Registrar of the Federal Court of Australia v Mensink [2021] FCA 1152 | Case summary

Background 7 Mr Mensink was a director of Queensland Nickel for substantial parts of the period between 2012 and 2017. On 18 January 2016, Queensland Nickel was placed into voluntary administration pursuant to s 436A of the Corporations Act 2001 (Cth). At that time, Mr Mensink was the company's sole director. 8 Queensland Nickel had no assets, but had liabilities of at least $226 million, including some $30 million for employee entitlements. On 22 April 2016, the creditors resolved that Queensland Nickel be wound up. The voluntary administrators became the general purpose liquidators (GPLs) of Queensland Nickel, pursuant to a resolution of creditors. 9 Some of the employees' entitlements were paid by the Commonwealth of Australia under a scheme known as the "Fair Entitlements Guarantee". On 18 May 2016, following an application by the Commonwealth, Dowsett J made orders appointing the SPLs to investigate certain dealings and transactions of Queensland Nickel. 10 The purposes of the SPLs' appointment were limited to specified matters, including conducting investigations and examinations under ss 596A and 596B of the Corporations Act; and commencing and conducting proceedings in relation to, relevantly, dealings or transactions between Queensland Nickel, its directors and officers, and potential claims for insolvent trading. 11 The solicitor for Mr Mensink deposes that on about 6 June 2016, Mr Mensink departed Australia for a holiday. Mr Mensink has not yet returned and is presently sojourning in Bulgaria. 12 On 28 July 2016, the SPL commenced proceeding QUD 580 of 2016 in this Court, seeking the examination of Mr Mensink and others in relation to the examinable affairs of Queensland Nickel and seeking production of documents. 13 On 3 August 2016, a summons for the examination of Mr Mensink was issued pursuant to s 596A of the Corporations Act. Service was not effected on Mr Mensink as he was overseas. 14 On 15 December 2016, District Registrar Baldwin made orders for the issuing of an amended examination summons, adjourning the return date to 22 February 2017. Those orders also permitted substituted service of that summons upon Mr Mensink (together, the Baldwin Orders). 15 Mr Mensink failed to attend before the Court for examination on 22 February 2017. 16 On 27 February 2017, Dowsett J ordered that Mr Mensink attend before a Deputy Registrar of the Court on 27 March 2017, for the purpose of complying with the order made by District Registrar Baldwin on 15 December 2016 (the Dowsett Orders). 17 On 27 February 2017, the Supreme Court of Queensland (in proceeding BS10294/16) ordered that Queensland Nickel be wound up in insolvency. The GPLs and SPLs continued as court-appointed liquidators of Queensland Nickel. 18 By an interlocutory application filed on 3 March 2017, Mr Mensink applied for the orders made by Dowsett J on 27 February 2017 to be set aside. This application was heard and dismissed by his Honour on 8 March 2017. 19 Mr Mensink failed to appear before the Deputy Registrar on 27 March 2017. Justice Dowsett ordered that a warrant issue for the arrest of Mr Mensink to bring him to court to attend for examination pursuant to the Baldwin Orders and the Dowsett Orders (Examination Warrant). 20 Mr Mensink has caused an affidavit to be filed explaining why he failed to comply with the Baldwin Orders and the Dowsett Orders. Mr Mensink contends that he had a reasonable excuse for not appearing on the return dates. 21 On 28 March 2017, the SPLs filed an interlocutory application pursuant to r 42.11 of the Federal Court Rules 2011 (Cth) seeking orders that Mr Mensink be punished for contempt. Rule 42.12 requires an application alleging contempt to be accompanied by a statement of charge in the prescribed form. The prescribed form requires the statement of charge to be signed by a judge. The statement of charge accompanying the interlocutory application in this case was signed by Dowsett J. Mr Mensink was charged with contempt of the Court in respect of his failure to comply with the summons requiring him to attend for examination on 22 February 2017 and with the order requiring him to attend for examination on 27 March 2017. 22 On 28 March 2017, Dowsett J also ordered that a warrant issue for Mr Mensink's arrest to answer the contempt charge (Contempt Warrant). On 29 March 2017, the Examination Warrant and the Contempt Warrant were formally issued. 23 On 30 June 2017, the SPLs and Queensland Nickel commenced proceedings in the Supreme Court of Queensland (Proceeding BS6593/17) against Mr Mensink and others, seeking, inter alia, compensation for alleged breaches of director's duties and insolvent trading. 24 On 28 June 2018, an appeal challenging the validity of the orders made by Justice Dowsett pursuant to which the warrants were issued was dismissed by the Full Court: Mensink v Parbery [2018] FCAFC 101. 25 On 3 August 2019, the remaining SPL, Mr Mensink and others entered into a Settlement Deed. The Settlement Deed was sanctioned by an order of Greenwood J made on 5 August 2019. In August 2019, the SPL's claims in proceeding BS6593/17 in the Supreme Court of Queensland were discontinued. 26 By letter dated 4 September 2019 to Mr Mensink's solicitor, the SPL confirmed that Mr Mensink was not required for examination under any examination summons the SPLs had caused to be issued and stated that, in circumstances where the SPL claims in proceeding BS6593/17 had been discontinued, there was no further utility in the examination summons issued to Mr Mensink. 27 On 11 September 2019, Registrar Belcher ordered that the examination summons issued on 2 August 2016 and amended on 15 December 2016 be discharged, effective from the date of the order. 28 On 8 June 2020, Mr Mensink filed an interlocutory application seeking orders, pursuant to r 39.05 of the Federal Court Rules, that the Dowsett Orders be set aside and that the Examination Warrant and the Contempt Warrant be discharged. 29 On 23 July 2020, a case management hearing was held before Reeves J. His Honour indicated that he would not deal with any discharge of Contempt Warrant until Mr Mensink's approach to the underlying contempt proceeding was made clear. His Honour was informed of the settlement between the SPL and Mr Mensink. The matter was adjourned so that the positions of Mr Mensink and the SPL in relation to the contempt proceeding could be ascertained. 30 On 5 August 2020, at the resumed case management hearing, the legal representatives for the SPL informed Reeves J that as the SPL had retired, and was, in any event, a party to an agreement releasing all claims, the SPL did not intend to take any further steps in the contempt proceeding. Justice Reeves then ordered on 5 August 2020 that: The Registrar of the Federal Court of Australia take over the prosecution of the statement of charge of contempt dated 28 March 2017. 31 On 29 October 2020, the Registrar amended the statement of charge. 32 On 29 April 2021, Mr Mensink filed an interlocutory application seeking an order enjoining the Registrar from continuing the contempt proceeding. 33 On 10 June 2021, Mr Mensink filed an amended interlocutory application seeking summary dismissal of the amended statement of charge. 34 The hearing of the interlocutory application was adjourned several times at the request of the parties, but eventually came on for hearing on 10 September 2021.

Consideration 43 Under s 31 of the Federal Court of Australia Act 1976 (Cth), the Federal Court has the same power, "to punish contempts of its power and authority as is possessed by the High Court in respect of contempts of the High Court". 44 In Re Colina; Ex parte Torney (1999) 200 CLR 386, Gleeson CJ and Gummow J observed that the corresponding provisions in the Judiciary Act 1903 (Cth) and the Family Law Act 1975 (Cth), "are not expressed to confer federal jurisdiction in respect of a particular species of 'matter'". Instead, as their Honours observed at [16]: They set out particular powers of this Court and the Family Court and should read as declaratory of an attribute of the judicial power of the Commonwealth which is vested in those Courts by s 71 of the Constitution. … That which renders such acts (if proved) liable to punishment has its source in Ch III of the Constitution. The power to deal summarily with contempts is, to use Isaac J's phrase "inherent" and is "a power of self-protection or a power incidental to the function of superintending the administration of justice. (See also Hayne J at [113]). 45 The Federal Court Rules provide three alternative procedures by which a party may apply to the Court to deal with an alleged contempt. The first is under r 42.01, which provides that a party who alleges that a person has committed a contempt in the face of the Court or in the hearing of the Court may apply for an order directing that the person be brought before the Court or for the issue of a warrant for the person's arrest. 46 The second procedure is under r 42.11, which provides for an application to be made where a party alleges that a contempt has been committed by a person, either in connection with a proceeding in the Court, or not in connection with a proceeding. Rule 42.12 provides that the application must be accompanied by a statement of charge in the required form specifying the contempt. 47 The third procedure is under r 42.16, which provides that if it is alleged that a person is guilty of contempt of the Court, a party may apply to the Court for an order directing a Registrar to make an application in the proceeding, or start a proceeding, for punishment of the contempt. 48 The Court may, on its own initiative (see r 1.40), direct that a person be brought before the Court or that a warrant issue for a person's arrest under r 42.01, or direct a Registrar to make application in the proceeding, or start a proceeding, for punishment of a contempt under r 42.16. 49 In the present case, the SPLs commenced the contempt proceeding against Mr Mensink under r 42.11. The interlocutory application was accompanied by a statement of charge. When the last remaining SPL informed the Court that he no longer intended to prosecute the contempt proceedings, one option available to Reeves J was to dismiss the proceeding. Another option was to order that the Registrar make an application for punishment of the alleged contempts. 50 The third option - the one taken by Reeves J - involved a hybrid of the procedures envisaged under r 42.11 and r 42.16. On 5 August 2020, his Honour ordered that the Registrar, "take over the prosecution of the statement of charge of contempt dated 28 March 2017". 51 Mr Mensink argues that Reeves J's order conferred the Registrar with no greater or ability to prosecute the contempt proceeding than was possessed by the SPL. It is argued that when the SPL compromised the contempt proceeding under the Settlement Deed, the SPL had no remaining interest in the proceeding; and that when the Registrar took over the proceeding, there was no interest remaining for the Registrar to prosecute. Mr Mensink submits that, consequently, the Registrar cannot succeed in the contempt proceeding. 52 In his oral submissions in reply, Mr Dunning QC for Mr Mensink conceded that: (a) what the SPL compromised was the SPL's right to pursue the claim of contempt against Mr Mensink; (b) the SPL could not - and did not purport to - compromise the right of the Court to order the Registrar to prosecute a proceeding for the same alleged contempt; (c) the validity and efficacy of the order of Reeves J appointing the Registrar to prosecute the proceeding for contempt could not be - and was not being - challenged in the present application. 53 Some of the arguments raised in Mr Mensink's written submissions as to why the Registrar has no reasonable prospects of successfully prosecuting the contempt proceeding appeared to have been abandoned by the end of oral submissions. The abandoned arguments include that: (a) the Settlement Deed is a complete bar to the prosecution of the statement of charge and the contempt proceeding; (b) the Commonwealth of Australia released Mr Mensink from legal processes arising from any sums paid by the Commonwealth in connection with the winding up of Queensland Nickel, and the release binds the Federal Court and the Registrar as much it binds the Commonwealth in its other capacities. 54 In his oral submissions in reply, Mr Dunning QC put his remaining argument in the following way: If one assumes there are, really, two rights to sue when it comes to the putative contempt law. There is the other party's litigation, who has a set of rights to sue principally concerned with the enforcement of the unmet obligation so that the other party can get the relief it seeks in the proceedings. And there's another bundle of rights that are principally concerned with vindicating the court's authority, which is reposed in the court - albeit, facts will significantly overlap. Possibly, even, considerations will overlap. But they are two separate rights to sue. What happened here is Reeves J ..... twice eschewed any notion that that second set of rights to sue - those that the Registrar have indicated - the public interest - were being taken up, and made it clear that what he had in mind …the Registrar was to take over was that bundle of rights which were the claim the SPL had to vindicate in relation to the contempt. But they are two separate bundles of rights, as I say, albeit with significant factual, if not complete factual overlap…But they are the two sets of rights. Reeves J did not intend to engage the second; he intended to engage the first. If the first no longer exist, then it is the end of the matter, as your Honour puts to me, but for the opposite reason - that is, because there was nothing - there were no rights left for the Registrar to vindicate in that first suite of rights. 55 Mr Dunning QC's submission that the Registrar has no reasonable prospects of successfully prosecuting the contempt proceeding appears to be based upon the following premises: (a) a contempt proceeding relying upon a breach of an order of the Court brought by a party to a proceeding under r 42.11 of the Federal Court Rules is brought solely, or at least principally, for the purpose of vindicating or serving the personal or individual interests of that party; (b) a proceeding commenced by the Registrar pursuant to r 42.16 of the Rules is brought solely, or at least principally, for the purpose of vindicating the Court's authority; (c) the order of Reeves J of 5 August 2020 required the Registrar to take over the proceeding that had been commenced by the SPL under r 42.11, his Honour having expressly stated that it was not an order made under r 42.16; (d) the effect of the order of 5 August 2020 was that the Registrar was to take over and prosecute the contempt proceeding only for purpose of vindicating the individual interests of the SPL, and the Registrar was not authorised to prosecute the proceeding to vindicate the authority of the Court; (e) as the SPL has compromised the contempt proceeding brought by the SPL, there are no individual interests of the SPL left for the Registrar to prosecute; (f) the Registrar, therefore, cannot succeed in the proceeding; (g) whether the Registrar ought to be directed to commence a proceeding for contempt under r 42.16 is a different question, for another day. 56 One premise of the argument that can be accepted is that the SPL compromised the contempt proceeding brought by the SPL. Clause 4.1(a) of the Settlement Deed releases Mr Mensink from the "SPL Claims". That expression is defined to mean, "a Claim by QN, the SPL…against or in respect of a QN Party, other than the GPL Claims". Mr Mensink is a "QN Party", and the contempt proceeding is not a "GPL Claim". The term "Claims" means, relevantly, "any proceeding in a Court…of any kind or type whatsoever and which arise out of or in relation to the QN Proceedings". The "QN Proceedings" are defined to mean proceeding BS6593/17 in the Supreme Court of Queensland. The contempt proceeding was brought within Federal Court proceeding QUD 580 of 2016, which was commenced for the purposes of issuing of examination summonses to allow information to be ascertained, and documents to be obtained, relevant to the "QN Proceedings". The issue is whether the contempt proceeding can be said to, "arise out of or in relation to the QN Proceedings". 57 At first, Mr Holt QC for the Registrar disputed that the SPL had compromised the contempt proceeding under the Settlement Deed, but that resistance had faded by the end of the hearing, and no submission was ultimately advanced that the contempt proceeding did not, "arise…in relation to the QN Proceedings". The phrase "in relation to" has been held to be "of broad import", and, "requires no more than a relationship, whether direct or indirect, between two subject matters": O'Grady v Northern Queensland Company Limited (1990) 169 CLR 356 at 374, 376. It may be accepted that the width of the phrase is affected by the context in which it appears. In this case, the context includes that cl 4.7 of the Settlement Deed requires the SPL to apply for the discharge of the summons for examination issued to Mr Mensink under s 569A of the Corporations Act. It was Mr Mensink's failure to comply with the examination summons which led to the contempt charge. Clause 4.7 is consistent with an intention under cl 4.1 to resolve, not merely the process underlying the contempt proceeding, but the contempt proceeding itself. I accept that, under the Settlement Deed, the SPL compromised the contempt proceeding brought by the SPL. 58 Another premise of Mr Mensink's argument which can be accepted is that the law allows a party who commences a proceeding for contempt based upon breach of a court order to compromise the proceeding. There is authority which supports that contention. So, in NHB Enterprises Pty Ltd v Corry (No 7) [2021] NSWSC 741, Bell P held at [413]: …[N]otwithstanding that the claim against Mr Ghaly is for criminal contempt in the sense of an alleged contumacious breach of court orders, it is brought in this Court's civil jurisdiction…and was capable of being compromised, such a compromise not being contrary to public policy. 59 It should be noted that Bell P was referring to the capacity of a private party bringing a contempt proceeding to compromise that proceeding with the alleged contemnor. His Honour was not suggesting that an inter partes compromise could bind a court not to order that proceedings be taken for the same contempt. In Witham v Holloway (1995) 183 CLR 525, the High Court observed at 533: It has been held that the "penal or disciplinary" jurisdiction may be exercised even when the parties have settled their differences and do not wish to proceed further. Thus, in Canadian Transport v Alsbury [(1952) 7 WWR (NS) 49], Sidney Smith JA rejected the submission that settlement precluded further proceedings saying: Are we to be told that after a party has defied a court, the court can still do nothing because the other party is willing to swallow the contempt? Nothing short of the clearest authority would convince me that that is the law; and there is no such authority and no such law. 60 Mr Dunning QC conceded that all the SPL compromised under the Settlement Deed was the SPL's own right to pursue the claim of contempt against Mr Mensink, and that the SPL could not - and did not purport to - compromise the right of the Court to order the prosecution of a proceeding for the same alleged contempt. That concession was correctly made. 61 Another premise of Mr Mensink's argument is that the purpose of a contempt proceeding based upon a breach of an order of the Court brought by a party under r 42.11 of the Federal Court Rules is solely, or at least principally, to benefit the private or individual interests of that party. The corollary of that premise is that a proceeding commenced by the Registrar pursuant to r 42.16 of the Rules is brought solely, or at least principally, for the public purpose of vindication of the Court's authority. These propositions suggest that the purposes of a contempt proceeding generally involve a clear dichotomy between the private interests of a party bringing the proceeding and the public interest in vindication of the authority of the Court, or at least very little overlap. 62 Mr Mensink's argument in this respect is based principally upon Attorney-General v Times Newspapers Ltd [1974] AC 273, where Lord Diplock stated at 307-308: One may leave aside for the purposes of the present appeal the mere disobedience by a party to a civil action of a specific order of the court made on him in that action. This is classified as a "civil contempt". The order is made at the request and for the sole benefit of the other party to the civil action. There is an element of public policy in punishing civil contempt, since the administration of justice would be undermined if the order of any court of law could be disregarded with impunity; but no sufficient public interest is served by punishing the offender if the only person for whose benefit the order was made chooses not to insist on its enforcement. 63 However, in Witham v Holloway (1995) 183 CLR 525, the plurality observed at 532-534: At best, the distinction between proceedings in the public interest and proceedings which are coercive or remedial in the interest of the private individual supports a separate category of civil contempt to the extent that it clearly appears that the proceedings are remedial or coercive in nature … However, in our view, there are fundamental problems even with that approach. One problem is that there is not a true dichotomy between proceedings in the public interest and proceedings in the interest of the individual. Even when proceedings are taken by the individual to secure the benefit of an order or undertaking that has not been complied with, there is also a public interest aspect in the sense that the proceedings also vindicate the court's authority. Moreover, the public interest in the administration of justice requires compliance with all orders and undertakings, whether or not compliance also serves individual or private interests. Nor can the dichotomy between proceedings in the public interest and proceedings in the interest of the individual be maintained on the basis that some cases involve an interference with the administration of justice and others merely involve an interference with individual rights. All orders, whether they be Mareva injunctions, injunctions relating to the subject matter of the suit, or, simply, procedural orders, are made in the interests of justice. Non-compliance necessarily constitutes an interference with the administration of justice even if the position can be remedied as between the parties. Moreover, there is considerable difficulty with the notion that, in some cases, the purpose or object of the proceedings is punitive and, in others, the purpose or object is remedial or coercive. It should at once be noted that the purpose of the proceedings is not the same as the purpose or object of the individual bringing the proceedings and it is well recognised that, notwithstanding that proceedings are brought by an individual to secure the benefit of an order or undertaking, a "penal or disciplinary jurisdiction" may also be called into play…. … And as already indicated, proceedings for breach of an order or undertaking have the effect of vindicating judicial authority as well as a remedial or coercive effect. Indeed, if the person in breach refuses to remedy the position, as is not unknown, their only effect will be the vindication of judicial authority. Given that purpose or object cannot readily be disentangled from effect and given, also, that a penal or disciplinary jurisdiction may be called into play in proceedings alleging breach of an order or undertaking, it is necessary to acknowledge, as it was in Mudginberri [(1986) 161 CLR 98 at 108], that punitive and remedial objects are, in the words of Salmon LJ "inextricably intermixed". (Footnotes and citations omitted.) 64 The particular relevance of Witham for present purposes is to emphasise that the purposes of a contempt proceeding involve no neat division between vindication of private interests and the public interest in vindicating the authority of the Court, but that they are "inextricably intermixed". The public interest requires compliance with all orders and undertakings. All proceedings for breach of an order necessarily serve the public interest in the administration of justice by vindicating the Court's authority, as well as serving private interests by having a remedial or coercive effect. The contention that the purpose or object of a contempt proceeding taken by a party under r 42.11 for breach of an order of the Court is solely, or principally, to serve the individual interests of that party cannot be accepted. 65 In light of the principles, concessions and matters discussed, the submission that the effect of the order made by Reeves J on 5 August 2020 was that the Registrar was to take over and prosecute the contempt proceeding only for the purpose of protecting the individual interests of the SPL can be considered. That submission cannot be accepted for the reasons that follow. 66 First, at the hearings on 23 July and 5 August 2020, Reeves J was made aware that the contempt proceeding had been compromised and that the SPL was not continuing with the prosecution of the contempt proceeding for that reason. It would not have made sense for his Honour to then require the Registrar to take over the prosecution of the contempt proceeding solely to protect or advance the individual interests of the SPL, when the SPL had made it clear that his interests were no longer affected by the alleged contempts. It is evident that the purpose of the order was for the Registrar to prosecute the contempt proceeding for the public interest in vindicating the authority of the Court. 67 Second, the terms of Reeves J's order that the Registrar, "take over the prosecution of the statement of charge of contempt dated 28 March 2017", are consistent with prosecution of the proceeding for any and all applicable purposes, and not merely some of them. The terms of the order do not purport to carve-out the purpose of vindicating the authority of the Court. The terms do not indicate that the prosecution is to be only for the purpose of protecting or advancing the individual interests of the SPL. 68 Third, Mr Mensink's argument that Reeves J eschewed any notion that the Registrar was being conferred with the ability to sue in the public interest cannot be accepted. In the case management hearing on 24 September 2020, Reeves J commented: I just want to make it clear that at the start of this matter, on 5 August, when I ordered the Registrar to take over the prosecution of the matter, I was not proceeding under rule 42.16…This prosecution had been commenced by the special purpose liquidators and all I was doing on 5 August was to order the Registrar to take over that prosecution. Mr Mensink submits that this passage demonstrates that Reeves J intended that the Registrar take over the prosecution of the contempt proceeding only for the purposes of vindicating the individual rights of the SPL. However, Reeves J was merely pointing out that, contrary to the assumption of Mr Mensink's counsel, the order that the Registrar take over prosecution of the contempt proceeding had not been made under r 42.16. That was obviously true because r 42.16 allows the Court to direct a Registrar to make or start a proceeding for punishment of a contempt, whereas the proceeding to be taken over remained on foot as it had not been discontinued or dismissed. 69 It should be inferred that Reeves J considered it would simply be more convenient for the Registrar to take over the existing proceeding commenced under rule 42.11 by the SPLs, rather than commencing a new proceeding under r 42.16. That course saved the Registrar the inconvenience of having to commence a fresh interlocutory application, obtain a new statement of charge, draw new affidavits, and have the documents served upon Mr Mensink. The fact that Reeves J required the Registrar to take over the proceeding commenced by the SPLs, rather than commencing a new proceeding, does not somehow indicate that the Registrar was to prosecute the proceeding only for the purpose of vindicating the individual rights of the SPL. 70 Fourth, Mr Mensink's argument assumes that a contempt proceeding brought by a party under r 42.11 of the Federal Court Rules for breach of an order is brought entirely or substantially for protection or vindication of the party's private or individual interests. As Witham v Holloway made clear at 533, there is, or may be, a distinction between the purpose of a contempt proceeding and the purpose of a party in bringing a contempt proceeding. The purpose of a contempt proceeding commenced by a party under r 42.11 involves the vindication of the public interest, as well as individual interests. The compromise of the individual interests does not, or does not necessarily, affect the public interest in the continued prosecution of the contempt proceeding. Accordingly, there remained a purpose in the prosecution of the proceeding, and the order that the Registrar take over the prosecution was for that purpose. 71 I reject Mr Mensink's submission that the order made by Reeves J was for the Registrar to take over and prosecute the contempt proceeding only for the purpose of protecting the individual interests of the SPL, and that, as those interests have been resolved, there is nothing left for the Registrar to prosecute. 72 I am conscious that the present application is for summary judgment, rather than a final determination of issues that may fall for determination at a final hearing. Mr Dunning QC accepted that none of the facts are controversial and that the legal propositions he contends for are either right or wrong. It is enough to reject, for the reasons I have given, the submissions that the Registrar has no reasonable prospects of successfully prosecuting the proceeding and that no reasonable cause of action is disclosed. 73 The application for summary judgment will be dismissed. I will order that Mr Mensink pay the costs of the summary judgment application. I certify that the preceding seventy-three (73) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Rangiah.

Registrar of the Federal Court of Australia v Mensink

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