April 2015 was not tendered by the Applicants at the hearing, despite their submissions stating that a copy would be produced. As it was not in evidence, I have not taken the contents of that affidavit into account on this application.
Second, and more significantly, Order 6 of Lindsay J's orders did not require the Executors to file accounts with the Probate Registrar or to "pass" any accounts. The Amended Statements of Charge also do not refer to the affidavit or allege that the Executors are in breach of Lindsay's J's orders by failing to verify and file accounts with the Probate Registrar for review, assessment and/or passing.
In oral submissions, the Executors submitted that the Applicants had not proven beyond reasonable doubt that the First Accounts were the only account filed in response to Lindsay J's orders, referring to paragraph 2 of Mr Rapson's 11 February 2020 affidavit which referred to swearing an earlier affidavit that enclosed copies of financial statements, taxation returns and Capital Gains Tax calculations prepared from source material for the estate. I do not accept that submission and am satisfied beyond reasonable doubt that the First Accounts were the statement of account filed and served in response to and purportedly in compliance with Order 6 of Lindsay J's orders. That finding is supported by Mr Nolan's unchallenged evidence, particularly the timing of the filing of Mr Rapson's affidavit and the First Accounts and the absence of any evidence that the earlier affidavit and enclosed documents were filed at all or in response to Lindsay J's orders.
The Executors conceded, appropriately in my view, that the First Accounts ought to have included transaction information from the date of the deceased's death and there were some months missing at the end of the 2019 financial year (T131.47-50). In light of that concession, I am satisfied that Order 6 of Lindsay J's orders was sufficiently clear and it ought to have been in the contemplation of the Executors that the statement of accounts was required to cover the whole of the period of the Executors' administration of the deceased's estate to around 11 February 2020, and that the failure by the Executors to provide accounts for the missing 27 months was in breach of that order.
However, the Executors disputed the Applicants' contention that Order 6 of Lindsay J's orders obliged them to produce documents to the Applicants or provide verification of the accounts on affidavit. They submitted that UCPR, r 46.5 has no application, arguing that Division 11 of Part 78 of the Supreme Court Rules is more relevant to a case of this nature (which Division relates to "Accounts and Commission" in probate proceedings); the words "common form" are ambiguous, such that it was open for the Executors to construe the Order 6 as simply requiring a statement of account of monies coming in and out without the underlying documents (T130.9-43); and the provision of accounts in common form involves a "process", the first stage of which does not necessarily require documents or verification. Reliance was placed on Chow v Chow [2016] NSWSC 908, a case in which Robb J noted the different purposes for which accounts may be ordered and that accounts in accordance with the modern accounting standards may be appropriate in certain circumstances: at [117]-[125].
On this aspect, I prefer the Executors' submission and have concluded that the Applicants have not established that the Executors were in breach of Order 6 by failing to attach any receipts for income received or tax invoices for expenses paid on behalf of the estate or because the First Accounts were not verified on affidavit by each of the Executors, as charged.
As the authorities to which I was referred make clear, an order to file and serve accounts in common form by executors requires them to account only for what they have actually received and any disbursements and distribution of the amounts so received and disposed of. The other party to the accounting can challenge the account by asserting that more was received (referred to as surcharging) or by asserting that less was disposed of (referred to as falsifying). Accounts in common form are to be contrasted with an order for taking accounts on the basis of wilful default, under which the accounting party must account not only for what was actually received but also for what should have been received; that is, for what would have been received if the relevant duties of the accounting party had been properly discharged: Juul v Northey [2010] NSWCA 211 at [186], citing Meehan v Glazier Holdings Pty Ltd [2002] NSWCA 22; (2002) 54 NSWLR 146 at [13] - [15]. The common account has been referred to as a procedure, which involves a process to ascertain the dealings of parties in respect of the subject property and to determine with precision the balance due between them: McLauchlin v Prince at [12].
I pause to observe that the authorities to which I was referred by the Applicants do not characterise the provision of documents that establish the receipts or disbursements nor verification by affidavit as requirements for an account in common form by an executor.
I accept that a party that is ordered to provide an account would usually be required to show each receipt and payment, with vouchers such as supporting records and verification on affidavit: see for example, Torlonia v Wright [2016] NSWSC 1139 at [23] and [65] (Torlonia); Hancock v Reinhardt [2015] NSWSC 646 at [353] and [383] (Hancock).
Form 150 of the UCPR, which is the form of the notice of motion to be served for an order passing of accounts relating to an estate under the Supreme Court Rules, Part 78, rr 76 and 77, also provides for an executor to swear an affidavit verifying the accounts and for documents, including receipts and bills, to be exhibited to the affidavit.
But, in my view, Order 6 of Lindsay J's orders is ambiguous in its terms, referring as it does to a "statement of accounts (in common form)" to be filed and served by the Executors. The use of the word "statement" to describe the accounts to be provided, together with the descriptor of common form without any reference to an affidavit or a folder of documents comprising receipts or bills supporting the statement of accounts, leaves open a construction that all that was required by that order was for the Executors to provide a document that sets out the details of all the amounts they had actually received and disposed of over the course of their administration of the deceased' estate. In my view, the other orders made by Lindsay J on 29 November 2019 support that interpretation as Orders 7 and 8 contemplate further orders might be made, as part of the "accounting process". Order 9, also only refers to the "statement of accounts" that are required to be filed and served, rather than an affidavit verifying the accounts or documents supporting the details of the transactions referred to in the statement of accounts.
There is also some ambiguity as to what "common form" meant in the orders. The Executor's Counsel referred to three possible meanings, namely common form by reference to a prescribed form, some uncodified expectation based on case law and a common form as known to an accountant (T130.10-14).
I accept that the Applicants' interpretation of what "a statement of accounts (in common form" required might be open based on the matters referred to at [98], [100] and [101] above and in the context of the dispute between the parties at that time. Plainly enough, Lindsay J's order was intended to aid the provision of accounting information to enable the Applicants to have some transparency as to how the deceased's estate had been administered and the evidence identifies there had been some concerns about redacted bank statements. But the Applicants did not point to any correspondence, submissions or transcript in existence at the time that aided their interpretation of Order 6, and there is no judgment other than the orders themselves.
The Applicants interpretation also seems to me to go beyond the express language of Order 6 and relies on inferences to be drawn of what was to be provided. The Applicants may have expected (and wanted) documents and verification on affidavit at that time, but their subjective intentions and expectations are not relevant to construing the orders: Pang v Bydand at [59]. Further, and while regard may be had to the surrounding circumstances, orders are generally framed with a view to being self-contained and self-explanatory: Athens & Anor v Randwick City Council [2005] NSWCA 317 at [29] and [140]. Relevantly, neither Order 6 nor the submissions advanced by the Applicants specify whether the order for accounts sought by the Applicants' notice of motion was sought (or made) pursuant to UCPR, r 47.6 or Supreme Court Rules, Part 78. As the Applicants submitted, if Lindsay J required a form of accounts with source documents and verification, it might be expected that the orders would have specified those matters, like the orders made by Windeyer J in Anderson v Hassett (see at [1]), by Brereton J in Torlonia (at [65]) and Hancock (at [383]), and by Hallen J on 24 June 2020.
To my mind, this is a case where, the language of Order 6 is open to a sensible and plain reading that the Executors were only required to file and serve a statement of accounts without the documents themselves or any verifying affidavits. Thus, even if I were satisfied that the meaning of common form accounts contended for by the Applicants was one which ought fairly have been in the contemplation of the Executors as a possible meaning for the purposes of Order 6, I do not consider that the Executors could be found guilty of contempt as they would be in breach of one of the two possible constructions of that order: Pang v Bydand at [52] citing Morgan (1965) 112 CLR 483 at 515-516.
[12]
Conclusion on contempt charge in relation to Lindsay J's orders
In conclusion, I am only satisfied that the Applicants have established, beyond reasonable doubt, that the Executors breached Order 6 by filing and serving a statement of accounts that did not cover the period from the death of the deceased on 2 November 2014 up to and including 30 June 2016 and the period from 1 July 2019 to 11 February 2020 (a period of 27 months).
The Applicants' case proceeded largely on the basis that if they established that Order 6 was breached (in the manner charged), a civil contempt of court by each of the Executors was thereby proved. This overlooked that the Applicants also had to prove beyond reasonable doubt that each of the Executors were on notice of the terms of the order and that the contempt was wilful and not merely casual, accidental or unintentional.
When this was raised with Applicants' Counsel during closing submissions, he submitted that he understood the Executors had been served with the order but conceded that he did not have an affidavit of service (T121.3-9). He submitted that knowledge should be inferred as they responded to the order by filing the First Accounts and that the preparation of the First Accounts by Mr Rapson in the way they were filed must have been intentional and not something done by mistake (T122.2-3). Counsel for the Executors did not submitted that any one of the Executors was not sufficiently on notice of the order or that the transaction information that was missing from the First Accounts was the result of some casual, accidental or unintentional act.
In light of the Executors' position at the hearing, and in circumstances where Order 6 was made in proceedings to which the Executors were a party and the First Accounts were filed by their solicitor seemingly in response to and purportedly in compliance with Order 6, I am satisfied that the Executors were on notice and had knowledge of Lindsay J's orders and that the breach constituted by the 27 months of missing information was the result of a deliberate act.
That said, the conclusion that I have come to is that this is a case where the court should exercise its discretion so as to not make a finding that the Executors are in continuing contempt of court as a consequence of their breach of Order 6. The Executors' attempt to comply with Order 6 may have been ill-advised but this is not a case where the Executors failed to comply with the order in the sense that they failed to produce any information to the Applicants at all or acted in complete disregard of the court's orders. The breach that I have found has also been fully remedied by the provision of the Rapson Spreadsheet in response to and in purported compliance with Hallen J's remedial orders. In those circumstances, I would characterise the Executors' breach of Order 6 as giving rise to a technical contempt and am not persuaded that making an order that they are guilty of civil contempt for failing to comply with Lindsay J's orders would represent an appropriate way of vindicating the court's authority or disciplining the Executors in this case: Australasian Meat Industry Employees Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98 at 113; [1986] HCA 46.
[13]
Charges in relation to Hallen J's orders
The Amended Statements of Charge in relation to Hallen J's orders, are in the following terms:
1. On 11 February 2020, the Executors purported to file accounts in accordance with Order 6 made by Lindsay on 25 November 2020.
2. On 24 July 2020, the Executors purported to comply with the orders made by Hallen J on 24 June 2020 by filing and serving an affidavit of John Rapson sworn on 24 July 2020, an accountant engaged on behalf of the Executors, to which was attached a form of accounts ('the Rapson Spreadsheet').
3. On 19 August 2020, the Executors served on the solicitor for the plaintiffs a folder of documents ('the Folder') purportedly pursuant to Orders 5 and 6 made by Hallen J on 24 June 2020.
4. On 21 August 2020, the Executors served upon the solicitors for the plaintiffs statements in respect to six bank accounts of the Deceased for the periods set out below, namely:
i National Australia Bank account xx37 (from 2 September 2014 to 17 November 2014 and 31 May 2016 to 31 May 2016).
ii National Australia Bank account xx14 (from 1 November 2014 to 31 May 2016).
iii. National Australia Bank account xx41 (from 11 October 2014 to 31 May 2016).
iv National Australia Bank account xx14 (from 11 November 2014 to 31 May 2016).
v Greater Building Society account xx97 (from 30 June 2014 to 31 December 2015).
vi Greater Building Society account xx43 (from 30 June 2014 to 30 June 2016).
not previously provided in the Folder as required by Order 4 made by Hallen J on 24 June 2020.
5. On 28 August 2020, the Executors served upon the solicitors for the plaintiffs statements in respect to Macquarie Bank Cash Management account number xx46 held in the name of the Deceased not previously provided in the Folder as required by Order 4 made by Hallen J on 24 June 2020.
6. On 28 August 2020, the Executors served upon the solicitors for the plaintiffs a single page online statement print out for the Greater Building Society access account number xx97 held in the name of the Deceased which disclosed a statement balance of zero and no transactions, which had not been provided in the Folder as required by Order 4 made by Hallen J on 24 June 2020.
7. On 8 September 2020, the Executors served on the solicitors for the plaintiffs account statements for National Australia Bank account number xx31 for the period from 29 November 2014 to 1 July 2016 held in the name of the Deceased not previously provided in the Folder as required by Order 4 made by Hallen J on 24 June 2020 and not provided with the 6 bank account statements on 21 August 2020 as identified in paragraph 4 above.
8. On 16 September 2020, the Executors served upon the solicitors for the plaintiffs a bundle of dockets comprising 392 pages consisting of tax invoices for legal expenses paid on behalf of the estate of the Deceased which the Executors had had not provided in the Folder as required by Order 4 made by Hallen J on 24 June 2020.
9. On 16 September 2020, the Executors served upon the solicitors for the plaintiffs affidavits by only two of the Executors, namely Mark Goldspring and Marianne Goodchild, purporting to verify the estate accounts as contained in the affidavit of John Rapson identified in paragraph 2 above.
10. On 17 September 2020, the Executors served upon the solicitors for the plaintiffs an affidavit of Peter Goldspring, purporting to verify the form of estate accounts included in the affidavit of John Rapson identified in paragraph 2 above.
11. Despite the provision of the affidavit of John Rapson identified in paragraph 2 above and the provision of the additional material in the period from 19 August 2020 to 17 September 2020 as identified in paragraphs 3 to 10 above and which additional material was required by the Hallen J Orders to be served no later than 24 July 2020, the Executors have failed to comply with the following orders made by Hallen J on 24 June 2020:
a. Order 1 (i), copies of authorities to pay amounts expended on professional assistance such as a solicitor, counsel, accountant, valuer or real estate agent have not been provided.
b. The individual items contained in the Rapson Spreadsheet are not numbered consecutively as required by Order 3, nor are the 14 pages of the Rapson Spreadsheet paginated or numbered.
c. Order 1, the Rapson Spreadsheet does not provide information in date order, being prepared in individual components by way of bank accounts and/or other heads of expense or other accounting headings.
d. The Rapson Spreadsheet contains no accounting for the Macquarie Share Portfolio Account xx29 as disclosed in the Inventory of Property as having a credit balance of $155,604.02 as at the date of death of the Deceased, other than a reference on the 10th unnumbered page of the Rapson Spreadsheet to the receipt of money from Macquarie Bank in an amount of $97,356.85 on 4 April 2017. The Macquarie Share Portfolio Account xx29 was in existence from a date prior to the death of the deceased on 2 November 2014 until at least 4 April 2017, but no account statements have been produced to provide a review of the transactions affecting that account as required by Order 4.
e. The Folder contains 385 pages none of which are paginated, nor do they contain any reference to identify or correspond to an entry in the Rapson Spreadsheet.
f. The Rapson Spreadsheet after excluding all blank lines and headings contains 998 individual line entries. Order 1 required the production of documents evidencing each receipt and expense in the Accounts. The Folder only contains evidence of documents representing approximately 39% of the income and expense items recorded in the Rapson Spreadsheet (385/998x100).
g. Order 1, the documents in the Folder are not in chronological order or other logical order.
h. The individual line entries in the Rapson Spreadsheet are not cross-referenced in any way to enable one to identify a receipt or expense item in the Rapson Spreadsheet with a document evidencing a receipt or expense contained in the Folder.
i. The Rapson Spreadsheet contains 62 line entries the receipt of monies or the payment of expense items on behalf of the Estate. No documents supporting those 62 journal entries have been provided as required by Orders 1(d) and 1(e).
j. Order 1(b), 1(d) and (e , on the 14th unnumbered page of the Rapson Spreadsheet, there are 6 profit distributions dated 30 June 2015, 30 June 2016, 30 June 2017, 30 June 2007, 30 June 2018, 30 June 2019 and 30 June 2020 respectively totalling $207,205.18. No information or documents are provided in the Folder to identify:
i. The source of those profit distributions as required by Order 1(b).
ii The bank accounts disclosing the account into which those amounts were deposited.
iii No documents are provided in the Folder disclosing what has happened to those funds).
k. On the first unnumbered page of the Rapson Spreadsheet, there is an amount recorded on 14 January 2016 in the sum of $24,982.60. The description for that entry is 'Unknown - Unknown Deposit - more investigations to discover'. No documents have been provided in the Folder to identify the source of that deposit as required by Orders 1(b) and 1(d).
12. By reason of the matters as set out in subparagraphs 11(a) to 11(k) above it is almost impossible to reconcile the entries in the Rapson Spreadsheet with the documents in the Folder, including those additional documents produced as set out in paragraphs 4 to 8 above, to constitute a form of accounts in common form as required by the orders of Hallen J dated 24 June 2020.
[14]
Threshold issues: imprecision with charges and abuse of process
The Executors also raised two matters which they submitted warranted dismissal of the charges in relation to Lindsay J's orders.
The Executors' primary submission was that the charges should be dismissed because they were bad for imprecision of expression, by reference to the principles outlined at [60] - [61] above.
They also submitted that the contempt application amounted to an abuse of process because the purpose of the finding of contempt is to support the relief sought by the Amended Motion for the revocation of the grant of probate, rather than what a civil contempt proceeding is designed for, arguing that the Applicants had attempted to run the application as a revocation proceeding.
I have already referred to the principles applicable to whether these proceedings amount to an abuse of process (at [81] - [82] above). For the same reasons as those set out at [83]-[88] above, I reject the Applicants' submission that the contempt charges in relation to Hallen J's orders should be summarily dismissed as an abuse of process. In particular, I am not persuaded by the Executors' submission that, by analogy with the observations of Kirby JA in New South Wales Bar Association v Muirhead (1988) 14 NSWLR 173 at 182-183, that it was unfair for the Executors (and the court) to have to deal with a contempt application that was "ill-considered and lacks discipline" in which the ultimate outcome (according to the Applicants) would be a remedy for which the contempt proceeding is not designed for, namely the revocation of probate (T140.28-37). As noted earlier, the hearing of the contempt charges was separated from the hearing of the other aspects of the Applicants' Amended Motion and the court has not taken into account on this contempt application the Applicants' evidence or submissions that go to matters of discretion on the broader probate challenge.
Further, giving the Applicants the benefit of the doubt and noting Mr Nolan's evidence in cross-examination that the purpose of the contempt application was not to seek revocation of probate granted to the Executor or to avoid filing a statement of claim (T44.47-T45.23), I would treat the Applicants' conduct of this contempt application as reflective of a genuine perception that the Executors have failed to comply with the court's orders and the need to protect and vindicate their personal interests in respect of the deceased's estate.
Turning to the submission regarding the form of the charges, the Executors submitted that the charges did not serve the fundamental purpose of informing them and the court how the Applicants case was to be presented and how it was to be met and adjudicated. They argued that the charges induced doubt rather than certainty as they left the Applicants with considerable discretion to frame their case once the evidence was complete.
It was asserted in the Executors' written submissions that paragraph 11 of the Amended Statements of Charge alleged eleven breaches, although in oral submissions, the matters referred to in (a)-(k) of paragraph 11 were described as "cumulative", like the breaches referred to in charges relating to Lindsay J's orders. Pausing here, for the reasons referred at [73]-[74] above, I do not accept the Executors' submission that the matters referred to in (a)-(k) of paragraph 11 are cumulative in the sense that each and every matter needs to be established in order to establish non-compliance with Hallen J's orders (as charged).
Further, and leaving to one side issues with the drafting of some of the sub-paragraphs and their overlap (which I deal with below), in my view, the gist or substance of the allegation in paragraph 11 is sufficiently clear, namely, that the Executors have failed to comply with (and are in breach of) Hallen J's orders in various respects notwithstanding the information contained in the Rapson Spreadsheet and the documents and verifying affidavits served by the Executors during the period 24 July 2020 to 17 September 2020. In other words, the charge in paragraph 11 involves an allegation of multiple failures to comply with Hallen J's orders as set out in the relevant sub-paragraphs (even after having regard to the various materials that had been served), which failures by themselves or together with another sub-paragraph (see, for example, (e) and (h)) are asserted by the Applicants to be sufficient to establish non-compliance in breach of Hallen J's orders.
The Executors also submitted that each sub-paragraph to paragraph 11 is defective for the following reasons: where the complaint is about documents not being produced, the document is not identified and there is no allegation that the document was able to be produced (for example, [11(a)]); not all of the alleged breaches accurately reflect the order said to have been breached (for example, [11(b)]) which refers to a lack of pagination); multiple allegations are made in each sub-paragraph (for example, [11(b)]); not all alleged breaches are tethered to an order (for example [11(e)]), and there is ambiguity in some of the orders (for example, [11(d)]).
As to paragraph 12 of the charges, the Executors submitted that the paragraph is dependent upon proof of each and every matter in paragraph 11, such that if one matter in paragraph 11 is not established then paragraph 12 falls away. They also submitted that paragraph 12 is fundamentally impermissible because of the imprecision which arises from the drafting of that paragraph referring, for example, to the expression "almost impossible to reconcile" which is said to involve not an allegation of an act or omission by the Executors but indicates the subjective judgement of the Applicants.
The Applicants contended that each of the matters alleged in paragraphs 11(a) to (k) were properly particularised and made clear what the case was against the Executors. As to paragraph 12, the Applicants Counsel described it as a "separate ground", "a "rolled-up paragraph" and "not part covered by paragraph 11" (T117.47, T118.15, T162.42); submitted that the charge was clear; invited the court to pick up a document contained in the "folder" and try and find where it was in the Rapson Spreadsheet (T117.48) and referred to it being a "very time-consuming process"; and referred to the "impossible task" of reconciling the entries in the folder without pagination or being sorted into chronological order (T118.15-24).
Leaving to one side that I did attempt and was able to cross-reference a document in the folder with an entry in the Rapson Spreadsheet, I am not persuaded by the Applicants' submissions and agree with the Executors that the Amended Statement of Charge based on paragraph 12 should be dismissed.
In my view, paragraph 12 is bad in form as it does not identify with sufficient precision what is said to constitute the particular conduct that entailed disobedience in breach of the court's orders and is alleged to constitute the contempt by reference to the requirements of Hallen J's orders. I also accept the Executors' submission that the meaning of the phrase "almost impossible to reconcile" is unclear, involves a subjective judgement about what is "almost impossible to do" and is open to several constructions (one of which is that all the documents in the Folder do not relate to the Rapson Spreadsheet, another is that some documents match and some do not, and another is that most of the items in the account do not match up). Further, the use of the words "almost impossible" indicates that it is possible to reconcile the accounts with the documents, consistent with some of Mr Nolan's evidence which indicates that he was able to reconcile tax invoices and other expense information with the Rapson Spreadsheet and identify entries that were not supported by the documents (see for example, [42] - [43] of his 30 September 2020 affidavit and Exhibit C). To my mind, paragraph 12 is akin to alleging that the materials are difficult to understand and follow rather than, as required, identifying the particular omission which is said to give rise to the breach of the obligation required for compliance with Hallen J's orders.
I should record that if I am wrong to dismiss the charge in paragraph 12 on this basis, I would have dismissed it for the reason that I am not satisfied that each and every matter referred to in subparagraphs 11(a) - 11(k) has been made out (as discussed below). As the Applicants' Counsel accepted in closing submissions, if the individual elements in paragraphs 11(a) - (k) are not established, he could not press the ground of contempt referred to in paragraph 12 in the way it is framed (T163.33-34). He also did not make any submission to suggest that the Applicants would seek to amend that charge.
[15]
Paragraphs 11(a) to (k) of the Amended Statements of Charge
In the following section I deal with the submissions regarding the form of the charges as constituted by paragraphs 11(a) to (k) of the Amended Statements of Charge and whether the Applicants have established that the Executors failed to comply with Hallen J's orders in the manner alleged by each of those sub-paragraphs. My findings are limited to the matters referred to in those sub-paragraphs, as they comprise the breaches that the Applicants have alleged give rise to their allegation of civil contempt in respect of Hallen J's orders. It follows that I have not addressed the other assertions made by the Applicants in their written and oral submissions about the Executors conduct in relation to the deceased's estate, such as that the Executors have failed to "pass accounts in common form… within 12 months of the grant of probate" (at [60]), failed to comply with their obligation to "file accounts in common form in respect of the administration of the deceased's estate"… which is "sufficient by itself to establish willful [sic] neglect or default" (at [61]), failed to verify the accounts as required by Hallen J's orders (T121.28-30) or "failed in … [their] duty" to bring forward the material properly in support of the accounts of the deceased's estate (T119.40-49).
[16]
11(a): Order 1 (i), copies of authorities to pay amounts expended on professional assistance such as a solicitor, counsel, accountant, valuer or real estate agent have not been provided
The Executors submitted that this aspect of the charges was vague and did not contain the requisite precision, relying on the principles referred to at [60] - [61] above. They argued that the sub-paragraph is defective as it complains that the "authorities" have not been produced but the relevant authorities are not identified. They also argued that the charge was defective as there is no allegation made that the invoices were able to be produced by the Executors.
The Applicants submitted that the charge in the sub-paragraph is clear, arguing that the copies of the "authorities" that have not been provided are invoices from Catalyst Legal. They also submitted that breach of Hallen J's orders has been established as Order 4 of Hallen J's orders required the Executors to prepare a folder containing "all invoices" (not just some) and Mr Nolan's evidence (and Exhibit C) demonstrates that tax invoices in relation to 43 payments made to Catalyst Legal during the period 15 December 2014 to 7 November 2019 were missing from the documents produced by the Executors.
I am not persuaded by the Applicants' submissions and have concluded that there is ambiguity and imprecision by the use of the expression "authorities" in the formulation of the charge in sub-paragraph 11(a), such that the Applicants have not established any failure to comply.
In my view, the words "any authority to pay" in Hallen J's orders would be understood as referring to the approval given to someone to make a payment of an invoice on behalf of the estate, consistent with the general meaning of the expression which connotes some permission, power or legal right provided to a party to make a payment. The requirement in order 1(i) of Hallen J's orders for the account to include "any authority to pay" is also distinct from the additional separate obligation that directed the Executors to prepare a folder containing "all invoices, receipts…or other evidence of transactions shown in the accounts". In other words, the charge in sub-paragraph 11(a) is drafted as alleging that the Executors have failed to comply with their obligation to provide evidence of a different type of document to that which is the subject of Mr Nolan's evidence.
Even if I was persuaded that sub-paragraph 11(a) should be construed as being directed to an alleged failure to provide "invoices" relating to professional assistance (as required by order 4), in my view, the charge as drafted is defective as it suggests that copies of invoices were not provided at all, contrary to the allegation made at the hearing that some but not all were produced. As the principles referred to above identify, a deficiency with a charge cannot be remedied by resort to Mr Nolan's affidavit evidence or the contents of Exhibit C.
I would accept that the Executors have the power to produce invoices from Catalyst Legal and further attention might have been paid to what was required by order 4 in relation to their production. However, in circumstances where Mr Nolan's evidence indicates that 392 pages of documents, including 89 invoices, relating to payments of legal expenses referred to in the Rapson Spreadsheet have already been produced by the Executors (at [42(a)], [43(c)], [43(d)] and [43(f)] of Mr Nolan's 30 September affidavit), I find it difficult to accept that the Applicants have established that the Executors' failure to produce the invoices referred to in Exhibit C amounted to a wilful default of their obligations in contempt of the court's processes.
For these reasons, I am satisfied that this charge should be dismissed.
[17]
11 (b) and (c): Rapson Spreadsheet does not number individual items consecutively, is not paginated or numbered and does not provide information in date order
The Applicants assert that the Rapson Spreadsheet fails to comply with Hallen J's orders as it fails to number the items in the spreadsheet consecutively (as required by Order 3), does not paginate or number the 14 pages of the spreadsheet, or provide information in date order (as required by Order 1).
The first issue with this submission is that Hallen J's orders do not, by their terms, require "pagination" of the Spreadsheet or "numbering" other than in respect of the items of the account statement which are to be numbered consecutively.
The evidence demonstrates that the Rapson Spreadsheet served in the printed form attached to Catalyst Legal's email dated 24 July 2020 did not include consecutive numbering next to the items of the account. However, in the context where the Excel version of the Rapson Spreadsheet that was made available to Mr Nolan included a unique number next to each line item which were numbered consecutively and Mr Nolan accepted in cross examination that his complaint is really about the lack of numbering on the printed version, I would characterise the Executors' failure to include consecutive numbering on the printed Rapson Spreadsheet as a technical breach of Order 3 only.
As to the complaint that the spreadsheet does not provide information in date order, in my view, Hallen J's orders did not require that all of the items referred to in the account statement be listed in date order. Rather, Order 1 provided that the form of accounts, in respect of the property comprising the deceased's estate, must commence from the date of death, presumably to deal with the fact that the First Accounts were missing information from that date and only commenced on 1 July 2016. Further, and as the Executors submitted, the transaction information included in the Rapson Spreadsheet was provided in date order, albeit in grouped categories that, according to Catalyst Legal's letter dated 16 September 2020, were intended to enable the items to be more readily accessed for the Applicants' benefit.
It follows that I have concluded that the Applicants have failed to establish the charges in sub-paragraphs 11(b) and (c) other than in respect of a technical breach for failing to include consecutive numbering on the printed version of the Rapson Spreadsheet.
[18]
11(d): No accounting or account statements for the Macquarie Share Account
The Executors submitted that this charge was ambiguous as it appeared to include "commentary" rather than specifying a charge that gave rise to a breach of an order by Hallen J (T136.17-18).
While I accept that sub-paragraph 11(d) could have been drafted more clearly, in my view, it is sufficient to identify the gist or substance of the charge against the Executors, which is that the Executors have failed to comply with the orders of Hallen J in that:
1. the Rapson Spreadsheet does not include accounting for the Macquarie Share Account, other than a reference at item 675 to the receipt of the money from Macquarie Bank in the amount of $97,356.85 on 4 April 2017; and
2. no account statements for the Macquarie Share Account were produced to provide a review of the transactions affecting that account, as required by Order 4.
As to the first allegation, I accept that Mr Nolan conceded in cross examination that he had received information from the Executors that identified a Capital Gain Tax calculation in respect of the estate's shares (as at 30 October 2019), which identified a loss to the estate and gross receipts of $97,374.00 (CB473, T59.21-44), and that the Rapson spreadsheet included entries in respect of the Macquarie CM Account totalling $180,001.34, which included the receipt of the money from the sale of shares on 5 April 2014 in the amount of $97,356.85 (T58.25-32). However, based on the contents of the Rapson Spreadsheet and Mr Nolan's evidence, I am satisfied, beyond reasonable doubt, that the material provided by the Executors is not a full account in respect of the Macquarie Share Account as required by Orders 1 and 4 of Hallen J's orders.
In particular, the Rapson Spreadsheet does not identify the nature and value of the Macquarie Share Account as at the date of the deceased's death, which the Inventory of Property identified had a credit balance valued at $155,604.02 at that time, as required by Order 1(a) of Hallen J's orders. Nor does it identify the asset loss that occurred, including the nature and value of that loss, as required by Order 1(h) of Hallen J's orders.
I do not accept the Executors' submission that it is not clear why the "bank account" would disclose anything in relation to the sale of shares within the share portfolio. To my mind, that submission misses the point. The transaction information and documents that should have been produced, but were not, are the account statements and documentary evidence relating to the Macquarie Share Account, not the Macquarie CM Account statements that have been produced.
I am also satisfied beyond reasonable doubt that documents relating to the Macquarie Share Account were not produced by the Executors, such as the account statement or other evidence that recorded the transaction referred to in the Rapson Spreadsheet of the receipt of the money from Macquarie Bank in the amount of $97,356.85 on 4 April 2017 in relation to the sale of shares. The Executors were requested to provide the Applicants with the accounts held in relation to Macquarie Share Account, by letter dated 27 August 2020 (above at [38]), but did not produce them and no explanation was provided as to why they were not produced at that time or at the hearing.
The details contained in the Inventory of Property and in the Capital Gain Tax calculation prepared as at 30 October 2019, and the entry in the Rapson Spreadsheet relating to the receipt of money from the sale of shares, also satisfy me that documents relating to the Macquarie Share Account had once been in the Executors' possession, custody or power and some remained in their power at the relevant time, namely between 24 June 2020 and 24 July 2020. The Rapson Spreadsheet was prepared by the accountant instructed by the estate, who must have had access to documents relating to the transactions listed in the spreadsheet, including in relation to the sale of the shares, which documents would have remained in the Executors' power to produce.
I am also satisfied that the breach was not casual, accidental or unintentional in the relevant sense. The Executors were ordered to produce a complete and detailed form of accounts and evidence of transactions shown in the accounts. They ought to have appreciated that information and documents that established the transactions in relation to the share account were required to be produced.
[19]
11(e), (g) and (h): Folder not paginated, not in chronological or other logical order and no cross-referencing between the Folder and the Rapson Spreadsheet
As to the matters referred to in these paragraphs, I accept the Executors' submission that the Applicants have not established any breach of Hallen J's orders in the manner alleged.
The difficulty with the charges is that, in their terms, Hallen J's orders did not require the "Folder" of documents to be paginated or contain any references that identified, corresponded to or cross-referenced any of the entries in the Rapson Spreadsheet. His Honour's orders did not refer to any requirement for the documents in the Folder to be placed in chronological or some "other logical" order or for the individual line entries in the Rapson Spreadsheet to be cross-referenced in any way to enable the identification of a receipt or an expense item in document in the Folder, as alleged in sub-paragraph 11(h). In any case, I do not accept that that the allegation of some "other logical order" is sufficiently precise to identify the gist or substance of the charge.
Nor do I accept the Applicants' submission that the aspects of Hallen J's orders that referred to the form of accounts commencing from the date of death and the items of the account statement being numbered consecutively should be interpreted as implicitly requiring the Folder of documents to do the same. As the Executors submitted, if Hallen J wished to require the Folder to be paginated and cross-referenced to the accounts in that way, it is to be expected that he would have provided for those matters in the orders, as he did at Order 3.
The Folder and other materials may have been produced to the Applicants in a way that was unhelpful and difficult to understand. But, in my view, production in such a manner is insufficient to establish any failure to comply with and breach of the orders made by Hallen J, of the nature alleged in sub- paragraphs 11(e), (g) and (h).
[20]
11(f): Folder only contains evidence of documents representing approximately 39% of the income and expense items recorded in the Rapson Spreadsheet
The Executors submitted, and I accept, that this charge should also be dismissed.
The issue with this charge is that the allegation of breach is based on the documents contained in the Folder only (asserting that they represent approximately 39% of the items recorded in the Rapson Spreadsheet) and fails to take account of the additional material provided by the Executors during the period 21 August 2020 to 16 September 2020, as referred to in paragraphs 4 to 8 of the Statement of Charges and the introductory words to paragraph 11. Put another way, the allegation that the Executors failed to comply with Order 1 (which presumably should refer to Order 4, as the order that required the production of documents) because the Folder only contained evidence of 39% of the items in the statement of accounts is unsupported by facts referred to in the Amended Statements of Charge and evidence adduced by the Applicants on this application, which makes plain that further materials relating to the income and expense items recorded in the Rapson Spreadsheet were produced by the Executors and received by the Applicants.
In addition, I do not accept that allocating a percentage figure to the income and expense items recorded in the Rapson Spreadsheet based on the number of pages in the Folder accurately represents and is sufficient to prove breach in circumstances where the percentage figure is premised on an assumption that a shortfall in the number of pages produced to the number of income and expense items referred to in the Rapson Spreadsheet means that documents have not been produced in breach of Hallen J's orders. Leaving to one side that this approach does not attempt to deal with whether any such document exists or remains in the possession, custody or power of the Executors, it ignores the possibility that one document may evidence multiple items referred to in the accounts, such as a bank statement that has multiple entries relating to receipts, interest, dividends, payments of charges and distributions to beneficiaries.
[21]
11(i) and (j): No documents supporting 62 journal entries and no information or documents provided in relation to six profit distributions referred to in the Rapson Spreadsheet
These charges concern 62 line entries included in the Rapson Spreadsheet that are described as "Manual Journal", under the column headed "Source". The line entries that are described in this way include six entries under each of the categories "Profit Distribution" (CB530) (Six Profit Distributions) and "Distribution of Profit" (CB517). They refer to "Profit Distributions" made every 30 June from 2015 to 2020 years that total around $207,000, an entry under the "Bank fees and charges" category on 30 June 2017 (for $0.05), and entries under the category "Capital Contributed from Fred" that refer, for example, to "Pick up cost base of the Lowe's Building" on 2 November 2014 in the amount of $236,498.17. Each of the entries includes an amount that is shown as a "debit" or "credit" in the Spreadsheet.
It was common ground that the materials produced by the Executors in response to Hallen J's orders did not include documents that supported these Manual Journal line entries, including the Six Profit Distributions referred to above.
The Applicants contended that it is to be expected that there would be bank accounts and other documents that would show where the profit distributions were deposited and what has happened to the funds, as well as other documents that support the Manual Journal entries that relate to the various credits and debits recorded.
I was not persuaded by the Applicants' submission that bank statements existed in relation to the amounts referred to in these entries. As the Executors' Counsel stated in oral submissions, by reference to the profit distributions entries, at the end of each financial year, there were two profit distribution entries, suggesting that they represented balancing entries of payments in and out (T133.22-36).
That said, I accept the Applicants' submission that some documents must exist that evidence the transactions described as Manual Journal entries. As the Executors' Counsel stated during oral submissions, there are no underlying documents besides, perhaps, the "actual journal entry" (T133.41-42). The existence of a document of that nature is, in my view, supported by the information under the "Reference" column which, in respect of all the Manual Journal line entries identified a # symbol and then a number (for example, #387 as the reference for the 30 June 2019 profit distribution in the sum of $67,106.76 appearing as a debit under the category "Distribution of Profit" and also appearing as the reference for the 30 June 2016 profit distribution in the sum of $67,106.76 appearing as a credit under the category "Profit Distribution".
In that context, I do not accept the Executors' submission that the Applicants have not established the existence of any documents in relation to the Manual Journal entries. The descriptions of the Manual Journal entries in the Rapson Spreadsheet, which all comprise credit or debit account transactions in relation to the deceased's estate, and various references, satisfy me that some form of journal entry document existed (whether in hard copy or electronic form) and was accessed by Mr Rapson when he prepared his spreadsheet. It could only be by reference to such documents that the Rapson Spreadsheet was prepared, in so far as that spreadsheet contains details of 62 Manual Journal account transactions. Either the Executors had the documents or Mr Rapson had them, in which case they were within the Executors power or control as documents relating to their administration of the deceased's estate. As noted above, the documents were not produced as part of the material in compliance with Hallen J's orders.
The purpose of Hallen J's orders was to require accounts and documents to be provided to enable the Executors' accounts to be tested or verified by the Applicants. The orders expressly referred to the production of a folder containing all invoices, documents evidencing electronic deposits and disbursements, receipts for any distributions to beneficiaries and "other evidence of transactions shown in the accounts" (Order 4). The failure by the Executors to produce documents that were apparently in existence is not, in my view, justified, as the Executors submitted, because the spreadsheet entries could be challenged by the Applicants. The obligation on the Executors was to produce a Folder containing the documents evidencing the transaction and they have not done so in accordance with then orders made.
It follows, that I am satisfied beyond reasonable doubt that, in breach of Order 4 of Hallen J's orders, the Executors failed to produce documents they had in their possession, custody or power that evidenced the Manual Journal transactions listed in the Rapson Spreadsheet, including the Six Profit Distributions referred to in paragraph 11(j) of the charges.
I am also satisfied that this breach was not casual, accidental or unintentional in the relevant sense. In my view, the Executors ought to have appreciated that the documents upon which Mr Rapson relied to prepare the Rapson Spreadsheet, including the actual journal entries that evidenced the 62 line items (and Six Profit Distributions) would be required notwithstanding they referenced "Manual Journal" as the source.
[22]
11(k): No document provided in the Folder to identify the source of the Unknown Deposit
By this sub-paragraph, the Applicants allege that the Executors have failed to comply with the Hallen J's orders (as required by Orders 1(b) and 1(d)) as no documents were provided in the Folder to identify the source of the transaction described in the Rapson Spreadsheet as "Unknown-Unknown Deposit - more investigations to discover" of $24,982.60, received on 14 January 2016 under the category "Capital contributed from Fred". The Applicants argued that no explanation was provided by Mr Rapson of what "investigations" were required, whether they had been undertaken (and if so, what they disclosed) and submitted that some evidence by way of a deposit slip, transfer document or something else should have been obtained from the bank and produced by the Executors to indicate where the money came from (T117.2-7).
I do not accept that submission. Simply put, and as the Applicants' Counsel accepted at the hearing, the bank statement that records the "Unknown - Unknown Deposit" transaction has already been produced by the Executors (T117.18). The fact that it might not identify the source of the payment does not mean that the Executors have failed to comply with Hallen J's orders. Those orders required the Executors to produce the bank statement on which the information contained in the Spreadsheet was based, which they have done.
In that context, I am not satisfied beyond reasonable doubt that the Applicants have established that further documents relating to the "Unknown - Unknown Deposit" were in existence and in the Executors' possession, custody or power at the relevant time.
It follows that I am not satisfied that the Applicants have established that the Executors' failed to comply with and breached Hallen J's orders, as referred to in sub-paragraph 11(k).
[23]
Conclusion on contempt charge relating to Hallen J
In summary, I am satisfied that the Applicants have established, beyond reasonable doubt, that the Executors are in breach of Orders 1 and 4 of Hallen J's orders as the Rapson Spreadsheet and the documents produced during the period 19 August 2020 to 16 September 2020 failed to include a full account of transactions relating to the Macquarie Share Account (as referred to in [11(d)] of the Charges) and to produce documents in relation to the line items referred to in the Rapson Spreadsheet as the 62 "Manual Journal" line entries, including in relation to the six profit distributions (as referred to in [11(i) and (j)] of the Charges) and that those breaches have not been remedied and are continuing.
For similar reasons to those set out at [108] and [109] above, I am also satisfied beyond reasonable doubt that the Executors were on notice and had knowledge of Hallen J's orders and that the breaches were the result of deliberate acts undertaken on their instructions and on their behalf, were not casual, accidental or unintentional. Relevantly, the Executors must have been aware of Hallen J's orders given the requirement to verify the accounts on affidavit, which they did to varying degrees.
Thus, I am satisfied, to the requisite standard, that the Applicants have established the elements of civil contempt by the Executors for breach of Hallen J's orders.
[24]
Conclusions and orders
For these reasons, I find the Executors have committed civil contempt of court by failing to comply with Hallen J's orders of 24 June 2020 by failing to include a full account in relation to the Macquarie Share Account or to produce documents in relation to the line items referred to in the Rapson Spreadsheet as "Manual Journal" entries, which include the Six Profit Distributions.
I am not otherwise satisfied that the Applicants have established that the Executors are in contempt of court in failing to comply with Lindsay J's orders or the other aspects of Hallen J's orders referred to in the Amended Statement of Charges and will dismiss those charges against the Executors.
I have deferred making any orders at this stage to enable the parties to consider these reasons.
I will hear the parties on the question of punishment (if any), as sought in Order 2 of the Amended Motion, and on the issue of costs.
The parties should confer and, within 7 days, provide an agreed timetable to deal with the remaining issues of punishment (if any), costs and what orders should be made as a consequence of these reasons. The proposed timetable should provide for the filing and service of any further evidence, a hearing on those issues and next steps in relation to the Applicants' Amended Motion. The parties are at liberty to approach my Associate if agreement on those matters cannot be reached within 7 days.
[25]
Endnotes
Transcript of 15 September 2021 at T2.44-T3.34.
Pages 114 to 505 of Court Book 4.
[26]
Amendments
15 June 2022 - 15/06/2022 - [68] "Applicants" changed to "Executors"
15/06/2022 - [136] spacing error corrected
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: 15 June 2022
] NSWSC 741
O'Connor v Hough [2016] 2 Qd R 543; [2016] QSC 4
O'Shane v Harbour Radio Pty Ltd (2013) 85 NSWLR 698; [2013] NSWCA 315
Pang v Bydand Holdings Pty Ltd [2011] NSWCA 69
Re Jimmy's Recipe Pty Ltd [2020] NSWSC 93
Re Modern Woodcraft Pty Ltd (in liq) (1997) 75 FCR 245
Rock v Henderson [2021] NSWCA 155
Torlonia v Wright [2016] NSWSC 1139
Williams v Spautz (1992) 174 CLR 509; [1992] HCA 34
Witham v Holloway (1995) 183 CLR 525
Witness JA v Scott [2015] QCA 285
Texts Cited: The Laws of Australia (2022, Thomson Reuters)
Ritchie's Uniform Civil Procedure New South Wales (loose-leaf, LexisNexis Australia)
Category: Principal judgment
Parties: Katherine Mary Jordan (First Applicant/Plaintiff)
Rhonda Fay Thomas (Second Applicant/Plaintiff)
Lynette June Goldspring (Third Applicant/Plaintiff)