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[2011] NSWSC 549
Supreme Court of NSW
2011-06-03
Bergin CJ
Original judgment source is linked above.
The Full Court in Siminton v Australian Prudential Regulation Authority [2006] FCAFC 118; (2006) 152 FCR 129 observed that because liberty of the subject was involved, dispensation with compliance with the requirements of O 37 r 2(3) should not be ordered, unless the evidence shows that the requirements of that rule have been fulfilled in some other way. 19Finally Mr Ipp relied upon the following passage of Drummond J's judgment in Australia Securities Commission v MacLeod, (Federal Court of Australia, 24 February 1993, unreported), in which his Honour was dealing with the failure to give notice of the penal consequences of failure to comply with a judgment of the Court: However, the absence of notice on the part of the respondent of those consequences, while not depriving the court of jurisdiction under r 2(5) to make an order for committal, would be a discretionary consideration that the court could take into account in deciding whether to order committal where there has not been personal service of an appropriately endorsed judgment or order on the respondent. 20Reference was also made to McGuirk v University of New South Wales [2009] NSWSC 1058 and [2010] NSWSC 448. However these decisions do not take the matter any further. 21The approach that has been adopted in these decisions is that where a penal notice has not been served, there is no impediment to the Court proceeding to hear the application for a finding of contempt, however the options available to the Court in the exercise of its discretion in sentencing, if a finding of contempt is made, is limited if no notice has been served. 22In those circumstances, Mr Ipp submits that there is a body of authority available to his client to submit that there is a serious issue to be tried as to whether the failure to serve a penal notice is a fatal flaw. At this stage, I am dealing only with an application for an adjournment and with Ms Dulhunty's application that I should not allow it because it would be inefficacious because whatever evidence would be called would not be able to be used efficiently or effectively because of the fatal flaw. 23I am satisfied that there is a serious issue to be tried in respect of whether it is necessary to comply with Rule 40.7(3) before a finding of contempt can be made and it should be considered at the trial of the matter. 24Accordingly, I will allow the adjournment on terms.
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Dealing first with the question of notice of the order to the respondents, it was not suggested that personal service of the order endorsed with a penal notice in accordance with UCPR r 40.7 (1) and (3) was effected. However, it was established that a sealed copy of the order, albeit without a penal notice, was provided to the solicitors for the respondents prior to expiry of time in compliance with the order. As I found, when it was submitted at the conclusion of the applicant's case that there was no case to answer, there was evidence from which at least, in the absence of evidence to the contrary, it was open to the court to conclude that the defendants had been notified of the terms of the order, whether by telephone, facsimile, email or otherwise, within r 40.7 (4)(b). Not only did no evidence to the contrary emerge, but evidence adduced in Mr Horthy's case affirmatively established that before time for compliance with the order had expired, he had received a copy of the order from the solicitors then acting for him. Neither respondent now disputes that he had notice of the order.
As the evidence stands, I am unable to be satisfied to the requisite standard that a copy bearing the penal notice was served. That, however, as I have said, goes to whether it may be inappropriate to proceed by way of committal or sequestration, and does not prevent a conclusion that there has been a contempt of court for which other sanctions might be available. Indeed it does not necessarily preclude the court even from proceeding by way of committal, if the dispensing power under r 40.7 is exercised although whether such a remedy should be invoked is influenced by whether the contemnor was aware of it, [see NCR Australia Pty Limited NSW v Credit Connection [2005] NSWSC 1118]. 18Additionally, Mr Ipp relied upon the following passage of Toben v Jones [2009] FCAFC 104:
Mr Hassett was present in court when the relevant order was made by Windeyer J and, on his own evidence, agreed to it. A sealed copy was sent to him by facsimile transmission and by pre-paid post on 2 August 2006. Neither bore the notice to party bound required by UCPR, r 40.7(3), nor was the order served personally on Mr Hassett, as required by UCPR, r 40.7(1). However, UCPR, r 40.7(4) provides that where a party bound has notice of a judgment by being present when the judgment is given, or by being notified of the terms of the judgment by telephone, telegram or otherwise, it may be enforced without service in accordance with r 40.7(1) and (3). As Mr Hassett was in court when the order was made, and on his own evidence agreed to it, and was notified of its terms by facsimile and post, and takes no point about sufficiency of notice of the order, I will accede to the application to deal with the matter pursuant to UCPR, r 40.7(4), notwithstanding that service of the order has not been effected in accordance with r 40.7.
The notice of motion was not served personally on Mr Hassett as required by SCR, Pt 55 r 9, but delivered to a receptionist at his office. However, as he has appeared to oppose the application, and takes no point about adequacy of service, I am prepared to dispense, pursuant to (NSW) Civil Procedure Act 2005, s 14, with further service of the motion. 15Anderson v Hassett involved a solicitor who had allegedly failed or refused to comply with an order of the Court to produce documents in respect of the estate of which he was the executor. It is not clear from the judgment whether any point was taken as to the existence of a notice as required by Rule 40.7(3) having been served on the defendant. The conclusion reached by Brereton J in paragraph 9 does suggest that if a party has notice of a judgment (presumably one that did not include the penal notice) by being present when the judgment is given then it may be enforced "without service in accordance with r 40.7(1) and (3)". It does not appear that there was any argument in relation to the need for the notice. It may have been of no moment in that case because the alleged contemnor was a solicitor. I am of the view that in that case, in particular in paragraph 9, Brereton J was focusing on the question of service rather than the content of the "judgment". In fact when judgments are given in Court, the matter referred to by Brereton J, there is usually no reference to any possibility of the person being liable to imprisonment or other penalty for non compliance with the judgment. The judgment referred to in Part 40.7 is the judgment entered and sealed for service on the alleged contemnor. 16Mr Ipp relied upon the following passage of Campbell J's (as his Honour then was) judgment in NCR Australia Pty Ltd v Credit Connection Pty Ltd [2005] NSWSC 1118 in which his Honour was dealing with Part 42 r 8 of the Supreme Court Rules 1970, now "mirrored" in Part 40.7 of the Rules :
An allegation of contempt of court is serious and not to be made lightly. It may lead to loss of liberty. It behoves anyone pursuing such an allegation to do so with precise attention to all matters going to due process. 12There is no issue that the plaintiff failed to comply with Rule 40.7(3) of the Rules . In his written submissions Mr Ipp conceded that the Consent Orders were not served personally as stipulated in Rule 40.7(1) and that the defendant was not served with a notice under Rule 40.7(3) that he would be liable to imprisonment if he disobeyed the orders. Those written submissions included what was described as an application under Rule 40.7(4) to have the Consent Orders enforced notwithstanding the absence of compliance with Rule 40.7(1) and Rule 40.7(3). 13In support of this submission Mr Ipp relied upon a number of decisions of this Court including Anderson v Hassett [2007] NSWSC 1310 per Brereton J at [9]; Davies v Beyond Building Systems Pty Ltd & Ors [2009] NSWSC 1282 per Brereton J at [6]; Duncan-Strelec v Tate [2008] NSWSC 1145 per Young CJ in Eq (as his Honour then was) at [17] and [18]; and Leung v Good Friend Development Pty Ltd [2008] NSWSC 142 per Barrett J at [6]. 14In Anderson v Hassett [2007] NSWSC 1310 Brereton J said:
The way in which Part 42 rule 8 Supreme Court Rules 1970 works is that, first, subrules (1) and (3) contain a positive requirement that, before a judgment is enforced by committal, a minute of the judgment be personally served on the person bound, in a form which is endorsed with the notification referred to in subrule (3). The minute of the judgment which is so served must be a minute of the very judgment in relation to which the order for committal is sought. Thus, in the present case, the minute of the judgment which is personally served was required to be a minute of the order of 10 May 2000 and of each of the variation orders which are identified in the Amended Notice of Motion and in the ten Statements of Charge.
Subrule (6) creates a discretionary power in the Court to enforce a judgment by committal even if the requirements of the earlier paragraphs in the rule have not been complied with. The circumstance in which that discretionary power arises is either one of the circumstances listed in subrule 6(a) and (b). However, the "judgment" that is there referred to is the judgment that is being sought to be enforced. Thus, in the present case, one of the circumstances in which the discretionary power under subrule 6 could be exercised would be if the second defendant had been present when the order of 10 May 2000, and each of the subsequent varying orders identified in the Notice of Motion and each Statement of Charge, was made. The other is if the second defendant had been notified of the terms of the order of 10 May 2000, and each of the varying orders.
Para (7) confers a separate power for the Court to dispense with service. It is in terms unconfined. ...
If the plaintiff had served the second defendant with a copy of the order endorsed as required by Part 46 rule 8, there would have been no real doubt that he knew that imprisonment was a possible consequence of breach. In that situation I would have imposed a sentence of imprisonment. However that course is not open to me. 17In Davies v Beyond Building Systems & Ors [2009] NSWSC 1282 Brereton J was dealing with a failure to serve a penal notice and said:
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