Australian Securities Commission v Macleod, R.J

900 99

JUDGMENT No. .....-

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...J ..

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CATCHWORDS

CONTElIPT - Person in contempt of court not entitled to make application to court to stay final judgment under 0 10 r 7(l)(b) pending his appeal against that judgment, his contempt not having been purged.

. .

ties

C o m r s s m

v mcleod (No. 31 (1993) 40

P.C.R. 475 Referred to

v	[l9521 P. 285 Considered

t Coneolidated Ptv. Lim-

v -v

- Gene&

gf New South Wales (unreported, New South Wales Court of

Appeal, 11 December 1978) Considered

ShQl;f v ShQEt (1973) 22 F.L.R. 320 Considered

v Council (1990) 69 L.G.R.A. 435

Conaidered

-	[l9911 1 A.C. 1

~ p ~ l i s h e r ~ ~

Considered

m v m

(1987) 7 N.S.W.L.R.

97 Referred to

2 9 NOV 1994

AUSTRALIA PRINCIPAL REQISTRV

IN THE FEDERAL COURT OF AUSTRXLIA )

No. QG 3011 of 1992

QUEENSLAND DISTRICT REGISTRY	)
GENERAL DIVISION	)

IN THE MATTER OF ROBERT JAMES MACLEOD AND OTHERS

AUSTRALIAN SECURITIES COMMISSION

Applicant

ROBERT JAMES MACLEOD

First Respondent

TRAINEX PTY. LTD. A.C.N. 001506332

Second Respondent

STARLIGHT FILM STUDIOS LTD.

A.C.N. 051750442

Third Respondent

STARLIC'WI! PICTURES STY. LTD.

A.C.N. 055168128

Fourth Respondent

STAR PARTNERS PTY. LTD.

A.C.N. 055168155

Fifth Respondent

m T E S OF ORDERS

JUDGE MAKING O-:

Drummond J

23 November, 1994

WHERE:

Brisbane

THE COURT ORDERS THAT:

1. The Court refuses to hear the application by the first respondent to stay the orders made on 17 November, 1994 and 22 November, 1994 until the first respondent has purged his contempt.

The first respondent pay the applicant's costs of the application of today and yesterday to be taxed, to be paid by the receivers out of the assets of the respondents.

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

JN THE FEDERAL COURT OF AUSTRALIA )

No. QG 3011 of 1992

QUEENSLAND DISTRICT REGISTRY	)
GENERAL DIV-	1

IN THE MATTER OF ROBERT JAMES MACLEOD AND OTHERS

AUSTRALIAN SECURITIES COMMISSION

Applicant

ROBERT JAMES MACLEOD

First Respondent

TRAINEX PTY. LTD.

A.C.N. 001506332

Second Respondent

STARLIGHT FILM STUDIOS LTD.

A.C.N. 051750442

Third Respondent

STARLIGHT PICTURES PTY. LTD.

A.C.N. 055168128

Fourth Respondent

STAR PARTNERS PTY. LTD.

A.C.N. 055168155

Fifth Respondent

4XZm:	Drummond J
m&:	23 November, 1994

EksS: Brisbane

RgASONS FOR JUDGMENT

On 10 November I published my reasons and foreshadowed the orders I proposed to make on the Australian Securities Commission's ("ASC") application for final judgment in the action. On 17 November and yesterday, I made a number

of orders in the proceedings. Yesterday, the first respondent applied by his counsel to stay an order I then made giving the receivers of the property of the first respondent power to sell a valuable home unit and to stay associated orders, pending the outcome of the appeal which the first respondent's solicitor swears he has instructions to institute.

The ASC, on whose application the receivers were appointed in June 1992 to be receivers of the property of the first respondent and the property of four companies controlled by him, opposes the stay application being heard because the first respondent is in contempt of court with respect to the same action in which the orders he seeks to stay were made. The ASC also advances a number of reasons why, assuming I have a discretion to refuse to hear a party in contempt, I should deny the first respondent a hearing on his stay application.

That the first respondent is in contempt of court in respect of orders made in these proceedings is clear. His contempts were serious, and resulted in my sentencing him on 11 March, 1993 to a total of six months' imprisonment: see Australian Securities Commission v Macleod (No. 31 (1993) 40 F.C.R. 475. The warrant for his arrest then issued was not executed, pending his appeal against the orders imposing these sentences. That appeal was dismissed on 13 August, 1993. I dealt in my reasons published on 10 November last with what happened then:

". . . the first respondent, using a false name, left

the country on 20 August, 1993 by a subterfuge and without going through Department of Immigration departure checks. The evidence shows that on 4 November, 1993, he entered the United States on his own passport, which he kept, despite the order made in these proceedings on 29 June, 1992 requiring him to deliver it up to the Court. At an early stage of the proceedings, he falsely told the Court that he did not have this passport."

The first respondent is in contempt of court in relation to the orders I made on 11 March, 1993. He has not served the sentences then imposed. He has left Australia in circumstances that show that he intends to avoid purging his contempt, which he can do either by serving the sentences or by making a successful application for discharge under 0. 40,

r. 12 the Federal Court Rulea.

Although there has not yet been an adjudication that he is also in contempt because he breached the order made on 29 June, 1992 in these proceedings that he surrender his passport to the receivers, an order quite separate from those for breach of which he received the sentences of imprisonment, the evidence to which I referred in my reasons of 10 November last shows that he is also in contempt of court by being in breach of that particular order. That by itself is sufficient to bring him within the rule that a party will not be heard in proceedings in respect of which he is in contempt of court.

See

v Jackman (1987) 7 N.S.W.L.R.

97 at 101.

In Hadkinson v Hadkinson [l9521 P. 285, Romer LJ

with whom Somervell LJ agreed, said at 288-9, that it was "not

open to question" that there was a general rule that a person in contempt was not entitled to make an application to the court until he has purged his contempt. His Lordship referred to a number of exceptions to this rule at 289-290, saying:

"One of such exceptions is that a person can apply for the purpose of purging his contempt and another is that he can appeal with a view to setting aside the order upon which his alleged contempt is founded; neither of those exceptions is relevant to the present case. A person against whom contempt is alleged will also, of course, be heard in support of a submission that, having regard to the true meaning and intendment of the order which he is said to have disobeyed, his actions did not constitute a breach of it; or that, having regard to all the circumstances, he ought not to be treated as being in contempt.

The only other exception which could in any way be regarded as material [i.e. material to the circumstances of that case] is the qualified exception which, in some cases, entitles a person who is in contempt to defend himself when some application is made against him ..."

The rule in its original form has come to be relaxed in a number of other respects. Once, it operated to bar the contemnor from making any application in the suit in respect of which he was in contempt, or in any other action in which he was involved. Now, its operation is restricted to the same

proceedings in which the contempt occurs: Short v m

(1973) 22 F.L.R. 320 at 330. I doubt, however, that Permewan

Priaht Consolidated Ptv. Limited v Jittornev-General of New South Wales (unreported, New South Wales Court of Appeal, 11 December 1978) as explained by Bignold J in W o o l l a b

Munici~al Council v Shahani (1990) 69 L.G.R.A.

435 at 437-440

is an example of a further relaxation of the rule. The

decision in permewan seems to me to fit within the exception referred to by Romer LJ in Hadkinson when his Honour said that a person against whom contempt is alleged will be heard in support of a submission that, having regard to all the circumstances, he ought not to be treated as in contempt. In

-, Denning LJ took a significantly different view from

the majority. His Lordship said at 298:

". . . the fact that a party to a cause has disobeyed

an order of the court is not of itself a bar to his being heard, but if his disobedience is such that, so long as it continues, it impedes the course of justice in the cause, by making it more difficult for the court to ascertain the truth or to enforce the orders which it may make, then the court may in its discretion refuse to hear him until the impediment is removed or good reason is shown why it should not be removed."

His Lordship thus held that the court had a discretion to hear an application by a party in contempt and that this discretion was circumscribed by the two conditions he mentioned. The Full Court of South Australia in short v

accepted that the court had a discretion to hear a contemnor's application but did not, as I read the judgment, accept that the discretion was limited in the way Denning LJ suggested: see 22 F.L.R. 320 at 330. In v Jackman, Young J in the New South Wales Supreme Court reviewed the authorities. His Honour came to a different conclusion from

the South Australian Court in Short. Young J rejected the

submission that the court had a general discretion to hear an

application by a contemnor and concluded at page 102:

"Accordingly, until those two decisions [i.e. Burnett v BUKnett (1903) 3 SR (NSW) 513 and Permewan Wriaht] are reconsidered by the Court of Appeal it seems to me that the law that binds a single judge in this State is that there is no exception to penit a judge to hear proceedings in his discretion, notwithstanding that the applicant is in contempt."

The ambit of the rule has most recently been

- r r a m ~ ian was different. At page 46, Lord

considered by the House of Lords in X Ltd. v Noraan-Gram~ign whether a contemnor has a right to be heard as an appellant against an order which is the basis of his contempt when he has not only failed to comply with the order, but takes up the attitude that, whatever the outcome of an appeal may be, he has no intention of complying with it. It is well established that a contemnor is entitled to be heard on an appeal by him against the adjudication that he is guilty of contempt, but the issue in Boraan

Bridge, after referring to the majority decision in Had-	I
said of Lord Denning's statement of the principle:

"I cannot help thinking that the more flexible

treatment of the jurisdiction as one of discretion to be exercised in accordance with the principle stated by Denning LJ better accords with contemporary judicial attitudes to the importance of ensuring procedural justice than confining its exercise within the limits of a strict rule subject to defined exceptions."

Lord Oliver at page 50 said:

"Whilst, therefore, there must clearly be a strong indication in favour of preserving a litigant's

right to appeal, even though he may be in contempt of court, I am in entire agreement with my noble and learned friend Lord Bridge of Harwich in thinking that there must also be a discretion to refuse to hear the contemnor and in favouring the flexible approach suggested by the judgment of Denning LJ in Hadkinson v Hadkinson [l9521 P 285. One can of course envisage, as his Honour did in that case, circumstances in which the court would be unlikely to exercise its discretion in favour of hearing a contemnor. He instanced the case of an abuse of the process or of disobedience to the order impeding the course of justice, but I would not be in favour of laying down any rules for the exercise of the discretion though it can do no harm to give examples which may serve as guidelines."

Lord Griffiths at 50 and Lord Lowry at 55 expressed agreement with both Lord Bridge and Lord Oliver on this point. Lord Oliver, while approving Lord Denning's flexible approach in holding that whether a contemnor should be heard was a matter of discretion, emphasised that that discretion was not to be fettered by rules regulating its exercise. He was not,

I think, endorsing everything that Lord Denning said in

Eadkinson. If there is a difference between the views of Lord Bridge and Lord Oliver as to the nature of this discretion, I would prefer those of Lord Oliver, as according more with the principles by reference to which judicial discretions are exercised.

However, it is unnecessary for me to determine whether the law binding me is that there is a prohibition against a contemnor being heard that is subject only to certain defined exceptions or whether, instead, the matter is one of discretion. Adopting the latter, as the view most favourable to the first respondent, I am not prepared to hear

his application for a stay of the orders in question pending

his appeal until he purges his contempt.

His three separate contempts all involve serious breaches of his obligations under orders of the Court made in these proceedings.

The application by the ASC in which I made the orders he now seeks to stay was an application for final judgment against the first respondent and the other respondents under 0. 10, r. 7(l)(b) the Federal Court Rules for failure by the respondents to comply with directions given in these proceedings. Of these defaults, I said in my reasons

of 10 November:

"In my view, the history of things leading up to the direction of 15 September, 1993 suggests that the respondents have no intention of co-operating with the Court and the applicant to get the matter ready for trial. They, and more particularly the first respondent, who is the person who controlled each of the corporate respondents until the applicant intervened and had receivers appointed pursuant to

S. 1323 the uroorations Law, have been playing for

time.

The first respondent's conduct in these various respects shows that he is likely to continue to defy the authority of the Court whenever it suits his purpose. The Court should not, in my opinion, entertain a request by such a contemnor to exercise, for his benefit, a discretion vested in it. It is inconsistent with the role of the Court as the

institution responsible for making authoritative

determinations of the rights and obligations of persons in dispute, for the Court to act at the behest of a litigant who is likely to respect the Court's decisions only if it suits

him to do that.

I certify that this and the preceding eight pages are a true copy of the reasons for judgment herein of the Honourable Justice Drummond.

Associate: bid +

Date :

23 November, 1994

Counsel for the applicant:	E.M. O'Reilly
Solicitors for the applicant:	Australian Securities Commission
Counsel for the respondents:	A.I. Philippides
Solicitors for the respondents:	Corrs Chambers Westgarth
Date of Hearing:	22 November, 1994

[1994] FCA 900

23 Nov 1994