Carlson and Carlson
[2020] FamCA 108
•26 February 2020
FAMILY COURT OF AUSTRALIA
| CARLSON & CARLSON | [2020] FamCA 108 |
| FAMILY LAW – APPLICATION – CONTEMPT – Sentencing – Where interim property orders were previously made, including an injunction restraining the husband from dealing with assets of corporations he controlled without him giving written notice to the wife – Where the wife alleges six counts of the husband failing to comply with the injunction – Where a breach of the injunction is capable of sanction under Part XIIIB of the Family Law Act 1975 (Cth) – Where each count alleges the husband’s contempt pursuant to s 112AP(1)(b) of the Family Law Act 1975 (Cth) – Where the husband relied on ss 90 and 137 of the Evidence Act 1995 (Cth) to contend admissions made by him in the course of proceedings were not admissible in evidence against him – Where the husband has previously been sanctioned for breaching orders without reasonable excuse – Where the Court is satisfied the husband had knowledge of the existence, content and meaning of the orders – Where six counts of contempt are proved – Where the husband is sentenced to concurrent terms of imprisonment, but the sentences are conditionally suspended – Costs reserved. |
| Crimes Act 1914 (Cth) Pt IB Family Law Act 1975 (Cth) Pts VIII, XIIB, ss 112AA, 112AP Family Law Rules 2004 (Cth) r 21.08 Stephen Odgers, Uniform Evidence Law (Thomson Reuters, 14th edition, 2019) |
| Abduramanoski and Abduramanoska (2005) FLC 93-215 Ascot Investments Pty Ltd and Harper and Harper (No.3) (1982) FLC 91-253 Burke v LFOT Pty Ltd (2002) 209 CLR 282 Carlson & Carlson [2015] FamCA 708 Cummings and Cummings (1976) FLC 90-100 Fauna Holdings Pty Ltd and Mitchell (No 2) (2000) FLC 93-053 G v H (1994) 181 CLR 387 Hay & Hay (1998) FLC 92-819 Ibbotson and Wincen (1994) FLC 92-496 Keehan & Keehan [2019] FamCAFC 250 Kendling and Kendling (Contempt) (2008) FLC 93-384 Little v The Queen [2018] NSWCCA 63 McClintock & Levier (2009) FLC 93-401 McGillivray v Piper, A, CEO of the Ministry of Justice (2000) FLC 93-046 Mead & Mead (2007) FLC 93-327 Oakley & Millar [2019] FamCAFC 12 Olbrich v The Queen (1999) 199 CLR 270 Papakosmas v The Queen (1999) 196 CLR 297 Re Colina; ex parte Torney (1999) 200 CLR 386 Sahari and Sahari (1976) FLC 90-086 Schwarzkopff and Schwarzkopff (1992) FLC 92-303 Tate and Tate (2002) FLC 93-107 The Queen v Olbrich (1999) 199 CLR 270 Vetter v Lake Macquarie City Council (2001) 202 CLR 439 Weissensteiner v The Queen (1993) 178 CLR 217 Witham & Holloway (1995) 183 CLR 525 |
| APPLICANT: | Ms Carlson |
| RESPONDENT: | Mr Carlson |
| FILE NUMBER: | NCC | 1538 | of | 2015 |
| DATE DELIVERED: | 26 February 2020 |
| PLACE DELIVERED: | Newcastle |
| PLACE HEARD: | Newcastle |
| JUDGMENT OF: | Austin J |
| HEARING DATE: | 13 February 2020 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Duane |
| SOLICITOR FOR THE APPLICANT: | Rankin Ellison Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Bithrey |
| SOLICITOR FOR THE RESPONDENT: | Gillard Family Lawyers |
Orders
In respect of each of the six counts of contempt contained within the Application-Contempt filed by the applicant wife on 5 December 2018, which are found proven, the respondent husband is sentenced to imprisonment for concurrent terms of three (3) months, and such sentences are:
(a)suspended until the orders finally made by the Family Court of Australia to determine the parties’ claims for relief under Part VIII of the Family Law Act 1975 (Cth) are completely fulfilled;
(b)upon the condition that the husband, from now until the expiration of the suspension period, complies with all existing and future orders made between the parties under the Family Law Act 1975 (Cth).
The wife’s costs in respect of the Application-Contempt filed on 5 December 2018 are reserved for 28 days.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Carlson & Carlson has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT NEWCASTLE |
FILE NUMBER: NCC 1538 of 2015
| Ms Carlson |
Applicant
And
| Mr Carlson |
Respondent
REASONS FOR JUDGMENT
Introduction
The parties are locked in dispute over the division of their property under Part VIII of the Family Law Act 1975 (Cth) (“the Act”) following the breakdown of their marriage in December 2014. Their respective applications for relief have not yet been finally determined and it is presently unnecessary to complicate these reasons with an explanation why.
On 12 August 2015, Cleary J made procedural and substantive orders between the parties on an interim basis. Relevantly for present purposes, her Honour restrained the husband from dealing with the assets of two corporations he controlled, pending him giving the wife notice of his intention to do so.
The relevant order (referred to hereafter as “Order 14”) provided:
Restraints
14.1 That the husband shall give to the wife notice in writing of any intention he forms to take one or more of the following steps:
…
14.1.6 Disposing of, transferring, converting, charging, encumbering or otherwise dealing with the assets of either I Group Pty Ltd or I Services Pty Ltd except in the ordinary course of business and with 7 days written notice of the wife;
…
14.2The husband is restrained by injunction for a period of 42 days following the giving of that written notice from taking any such step without the prior written consent of the wife or Order of the court.
Elsewhere, the orders more fully describe those two corporations as I Group Pty Ltd and I Services Pty Ltd (to which I will refer in these reasons as “IG” and “IS” respectively).
On 5 December 2018, the wife filed an Application-Contempt alleging the husband breached Order 14 (it being mutually accepted that the numerous references in the Application to the order being made on “12 August 2018” were merely typographical errors) on six separate occasions in January and February 2017 by divesting either IG or IS of assets without giving her any notice at all. The husband denied his contempt on all six counts.
These reasons deal only with the Application-Contempt, heard in February 2020.
Legal context
There was no dispute that Order 14 was one which is capable of sanction under Part XIIIB of the Act (ss 112AP(9) and 112AA).
Each count alleged the husband’s contempt by his disobedience of Order 14, which disobedience amounts to the flagrant challenge to the Court’s authority (s 112AP(1)(b)).
Any finding of contempt is reserved for those cases in which all other legitimate methods of enforcement have been exhausted and the subject conduct amounts to a challenge to the administration of justice rather than merely the enforcement of private rights (Cummings and Cummings (1976) FLC 90-100 at 75,460; Sahari and Sahari (1976) FLC 90-086 at 75,407 and 75,410; Ibbotson and Wincen (1994) FLC 92-496 (“Ibbotson and Wincen”) at 81,162).
To constitute a flagrant challenge to the Court’s authority, the breach of orders must be wilful, though not necessarily contumacious (Fauna Holdings Pty Ltd and Mitchell (No 2) (2000) FLC 93-053 at [64]; Hay & Hay (1998) FLC 92-819) and the conduct must be exceptional, striking, or repeated in nature (Ibbotson & Wincen at 81,162). Whether the subject conduct can be characterised in that way is said to be neither solely a finding of fact nor solely the exercise of discretion (Kendling and Kendling (Contempt) (2008) FLC 93-384 at 82,890-82,892).
It is well accepted that the onus of proof rests with the wife, as the applicant, to prove beyond reasonable doubt all elements of the contempt allegations, including the husband’s knowledge of both the terms and the meaning of the breached order (Witham v Holloway (1995) 183 CLR 525; Tate and Tate (2002) FLC 93-107 (“Tate and Tate”); Mead & Mead (2007) FLC 93-327 (“Mead & Mead”); Oakley & Millar [2019] FamCAFC 12 (“Oakley & Millar”) at [30]).
The procedure for hearing the contempt application is set out in rule 21.08 of the Family Law Rules 2004 (Cth), which rule is authorised by s 112AP(3) of the Act (Abduramanoski and Abduramanoska (2005) FLC 93-215 at [46], [85]; Oakley & Millar at [31]). That procedure was followed in this instance.
As I apprehend it, there was no dispute about the content of either the procedural or substantive law governing the dispute.
Evidence
The wife
To prosecute the application, the wife relied upon her affidavit filed on 5 December 2018, together with numerous documents tendered as exhibits.
Some objections were successfully taken to some parts of the wife’s affidavit. She was not cross-examined on the balance of her evidence.
Most of the wife’s exhibits were tendered consensually, but three were not,[1] and they were admitted in evidence over the husband’s objection for the reasons which follow.
[1] Exhibits A14, A15, A16
The three contentious exhibits were transcript excerpts of sworn evidence given by the husband in cross-examination on prior occasions. In September 2017,[2] he gave evidence in the first trial of the parties’ property settlement dispute before Cleary J and, in November 2018[3] and December 2018,[4] he gave evidence before me when summoned by the wife for his financial examination in her attempt to enforce the property settlement orders. The husband made admissions on those occasions of having sold vehicles belonging to either IS or IG and so such admissions were pertinent to the current contempt proceedings.
[2] Exhibit A14
[3] Exhibit A15
[4] Exhibit A16
The husband contended the admissions were not now admissible in evidence against him because, either:
a)it would be unfair to use the evidence against him, having regard to the circumstances in which he made the admissions (s 90 of the Evidence Act 1995 (Cth) (“the Evidence Act”)); or
b)the present probative value of the admissions was outweighed by the danger of his unfair prejudice (s 137 of the Evidence Act).
The husband abandoned reliance upon s 135(a), in preference for s 137, of the Evidence Act as the second ground for rejection of the evidence once it was accepted these contempt proceedings were “a criminal proceeding” for the purpose of application of the Evidence Act. Eventually, the wife accepted the proceedings were criminal in nature (Tate and Tate at [75]-[76]).
The husband’s underlying argument was that he was compelled to make the admissions at the hearings in 2017 and 2018 and it was now unfair to use the admissions against him in these proceedings because he is entitled to maintain his privilege against self-incrimination.
At trial in September 2017, the questions posed to him about the divestiture of assets by IG and IS were relevant to the property settlement proceedings because it bore upon the value of the corporations and, hence, the value of the parties’ shareholdings in IG and the husband’s sole shareholding in IS. The husband was legally represented at that hearing and his counsel took no objection to the questions he was then asked. The husband was obliged to answer proper questions and, according to his oath, was expected to give truthful answers.
At the enforcement hearing in November 2018, the values of the husband’s shareholdings in IG and IS were relevant because, under the property settlement orders made by Cleary J in June 2018, he obtained sole ownership and control of the corporations. Since he was in alleged default of the property settlement orders, the wife was understandably interested in the value of his remaining property in the hope she could execute against it. Again, the husband was obliged to answer proper questions and, according to his oath, was expected to give truthful answers.
On that occasion in November 2018, the husband was not legally represented and so the nature of the proceedings was explained to him, whereupon he initially stated his refusal to answer any questions, as the transcript reveals:[5]
…
HIS HONOUR: The balance of the application is the wife’s desire to have you come into the witness box and be susceptible to cross-examination about financial circumstances because she anticipates that through her lawyers she will be able to procure information that will help her go about enforcing the orders of Cleary J made in June which have not been stayed. Do you follow that?
[THE HUSBAND]: I follow that.
HIS HONOUR: Is there any problem with us embarking on that course.
[THE HUSBAND]: Yes, I decline to get into the witness box at the moment. I’ll ….. part of this case and I will still cite that there is currently the paperwork, etcetera, that have gone to Sydney for the appeal to happen, and, no, I do refuse at the moment to get into the witness box to jeopardise any part of that appeal or any further case that will take place.
HIS HONOUR: Okay. Well, we could run into a problem here, [the husband], because you refuse to submit to an orthodox enforcement procedure in relation to orders that remain operable and have not been stayed, one view might be that you are in contempt of court which leaves you exposed to a sentence of imprisonment, or, alternatively, if you decamp the court and refuse to participate, it may lead to your arrest pursuant to warrant to be brought back. So there are some complications that you may not have foreseen and you need to give some consideration to. So let’s leave that there for the moment. We may need to revisit that.
…
(Transcript 8 November 2018, p.7 lines 17-40)
[5] Exhibit R1
Later, the husband revised his position. He agreed to answer questions and was then informed of his right to object to any question asked in cross-examination in the following terms:[6]
…
HIS HONOUR: If [counsel for the wife] asks you a question to which you object, all you need say is “I object”. I will then stop the process. I will ask you to explain why you object. Once I’ve heard an explanation, if I need to, I will revert to [counsel for the wife] to hear his submissions. I may not need to do that, and if your objection is sustained, the question can’t be asked, and [counsel for the wife] needs to move on to his next question. If the objection is overruled, you need to give an answer. Do you follow?
[THE HUSBAND]: Yes, your Honour.
HIS HONOUR: Do you have any questions?
[THE HUSBAND]: Not at this stage, no.
…
(Transcript 8 November 2018, p.28 lines 5-16)
[6] Exhibit A13
The admissions the husband then made in cross-examination on that occasion were in answer to relevant questions, to which he did not object.
By the time of the next enforcement hearing in December 2018, this present contempt application had recently been filed and served upon the husband. Questions were again posed to the husband about the assets of the corporations he controlled, but the existence of the contempt application created a different context for the husband’s evidence, since it might bear upon his defence of the pending contempt application. The husband remained well aware of his right to object to the questions he was asked, as he demonstrated by successfully objecting part way into his cross-examination. His objection was sustained and that line of inquiry by the wife was terminated, as the following excerpt of transcript reveals:[7]
[7] Exhibit A16
[COUNSEL FOR THE WIFE]: 8 February 2017, you signed a transfer on behalf of [IS] to your friend’s company, [KK Pty Ltd], of a Motor Vehicle 1. Correct?
[THE HUSBAND]: --- Your Honour, I’m going to ask for [counsel for the wife]’s questions to – regarding all the vehicles he currently has or there’s an application regarding – beg your pardon, not contravention - - -
HIS HONOUR: Contempt?
[THE HUSBAND] --- - - - contempt on the foot and asking questions about that, or that application that is to be decided. I don’t believe it would be relevant at the moment.
[HIS HONOUR]: Yes. All right. [Counsel for the wife], [the husband] hasn’t articulated it this way, but I’m getting the impression he’s, if not unwilling then disinclined to answer questions about the vehicles when he knows that there is pending a contempt application which you would suggest is going to result in his conviction and sentence or a sanction in some form because a contempt, if proven, is quasi criminal, and it seems that he would like to preserve his right against self-incrimination, which appears to me to have some legitimacy. That’s the first thing.
[COUNSEL FOR THE WIFE]: Well, if he – if he – yes. If that’s what he’s doing then, your Honour, I’ve asked - - -
HIS HONOUR: That’s the first thing.
[COUNSEL FOR THE WIFE]: Yes.
HIS HONOUR: The second thing is that so far, you haven’t asked him about any of the assets that were his. You’ve only asked about assets that belong to a corporation. And even if you are perfectly correct in that [the husband] was duck shoving assets around to be difficult, he hasn’t done anything to divest himself of an asset and the only person who was obliged to comply with the orders, which you contend are breach, is him, not [IS], not [I Pty Ltd], not [I2 Pty Ltd].
[COUNSEL FOR THE WIFE]: Yes.
HIS HONOUR: So I’m a little puzzled as to where this is going to end up.
[COUNSEL FOR THE WIFE]: Well, he’s the shareholder of [IS], and the shares are something that potentially - - -
HIS HONOUR: But that – a property he has is just a shareholding in the company.
[COUNSEL FOR THE WIFE]: Yes. That’s right. So that’s potentially a source of a remedy, but in practical terms, your Honour is right.
…
(Transcript 19 December 2018, p.35 lines 1-44)
As can be seen, once the husband raised a valid objection, he was not compelled to answer any questions and he preserved his privilege against self-incrimination in relation to the pending contempt application. Until then, the admissions he made were voluntary. They were not “compelled”, as he incorrectly submitted in these proceedings.
Aside from the alleged compulsion of his admissions, which is rejected, there was nothing else about the circumstances in which the admissions were made that the husband contended should attract the discretionary operation of s 90 of the Evidence Act. The first ground upon which the husband sought to exclude the evidence of his admissions is rejected.
Even if I am wrong, and the husband was in fact compelled to make the admissions about his conduct at the earlier hearings in 2017 and 2018, there is authority to the effect that it is not necessarily unfair to use lawfully compelled admissions in evidence against a defendant (or, by analogy, a respondent in this jurisdiction) (Stephen Odgers, Uniform Evidence Law (Thomson Reuters, 14th edition, 2019) at [EA.90.120]).
It must be remembered that the application of s 90 of the Evidence Act is discretionary so, even if the husband’s admissions were compulsorily made, the surrounding circumstances still need to make it unfair to use the admissions against him before they are excluded. I would not have exercised the discretion in the husband’s favour. When he made the admissions in September 2017, the evidence was pertinent to the property settlement orders made by Cleary J in June 2018. When he made similar admissions in November and December 2018, he was in apparent breach of the property settlement orders and appeared to be belligerently obstructing the wife’s enforcement of them. The husband could not articulate why, in those circumstances, it would now be unfair to allow the wife’s use of his admissions against him.
For s 137 of the Evidence Act to apply and exclude the evidence of the husband’s admissions, the husband was obliged to demonstrate how the probative value of the admissions in these proceedings was outweighed by the danger of him thereby suffering unfair prejudice.
Reception of his admissions in evidence would clearly be prejudicial to his chances of successfully defending the contempt charges, but that is not the “unfair prejudice”, or the “danger” of it, to which s 137 of the Evidence Act is directed. The “danger” contemplated is the misuse of the evidence in some way which would prejudice the husband unfairly (Papakosmas v The Queen (1999) 196 CLR 297 at [91]).
The husband successfully objected to the admissibility of the wife’s opinion evidence, identifying his signatures on the documents publicly notifying of the vehicle sales by IG and IS.[8] As was his entitlement, the husband put the wife to strict proof about his alleged sale of those vehicles. Consequently, his prior admissions of selling at least some of the vehicles tended to carry considerable probative value in the factual contest over his alleged conduct as the basis for his contempt. What then was the danger of unfair prejudice to the husband in the use of those admissions against him? The husband did not identify any such danger, aside from his increased jeopardy of conviction, which is not to the point.
[8] Exhibits A2, A4, A6, A8, A10, A12
Although the husband’s objections under the Evidence Act can be overruled by reliance upon the terms of the statutory provisions, it is worth pointing out that prior to the enactment of the Evidence Act, in analogous circumstances, the Full Court permitted a respondent’s prior admissions of breaching orders to be used in evidence against him in contempt proceedings (Ascot Investments Pty Ltd and Harper and Harper (No.3) (1982) FLC 91-253 at 77,406-77,407). The use of admissions against a respondent in contempt proceedings is not novel.
The husband’s objection to the admissibility of the three contentious exhibits was overruled and the documents were received in evidence.
The husband
The husband elected not to give any evidence in his defence after the close of the wife’s case.
Uncontested facts
At all material times, the parties were both shareholders and directors of IG.[9]
[9] Exhibit A17
At all material times, the husband was the sole shareholder and director of IS. The husband admitted this fact and, as per s 191 of the Evidence Act, his counsel was content for the agreement to be recorded on the transcript and not reduced to writing.
The husband was present in Court and was legally represented when Cleary J pronounced the orders and delivered ex tempore reasons on 12 August 2015.
The restraints imposed upon the husband by the orders made on 12 August 2015 were premised on findings made by Cleary J in these terms (Carlson & Carlson [2015] FamCA 708):
…
42.The evidence of the [husband] is that he has, without reference to the [wife], recently sold an Asset 1 for $39,500 and an Asset 2 for $9,200. This may well be an issue at final hearing, since it is asserted on behalf of the [wife] that the Asset 1 was purchased four years ago for $100,000 and that the purchaser of the equipment is not somebody who was an arm’s length buyer.
43.Dealing with the facts as they are now at this moment though, the items were sold without consultation and the best evidence the [husband] gives is that $30,000 or more of it was used to repay debt to his parents.
…
49.There are Orders for restraints on the actions of the company. Appropriately, no submissions were made against those restraints. There is provision for the [husband] to give notice of any proposed action and for a time lapse until that action is taken.
…
The husband appealed from some of the orders made on 12 August 2015, but the appeal was heard and dismissed on 14 September 2016.
The husband has, twice before in proceedings between the parties under the Act in this Court, been sanctioned for breaching orders without reasonable excuse.
On 9 August 2016, he was found to have contravened a parenting order made on 12 August 2015, without reasonable excuse, for which he was ordered to enrol in and complete a “Parenting after Separation” program.
On 24 April 2017, he was found to have contravened another parenting order made on 21 September 2016, without reasonable excuse, and was directed to enter into a good behaviour bond for a period of 12 months.
Husband’s knowledge
In submissions, the husband conceded he knew of the existence of Order 14, but submitted the wife had failed to prove beyond reasonable doubt that he knew either the content or meaning of Order 14. The submission is rejected.
In the absence of any admission by the husband about his subjective knowledge of the content and meaning of Order 14 (and there was no such admission), the wife could not prove his knowledge and understanding directly. Such proof could only be circumstantial, arising inferentially from other facts and circumstances proven by the wife (Mead & Mead at [11]-[12]).
Relevantly, the wife proved beyond reasonable doubt that the husband:
a)was in Court on 12 August 2015 to personally hear Cleary J orally pronounce Order 14 and give ex tempore reasons for that order (which is to say nothing of the husband and his lawyers later receiving from the Court sealed copies of the orders and a hard copy of the reasons for judgment); and
b)instructed lawyers to appeal against some, but not all, of the orders made on 12 August 2015
The husband must have discussed the orders made on 12 August 2015 with his lawyers to decide those orders from which he would appeal and those from which he would not. Order 14 was among the orders he did not appeal. For the husband to eschew an appeal against Order 14, the inference is readily available that he knew and understood the content of that order. He must have consciously chosen not to challenge Order 14, even though he opposed (or at least did not consent to) the wife’s application for an order in those (or similar) terms during the hearing before Cleary J.
The husband submitted that the possibility of his lack of knowledge was not excluded by the wife and so she failed to discharge her criminal burden of proof. The possibilities postulated by the husband’s counsel included inventive speculation like the husband’s simple oversight of Order 14, due to his greater interest in the contentious interim parenting orders which were made simultaneously. However, the husband elected not to give evidence in these proceedings positively disclaiming his knowledge of the content and meaning of Order 14. Of course, he was not obliged to do so, but the consequences of that forensic decision fall to him. The positive inference of his knowledge of both the content and meaning of Order 14, as urged by the wife, is much easier to accept in the absence of any positive evidence of the hypotheticals imagined by his counsel in submissions. There is a distinction between safely drawing the inference of the husband’s knowledge, as is open, and simply imputing his guilt due to his decision not to give evidence, which imputation is not available (Weissensteiner v The Queen (1993) 178 CLR 217 at 223-228, 235-236; G v H (1994) 181 CLR 387 at [22]; Mead & Mead at [13]).
I am satisfied inferentially, beyond reasonable doubt, of the husband’s personal knowledge of the existence, content, and meaning of Order 14.
The father’s past penalties for breaching orders of the Court without reasonable excuse must mean he well understands that repercussions flow from the disobedience of orders, even though his former contraventions were dealt with relatively benignly. Such past experience is liable to mean his further breaches of orders are more readily capable of characterisation as flagrant challenges to the administration of justice and the Court’s authority. Subject to proof of his responsibility for the sales of the vehicles in breach of Order 14, as alleged in the six counts, his conduct can properly be regarded as wilful, striking and repeated.
Husband’s conduct
Count 1
This count alleged that, on 24 January 2017, the husband disposed of a vehicle (Motor Vehicle 2), owned by IG, without giving the wife any notice under Order 14.
IG was the registered owner of the vehicle when the orders were made on 12 August 2015.
A Notice of Disposal, dated 24 January 2017, publicly notified IG’s transfer of ownership in the vehicle to Mr LL. The Notice was lodged with the NSW Department of Roads and Maritime Services (“the RMS”). The Notice disclosed the sale price as $3,900.
The husband admitted he sold the vehicle.[10] Aside from the admission, the Notice was signed by “Mr Carlson”.[11] The wife did not sign the Notice. The only other director of IG was the husband. He did not report the vehicle had been unlawfully alienated from IG by the wife or any unidentified third party so, by process of elimination, he must have sold the vehicle.
[10] Exhibit A16, page 34
[11] Exhibit A2
The husband did not give the wife any notice of IG’s sale of the vehicle.
Mr LL later transferred the vehicle to the husband’s mother in 2018.
The count is proven beyond reasonable doubt.
Count 2
This count alleged that, in 2017, the husband disposed of a vehicle (Motor Vehicle 3), owned by IS, without giving the wife any notice under Order 14.
IS was the registered owner of the vehicle when the orders were made on 12 August 2015.
A Notice of Disposal, dated 8 February 2017, publicly notified IS’s transfer of ownership in the vehicle to KK Pty Ltd. The Notice was lodged with the RMS. The Notice disclosed the sale price as $2,900.
The husband equivocally admitted he sold the vehicle.[12] In any event, the Notice was signed by “Mr Carlson”.[13] The husband was the only director of IS. He did not report the vehicle was unlawfully alienated from IS by any unidentified third party so he must have sold the vehicle.
[12] Exhibit A16, pages 27, 34
[13] Exhibit A4
The husband did not give the wife any notice of IS’s sale of the vehicle.
KK Pty Ltd later transferred the vehicle to I (NSW) Pty Ltd in 2017, which new corporation the husband admitted employed both him and his mother.[14]
[14] Exhibit A16, pages 31, 32
The count is proven beyond reasonable doubt.
Count 3
This count alleged that, in 2017, the husband disposed of a vehicle (Motor Vehicle 1), owned by IS, without giving the wife any notice under Order 14.
IS was the registered owner of the vehicle when the orders were made on 12 August 2015.
A Notice of Disposal, dated 8 February 2017, publicly notified IS’s transfer of ownership in the vehicle to KK Pty Ltd. The Notice was lodged with the RMS. The Notice disclosed the sale price as $7,800.
The husband admitted he sold the vehicle.[15] Aside from the admission, the Notice was signed by “Mr Carlson”.[16] The husband was the only director of IS. He did not report the vehicle was unlawfully alienated from IS by any unidentified third party so he must have sold the vehicle.
[15] Exhibit A16, page 27
[16] Exhibit A6
The husband did not give the wife any notice of IS’s sale of the vehicle.
The count is proven beyond reasonable doubt.
Count 4
This count alleged that, on 14 February 2017, the husband disposed of a vehicle (Motor Vehicle 4), owned by IS, without giving the wife any notice under Order 14.
IS was the registered owner of the vehicle when the orders were made on 12 August 2015.
A Notice of Disposal, dated 14 February 2017, publicly notified IS’s transfer of ownership in the vehicle to Mr MM. The Notice was lodged with the RMS. The Notice disclosed the sale price as $42,910.
The husband admitted he sold the vehicle,[17] the effect of which was to remove it from the asset pool.[18] Aside from the admission, the Notice was signed by “Mr Carlson”.[19] The husband was the only director of IS. He did not report the vehicle was unlawfully alienated from IS by any unidentified third party so he must have sold the vehicle.
[17] Exhibit A14, page 226
[18] Exhibit A15, pages 65, 68
[19] Exhibit A8
The husband did not give the wife any notice of IS’s sale of the vehicle.
Mr MM later transferred the vehicle to the husband’s father in 2017.
The count is proven beyond reasonable doubt.
Count 5
This count alleged that, on 24 February 2017, the husband disposed of a vehicle (Motor Vehicle 5), owed by IS, without giving the wife any notice under Order 14.
IS was the registered owner of the vehicle when the orders were made on 12 August 2015.
A Notice of Disposal, dated … 2017, publicly notified IS’s transfer of ownership in the vehicle to Mr NN. The Notice was lodged with the RMS. The Notice disclosed the sale price as $9,200.
The Notice was signed by “Mr Carlson”.[20] The husband was the only director of IS. He did not report the vehicle was unlawfully alienated from IS by any unidentified third party so he must have sold the vehicle.
[20] Exhibit A10
The husband did not give the wife any notice of IS’s sale of the vehicle.
The count is proven beyond reasonable doubt.
Count 6
This count alleged that, on 27 February 2017, the husband disposed of a vehicle (a trailer), owed by IS, without giving the wife any notice under Order 14.
IS was the registered owner of the trailer when the orders were made on 12 August 2015.
A Notice of Disposal, dated 27 February 2017, publicly notified IS’s transfer of ownership in the vehicle to the husband’s father. The Notice was lodged with the RMS. The Notice disclosed the sale price as $100.
The Notice was signed by “Mr Carlson”.[21] The husband was the only director of IS. He did not report the vehicle was unlawfully alienated from IS by any unidentified third party so he must have sold the vehicle.
[21] Exhibit A12
The husband did not give the wife any notice of IS’s sale of the trailer.
The count is proven beyond reasonable doubt.
Sanctions
It is usual to deal with the establishment of the contempt separately from the issue of penalty (Mead & Mead at [3]). The parties mutually invited my consideration of sanctions in the same hearing, once an indication was given of the husband’s proven contempt, so as to contain the hearing to one day. The issues of guilt and sanction were therefore considered separately, albeit within the one hearing.
A person who is proven to have acted in contempt of a court exercising federal jurisdiction does not contravene a law of the Commonwealth and is therefore not a federal offender for the purposes of the Crimes Act 1914 (Cth), and so the provisions of Part IB of the Crimes Act dealing with the sentence, imprisonment and release of federal offenders do not apply (see Re Colina; ex parte Torney (1999) 200 CLR 386 at [25], [108], [113]; McGillivray v Piper, A, CEO of the Ministry of Justice (2000) FLC 93-046 at [15]-[18]; Schwarzkopff and Schwarzkopff (1992) FLC 92-303 at 79,287-79,290).
Section 112AP(4) of the Act prescribes the punishment for a natural person found to be in contempt of the court as “committal to prison or fine or both”. No maximum sentence is prescribed for the prison term.
Section 112AP(6) of the Act provides the Court may make an order for the husband’s punishment on terms, suspension of the punishment, or the provision by the husband of security for good behaviour.
The wife adduced extra evidence in relation to the husband’s sanction, being an affidavit filed by Jennifer Reilly on 3 February 2020. The husband did not object and the deponent was not required for cross-examination. The evidence proved that the vehicle which is the subject of Count 4 was being used by the husband’s father during the period it was officially recorded as being owned by Mr MM, the man to whom the vehicle was sold by the husband on behalf of IS, and whom the husband professed he barely knew.[22] In cross-examination, the husband declined to directly answer any questions which would explain that curiosity. He similarly obfuscated when earlier asked about it at the hearing in November 2018.[23]
[22] Exhibit A14, pages 226, 227
[23] Exhibit A15, pages 66-68
The husband relied upon his affidavit sworn on 13 February 2020 and its annexures as evidence pertinent to his sanction.[24] The wife successfully took objection to some parts of the affidavit and availed of the opportunity to cross-examine the husband. Overall, the husband’s evidence was less than satisfactory, which his counsel commendably admitted.
[24] Exhibits R2 and R3
Significantly, the husband failed to demonstrate any contrition for his contempt of the Court’s orders. After denying his contempt, putting the wife to strict proof, and objecting to the reception in evidence of his past admissions of selling some of the vehicles, he then admitted his responsibility for the sales in his affidavit. In cross-examination, he arrogantly refused to answer questions which probed beyond the narrow confines of his evidence-in-chief.
The thrust of the husband’s evidence was that he was obliged to sell IS’s vehicles and use the proceeds to meet the corporation’s debt and recurrent expenses. He regarded the vehicles as “surplus to the company requirements”.
The evidence proved that IS’s vehicles were sold for in excess of $60,000 within a period of three weeks in February 2017 but, according to the husband’s evidence, at that point in time, IS only had capital debt of $17,629.70 and its only recurrent expense was the payment of one employee’s wages and emoluments. The husband failed to adduce any evidence at all of IS’s assets and income. He did not produce the corporation’s balance sheet, asset inventory, financial statements, BAS returns, tax returns or any other financial documents which would corroborate his contention that IS was in such dire financial trouble that an apparent fire sale of its assets was necessary. When asked in cross-examination, the husband said he did not know when IS stopped trading or when its income dried up.
As the sole director and shareholder of IS, it was within the husband’s power to adduce such evidence. All evidence must be weighed according to the proof which is in the power of one side to have produced and the power of the other to have contradicted (see Vetter v Lake Macquarie City Council (2001) 202 CLR 439 at 454; Burke v LFOT Pty Ltd (2002) 209 CLR 282 at 330). The husband must have reasonably anticipated his alleged motive for transferring IS’s assets would have been the subject of challenge, since he well knows the wife has always contended he alienated assets to place them beyond the reach of property settlement orders between the parties. In the absence of corroborative financial data, which the husband could and should have reasonably furnished, and the lack of veracity he demonstrated in the witness box, I am not satisfied the husband established on the balance of probabilities that IS’s vehicles were sold for genuine commercial reasons. I have proceeded on the basis that the husband’s evidence in purported mitigation need only meet the lower civil standard of proof (The Queen v Olbrich (1999) 199 CLR 270).
The husband’s counsel submitted that, objectively, the husband’s contempt was not as serious as it otherwise might have been because the contempt amounted to merely his breach of an obligation to give the wife notice, rather than his breach of a restraint from alienating assets. Although Order 14 did not unconditionally preclude alienation of corporation assets, because it was still permissible “in the ordinary course of business”, such alienation was dependent upon written notice being given by the husband to the wife. The obvious purpose of the terms of Order 14 was to give the wife the opportunity to interrogate the husband about the reason for the intended sale of assets and give her time to object if she wished. The sale of corporate assets without notice to the wife was the mischief Order 14 sought to avoid. It does not help the husband to now contend he had good reason to sell the vehicles in the ordinary course of business, which he did not prove to the civil standard in any event.
It should not pass unnoticed that the husband did not lead any evidence at all about the financial circumstances of IG, which was the proprietor of the vehicle the subject of Count 1.
The six vehicles were sold for an aggregate total of about $67,000. The husband deposed the sale proceeds were deposited into the corporations’ bank accounts, but again, in the absence of bank account statements to verify that fact, I am not prepared to accept the husband’s uncorroborated evidence as proof of that fact on the balance of probabilities. It will be remembered that one vehicle (the subject of Count 4) was seen being used by the husband’s father when it was supposedly owned by another man, whom the husband said he barely knew, and the vehicle was then transferred into the ownership of the husband’s father less than four months after its sale by IS. Two other vehicles sold by the husband on behalf of IG and IS (the subject of Counts 1 and 2) were transferred within relatively short periods of time to the husband’s mother and a third corporation (bearing a remarkably similar name to IG and IS) for which the husband and his mother both worked. The husband chose not to explain any of those curiosities and positively refused to do so when asked about them in cross-examination.
As the wife submitted, Order 14 was made to preserve the corporations’ assets while the parties contested their property settlement dispute under Part VIII of the Act. Significantly, the order was made against the backdrop of Cleary J finding the husband had already sold other valuable marine craft in unsatisfactorily opaque circumstances. I accept the wife’s submissions that the husband’s breaches of the injunction deprived the parties’ property settlement litigation of its integrity by putting the assets beyond the reach of the Court, which mischief cannot now be undone.
The husband did not adduce evidence of his current financial circumstances, presumably deliberately, and so he deprived the Court of any evidence which might help establish the proper quantum of a fine which could be imposed upon him pursuant to the power reposed in s 112AP(4) of the Act. His counsel conceded that was the practical effect of the husband’s forensic choice.
When pressed to submit for the appropriate sanctions, the husband’s counsel submitted sentences of imprisonment were appropriate, subject to the aggregate period of imprisonment not exceeding two months and the sentences being suspended on condition of the husband’s good behaviour, as s 112AP(6) of the Act permits.
The wife’s counsel agreed sentences of imprisonment were appropriate, but contended for an aggregate period of imprisonment of up to four months and for the time to be served forthwith without suspension.
As it transpired, there was no dispute that imprisonment was the only appropriate sanction, which agreement I endorse. The dispute was therefore contained to the duration of the aggregate sentences of imprisonment and the question of whether or not they ought be suspended.
Neither party could rationally explain why they contended the circumstances justified as few as two or as many as four months as the term of the husband’s imprisonment, nor could they explain why the sentences should or should not be suspended. That is unsurprising because the ultimate decision is really a process of “intuitive synthesis” of relevant objective and subjective considerations (Little v The Queen [2018] NSWCCA 63 at [47]). Every case has unique circumstances.
There is no evidence the husband has been convicted of any prior criminal offences and imprisonment is a serious penalty of last resort.
I have concluded that:
a)a sentence of three months imprisonment should be imposed upon the husband in respect of each count of contempt;
b)the sentences should be served concurrently, so that the aggregate sentence is contained to three months;
c)the operation of the sentences should be suspended;
d)the suspension of the sentences should extend until the current proceedings between the parties under Part VIII of the Act conclude and the final orders (whatever they happen to be) are fully implemented; and
e)the suspension of the sentences is conditional upon the husband henceforth faithfully complying with all existing and future orders made between the parties under any Part of the Act, which includes parenting, financial, injunctive, or any other orders.
Sentences in those terms, in my view, take account of relevant objective and subjective circumstances and appropriately reflect principled consideration of the need to punish the husband for his flagrant breach of orders, encourage his future compliance with orders, deter him from acting in contempt again, and to deter others from contemptuous conduct (Keehan & Keehan [2019] FamCAFC 250 at [23]; Oakley & Millar at [45]; McClintock & Levier (2009) FLC 93-401 at [150]-[151]).
The husband’s counsel informed me the husband was well aware that his breach of the condition which attends the suspension of his sentences would break the suspension and result in his imprisonment for the full terms of the sentences. Suffice to say, he is forewarned of the consequences of any further breach.
The costs of the hearing are reserved for 28 days.
I certify that the preceding one hundred and fourteen (114) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Austin delivered on 26 February 2020.
Associate:
Date: 26 February 2020
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