Carr v Larussa Custodian Services Australia Pty Ltd - [2017] WASC 42

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: CARR -v- LARUSSA CUSTODIAN SERVICES AUSTRALIA PTY LTD [2017] WASC 42

CORAM: CHANEY J

HEARD: 16 JANUARY 2017

DELIVERED : 22 FEBRUARY 2017

FILE NO/S: CIV 2638 of 2015

BETWEEN: ANNA CARR
Plaintiff
AND
LARUSSA CUSTODIAN SERVICES AUSTRALIA PTY LTD
First Defendant
ALEXANDRA LARUSSA
Second Defendant
TONY LARUSSA
Third Defendant

Catchwords:

Contempt - Failure to comply with orders - Whether non-compliance amounted to contempt - Discretion not to make finding - Non-compliance intentional - Standard of proof - Turns on own facts

Legislation:

Nil

Result:

Declaration of contempt made
Defendants to pay costs

Category: B

Representation:

Counsel:

Plaintiff:     Mr S M Standing
First Defendant             :     Mr D J Garnsworthy
Second Defendant         :     Mr D J Garnsworthy
Third Defendant           :     Mr D J Garnsworthy

Solicitors:

Plaintiff:     Friedman Lurie Singh & D'Angelo
First Defendant             :     Dunns CCL Lawyers
Second Defendant         :     Dunns CCL Lawyers
Third Defendant           :     Dunns CCL Lawyers

Case(s) referred to in judgment(s):

Advan Investments Pty Ltd v Dean Gleeson Motor Sales Pty Ltd [2003] VSC 201
R v Poplar Borough Council (No 2) [1922] 1 KB 95
Witham v Holloway [1995] HCA 3; (1995) 183 CLR 525

CHANEY J: On 13 August 2015, Master Sanderson made orders (master's orders) in action CIV 1132 of 2015. That action was commenced by Anna Carr, the plaintiff in this action, against Larussa Pastoral Holdings Pty Ltd as first defendant, and Larussa Custodian Services Australia Pty Ltd (LCSA), the first defendant in this action, as the second defendant. The master's orders were as follows:
1.Within 10 days, the Second Defendant, as trustee of the Larussa Pastoral Trust ('Trust'), produce for inspection by the Plaintiff, and for the Plaintiff to take copies of, such of the following documents as are in its possession, custody or power:
1.1all annual financial statements and accounts of the Trust;
1.2any Deed of Variation to the Trust Deed;
1.3the minutes of meetings of the Trustee since the inception of the Trust (save and excluding any portion thereof which records any consideration or discussion as to whom distributions would be made and in what amounts);
1.4all documents relating to the financial transactions (including distributions, payments and loans) involving the Trust and Giuseppe Larussa;
1.5all documents relating to, and any adjustments to, the Beneficiary Loan Account of Giuseppe Larussa.
2.The parties make submissions in relation to the question of costs.
The documents referred to in the master's orders were not produced within 10 days. On 15 October 2015, the plaintiff commenced these proceedings seeking orders of committal for contempt against LCSA and its two directors, Alexandra Larussa and Tony Larussa, the second and third defendants respectively.
Following a coercive order made in these proceedings on 12 November 2015, the documents were produced for inspection by the plaintiff on 20 November 2015. Inspection of some of the documents was initially withheld on the basis of claims of privilege which then became the subject of dispute between the parties. Eventually, by February 2016, LCSA abandoned its claims to privilege, and inspection of those documents in respect of which privilege had been claimed was granted.
Because the parties were engaged in other litigation which eventually came to trial in late 2016, and because the documents had eventually been produced by February 2016, finalisation of these proceedings was left in abeyance. On 12 May 2016, the defendants issued a summons seeking an order that the proceedings against all defendants be dismissed and the costs of the application be paid by the plaintiff. Finalisation of that summons was also deferred while the other substantive proceedings were dealt with.
The master's orders having been eventually complied with, the plaintiff now seeks no further coercive orders, nor any orders by way of punishment for contempt. Rather, she seeks declarations that the first and third defendants were guilty of contempt in that they disobeyed the master's orders:
(a)from 24 August 2015 to 20 November 2015 having failed to produce for inspection any documents pursuant to the orders;
(b)from 24 August 2015 to 18 January 2016 having failed to produce for inspection the document entitled 'Memorandum of Agreement - Mutual Release' in an unredacted form; and
(c)from 24 August 2015 to 17 February 2016 having failed to produce for inspection the document referred to as 'Letter of Advice'.
Those declarations are sought by way of a foundation for the costs orders which the plaintiff seeks, namely that the first and third defendants pay the plaintiff's costs, including reserved costs, to be taxed on an indemnity basis, and an order that the first and third defendants pay the plaintiff's costs and expenses incurred in respect to an attempted inspection of the documents in Melbourne on 3 and 4 September 2015, such costs to be taxed if not agreed.

The relevant facts

The defendants contend that, although the master's orders were not complied with in a timely way, the surrounding factual circumstances are such that the defendants should not be held to have been in contempt of the orders, or if they were technically in contempt, the court ought exercise its discretion not to make a finding of contempt.
The defendants' submissions were made in the context of two legal principles, neither of which was in dispute in these proceedings. The first is that, regardless of whether proceedings are for civil or criminal contempt, the charges of contempt must be proved beyond reasonable doubt: Witham v Holloway [1995] HCA 3; (1995) 183 CLR 525, 534 [19]. The second is that the court has a discretion to decline to exercise its contempt jurisdiction in appropriate circumstances: Advan Investments Pty Ltd v Dean Gleeson Motor Sales Pty Ltd [2003] VSC 201 [46] ‑ [50] (Gillard J).
I turn therefore to the relevant facts.
The master's orders were made on 13 August 2015, and required production of the documents for inspection and copying within 10 days. The order was directed to LCSA in its capacity as trustee of the Larussa Pastoral Trust. Alexandra Larussa and Tony Larussa are directors of LCSA, and Tony Larussa is secretary of LCSA. Both have been officers of the company since 18 January 2014.
On 17 August 2015, the plaintiff's solicitors wrote to the defendants' solicitors referring to the master's orders, and seeking confirmation that the documents would be made available for inspection prior to 23 August 2015, or because that day was a Sunday, at the latest on 24 August 2015. The letter sought advice as to when and where the documents would be made available.
On 21 August 2015, a Mr Amid Humd, who described himself as 'Senior Trial Manager, Dunns CCL Lawyers - Melbourne', wrote to the plaintiff's solicitors by facsimile. He advised that an appeal had been lodged against the master's orders, that a stay of proceedings would be sought and that the necessary papers would be filed that day. The letter continued:
In the event that a stay is not granted arrangements have been made for your representatives to inspect documents at Level 40, 140 William Street Melbourne where 4 hours have been allocated in our boardroom with a security guard. You will be afforded private inspection of the same but will not be permitted to remove the original documents.
This can be arranged within 24 hours of the outcome of the stay application being determined. You are advised that there is a significant volume of documents given the wide scope of the order and you may wish to make arrangements reflecting this fact. A number of documents are subject to legal privilege. You are advised that certain deeds of release and other document (sic) will be redacted due to legal advice given in relation to certain matters which might touch on interstate criminal investigations involving the late Mr Larussa senior. We can discuss these matters as they arise or seek further orders by way of general summons.
On 27 August 2015, the plaintiff's solicitors replied. They noted that they had not been served with any appeal notice and that the documents would be made available for inspection at the address in Melbourne stipulated by the defendants' solicitors. They advised that the writer of the letter, and the plaintiff, would attend the premises at 1.00 pm on 3 September 2015 to inspect the documents, and sought further information as to the basis upon which documents would be redacted and privilege would be claimed.
On 31 August 2015, the plaintiff's solicitors received a letter dated 27 August 2015 from the defendants' solicitors enclosing a notice of appeal against the master's orders, and an application in that appeal seeking suspension of the master's orders. The notice of appeal was dated 21 August 2015.
At 1.36 pm on 2 September 2015, Mr Barry Moshel, a 'supervising solicitor', of the defendants' solicitors sent a facsimile to the plaintiff's solicitors in which he advised that arrangements had been made to transfer 'the Larussa Pastoral files' from Melbourne to an office in Perth. The letter advised that the Court of Appeal had indicated that there would be a directions hearing for the stay application on 19 September 2015. It continued:
We are prepared to give disclosure of most material without prejudice to our opposition generally. This included (sic) some material already provided (such as trust deeds and taxation returns) but includes all financial records up to the date of the late Mr Larussa's demise and deeds of variation.
This action does not give rise to any concession or inference. We are still however opposed to the discovery of certain documents and will resist the disclosure of the same.
The letter concluded by advising that a clerk would contact the plaintiff's solicitor 'after Monday' to arrange a convenient time for attendance at the Perth office.
Notwithstanding that facsimile, the plaintiff and her solicitor Mr Dara Singh, proceeded with their planned journey to Melbourne to inspect the documents on 3 September 2015, as foreshadowed in the letter of 27 August 2015.
Mr Singh and the plaintiff attended at the address nominated by Mr Humd for inspection of the documents. No documents were made available for inspection.
In his affidavit in support of this application, Mr Singh produced a handwritten letter which he apparently wrote whilst standing in the reception area of the defendants' solicitors office at the address nominated for inspection. After recording that fact, the note continued:
As you well know I am here with my client Mrs Anna Carr to inspect documents pursuant to the order of Master Sanderson made on 13 August 2015. I made this clear to you in my fax sent yesterday.
The receptionist has rung your Mr Humd who has through her conveyed to my client and I that the documents are not available for inspection and will not be made available for inspection at the time and date I nominated on behalf of my client ie 1p.m (Melbourne time).
On behalf of my client I DEMAND that all documents ordered to be made available by the court, be produced for inspection at 1.30pm today.
I will call at the nominated address with my client at 1.30pm today to try to conduct the inspection again at that time.
If the documents are not made available then, my client and I will call at the same place at 9.00am tomorrow to conduct the inspection again.
Your client is now in contempt of court. If they (sic) documents are produced as demanded our client will consider waiving any action arising as a consequence of the failure.
If your client fails to respond to the DEMAND above, appropriate action will be taken against your client without further reference to you.
The letter was addressed to both Mr Moshel and Mr Humd.
Mr Singh sent a further email to Mr Moshel and Mr Humd at 1.39 pm on 3 September 2015. He referred to his earlier handwritten facsimile, and recorded that he had again attended the premises at 1.30 pm that day and that no documents had been made available for inspection. He expressed the view that the documents had been deliberately withheld without justification, and that LCSA's directors were in contempt of court. He foreshadowed an intention to return to the premises at 9.00 am the following day to inspect the documents.
At 2.32 pm on 3 September 2015, Mr Singh sent a further email to Mr Moshel and Mr Humd in the following terms:
I have just received a telephone call on my mobile phone from Mr Humd purportedly on your behalf.
He told me that there will be no documents for me and my client to inspect at the nominated premises at Level; 40 140 William Street at 9am tomorrow as 'there are no documents to provide'.
He has suggested that I should have 'a holiday in Melbourne for another day' instead and that the 'the shopping in Melbourne is good'. I reserve my rights in relation to the insinuations made and demand an unreserved apology.
Your client and its directors are in contempt of court and my client will take appropriate action.
I will with my client call at the nominated premises at 9am tomorrow as scheduled.
On 6 September 2015, Mr Moshel wrote to the court seeking an urgent mention of the application for a stay of the master's orders. Mr Moshel said:
On the 21^st August we requested that the Court grant a hearing of the suspension application on an urgent basis. We added that we were, as was our client, mindful of the Courts orders and that our client may be in technical contempt if the hearing for stay did not proceed in an expidious (sic) manner.
On 9 September 2015, the plaintiff's solicitors wrote to Mr Moshel pointing out that leave to appeal out of time was required because the notice of appeal had not been served as required by the Supreme Court (Court of Appeal) Rules 2005 (WA) within 14 days of the date of the decision being appealed. The request for immediate inspection of all documents was repeated.
The application for an order suspending the master's orders was dismissed by the Court of Appeal on 16 September 2015. On 18 September 2015, the Court of Appeal registrar wrote to the defendants' solicitors advising that the appeal appeared to be interlocutory, and therefore amendments were required to the appeal notice, and an application to extend time to file and serve the appellant's case would be necessary. After prompting from the plaintiff's solicitors, the Court of Appeal registrar wrote again to the defendants' solicitors on 30 September 2015 advising that, by reason of late service, the appeal had not been commenced within time, and that an amended appeal notice seeking an extension of time within which to commence the appeal was required.
On 21 September 2015, the plaintiff's solicitors formally served LCSA at its registered office a copy of the master's orders, endorsed with the notice to the second and third defendants, as officers of the first defendant, warning them of their potential liability to process of execution. A further copy was sent separately to the second and third defendants by mail.
It does not appear that any amended notice of appeal was ever filed by the defendants and, on a date which is not entirely clear from the papers before me, the appeal was discontinued.
Mr Singh deposed that, on 14 October 2015, he attempted unsuccessfully to contact the defendants' solicitors to confer with them prior to issuing these contempt proceedings. He then sent an email to both Mr Moshel and Mr Mestichelli, who appears to have taken over the conduct of the matter on behalf of the defendants, noting that his attempts to contact them had been unanswered and advising that he was proceeding with the contempt application. Mr Mestichelli responded noting the content of Mr Singh's email and confirming that a response in writing would be made that afternoon after receipt of instructions.
Sometime later that day, Mr Mestichelli wrote to Mr Singh observing that Mr Moshel had previously sought a short indulgence because of an unexpected hospitalisation of Mr Humd and the file solicitor (presumably Mr Mestichelli) being indisposed by virtue of family matters.
The letter continued:
It was indicated to you that if an application of stay was unsuccessful the plan was to make the documents available at our Perth office. Affidavit material served upon you indicates that all the documents were with Solicitors Clerking Services which provided the corporate secretarial services for both Larussa Pastoral and Larussa Custodian and had done so prior to the commencement of your action.
The documents were in the process of being collated and scanned into PDF format.
Mr Singh deposed that his firm had never been served with any affidavit which indicated that 'all documents were with Solicitors Clerking Services'. It appears that 'Solicitors Clerking Services' is a service with which, at the relevant time, Mr Humd has some type of association. The letter advised that Mr Larussa had requested Mr Humd 'to secure the documents from Solicitors Clerking' on Mr Humd's scheduled trip to Melbourne on 19 September, and that Mr Humd had 'phoned and arranged for the collection to be taken to his home' in Melbourne, but that Mr Humd became suddenly unwell and subsequently 'submitted his resignation due to ill health'. Presumably that was a resignation from employment with the defendants' solicitors. The letter continued:
We understand that Mr Humd and yourself had not enjoyed a good relationship over the passage of time. This has not aided in attending to compliance with the court's order given what he perceives as your unsympathetic response.
We are in the course of attempting to contact Mr Humd and ascertain precisely the location of the documents and when they can be transferred to Perth.
As you will understand, the documents are not in the possession (or in the current circumstances, immediate control) of either Mr or Mrs Larussa, and they have accordingly, made all reasonable efforts to ensure the same available.
As noted earlier, when these proceedings came on for directions on 12 November 2015, I made orders that the documents be produced for inspection by 4.00 pm on 20 November 2015 within 5 km of the central business district of Perth, and that the second and third defendants be directed to do all in their power to cause the first defendant to comply with that direction.
Inspection of documents was made available on 20 November 2015, and again on 23 November 2015. Two documents, which were of central relevance to the issue in respect of which inspection of documents was ordered, were not produced in original form, but were produced as copies containing redactions. The redactions appear to have been made on the basis of a claim for privilege, which, as noted earlier, was eventually abandoned by February 2016 when unredacted copies of the documents were made available.

Response to the application

In November 2015, Mr Tony Larussa, the third defendant, made an affidavit in response to the contempt application. In that affidavit he said:
As to compliance, I have always believed that Anna Carr had an agenda which was totally self serving. Up until this time, it was only a suspicion but the new evidence which I have now submitted in the section 92 application I believe vindicates me. Alexandra on the other hand wished to comply [13].
Mr Larussa said that he is the one with the day to day care and management of LCSA. The reason that the plaintiff does not now seek any declaration or costs orders against the second defendant is that she accepts Mr Larussa's statements that he controls day to day management of LCSA, and that the second defendant, who is his wife, wished to comply with the master's orders.

Mr Larussa then said that he wished to set out the reasons and issues as to why he 'sought to resist the order to produce for inspection the documents described' in the master's orders. He continued:
I have maintained from the outset that the plaintiff is maligned, has a conflict of interest and moreover has her own agenda and it is for these reasons and these reasons alone why I have resisted compliance with the orders [19].
Mr Larussa then set out various proceedings which were on foot and which were contemplated and matters which he indicated demonstrated that the plaintiff had 'an insurmountable conflict of interest and has acted improperly and should be removed as administratrex (sic)'.
He continued:
It is by virtue of this type of conduct and self interest that I wanted to resist the order to release documents the subject of Master Sanderson's order. Had an independent Administrator been appointed as I initially requested, I would have complied forthwith [27].
The balance of the affidavit was directed to assertions as to misconduct or conflict on the part of the plaintiff.
Against that background, counsel for the defendants put forward a number of arguments as to why the relief sought by the plaintiff should not be granted.
First, counsel argued that the proper parties were not before the court. He submitted that the second and third defendants were not parties to the proceedings before the master, and one of the parties before the master, namely Larussa Pastoral Holdings Pty Ltd, which was the previous trustee of the Larussa Pastoral Trust and therefore the previous custodian of the documents, was not a party to these proceedings. There is no substance in that submission. No order was made against Larussa Pastoral Holdings Pty Ltd. These proceedings are purely concerned with contempt of the master's orders. The interests of Larussa Pastoral Holdings Pty Ltd are not affected by these proceedings and there would have been no basis for them to have been a party to these proceedings.
Section 98 of the Civil Judgments Enforcement Act 2004 (WA) provides that if a corporation disobeys a judgment to which div 2 of pt 5 of the Act applies, the corporation is guilty of contempt and each officer of the corporation is also guilty of contempt unless he or she satisfies the court that the corporation's disobedience occurred without the officer's consent or connivance and the officer took all measures to ensure that the corporation obeyed the judgment. Counsel for the defendants contended that s 98 did not apply because the master's orders were not a judgment to which div 2 of pt 5 applied. Section 97 provides that that division applies if a judgment requires or has the effect of requiring a person to do an act other than pay money or give possession of any real or personal property to another person. Section 3 defines a judgment to mean, amongst other things, an order of a court that requires or has the effect of requiring a person to do an act. There is no doubt that the master's orders, which finally disposed of the proceedings before him, met that definition. By virtue of s 98, each of the defendants was liable for disobedience of the master's orders. They were therefore proper parties to these proceedings.
In oral submissions, counsel for the defendants argued that the requirement for proof of contempt beyond reasonable doubt had not been met, because the plaintiff had not produced any evidence that the documents in question were within the possession, custody or power of the first defendant. The evidence discloses a number of admissions by the first defendant's solicitors, and by Mr Larussa, of the fact that the documents were within its control and power at the material times. From time to time in Mr Larussa's affidavit, and in the defendants' submissions, the assertion is made that Solicitors Clerking Service was the 'custodian' of the document. I accept that that was the case. They nevertheless remained LCSA's documents. Whatever the relationship, if any, between Solicitors Clerking Services and the defendants' solicitors, it appears that Mr Humd was in a position to cause the documents to be produced. His letter of 21 August, written in his capacity as an employee of the defendants' solicitors, advised that arrangements had been made for the documents to be available for inspection in Melbourne. No issue of difficulties with the 'custodian' was intimated. Obviously, documents held on a client's behalf by a solicitor, or a document management service (if that is what Solicitors Clerking Services is), are required to be dealt with in accordance with a client's instructions. They are within the control of the client.
Most glaringly, Mr Larussa has said on oath that had his wish to have an independent administrator appointed been met, he would have immediately made the documents available. I am satisfied beyond reasonable doubt that the first defendant was in a position to provide inspection of documents in accordance with the master's orders if it chose to do so, and that Mr Larussa was in a position to cause inspection to be provided.
The third contention made by counsel for the defendants was that there was in fact no contempt, or if there was, then as a matter of discretion no relief should be granted. That submission is based on the proposition that the defendants had taken steps to appeal against the master's orders, and to seek a stay, which justified their non‑compliance with the orders. When the stay was refused, the attempts to produce the documents were thwarted by Mr Humd's untimely medical issues. Those are matters which are relevant to any punitive orders that might be made, but do not alter the fact that the defendant failed to comply with the orders, and did so intentionally. Its motivation for doing so is irrelevant for the purpose of establishing contempt: Borrie and Lowe: The Law of Contempt (3^rd ed, 1996) 556 citing R v Poplar Borough Council (No 2) [1922] 1 KB 95 [103].
The mere institution of an appeal did not operate as a stay, a proposition of which the defendants' solicitors appear to have fully appreciated.
I am satisfied, beyond reasonable doubt, that between 23 August 2015 and 20 November 2015, the defendants were in contempt in relation to the master's orders. Thereafter, non‑production related to claims for legal professional privilege. Although those claims were ultimately not pursued, the documents were, albeit in a redacted form, produced, and I am not satisfied to the required standard that after 20 November 2015, the defendants should be held to have been in contempt.
The defendants argue that, even if contempt is found to have existed, the court should exercise its discretion not to make any finding to that effect. That submission is based upon the fact that the contempt was eventually purged, and that there were reasons for the failures by the defendants to comply with the orders which were reasonable and should result in no orders being made.
The plaintiff does not seek any punitive orders. In my view, that is an appropriate approach to take in the circumstances of this case where the matter is being dealt with well after the contempt has been remedied, and the only real issue is as to the costs of the proceedings, and of the thwarted attempts by the plaintiff to inspect documents. I do not accept, however, the defendants' argument that the reasons for non‑compliance are such that no declaration as to the fact of contempt should be made. The affidavit of Mr Larussa makes it clear that his failure to have the company comply with the orders was intentional, and designed to further his interests in litigation with which he, or entities associated with him, are involved or were likely to become involved. The non‑compliance occurred for tactical reasons. The court's disapproval of that conduct should be marked with the making of the declaration sought, insofar as it relates to contempt up to 20 November 2015, and the costs orders which flow from that declaration.
As noted, no remedy is now sought against the second defendant. Some suggestion was made in the defendants' submissions that the second defendant should have her costs of the proceedings. It is difficult to imagine that the second defendant incurred any additional costs beyond those incurred by the first and third defendant, but in any event, the evidence falls short of establishing the exceptions to liability of the second defendant as an officer of LCSA. The proceedings were properly brought against her, notwithstanding that, as matters have transpired, no relief is now sought against her.

Conclusion

There should be a declaration that the first and third defendants are guilty of contempt of court in that they disobeyed the orders of the master made on 13 August 2015 in CIV 1132 of 2015 by, from 24 August 2015 to 20 November 2015, failing to produce for inspection any documents pursuant to the master's orders.
There should be an order that the first and second defendants pay the plaintiff's costs of and incidental to the proceeding. Costs were sought on an indemnity basis, but there is no evidence that costs on a party/party basis are inadequate to properly compensate the plaintiff in relation to the proceedings, and I would decline to order that the costs be paid on an indemnity basis.
There should also be an order that the first and third defendants pay the plaintiff's costs of and expenses incurred by or on behalf of the estate of the late Giuseppe Larussa in respect of the attempted inspection of the documents, including the attempted inspection in Melbourne on 3 and 4 September 2015, such costs to be taxed if not agreed. I make that order because the need to travel to Melbourne to inspect the documents resulted from the defendants' solicitors' advice that the documents were located there and could be inspected there, and the fact that the documents were in fact in Melbourne at the time and should have been produced for inspection on request.
The defendants' application to dismiss the plaintiff's application should be dismissed and the defendants ordered to pay the plaintiff's costs of that application (if any) to be agreed or failing agreement to be taxed.