Australian Securities Commission v MacLeod

Re: AUSTRALIAN SECURITIES COMMISSION
And: ROBERT JAMES MACLEOD; TRAINEX PTY. LTD.; STARLIGHT FILM STUDIOS LTD.;
STARLIGHT PICTURES PTY. LTD. and STAR PARTNERS PTY. LTD.
No. Q G3011 of 1992
FED No. 132
Number of pages - 31
Contempt - Federal Court

COURT

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
Drummond J.(1)

CATCHWORDS

Contempt - Federal Court - deliberate defiance of order

Federal Court - O. 37, r. 2(5) of the Federal Court Rules - discretion to order committal for breach of orders where endorsed copies of orders not served as required by O. 37, r. 2(1) and (3)

Words and Phrases - "forthwith" - meaning - appropriateness of use in orders fixing time for performance of act

Companies (Queensland) Code - ss. 573, 574

Corporations Law - ss. 1323, 1324

Federal Court Rules - O. 35, r. 4; O. 37, r. 2

Australian Meat Industry Employee's Union v Mudginberri Station Pty. Ltd. (1986) 161 CLR 98

D.W. Murray v Quan Sing (1901) 11 WALR 115

Freeman v Trimble (1906) 6 SR (N.S.W.) 133

Gilbert v Endean (1878) 9 Ch D 259

Hillingdon London Borough Council v Cutler (1968) 1 QB 124

Sofroniou v Szgetti (1991) FCR 332

Thomas v Nokes (1868) LR 6 Eq 521

HEARING

BRISBANE, 15, 16 and 24 February 1993

#DATE 4:3:1993

Counsel for the applicant: Ms E.M. O'Reilly

Solicitors for the applicant: Australian Securities Commission

Counsel for the respondents: Mr R.I.M. Lilley

Solicitors for the respondents: John M. O'Connor and Co.

ORDER

THE COURT ORDERS THAT:

1. The Notice of Motion is dismissed in relation to the charges

of contempt for the breach of the orders set out in paragraph (a) of the Notice of Motion insofar as the charge relates to the order of:

(i) Heerey J of 29 June, 1992; and

(ii) Spender J of 3 July, 1992.

2. The first respondent is guilty of contempt in that in breach

of the order of Spender J of 3 July, 1992 as varied by Cooper J on 21 July, 1992, that he furnish to the receivers by 23 July, 1992 a list containing the information specified in paragraph (a)(i) of the Notice of Motion, in that he failed, and continues to fail, to disclose his interest in property described as Allotment 163 of Portion of Section 1595 Hundred of Yatala in the area named Redwood Park (L.T.R.O. Deposited Plan No. 18023) being all that land described in South Australia Register Book Volume 4270 Folio 184.

3. The first respondent is guilty of contempt in that in breach

of the order of Spender J of 3 July, 1992 as varied by Cooper J on 21 July, 1992 that the first respondent by himself, his servants or agents, be restrained from "disposing of, encumbering, taking any steps to dispose of or encumber, or dealing in any manner whatsoever with, any or all property of the respondents", he did transfer to Margaret Rae Wilkie by a memorandum of transfer dated 27 June, 1992 but executed on 10 July, 1992 his property described as Allotment 163 of Portion of Section 1595 Hundred of Yatala in the area named Redwood Park (L.T.R.O. Deposited Plan No. 18023) being all that land described in South Australia Register Book Volume 4270 Folio 184, that transfer being registered on 15 July, 1992.

4. The first respondent is guilty of contempt in that in breach

of the order of Spender J of 3 July, 1992 as varied by Cooper J on 21 July, 1992 that the first respondent by himself, his servants or agents, be restrained from "disposing of, encumbering, taking any steps to dispose of or encumber, or dealing in any manner whatsoever with, any or all property of the respondents", he, on or about 21 September, 1992, dealt with the property of the third respondent, namely, an ANZ cheque dated 18 September, 1992 and drawn on account number 5981 99519 in the name "S.A. Carroll" being cheque number 862397 in the sum of $7,200.00 payable to the third respondent and posted to the third respondent at its Sydney office by obtaining possession of that cheque and asking Joseph Leo Carroll to endorse that cheque to the first respondent personally, and by returning that cheque to Joseph Leo Carroll on the latter's refusal of that request.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

DRUMMOND J. By notice of motion, the ASC seeks orders that the first respondent, Mr. MacLeod, "be committed to prison or otherwise punished" for failure to comply with interlocutory orders made in the proceeding in which receivers have been appointed pursuant to s. 573 of the Companies (Queensland) Code and s. 1323 of the Corporations Law of the property of Mr. MacLeod and the other respondents in the action.

By seeking this relief, the ASC has undertaken the burden of proving, as a minimum requirement, that Mr. MacLeod not merely breached one or more of the orders, but that he wilfully disobeyed them, i.e., that his disobedience was something more than merely casual, accidental or unintentional: AMIEU v Mudginberri Station Pty. Ltd. (1986) 161 CLR 98 at 112-3. Once such conduct is proved, it is open to the Court to make a penal order against the respondent for the purpose of disciplining him and for the further purpose of protecting the effective administration of justice by demonstrating that the Court will enforce compliance with its orders: Mudginberri, ibid.
I also think that the form of relief claimed by the ASC in its notice of motion is sufficient to entitle the Court, if the circumstances are appropriate, to exercise its jurisdiction in contempt for the further purpose of coercing the respondent into compliance with the orders he is said to have breached: see Mudginberri at 113.
It was accepted by the ASC that, for practical purposes, it had to prove its case beyond reasonable doubt.
While the orders alleged to have been breached all bound the five respondents to do or refrain from doing certain things, the case was argued on the basis that Mr. MacLeod was as much accountable for any failure to comply with any of the orders as were any of the other respondents.
The statement of charge served with the notice of motion alleges that Mr. MacLeod breached an order made on 29 June, 1992, which required the respondents to deliver to the receivers "forthwith upon service of a copy of this order" a comprehensive and detailed list of all the property of the respondents, whatever the nature and extent of the interest therein, and whether the interest was presently existing or had at any time since 1 January, 1989 so existed and whether the property was held upon trust for others.
No such list was delivered to the receivers prior to the morning of 3 July, 1992 when Spender J vacated this particular order and made an order in identical terms, along with certain other orders.
In the course of the hearing, I overruled a submission that Mr. MacLeod had no case to answer that he had breached this order. The submission was based upon the proposition that, the order requiring delivery of the list forthwith, Mr. MacLeod did not have a sufficient time to comply with that obligation even though a copy of that order was handed to Mr. MacLeod by Mr. Burton, an employee of the receivers, late on the afternoon of 30 June, 1992 and a sealed copy of the order was served on him on 2 July, 1992. I rejected the "no case" submission on the grounds that the order of 29 June, properly construed, required delivery of the list within a time which was reasonable in all the circumstances and that the determination of what that period was involved a question of fact, governed by all the circumstances of the case. I had regard particularly to what the respondents had to do to comply with the obligation to deliver the list and held that it was open to me to find that a reasonable time for delivery of the list was a shorter period than the period between 6.30 p.m. on 30 June, 1992 when the order was delivered to Mr. MacLeod and 3 July, 1992, when Spender J vacated that order.
I now must decide whether I am satisfied beyond reasonable doubt that Mr. MacLeod, who had not delivered a list by 3 July, 1992, had a reasonable time to furnish the list prior to that date. While it is true that the list ultimately delivered indicates that the task that compliance with the order placed on Mr. MacLeod was not a particularly onerous one, I take into account the fact that the order of 29 June was unusually draconian in that, although made ex parte, it empowered the receivers to take possession of the entirety of Mr. MacLeod's property, including all his personal effects and clothing, and that it also empowered the receiver to sell any of the respondents' property. The only concession this ex parte order made to Mr. MacLeod was that it permitted him to withdraw a maximum of $250.00 per week from an account in his own name "for his personal use".
The evidence shows that the receivers promptly set about exercising their powers under this order. On 30 June, but before Mr. MacLeod had any notice of the order, they took possession of his residence and later that same day refused his request for access to it. An employee of the receiver also then took possession of the keys to Mr. MacLeod's motor vehicle and later refused to return them to him. The receivers engaged a real estate agent who, that same day, 30 June, entered Mr. MacLeod's residence to appraise its value. On 2 July, 1992, the receivers' employee located Mr. MacLeod leaving a unit in another building, where he had apparently stayed after being excluded from his own residence, with some of his personal possessions, including a leather jacket that that employee had seen in Mr. MacLeod's residence on 30 June. He says he then explained to Mr. MacLeod that Mr. MacLeod was not able to deal with any property of any of the respondents and that if he did so he would be in contempt of court. He also repeated his request, first made on the afternoon of 30 June, that Mr. MacLeod make an appointment to see him to prepare a list of property for the receivers and told him that failure to provide the list would be a contempt of court.
The evidence indicated that Mr. MacLeod was taken by surprise when told on the afternoon of 30 June by the employee of the receiver that this order had been made.
On 3 July, Spender J vacated all the orders that imposed any obligation on Mr. MacLeod and the other respondents, as well as the order appointing the receivers. He then made orders which were in many respects identical to the earlier orders made. However, Spender J limited the powers he conferred on the receivers by denying them the power to sell the respondents' property and he directed that Mr. MacLeod be "permitted the uninterrupted and unfettered use of" his residence, his motor vehicle and his personal effects and clothing; he also gave the respondents access to $20,000.00 of their frozen funds for the purpose of defending the proceedings.
Spender J's order was made with the consent not only of the respondents, but also of the ASC. I take this to be recognition by the ASC that it had obtained, on 29 June, an order which was, in a number of respects, unjustifiably intrusive into Mr. MacLeod's affairs.
It needs little imagination to accept that, when Mr. MacLeod was, without prior warning, told on the afternoon of 30 June of the making of the order by the employee of the receiver, who had just taken possession of Mr. MacLeod's residence and all his possessions, he would be in a state of considerable disarray for some time. I am not prepared to find beyond reasonable doubt that Mr. MacLeod's failure to attend to the obligation imposed by the order to furnish "a comprehensive and detailed" list of all the property of himself and the companies with which he was associated, in the period between the afternoon of Tuesday, 30 June and the morning of Friday, 3 July, means that he failed to make use of a reasonable time for doing that. I therefore dismiss the application, insofar as it is based on an alleged breach by Mr. MacLeod of the order of 29 June, 1992 that required him to deliver a list of the respondents' property to the receivers.
In his closing submissions, counsel for Mr. MacLeod raised for the first time two other objections to the validity of the charge of contempt alleging a breach of this particular order which I should deal with.
The first submission was that, because the order did not fix a time for delivery of the list other than by specifying that it was to be delivered "forthwith upon service of a copy of this order", there was non-compliance with O. 35, r. 4(1), which stipulates that "an order which requires a person to do an act shall specify the time within which he is required to do the act". In Freeman v Trimble (1906) 6 SR (N.S.W.) 133, Simpson C.J. in Eq dismissed contempt proceedings against a person in possession of certain documents who had been ordered to "forthwith deliver over the same" to a receiver because the stipulation in the order that the documents were to be delivered "forthwith" was not a sufficient compliance with a rule of court similar to O. 35, r. 4(1). Simpson C.J. preferred the obiter dictum of Jessel M.R. in Gilbert v Endean (1878) 9 Ch D 259 at 266 and a statement in the 6th Edition of Seton's Judgments and Orders to the decision in the contempt case of Thomas v Nokes (1868) LR 6 Eq 521, saying that the "preponderance of authority" favoured the view that "forthwith" was not sufficient. The preponderance of authority, however, now very much favours the contrary opinion of the Master of the Rolls in Thomas v Nokes: see Halsbury's Laws of England, 4th Ed., Vol. 9, para. 60, note 2 and Borrie and Lowe's Law of Contempt, 2nd Ed., page 427, note 4.
In the context of a statutory provision, Harmon L.J. in Hillingdon London Borough Council v Cutler (1968) 1 QB 124 at 135 said: "... 'forthwith' is not a precise time and, provided that no harm is done, 'forthwith' means any reasonable time thereafter ... it may involve action within days: it may not involve action for years ..." This reflects the meanings that "forthwith" can have. In the Macquarie Dictionary the following appear as meanings of "forthwith": "(1) immediately; at once; without delay; (2) as soon as can reasonably be expected".
It is certainly preferable for an order to specify, by reference to a nominated number of days or other intervals of time, the period within which an act required by an order must be done, especially in a case in which there is any possibility that the order will not be complied with. But I am not prepared to hold that this word, so commonly used in statutes, subordinate legislation and commercial documents, is a delimitation of the period of time within which an order can require an act to be done that is insufficient for the purposes of the rule. There is nothing in the words of O. 35, r. 4 that would require a contrary conclusion.
It was also argued that, upon the vacation by Spender J of the earlier orders, the parties must be regarded as having been put in the position they would have been in if those orders had never been made and there could therefore be no question of Mr. MacLeod being in breach of them. D. and W. Murray v Quan Sing (1901) 11 WALR 115 was said to be authority for this proposition. The order of 29 June requiring delivery of the list was expressed to be made pursuant to s. 574 of the Companies (Queensland) Code and s. 1324 of the Corporations Law. These provisions respectively empower the Court to "rescind or vary" and "discharge or vary" an injunction granted thereunder. No argument was directed to whether Spender J's order "vacating" the earlier orders was made in reliance upon these provisions. It was assumed that his Honour "set aside" the earlier orders in reliance on O. 35, r. 7(c). If, as I think likely, Spender J acted to rescind and discharge the orders of 29 June, in the exercise of the power conferred by s. 574(4) of the Code and s. 1324(5) of the Law, that could not have the result that those orders must be treated as if they never were made. In view of the ordinary meaning of the words, such a rescission and discharge would, I think, operate only prospectively and could not absolve Mr. MacLeod from liability for a breach of the orders while they were in force.
By his order of 3 July, 1992, Spender J restrained the respondents in the action, including Mr. MacLeod, from disposing of, encumbering, taking any steps to dispose of or encumber, or dealing in any manner whatsoever with, any and all property of the respondents.
The ASC concedes that this order should be understood as only restraining the respondents, including Mr. MacLeod, from dealing with their property in the sense of property to which they were beneficially entitled and that it does not operate to restrain any respondent from dealing with property held by him or it on behalf of another.
The statement of charge alleges that Mr. MacLeod breached this restraining order by transferring to Margaret Rae Wilkie his property in South Australia, which was identified in the statement of charge, by memorandum of transfer dated 27 June, 1992 but executed on 10 July, 1992, that transfer being registered on 15 July, 1992. Mrs. Wilkie is Mr. MacLeod's grandmother.
Spender J's order was never served on Mr. MacLeod. In reliance upon this, counsel for Mr. MacLeod submitted at the end of the ASC's case that he had no case to answer of being in breach of this order.
I rejected this submission. I held that, assuming O. 37, r. 2 of the Federal Court Rules applies to contempt proceedings of the kind here in question, once the requirements of O. 37, r. 2(5) are satisfied, the Court has a discretion to enforce an order by committal even though the order has not been served in compliance with O. 37, r. 2(1)(a) and even though the notice required by O. 37, r.2 (3) has not been given either. I add a reference to the Court of Appeal decision in Sofroniou v Szgetti (1991) FCR 332 to the cases I discussed in this regard in my ruling on the "no case" submission. I ruled that there was evidence sufficient to entitle the Court to be satisfied beyond reasonable doubt that Mr. MacLeod had been notified, as required by O. 37, r. 2(5), of the terms of the order made by Spender J on 3 July, 1992, by the afternoon of that same day. I relied on the fact that Spender J's order was a consent order and upon the evidence of Mr. Burton, an employee of the receivers, of conversations he had with Mr. MacLeod on the afternoon of 3 July, 1992. I also held that the ASC's evidence was sufficient to entitle the Court to be satisfied beyond reasonable doubt that Mr. MacLeod was aware that non-compliance with Spender J's order would make him potentially liable to some form of punishment, even though, not having been served with a copy of Spender J's order, he had not been given the notice provided for by O. 37, r. 2(3) either. In this regard, I relied upon the evidence of Mr. Burton concerning discussions he had with Mr. MacLeod on 30 June, 1992 when he handed a copy of the order of 29 June to him and again on 2 July, 1992, immediately after Mr. MacLeod had been personally served with a copy of those orders, which were endorsed with this notice and upon the fact that the restraining order of 29 June was in identical terms to the restraining order of Spender J.
In his closing submissions, counsel for Mr. MacLeod argued that I could not be satisfied beyond reasonable doubt that Spender J's restraining order was sufficiently notified to Mr. MacLeod for the purposes of O. 37, r. 2(5). The evidence upon which I relied in rejecting the no case submission stands uncontradicted, since Mr. MacLeod did not choose to put any evidence before the Court. I have reviewed that evidence and I am satisfied beyond reasonable doubt that, even though the orders of Spender J of 3 July, 1992 were never served on Mr. MacLeod, he was notified of the terms of those orders. I am also satisfied that he was aware, by the afternoon of the day those orders were made, of his liability to some form of punishment should he breach them. Accordingly, the failure of the ASC to serve the order in accordance with O. 37, r. 2(1) endorsed with a notice required by r. 2(3) provides no ground for refusing to find Mr. MacLeod in breach of Spender J's restraining order.

It was also submitted that I should, at the very least, have a reasonable doubt as to whether Mr. MacLeod ever had any interest in the property and so could not find that he breached the restraining order by what he did in relation to the transfer of this property. Alternatively, it was submitted that, even if his actions with respect to the transfer of the property did amount to a breach of the restraining order, any contempt was a technical one, not motivated by an intention to flout the Court's authority, but rather by concern to ensure that a bona fide transfer, already initiated before the ASC moved against him, should go through without interruption. There are obvious difficulties with the second submission if I find that Mr. MacLeod was the beneficial owner of the property when he transferred it to his grandmother, quite apart from there being no evidence at all to suggest that he may have had, at that time, a bona fide reason for deciding to transfer his property to Mrs. Wilkie.
There is a substantial body of evidence which shows that Mr. MacLeod was the beneficial owner of this property and, as between himself and Mrs. Wilkie, remains the owner of it.
The property was purchased for $47,000.00 by Mr. MacLeod under a contract which he signed on 6 June, 1990. I am satisfied that the funds to buy this property came from one of the accounts of the second respondent, Trainex Pty. Ltd., described as the "Toddler Taming Film account". Mr. MacLeod had a house built on that property in the latter half of 1990 and I am satisfied that some of the funds for the construction of this house came from the "money market account" of the second respondent. However, the position revealed by the evidence here is not the simple one of a director using company moneys to make personal purchases: there is evidence in the ASC's case which suggests that Mr. MacLeod may have been entitled to payment of significant sums from the second respondent's various accounts for services rendered by him. The ASC ultimately conceded that its evidence was insufficient to establish that Mr. MacLeod was not personally entitled to the moneys. The property may have been purchased and the house built on it with funds to which Mr. MacLeod was entitled.
The certified copy of the certificate of title shows that Mr. MacLeod was the registered proprietor of the land under a transfer "produced 16.7.1990 at 11.40". The certificate also shows Mrs. Wilkie as the current registered proprietor under a transfer which was "produced 17.7.1992 at 12.30". The copy of the memorandum of transfer of this property from Mr. MacLeod to Mrs. Wilkie shows that the original was dated 27 June, 1992. The copy transfer bears a duty stamping dated 15 July, 1992 and the transfer is expressed to be "without any monetary consideration whatsoever". It also bears notations indicating that the original transfer was lodged for registration by a land broker, Hans Liedig, at 12.30 on 17 July, 1992. The certificate of the Deputy Registrar-General that verifies this as a copy of the transfer is dated 31 July, 1992 and it shows that the transfer had not then been registered in the register book, notwithstanding the notation that is now on the certified copy of the certificate of title (which certified copy was issued on 6 November, 1992). The original transfer is of course not in evidence and there is no evidence before me of the date of registration of the transfer, which the Registrar-General is required to endorse on the original transfer pursuant to s. 52 of the Real Property Act 1886 (S.A.). But it is clear that, although the transfer was lodged for registration on 17 July, it was only in fact registered some time between 31 July, 1992 and 6 November, 1992.
I am satisfied by the unchallenged evidence of Mr. Liedig that Mr. MacLeod signed this transfer as transferor in Mr. Liedig's presence on 10 July, 1992 and that Mrs. Wilkie then signed it as transferee. I am also satisfied that the transfer was back-dated by Mr. Liedig to 27 June, 1992 on the instructions of Mr. MacLeod and in the presence of Mrs. Wilkie, back-dated, that is, to a date prior to 29 June, 1992, the date on which the first order was made which restrained Mr. MacLeod from disposing of any of his property.
I have referred to the evidence indicating that Mr. MacLeod was the beneficial owner of the property which he bought by contract in his name and of which he was the registered proprietor from mid-1990 to some date after 31 July, 1992. The evidence that indicates that Mr. MacLeod may not have been the beneficial owner is:

(a) his own statement to his then-solicitor, which the solicitor passed on to the ASC in the letter of 9 September, 1992 and which the ASC put into evidence, which is as follows:

"We are specifically instructed by the first respondent (i.e., Mr. MacLeod) that he personally does not now have and has never had any equitable interest in the subject property. Mr. MacLeod instructs us that at all times during which he was the registered proprietor of the subject property, he held the property on trust for his grandmother Margaret Rae Wilkie and that this trust was established for family reasons which are entirely unassociated with any matters the subject of your investigation."

(b) the fact that it was Mrs. Wilkie who, about two weeks before the first restraining order was made against Mr. MacLeod at the behest of the ASC, initiated the action taken by Mr. Liedig to transfer the property into her name;

(c) that Mrs. Wilkie then said to Mr. Liedig that the property had been put into Mr. MacLeod's name although it was truly hers, she having paid for its purchase in 1990, because of a family dispute which was settled by the time she approached Mr. Liedig;

(d) that at the time of Mrs. Wilkie's approach to Mr. Liedig, Mr. MacLeod had, on the evidence before me, no warning that the ASC might move against him, i.e., no warning that it might be prudent to divest himself of title to his own property;

(e) that it was Mrs. Wilkie who handed Mr. Liedig the certificate of title and who paid his fees and all the other charges associated with the transfer;

(f) Mr. Liedig received three telephone calls from Mrs. Wilkie in the period between the meeting of 10 July, 1992 and 18 August, 1992 in each of which Mrs. Wilkie sought to expedite the registration of the transfer, which it is clear had not been registered, at least by 31 July, 1992. Her explanation for her concern in this regard was bound up with her wish to obtain certain local government concessions.

However, as against this evidence which is relied upon by Mr. MacLeod to show, or at least to raise a reasonable doubt, that he was never the beneficial owner of the property, there is the following evidence:

(a) Mrs. Wilkie's assertion that she paid the purchase price is unsupported by any other evidence and is, moreover, contradicted by the evidence that the property was purchased by Mr. MacLeod with moneys to which he personally may have been entitled;

(b) there is no evidence that might suggest how Mrs. Wilkie could in that event have been beneficially entitled to the property when it was acquired by Mr. MacLeod in his name with his moneys in mid-1990, e.g., there is no evidence suggesting that Mr. MacLeod was then under any obligation to Mrs. Wilkie that might have been discharged by his buying the property in his name with his moneys but holding it on trust for her. Moreover, the transfer states that it was made for nil consideration;

(c) there is no evidence to suggest what the nature of the family dispute was that is said to have led to the property being registered in Mr. MacLeod's name rather than Mrs. Wilkie's or even that there ever was such a dispute;

(d) Mr. MacLeod was aware, at the time he signed the transfer on 10 July, 1992, of the orders of Heerey J and Spender J that restrained him from disposing of his own property and which required him, along with the other respondents, to deliver a list of all their property, including property they held on trust for others, to the receiver. Yet with this knowledge, Mr. MacLeod did not disclose the existence of this property in the list ultimately delivered, something that could not have led to any problem for Mrs. Wilkie if the property was truly hers;

(e) there is no evidence to suggest any possible innocent reason for Mr. MacLeod instructing Mr. Liedig to back-date the transfer to a date prior to the making of the first restraining order against him, which leaves the inference to be drawn that he gave this instruction in an endeavour to create false evidence that he did not own the property at the time this first order was made;

(f) I am satisfied that Mr. MacLeod, who was involved in the delivery to the receiver on 23 July, 1992 of the list of the respondents' property which omitted any reference to this house property, thereafter by a combination of a threat and pleas for sympathy in the three telephone calls he made to Mr. Liedig between the end of July and mid-August 1992, sought to discourage Mr. Liedig from providing any information to the ASC concerning the house property, should the ASC approach him. If the property was truly Mrs. Wilkie's, there was no reason why Mr. MacLeod should feel any need to attempt to so persuade Mr. Liedig.

I therefore reject the self-serving statement made by Mr. MacLeod to the effect that he was at all times a trustee of the house property for his grandmother. I find that the property was acquired by, and always belonged to, Mr. MacLeod as beneficial owner. On the evidence before me, I find that Mrs. Wilkie had no entitlement to this house property.
It is necessary to record that Mrs. Wilkie was not a party to the proceeding and has not been heard on the question whether she has any claim to that property. My conclusion, which is based entirely on the evidence that the ASC put before me, the respondents electing not to lead any evidence, cannot prevent her making a claim to this property. I mention that counsel for Mr. MacLeod informed me from the bar table that the ASC intended to make application in the action to join Mrs. Wilkie. I declined to act on this assertion since it was open to Mr. MacLeod, in the present proceedings, to tender any evidence he wished from himself, from Mrs. Wilkie or from anyone else with respect to the house property, but he elected not to do so.
However, the question remains whether, given my finding that Mr. MacLeod was the beneficial owner of the property at all times, he nevertheless breached the restraining order made by Spender J on 3 July, 1992 by subsequently taking action to transfer the property to his grandmother.
What tells most heavily in his favour here is the evidence that it was Mrs. Wilkie who took the first step that led to the making of the transfer about two weeks before the first order restraining Mr. MacLeod from dealing with his property was made in circumstances in which, so far as the evidence indicates, Mr. MacLeod had no reason to think that the ASC might be intending to move against him. However, I do not think this is sufficient, when considered with all the other evidence to which I have referred concerning the circumstances surrounding the transfer, to raise any real doubt that when Mr. MacLeod signed the transfer he was quite deliberately acting in an attempt to divest himself of the indicia of ownership of his property in defiance of the restraining order of Spender J, of which he was then well aware.
A further allegation against Mr. MacLeod is that he breached the order of Spender J as varied by Cooper J by delivering a list of the respondents' property to the receivers that omitted reference to this South Australian property.
It was submitted that the order of Cooper J which varied the order of Spender J by requiring delivery of a list of the respondents' property by 9.30 a.m. on 23 July, 1992 in lieu of an obligation to deliver that list forthwith upon service of the order had not been shown to have been brought to the notice of Mr. MacLeod and, for that reason, there could be no adjudication that he was in breach of the order as varied by delivery of a list which did not include reference to the South Australian property.
In rejecting a submission that Mr. MacLeod had no case to answer of breaching this particular order as varied, based upon the same proposition, I then held that there was evidence capable of entitling the Court to find that Mr. MacLeod was sufficiently aware of this order as varied to prevent non-service of the order standing in the way of a finding of contempt. As I have mentioned, Mr. MacLeod elected not to call any evidence. I have reviewed the uncontradicted evidence on this matter and am satisfied beyond reasonable doubt that Mr. MacLeod became aware some time between 21 July, 1992 (when Cooper J made his order) and the morning of 23 July, 1992 (when the list was delivered to the receiver) that Cooper J had made the order that fixed a new deadline for delivery of the list required by Spender J's order. I also find, on the evidence I referred to in rejecting the "no case" submission, that Mr. MacLeod was aware of the likely consequences of non-compliance with this particular order as varied.
Spender J's order, as varied by Cooper J on 21 July, 1992, required the respondents, including Mr. MacLeod, to deliver to the receivers by 23 July, 1992 a comprehensive and detailed list of all the property of the respondents whatever the nature and extent of the interest therein and whether the interest was presently existing or had at any time since 1 January, 1989 so existed; the order also expressly required the respondents to include in the list any property held upon trust for other persons. In the list of the respondents' property delivered to the receivers on 23 July, 1992, there was no mention of this house property which, on the most favourable view of the evidence for Mr. MacLeod, was property held by him upon trust by him for his grandmother from mid-1990 until his transfer of the property to her was registered sometime after 31 July, 1992. The order as varied expressly obliged him to disclose such a property in the list.
Given his involvement in the transfer of the property from himself to Mrs. Wilkie on 10 July and what he had to say to Mr. Liedig on the three occasions he spoke to him between about the end of July and the middle of August 1992, on the view of the evidence most favourable to Mr. MacLeod, I am satisfied that he was guilty of a deliberate breach of the obligation imposed on him by the order in question by failing to ensure that this property was included in the list delivered to the receivers on 23 July, 1992. I can readily be satisfied of that beyond reasonable doubt. However, for the reasons already given, I am also satisfied beyond reasonable doubt that Mr. MacLeod did not hold the property in trust for Mrs. Wilkie, but was the beneficial owner of it. This aggravates his deliberate breach of the order constituted by his failure to mention the property in the list delivered to the receivers by showing that the reason for this omission was to conceal from the receivers knowledge of the existence of the property owned by Mr. MacLeod.
There remains the allegation in the statement of charge that Mr. MacLeod breached the order of Spender J as varied by the order of Cooper J, which restrained him from disposing of or dealing in any manner whatsoever with any property of any of the respondents by what he did in relation to a cheque for $7,200.00 drawn by a Mrs. Carroll payable to the third respondent. Mrs. Carroll drew this cheque on 18 September, 1992 and posted it to the third respondent at its Sydney office. The allegation is that Mr. MacLeod breached the restraint by asking Mr. Carroll to endorse that cheque over to him personally and by returning the cheque to Mr. Carroll when the latter refused to comply with Mr. MacLeod's request.
The uncontradicted evidence of Mr. and Mrs. Carroll shows that in June 1992, she forwarded to it a cheque for $1,800.00, which she drew in favour of the third respondent. This was 20% part payment of an investment totalling $9,000.00 which the Carrolls had agreed to make with the third respondent.
Mr. Carroll says that at about the end of August, Mr. MacLeod called on him and gave him his version of what the ASC had done and procured Mr. Carroll's signature to a petition expressing support by investors in the third respondent for Mr. MacLeod's management of that respondent. Mr. Carroll says that, while Mr. MacLeod did not then mention that the third respondent was restrained from trading (as it in fact was, pursuant to the order of 3 July, 1992), Mr. MacLeod also enquired when Mr. Carroll would be paying the balance of $7,200.00 of his investment in one of the third respondent's film projects; Mr. Carroll said he would make the payment in two weeks.
On 18 September, 1992, Mrs. Carroll drew the cheque for the balance $7,200.00 in favour of the third respondent and posted the cheque to its Sydney address. Some time later, she was telephoned by Mr. MacLeod, who asked whether the cheque had been sent and, when told she had posted it to the third respondent's Sydney office, Mr. MacLeod said that he was not happy about it going there, but had someone who could collect it for him. A short while later, Mr. MacLeod again telephoned Mrs. Carroll. He told her he had asked Mr. Carroll to make out the cheque to him personally and not to the third respondent. He asked if she could make out another cheque in his name. Mrs. Carroll referred Mr. MacLeod to her husband. In the week commencing 21 September, 1992, Mr. Carroll said his wife telephoned him to tell him of this conversation. That same day Mr. MacLeod contacted him and arranged a meeting for that evening. Mr. Carroll describes what took place at this meeting:

"He said 'I asked you to make the cheque out to me personally and not to the company because I need to maintain a fighting fund for legal services and for living expenses.' I said 'I don't understand how I can pay you personally when I owe the money to Starlight.'

He said 'I need funding to continue my action against the ASC. I'll give you a letter saying that the money is in fact a loan to me, it's recoverable at any time and Starlight won't pursue the outstanding investment for Compulsory Heroes. You've received your tax break so I'm entitled to the money and I'm asking you to endorse your cheque and make it payable to me. It's useless to me if it isn't payable to me personally.' I refused, and MacLeod then handed me back the cheque.

During the conversation MacLeod showed me an example of a letter. I do not recall his exact words but he said words to the effect of: 'This is one of a number of letters which have been signed by other investors in the company.' As the example of the letter was only shown to me by MacLeod, and not given to me, I cannot produce it or a copy. I did however read the example of the letter shown to me, and can recall its contents. The letter provided that monies paid were a loan to MacLeod which was recoverable at any time and that Starlight would not pursue its claim for outstanding monies due if the loan was made to MacLeod."

Mr. Carroll says he subsequently tore up the cheque for $7,200.00 which Mr. MacLeod had given back to him. Mr. MacLeod did not cease his efforts to persuade Mr. Carroll to give the $7,200.00, which the Carrolls were bound to pay to the third respondent, to Mr. MacLeod personally. Mr. Carroll describes his subsequent contact with Mr. MacLeod as follows:

"On 6 October 1992 MacLeod telephoned me on board H.M.A.S. Hobart. I do not recall the exact words of our conversation but we said words to the following effect: I said 'I've spoken to my accountant and he has advised me not to proceed further. He has also told me to get a second taxation office ruling about the payments.' He said 'Don't do that. If I speak to your accountant I can resolve this problem. He won't understand but I've been through this situation before and I can convince him that it is legal.'

I said 'No I'm not happy with that and I don't want you to contact my accountant. Please don't contact me again until Friday when I'll speak to my accountant again.' On 12 October 1992 MacLeod telephone me at my home. I do not recall the exact words of our conversation but we said words to the following effect:

He said 'Can I come around and get the money owing?' I said 'I'm not happy with the situation and I'm seeking further clarification.'

He said 'If you arrange for me to speak to your accountant I am sure I could resolve any doubts and misunderstandings within 20 minutes.'

I said 'I don't want you to contact my accountant.' In the afternoon of 13 October 1992 MacLeod again telephoned me. I do not recall the exact words of our conversation but I said words to the following effect: 'I'm getting legal advice about this matter. Could you contact me at 7 this evening."

On each of 15 and 16 October, 1992, Mr. MacLeod yet again telephoned Mr. Carroll. On both occasions, Mr. Carroll recorded the conversations and the transcripts are in evidence. These transcripts reveal Mr. MacLeod as still seeking to persuade Mr. Carroll to give him the $7,200.00 personally, while at the same time seeking to dissuade Mr. Carroll from having any contact with the receivers of the respondents about Mr. MacLeod's approach to him. One of the arguments Mr. MacLeod used to try to persuade Mr. Carroll to alter his view that, because he owed the money to the third respondent, he could not pay it over to Mr. MacLeod personally, was to assert that many other investors had in effect agreed to Mr. MacLeod's suggestions to pay moneys owing by them to one or other of the respondents to Mr. MacLeod personally.
I have already explained why I reject the submission advanced on behalf of Mr. MacLeod that the failure to serve the order of Spender J as varied by Cooper J on Mr. MacLeod is no answer to the charge that he has breached this particular order.
It was also submitted that Mr. MacLeod could not be in breach of the restraint against dealing with the third respondent's property because what he did with respect to the Carroll cheque amounted to compliance by him with the other order of Spender J which restrained the respondents from being in any way concerned in the purchase of securities of the corporate respondents or of prescribed interests. The argument is devoid of any merit, even if I were to accept counsel for Mr. MacLeod's invitation to focus, to the exclusion of all else that Mr. MacLeod did in relation to the cheque, upon the act of handing the cheque back to Mr. Carroll. The proposition appears to be that because all the respondents including Mr. MacLeod were restrained from soliciting investments, he was bound to undo the receipt by the third respondent of Mrs. Carroll's cheque since such receipt might have amounted to a breach of that restraint by the third respondent. How that could constitute compliance by Mr. MacLeod with that particular restraining order, even if there were evidence to suggest that that was the reason for his approaches to the Carrolls, was not explained. But in any event the only evidence bearing upon Mr. MacLeod's state of mind is that he quite determinedly sought to get for himself property that belonged only to the third respondent and gave the cheque back to Mr. Carroll when he was frustrated in that attempt because it was no use to him personally.
I am satisfied, on the uncontradicted evidence of the Carrolls, that Mr. MacLeod breached the order of Spender J by disposing of the cheque for $7,200.00 which Mrs. Carroll sent to the third respondent when he returned that cheque to Mr. Carroll when he was unsuccessful in persuading Mr. Carroll to endorse it over to Mr. MacLeod personally. I am also satisfied that Mr. MacLeod breached this order of Spender J by dealing with the cheque: Mr. MacLeod obtained possession of the cheque, which was the property of the third respondent, when it should have been in the possession of the receivers and he took that cheque to Mr. Carroll and sought to persuade him to endorse it over to Mr. MacLeod personally.
I am satisfied, on the evidence of the Carrolls, that Mr. MacLeod by this conduct deliberately breached this order. His statements to Mr. Carroll on 15 October, 1992 in which he urged Mr. Carroll not to contact the receivers show he was well aware that he was acting improperly in seeking to persuade Mr. Carroll to endorse the third respondent's cheque over to Mr. MacLeod personally. This contumacious conduct in breach of the order is further aggravated by the persistence Mr. MacLeod showed in seeking on several occasions to persuade Mr. Carroll to agree to his reprehensible proposal.
While I do not think that Mr. MacLeod's conduct involved any element of public defiance of the Court's authority - it was, on the contrary, essential, if the objects he sought to achieve by his disobedience of the various orders were to be gained, that his conduct should remain undiscovered - I am satisfied that his conduct involved deliberate defiance of the authority of the Court insofar as that was necessary to enable him to put his South Australian property beyond the reach of the receivers and to enable him to get for himself the third respondent's moneys, to the control of which the receivers were entitled.
As to the breach which I have found Mr. MacLeod committed of the restraining order by his involvement in the transfer of the South Australian property to his grandmother and the associated breach of the order requiring delivery of a full list of the respondents' property, it appears unlikely that there is room for the exercise of the jurisdiction in contempt to coerce Mr. MacLeod into complying with the restraint by undoing the transfer. The fact that the ASC has an application on foot for leave to join Mrs. Wilkie for the purpose of seeking an order against her requiring her to transfer the house property back into the name of Mr. MacLeod seems to me to make it difficult to contend that there is room for the exercise of the coercive power against Mr. MacLeod here. Of course, if Mr. MacLeod were to produce to the Court a memorandum of transfer capable of immediate registration transferring this property from Mrs. Wilkie back to him, then that would be an important matter in mitigation which the Court would take into account in fixing the penalty for that particular breach. But there is certainly room for the exercise of the Court's punitive power to punish for contempt in relation to this breach. In relation to the breach of this same restraint constituted by Mr. MacLeod's dealing with the cheque drawn by Mrs. Carroll in favour of the third respondent, there is no room for the use of jurisdiction in contempt to coerce Mr. MacLeod into complying with any order of the Court. This particular breach, however, plainly justifies the exercise of the Court's punitive powers in contempt.
I will give Mr. MacLeod an opportunity to make submissions in mitigation of punishment before I dispose of the ASC's application.

[1993] FCA 132

04 MARCH 1993