Wyszenko v Wyszenko

Judgment 1HIS HONOUR: By notice of motion filed on 23 January 2012 the plaintiff seeks a declaration that the defendant, Ms Evi Wyszenko, is guilty of a civil contempt of court for failing to comply with an order of the Court made on 11 October 2011 that she pay the costs of the plaintiff's solicitors in the agreed sum of $40,000 on or before 25 October 2011. That order was made by consent. The defendant did not pay the sum of $40,000 on or before 25 October 2011, or at all. It is the failure to pay this sum that is alleged to constitute a contempt of court. 2This application has taken some time to come on for hearing. The matter was listed for hearing on 14 May 2012 when there was no appearance for the defendant. The matter was adjourned to today and the defendant has appeared. No affidavit was filed or served by the defendant in opposition to the claim, but she was permitted to give oral evidence at the hearing today. 3The background to the orders of 11 October 2011 is that on 10 May 2011, the plaintiff filed a statement of claim which sought, amongst other relief, a declaration that the defendant held her interest in a property in Gosford on trust for the plaintiff and an order that she remove all registered and unregistered dealings on the property, including a mortgage to the Commonwealth Bank of Australia. An order was also sought that the defendant, either in her personal capacity or as executor of her late husband's estate, pay the plaintiff $293,541.41. 4The plaintiff was the father of the defendant's husband. Her husband died on 2 October 2010. The proceedings were listed for hearing before Black J on 11 October 2011. The Associate's record of the proceedings on that date records that the matter was settled. Both the plaintiff and the defendant were represented by solicitors and counsel. Orders were made by consent. These orders included that the defendant pay the plaintiff the sum of $250,000 by 11 October 2012 and pay the plaintiff's costs, agreed at $40,000, on or before 25 October 2011. 5The defendant's position is that she has not been able to comply with the latter order because she has not had the moneys available to do so. The defendant said that she did not deny her liability to pay, but did not have the physical funds with which to do so. She remains the owner of two properties, but she says, and I accept, that they are mortgaged, the mortgage is cross-collateralised, and if the properties were sold it is unlikely that any proceeds would be available with which to pay the judgment debt of $40,000. In short, she says there is no equity in the properties. There is no contrary evidence. 6It was also a term of an agreement made between the parties on 11 October 2011 that the plaintiff would have a licence to occupy the Gosford property until the full amount of $250,000, plus any interest, was paid. 7The defendant's evidence is that she does not have any credit balance in any bank account and that she pays income received from commissions as a finance broker into a line of credit account which is overdrawn. She says that her personal assets consist of the two properties, together with a car she described as a Nissan Micra. There was no evidence that the car could be sold to realise proceeds which would be sufficient to pay the judgment debt. 8The defendant was asked about a payment of approximately $293,000 which she acknowledges the plaintiff made to her late husband. Her evidence was that her husband, and not she, who dealt with those funds, and that she did not obtain the benefit of them. Again, there was no evidence that she did obtain the benefit of the funds. There is no evidence that the defendant has had moneys with which to pay the judgment debt. 9The fact that the defendant agreed to the orders of 11 October 2011 requiring her to pay $40,000 in 14 days could give rise to an inference that at that time she had the moneys available with which to comply with the Court's order. The defendant's evidence is that that inference would not be correct. At that time the defendant was seeking to pursue a claim against Tower Life Australia Limited on her late husband's life insurance policy. She said that by the end of 2010 she was aware that Tower Life had refused to make a payment under the policy. It asserts that her late husband failed to comply with his duty of disclosure when he applied for the policy, or made a misrepresentation, which entitles it to refuse to pay under the policy. Prior to October 2011, the defendant had retained Matthews Folbigg, solicitors, to act for her in relation to that claim. It is clear from correspondence she tendered with Matthews Folbigg that she had difficulty prior to October 2011 in raising even a small amount towards that firm's costs. She said that that firm is now acting for her on a no-win no-fee basis. She was able to deposit only $575 in that firm's account on account of expenses. 10It seems the insurer refused to make documents available to Matthews Folbigg which they sought in order to assess her prospects of success. As a result, an application has been filed in the District Court for preliminary discovery. It appears that that matter remains unresolved. 11The defendant gave evidence that when she consented to the orders on 11 October 2011, she hoped that funds would be available from her late husband's insurance policy with which to make the payment. She had no reason, however, at that time to expect that such a payment would be made, at least prior to 25 October 2011. She considers that the claim against the insurer is, to use her words, a viable one; on the basis that the solicitors have agreed to act on the basis that they will not be paid if the claim does not succeed. 12Having regard to the evidence the defendant has adduced, any inference that might otherwise arise from her having consented on 11 October 2011 to the order that she pay $40,000 by 25 October 2011, that she, at that time, had the means with which to make the payment, has been rebutted. 13It is not every breach of an order of a court that amounts to a contempt. In Australasian Meat Industry Employees Union v Mudginberri Station Pty Ltd [1986] HCA 46; (1986) 161 CLR 98 the plurality said (at 112 and 113) that a wilful or deliberate breach of a court order will constitute contempt. It was held that "a deliberate commission or omission which is in breach of an injunctive order or undertaking will constitute such wilful disobedience, unless it be casual, accidental or unintentional". 14In Anderson v Hassett [2007] NSWSC 1310, Brereton J held that it is not necessary for the party alleging contempt to prove that the alleged contemnor had a specific intent of disobeying the court's order. 15Nonetheless, it is necessary for the party alleging contempt to prove that the breach of the court's order was deliberate and not casual, accidental or unintentional. 16In the present case, it is unnecessary to decide whether the party alleging contempt must prove the deliberateness or wilfulness of the breach beyond reasonable doubt, or whether, in the case of a civil contempt such as this, proof to the standard prescribed by s 140 of the Evidence Act 1995 is sufficient (see Markisic v The Commonwealth of Australia [2007] NSWCA 92; (2007) 69 NSWLR 737 at [60]; Pang v Bydand Holdings Pty Ltd [2011] NSWCA 69; Sigalla v TZ Limited [2011] NSWCA 334, where it is assumed, following Witham v Holloway [1995] HCA 3; (1995) 183 CLR 525, that proof of each element in the charge must be beyond reasonable doubt, but where the operation of the Evidence Act 1995 (NSW) on that question was not considered. Compare Australian Securities and Investments Commission v Sigalla (No. 4) [2011] NSWSC 62 at [89]-[94].) 17The question is not whether the defendant acted recklessly or deceitfully in agreeing to the orders of 11 October 2011. The question is whether her failure to make the payment of $40,000 required by 25 October 2011 was deliberate or wilful. In my view, her failure to make that payment could not be so described if, as I have found, she was unable to make the payment. In National Australia Bank (NAB) Ltd v Juric [2001] VSC 375, Gillard J stated (at [37]) that the essential requirements to prove a civil contempt of court involving a breach of the order of the Court were as follows: "1. That an order was made by a court. 2. That the terms of the order are clear, unambiguous and capable of compliance. 3. That the order was served on the alleged contemnor or excused in the circumstances or service dispensed with, pursuant to the Rules of Court. 4. That the alleged contemnor has knowledge of the terms of the order. 5. That the alleged contemnor has breached the terms of the order." (My emphasis.) 18I followed that decision in Wyszynski v Bill [2005] NSWSC 110. 19The fact that the defendant consented to the order 14 days before the time for payment fell due does not mean that her breach of the order was deliberate or wilful, even though she did not then have the means of making the payment. Nor does it mean that there was any interference with the authority of the Court. 20By consenting to the order for payment of $40,000 by 25 October, the defendant put the plaintiff in the position of being a judgment creditor, with all of the remedies available to a judgment creditor for the enforcement of an order for the payment of a money sum. Pursuant to s 106 of the Civil Procedure Act (2005), the judgment debt could be enforced by a writ for the levy of property or a garnishee order, or a charging order. Pursuant to r 40.2 of the Uniform Civil Procedure Rules 2005, the judgment for the payment of money could be enforced by the appointment of a receiver of income of the property of the defendant, or sequestration of her property. Sequestration would not be possible unless r 40.7 were complied with. In the present case the defendant had notice of the judgment by being present when the orders were made (Uniform Civil Procedure Rules, r 40.7(4)). 21I accept the defendant's evidence that she hoped that moneys would be forthcoming with which to make the payment in time, although I am not satisfied that there was a reasonable basis, at the time when she consented to the order, for that hope. That does not mean that her failure to comply with the order within time was deliberate or wilful. For these reasons, the contempt is not established. 22Even if contempt had been established, I would not have been prepared to make any orders for punishment of the contempt. The order in question is for the payment of a sum of money. Except in cases of contempt, the Civil Procedure Act and the Rules do not provide for attachment or committal as a mode of enforcement for the enforcement of a money judgment. Debtors' prison has fallen into disfavour. In Re Davies (1888) 21 QBD 236 Mathew J, albeit in a very different context, said (at 239) that: "Recourse ought not to be had to process of contempt in aid of a civil remedy where there is any other method of doing justice." 23That principle was endorsed by Nettle and Ashley JJA in the Court of Appeal in Victoria in Morgan v State of Victoria [2008] VSCA 267; (2008) 22 VR 237 (at [145]). Their Honours said: "It is a general principle that process by way of contempt should not be lightly employed and not in aid of a civil remedy where some other method of achieving justice is available." 24It is this principle that probably explains the paucity of contempt applications for failure to pay moneys payable under a judgment. As previously mentioned, the plaintiff has all the remedies of a judgment creditor. Punishment of the defendant for contempt would not advantage the plaintiff. As it is established that the defendant remains unable to pay the judgment, no useful purpose would be served by proceeding to punish her for contempt, had the contempt been established. 25For the reasons I have given, I am not satisfied that contempt has been established. I order that the plaintiff's notice of motion filed on 23 January 2012 be dismissed. [Parties addressed on costs.] 26Having regard to the defendant's failure to serve evidence which, had it been served, might have meant that the plaintiff did not press this application, and having regard to her non-attendance when the matter was previously listed for hearing, the notice of motion will be dismissed without costs. I order that there be no order as to costs in respect of the plaintiff's notice of motion. 27Exhibit A may be returned, but the documents comprising Exhibit A are to be retained by Ms Wyszenko, at least until the expiry of 28 days, and if an appeal is filed, until the determination of such an appeal. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 29 June 2012