Siminton v Australian Prudential Regulation Authority [2006] FCAFC 118 | Case summary

the contempts 7 On 29 December 2005, 4 January 2006 and 19 January 2006 APRA filed notices of motion and statements of charge alleging that the appellant breached the orders of Sundberg J in nine respects and seeking that he be punished for contempt. 8 In reasons for judgment delivered on 30 March 2006 (delivered separately from the judgment dismissing motions to set aside earlier orders of Sundberg J, Gray J and Merkel J), Merkel J dealt with the contempt charges. The charges related to three categories of conduct. First, APRA alleged that the appellant on six occasions breached the order which required that the appellant be restrained from, inter alia, dealing with or disposing of moneys standing to his credit and/or that of his nominee ('the disposal allegations'). Secondly, APRA alleged that the appellant breached the order that the appellant file certain documents with the Court ('the failure to file allegations'). Thirdly, APRA alleged that the appellant breached the order that a notice be placed on the websites of the 'Principality of Camside' and 'Terra Nova Cache' (the 'website notice allegations'). The appellant pleaded not guilty to the contempt charges. 9 The disposal allegations were set out in charges 1.1 and 1.2 in the first statement of charge and charges 1.1, 1.2, 1.3 and 1.4 in the second statement of charge. In relation to charge 1.1 in the second statement of charge APRA alleged that the appellant dealt with, or gave instructions in relation to, the transfer of $536,880.18 from the Terra Nova Cache account with Technocash Pty Ltd (which account was held by the appellant) to the Agios Corporate Trust account with Technocash Pty Ltd on 17 December 2005. The contact for the Agios account was Hardy Erhardt, the appellant's solicitor. In relation to charge 1.2 in the second statement of charge, APRA alleged that the appellant dealt with or gave instructions in relation to the transfer of $5,000 from the Terra Nova Cache account to an account with an external financial institution on 19 December 2005. In relation to charge 1.3 in the second statement of charge, APRA alleged that the appellant dealt with, or gave instructions in relation to, the transfer of $38,000 from the Terra Nova Cache account to the Agios Corporate account on 20 December 2005. 10 With respect to charge 1.1 in the first statement of charge, APRA alleged that on 21 December 2005 the appellant attended the Bendigo Bank with Mr David John Dodson. Two direct credits were made into an account of Mr Dodson on 20 December 2005 in the amounts of $205,000 and $324,000. The credits were the result of transfers from the Agios Corporate Trust account. Mr Dodson advised the bank that he wished to withdraw $500,000 in cash from his account. Mr Dodson and the appellant completed the paperwork required for the appellant to become a signatory to that account. In relation to charge 1.2 in the first statement of charge, APRA alleged that on 21 December 2005 the appellant attempted to withdraw $10,000 from a Bendigo Bank account in the name of David Dodson of which he was a signatory. With respect to charge 1.4 in the second statement of charge APRA alleged that on 21 December 2005 the appellant dealt with, or gave instructions in relation to the transfer of, $43,000 from the Terra Nova Cache account to the Agios Corporate Trust account. 11 Merkel J was satisfied that the evidence adduced by APRA established the facts relied on, finding that the evidence was not controverted and was strongly supported by the affidavit and documentary evidence. His Honour was satisfied that APRA had proved beyond reasonable doubt that the appellant deliberately engaged in the conduct the subject of the disposal allegations and that that conduct breached the orders of Sundberg J. In relation to the appellant's failure to give evidence Merkel J said at [29]: "In the present case, Siminton's failure to contradict the 'damning' inferences which APRA claims ought to be drawn from the proven facts, leaves no real scope for a rational or reasonable hypothesis consistent with his innocence. In the circumstances, I am satisfied beyond reasonable doubt that: (a) the inferences contended for by APRA ought to be drawn; (b) the conclusions contended for by APRA are entirely justified and warranted by the evidence; (c) the evidence does not justify or warrant a finding that there is any reasonable or rational hypothesis consistent with Siminton's innocence of the contempt charges." 12 Merkel J was not satisfied that APRA had established the "failure to file allegations" (charges 1.3 and 1.4 in the first statement of charge) beyond reasonable doubt. Given that finding, it is unnecessary to recite the content of those charges. 13 The website notice allegations were the subject of charge 1.5 in the first statement of charge. APRA alleged that the appellant did not, within two days of 16 December 2005 (the day the order of Sundberg J was served on the appellant), cause a notice to be placed on the internet site of the 'Principality of Camside' in the form set out in schedule 1 to the order, as required by paragraph 5 of the order. A senior analyst at APRA swore an affidavit on 23 December 2005 stating that on 23 December 2005 no notice in the form set out in schedule 1 to the Sundberg J orders appeared on the website. The appellant swore an affidavit on 4 January 2006 in which he stated that the required notice 'now appears on the website of the Principality of Camside' and that he had attempted to place a similar notice on 'a website for the Terra Nova Cache'. 14 Merkel J found that the charge the subject of the website notice allegations was established beyond reasonable doubt. Merkel J said at [41]: "Paragraph 5 of the Sundberg J orders required Siminton to 'cause' a particular outcome. He failed to do so and there is no evidence that he was unable to 'cause' that outcome. In the circumstances, I am satisfied beyond reasonable doubt that Siminton breached [5] of the Sundberg J orders by failing to cause the requisite notice to be posted on the website of the Principality of Camside within two days of service of the Sundberg J orders. I am also satisfied beyond reasonable doubt that Siminton breached [5] by failing to cause the requisite notice to be posted on the website of the Terra Nova Cache within two days of service of the Sundberg J orders." 15 In addition to arguing that APRA had not established beyond reasonable doubt that he engaged in deliberate conduct which was in breach of the orders of Sundberg J, the appellant contended that the orders of Sundberg J were made without jurisdiction for a number of reasons and were therefore a nullity and not capable of founding a basis for the contempt charges. Merkel J identified two fundamental problems with the appellant's argument. The first was that even if the matters alleged by the appellant were made out, those matters would not establish an absence of jurisdiction. Secondly, as the orders made by Sundberg J were orders made by a judge of a superior court of record, they were valid and binding until set aside, even if made in excess of jurisdiction. His Honour referred to Cameron v Cole (1944) 68 CLR 571 at 590, Wilde v Australian Trade Equipment Co Pty Ltd (1981) 145 CLR 590 at 602, R v Ross‑Jones; Ex parte Green (1984) 156 CLR 185 at 215 and Jackson v Sterling Industries Ltd (1987) 162 CLR 612 at 620. Merkel J held that the arguments as to absence of jurisdiction were without substance and should be rejected.

Grounds of appeal 25 It is somewhat difficult to discern the grounds of appeal upon which the appellant relies. The amended notice of appeal in relation to the orders made on 10 April 2006 sets out some 28 grounds of appeal. The appellant appeals against the findings of contempt and the penalties imposed. In summary, the categories of grounds of appeal include that Merkel J: · failed to find that the Sundberg J orders were an abuse of process and involved a lack of jurisdiction; · failed to take into account relevant factors in drawing inferences; · refused to adjourn the hearing of the contempt charges; · made certain incorrect findings of fact; · drew irrelevant, prejudicial and unjustified inferences; and · failed to take into account certain factors regarding penalty and imposing an excessive sentence. At the outset, it is clear that many of the grounds of appeal do not relate to the orders made on 10 April 2006. 26 The draft notice of appeal in respect of Merkel J's dismissal of the motion to set aside the orders of Sundberg J on 15 December 2005 sets out thirteen grounds of appeal. Twelve of those grounds are in identical form to those in the notice of appeal from the judgement on 10 April 2006. 27 A number of the grounds of appeal are predicated upon submissions, in substance, that the orders and injunctions granted by Sundberg J on 15 December 2005 were either without jurisdiction or should not have been made because of a number of vitiating factors. The submissions appear to be based on the proposition that because Sundberg J should not have made the orders, or had no jurisdiction to do so, then the appellant was not obliged to obey such orders and injunctions and any breach of them by the appellant was not a contempt of Court. 28 We categorically reject that submission. It has no foundation in principle or in authority and, indeed, established authority is to the opposite effect. An order made by a superior court of record stands and is bound to be observed even though it may ultimately be determined that the order should not have been made or was made without jurisdiction. Whilst the order stands, and is not set aside, it must be observed and obeyed and any breach or contravention of such an order can give rise to a charge of contempt for failing to comply with it or observe it. 29 In Cameron v Cole (supra) Rich J said at 590, "[I]t is settled by the highest authority that the decision of a superior court, even if in excess of jurisdiction, is at the worst voidable, and is valid unless and until it is set aside ". See also Australia and New Zealand Banking Group Ltd v Merribee Pastoral Industries Pty Ltd (1998) 84 FCR 367 at 380 per Finkelstein J. 30 This observation was cited with approval by Stephen, Murphy and Wilson JJ in Wilde v Australian Trade Equipment Co Pty Ltd (supra) at 602. In Jackson v Sterling Industries Ltd (supra), Wilson and Dawson JJ said at 620, "[T]he principle remains, however, that the order of a competent court must be obeyed whilst it remains in force". 31 The appellant's submissions can be grouped under a number of general headings. The first is that Merkel J should have adjourned or stayed the hearing of the contempt charges until the principal proceeding had been determined. The appellant submitted that Merkel J was in error in ruling that the appellant's decision to exercise his right against self‑incrimination, and any constraints that that decision imposed upon him in the conduct of the contempt proceeding, was not a relevant factor to be taken into account in deciding whether or not to accede to the appellant's request to adjourn the hearing of the contempt charges. The appellant also submitted that Merkel J was in error in ruling that the prejudice likely to be suffered by the appellant from any publishing of the contempt proceeding in any subsequent criminal proceedings for breach of the Act was not such a matter as to justify adjourning the hearing of the contempt charges. 32 Insofar as Merkel J ruled in the manner submitted by the appellant, we do not consider that his Honour erred in any way. The contempt charges raised quite different issues from those that were to arise in the principal proceeding. The hearing of the contempt charges did not involve the Court considering issues that would arise in that principal proceeding. The two proceedings were quite different and any failure by the respondent to succeed in the principal proceeding would not have resulted in a defence to the contempt proceeding. The contempt which was alleged and established was a failure to comply with a Court order which stood quite independently of any outcome of the principal proceeding. 33 Further, no criminal proceedings have been commenced against the appellant. At the time of the contempt proceeding the appellant had not been charged with any criminal offence and we cannot see how the hearing of the contempt charges could have any effect on any criminal proceeding which might subsequently arise out of the subject matter alleged in the principal proceeding. As we have already stated, the hearing of the contempt charges did not involve the Court considering issues that would arise in the principal proceeding or in any criminal proceeding. 34 The next general heading under which the appellant made submissions was that the entitlement of the appellant not to give evidence relying upon the privilege against self‑incrimination meant that findings of fact could not be made against him or inferences drawn against him from such facts as existed. This submission misunderstands the consequence of a party not giving evidence in reliance upon the privilege against self‑incrimination. That decision not to give evidence does not preclude a court from making findings against the person in respect of facts and allegations made against him. Nor does it preclude the court from drawing inferences against him from facts placed properly before the court. The appellant's decision not to give evidence did not prevent the respondent from presenting facts upon which it relied before the Court and inviting the Court to draw inferences from those facts. In the absence of evidence from the appellant, Merkel J was entitled to draw such inferences as were available to him from the evidence presented by the respondent. In the absence of evidence from the appellant, inferences were open to Merkel J. 35 In this respect we refer to, and adopt, the observation of the majority of the High Court (Gaudron A‑CJ, Gummow, Kirby and Hayne JJ) in RPS v The Queen (2000) 199 CLR 620 at 632‑633: "The most that can be said in criminal matters is that there are some cases in which evidence (or an explanation) contradicting an apparently damming inference to be drawn from proven facts could come only from the accused. In the absence of such evidence or explanation, the jury may more readily draw the conclusion which the prosecution seeks. As was said in Weissensteiner v The Queen [(1993) 178 CLR 217 at 227‑228]: '[I]n 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)" 36 It was open to Merkel J on the evidence before him, which was uncontradicted, to draw the inferences which he did adversely to the appellant. It is not correct to say that Merkel J drew inferences adversely to the appellant about his conduct relating to the subject matter of the contempt proceeding on the ground that he had declined to give evidence. His Honour was satisfied that the evidence of the respondent which was uncontradicted established each of the matters of fact relied upon by the respondent beyond reasonable doubt and that the evidence did not justify or warrant a finding that there was any reasonable or rational hypothesis consistent with the appellant's innocence of the contempt charges. 37 The appellant submitted that Merkel J had drawn adverse inferences against him with respect to his failure to hand in his passport and in relation to his alleged bankruptcy. Those matters were noted by his Honour in the course of his narrative of the events which had occurred but he did not draw any inferences from those matters. 38 The appellant also challenged Merkel J's finding that he was satisfied beyond reasonable doubt that the appellant had breached paragraph 5 of the orders of Sundberg J which required him to publish a notice on certain websites. The appellant submitted that Merkel J had effectively ruled that there was sufficient evidence to establish beyond reasonable doubt that the posting of the schedules to the relevant websites by the appellant could have actually been achieved by the time allowed by the relevant order (namely two days after service of the order). Merkel J made no such ruling. The respondent was obliged to satisfy Merkel J that the appellant had breached the terms of paragraph 5 of Sundberg J's order. Merkel J so found and there was no evidence before him as to whether the appellant was unable to comply with paragraph 5 of Sundberg J's order. 39 The appellant also challenged a number of findings made by Merkel J in his reasons on 10 April 2006 in which he determined and fixed the relevant penalties to be imposed for the contempt charges which he had found. 40 The appellant submitted that Merkel J had failed to give any credit to the appellant for the offers he had made to settle the main proceeding. That is not a correct statement of what Merkel J did. He referred to material which was filed to the effect that the appellant's solicitor was making an endeavour to settle the main proceeding and also referred to a statement of a friend of the appellant which was supplemented from the Bar table and although his Honour noted that those matters were relevant to penalty his Honour found that they carried little weight on the issue of penalty "having regard to the seriousness of the contempt". 41 In a similar vein the appellant submitted that Merkel J failed to give sufficient credit to his apology to the Court on the basis that it contained no evidence of remorse and that his Honour ignored the further reason of an apology as evidence of an acknowledgement of deference and respect which the appellant was otherwise alleged not to have shown. We do not consider that Merkel J erred in his approach to this issue. The appellant through his counsel offered an apology which was expressed to be "unreserved" but was one which was given in the context of the fact that the appellant maintained his plea of not guilty to the contempts and intended to appeal Merkel J's contempt findings. In our view, Merkel J was correct in finding that such an apology did not demonstrate any remorse that should be taken into account. 42 The appellant claimed that Merkel J had relied on his alleged bankruptcy as a reason to imprison him rather than to fine him on the basis that a fine would have no effect on a bankrupt. Again, his Honour's reasoning has been misunderstood. Merkel J did not determine that the imposition of a fine on a bankrupt has no effect. Rather, he considered that the imposition of a fine on the appellant was not likely to have a significant effect upon him having regard to all the circumstances. However, what is more relevant is that his Honour went on to say that the imposition of a fine "would be insufficient to vindicate the authority of the Court in respect of the disposal contempts". In this respect his Honour made no error. 43 The appellant also submitted that Merkel J placed excessive significance on the importance of the contempt proceeding as a deterrent to others and that he placed insufficient significance upon the particular circumstances of the appellant and this case. He also contended that in the circumstances an excessive sentence had been imposed. We do not consider that Merkel J placed insufficient significance on the particular circumstances of the appellant and this case. Those circumstances were set out in considerable detail and analysed by his Honour in both his reasons in which he found the contempts established and in his reasons in which he imposed the relevant penalties. We do not consider that Merkel J placed excessive significance on the importance of the contempt proceedings as a deterrent to others. As his Honour noted in par [17] of his reasons on 10 April 2006, the appellant's disposal contempts had a severe and deleterious effect on the administration of justice. We agree with his Honour's observation at par [17] that "the rule of law in a democratic society does not permit any member of the society to pick and choose the laws or court orders that are to be observed and those that are not". We would also observe that the contempts were very serious and involved deliberate attempts to transfer substantial funds in deliberate contravention of the orders of Sundberg J. 44 In the course of argument on the first day of the hearing of the appeal, counsel for the appellant submitted that the matter was brought before Sundberg J without a proper factual basis. Counsel was asked what facts were challenged before Merkel J. He was asked, in particular, whether the appellant challenged the fact that he was served with copies of the order made by Sundberg J. Counsel responded: "We did not challenge that, other than - we did not put in contrary material, your Honour". Counsel however did contend that the appellant challenged the allegations contained in the application, the statement of claim and in the affidavit that there was evidence of the appellant conducting a bank. He contended that the appellant challenged the allegations that he breached the orders of Sundberg J by contending that there was not sufficient material to prove beyond reasonable doubt the allegations and that they did not come within the ambit of the orders made by Sundberg J. 45 Counsel for the appellant acknowledged that there was evidence before Merkel J that the order was personally served upon the appellant and that he read and understood the order. North J then asked whether the endorsement required by O 37 r 2 of the Federal Court Rules had been made on the order itself. 46 Order 37 r 2 of the Federal Court Rules provides: "Service before committal or sequestration 2(1) Subject to the Rules, an order shall not be enforced by committal or sequestration unless - (a) the order or a certified or office copy thereof is served personally on the person bound; and (b) if the order requires the person bound to do an act within a specified time, the order or a certified or office copy thereof is so served before that time expires. (2) Subject to the Rules, where the person bound by an order is a corporation or organisation the order shall not be enforced by committal of an officer of the person bound or by sequestration of the property of an officer of the person bound unless, in addition to service under subrule (1) on the person bound - (a) the order or a certified or office copy thereof is served personally on the officer; and (b) if the order requires the person bound to do an act within a specified time, the order or a certified or office copy thereof is so served before that time expires. (3) An order or a certified or office copy thereof served under this rule must bear a notice (naming the persons concerned) that the person served is liable to imprisonment or to sequestration of property if - (a) where the order requires the person bound to do an act within a specified time, the person bound refuses or neglects to do the act within that time; or (b) where the order requires the person bound to abstain from doing an act, the person bound disobeys the order. (4) Subject to the Rules, where - (a) an order requires the person bound to do an act; and (b) another order specifies the time in which the act is required to be done, each order or a certified or office copy thereof shall be served on the person bound before the expiry of that time as so abridged or extended. (5) Where a person liable to committal or sequestration of his property by way of enforcement of a judgment or order has notice of the judgment or order - (a) by being present when the judgment is pronounced or when the order is made; or (b) by being notified of the terms of the judgment or order whether by telephone, telegram or otherwise, the judgment or order may be enforced by committal of that person or by sequestration of his property notwithstanding that service has not been effected in accordance with this rule. (6) The Court may dispense with service under this rule." 47 Counsel for the appellant said that he believed that the endorsement was on the order. Counsel for the appellant then continued a submission that Merkel J should have found there was reasonable doubt about whether the appellant read or understood the order of Sundberg J. Submissions were made as to whether the acts committed by the appellant fell within the terms of the order of Sundberg J. 48 North J then asked whether there was in Court a copy of the affidavit of service of the order of Sundberg J on the appellant. He asked whether an order was ever taken out with the endorsement required by O 37 r 2 of the Federal Court Rules. The only evidence before this Court as to the form of the order that was served on the appellant was in par 5 of an affidavit by Mathew Wyllie, a senior analyst employed by APRA sworn on 22 December 2005 in which he said: "On Friday 16 December 2004 I personally served a copy of the orders made by the Honourable Justice Sundberg on 15 December 2005 (the Orders) on the Respondent. I did so by attending at 15 Olwen Street, Nunawading. I knocked on the front door a number of times and obtained no answer. I went around to the back door and heard a person talking on the telephone then went to the back door, which was open, and I saw the Respondent in bed talking on the telephone. I recognised the Respondent from his photograph on the website of the Principality of Camside. I said "Hello David" and he responded. I asked him to come to the door and he came to the door. I introduced myself and handed him an envelope bearing the APRA crest containing the Orders." 49 Counsel for APRA was then asked how the Court could be satisfied that the order contained in the envelope handed by Mr Wyllie to the appellant bore the notice required by O 37 r 2. Counsel for APRA acknowledged that the Court could not be satisfied on the basis of the evidence that was before Merkel J. Counsel for APRA then sought the opportunity to see whether there was further evidence that could be placed before the Court as to the form of the order served on the appellant and whether it bore the notice required by O 37 r 2. 50 The issue which was, in substance, then being addressed was whether Merkel J was in error in being satisfied beyond reasonable doubt that an order with the notice required by O 37 r 2 had been served upon the appellant. The sealed copy of the order of Sundberg J which was on the Court file did not bear the notice required by O 37 r 2(3). 51 Counsel for APRA then conceded that the only form of order ever taken out and which could have been served on the appellant was a form of order that did not bear the notice referred to in O 37 r 2(3). 52 The issue then arose directly that the lack of the notice on the order served on the appellant meant that Merkel J could not make an order for the committal of the appellant. Weinberg J observed that there was no ground of appeal raising this issue which had been raised by the Court. Counsel for APRA, quite properly, stated that APRA would not take the failure to raise the issue in the notice of appeal as a point itself. 53 After the luncheon adjournment Counsel for the appellant sought, and was granted, leave by consent to add a further ground to the notice of appeal: "That there was no or no sufficient evidence at the hearing before Merkel J of: (a) the existence of an Order in compliance with Order 37 rule 2(1) and (3); (b) personal service upon the Appellant of any such order; such as to preclude the enforcement of such Orders against the Appellant." 54 Counsel for APRA then stated that the position of APRA in relation to the added ground of appeal was that it conceded that there was not an order either taken out or served on the appellant that complied with O 37 r 2(3). APRA submitted that the result of non‑compliance with O 37 r 2(3) was not that there could be no conviction for contempt or that a penalty could not be imposed but rather that there was no power to imprison. APRA relied on Re Modern Woodcraft Pty Ltd (in liq) (1997) 75 FCR 245 at 252-253. 55 APRA did not seek to challenge the proposition that non‑compliance with O 37 r 2(3) meant that the person served with a non‑complying order could not be imprisoned but rather sought to rely upon O 37 r 2(6) which provides that: "The Court may dispense with service under this rule". 56 In substance, the contention of APRA was that although Merkel J did not have the power to impose a term of imprisonment, so that the imprisonment part of his order should be set aside, the Full Court, on appeal, was in a position to look at the issue of penalty itself and was able to exercise the power of dispensation under O 37 r 2(6) and impose a sentence of imprisonment. 57 The focus of attention on O 37 r 2 also raised for consideration whether there was a further defect in the service of the order on the appellant. Order 37 r 2(1)(a) requires "the order or a certified or office copy thereof" to be served personally on the person bound. This gives rise to the question whether a copy of the order made by the Court, albeit bearing the relevant notice, which is served on the person to be bound is sufficient compliance with this rule or does the order have to be authenticated in a particular way? If a certified or office copy of the order is not served personally on the person bound, then the only other possibility is that the actual order made by the judge and signed by the judge or the original order authenticated by the Court has to be served. There was no evidence that an order signed by Sundberg J, or the original order authenticated by the Court or a certified or office copy of that order was served on the appellant. 58 APRA accepted that unless it could persuade the Court to exercise the dispensation power in O 37 r 2(6) then upon the correct construction of O 37 r 2(3) that there was no power to imprison the appellant although there was a power in the appellate court to impose a fine in relation to the disposal allegations. 59 The hearing of the appeal on 5 May 2006 was adjourned to enable APRA to consider and file further submissions in relation to the added ground of appeal. Counsel for APRA indicated on that day that APRA would not seek to adduce fresh evidence in relation to the added ground of appeal. Subsequent to the adjournment APRA determined to seek to adduce further evidence about the details of service of the order of Sundberg J on the appellant which was not included in the affidavit of Mr Wyllie sworn 22 December 2005. The explanation given for these details not being included in Mr Wyllie's affidavit was "oversight as to the level of detail which should be included in an affidavit of service of this nature". 60 A further affidavit of Mr Wyllie sworn on 22 May 2006 was filed with the Court and APRA sought to rely upon that affidavit. Mr Wyllie said that the envelope which he handed to the appellant on 16 December 2005 at 15 Olwen Street, Nunawading included an authenticated order of Sundberg J made on 15 December 2005. Mr Wyllie says that by his use of the word "authenticated" he was meaning an order with an original purple stamp of the Federal Court of Australia on it. He exhibited to his affidavit a copy of such authenticated order. That order was authenticated in the manner required by O 36 r 7 of the Federal Court Rules. Mr Wyllie went to the rear of the premises, saw a man who he recognised as the appellant from a photograph of the appellant on his Principality of Camside website and he gave the appellant the envelope with the authenticated order in it. 61 Having regard to the fact that no issue was taken by the appellant at the hearing before Merkel J as to the service of the order of Sundberg J on him or the efficacy of it, we are disposed to allow APRA to rely upon the further affidavit of Mr Wyllie on this appeal. 62 In its further submissions in relation to the added ground of appeal, APRA submitted that although the absence of the notice on the order served on the appellant required by O 37 r 2(3) must result in the penalty of imprisonment imposed by Merkel J being set aside, this Court should exercise its dispensation power under O 37 r 2(6), dispense with the requirement of the notice and impose a period of imprisonment. APRA accepted that the threshold for dispensation is a high threshold. If this Court was not disposed to exercise the dispensation power and order a period of imprisonment, APRA submitted that the absence of the O 37 r 2(3) notice did not prevent the Court from upholding the finding of contempt and that an alternative penalty such as a fine should be imposed in place of the imprisonment ordered by Merkel J. 63 The further affidavit of Mr Wyllie does not substantially add to the evidence which was before Merkel J as to service of the order of Sundberg J on 16 December 2005 on the appellant other than that service of an authenticated copy of the order made. This does not substantially add to the respondent's case for dispensation with service under O 37 r 2 as it is not contested that the order served on the appellant did not bear the notice required by O 37 r 2(3). In the absence of any challenge to service before Merkel J, it was open to Merkel J to be satisfied on the evidence of Mr Wyllie before him that the appellant was personally served with a copy of the order made by Sundberg J on 15 December 2005 albeit that there was no evidence before Merkel J that the copy served was an authenticated copy or a certified or office copy or a copy which bore the notice required by O 37 r 2(3). 64 We consider that O 37 r 2(3) requires service of either an order actually signed by the judge or an authenticated certified copy or authenticated office copy of that order, authenticated in accordance with O 36 r 7. 65 Having regard to the provisions of O 37 r 2(1)(a) the evidence in Mr Wyllie's affidavit was necessary before Sundberg J's order of 15 December 2005 could be enforced by committal or sequestration. However, the further evidence does not take the matter much further as the order served did not bear the notice required by O 37 r 2(3) so that it was not open to Merkel J to impose a penalty of imprisonment. 66 The appellant submitted that the effect of O 37 r 2 was that a failure to include a notice in accordance with r 2(3) precluded a court from imposing a fine. He contended that the intent of the requirement for the notice logically included a fine as the ultimate sanction for failure to pay a fine was imprisonment and that there should not be a basis for the indirect imposition of imprisonment when the direct sanction of imprisonment was precluded. 67 Although the copy of the order of 15 December 2005 served on the appellant did not bear the notice required by O 37 r 2(3), it does not follow that it was not open to Merkel J to find that the appellant had committed the contempts alleged against him. The opening words of O 37 r 1 are clear, namely that "an order shall not be enforced by committal or sequestration" unless, inter alia, it bears the notice required by O 37 r 2(3). The restraint on enforcement does not extend to precluding a finding of contempt otherwise open or the imposition of any fine which has been ordered. It is only committal or sequestration which are precluded. Although a fine might, in any given case, be enforced in default of payment by ordering committal, such an event is not contemplated or referred to in O 37 r 2, and, in any event, there are intermediate steps which have to be undertaken and additional requirements met before that ultimate destination is achieved. 68 In Windsurfing International Inc v Sailboards Australia Pty Ltd (1986) 19 FCR 110, Burchett J was concerned with an issue whether a contempt of court had been committed for failure to comply with the relevant rule at the time. In the course of his reasons, Burchett J said at 113: "It is conceded that O37, r 2 is not applicable, as it does not refer to undertakings but to orders. In any case, O 37, r 2 places an embargo only upon enforcement by committal or sequestration; it does not affect the power of the court to impose a fine for contempt in an appropriate case." This reasoning was followed by Lindgren J in Re Modern Woodcraft Pty Ltd (supra). Lindgren J said at 252‑253: "I think that r 2(3) is directed only to the situation in which enforcement by imprisonment or sequestration is ultimately sought. Although r 2(3) could be better expressed, it is clear, in my view, that it and r 2(1) are addressed to the point of time at which the Court is asked to enforce an order by committal or sequestration. The expression 'served under this rule' in r 2(3) refers to a service which is relied upon for the purpose of the making of such an order. It remains possible, in my view, for a contempt of the Court to be committed even though the order served does not bear the endorsement referred to. This view is supported by Windsurfing International Inc v Sailboards Australia Pty Ltd … and Bourke Shire Council v Dwyer (1993) 79 LGERA 185 at 186". 69 In Primelife Corporation Limited v Newpark Pty Ltd [2003] VSC 106, Nettle J, in the Supreme Court of Victoria, thought he should follow Windsurfing International Inc v Sailboards Australia Pty Ltd (supra) and Bourke Shire Council v Dwyer (1993) 79 LGERA 185. He concluded "with some diffidence" that there was a power under the relevant rule of the Supreme Court of Victoria to fine even if an order had not been endorsed in accordance with that rule. Subsequently, the Victorian Court of Appeal addressed his Honour's observations. In Miller v Eurovox Pty Ltd [2004] VSCA 211, Vincent JA, with whom Batt JA and Buchanan JA agreed, said at [38]: "Whilst his Honour's concern about the possible unfairness of this approach is understandable, it is apparent, in my view, that a clear distinction is made in the Rules between the penalties of committal and sequestration on the one hand, and the imposition of a fine on the other. Order 66.10 is applicable only to the enforcement of orders by sequestration or committal. Under Order 75.11 contempt may be punished, in the case of a natural person, by committal to prison or a fine or both. It does not seem to me that the absence of the endorsement required, if the order is to be enforced by possible imprisonment, would remove the power of the Court to impose a fine." 70 We are satisfied that there is a power in the Federal Court to fine for contempt of court even if the order served on the party alleged to be in contempt does not bear the notice required by O 37 r 2(3). We can see no reason to differ from the conclusions reached by Burchett J and consider that on the plain words of the rule, Burchett J was correct. 71 A possible reason why the notice required by O 37 r2(3) refers only to committal and sequestration, and not to a fine, lies in the fact that traditionally, it was considered that a fine was neither a permissible, nor appropriate outcome to proceedings for civil contempt. See generally Australian Consolidated Press Ltd v Morgan (1965) 112 CLR 483. If the only penalties available for breach of a court order were committal or sequestration, it made good sense to frame notices in the terms presently stipulated by the Rules. There was no need to refer to fines, because they simply could not be imposed. 72 Professor CJ Miller in his standard text Contempt of Court (2nd ed, 1989) observes that the view that a fine cannot be imposed for breach of a court order is now no longer held in England. He argues that, as a matter of principle, once it is accepted that a committal order may be made as a penalty for disobedience of court orders, it must follow that the court has power to impose the lesser penalty of a fine. He refers to a number of English cases, all of which assumed the existence of this power before the matter was finally settled, beyond doubt, in Heatons Transport (St Helens) Ltd v Transport and General Workers' Union [1973] AC 15 at 109. 73 Australian courts now take the same approach. Even without the authority of express provision in the Rules, fines are regularly imposed for breach of court orders. See for example Flamingo Park Pty Ltd v Dolly Dolly Creation Pty Ltd (1985) 5 FCR 169 at 178-181 per Wilcox J and Mudginberri Station Pty Ltd v Australasian Meat Industry Employees Union (1985) 11 FCR 573 at 577-578 per Bowen CJ. See also the discussion by Professor Miller at 32-33 and 445-446. 74 Any doubt about this Court's power to impose a fine has now been removed with express power provided by the High Court Rules 2004 (Cth), which came into effect on 1 January 2005. Section 31 of the Federal Court of Australia Act 1976 (Cth) confers upon the Court the same power to punish contempts of its power and authority as is possessed by the High Court. Rule 11.04 of the High Court Rules, which was in effect at the time of the contempts committed by the appellant, provides that, where the contemnor is a natural person, the Court or Justice may order that "the contemnor pay a fine, be committed to prison or both pay a fine and be committed to prison". 75 We do not consider that this is an appropriate case whereby where we should exercise the dispensation power given to the Court under O 37 r 2(6). We adopt the observation of Kaye J in Clifford v Middleton [1974] VR 737 at 741: "In my opinion, the power to relieve a party from the consequences of non‑compliance with the Rules of the Court where the liberty of the subject is in jeopardy should not be exercised unless the evidence shows that the requirements of and purpose for the particular rule have been fulfilled in a manner otherwise than in the form provided." Kaye J observed that a similar view had been expressed by Lord Greene MR in Gordon v Gordon [1946] P 99 at 103: "Attachment and committal are very technical matters, and as orders for committal or attachment affect the liberty of the subject such rules as exist in relation to them must be strictly obeyed. However disobedient the party against whom the order is directed may be, unless the process of committal and attachment has been carried out strictly in accordance with the rule he is entitled to his freedom". 76 As Nettle J pointed out in Primelife Corporation Limited v Newpark Pty Ltd (supra) at [31]: "The purpose of the indorsement is to warn the party of the consequences which might befall him should he fail to perform the act directed." There have been a number of cases in which dispensation has been given by a court but in such cases the court was satisfied either that the party alleged to be in contempt was present in court at the time when the order was made (Takhar v Animal Liberation (SA) Inc [2002] SASC 71), or that the terms of the undertaking had been expressly drawn to the attention of the party the subject of the order who had acted on legal advice (Keith Harris & Co Limited v Bryant (1980) 30 ALR 663 at 666) or that there was some evidence from the party alleged to be in contempt which disclosed that he had knowledge of the need to obey the order (Keith Harris & Co Limited v Bryant (supra) at 666). None of those circumstances exist, on the evidence, in the present case. 77 There is also a suggestion in Deverall v Wannunup Development Nominees Pty Ltd (1994) 12 WAR 561 at 565, that failure to serve an order bearing a notice of the kind required by O 37 r 2(3) might be condoned or dispensed with where the party the subject of the order had made up his mind to ignore the order and defy the court so that service of a properly endorsed order "would have been a useless formality". However, there is no evidence that this was the situation in the case of the appellant nor are we prepared to infer that he had such an intention having regard to his conduct during the days shortly after he was served with a copy of the order of Sundberg J. 78 Although there was uncontested evidence before Merkel J that transfers of money from the Terra Nova Cache account began on the day following the service of the order of Sundberg J on him and gave inconsistent answers to officers at the Bendigo Bank as to the need for the withdrawal he was seeking to make we are not satisfied that it is appropriate to infer from this conduct that he was aware of the fact that he was liable to committal if he did not comply with the order of Sundberg J. It must be remembered that the orders of Sundberg J were made ex parte and that the appellant had not been served with the application and supporting affidavit when he was served with the order. Further, there is no evidence that he received legal advice about the consequences of not complying with the order of Sundberg J at or about the time he was served with the order. 79 Having set aside the order of Merkel J for committal it is then necessary to consider what penalty this Court should impose in respect of the contempt committed by the appellant. The appellant submitted that it was not appropriate for this Court to vary or alter the penalty as it was the trial judge's province to determine the appropriate penalty. He submitted, in the alternative, that it was undesirable that an undischarged bankrupt be fined although he did not make it clear why this was so other than to say that Merkel J had reached this conclusion. 80 This Court has the power to impose an alternative penalty pursuant to s 28 of the Federal Court of Australia Act 1976 (Cth). The contempts committed by the appellant were most serious contempts. We agree with Merkel J's characterisation of them. Although Merkel J was concerned about the efficacy of the imposition of a fine upon the appellant having regard to the fact that he was a bankrupt, we are satisfied that it is appropriate in all the circumstances that a substantial fine be imposed in recognition of the serious nature of the contempts committed. 81 In these circumstances we consider that an appropriate penalty to be imposed for the disposal contempts is $50,000.00. 82 As to the question of costs, the appellant has only succeeded on a point raised by the Court after the hearing of the appeal commenced and he was given leave to amend his notice of appeal. Otherwise he has not been successful on any of the grounds raised in his notice of appeal. In these circumstances we consider that the appropriate costs order to make is that each party bear its or his own costs of the appeal and of the proceeding before Merkel J. 83 On the application for leave to appeal from the order of Merkel J on 30 March 2006 dismissing the appellant's motion to set aside orders made ex parte against him by Sundberg J on 15 December 2005, leave is refused with costs. The order of Sundberg J had no further operation after Gray J's order of 10 January 2006. The reason why the appellant was seeking to set aside Sundberg J's order was in the mistaken belief that such setting aside would eliminate the basis for the findings of contempt made by Merkel J. As we have noted earlier, that belief was misconceived. Whilst Sundberg J's order was extant, the appellant was obliged to observe it. 84 Sundberg J's order was made ex parte but there was no evidence before Merkel J that the respondent had misled the Court in obtaining the order sought or that it had failed to make full disclosure. The grounds upon which leave to appeal is sought relating to abuse of process before Sundberg J or that there were other grounds upon which Sundberg J's orders should not have been made are misconceived because, even if there was any substance in them, and we are satisfied that there is not, they did not have any effect on the proposition that while Sundberg J's order was extant, the appellant was obliged to comply with it.

Siminton v Australian Prudential Regulation Authority

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