Pico Holdings, Inc v Voss [2002] VSC 319

Supreme Court of Victoria|2002-08-09|Before: GILLARD J.

CONTEMPT OF COURT - Breach of Mareva injunction - Serious, defiant and contumacious breach - Plea of guilty - Fine - Solicitor-client costs.

This is the return of a summons issued in the proceeding by the plaintiff, seeking orders that the defendant be punished for contempt of court and that he pay the plaintiff's costs of the summons.

On 29 August 2001, the plaintiff Pico Holdings Inc ("Pico"), issued a writ against the defendant, Peter David Voss ("Mr Voss").

The plaintiff claimed damages from Mr Voss for breach of the Trade Practices Act in respect to alleged false representations made by Mr Voss to the plaintiff. The plaintiff was induced to lend money to a company controlled by Mr Voss, Dominion Capital Pty Ltd ("Dominion Capital"), upon Mr Voss offering, as security for the repayment of the loans, shares held by Dominion Capital in another company called Dominion Wines Pty Ltd ("Dominion Wines"). Mr Voss, at all relevant times, was chairman and managing director of Dominion Capital.

It is alleged that Mr Voss represented to Pico that the shares held by Dominion Capital in Dominion Wines were unencumbered. It is alleged that that was untrue in that on 9 October 1996, Dominion Capital had granted a fixed and floating charge over all its assets and undertaking to the National Australia Bank Limited.

In August 2001, in another proceeding, Pico obtained summary judgment against Dominion Capital for US$1.2M. The company has now gone into liquidation. It is defending in respect of the other loan of US$1M on the basis that the money was not lent but was the payment of a fee.

A Mareva injunction was granted in that proceeding against Dominion Capital on 20 August 2001 by Bongiorno J and later, the order was extended "until further order".

In the present proceeding, Mr Voss has been sued under the Trade Practices Act for damages for false representations made by Dominion Capital in respect of the security for the loans.

On 5 September 2001, application was made by Pico, ex parte, to Beach J for a Mareva injunction against Mr Voss.

On 5 September 2001, Beach J made the following order -

"4. Until the final hearing and determination of this proceeding or further order, the defendant whether by himself, his servants or agents, shall be restrained from disposing of, or dealing with, any of his assets other than for normal living expenses or payment of legal fees in relation to the defence of this proceeding up to a maximum of $5,000 per week."

The Judge also granted orders for substituted service to the effect that Pico could serve any document in the proceeding "by sending it by pre-paid post to 39 de Havilland Road, Mordialloc". This address was the business premises of Dominion Capital.

The learned Judge also directed that a judge authenticate the order. The order was authenticated on 12 September 2001.

On 17 September 2001, Mallesons Stephen Jaques filed an appearance for Mr Voss in the proceeding.

In the meantime, on 13 September 2001, the said firm wrote to the plaintiff's solicitors requesting a copy of the orders made by Beach J on 5 September 2001. On the following day, the plaintiff's solicitors sent a letter and facsimile to Mr Voss at the Mordialloc address notifying him of the orders and also sent the same correspondence to Mr Voss' solicitors.

After receiving the authenticated order, Pico's solicitors, on 11 October 2001, sent a copy of the order to Mr Voss' solicitors.

After Pico had obtained summary judgment against Dominion Capital in the other proceeding, its solicitors, on or about 6 September 2001, caused to be served on the company, a statutory demand. Dominion Capital evidently engaged Mallesons Stephen Jaques to represent it in relation to the matter, and in proceeding No. 7718 of 2001, in this Court, sought to set aside the statutory demand. The solicitor handling the matter, Jeremy John Whelen, apparently was also the solicitor representing Mr Voss in the present proceeding.

On 26 September 2001, Mr Voss swore an affidavit in the Corporations proceeding in which he stated that Dominion Capital was unable to pay the amount claimed by the statutory demand because of the existence of a Mareva order made by Bongiorno J.

"5. Dominion Capital would be in breach of the `mareva' order made by this honourable court if it were to pay the amount claimed by Pico in the statutory demand."

As things turned out, this was incorrect as the order did allow the payment of certain debts.

The importance of what Mr Voss stated is that he had an understanding of the nature and extent of a Mareva injunction. The evidence establishes that by 26 September 2001, Mr Voss had knowledge of the terms of the order made by Beach J in the present proceeding. In the absence of any evidence from him, Mr Voss knew and understood the effect of that order by that date.

In September 1998, Mr Voss and his wife were registered as joint proprietors of a residential property situated at 7 North Road, Brighton ("the property"). The property was mortgaged to the National Australia Bank.

Prior to the issue of the writ in this proceeding, Mr and Mrs Voss, on 4 August 2001, executed a contract of sale of the property for a consideration of $3,050,000. Settlement was to occur on 3 December 2001, or earlier by agreement.

It is clear that the Mareva injunction granted by Beach J precluded the settlement of the sale, which had not occurred by 5 September 2001.

Despite the fact that the Mareva injunction was granted ex parte, and further, that it was to operate until the trial of the proceeding or further order, no application was made by Mr Voss to vary or set aside the order. Because the order was made ex parte, he was entitled, as of right, to bring an application to vary or discharge the order before a judge of the Court.

Despite the presence of the order, on 3 December 2001, Mr and Mrs Voss executed the transfer of the land, the purchasers paid the consideration and the sale was completed.

On 30 November 2001, solicitors acting for Mr and Mrs Voss, in the conveyance transaction, Oakley Thompson and Co, wrote to the solicitors for the purchasers and informed them that the vendors required eight bank cheques as follows -

The reference to "K. Voss" is to the wife of Mr Voss.

In a proceeding in the Federal Court, No. V3063 of 2001, in opposition to Pico's winding up application against Dominion Capital, Mr Voss swore an affidavit on 3 December 2001, and in paragraph 16(c) of the affidavit, stated -

"(c) The house was sold some months ago for $3,050,000 and settlement took place earlier today. My wife and I have already received part of the purchase price. In respect of the remaining $2,747,055.44 at settlement National Australia Bank Limited insisted on:

(i) taking an amount of $1,531,800.31 owed by my wife and I under the mortgages; and

(ii) taking my share of the proceeds of the sale (approximately $586,869.36) partly in satisfaction of the debt owed to the National by Dominion."

On 14 December 2001, Pico's solicitors wrote to Malleson Stephen Jaques, pointing out that it appeared Mr Voss had breached the Mareva injunction and requesting certain information. Mr Voss' solicitors did not respond to that correspondence. A similar letter was written to the National Australia Bank Limited, which responded on 18 December 2001 by stating that the bank was due to receive amounts on the settlement because of "the existence of an all monies mortgage executed by the owners upon acquisition of the relevant security property", and the letter set out the monies which were owing to the bank pursuant to certain facilities. The amounts owing related to home loans and various loans to companies associated with Mr Voss.

On 27 December 2001, Pico's solicitors issued a summons in the present proceeding seeking an order that Mr Voss be punished for contempt of court and alleging that he breached paragraph 4 of the order of Beach J in that "the defendant on or about 3 December 2001 paid an amount of $2,118,669.67 to the National Australia Bank Limited."

Mr Voss contested the proceeding. It was necessary for Pico to investigate the facts concerning the relationship of Mr Voss with the National Australia Bank Limited, and steps were taken in that regard.

On 16 July 2002, Pico filed an amended summons and added an additional charge, which was expressed in these terms -

"That in breach of paragraph 4 of the order of the Honourable Justice Beach ... the defendant, on or about 3 December 2001:

(a) transferred his interest in the property located at 7 North Road Brighton, being more particularly described in Certificate of Title Volume 9700 Folio 686".

Discussions took place between the parties and Mr Voss admitted that he had breached the order by transferring his interest in the property. Upon that admission being made, Pico indicated that it would not proceed with the other charge, namely, the payment of the amount to the bank.

At the hearing, the parties agreed to a bundle of documents being tendered in evidence, and the application was supported by an affidavit of Georgina Elspeth Hayden, a solicitor acting for Pico.

Mr Voss did not file any affidavit material, nor did he give any evidence.

It was pointed out during the course of submissions that his failure to call any evidence, was a matter that the Court could take into account in considering inferences that were open on the evidence. Reference was made to the High Court decision of Weissensteiner v The Queen [1993] HCA 65; (1993) 178 CLR 217. The High Court held that where an accused person elects to remain silent at trial, the silence cannot amount to an implied admission. However, where it would be expected that the accused would have knowledge of certain matters, his failure to give evidence is a circumstance which may bear upon the probative value of evidence that has been given and the tribunal of fact may take it into account for the purpose of evaluating the evidence. The principle was stated by Mason CJ, Deane and Dawson JJ at p.227 as follows -

" ... that it has never really been doubted that when a party to litigation fails to accept an opportunity to place before the court evidence of facts within his or her knowledge which, if they exist at all, would explain or contradict the evidence against that party, the court may more readily accept that evidence. It is not just because uncontradicted evidence is easier or safer to accept than contradicted evidence. That is almost a truism. It is because doubts about the reliability of witnesses or about the inferences to be drawn from the evidence may be more readily discounted in the absence of contradictory evidence from a party who might be expected to give or call it. In particular in a criminal trial hypotheses consistent with innocence may cease to be rational or reasonable in the absence of evidence to support them when that evidence, if it exists at all, must be within the knowledge of the accused." (Emphasis added).

Mr Voss has admitted that he breached the order made by Beach J on 5 September 2001 and through his counsel, has effectively pleaded guilty to the charge of contempt. By his plea of guilty, Mr Voss admits that each of the elements of the charge have been proven against him, beyond reasonable doubt.

The plea of guilty constitutes an admission of all the essential facts which are necessary to constitute the charge, negates any possible defence and provides very strong evidence of guilt. See R v Broadbent [1964] VicRp 94; [1964] VR 733 at 735, and R v Stewart [1960] VicRp 16; [1960] VR 106.

It follows that Mr Voss admits that the order was made by the Court; that it was operating at the time when he breached it; that the terms of the order were clear, unambiguous and capable of compliance; that the order was served upon him; that he had knowledge of the terms of the order; and that he intentionally breached the terms of the order.

It follows that the hearing before the Court was concerned with the question of penalty.

When an injunction order is made, it is the duty of those bound by it to strictly observe the terms of it.

The obligation to obey an order was stated by Romer LJ in Hadkinson v Hadkinson [1952] P 258 at 288. His Lordship emphasised that it was the plain and unqualified obligation of every person against whom an order is made to obey it "unless and until that order is discharged". The obligation applies even if there are doubts about the validity of the order. Whilst it stands, the order must be obeyed to the letter.

The principles stated by Romer LJ were quoted with approval by the Privy Council in Isaacs v Robertson [1985] AC 97 at 102. The latter was a case where there were doubts about the validity of the order.

An order, whilst it is in operation, must be obeyed. It is not open to a person bound by the order to ignore it or to seek to treat it as null and void.

These principles underline the importance of upholding and enforcing the authority of the Court.

As a general proposition, failure to comply with an injunction in a civil proceeding is a civil contempt. However, it can be converted into a criminal contempt. In Witham v Holloway (1995) 183 CLR 525, Brennan, Deane, Toohey and Gaudron JJ at p.530 said -

"In general terms, the distinction between civil and criminal contempt is that a civil contempt involves disobedience to a court order or breach of an undertaking in civil proceedings, whereas a criminal contempt is committed either when there is contempt in the face of the court or there is an interference with the course of justice. However disobedience or breach of an undertaking amounts to a criminal contempt if it involves deliberate defiance, or as it is sometimes said, if it is contumacious." (Emphasis added).

Their Honours went on to state at p.531, that the basis for the distinction lies in the difference between the civil contempt, which is remedial or coercive, and a criminal contempt, which is concerned with the public interest, vindicating judicial authority and maintaining the integrity of judicial process. In other words, criminal contempt is primarily concerned with punishment rather than coercion.

If the degree of misconduct is such that a civil contempt becomes a criminal contempt, this involves the interaction of two important principles: the purpose of any sanction for civil contempt is to enforce the order which had been made and breached, whereas when the contempt is criminal, a penal jurisdiction is to be exercised in the public interest, namely, to uphold the authority and dignity of the law.

The contumacious defiance of a court order strikes at the very heart of the judicial system and puts in jeopardy, the rule of law. The point was made by Lindley LJ in the case of Seward v Patterson [1897] 1 Ch 545 at 556 where his Lordship, speaking in another context, but apposite to the present, said -

"A court will not allow its process to be set at nought and treated with contempt. If an order is contumaciously set at nought the court must bring home to the contemnor that he has attacked the standing and authority of this court. It strikes at the very heart of the rule of law and the importance of upholding the judicial system in this country."

It is vital to the administration of justice in this State, that a person, the subject of an order, obeys it. Disobedience to an order poses a threat to the administration of justice and just as importantly, attacks the very foundation. If a litigant wilfully refuses to obey an order and is not severely punished for wilful disobedience, parties to litigation will have no real confidence in the legal system. This strikes at the very heart of the rule of law. The rule of law will be replaced by self-help outside the legal system. Respect for the system must be maintained. There is a public interest factor in punishing a contemnor in most cases.

Here, the prime objective of punishment is punitive.

At common law, the penalties for contempt were committal or attachment and the Court was empowered to make orders for an indefinite period of imprisonment. At one stage, it was thought that the courts had no common law power to impose a fine in respect of a contempt committed by disobeying court orders. However, any doubts about the power have now been put to rest by the Rules of Court.

The Rules of Court deal with punishment for contempt - see Part 4 of Order 75. The Court is empowered, where the defendant is a natural person, to commit the person to prison or fine him or her, or do both. The Court is also given power, when it imposes a fine, to commit the contemnor to prison until the fine is paid. The Court also has power to suspend the punishment. In addition, the Court can, in its discretion, order costs against the contemnor.

In accordance with the normal principles of sentencing in this State, any finding of fact which has not been admitted by the plea of guilty, has to be established beyond reasonable doubt if it is adverse to the interests of Mr Voss. On the other hand, any facts in his favour have to be established on the balance of probabilities. See R v Storey [1998] 1 VR 359 at 366, R v Olbrich [1999] HCA 54; (1999) 199 CLR 270, and R v Cheung [2001] HCA 67; (2002) 76 ALJR 133.

In my opinion, the breach of the order was serious. Any contempt of court is serious, but there are features about this breach which show a contumacious attitude to the order and a deliberate and flagrant defiance of the authority of this Court.

By the end of September 2001, I am satisfied beyond reasonable doubt, that Mr Voss knew the terms of the order made by Beach J, that he understood their effect, and had an understanding of what a Mareva injunction was. These findings are supported by the affidavit he swore in the Corporations matter in this Court, which shows that he had an understanding of the effect of a Mareva injunction. At that time, both Mr Voss and his company had retained solicitors, the same solicitors were acting for Mr Voss and the companies in the litigation and, in my view, it is proper to draw the inference that Mr Voss was properly advised as to the effect of the injunction. No application was made by Mr Voss to vary or set aside the order.

Mr Voss was aware of the date of settlement of the conveyance. He fully understood that the National Australia Bank had a mortgage over the property and had to be paid on settlement. Despite the presence of the order, Mr Voss proceeded with the conveyance.

Prior to the date of settlement, Mr Voss had discussions with the National Australia Bank. The evidence establishes, in the absence of any evidence from Mr Voss, that after paying out the National Australia Bank's several loans in respect to the property, there was a sum of $1,173,738.72 over, which would belong to Mr and Mrs Voss jointly. However, Mr Voss had given personal guarantees in relation to other debts and the bank was calling upon him to honour those personal guarantees. Discussions took place between Mr Voss and the bank, and the bank decided that it would accept half of the balance of the sale price and Mr Voss arranged with his wife that she would get the other half. These facts are supported by the correspondence between Mr Voss and the bank dated 3 December 2001 and a direction which he must have given to his solicitors with respect to the number of cheques and the payees on settlement, in the letter dated 30 November 2001 from his solicitors to the purchaser's solicitors.

The letter from the bank to Mr Voss was dated 3 December 2001 and after noting that the settlement was to take place that day, went on to provide -

"You will also be aware from our previous correspondence and conversations, that entities for which you have provided the bank with a personal guarantee, are currently irregular, and outside of formal arrangements. We understand that after repayment of direct debt associated with the 7 North Road property, a surplus in the order of $1,173,738.72 will be available, of which the bank has arranged to receive 50% of ($586,869.36) in order to partially satisfy your financial obligations under personal guarantees executed. In terms of previous discussions, the arranged portion of surplus proceeds will be applied as follows - "

(And then the five companies associated with the plaintiff were listed, together with amounts.)

By carrying out this manoeuvre and entering into this arrangement with the bank and Mrs Voss, Mr Voss managed to divert money to his wife, which was jointly the monies of his wife and himself. The Mareva injunction had the effect of holding those funds pending the determination of the proceeding or further order. The amount was substantial, namely, $586,869.35.

Mr Voss defiantly and contumaciously thumbed his nose at the Court and its order, and diverted money away from a potential judgment creditor. His actions directly put at nought the object of the Mareva injunction and rendered it substantially futile.

When asked by the Court, Mr Voss' counsel stated that he had no instructions as to whether Mrs Voss would be prepared to disgorge the money and have it retained pending the outcome of this proceeding.

I view Mr Voss' breach of the order as serious and deserving of a substantial penalty. A penalty not only to punish Mr Voss for his wilful contempt, but also to send a strong message to anybody else who may think that he, she or it can ignore court orders.

What is the appropriate penalty must depend upon all the circumstances of a particular case.

In my opinion, the principles relating to sentencing of criminals in this State apply in relation to a contempt finding, although some of the principles could not apply because of the very nature of the charge. In this regard, I refer to what Winneke P said in Hugo Rich v Attorney-General for the State of Victoria (1999) VSCA 14.

The sentencing process was described by the Court of Appeal in R v Storey, supra, at p.366, where four members of the Court said -

"Sentencing is not a mechanical process, it requires the exercise of a discretion. There is no single right answer which can be determined by the application of principle. Different minds will attribute different weight to various facts in arriving at the `instinctive synthesis' which takes into account the various purposes for which sentences are imposed: just punishment, deterrence, rehabilitation, denunciation, protection of the community, and which pays due regard to the principles of totality, parity, parsimony and the like."

Some of the relevant matters would not apply to punishment for contempt. By way of example, rehabilitation and protection of the community. However, the public has an interest in the outcome because of the importance of the rule of law.

I accept the submission of Mr Voss' counsel that it is unlikely he would breach an order in the future. Specific deterrence does not apply.

The Court is bound to take into account the level of criminality or culpability and in the end result, the penalty must fit the particular offence. In other words, it must be appropriate and proportionate to the gravity of the offence considered in the light of the objective circumstances.

The aggravating features of this contempt are Mr Voss' deliberate defiance of the Court order and destruction of its very purpose by diverting money to his wife and seeking to put it beyond the reach of the judgment creditor. When confronted with the breach of the order, Mr Voss' solicitors did not respond to the allegation and he has, since the issue of the summons in December last year, up until recently, adopted the attitude that he was not guilty of contempt. It was submitted by his counsel that this conduct was justified on the ground that the original charge asserted he had paid a sum of money to the National Australia Bank and it was said that he did not pay the money to the Bank, hence he had a defence. That was the reason why he was not guilty of the charge prior to its amendment. In my view, that is a specious argument which does not stand scrutiny, when it is appreciated that Mr Voss made his own arrangements with the bank and gave instructions to his solicitor as to who was to receive what money at settlement. On any view, he was the guiding hand that caused the payment to the bank. It was put to the Court that it was not until there was an amendment to the summons that he accepted he had no defence to the charge. I do not accept the submission. He never had any defence to the original charge. He adopted an attitude of defiance throughout until very recently. These matters are relevant to the question of remorse.

The consideration and determination of appropriate penalty requires the Court not only to take into account matters that may be generally described as relevant to the seriousness of the offence, but also to take into account matters which are mitigating and which are personal to Mr Voss.

Mr Voss' counsel, Mr Parry, has identified a number of mitigating factors.

Mr Voss is presently aged 55 years, lives with his wife in rented accommodation and has three children aged 11, eight and six. He did occupy a senior position with Dominion Wines Pty Ltd, a company which makes wine in the Avenel region. This was the major source of his income. He resigned the position recently because of the present proceeding and the concern that any finding made against him would be to the detriment of the company. His counsel informed the Court, that any income hereafter would be on an ad hoc basis as a consultant in the wine and investment areas. It was emphasised that the breach was one instance, and not repeated, that he has accepted that he breached the order by his plea of guilty, and that he has no prior convictions of any type other than for traffic offences. Mr Parry apologised on his behalf to the Court and said that Mr Voss was remorseful and sorry for what he had done. I note the references to remorse and the apology. They are matters that I do take into account, but the weight I attach to both is small. The apology came on the day of the hearing, was not supported by oath, and the assertion of remorse does not sit comfortably with the conduct of Mr Voss up to 3 December or his subsequent conduct up to the date when he decided to plead guilty.

Mr Parry emphasised that his conduct was not a public defiance of the Court's authority, and further, that his breach was not covert or underhand, in that Pico was aware, prior to obtaining the Mareva order, that Mr Voss and his wife had sold the property. Whilst I accept that Pico was aware of the sale of the property, it could hardly be said that Mr Voss' conduct was open and known to Pico. In my view, what he was doing was underhand, and what he did was done with full knowledge that he was breaching the order. His actions only came to light when Pico's representatives read the affidavit of 3 December 2001. When Pico's solicitors sought further information from Mr Voss' solicitors, they failed to respond. Pico gathered some information from the bank but was forced to subpoena the bank's records to ascertain the true position. Mr Voss, through counsel, raised objections to the production of the files and contested the subpoena.

This is hardly the conduct of a person who was remorseful or candid and frank.

A realistic appraisal of the circumstances as at 3 December 2001, would have quickly led to the conclusion that he breached the injunction.

It was also put on his behalf that it was unlikely that he would breach an order in the future and I agree with that submission. Further, it was submitted that if the Court was to treat the contempt as a criminal contempt and further record a conviction, those findings would be some punishment in themselves. I agree and take those matters into account.

In addition, it was emphasised that if an order for costs was made against Mr Voss, this would be a substantial punishment. Apropos of that question, I requested counsel to give the Court a ball park figure with respect to costs, and the Court was informed that the costs of Mr Voss would be in the order of some $35,000 and the costs of Pico would be in the order of some $60,000.

This Court grants interlocutory injunctions most days of the legal year. Fortunately, most orders are complied with. A Mareva injunction does have a significant impact on the property of the person against whom it is granted and it is a drastic remedy which should not be granted lightly. See Carile v Led Builders Pty Ltd [1999] HCA 18; (1999) 73 ALJR 657 at 669. But nevertheless, whilst the order operates, it must be obeyed. It was open to Mr Voss, if he so chose, to return to court, as he had the right to do, as the order was ex parte, and seek to have it discharged or varied. The most likely outcome of such an application would have been to vary the order to enable the sale of the property to be settled. However, the negative aspect so far as Mr Voss was concerned, was that any moneys that he and his wife could jointly lawfully claim on settlement would be frozen. Mr Voss chose not to make any application. Mr Voss chose to order his affairs so that a substantial sum of money was paid to his wife and hence, put beyond the reach of the plaintiff if it becomes a judgment creditor.

His defiant and contumacious attitude to the order demands a substantial penalty. His level of culpability is high, his breach of the order, serious.

The seriousness of the breach warrants a penalty of a period of imprisonment. However, taking into account the mitigating factors put forward by his counsel, and his plea of guilty, the fact that he supports a young family, and the fact that any order for costs will be a substantial penalty in itself, I do not propose to impose a penalty of imprisonment, but to fine Mr Voss.

I am satisfied that his breach of undertaking involved deliberate defiance or, as it is sometimes put, was contumacious, and accordingly, the breach should be treated as a criminal contempt and, further, in my discretion, because of the gravity of the contempt, I should find him guilty of contempt. See Re Perkins; Mesto v Galpin and Ors [1998] 4 VR 505, especially at p.514, and Davis v Baillie [1946] VicLawRp 76; [1946] VLR 486 at 493-4. In my view, there should be a recording of a conviction because of the nature of the breach. I take these matters into account as punishment in determining the penalty.

That brings me to the amount of the fine. In fixing the amount, I take into account the order for costs which I propose to make which will result in a payment of the order of $60,000. I have not overlooked the fact that he will have to pay his own, not insubstantial, costs.

I fine Mr Voss the sum of $25,000 and I order that he be committed to prison until the fine is paid, pursuant to Rule 75.11.(3). I will grant a stay of seven days to enable him to pay the fine. The warrant shall issue but remain in the Office of the Prothonotary unexecuted pending payment of the fine.

This brings the Court to the question of costs. Mr Pearce of Counsel, on behalf of Pico, submitted that Mr Voss should pay the costs of the contempt proceeding on a solicitor-client basis. Mr Parry submitted that the Court should not order costs on a solicitor-client basis but, in the alternative, submitted that the costs should be on a party-party basis up to the date when the amendment was made to the summons, and solicitor-client costs after that date.

"The cost of an application for punishment for contempt shall be in the discretion of the Court whether an order for committal is made or not."

As a matter of practice, in this State, it is usual in a contempt proceeding to order the contemnor to pay costs on a solicitor-client basis. But there is no rule of law or binding principle which requires that course to be taken. In Plating Co v Farquharson (1881) 17 Ch D 49, the Court of Appeal said at p.57 -

"Costs as between solicitor and client may sometimes be given." (Emphasis added).

In McIntyre v Perkes (1988) 15 NSWLR 417, the New South Wales Court of Appeal held that there is no normal rule that costs should be ordered on a solicitor-client basis. In the end, it is clearly a question of discretion.

However, there have been cases in the past where such an order has been made - see Stamcombe v Trowbridge Urban Council [1910] 2 Ch 190 at 197. Indeed, in my opinion, in a case such as the present, where the litigant has brought the proceeding, not so much to coerce the defendant to comply with the order but to have him punished for contempt, the litigant, in effect, vindicates not only its rights but vindicates the public interest in upholding the rule of law. In those circumstances, the party bringing the proceeding should not be out of pocket - see McIntyre v Perkes, supra, at pp.434-5 per Rogers A-JA.

In my opinion, whilst there is no normal or binding rule with respect to the question, the practice in this State has been to order a contemnor to pay costs on a solicitor-client basis as a general rule. See McNair Anderson Associates v Hinch [1985] VicRp 30; [1985] VR 309, which was a case involving a breach of an injunction.

I propose to follow the usual rule in this case as I am not persuaded by the submissions of Mr Parry that I should order costs on any other basis. The costs on a solicitor-client basis form part of the punishment and have been taken into account in determining the appropriate fine.

Mr Parry submitted that Pico should only have its costs on a solicitor-client basis after the amendment and have party-party costs up to that date. As I have stated, I do not accept that Mr Voss was justified in taking the view that he was not guilty of the original charge. The point taken by counsel has no merit because he was clearly the moving party behind the payment of monies at settlement and gave instructions as to whom the monies were to be paid.

In my opinion, the proper order is that Mr Voss should pay Pico's costs of its summons on a solicitor-client basis.

The Court has power in my opinion to have Mr Voss committed to prison until the costs are paid.

This was done in McNair Anderson and Associates v Hinch, supra.

The warrant for the committal of Mr Voss shall issue, but it will lie in the office of the Prothonotary for a period of 30 days after the service upon him of a bill of the plaintiff's costs, to be taxed as between solicitor and own client. When costs and the fine are paid, the warrant shall be forever stayed.

The terms of the Mareva injunction restrain Mr Voss from complying with the orders that the Court proposes to make. It will be necessary to vary that order to enable him to comply with the orders about to be made. Mr Pearce, on behalf of Pico, referred to the penalty of a fine and also sought costs of the proceeding. I have assumed that there would be no objection to the Mareva injunction being varied. I propose to proceed on that assumption.

Subject to any submissions by counsel, I propose to make the following orders:

(1) That Peter David Voss is adjudged in contempt of court, in that on or about 3 December 2001, in breach of paragraph 4 of an order of the Honourable Mr Justice Beach dated 5 September 2001, he transferred his interest in the property located at 7 North Road Brighton, being more particularly described in Certificate of Title Volume 9700 Folio 686;

(2) that the contempt is a criminal contempt;

(3) that the said Peter David Voss is fined the sum of $25,000, such sum to be paid on or before 4 p.m. on 16 August 2002;

(4) that the plaintiff's costs of the contempt proceeding be paid by the defendant, Peter David Voss, on a solicitor and own client basis;

(5) that a warrant for committal of Peter David Voss issue for his imprisonment until he pays the said fine and costs, but that it lie in the Office of the Prothonotary unexecuted for a period of 30 days after service upon him of a bill of the plaintiff's costs to be taxed on a solicitor and own client basis;

(6) that there be general liberty to apply;

(7) that upon payment of the said fine and costs, the warrant be forever stayed;

(8) that paragraph 4 of the Orders made by Beach J on 5 September 2001 be varied by adding the words -

"and payment of the fine and order for costs made on the plaintiff's summons filed 27 December 2001, on 9 August 2002."

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At a glance

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Judgment (113 paragraphs)

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Cases Cited (6)