CC Containers Pty Ltd v Lee (No 9)
[2015] VSC 595
•27 October 2015
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT
S CI 2010 06056
| CC CONTAINERS PTY LTD and others (according to the attached schedule) | Plaintiffs |
| v | |
| DESMOND MING LEE and others (according to the attached schedule) | Defendants |
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JUDGE: | GINNANE J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 6 October 2015 |
DATE OF JUDGMENT: | 27 October 2015 |
CASE MAY BE CITED AS: | CC Containers Pty Ltd v Lee (No 9) |
MEDIUM NEUTRAL CITATION: | [2015] VSC 595 |
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CONTEMPT OF COURT – Freezing Order – Breaches – Penalty – Whether Court should convict – Appropriate Penalty – Fines – Costs – Supreme Court of Victoria (General Civil Procedure Rules 2005 (Vic) R 75.11.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr J M Brereton | K & L Gates |
| For the third Defendant | Dr B Orow | Jack Bock Lawyers |
SCHEDULE OF PARTIES
S CI 2010 06056 BETWEEN: CC CONTAINERS PTY LIMITED Firstnamed Plaintiff MEDITERRANEAN SHIPPING COMPANY (AUST) PTY LTD Secondnamed Plaintiff MSC MEDITERRANEAN SHIPPING COMPANY SA Thirdnamed Plaintiff - and - DESMOND MING LEE Firstnamed Defendant LEE HOLDINGS (AUSTRALIA) PTY LTD Secondnamed Defendant KEVIN SENG YEE CHONG Thirdnamed Defendant KAIN PATT CHONG Fourthnamed Defendant GEORGE PANTZOGLOU Fifthnamed Defendant CHRISTOPHER HOWARD NEALE Sixthnamed Defendant
HIS HONOUR:
On 9 September 2015, I found two charges of contempt of court proved against Mr Kevin Seng Yee Chong, the third defendant.[1] The contempts consisted of breaches of a freezing order.
[1]CC Containers Pty Ltd v Lee (No 7) [2015] VSC 477.
The proceeding was relisted and the parties made submissions as to the appropriate orders, including penalties, that the Court should make.
Rule 75.11(1) of the Supreme Court (General Civil Procedure) Rules 2005 (Vic) (‘the Rules’) provides that the Court may punish a natural person for contempt ‘by committal to prison or fine or both’.
Mr Chong was not personally served with a copy of the order and it was conceded that that fact prevented the Court exercising the power of committal.[2]
[2]Chan v Chen (No 2) [2007] VSC 24, [33].
In Deputy Commissioner of Taxation v Gashi (No 3),[3] Dixon J listed considerations relevant to determining an appropriate penalty for contempt of court. I will refer to a number of those considerations which are of particular relevance in this instance.
[3][2011] VSC 448 [5].
In respect of Mr Chong’s personal circumstances, I was informed that he is 46 years old and had been employed as a manager by CC Containers. He is now bankrupt. His present employment is limited to performing some casual waiting work in a restaurant. He is separated from his wife and has a daughter. He suffers from a diabetic condition.
In respect of the nature and circumstances of the contempts, I found in the principal judgment that the contempts were of two categories. First, there were withdrawals of amounts totalling $81,375.17 in breach of the freezing order caused by Mr Chong permitting direct debits to continue to be made to a Bank of Queensland account after he had received notice of the freezing order.
The direct debits appeared to be principally payments for the leasing or purchase of expensive motor vehicles. The plaintiffs submitted that Mr Chong had not disclosed the Bank of Queensland account on which the direct debits were drawn and that that factor aggravated the contempts.
The second category, of the contempts of court that I found proved, consisted of Mr Chong’s actions in making three withdrawals by cheques totalling $5,500.00 from a National Australia Bank account.
The financial consequences of the contempts were the withdrawal of amounts totalling $86,875.17 in breach of the freezing order.
That amount might otherwise have been used in part satisfaction of the very large Court judgment obtained by the plaintiffs, or some of them, against Mr Chong, which amounted to $10,283,083.00.[4] The plaintiffs contended that that judgment will survive Mr Chong’s discharge from bankruptcy by reason of the effect of s153(2)(b) of the Bankruptcy Act 1966 (Cth).
[4]See CC Containers Pty Ltd v Lee (No 6) [2014] VSC 151; Chang & Neale v CC Containers Pty Ltd [2015] VSCA 137.
Mr Chong’s counsel submitted that the Court, in its interpretation of the terms of the freezing order, had created new law. He also submitted that the terms of the freezing order were ambiguous. I do not accept those submissions, which had in essence been made and considered at the hearing of the contempt charges.
Nor do I accept the submission that this proceeding is invalidly brought because it can be said to be seeking to punish Mr Chong.
I note that I received no evidence from Mr Chong about his understanding of the restrictions or obligations imposed on him by the freezing order.
However, I take into account that the authorities for the direct debits had been created prior to the date of the freezing order. I also take into account that the three cheques were drawn after moneys were paid into the National Australia Bank account by members of Mr Chong’s family to cover the amount of the cheques.
I take into account too that Mr Chong did not always withdraw from the accounts, that were the subject of the freezing order, the maximum amount of $1000.00 per week permitted for ordinary living expenses. However, that factor does not detract from the consequences of his withdrawals made in breach of the freezing order.
Mr Chong’s failure to obey the freezing order interferes with the administration of justice as is the case with any significant breach of a court order.
It is important that the Court states that breaches of freezing orders are serious matters and can lead to the imposition of significant penalties on those responsible for the breaches.
So far as Mr Chong’s culpability is concerned, I note that, save in one respect, I have not heard from him, nor from any witness on his behalf. The one qualification is that, at the commencement of the hearing on penalty, counsel for Mr Chong tendered an apology signed by him, in which he stated:
I, Kevin Seng Yee Chong, wish to express to this court, my unreserved apology for the conduct which has led to the finding that I have breached a freezing Order.
I express my remorse and shame to the court and the community for the contempt of court committed through those breaches of the Freezing Order.
…
Whilst at the time of my actions or failures to inform the Plaintiff, I gave little consideration to the acts of contempt, I now recognize that my conduct flies in the face of the authority of this court. This was never my intention and I sincerely apologize for the contempt of court.
I take that apology into account.
However, I do consider and find that Mr Chong intentionally carried out or permitted the actions which I have found to be contempts of court.
No prior conviction for contempt or any other conviction was alleged against Mr Chong.
I have received no sworn evidence of Mr Chong’s financial means. He was declared bankrupt in 2013. He appears to have received some financial support from his family and he has been legally represented throughout this contempt proceeding.
An initial question is whether the Court should proceed as the plaintiffs submit to convict Mr Chong of contempts of court. He submitted that the Court should not so convict him. The resolution of this issue depends to a significant extent on whether the Court considers his conduct was contumacious. It appears that Mr Chong was not given notice that the plaintiffs would submit that his conduct was contumacious.
In Construction, Forestry, Mining and Energy Union v Grocon Constructors (Victoria) Pty Ltd,[5] the Victorian Court of Appeal stated:
It is one thing to conclude that, before X7 and Lee, the state of the law was that contumacy need not be pleaded in a charge, and that it was a matter for determination if a contempt was established. It is another thing altogether to say, if contumacious conduct was to be asserted, that the moving party was under no obligation to put the alleged contemnor on notice of that matter at the outset. In our opinion, it should be concluded, in order to ensure that an alleged contemnor was accorded procedural fairness, that there was such an obligation. At least that was so where the moving party intended at the outset to press for such a finding at the penalty phase, if the contempt was found proved.
The allegation that the breach was contumacious exposes the contemnor to a finding that he or she has committed an offence for which there may be a conviction recorded and greater punishment imposed than would be warranted for a civil contempt.
[5][2014] VSCA 261, [302]–[303]; appeal dismissed: Construction, Forestry, Mining and Energy Union v Boral Resources (Vic) Pty Ltd (2015) 320 ALR 448.
Taking into account all the considerations relating to the contempts of court by Mr Chong that I have found proved, and the fact that contumacious conduct by him was not alleged, I propose to declare that he has committed contempts of court but not convict him.[6]
[6]See ASIC v Sigalla (No 5) [2012] NSWSC 82[84].
However, I do consider that a penalty should be imposed for the contempts of court. I do not consider that the contempts should be dismissed on the basis that they were casual, accidental, unintentional or technical.[7] I am satisfied that the terms of the freezing order were explained to Mr Chong by Mr Stephen Thompson, the plaintiffs’ solicitor. The two categories of contempt must be considered separately. The penalties discussed in the parties’ submissions were either a fine or a community corrections order.
[7]See Deputy Commissioner of Taxation v Gashi (No 3) [2011] VSC 448, [4].
As mentioned, Rule 75.11 gives the Court power to imprison or fine. There is a line of New South Wales authority that such a rule does not exhaust the Court’s power to punish a contempt of court and that under the Court’s inherent power a community corrections order can be imposed.[8] I was not referred to any Victorian authority that has adopted that approach. In Grocon Constructors (Victoria) Pty Ltd v Construction, Forestry, Mining and Energy Union(No 2),[9] Cavanough J stated that the power of the Court to punish for contempt is confirmed and regulated by Order 75 of the Rules. That view does not necessarily exclude the exercise of the Court’s inherent power to impose other penalties, but in this case, I consider that it is appropriate to impose a penalty provided for in Rule 75.11.
[8]Registrar of the Court of Appeal v Maniam {No 2] (1992) 26 NSWLR 309, 314, 319; NCR Australia Pty Ltd v The Credit Connection Pty Ltd [2005] NSWSC 1118.
[9][2014] VSC 134, [73]; appeal dismissed Construction, Forestry, Mining and Energy Union v Grocon Constructors (Victoria) Pty Ltd [2014] VSCA 261.
The only available penalty in the circumstances of this case is a fine. While it is unusual to impose a fine on a person who is bankrupt, the plaintiffs accepted that fines were not provable debts and would survive the bankruptcy. Mr Chong may well be discharged from bankruptcy in 2016.
In fixing appropriate fines, I have taken into account all of the considerations to which I have referred previously. I have also taken into account the principle of totality and have determined whether the total penalty is just and appropriate in all the circumstances.[10] It is important to keep in mind that I am imposing penalties in respect of the breaches of the freezing order and not in respect of Mr Chong’s actions that were the subject of the judgment and orders of Ferguson J.
[10]Mill v The Queen (1988) 166 CLR 59 at 63.
I do find that Mr Chong was informed of the terms of the freezing order and took no steps to prevent the direct debits continuing and withdrew the three amounts that are the subject of the third charge. He did not inform the plaintiffs of these withdrawals and did not approach the Court to seek a variation of the freezing order.
The penalties that I impose on Mr Chong are that he be fined the sum of $10,000.00 in respect of the first charge of contempts of court and $2,000.00 in respect of the third charge of contempts of court.
There will be no order as to costs. The plaintiffs did not seek costs. I certainly do not accept Mr Chong’s submission that because one charge of contempt of court was unsuccessful and others abandoned that there should be an order for costs in his favour. I do not see this as a case where there should be separate orders in respect of separate issues.
Conclusion
The declarations and orders I will make are that:
(1)The Court declares that Kevin Seng Yee Chong committed contempts of court in that in breach of the freezing order of the Honourable Justice Sifris of 9 November 2010 he withdrew:
(a)$81,375.17 from the Bank of Queensland Ltd Kevin Seng Chong Cash Management Account (BSB 124 001 Acc 2022 0296) in twenty–two separate withdrawals made between 26 November 2010 and 1 July 2011 as particularised in the document entitled amended paragraph 4 (a)(i) of the Contempt Summons initialled by the Judge and placed on the Court file;
(b)$5,500.00 from the National Australia Bank Ltd AB KS Chong Classic Banking Account (BSB 083 893 Acc 46072 4800) in three separate withdrawals, one in the amount of $3000.00 on 23 September 2011, another in the amount of $1,500.00 on 30 September 2011, and the other in the amount of $1,000.00 on 30 September 2011.
(2) Kevin Seng Yee Chong is fined:
(a)The sum of $10,000.00 in respect of the contempt of court referred to in paragraph 1(a) of this order;
(b)The sum of $2,000.00 in respect of the contempt of court referred to in paragraph 1(b) of this order.
(3)Kevin Seng Yee Chong is to pay the fines referred to in paragraph 2 of this order to the Prothonotary of the Supreme Court of Victoria.
(4) There be no order as to costs.
(5)The Plaintiffs’ amended summons dated 24 March 2015 against the third defendant is otherwise dismissed.
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