Australian Securities and Investments Commission v Michalik

[2004] NSWSC 1259

Reported Decision: 52 ACSR 115
(2005) 23 ACLC 188

Supreme Court

CITATION:	ASIC v Michalik & Ors [2004] NSWSC 1259
HEARING DATE(S):	20 December, 2004
JUDGMENT DATE:	20 December 2004
JURISDICTION:	Equity Division
JUDGMENT OF:	Palmer J
DECISION:	Each Defendant sentenced to eighteen months imprisonment; First Defendant fined $120,000; Second Defendant fined $80,000; Defendants ordered to pay indemnity costs.
CATCHWORDS:	CONTEMPT OF COURT - CORPORATIONS - ASIC commences proceedings against Defendants alleging contraventions of Corporations Act - Defendants restrained by interlocutory orders from dealing with assets or leaving Australia - in deliberate disobedience of orders, Defendants realise assets and attempt to flee - discussion of relevant factors for consideration in determining punishment.
LEGISLATION CITED:	- Corporations Act 2001 (Cth) - s.911A, s.911B - Supreme Court Rules 1970 (NSW) - Pt 55 r.6, r.7, r.10, r.13
CASES CITED:	- Australian Competition & Consumer Commission v Hughes (2004) 207 ALR 116 - Australian Competition & Consumer Commission v World Netsafe Pty Ltd (2003) 133 FCR 279 - ASIC v Matthews (2001) 39 ACSR 110 - Court of Appeal Registrar v Craven (No 2) (1995) 120 FLR 464 - Marriage of Tate (No 3), Re (2003) 30 Fam LR 427 - Principal Registrar of the Supreme Court of New South Wales v Jando (2001) 53 NSWLR 527 - Registrar of the Court of Appeal v Maniam (No 2) (1992) 26 NSWLR 309 - Registrar of the Court of Appeal v Raad (unrep.) NSWCA, 9 June 1992 - Ryan v Wright (No 2) [2004] NSWSC 1019 - Von Doussa v Owens (No 3) (1982) 31 SASR 166 - Wood v Staunton (No 5) (1996) 86 A Crim R 183 - Young v Jackman (unrep.) NSWCA 2 June 1993
PARTIES :	Australian Securities and Investments Commission - Plaintiff Andrzej Janusz Michalik - First Defendant (aka Tomas Tomaszewski and Stanislav Konstanty Krawczyk) Martin Michalik - Second Defendant Kilahim Pty Ltd - Third Defendant
FILE NUMBER(S):	SC 4434/04
COUNSEL:	D.R. Stack - Plaintiff D.E. Grieve QC, B. Slowgrove - Defendants
SOLICITORS:	Australian Securities & Investments Commission - Plaintiff Dennis & Co - Defendants

Introduction

1    The First and Second Defendants have pleaded guilty to a number of charges of contempt of court. They have been detained in custody and now appear before the Court for determination of what punishment, if any, should be imposed. 2    The First Defendant is the father of the Second Defendant; together they control the Third Defendant. On 10 August 2004 the Australian Securities and Investment Commission (“ASIC”) commenced proceedings against the Defendants for numerous contraventions of the Corporations Act 2001 (Cth) (“CA”) involving dishonesty. Large sums of money were in issue. ASIC's contentions are that:


a) the Defendants had been carrying on a financial services business without an Australian Financial Services Licence, in contravention of s.911A and s.911B CA;

b) the business carried on by the Defendants involved “enabling” persons to gain access to their superannuation funds in circumstance where those persons were not permitted by law to gain such access;

(c) the business was frequently advertised in a number of newspapers and, in a large number of cases, those advertisements were made under the name of “Ray Rohid” ;

(d) the business appears to have worked in a way whereby a legitimate superannuation fund would be provided with a ‘roll over’ form which resulted in the Defendants receiving the client’s superannuation funds which were then banked into their accounts and then remitted (less a significant commission) to the relevant client – in this regard, the accounts evidence that in excess of $10.336 million had been received and deposited by the Defendants;

(e) in at least two instances:

i) the signature of the clients appears to have been forged on several of the documents;

ii) the ‘rollover’ forms contained false information in terms of the identity of the fund into which the rollover was to be made; and

iii) commission was charged between 20% to 30% of the value of the fund.

3 On 10 August 2004 White J, upon ex parte application by ASIC, made certain asset preservation orders against the Defendants, ordered the First and Second Defendants to surrender their passports, and prohibited them from leaving New South Wales. The orders were made effective up to and including 16 August 2004. There is no dispute that the orders were served on the First and Second Defendants personally on 11 August 2004. 4 On 16 August the matter came before Barrett J. The Defendants were represented by counsel and solicitors. Barrett J made interlocutory orders by consent extending the orders made by White J until further order, with some variations. In addition, his Honour made orders restraining the First and Second Defendants, until further order, from leaving New South Wales or Australia and from going within 200 metres of a point of overseas departure. 5 On 22 November 2004, upon ex parte application by ASIC, I extended the scope of those interlocutory orders. Relevantly, I ordered that within one business day of service of the orders the First and Second Defendants deliver up to the Registrar all passports and airline tickets concerning their travel arrangements for the ensuing twelve months. The orders were served personally on the First and Second Defendants on 22 and 23 November. The proceedings were stood over for further hearing to 29 November 2004. 6 On Saturday, 27 November 2004, the First and Second Defendants were apprehended by the Australian Federal Police at Perth Airport as they were endeavouring to board a plane to Singapore. They had in their possession passports and airline tickets. ASIC then made urgent application to me as Duty Judge for a warrant for the arrest of the Defendants under Pt 55 r.10. ASIC prepared a Notice of Motion in accordance with Pt 55 r.10(a) and r.6(1), and a Statement of Charge in accordance with Pt 55 r.7. I granted leave to file the Notice of Motion and Statement of Charge in Court immediately. There had been no time to prepare an affidavit in support of the motion and the circumstances of the Defendants' apprehension were related to me orally by Counsel. I signed Warrants of Arrest for the Defendants. The Defendants were then taken into custody in Perth and, after an extradition proceeding, they were returned to New South Wales and delivered to the Sheriff.

The guilty pleas

7    On 29 November 2004, Barrett J granted leave to ASIC to file Amended Statements of Charge against the Defendants. The Amended Statements were filed on 10 December. On 10 December 2004, when the matter came back before me, Mr Slowgrove of Counsel appeared for the First and Second Defendants and indicated that they intended to plead guilty to a number of the charges of contempt. The matter was then stood over until today. Mr Grieve QC now appears with Mr Slowgrove for the First and Second Defendants, and Mr Stack appears for ASIC. 8    The First Defendant pleads guilty to twelve separate contraventions of the Court's orders made on 10 August, 16 August and 22 November 2004, as follows.


In contravention of the 10 August Orders:

a) on 12 August 2004, the First Defendant effected, caused, permitted and allowed $112,000 to be transferred from New South Wales to an account in Singapore; and

b) on 13 August 2004, the First Defendant effected, caused, permitted and allowed $100,000 to be withdrawn from a Citibank bank account and deposited into a credit card account with Westpac Banking Corporation.

In contravention of the 16 August Orders :

a) on 18 August 2004, the First Defendant effected, caused, permitted and allowed a withdrawal totalling $20,000;

b) on 19 August 2004, the First Defendant effected, caused, permitted and allowed three separate withdrawals totalling $60,000;

c) on 30 September 2004, the First Defendant effected, caused, permitted and allowed $295,000 to be transferred from New South Wales to an account in Hong Kong;

d) on 25 October 2004, the First Defendant effected, caused, permitted and allowed $280,000 to be transferred from New South Wales to an account in Hong Kong;

e) on or shortly before 27 November 2004, the First Defendant left New South Wales; and

f) on 27 November 2004, the First Defendant attended Perth International Airport, checked in for a flight on Qantas flight number QF71 which was bound for Singapore and attempted to enter the overseas departure area at Perth International Airport.

In contravention of the 22 November Orders:

a) the First Defendant failed to deliver up to the Court his Australian passport; and

b) the First Defendant failed to deliver up to the Court his Polish passport.

ASIC does not press the other charges contained in the Amended Statement of Charge against the First Defendant.

9    The Second Defendant pleads guilty to eight separate contraventions of the Court's orders made on 10 August, 16 August and 22 November 2004 as follows.


In contravention of the 10 August Orders, on 13 August 2004, the Second Defendant effected, caused, permitted and allowed $100,000 to be withdrawn from a Citibank bank account and deposited into a credit card account with Westpac Banking Corporation.

In contravention of the 16 August Orders:

a) on 18 August 2004, the Second Defendant effected, caused, permitted and allowed a withdrawal totalling $10,000;

b) on 30 September 2004, the Second Defendant effected, caused, permitted and allowed $295,000 to be transferred from New South Wales to an account in Hong Kong;

c) on 19 November 2004, the Second Defendant effected, caused, permitted and allowed $60,000 to be transferred from New South Wales to an account in Hong Kong;

d) on or shortly before 27 November 2004, the Second Defendant left New South Wales; and

e) on 27 November 2004, the Second Defendant attended Perth International Airport, checked in for a flight on Qantas flight number QF71 which was bound for Singapore and attempted to enter the overseas departure area at Perth International Airport.

In contravention of the 22 November Orders:

a) the Second Defendant failed to deliver up to the Court his Australian passport; and

b) the Second Defendant failed to deliver up to the Court his Polish passport.

ASIC does not press the other charges in the Amended Statement of Charge against the Second Defendant.

10    ASIC submits that the contempts committed by the Defendants were repeated, wilful and done in conscious defiance of the Court's orders. ASIC says that in carrying out the contempts, the Defendants acted in concert with the purpose of fleeing the jurisdiction permanently, taking with them as much of their assets as they could realise in order to escape the consequences of the proceedings which ASIC had commenced against them. In doing so, ASIC says, the Defendants acted in accordance with a carefully worked out plan, practising a number of frauds and deceits in its execution. 11    The Defendants have offered no evidence contradicting any of the evidence tendered by ASIC, nor have they offered any evidence seeking to explain or excuse their conduct.


The transfers of cash

12    Between the making of the first of the Court's orders on 10 August 2004 and the Defendants' apprehension at Perth Airport on 27 November, the Defendants dealt with at least $837,000 in contravention of the Court's orders as follows:


a) a total of $747,000 was paid into bank accounts in Hong Kong and Singapore in the joint names of the First and Second Defendants; and

b) a total of $90,000 was disposed of between 18 and 19 October 2004 by both the First Defendant (who drew $80,000) and the Second Defendant (who drew $10,000).

13    These funds included proceeds from the liquidation of the Defendants’ assets, as follows:


a) on 29 September 2004, the First and Second Defendants authorised a “complete” draw down of $294,000 on a “real property” mortgage facility conducted by the Third Defendant with Perpetual Trustees. At that time, the facility had a debit balance of approximately $5,000, but had a draw-down limit of $299,700;

b) between 11 and 21 October 2004, the First Defendant sold a large parcel of shares on the Stock Exchange which resulted in the receipt of approximately $272,500 in cash.

14    In order to transfer these and other funds out of Australia, the First and Second Defendants used bank accounts undisclosed to ASIC and established new bank accounts as follows:


a) an existing account with HSBC was used to send $112,000 to Singapore;

b) on 26 August 2004, an account was opened with ANZ in the name of the Third Defendant, with the First and Second Defendants as signatories. This account was to receive the “house draw down funds” and to effect the transfer of $295,000 to Hong Kong;

c) on 20 September 2004, an account was opened with HSBC by the First Defendant. This account was used to receive “share sale funds” and to effect the transfer of $280,000 to Hong Kong;

d) on 17 September 2004, a credit card facility was opened with St George Bank by the First Defendant; and

e) on 19 November 2004, an account was opened with the Bank of Cyprus in the name of the Third Defendant, the signatories being the First and Second Defendants.

15    The following transfers of funds overseas occurred:


a) on 18 November 2004 the sum of AUD 4,980 was transferred from HSBC Bank Australia to an account in Hong Kong with Citibank in the name of the First Defendant. The details of the customer ordering this transfer are recorded as “Andrzej J. Michalik of 39 Morrison Avenue, Coledale, NSW” ;

b) on 19 November 2004 the sum of AUD 60,000 was transferred from National Australia Bank to an account in Hong Kong with Citibank in the name of the First Defendant. The details of the customer ordering this transfer are recorded as “Martin Michalik of 39 Morrison Avenue, Coledale, NSW” ;

c) also on 19 November 2004 the sum of AUD 30,095 was transferred from Citibank to an account in Hong Kong with Citibank in the name of the First Defendant. The details of the customer ordering this transfer are recorded as “Andre Tomaszewski of 11/12 Woodville Street, Hurstville, NSW” ;

d) on 19 November 2004 the sum of AUD 4,980 was transferred from HSBC Bank Australia to an account in Hong Kong with Citibank in the name of the First Defendant. The details of the customer ordering this transfer are recorded as “Andrzej J. Michalik of 39 Morrison Avenue, Coledale, NSW” .



New passports

16    On or shortly after 16 August 2004, the Defendants had, in accordance with the orders made on that date, surrendered to the Registrar in Equity their Australian and Polish passports. 17    On 20 August 2004, the First Defendant completed an application for the urgent issue of a new Australian passport in which he falsely asserted that he had only ever held a passport which had expired in 1988. He did not disclose that his current passport was held by the Court. A new passport was issued to him on 23 August 2004. 18    On 7 September 2004, the Second Defendant completed an application for the urgent issue of a new Australian passport in which he falsely asserted that he had lost his passport at home on 10 August 2004. 19    During September 2004, both the First and the Second Defendants applied to the Polish Embassy for the urgent issue of new Polish passports. They informed the Embassy that they had lost their passports in a boating accident. A temporary passport was issued to the First Defendant in the name "Andre Tomaszewski" on 17 September 2004 and was collected on 20 September 2004. A temporary passport was issued to the Second Defendant on 10 September 2004 and collected on 15 September 2004. A new passport was issued to the Second Defendant on 7 October 2004 and collected on 9 November 2004. 20    These circumstances are all disclosed in documents procured by ASIC from the authorities concerned. The circumstances are set out in an affidavit of Mr Evans sworn on 29 November 2004. As I have indicated, the Defendants have not filed any evidence which denies the veracity of the facts asserted.


The Defendants’ attempt to flee

21    On 17 November 2004, ASIC wrote to the Defendants' solicitors setting out in considerable detail the Defendants' contravention of the Court's orders of 10 and 16 August which ASIC had uncovered. ASIC required an explanation within twenty-four hours and foreshadowed an immediate application to the Court. 22    The Defendants' solicitors responded on 18 November, saying that they were unable to get proper instructions from their clients until the following week and they sought a delay of any application to the Court. 23    As soon as the orders of the Court made on 22 November 2004 were served on the Defendants on 22 and 23 November 2004, the Defendants were required to surrender to the Registrar in Equity the new passports which they had obtained. In deliberate contravention of those orders, they failed to surrender their passports. Indeed, it is clear that the Defendants had by this time realised that ASIC had detected their earlier contravention of the Court's orders. Rather than then immediately confessing to those contraventions and submitting to the Court's orders, the Defendants determined to flee at once. 24    At 6.45pm Perth time on Saturday, 27 November 2004, the Defendants were intercepted by Australian Federal Police Officers in the outward-bound customs departure area of Perth Airport as they were about to board Qantas Flight 71 bound for Singapore. They had with them their new Australian passports. The First Defendant was carrying a money belt containing $36,000. The Second Defendant had some $35,000 in cash in his hand luggage.


Principles

25 The principles upon which the Court acts in determining what punishment is appropriate for a contempt of court are well settled and they need not be recounted at length. In the present case, I am not dealing with what is sometimes called a technical contempt, such as may occur if an order of the Court is breached inadvertently or accidentally. In this case I am dealing with what is called a wilful or contumacious contempt in which the Defendants, with the benefit of legal advice at all relevant times, must clearly have understood the effect of the Court's orders of 10 August, 16 August and 22 November, and must clearly have understood the consequences of disobeying those orders. 26 Part 55 r.13(1) of the Supreme Court Rules 1970 (NSW) provides that where a contemnor is a natural person, a court may punish a contempt by committal to a correctional centre, that is, imprisonment, or fine or both. It is now well established that if punishment for contempt involves a custodial sentence, the sentencing considerations required in the Crimes (Sentencing Procedure) Act 1999 (NSW) are applicable: see Principal Registrar of the Supreme Court of New South Wales v Jando (2001) 53 NSWLR 527 at paras.42 to 45 per Studdert J; Ryan v Wright (No 2) [2004] NSWSC 1019 per Gzell J at paragraph 21. 27 In Registrar of the Court of Appeal v Maniam (No 2) (1992) 26 NSWLR 309, Kirby J, with whom Mahoney and Clarke JJ agreed, said at 314:
“A conviction of contempt of court is a conviction of an offence, criminal in nature. Punishment of the convicted contemnor must therefore take into account the considerations normally applicable to the punishment of crime and apt to uphold the purpose of this jurisdiction, viz, the undisturbed and orderly administration of justice in the courts according to law. Thus, in determining the punishment which is apt to the circumstances which have led to a conviction of contempt, it is appropriate to bear in mind the purposes of punishing the contemnor; deterring the contemnor and others in the future from committing like contempts; and denouncing the conduct concerned in an approximately emphatic way: see Director of Public Prosecutions v John Fairfax & Sons Ltd (1987) 8 NSWLR 732 at 741. In this jurisdiction, contempt is a common law offence for which there is therefore no maximum penalty in this Court: R v Dunbabin; Ex parte Williams (1935) 53 CLR 434 at 442. Any limits which are imposed upon the Court's powers derive from the purposes stated above and the limitations expressed in the Tenth Article of the Bill of Rights 1688 which restrains the imposition of cruel or unusual punishments or "excessive fines" : see Smith v The Queen (1991) 25 NSWLR 1, noted (1991) 65 ALJ 695.”
28    In Wood v Staunton (No 5) (1996) 86 A Crim R 183, at 185, Dunford J identified a number of factors which are relevant in considering the proper punishment for contempt of court. The contempt there charged was a refusal to give evidence at a criminal trial, but the relevant factors identified by his Honour are, with appropriate adaptions, of wider utility: see, for example, Australian Competition & Consumer Commission v World Netsafe Pty Ltd (2003) 133 FCR 279. 29 For present purposes the relevant factors to be considered may be summarised thus:

i) the seriousness of the contempt proved;

ii) whether the contemnor was aware of the consequences to himself of what he proposed to do;

iii) the actual or potential consequences of the contempt on the proceedings in which the contempt was committed;

iv) whether the contempt was committed in the context of a proceeding alleging crime or conduct seriously prejudicial to the public interest: see, for example, Von Doussa v Owens (No 3) (1982) 31 SASR 166;

v) the reason or motive for the contempt;

vi) whether the contemnor has received, or sought to receive, a benefit or gain from the contempt;

vii) whether there has been any expression of genuine contrition by the contemnor;

viii) the character and antecedents of the contemnor;

ix) what punishment is required to deter the contemnor and others of like mind from similar disobedience to the orders of the Court;

x) what punishment is required to express the Court's denunciation of the contempt.



The Defendants’ submissions

30    Mr Grieve QC makes the following submissions on behalf of the Defendants, both orally and in the written submissions previously delivered to the Court. First, the orders of the Court disobeyed by the Defendants were interlocutory, not final. Second, a court of equity acts to coerce, not to punish. Third, the consequences of the Defendants' disobedience have been undone. Their passports are now in the possession of the Court and they have executed documentation enabling a receiver to take possession of the funds sought to be removed from the jurisdiction. Fourth, the Defendants have purged their contempt by an apology to the Court by surrendering their passports, by executing documents enabling recovery of the funds transferred overseas, by offering to charge the Third Defendant’s real estate to secure their continuing presence in New South Wales, and because they have now been in custody since 27 November 2004. Fifth, imprisonment is no longer necessary to ensure compliance with the Court's interlocutory orders. Sixth, the Defendants have pleaded guilt to the contempt charges and have thereby relieved ASIC of the burden of proving their guilt. Seventh, the Defendants, as far as is known, have no previous convictions. Eighth, in view of the fact that the Defendants have already been in custody for about three weeks, the appropriate punishment to be imposed is the acceptance of an apology to the Court, and an order that the Defendants pay ASIC’s costs of the contempt proceedings. 31    As to the first submission: it makes no difference, in my view, that the injunctions disobeyed were interlocutory, not final. Every injunction is to be treated with equal seriousness. It is not for any party to the Court's process to decide for himself or herself which injunctions must be obeyed and which may be ignored, which are important, and which are not so important. The orders in the present case were expressly designed to prevent the Defendants from defeating the entire purpose of the proceedings commenced by ASIC. If the Defendants’ contempts had succeeded in their aim, the Defendants would have frustrated the whole of the proceedings and the Court's process. 32    As to the second submission: in punishing a contempt, a court of equity acts no differently from a court of common law. The distinction between common law and equity in this context is meaningless. In punishing for contempt, a judge of the Supreme Court is vindicating the authority of the Court itself, regardless of the Division in which the judge happens to be sitting. 33    As to the third submission: the Defendants did not act to undo the consequences of their contempts until after they had been caught and taken into custody. This submission would have had much greater force had the Defendants acted to purge their contempts as soon as ASIC warned them in its letter of 17 November 2004 that they had been discovered. Instead, the Defendants decided to escape. 34    As to the fourth submission: the Defendants’ apologies have very little weight, for the reasons I have given in answer to the third submission. It is significant in this respect that the Defendants themselves do not personally come before the Court to make their apologies so that I may assess for myself the sincerity of their contrition. Further, the security they offer is over the property of the Third Defendant. The mortgage on that property has been fully drawn down, in furtherance of the Defendants’ contempts. 35    As to the fifth submission: I can have no confidence that the Defendants, if released, will not attempt to procure other passports using dishonest means, as they have previously done, or that they will not attempt to disappear so as to avoid having to answer the serious allegations of contravention of the Corporations Act made against them by ASIC in these proceedings. The Defendants have tendered no evidence as to their personal circumstances such as to indicate the unlikelihood of their absconding from Australia permanently. 36    As to the sixth submission: I do take into account the fact that the Defendants have pleaded guilty, but I must also take into account that the evidence of guilt tendered against them by ASIC was overwhelming. 37    As to the seventh submission: I take into account that as far as the evidence discloses, the Defendants have no prior convictions. 38    As to the eighth submission: I take into account the following circumstances in determining the appropriate punishment. I will follow the sequence of the considerations which I have earlier recounted in paragraph 29 above.


Factors relevant to consideration of punishment

39    First, it is difficult to imagine more serious, flagrant and calculated contempts of court than those committed by the Defendants. The contempts of each Defendant were numerous: twelve on the part of the First Defendant, and eight on the part of the Second Defendant. The contempts were committed over a period of four months and were clearly part of a carefully worked out plan to frustrate the Court's orders. That plan must have been conceived by both Defendants almost as soon as the first orders were made. The contempts were committed methodically, and involved the making of false statements by each Defendant to procure new passports from the Australian and the Polish authorities. In short, it is clear that the Defendants acted in concert to do whatever was necessary to ensure that they escaped the jurisdiction of the Court with as much of their assets as they could realise. 40    Second, there can be no question that the Defendants must have been aware of the consequences to themselves of their contempts. They have Australian citizenship, having apparently been resident in this country for some years. There is no evidence that they have any difficulty understanding English. Their conduct of a business of finance broking suggests the opposite conclusion. They have at all relevant times had the benefit of advice from competent counsel and solicitors. The orders made on 16 August 2004 were made by consent, Mr Slowgrove of Counsel appearing on their behalf on that occasion. There could be no basis for assuming that Mr Slowgrove and his instructing solicitor did not properly explain to the Defendants the nature and effect of the orders then made, and the consequences to the Defendants if they disobeyed those orders. As I have said, the Defendants have not put on any evidence to suggest that such explanations were not given to them, or were not understood by them. 41    Third, if the Defendants had succeeded in their plan to flee the country with their assets, the whole purpose of the proceedings commenced against them by ASIC would have been frustrated. 42    Fourth, the Defendants’ contempts were committed in the context of proceedings against them alleging serious contraventions of the Corporations Act , and involving large sums of money. The contraventions were alleged to have involved solicitation of the public by means of frequent advertisements and were said to have resulted in substantial financial gain to the Defendants, all said to be dishonestly derived. Clearly, there was a serious public interest to be vindicated by ASIC's proceedings. 43    Fifth, I have no hesitation in concluding that the Defendants’ motive for the contempts was to escape the consequences to themselves of ASIC’s proceedings, if they succeeded, and to take with them as much as they could of their assets so as to frustrate any judgment which the Court might award in those proceedings. 44    Sixth, I am satisfied that the Defendants sought to gain financial benefit to themselves from their contempts, for the reasons which I have explained in the previous paragraph. 45    Seventh, the Defendants did not attempt to purge their contempts as soon as they were informed by ASIC on 17 November that their contempts had been detected nor did they attempt to purge their contempts when the Court's orders of 22 November were served on them on that and the following day. The Defendants’ apologies came only after they had been arrested. Further, as I have said, although they are now present in Court they do not come forward themselves to make their apologies personally. Their apologies are conveyed only by their Counsel. Eloquent though those apologies are, I am not able to gauge their sincerity by direct observation of the Defendants themselves. In those circumstances, I am not able to feel with any degree of conviction that the Defendants’ apologies are sincere. 46    Eighth, the Defendants have tendered no evidence of their antecedents, their characters, their personal circumstances, or as to any mitigating factors. All that the Court knows is that the First Defendant was born in June 1950, so that he is now 54, and that the Second Defendant was born in March 1973, so that he is now 31. Both Defendants were born in Poland. Both are now Australian citizens, apparently having Polish citizenship as well. The evidence shows that both Defendants are educated and experienced enough in financial matters to use corporations and local and overseas bank accounts confidently in their business dealings. There is no evidence to suggest that the Second Defendant, who is the son of the First Defendant, is overborne by the First Defendant and is therefore less answerable for his conduct. In short, there is no evidence offered by either Defendant which seeks to explain, excuse or mitigate his conduct. 47    Ninth, in my opinion, such serious, flagrant and calculated contempts as have been committed by each Defendant require the imposition of a custodial sentence as a deterrent both to such Defendants, and to others tempted to disobey the Court's orders in such a manner. Much has been said in the authorities about the critical importance of ensuring that the Court's orders are obeyed. If they are not, the very basis and structure of the administration of justice crumbles. Further, as the contempts were designed to remove the Defendants’ assets from the Court's jurisdiction for their own financial gain, it is also appropriate as a deterrent to impose a substantial fine so that both the Defendants and others like-minded may appreciate that in no sense does it pay to disobey the Court's orders. 48    Tenth, the law requires that I impose a separate punishment for each of the twelve contempts committed by the First Defendant, and for each of the eight contempts committed by the Second Defendant. However, the separate contempts of each Defendant were in truth steps in a single plan designed to subvert the Court's orders. Each sentence therefore will be served concurrently.

Punishment

49    I have reviewed numerous decisions of the Courts as to what sentence would be appropriate in circumstances such as the present. In addition to the decisions referred to in Principal Registrar Supreme Court v Jando , I have looked at the following cases in which custodial sentences or substantial fines have been imposed with or without conditions: Von Doussa v Owens (No 3) (supra); Re Marriage of Tate (No 3) (2003) 30 Fam LR 427; Australian Competition & Consumer Commission v Hughes (2004) 207 ALR 116; Young v Jackman (unrep.) NSWCA 2 June 1993; Court of Appeal Registrar v Craven (No 2) (1995) 120 FLR 464; ASIC v Matthews (2001) 39 ACSR 110; Registrar of the Court of Appeal v Raad (unrep.) NSWCA, 9 June 1992; ACCC v World Netsafe Pty Ltd (supra). In the end, as Studdert J says in Jando at p.539, review of the punishments in other cases is of limited assistance, as each case really depends upon the Court's assessment of the relevant facts. 50 As will have appeared, I regard the Defendants’ contempts in this case as of the most serious category. I have determined that the appropriate penalty for each offence of each Defendant is a sentence of imprisonment for eighteen months, with each sentence to be served concurrently. This is not a case in which I would consider it at all appropriate that the sentence be served by way of periodic detention, as was ordered in Jando , or that the sentences be suspended on condition that the Defendants perform community service, as was done in Ryan v Wright (No 2) . The sentences must be served in full-time custody. 51    In addition, I will impose a fine of $10,000 for each contempt committed by each Defendant, so that the First Defendant will be fined a total of $120,000, and the Second Defendant will be fined a total of $80,000. I appreciate that these are large sums, and that the Defendants must have resources to pay the legal costs of the defence of the ASIC proceedings. However, the evidence shows that the Defendants have realised at least $837,000 in cash from their assets, and they are said to have some other property still in New South Wales. 52    There is, as I have said, no evidence that the Defendants have any dependants, or that they need any part of the money which they sought to remove from the jurisdiction for the conduct of any ongoing business. In those circumstances, I do not see that the fines will deprive the Defendants of the ability to conduct their defences, nor that the fines will cause undue hardship to other persons.


Orders

53 I make the following orders pursuant to the powers conferred by Pt 55 r.13(1) of the Supreme Court Rules :


1. In respect of each of the contempts specified in paragraphs 1, 2, 4, 5, 6, 7, 8, 9, 14, 15, 16 and 17 of the Amended Statement of Charge filed by ASIC in respect of the First Defendant, I sentence the First Defendant to imprisonment for eighteen months.

2. I order that each sentence imposed on the First Defendant be served concurrently, and I fix the date of commencement of each sentence as 27 November 2004.

3. In respect of each of the contempts specified in paragraph 1 of these orders, I impose a fine of $10,000 on the First Defendant

4. In respect of each of the contempts specified in paragraphs 2, 3, 8, 11, 14, 15, 16 and 17 of the Amended Statement Of Charge filed by ASIC in respect of the Second Defendant, I sentence the Second Defendant to imprisonment for eighteen months.

5. I order that each sentence imposed on the Second Defendant be served concurrently, and I fix the date for commencement of each sentence as 27 November 2004.

6. In respect of each of the contempts specified in paragraph 4 of these orders, I impose a fine of $10,000 on the Second Defendant.

7. In respect of each sentence of imprisonment imposed upon the First and Second Defendants, I fix a non-parole period of twelve months.

8. I order that the Defendants pay ASIC's costs of the contempt proceedings on the indemnity basis.

9. I grant liberty to apply on forty-eight hours’ notice.

10. I order that exhibits may be returned.

~ oOo ~

Last Modified: 12/23/2004