Caratti v Boban Pty Ltd (Administrators Appointed) [No 2]
[2015] WASC 139
•22 APRIL 2015
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: CARATTI -v- BOBAN PTY LTD (ADMINISTRATORS APPOINTED) [No 2] [2015] WASC 139
CORAM: MITCHELL J
HEARD: 16 & 17 APRIL 2015
DELIVERED : 17 APRIL 2015
PUBLISHED : 22 APRIL 2015
FILE NO/S: COR 60 of 2014
BETWEEN: ALLEN BRUCE CARATTI
Plaintiff
AND
BOBAN PTY LTD (ADMINISTRATORS APPOINTED)
First DefendantPINEVIEW INVESTMENTS PTY LTD (ADMINISTRATORS APPOINTED)
Second DefendantAUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
Third DefendantJAMIE KEVIN POLLOCK
Fourth DefendantJOHN SHEAHAN AND IAN RUSSELL LOCK AS JOINT AND SEVERAL ADMINISTRATORS OF BOBAN PTY LTD
Fifth DefendantJOHN SHEAHAN AND IAN RUSSELL LOCK AS JOINT AND SEVERAL ADMINISTRATORS OF PINEVIEW INVESTMENTS PTY LTD
Sixth Defendant
Catchwords:
Criminal law - Contempt of court for breach of injunction - Elements of contempt - No case to answer submission - Construction of injunction
Legislation:
Civil Judgments Enforcement Act 2004 (WA), s 98
Corporations Act 2001 (Cth), s 438A(b)
Result:
No case to answer submission upheld in respect of application for orders holding firstnamed fifth defendant in contempt
Application for orders holding secondnamed fifth defendant in contempt dismissed
Category: B
Representation:
Counsel:
Plaintiff: Mr N D C Dillon
First Defendant : No appearance
Second Defendant : No appearance
Third Defendant : No appearance
Fourth Defendant : No appearance
Fifth Defendant : Mr J A Thomson SC & Mr T J Porter
Sixth Defendant : Mr J A Thomson SC & Mr T J Porter
Solicitors:
Plaintiff: Roe Legal Services
First Defendant : No appearance
Second Defendant : No appearance
Third Defendant : No appearance
Fourth Defendant : No appearance
Fifth Defendant : Sheahan Lock Partners
Sixth Defendant : Sheahan Lock Partners
Case(s) referred to in judgment(s):
CEO, Department of Environment and Conservation v Szulc [2010] WASC 195
Commissioner for Consumer Protection v Armstrong [2015] WASC 8
International Land Developments Pty Ltd v Diamo Nominees Pty Ltd [2007] WASC 96; (2007) 34 WAR 201
Lade & Co Pty Ltd v Black [2006] QCA 294; [2006] 2 Qd R 531
Lehman Brothers Holdings Inc v City of Swan [2010] HCA 11; (2010) 240 CLR 509
Morrison v Kiwi Electrix Pty Ltd (1998) 19 WAR 482
Perpetual Trustees Victoria Ltd v Allen [2012] WASC 258
R v Bilick (1984) 36 SASR 321
Re Mycorp Pty Ltd [2014] NSWSC 899
The State of Western Australia v Burke [2011] WASCA 190; (2011) 42 WAR 124
Wilson v Ferguson [2015] WASC 15
Witham v Holloway (1995) 183 CLR 525
Table of Contents
Summary
Factual and procedural background
Prosecution case
Submissions as to elements of the offence
The no case to answer submission
Test to be applied
Case against Mr Sheahan
Case against Mr Lock
Primary facts
Paragraph 11.1: liaising with Mr Pollock
Paragraph 11.2: analysing materials provided by Mr Pollock
Paragraph 11.3: unilaterally providing information to the ATO
Paragraph 11.4: advising the ATO of the trial
Paragraph 11.5: analysing and providing further financial material
Paragraph 11.6: agitating the ATO to make a claim
Purpose of the acts alleged in par 11 of the Submissions
Conclusion
Determination of the contempt application against Mr Lock
General principles concerning findings of criminal guilt
Presumption of innocence, burden and onus of proof
Evidence
General principles concerning contempt
Assessment of the credibility of witnesses
Alleged conduct not established on the evidence
Paragraph 11.1: liaising with Mr Pollock
Paragraph 11.2: analysing materials provided by Mr Pollock
Paragraph 11.3: unilaterally providing information to the ATO
Paragraph 11.4: advising the ATO of the trial
Paragraph 11.5: analysing and providing further financial material
Paragraph 11.6: agitating the ATO to make a claim
Original particulars
Conclusion as to conduct
Conduct not an investigation under s 438A of the Corporations Act
Conduct did not contravene the injunction
Other matters
Conclusion
MITCHELL J:
Summary
In these proceedings the plaintiff, by interlocutory process dated 6 March 2015, applied for orders holding the fifth defendant, John Sheahan and Ian Russell Lock, in contempt and requiring the fifth defendant to pay various costs of the plaintiff. The contempt application was listed for hearing on 16 April 2015.
After the close of the plaintiff's evidence on the afternoon of 16 April 2015, counsel for Mr Sheahan and Mr Lock sought leave to submit that there was no case to answer before electing whether or not to lead evidence. I granted that leave and heard argument on the no case to answer submission on 16 April 2015.
On the morning of 17 April 2015, I upheld the no case to answer submission in respect of Mr Sheahan and overruled the submission in respect of Mr Lock.
Mr Lock then elected to give evidence in his defence. After hearing closing submissions from both parties, I found that the charge that Mr Lock had committed a contempt of court was not established beyond reasonable doubt, and dismissed the plaintiff's application.
I gave reasons for upholding the no case to answer submission in part, and dismissing the plaintiff's application, orally in the morning and afternoon of 17 April 2015 respectively. Those reasons are reproduced below, edited for grammar and syntax, and the addition of citations and references. The opening sections, setting out the factual and procedural background, summarising the prosecution case and the parties' submissions as to the elements of the offence, formed part of both sets of reasons but are reproduced only once below.
Factual and procedural background
The plaintiff claims that he is a director and shareholder of the first defendant (Boban) and a director of the second defendant (Pineview), and seeks rectification of the registers maintained by the third defendant (ASIC) to reflect that position. That rectification would also address the position of the fourth defendant (Mr Pollock) in relation to Boban and Pineview.
Mr Sheahan and Mr Lock have been purportedly appointed as administrators of Boban and Pineview. In their capacity as administrators of Boban they are the fifth defendant in these proceedings. In their capacity as administrators of Pineview they are the sixth defendant in these proceedings.
On 1 April 2014, Master Sanderson granted an injunction restraining the fifth and sixth defendants from 'taking any step in the administration of [Boban] and [Pineview], or doing any act or thing in furtherance of those administrations' until the hearing and determination of this and other actions, or until further order.
A variation was made to the injunction on 2 September 2014, which lifted the restraint insofar as it related to the investigation, management and progression of any claim that Boban and Pineview might have against a company called IME Nominees Pty Ltd.
By interlocutory process dated 6 March 2015, the plaintiff applies for orders that the fifth defendant be held in contempt of the injunction granted on 1 April 2014.
Prosecution case
The interlocutory process alleges that the fifth defendant, after 1 April 2014:
(a)investigated and identified the Australian Taxation Office (ATO) as a potential creditor of Boban; and/or
(b)provided information to the ATO as a potential creditor in the administration of Boban; and/or
(c)raised with the ATO whether the ATO should claim in the administration of Boban.
The plaintiff contends that this conduct constituted either the taking of a step in the administration of Boban, or the doing of an act or thing in furtherance of the administration of Boban. These alleged breaches of the injunction were said to be evidenced by emails dated 24 October 2014 from Mr Lock to officers of the ATO with an attached spreadsheet and bundles of invoices.
In opening submissions, counsel for the plaintiff further particularised the alleged conduct said to constitute contempt by reference to par 11 of an outline of responsive submissions dated 10 April 2015 and filed in this court by the plaintiff on 14 April 2015 (Submissions). That paragraph reads:
The above evidence established that, in breach of the Injunction, the Fifth Defendants took steps in the administration of Boban by:
11.1liaising with the former director (Mr Jamie Pollock);
11.2analysing materials provided by Mr Jamie Pollock including financial material provided by the former accountant of Boban at Mr Jamie Pollock's request (or, alternatively the request of Mr Kevin Pollock);
11.3unilaterally and without request from the ATO or compulsion, provided that material to the ATO;
11.4advising the ATO of the fact the trial of this and the associated proceedings was listed for 27 October 2014;
11.5analysing further financial materials provided by the Pollock parties and forwarded those further materials to the ATO with further comments;
11.6agitating the ATO to make or consider making a claim in the administration of Boban as a substantial creditor.
Paragraph 11 of the Submissions must be read in the context of par 12 of the Submissions, also adopted in opening, which states:
With respect, it cannot seriously be contested that the actions of the Fifth Defendants were not 'a step in the administration of the First Defendant and Second Defendant, or doing any act or thing in furtherance of those administrations' – that is, that the steps were taken in breach of the injunction. That is, that the Fifth Defendant have acted in contempt of the injunction. (original emphasis)
In his opening statement, counsel for the plaintiff also explained the plaintiff's case in the following terms. It was alleged that the two accused men conferred with a former director in relation to a particular issue, received material from that director, analysed that material, forwarded the material on to the ATO and agitated for action by the ATO in respect of that material. Counsel said the emails of 24 October 2014 established that this conduct occurred. He alleged that this was done for the purpose of investigating the financial circumstances of Boban for the purpose of forming an opinion about the matters referred to in s 438A(b) of the Corporations Act 2001 (Cth) (Corporations Act). He said that the conduct involved the accused men identifying a creditor, determining the legitimacy of its claim, and determining whether that claim would be pressed for the purpose of forming a view as to the solvency of Boban.
Counsel for the plaintiff also relied on the fact that the material was supplied to the ATO on Friday, 24 October 2014, in circumstances where the trial of proceedings concerning Boban and its solvency was to commence on Monday, 27 October 2014. Counsel also relied on the fact that a contingent proof of debt was issued by the ATO within a matter of hours after the information was given by the accused to the ATO. He said that these circumstances supported an inference as to the purpose for which the accused were acting in providing the information.
Senior counsel for the accused men noted that the injunction had two limbs. The first limb restrained the accused from taking any step in the administration of Boban. The second limb restrained them from doing any act or thing in furtherance of that administration. Senior counsel submitted that, by adopting par 11 of the Submissions, counsel for the plaintiff had abandoned that part of his case which alleged that the conduct involved doing an act or thing in furtherance of Boban's administration. He pointed to the fact that par 11 only refers to 'steps' being taken. He said that while par 12 refers to both limbs of the injunction, the first sentence in that paragraph ends by referring to the 'steps' taken in breach of the injunction.
I do not accept that the plaintiff has abandoned the part of the case which alleges that the conduct referred to was undertaken in furtherance of the administration of Boban. Words of counsel in an opening are not to be construed as a statute. When the interlocutory process is considered against counsel's opening as a whole and the reference to the second limb of the injunction in par 12 of the Submissions, I do not think it can be concluded that the case based on the second limb of the injunction was abandoned.
Submissions as to elements of the offence
There does not appear to be any substantial dispute between the parties as to what the plaintiff must establish in order to prove contempt. The plaintiff accepts that he must prove that the injunctive order was made and that the accused were at all material times aware of the order and what it prohibited them from doing. The accused men admit knowledge of the injunction and its terms through their counsel.
The plaintiff must prove that the accused men disobeyed the injunction by acting in breach of its terms. Whether the plaintiff has proven contravention of the injunction is the central issue in dispute in these proceedings.
The plaintiff also accepts that he must prove that the conduct which constituted the contravention of the injunction was deliberate and voluntary. This requirement that the conduct be deliberate does not demand that the alleged contemnor knew that their conduct was in breach of the order. It is sufficient that the alleged contemnor is aware of facts that make their conduct a breach of the order.[1] In the present case there is little room for doubt that, if the accused men did the acts alleged, those acts were done voluntarily and deliberately in the sense I have described.
[1] CEO, Department of Environment and Conservation vSzulc [2010] WASC 195 [5]; Perpetual Trustees Victoria Ltd v Allen [2012] WASC 258 [27]; Commissioner for Consumer Protection v Armstrong [2015] WASC 8 [31].
The no case to answer submission
After the close of the plaintiff's evidence, counsel for Mr Sheahan and Mr Lock sought leave to submit that there was no case to answer before electing whether or not to lead evidence. I granted that leave and heard argument on the no case to answer submission on 16 April 2015.
Test to be applied
The test to be applied in determining a no case submission where the prosecuting party bears the onus of proving guilt beyond reasonable doubt is well established. In Morrison v Kiwi Electrix Pty Ltd,[2] Malcolm CJ adopted what was said by King CJ in R v Bilick:[3]
The same test is to be applied to deciding a submission of no case to answer in a case depending on circumstantial evidence as in a case depending upon direct evidence, although the manner of its application will be different. The question to be asked by the trial judge is whether there is evidence with respect to every element of the offence charged which, if accepted, could prove that element beyond reasonable doubt … Where the case is a circumstantial or partly circumstantial case and therefore depends on inferences, the question may be expanded so that it becomes: On the assumption that all the evidence of primary fact considered at its strongest from the point of view of the case for the prosecution, is accurate, and on the further assumption that all inferences which are reasonably open, are drawn, is the evidence capable of producing in the mind of a reasonable person satisfaction beyond reasonable doubt, of the guilt of the accused?
[2] Morrison v Kiwi Electrix Pty Ltd (1998) 19 WAR 482, 491.
[3] R v Bilick (1984) 36 SASR 321, 337.
The Court of Appeal explained what this required in a case involving circumstantial evidence in State of Western Australia v Burke:[4]
The test to be applied by a trial judge in determining a submission of no case to answer at the close of the prosecution case has been considered and discussed in numerous authorities. See, for example, May v O'Sullivan [1955] HCA 38; (1955) 92 CLR 654; R v Bilick (1984) 36 SASR 321; Morrison v Kiwi Electrix Pty Ltd (1998) 19 WAR 482; The State of Western Australia v Montani [2007] WASCA 259; (2007) 182 A Crim R 155. The question is not whether, on the evidence as it stands, the accused ought to be convicted, but whether, on the evidence as it stands, he or she could lawfully be convicted.
…
Accordingly, where a submission of no case to answer is made in a criminal prosecution which depends upon circumstantial evidence, the trial judge should rule on the submission on the basis of such inferences as are reasonably open on the evidence and as are most favourable to the State. The trial judge should not choose between such inferences. He or she is concerned only with whether a reasonable tribunal of fact, properly instructed, could conclude beyond reasonable doubt that the accused is guilty or, to put it another way, could exclude all hypotheses consistent with innocence as not reasonably open on the evidence.
Case against Mr Sheahan
[4] TheState of Western Australia v Burke [2011] WASCA 190; (2011) 42 WAR 124 [12], [19].
I begin by applying this test to the case against Mr Sheahan.
The two accused men are jointly charged with committing the same contempt. However, in considering the guilt of the accused I must consider the position of each accused separately. My finding in respect of one accused does not dictate what my finding will be in respect to the other accused. I have to consider each accused's position separately and evaluate the evidence as it relates to the accused separately in relation to the offence with which they have both been charged.
It is unnecessary to set out the evidence in any detail for the purpose of deciding Mr Sheahan's no case submission. The simple fact is that there is no evidence of Mr Sheahan engaging in any conduct which is capable of constituting a contravention of the injunction. The only evidence in relation to Mr Sheahan is that he was sent a copy of the emails addressed to the ATO by Mr Lock on 24 October 2014, and emails sent by Mr Pollock and the ATO on 23 and 24 October 2014 respectively. The most that this could establish was that Mr Sheahan was aware of the conduct of Mr Lock in sending his emails of 24 October 2014. There is no evidence of whether, and if so when, Mr Sheahan read those emails. There is no evidence capable of establishing beyond reasonable doubt that Mr Sheahan counselled, procured, assisted, encouraged or otherwise participated in any contravention of the injunction.[5] The mere fact that he might have been aware of conduct of Mr Lock which may have amounted to such a breach falls a long way short of establishing a case of contempt against Mr Sheahan.
[5] Counsel for the plaintiff did not contend, in opening, that Mr Sheahan could be liable under s 98(2) of the Civil Judgments Enforcement Act 2004 (WA), or adduce any evidence to establish, beyond reasonable doubt, the existence of a partnership.
Therefore, I uphold the no case submission made in relation to Mr Sheahan and will order that par 1 of the plaintiff's interlocutory process be dismissed so far as it relates to Mr Sheahan.
Case against Mr Lock
I turn to consider the more difficult issues raised by Mr Lock's no case submission.
I shall consider this issue first by identifying the primary facts which the evidence is capable of establishing beyond reasonable doubt, then by considering whether the inferences for which the plaintiff contends are reasonably open, before finally assessing whether the prosecution case is capable of establishing Mr Lock's guilt.
Primary facts
In my view the evidence, if accepted, is capable of establishing the following primary facts against Mr Lock.
First, there is evidence that Mr Lock was aware of the injunction and its terms at all material times after it was made. So much is admitted by Mr Lock through his senior counsel.
I am satisfied that the following facts are capable of being established from exhibit 3 and the documents annexed to Mr Weaver's affidavit. I note that counsel for the accused accepted that the emails attached to that affidavit were evidence of the fact that the emails were sent, notwithstanding that they were neither sent nor received by Mr Weaver.
At 7.44 pm on Thursday, 23 October 2014, Mr Lock received an email from Mr Pollock which read as follows:
Good evening
Please see attached true position for Boban in relation to Income
Please note there are two worksheets, one for the collection of the relevant expenses by year, and the second one being a summary page.Can you please call Kevin in the morning so he can further explain and clarify, anytime from 9 am your time is fine.
A spreadsheet was attached to that email.
At 10.34 am on Friday, 24 October 2014, Mr Lock sent an email to Sourina Simmalavong and Barry Holland, both of whom are officers employed in the ATO. The email read:
Sourina,
We received last night from Jamie Pollock, the companies' director, the attached spreadsheet, which I understand was prepared by Philip Metcalf, the companies' former accountant. It apparently details $3m of allegedly incorrectly claimed costs of Boban and [Pineview]. If accurate, this would, I understand, turn the carried forward loss of Boban/[Pineview] into a $2.5m profit. My understanding of the spreadsheet is that the first sheet itemises amounts accounted for by Boban/[Pineview] as expenses, which were (according to the Pollocks) in fact invoices issued by Mammoth Nominees to Soil and Contracting, and in respect of which Soil and Contracting had made provision in calculating its contract price with Boban/[Pineview]. The second sheet appears to summarise these figures, together with proposing related adjustments for interest (being interest charged by Mammoth Nominees to Boban/[Pineview] which, according to the Pollocks, had no basis for being charged) for the relevant tax years.
I understand that Philip Metcalf can be contacted on Kevin Pollock's mobile … or on his own mobile … in the event that the ATO wishes to talk to him directly.
Kind regards,
Ian
The spreadsheet attached to that email was that which had been forwarded to Mr Lock by Mr Pollock the previous evening.
At 2.45 pm on 24 October 2014 (which I infer from the email chain to have been 2.45 pm AEST) Mr Holland, whose email indicates that he works for the 'Private Groups and High Wealth Individuals' section of the ATO, sent an email to colleagues in the ATO which read as follows:
We just spoke to Iain Lock and the info below suggests the COT has a contingent interest in the entity by way of probable adjustment to the taxable income of the company as lodged.
There is a matter being heard next Monday which I believe requires the COT to present amicus curie.
The information referred to 'below' was the email sent by Mr Lock at 10.34 am on 24 October 2014. I infer that the reference to 'the COT' is to the Commissioner of Taxation.
At 1.35 pm on 24 October 2014, Mr Lock sent a further email to Ms Simmalavong which read as follows:
Sourina,
I refer to my email below [the email sent at 10.34 am on 24 October 2014]. I have been provided this afternoon with an electronic copy of a number of invoices from Mammoth Investments to Soil and Contracting, which appear to match items in the schedule of costs claimed (allegedly) by Boban/[Pineview]. I attach those copies herewith (some of them are upside down, which is how they were received by me). Please forward to the appropriate persons within the ATO.
…
Kind regards,
Ian
At 2.26 pm on 24 October 2014, an officer of the ATO sent an email to Mr Lock and Mr Sheahan indicating that a contingent proof of debt was attached.
The attached proof of debt in the administration of Boban was for payment of an amount of $2,308,324.70.
The trial of various proceedings involving Boban was listed to commence on Monday, 27 October 2014. The proof of debt was tendered at the hearing on the first day of the trial. The trial was aborted as a result of the issue of the proof of debt by the ATO.
I turn now to the inferences which the plaintiff asks me to draw by reference to par 11 of the Submissions.
Paragraph 11.1: liaising with Mr Pollock
The first inference which the plaintiff asks me to draw from the primary facts is that Mr Lock liaised with Mr Pollock. Exhibit 3 provides direct evidence of Mr Pollock providing information to Mr Lock. Further, it is reasonably open to infer from Mr Lock's emails of 24 October 2014 that he was in communication with Mr Pollock and that those communications extended beyond the emails tendered in evidence. The content of the emails sent by Mr Lock on 24 October 2014 at 10.34 am contains information beyond that which can obviously be inferred from Mr Pollock's email. I do not, however, consider that the evidence leaves it open to reasonably infer that Mr Lock initiated that contact. The evidence simply does not provide any sufficient indication as to that matter.
Paragraph 11.2: analysing materials provided by Mr Pollock
The 'analysing' identified by counsel for the plaintiff was said to be an analysis of the information in the spreadsheet which Mr Pollock provided on 23 October 2014 which was sufficient to reach a conclusion about the effect of the information, if accurate, on the past profit and loss position of Boban. I consider it reasonably open to infer, from the statements in Mr Lock's email of 10.34 am on 24 October 2014, that Mr Lock did this analysis or caused it to be undertaken. In that email, Mr Lock describes the effects of the information which, if accurate, would turn the carried forward loss of Boban into a $2.5 million profit. He also describes his understanding of the spreadsheet.
Paragraph 11.3: unilaterally providing information to the ATO
Mr Lock's emails of 24 October 2014 provide direct evidence that he provided material received from Mr Pollock to the ATO.
The question is then whether it is reasonably open to infer that Mr Lock provided the material to the ATO 'unilaterally and without request or compulsion', as alleged in par 11.3 of the Submissions adopted as particulars in opening. In my view, that inference could reasonably be drawn on all of the evidence. There is no suggestion in the evidence of any request or compulsion being made by the ATO. There was limited time for a request to have been made by the ATO between the time when the information was received by Mr Lock and when it was provided to the ATO. The fact that the information was provided to the ATO on the eve of a trial at which the solvency of Boban was in issue, combined with the identification in the emails of matters going to the tax liability of Boban, could also support the inference that the purpose of the communication was to flush out the ATO as a potential creditor.
The question for me at this stage is not whether I draw the inference, but whether the inference is reasonably open on all the evidence. In my view the evidence, taken as a whole, would allow a reasonable person to draw the inference that Mr Lock instigated the provision of the information to the ATO.
Senior counsel for Mr Lock submitted that the content of the first email sent at 10.34 am indicated that this email was not Mr Lock's first contact with the ATO. So much may be accepted, but that does not compel the conclusion that the previous contact was a request or demand by the ATO for the information subsequently provided. I remind myself that at this stage I must find the inferences which are reasonably open and as are most favourable to the plaintiff, and should not choose between inferences.
Paragraph 11.4: advising the ATO of the trial
The only evidence of the particular at par 11.4 is the internal ATO email sent on 24 October 2014, which refers to Mr Holland and another speaking to Mr Lock and indicates that the ATO were aware of the hearing. The only inference which could reasonably be drawn from this email is that the ATO officer spoke to Mr Lock. However, I do not think that an inference can be reasonably drawn from this limited information, as the only reasonable inference, that Mr Lock informed the ATO of the date of the trial. There are simply too many alternative sources of that information, and the ATO's email does not say that the information about the trial was received from Mr Lock.
Paragraph 11.5: analysing and providing further financial material
The further material referred to in this particular is that attached to Mr Lock's second email to the ATO on 24 October 2014. The 'analysis' described by counsel in opening was that required to reach the conclusion, expressed in the email, that the invoices appeared to match the schedule of costs claimed. I am satisfied that it can be reasonably inferred from the content of this email that Mr Lock undertook, or caused to be undertaken, the alleged analysis.
Paragraph 11.6: agitating the ATO to make a claim
In my view, the facts that:
(a)Mr Lock provided the ATO with information on which a contingent claim could be based;
(b)the ATO acted on the information provided with exceptional speed; and
(c)the trial was imminent,
leave open the inference that Mr Lock intentionally encouraged the ATO to lodge a proof of debt in the Boban administration. It might reasonably be inferred that, if Mr Lock had not 'agitated' the ATO in this manner, it would not have acted so quickly after receiving the initial information.
Purpose of the acts alleged in par 11 of the Submissions
The final relevant inference the plaintiff seeks to have the court draw is that the acts specified in par 11 of the Submissions were engaged in by Mr Lock for the purpose of forming an opinion as to the solvency of Boban by identifying a creditor, determining the legitimacy of its claims and determining whether the creditor would proceed with recovery action. I am satisfied that this inference is an inference favourable to the plaintiff which is reasonably open on all of the evidence. The combination of the facts referred to above, including the fact that action was taken on the last working day before a trial; the speed of the ATO's response; and the nature of the information provided, could support the inference contended for by the plaintiff as to the purpose of Mr Lock's conduct.
Conclusion
Senior counsel for the accused submitted that before a contempt of court is established the order must direct what is to be done in unambiguous terms, in the sense described by Black J in Re Mycorp Pty Ltd.[6] I accept that proposition, which accords with the views I expressed in Wilson v Ferguson.[7]
[6] Re Mycorp Pty Ltd [2014] NSWSC 899 [53] ‑ [54].
[7] Wilson v Ferguson [2015] WASC 15 [62].
Senior counsel next submits that the reference in the injunction to 'taking any step in the administration of [Boban]' is to the taking of one of the formal steps in the administration provided for in pt 5.3A of the Corporations Act. Alternatively, counsel submits that the injunction is at least capable of being reasonably understood in that way. At this stage it is sufficient for me to note that I accept that submission, essentially for the reasons counsel advocated (although I do not attach any significance to the form of the application for injunctive relief in reaching that conclusion).
However, I do not accept the final step in counsel's submission to the effect that the plaintiff's case, taken at its highest, fails to establish conduct of Mr Lock which is capable of constituting a contravention of the injunction. In my view, the conduct established by the plaintiff's evidence, taken at its highest, can be properly characterised as Mr Lock investigating Boban's financial circumstances for the purpose of putting him in a position to form an opinion about the matters referred to in s 438A(b) of the Corporations Act. In my view, such an investigation is either a step in the administration of Boban, being the step provided for in s 438A(a) of the Corporations Act, or an act in furtherance of that administration. In my opinion, the injunction does unambiguously restrain the administrators from undertaking the investigation referred to in s 438A(a) of the Corporations Act. The plaintiff's case, taken at its highest, is capable of satisfying a reasonable mind beyond reasonable doubt that the conduct referred to in paragraphs 11.1 ‑ 11.3 and 11.5 ‑ 11.6 of the Submissions, so far as I have found that conduct to be capable of being established, was taken in the course of such an investigation. If that evidence were accepted and all inferences most favourable to the plaintiff which are reasonably open are drawn, a reasonable mind could exclude the hypothesis that Mr Lock was, for example, not acting in the administration but was simply responding to requests from the ATO acting in its enforcement capacity.
I reiterate that at this stage I am not concerned with the question of whether I am satisfied beyond reasonable doubt of Mr Lock's guilt or whether I would draw the inferences that I have identified as reasonably open on the evidence. I am, at this stage, only concerned with whether the plaintiff's evidence, if accepted and used to draw all inferences reasonably open, is capable of producing in a reasonable mind a conclusion of guilt beyond reasonable doubt. I am, for the reasons I have given, satisfied that the plaintiff's evidence is capable of sustaining that conclusion.
For those reasons I would reject the no case submission made on behalf of Mr Lock.
Determination of the contempt application against Mr Lock
(The following reasons were delivered after hearing the evidence of Mr Lock and the parties' closing submissions, and adopting relevant parts of my decision on the no case submission.)
General principles concerning findings of criminal guilt
Presumption of innocence, burden and onus of proof
At the outset, it is appropriate that I remind myself of three important principles that apply in every criminal trial, which in my view also apply in these proceedings.
The first is the presumption of innocence. It is important for me to remember, when considering the evidence, that Mr Lock, like every accused person, is presumed innocent of the charge that has been brought against him.
The second principle concerns the burden of proof. The burden of proving the accused's guilt is on the plaintiff. It is the plaintiff that has brought the charge against the accused and it is therefore the plaintiff which bears the burden of proving that he is guilty of the charge. The burden of proof never shifts from the plaintiff to the accused. The accused does not have to prove anything.
The third principle is that the standard of proof that the plaintiff must achieve is proof beyond reasonable doubt. For the plaintiff to discharge his burden of proving the guilt of the accused, he must prove beyond reasonable doubt that the accused is guilty of the contempt which is alleged against him. Beyond reasonable doubt is a high standard. It is the highest standard that is known to law. I cannot return a finding that Mr Lock has committed contempt unless the plaintiff proves to my satisfaction, beyond reasonable doubt, each of the essential elements of the contempt as particularised in the opening of the plaintiff's case.
I keep these principles about the presumption of innocence and the burden and standard of proof firmly in mind as I assess the evidence in this case. These principles provide the framework within which I must assess the evidence.
If, during the course of these reasons, I refer to the plaintiff satisfying me of any element of the charged offences, I am referring to satisfaction to the high standard of beyond reasonable doubt.
Evidence
The accused has a right of silence. An accused may, but does not have to, give or call evidence. Whether an accused person gives evidence is a matter of choice for that person. It does not mean that the accused person has an onus of proof or has to prove that he or she is innocent if that person exercises the choice not to give evidence.
In this case, Mr Lock chose to give evidence during the trial. He did not have to give evidence. He was at liberty not to do so, but he chose to do so and, as a result, submit himself to cross‑examination by counsel for the plaintiff. The fact that Mr Lock did give evidence does not in any way detract from the important principles that the onus is on the plaintiff to prove the charge, and the accused is presumed to be innocent of the charge until his guilt has been proven beyond reasonable doubt.
I remind myself of some important principles governing how I must consider the accused's evidence.
As with any witness, in assessing the evidence given by the accused I can decide to accept all of the witness's evidence, some of the witness's evidence, or none of the witness's evidence. I can accept part of a witness's evidence and reject other parts of that witness's evidence.
It may be that I believe all of his evidence. On the other hand, I may think that although his evidence was not convincing, it leaves me in a state of reasonable doubt as to what the true position was.
Even if I do not believe his evidence, I cannot find an issue against the accused contrary to his evidence if his evidence or any other evidence has given rise to a reasonable doubt on that issue. I must remember that the question I have to ask is whether on all of the evidence before me, the plaintiff has proved the charge against the accused beyond reasonable doubt.
If the evidence of the accused has given rise to a reasonable doubt, then he is entitled to the benefit of that doubt and I cannot find the charge of contempt proven. Even if I do not accept his evidence, it does not automatically follow that I should find him guilty. The accused does not have to prove anything. The question is whether the plaintiff, on the basis of the evidence that I do accept, proved the guilt of the accused beyond reasonable doubt.
General principles concerning contempt
In Perpetual Trustees Victoria, Beech J observed:[8]
It has often been observed that criminal contempt of court is the only common law criminal offence in Western Australia: R v Lovelady; Ex parte Attorney General [1982] WAR 65, 66; Briggs v Lunt [No 4] [2011] WASCA 145 [34]. However, contempt by disobedience to an order or judgment of the court now has a statutory setting in the Civil Judgments Enforcement Act.
[8] Perpetual Trustees Victoria [19].
That statutory setting is of particular significance in the present case. In the present case the plaintiff relies on the 'statutory offence' which he says is created by s 98 of the Civil Judgments Enforcement Act 2004 (WA) (CJE Act), which provides:
If a natural person disobeys a judgment to which this Division applies the person is guilty of a contempt of court.
Section 98 must be read with s 97 of the CJE Act, which provides that div 2 of pt 5 of the CJE Act applies, subject to presently immaterial exceptions, 'if a judgment requires or has the effect of requiring a person to not do an act, to cease doing an act, or to do an act'.
Section 98 of the CJE Act does not provide for the sanction which may result from the contempt of court provided for in that section. The same can be said of other provisions of the Act establishing a statutory contempt.[9] The Act leaves it to the common law to provide for the consequences of the commission of the contempt for which it provides. However, s 98 does define statutory criteria for the existence of a contempt of court.
[9] See s 24(3), s 29(5), s 30(4), s 63(5), s 89(5) and s 90(1); note that s 90(3) limits the period of imprisonment for contempt under s 90(1) to 40 days. Section 15(5)(d) and s 90(4) of the CJE Act provide for the suspension of a person's imprisonment in certain circumstances, while s 92 provides for the release of the person from imprisonment in certain circumstances.
In identifying whether a person is guilty of contempt under s 98 of the CJE Act, it is necessary to give attention to the terms of that section understood in the context of other provisions of the Act and the background of the common law against which the provision was enacted. It is the terms of the statute which define the criterion of liability for the statutory contempt for which the CJE Act provides.
In Lade & Co Pty Ltd v Black,[10] there was division in the Queensland Court of Appeal as to what, in the context of the Commonwealth Criminal Code, would be referred to as the 'fault element' for common law contempt. Jerrard JA thought that contempt at common law was established by proof of a deliberate act or omission which breaches an order or undertaking, it being no defence to show that the party deliberately doing the act believed that it was not in breach of the order.[11] Keane JA thought that it was sufficient that the order had been disobeyed, with the fault element being relevant to whether a punitive order was justified.[12] Jones J considered that relief from what he referred to as quasi‑criminal liability depended on the conduct being wilful and not casual, accidental or unintentional.[13] While Jones J expressed agreement with remarks of Keane JA,[14] the language he used in his own reasons suggested that he regarded the element of wilfulness as going to whether contempt was established rather than the appropriate curial response to an established contempt.
[10] Lade & Co Pty Ltd v Black [2006] QCA 294; [2006] 2 Qd R 531.
[11] Lade & Co [24].
[12] Lade & Co [55], [57], [63].
[13] Lade & Co [109].
[14] Lade & Co [110].
The divergence of approach in members of the Queensland Court of Appeal was referred to by Martin CJ in International Land Developments Pty Ltd v Diamo Nominees Pty Ltd.[15] In Diamo, Martin CJ had recourse to general principles of the common law in concluding that the conduct constituting contempt had to be deliberate.[16] Other decisions of this court have adopted a similar approach at common law.[17] This requirement that conduct be deliberate does not demand that the alleged contemnor knew that their conduct was in breach of the order. It is sufficient that the alleged contemnor is aware of facts that make their conduct a breach of the order.
[15] International Land Developments Pty Ltd v Diamo Nominees Pty Ltd [2007] WASC 96; (2007) 34 WAR 201 [59] ‑ [65].
[16] Diamo [66] ‑ [69].
[17] Szulc [5]; Perpetual Trustees [27]; Armstrong [31].
Whatever the position at common law, in a case where s 98 of the CJE Act is engaged, it is the provisions of that section that define contempt. Section 98 does not refer, in terms, to conduct which is deliberate. Rather, it refers to disobedience of a judgement to which the division applies.
When the reference to disobedience of a court order in s 98 of the CJE Act is considered against the background of the common law, the reference to disobedience should be taken to involve more than a mere failure to comply with an order. In this context, the observations of Keane JA in Lade & Co as to the common law are apposite:[18]
There must, of course, be actual disobedience. There cannot be disobedience if the alleged contemnor does not know of the order which he or she is alleged to have breached. Nor could there be disobedience where the breach of the order occurs by reason of circumstances outside the control of the alleged contemnor. But if the facts of the case enable one fairly to conclude that the alleged contemnor has disobeyed the order or undertaking then that is sufficient to constitute a contempt.
[18] Lade & Co [63].
I note that different considerations might arise in a case where it is alleged that a person has disobeyed an order which requires a person to take action, as opposed to cases where the order prohibits certain conduct. In cases where positive action is required, an allegation that a person has failed to act may entail an inquiry as to whether the person had the capacity to act in the manner required by the order. If a person is required by an order to do an act on land but does not have any lawful means of gaining access to the land, for example, then a failure to do the act cannot be regarded as disobedience of the court's order. The failure to comply with such an order in those circumstances would be a product of the alleged contemnor's lack of capacity to do the act rather than any disobedience. Similarly, if an act which was prohibited by an order was not voluntarily done, then it could not be said that the doing of the act amounted to disobedience of the order. It is essential that the conduct which is said to constitute the offence be shown to be voluntary if it is to constitute 'disobedience'.
The statutory concept of disobedience may also be seen to assume that the disobeyed command has a sufficiently certain meaning so as to enable obedience to it. If a command is expressed in uncertain or ambiguous terms, then it may not be capable of obedience since it is not possible to objectively say how its requirements are to be satisfied. Reading the requirement of disobedience in this manner is consistent with the common law rule, to which I referred in Wilson v Ferguson,[19] that a person will not be found in contempt for breach of an order that is not clear and unambiguous.
[19] Wilson [62] and cases there cited.
The onus of establishing conduct which amounts to a contempt of court lies on the person asserting the contempt, and the facts demonstrating that contempt has been committed must be established on admissible evidence beyond reasonable doubt.[20]
[20] Witham v Holloway (1995) 183 CLR 525.
In summary, my view is that to show that Mr Lock has committed a contempt of court in this case, the plaintiff needs to adduce admissible evidence to establish beyond reasonable doubt that Mr Lock disobeyed the injunction after the date on which it granted. In the circumstances of the present case this requires proof beyond reasonable doubt that:
(a)Mr Lock knew that the injunction had been granted by this court and, at least in a general sense, knew of its terms;
(b)the injunction was sufficiently certain and unambiguous so as to be capable of obedience;
(c)Mr Lock voluntarily did one of the acts identified in the interlocutory process, in the manner particularised in par 11 of the Submissions; and
(d)one or more of those acts constituted either the taking of a step in the administration of Boban, or the doing of an act or thing in furtherance of the administration of Boban.
Although I have arrived at this destination by a different route than other judges of this court who have found that a person alleging contempt must prove that the relevant conduct was deliberate, I do not regard my conclusion as significantly different to that reached by my colleagues. Voluntarily doing an act which is prohibited by an order, of which the alleged contemnor is aware, may be described both as disobedience of that order and a deliberate failure to comply with the order. Voluntarily failing to do an act which the alleged contemnor has the capacity to do and which is required by an order, of which the alleged contemnor is aware, may also described both as disobedience of that order and a deliberate failure to comply with the order.
To the extent that the common law offence survives the enactment of s 98 of the CJE Act, the requirements for proof of a punishable contempt remain in substance the same.
Assessment of the credibility of witnesses
Mr Weaver, parts of whose affidavit sworn 15 April 2015 was read in these proceedings, was cross-examined on his affidavit. I did not find any reason to doubt the credibility of what he said as a result of that cross‑examination. However, his evidence was limited to the production of documents which he had sent and received as provisional liquidator of Boban. I do not find any issue in this case to turn on the credibility of his evidence.
Mr Lock gave evidence, and was cross‑examined extensively by counsel for the plaintiff. I found him to be an impressive witness. He was careful and precise in his answers, and clearly appreciated the importance of ensuring that the evidence which he gave was accurate. When he could not recall something, he said so. When his recollection of events was reconstructed from notes, he volunteered as much. On more than one occasion he corrected counsel when asked a question based on a false premise.
I have no hesitation in accepting Mr Lock's evidence, in its entirety, as an honest and reliable account of the events which he describes. His evidence certainly raised a reasonable doubt about many of the inferences which, in dealing with the no case submission, I regarded as open. But it does more than that. I also positively accept what he said and accept that the circumstances of the admitted disclosure of information to the ATO were as described in his evidence.
Accepting Mr Lock's evidence, the plaintiff's allegation that he committed contempt must fail for at least three reasons.
Alleged conduct not established on the evidence
The first reason why the allegation of contempt must fail is that I am not satisfied beyond reasonable doubt that Mr Lock engaged in any of the conduct described in paragraphs 11.1 ‑ 11.6 of the Submissions, other than that alleged in par 11.4 (which in my view is not capable of constituting disobedience of the injunction). I shall deal with each particular in turn. Of course, it is the case as particularised in the Submissions which the plaintiff must establish.
Paragraph 11.1: liaising with Mr Pollock
I am not satisfied beyond reasonable doubt that Mr Lock had any contact with Jamie Pollock, other than being the recipient of Mr Pollock's email of 23 October 2014. Mr Lock said, and I accept, that he had never met or spoken to Mr Pollock. In his evidence in chief he accepted the possibility that he might have sent an email to Mr Pollock passing on the request for information from the ATO. However he was not sure that he has done so, and would have been more likely to contact Kevin Pollock, Jamie Pollock's father. In my view the evidence of Mr Lock, taken together with all the other evidence, does not exclude the reasonable inference that Mr Fryer, an employee of Sheahan Lock Partners, had contacted Jamie Pollock without any involvement by Mr Lock.
In my view the evidence does not establish, beyond reasonable doubt, any liaising of the kind alleged in the plaintiff's opening or which could constitute a breach of the injunction. Such conduct clearly comprehended Mr Lock making some approach to Jamie Pollock, rather than simply being the recipient of an email solicited by others. In my view, this particular is not established.
Paragraph 11.2: analysing materials provided by Mr Pollock
I accept Mr Lock's evidence that he did not undertake any analysis of the information he received from Jamie Pollock or Kevin Pollock, and that the emails which he sent to the ATO on 24 October 2014 only contained information which he had received from one of those men. Although the emails are sometimes expressed in terms of Mr Lock's understanding or what appeared to him to be the case, I accept his evidence that the views he expressed in the emails were based solely on what he had been told and not on his own analysis.
Paragraph 11.3: unilaterally providing information to the ATO
Mr Lock readily accepts that he provided information he had received from the Pollocks to the ATO and that he did not do so under any compulsive process. However, that is not sufficient to constitute the contravention of the injunction alleged by the plaintiff in opening.
Paragraph 11.3 of the particulars made clear, as did the opening considered as a whole, that what was alleged was unilateral action by Mr Lock providing information to the ATO in order to flush out a potential creditor of Boban. In my view, the case as alleged in opening has not been established. I do not accept that it is open to counsel for the plaintiff to attempt to recast this allegation, as he sought to do in closing, by removing the element that Mr Lock provided the information unilaterally.
I find that this particular has not been made out.
Paragraph 11.4: advising the ATO of the trial
I am satisfied beyond reasonable doubt that Mr Lock advised the ATO of the trial date. The trial date was referred to in a letter signed by Mr Lock and copied to the ATO on 23 October 2014 (exhibit 8). However, for reasons I will explain, I am not satisfied that this conduct was in breach of the injunction.
Paragraph 11.5: analysing and providing further financial material
I am not satisfied that this particular is made out so far as it relates to analysing the invoices forwarded to the ATO in Mr Lock's second email of 24 October 2014. I accept his evidence that he did not conduct any such analysis. While it is clear that Mr Lock did forward the invoices to the ATO, I do not find this particular to have been made out.
Paragraph 11.6: agitating the ATO to make a claim
I accept Mr Lock's evidence that he did nothing to agitate or suggest to the ATO that a proof of debt should be lodged. While there was some evidence that an officer of the ATO mentioned a proof of debt, in a file note prepared by a Mr Williams of a discussion on 23 October 2014 (exhibit 6), I am not satisfied beyond reasonable doubt that this was in fact said based only on that file note.
In any event, I find that Mr Lock was doing no more than responding to requests for information which had been made to him by Commonwealth law enforcement agencies which he reasonably understood to be investigating serious criminal offences suspected of having been committed by Boban and others. I reject the allegation that he was agitating for the ATO to make a claim in the administration.
Original particulars
For completeness I consider the original particulars in par 3 of the interlocutory process. I am positively satisfied that Mr Lock did not, at any time after 1 April 2014, investigate or identify the ATO as a potential creditor of Boban. I am also positively satisfied that he did not raise with the ATO whether the ATO should claim in the administration of Boban. While I am satisfied that he provided information to the ATO, he provided the information because the ATO was a Commonwealth law enforcement agency which he understood to be investigating serious criminal offences, not because the ATO was a potential creditor of Boban. Mr Lock certainly did not provide that information in the manner particularised in par 11 of the Submissions.
Conclusion as to conduct
In conclusion, the plaintiff has not established that Mr Lock engaged in any of the conduct which the plaintiff alleged to constitute contempt, other than that Mr Lock informed the ATO of the hearing on 27 October 2014. On no reasonable view of the terms of the injunction can the mere provision of information about a hearing date in this court constitute a contravention of the injunction. The first reason why the plaintiff's allegation is not established is that the plaintiff has failed to prove the conduct which he alleged to constitute the contempt beyond reasonable doubt.
Conduct not an investigation under s 438A of the Corporations Act
The second, independent, reason why the plaintiff's allegation fails is that the fundamental premise of the case as alleged, and as I found on the no case submission, was that the conduct particularised in par 11 of the Submissions was undertaken as part of an investigation under s 438A(a) of the Corporations Act for the purposes of forming an opinion referred to in s 438A(b) of the Act.
What the plaintiff alleged in opening was that the then two accused men conferred with a former director in relation to a particular issue, received material from that director, analysed that material, forwarded the material on to the ATO and agitated for action by the ATO in respect of that material. Counsel for the plaintiff said the emails of 24 October 2014 established that this conduct occurred. He alleged that this was done in the course of investigating the financial circumstances of Boban so as to form an opinion about the matters referred to in s 438A(b) of the Corporations Act. He said that the conduct involved the accused men identifying a creditor, determining the legitimacy of its claim, and determining whether that claim would be pressed for the purpose of forming a view as to the solvency of Boban.
In rejecting Mr Lock's no case submission, I accepted as open on the plaintiff's case, taken at its highest, the inference that the acts specified in par 11 of the Submissions were undertaken by Mr Lock for the purpose of forming an opinion as to the solvency of Boban by identifying a creditor, determining the legitimacy of its claims, and determining whether the creditor would proceed with recovery action. However, that conclusion cannot be reached in the face of Mr Lock's evidence, and I find that he did not in fact act for that purpose.
The rejection of that contention as to purpose completely undercuts the case advanced by the plaintiff in opening. The basis on which the alleged contempt was put has not been made out. Even if I had been satisfied that the conduct referred to in par 11 of the Submissions had occurred, I would have rejected the plaintiff's case on the basis that he had not made out the alleged purpose for engaging in that conduct.
Further, the fact which was established - provision of the hearing date to the ATO - is not capable of being seen as conduct investigating the financial affairs of the company for any purpose, much less the purpose identified in s 438A(b) of the Corporations Act.
Conduct did not contravene the injunction
The third reason for rejecting the plaintiff's allegation is that the conduct described by Mr Lock is not capable of constituting contravention of the injunction.
The plaintiff's counsel submitted that anything an administrator might do as administrator was restrained by the injunction. That is not, in my view, a reasonable construction of the injunction. It would mean that the fifth defendants would have breached the injunction by appearing as parties in this court in this and other matters to be tried next week, by holding books or property of the company, or even by opening a letter addressed to an administrator. As senior counsel for Mr Lock notes, I do not have to look to hypothetical examples in this case to identify the ridiculous consequences which would flow from the plaintiff's construction of the terms of the injunction. Such an example is provided by the plaintiff's allegation that the mere provision of information about a hearing date in this court breached the injunction.
I accept the submission of senior counsel for the plaintiff that it is appropriate to stand back and ask whether the orders can reasonably be seen to prevent the fifth defendants from giving information sought by a law enforcement agency of the Commonwealth government which had sought that information in the course of investigating allegations of serious criminal conduct by Boban and others. My conclusion is that the injunction cannot properly be understood in that way.
The injunction does not prevent the administrators from doing anything at all in their capacity as administrators. If it had done so, the administrators would have effectively been removed from office by the order. Rather, the injunction prohibits the taking of a step in the administration of Boban, or an act in furtherance of that administration.
In my view, the reference to 'taking any step in the administration of [Boban]' is to the taking of one of the formal steps in the administration provided for in pt 5.3A of the Corporations Act. That part exists for the object identified in s 435A of the Act, that is to provide for the business, property and affairs of an insolvent company to be administered in a way that:
(a)maximises the chances of the company, or as much as possible of its business, continuing in existence; or
(b)if it is not possible for the company or its business to continue in existence - results in a better return for the company's creditors and members than would result from an immediate winding up of the company.
The various steps which are involved in an administration were summarised by the High Court in Lehman Brothers Holdings Inc v City of Swan[21]. It is unnecessary for me to repeat that summary.
[21] Lehman Brothers Holdings Inc v City of Swan [2010] HCA 11; (2010) 240 CLR 509 [28] ‑ [30].
In my view, what is prohibited is the taking of the steps provided for in pt 5.3A, such as calling creditors' meetings and taking the statutory steps towards the preparation of a deed of company arrangement or the winding up of the company. I do not consider that providing information to law enforcement agencies investigating criminal conduct to constitute the taking of a step in the administration, even if the law enforcement agency concerned happens also to be a creditor. Equally, I do not consider that the provision of that information would further the administration. It does nothing to advance the objects identified in s 435A, or progress any of the statutory steps provided for in pt 5.3A of the Corporations Act.
Therefore the conduct described in Mr Lock's evidence is not, in my view, capable of constituting a breach of the injunction.
Other matters
I mention three other matters raised in submissions.
Firstly, as counsel for the plaintiff noted, the information provided to the ATO was not provided under compulsion. However, I do not think that that fact establishes a contempt of court. I must of course bear in mind that the subject of the contempt allegation is not a misuse of information in breach of confidence, but rather a contravention of the injunction.
Counsel for the plaintiff also referred to a prior variation of the injunction to which Mr Lock had consented. While the evidence establishes that Mr Lock consented to variation of the injunction, the correspondence leading to that variation, which has been tendered in evidence, makes it clear that Mr Lock maintained that the variation was not required. I take the view that Mr Lock was attempting to placate the plaintiff and his solicitors in relation to complaints which had been made about Mr Lock's conduct. It is unnecessary and inappropriate in these proceedings for me to express any view about whether the circumstances that prompted the variation of the injunction would have constituted a contempt of court, as that is not an allegation before me. The point of referring to the correspondence which preceded the variation is to note that evidence about the variation does not establish wilful disobedience by Mr Lock or operate to fill the significant holes in the plaintiff's case.
Counsel for the plaintiff made the point that the administrators were approached because they were administrators and were able to obtain information from Mr Pollock under s 438B(3)(b) of the Corporations Act. However, to say that Mr Lock was acting in his capacity as administrator does not mean he was taking a step in the administration or doing an act in furtherance of the administration.
Conclusion
For all of those reasons, I am not satisfied that the allegation of contempt levied against Mr Lock has been established beyond reasonable doubt and I would dismiss par 1 of the interlocutory process.
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: CARATTI -v- BOBAN PTY LTD (ADMINISTRATORS APPOINTED) [No 2] [2015] WASC 139 (S)
CORAM: MITCHELL J
HEARD: 5 MAY 2015
DELIVERED : 5 MAY 2015
PUBLISHED : 8 MAY 2015
FILE NO/S: COR 60 of 2014
BETWEEN: ALLEN BRUCE CARATTI
Plaintiff
AND
BOBAN PTY LTD (ADMINISTRATORS APPOINTED)
First DefendantPINEVIEW INVESTMENTS PTY LTD (ADMINISTRATORS APPOINTED)
Second DefendantAUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
Third DefendantJAMIE KEVIN POLLOCK
Fourth DefendantJOHN SHEAHAN AND IAN RUSSELL LOCK AS JOINT AND SEVERAL ADMINISTRATORS OF BOBAN PTY LTD
Fifth DefendantJOHN SHEAHAN AND IAN RUSSELL LOCK AS JOINT AND SEVERAL ADMINISTRATORS OF PINEVIEW INVESTMENTS PTY LTD
Sixth Defendant
FILE NO/S :COR 23 of 2014
BETWEEN :SOIL AND CONTRACTING PTY LTD
Plaintiff
AND
BOBAN PTY LTD (ADMINISTRATORS APPOINTED)
Defendant
Catchwords:
Costs - Unsuccessful application for orders holding accused in contempt of court - Interaction of privilege against selfincrimination with obligation of parties to confer in civil proceedings - Circumstances in which contempt proceedings can properly be instituted
Costs - Where action settled during the trial - Turns on own facts
Legislation:
Nil
Result:
Plaintiff in COR 60 of 2014 to pay the fifth defendant's costs of the trial of the contempt proceedings
No order as to the costs of the primary proceedings
Category: B
Representation:
COR 60 of 2014
Counsel:
Plaintiff: Mr N D C Dillon
First Defendant : No appearance
Second Defendant : No appearance
Third Defendant : No appearance
Fourth Defendant : Mr J E Scovell
Fifth Defendant : Mr T J Porter
Sixth Defendant : Mr T J Porter
Solicitors:
Plaintiff: Roe Legal Services
First Defendant : No appearance
Second Defendant : No appearance
Third Defendant : No appearance
Fourth Defendant : Mills Oakley Lawyers
Fifth Defendant : Sheahan Lock Partners
Sixth Defendant : Sheahan Lock Partners
COR 23 of 2014
Counsel:
Plaintiff: Mr J E Scovell
Defendant: No appearance
Solicitors:
Plaintiff: Mills Oakley Lawyers
Defendant: No appearance
Case(s) referred to in judgment(s):
Advan Investments Pty Ltd v Dean Gleeson Motor Sales Pty Ltd [2003] VSC 201
Allbeury v Corruption and Crime Commission [2012] WASCA 84 (S)
ASIC v Sigalla [No 4] [2011] NSWSC 62; (2011) 80 NSWLR 113
Brookvista Pty Ltd v Meloni [2009] WASCA 180
Caratti v Boban Pty Ltd (administrators appointed) [2015] WASC 118
Gray v Sirtex Medical Ltd formerly known as Paragon Medical Ltd [2009] WASC 126
Hinch v Attorney General (Vic) (1987) 164 CLR 15
Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622
Witham v Hollaway (1995) 183 CLR 525
MITCHELL J:
(This judgment was delivered extemporaneously on 5 May 2015 and has been edited from the court's record.)
Costs of the contempt application
On 16 April 2015, I upheld a no case submission on the application of Mr Caratti, the plaintiff in COR 60 of 2014, to commit Mr John Sheahan for contempt of court. On the following day I dismissed the same application made against Mr Ian Lock.
Costs should follow the event
Mr Caratti's submissions accept that the rule as to costs which ordinarily applies is that costs should follow the event.[22]
[22] Hinch v Attorney General (Vic) (1987) 164 CLR 15, 89 ‑ 90; Allbeury v Corruption and Crime Commission [2012] WASCA 84 (S) [7].
In the present case I see no reason to depart from that ordinary rule.
Mr Caratti relies on an alleged failure by the fifth defendant to confer in relation to the contempt application, which failure is said to be in breach of O 59 r 9 of the Rules of the Supreme Court 1971 (WA) (Rules). I reject that submission. The privileges against self‑incrimination and exposure to penalties, to which I referred in Caratti v Boban Pty Ltd,[23] are clearly not abrogated by O 59 r 9 of the Rules, or the obligation of parties to confer about interlocutory disputes.
[23] Caratti v Boban Pty Ltd (administrators appointed) [2015] WASC 118.
The fact that the contempt application may be made in civil proceedings or may even be classified as a civil contempt does not alter the onus of proof, being beyond reasonable doubt,[24] or abrogate the privileges to which I have referred. It is also clear that contempt proceedings do not take their character from the proceeding in which the application for contempt is made.[25]
[24] See Witham v Hollaway (1995) 183 CLR 525.
[25] See ASIC v Sigalla [No 4] [2011] NSWSC 62; (2011) 80 NSWLR 113 [23] ‑ [31] and authorities there discussed.
Mr Caratti also points to the fact that the fifth defendant did not disclose various matters concerning their defence until after the close of the prosecution case. That is an attitude which may be expected in such a matter, and is merely the manifestation of the exercise of the privileges to which I have referred. It provides no basis for departing from the ordinary rule that costs follow the event.
In many respects, the submissions as to the costs of the contempt proceedings by those representing Mr Caratti display a fundamental lack of understanding of what is involved in alleging and establishing a contempt of court. The allegation of contempt is a serious allegation which may well see the alleged contemnor imprisoned or fined. An allegation of contempt is properly made only if the person making the allegation is in possession of, or is confident that he or she is in a position to obtain, admissible evidence capable of establishing the guilt of the accused beyond reasonable doubt. Commonly with other proceedings in which criminal sanctions may be applied, the person making the allegation should not expect the accused to assist in their own prosecution or disclose any defence prior to the close of the prosecution case.
I also agree with observations that were made by Gillard J in the Supreme Court of Victoria in Advan Investments Pty Ltd v Dean Gleeson Motor Sales Pty Ltd,[26] which I believe bear quoting in full. There Gillard J said:
[26] Advan Investments Pty Ltd v Dean Gleeson Motor Sales Pty Ltd [2003] VSC 201 [91] ‑ [95].
Any charge of contempt of court against a person or company is serious. Court orders are made and must be obeyed to the letter. To allege that a litigant has failed to comply with an order and to bring proceedings that he or it should be punished for breach are indeed serious matters.
Contempt proceedings should not be brought for an ulterior purpose. In civil proceedings where there is an alleged breach of an order, the main purpose for bringing a contempt proceeding is coercive or remedial. There may be another purpose. In the case of deliberate refusal to obey an order, contempt proceedings are appropriate to uphold the rule of law and to vindicate judicial authority, by the imposition of a penalty, ie punishment. The contempt jurisdiction fulfils a dual purpose, namely, enforcement of the order and punishment, in an appropriate case, for disobedience. Once this occurs, the question arises whether the circumstances warrant some form of punishment. Care must be exercised before bringing the proceeding and careful consideration must be given to the continuation of the proceeding after the coercive function has been satisfied.
The issue and continuation of the proceeding usually produces compliance so that the coercive function is satisfied. The enforcement of a court order by the remedy of contempt is indeed drastic, bearing in mind that the penalty includes imprisonment, and in my opinion contempt proceedings to enforce an order should be a remedy of last resort. As a general rule, the coercive function of the proceeding should only be employed when there are no other effective means of doing so. The cases support that proposition. See, by way of example, Danchevsky v Danchevsky. In Ansah v Ansah Ormrod LJ, at p 144 said:
'Breach of … an injunction is, perhaps unfortunately, called contempt of court, the conventional remedy for which is a summons for committal. But the real purpose of bringing the matter back to the court, in most cases, is not so much to punish the disobedience as to secure compliance with the injunction in the future. It will often be wiser to bring the matter before the court again for further direction before applying for a committal order. Committal orders are remedies of last resort; in family cases they should be the very last.' (emphasis added by Gillard J)
It must be steadily borne in mind that contempt proceedings are serious and must not be issued without serious and careful appraisal of the facts. The jurisdiction is not available for a litigant to punish the other litigant or seek to gain an advantage.
If the coercive function is satisfied, punishment for disobedience to a court order should, as a general rule, be confined to intentional breaches which are serious. This will depend upon the degree of culpability of the contemnor and whether there is any element of contumacy. (footnotes omitted)
In the present case the plaintiff accepts that the principal purpose for bringing the contempt proceedings was to avoid the fifth defendant being appointed as the liquidator of Boban Pty Ltd (Boban) and Pineview Investments Pty Ltd (Pineview) in the main proceedings. In my view, that was not a proper purpose for the bringing of a contempt application.
Had an indemnity costs order been sought, I would have been very sympathetic to it for that reason. However, Mr Porter made it clear in his submissions for the fifth defendant that indemnity costs are not being sought in these proceedings.
Nonetheless, in determining that the ordinary rule as to costs should apply, I take account of the improper purpose for which the contempt proceedings were instituted by the plaintiff. I also take account of the fact that there was no reasonable basis for instituting contempt proceedings against Mr Sheahan. Mr Caratti produced no admissible evidence capable of establishing contempt against Mr Sheahan, and on the state of evidence in possession of Mr Caratti against Mr Sheahan the contempt application against him should not have been brought on that ground alone. The point is highlighted by the submission advanced on behalf of Mr Caratti that 'it was reasonable to assume that Mr Sheahan will have participated in the conduct which was the subject of the Contempt Proceedings'. An allegation of contempt should be based on evidence, not assumption.
Further, and contrary to Mr Caratti's submissions, the joint appointment of Mr Sheahan and Mr Lock as administrators was not itself a basis for the conclusion that Mr Sheahan had committed contempt.
Mr Caratti also points to the circumstances in which the trials listed for 27 October 2014 came to be adjourned. However, in my view the adjournment resulted from the independent action of Commonwealth authorities, and was not a matter for which the fifth defendant was responsible.
In any event, the matters which are raised by Mr Caratti in relation to what occurred on 27 October 2014 might have been relevant to the question of the costs of the adjournment and the appointment of a provisional liquidator. It is unnecessary for me to decide that point in circumstances where those costs have been agreed as between the plaintiff and fifth defendant. However, even if those matters were established, it would not have any significant influence on my discretion to award costs of the proceedings for contempt.
I also do not think there is any significant weight to be attached to the criticisms made by Mr Caratti as to the consents to act as liquidators provided by the fifth defendant. In any event, it is not appropriate on a costs application that I determine the validity of those criticisms, which I understand to be disputed by the fifth defendant.
Fixing costs
The fifth defendant asks that I fix the costs of the contempt proceedings in an amount of $140,418.70, reflecting a schedule annexed to the affidavit of Mr Lock sworn on 29 April 2015.
When a costs order is made the court may fix the amount of the costs payable rather than order that they be taxed. The purpose of fixing costs is to avoid the expense and delay involved in taxation. Consistent with that objective, in fixing the sum the court will not subject the costs to the detailed scrutiny often applied in a taxation of costs. It is appropriate instead to apply a much broader brush than would be applied on a taxation of costs. But in fixing the amount of the costs, the approach of the court should be logical, fair and reasonable. The power to award a fixed sum should only be exercised when the court considers that it can determine the amount of the costs fairly. That means the court must have available to it sufficient material that it is confident it can arrive at an appropriate sum.[27]
[27] Brookvista Pty Ltd v Meloni [2009] WASCA 180 [26] ‑ [27].
Absent any application or order for indemnity costs, that assessment must be made on a party and party basis.
In my view, it is not appropriate for me to fix a sum based on the schedule to Mr Lock's affidavit, as I am not in a position to fairly determine the extent to which the many items claimed were reasonably incurred. I am not confident that I can determine the amount of costs that will compensate the fifth defendant on a party and party basis for the costs they have reasonably incurred in defending the proceedings.
In my view, the appropriate order is that costs be taxed rather than fixed in a lump sum.
Engaging senior counsel
Given the seriousness of the allegations made against Mr Lock and Mr Sheahan it was, in my view, appropriate for junior and senior counsel to be briefed in the matter. However, it is not necessary for me to make any order in respect of the engagement of senior counsel, as sought by the fifth defendant. The Rules have dispensed with the requirement for a certificate for second counsel.
Orders
I would therefore make an order that Mr Caratti pay the fifth defendant's costs of and incidental to the plaintiff's interlocutory application for contempt, including the costs of their application for costs orders, to be taxed if not agreed.
There was some debate before me as to the appropriate scale item[28] to be applied to that exercise. It is accepted by Mr Caratti that I have a discretion to order that costs be taxed on the basis that the hearing on 16 ‑ 17 April 2015 was a trial to which item 20 applies. I consider it appropriate to make that order, because the contempt application is properly regarded as a separate hearing, albeit one that takes place within existing proceedings, and also because the items in the scale dealing with interlocutory applications would not make adequate provision for the proper costs incurred by the fifth defendant in defending the proceedings.
[28] The 'scale' is Table B to the Legal Profession (Supreme Court) (Contentious Business) Determination 2014.
Other costs
In relation to the other aspects of COR 60 of 2014 and the whole of COR 23 of 2014, it is my view that the appropriate order is that there be no order as to costs beyond those costs orders already made in the proceedings. The matters effectively settled prior to a contested hearing, on terms which did not entirely reflect the initial position advanced by any party.
Ordinarily the power to award costs is exercised after a hearing on the merits, and as a general rule the successful party is entitled to his or her costs. However, where there has been no hearing on the merits, the court is deprived of the factor that usually determines whether or how it will make a costs order.
In Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin,[29] McHugh J considered the relevant principles for determining costs orders where there has been no hearing on the merits of the case. His Honour found:
[29] Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622.
If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases. (footnote omitted)
McHugh J identified that in appropriate cases a court will make an order for costs where there has been no hearing on the merits, and these cases include:
(a)Where one party has acted so unreasonably that the other party should obtain the costs of the action.[30]
[30] Lai Qin (624); Gray v Sirtex Medical Ltd formerly known as Paragon Medical Ltd [2009] WASC 126 [67].
(b)Where although the parties acted reasonably, by looking at the undisputed facts one party was almost certain to have succeeded in the matter.[31] That party should have the benefit of having their costs paid.
[31] Lai Qin (625).
However, the court must not attempt to resolve a hypothetical action between the parties.[32] The undisputed facts disclosed in the pleadings, affidavits, discovered documents or interlocutory relief granted can be used in determining whether one party was almost certain to have succeeded.[33]
[32] Re Western Australian Planning Commission; Ex parte Solomon [2010] WASCA 236 [9].
[33] Jeruth Pty Ltd v Haybale Pty Ltd [2004] VSC 319 [6].
I am not satisfied that any party was almost certain to have succeeded in the matter. The submissions of Mr Pollock and Soil and Contracting Pty Ltd (Pollock parties) effectively invite me to conduct a trial of the matter and resolve disputed issues in order to make an award of costs. They say that the extensive evidence and written submissions filed in the matter empowers the court to determine a position as to the costs of the application to wind up Boban and Pineview on the just and equitable ground. I decline to accept that invitation. The evidence is extensive and disputed, as are the submissions. The Pollock parties are effectively asking me to try the application to wind up the companies on the just and equitable ground for the purpose of determining the costs of that application. That is not, in my view, an appropriate approach to adopt for a costs issue.
The Pollock parties suggest that the issue of costs might be adjourned until the liquidators deliver their report as to the solvency of Boban and Pineview. I do not accept that submission. Costs ordinarily follow the event after a determination by the court. A report of liquidators is not a determination by the court, and is not limited to considering the evidence which has been produced in court to date. I do not accept that a report of liquidators can serve as a substitute for a determination of this court for the purposes of awarding costs.
Mr Caratti attempted to attribute blame to the Pollock parties for the adjournment of the trial scheduled to commence on 27 October 2014, and sought an order that Mr Pollock pay costs of and associated with that adjournment. In my view, that adjournment was a consequence of the Australian Taxation Office (ATO) taking action independently of the parties to these proceedings. Although Mr Pollock provided information to the ATO at its request through the fifth defendant, he is not responsible for the response of the ATO to the provision of that information. In my view, the costs of the adjournment on 27 October 2014 are simply part of the costs of the proceedings for which no special order should be made.
Mr Caratti and the Pollock parties effectively sought to blame each other for costs incurred prior to the resolution of the matters on 23 April 2015. However, the proceedings effectively resolved by consent, except in relation to the issue of which of the alternative candidates for the office of liquidator put forward by Mr Caratti should be preferred, that being an issue which I determined on that day. Otherwise there was no determination of the merits of any party's contentions. The resolution of the proceedings in that manner, effectively by consent, involved both Mr Caratti and the Pollock parties altering their positions at the eleventh hour.
I am not satisfied that either Mr Caratti or the Pollock parties has, in relation to the other matters raised in the two proceedings, acted so unreasonably that the other parties should obtain the costs of the action or a substantial part of it, except to the extent as has already been ordered. I understand that a costs order has been made in relation to a first adjournment of a trial of the proceedings and all parties accept it is not appropriate for any order I make today to disturb that costs award.
Nor is there any other reason why one party should be required to pay the other's costs, except to the extent that costs have been ordered, in circumstances where there has been no determination of the merits of the proceedings.
Therefore the order in COR 60 of 2014 and COR 23 of 2014 should be that, except as otherwise ordered, there be no order as to costs.
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