Chan v Chen (No 2)

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

No. 7446 of 2003

KIM MAN CHAN	First Plaintiff
KWOK WAI CHAN	Second Plaintiff
EASTWORLD INTERNATIONAL (AUSTRALIA) PTY LTD (ACN 094 780 775)	Third Plaintiff
EASTWORLD INTERNATIONAL LIMITED	Fourth Plaintiff
v
DAVID WEIPING CHEN	First Defendant
RENMIN LU CHEN	Second Defendant
LUJIA CHEN	Third Defendant

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JUDGE:	KAYE J
WHERE HELD:	Melbourne
DATE OF HEARING:	29 January to 2 February; 5 February to 8 February 2006
DATE OF JUDGMENT:	16 February 2007
CASE MAY BE CITED AS:	Chan and ors v Chen and ors (No. 2)
MEDIUM NEUTRAL CITATION:	[2007] VSC 24

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CONTEMPT OF COURT – Breaches of Mareva injunctions – Relevant principles – Orders not served on defendants pursuant to Rule 66.10(1) – Knowledge of Orders by defendants – Whether Orders clear and unambiguous – Whether breached – Whether second defendant liable for contempt for aiding and abetting breaches by first defendant – Exercise of discretion not to convict third defendant for contempt found proven.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr M. Simon	Chadwicks
For the First Defendant	Appeared in person
For the Second Defendant	Appeared in person
For the Third Defendant	Mr T.D. Best	Victoria Legal Aid

TABLE OF CONTENTS

“Civil” Contempt - Principles......................................................................................................... 9

Order must be clear and unambiguous....................................................................................... 10

Service and Knowledge of Orders................................................................................................ 11

Knowledge of the Order of 11 November 2005.......................................................................... 17

Knowledge of Mareva injunctions of 16 November 2005........................................................ 19

Contempts alleged against Lujia Chen........................................................................................ 25

Breach of injunction – principles.................................................................................................. 27

“Aid and abet” – legal principles.................................................................................................. 28

Alleged breaches by David Chen and Renmin Lu: failure to file affidavit as to assets.... 29

Breaches alleged against David Chen and Renmin Lu: withdrawals from bank accounts 30

Renmin Lu: alleged contempts.................................................................................................. 34

Withdrawals from National Australia Bank – 14 November 2005......................................... 34
Citibank withdrawals – 14 November 2005............................................................................ 34
Citibank withdrawal – 15 November 2005 - $190,006.50...................................................... 34
Withdrawal of $190,163.24 from Bank of Queensland on 5 December 2005......................... 37
Citibank withdrawals - 28 November and 30 November 2005............................................... 38
Bendigo Bank account withdrawal of $53,000 on 22 June 2006............................................. 38
Withdrawals of funds from HSBC account............................................................................. 38

Liability of David Chen for withdrawals of funds................................................................. 40

Conclusion......................................................................................................................................... 45

Further Disposition......................................................................................................................... 46

HIS HONOUR:

The plaintiffs by summons seek orders committing the three defendants for contempt of court. The application is made in proceedings originally instituted by the plaintiffs against the defendants. The trial of those proceedings took place before Gillard J in September and October 2005. His Honour delivered written reasons for judgment on 11 November.[1] On the same date, on the application of the plaintiffs, his Honour made an order containing Mareva injunctions against each of the three defendants. Gillard J otherwise adjourned the plaintiffs’ motion for judgment to 16 November. On that date his Honour pronounced the final relief in the substantive proceedings, and also granted Mareva injunctions against the defendants. In this application the plaintiffs allege that each of the defendants have acted in contempt of the Mareva injunctions granted on 11 November and 16 November 2005.
[1]Chan & Ors v Chen & Ors [2005] VSC 432.

The first defendant, David Chen (“David Chen”), and the second defendant, Renmin Lu (“Renmin Lu”), are husband and wife. The third defendant, Lujia Chen (“Lujia Chen”), is their daughter. The first named plaintiff, Kim Man Chan, is the brother of the first defendant. The second plaintiff is Mr Chan’s wife. The third and fourth plaintiffs are companies in which Mr and Mrs Chan have an interest.

In September 2003 the plaintiffs issued a writ against the defendants. In those proceedings the following claims were made:

(i)A claim by Mr and Mrs Chan against David Chen for the recovery of moneys owed by them to David Chen which they allege were to be used in the operation of the third plaintiff, and which they alleged were unlawfully misappropriated by David Chen for his own use;
(ii)a claim by the third plaintiff against each of the three defendants for reimbursement of its moneys which were alleged to have been unlawfully misappropriate by David Chen;
(iii)a claim by Mr and Mrs Chan for the return of certain chattels or alternatively their value against the three defendants.

In the same proceedings David Chen and Renmin Lu, in their counterclaim, made the following claims:

(i)A claim that Mr and Mrs Chan transfer a half interest to David Chen in a property at 178 Kooyong Road Toorak, of which Mrs Chan was the registered proprietor, and an order for the sale of that property;
(ii)a claim for moneys alleged to be owing by the third plaintiff to David Chen and Renmin Lu as employees;
(iii)a claim for damages by David Chen against the third plaintiff for damages for wrongful dismissal.

As I have stated, Gillard J handed down his written reasons for judgment on the morning of 11 November 2005. At that stage, the three defendants were represented by Mr Andrew Cox, solicitor, of Poynton Partners. David Chen and Renmin Lu were in Court. Lujia Chen was not. In his reasons for judgment his Honour found that the evidence established that David Chen and Renmin Lu had misappropriated moneys belonging to the plaintiffs, and that Lujia Chen at some time in 2003 had moneys of the third and fourth plaintiffs in bank accounts in her own name.[2] His Honour also held that the three defendants had misappropriated substantial amounts of money which belonged to the plaintiffs and which they were obliged to account to the plaintiffs. His Honour found that the plaintiffs had forwarded to David Chen $853,402.86 between October 2000 and March 2002, that that money had been intermingled with the Chens’ money, and that it was impossible to say what amount if any is left and where it is.[3] His Honour dismissed the counterclaim by the defendants. After handing down his written reasons, Gillard J stood the matter over until the afternoon, in order to give the parties time to formulate final orders in the proceeding.
[2]At para [121].
[3]At para [123].

The matter returned to Gillard J at 2.35pm on the same day. Mr and Mrs Chen were again in Court. Mr Cox announced that his instructions to act on behalf of the defendants had been terminated. He sought leave to file a notice of ceasing to act as solicitor under Order 20.03(3) of the Rules of the Supreme Court. Gillard J did not grant Mr Cox leave, and requested Mr Cox to assist in the formulation of final orders. Discussion then took place between his Honour and Mr Cox on the one hand, and his Honour and Mr Simon, who represented the plaintiffs, on the other hand, concerning the final relief which was to be granted. Ultimately his Honour stood the matter over to 16 November in order to allow further time for the parties to discuss the terms of that relief. Mr Simon on behalf of the plaintiffs sought a Mareva order against the three defendants. His Honour treated the application as an ex parte application. Upon the plaintiffs by their counsel giving the usual undertakings as to damages, his Honour made the following two orders:

“1.The defendants be restrained and an injunction be granted restraining them until 5.00pm on Wednesday, 16 November 2005 or further order of this Court, whether by themselves, their servants or agents or otherwise howsoever, from transferring, dealing with, charging, diminishing, mortgaging, assigning or disposing of other than to the plaintiffs any of their assets wherever situated.
2.Notwithstanding the order contained in paragraph 1, and subject to the defendants recording in a form to be made available to the Court on the request of the solicitors for the plaintiffs, the source of the relevant funds, the defendants be at liberty to expend moneys on their ordinary living expenses not exceeding $3,000 and for future legal costs not exceeding $5,000.”

His Honour then adjourned the plaintiffs’ motion for judgment to 16 November. On that date the defendants were not present. In fact Mr and Mrs Chan had, in the meantime, departed for China in the morning of 15 November. On 14 November Mr Chen had sent to his Honour a letter seeking an adjournment of the motion for judgment. On 16 November the plaintiffs were represented by Mr Simon. Mr Cox appeared, as he was still the solicitor on the record for the defendants. His Honour commenced by rejecting the application by the plaintiffs for adjournment. After discussion with counsel, and with Mr Cox, his Honour then pronounced final orders on 16 November 2005. Paragraphs 1 to 8 of those orders dealt with the principal relief ordered by his Honour, which consisted of the taking of an account of all moneys received and disbursed by the first defendant in respect of a sum of $2,250,000 transferred by the second plaintiff to the first defendant, and the taking of an account of all moneys received and disbursed by the defendants in respect of the third plaintiff. His Honour ordered that the proceeding be referred to a Master for the taking of those accounts. His Honour dismissed the counterclaim and made orders for costs. Gillard J then pronounced the following orders which are the subject of these proceedings:

“9.Until further order, the defendants be restrained and an injunction be granted restraining them, whether by themselves, their servants or agents or otherwise howsoever, from transferring, dealing with, charging, diminishing, mortgaging, assigning or disposing of other than to the plaintiffs any of their assets wherever situated, save insofar as the unencumbered value of such assets exceed the sum of $800,000.
10.Notwithstanding the order contained in paragraph 9, and subject to the defendants recording in a form to be made available to the Court on the request of the solicitors for the plaintiffs, the source of the relevant funds, the defendants be at liberty to expend a sum of $1,000 per week on their ordinary living expenses and the sum of $5,000 for legal expenses.
11.The defendants, within 28 days make, file and serve on the plaintiffs an affidavit disclosing the full value and location of their assets wherever situated, identifying with full particulars the nature and whereabouts of such assets, including, without limiting the generality of the foregoing, every bank account and stating whether the same is held in their name or jointly by one or more of the defendants and/or their nominees or otherwise held on their behalf and exhibiting or disclosing all relevant documents in their possession, power, custody or control concerning such assets.”

In this proceeding the plaintiffs allege that the defendants have each breached, and are in contempt of, the orders of 11 November and 16 November 2005, by withdrawing and disposing of funds from the bank accounts in their names between 14 November 2005 and 25 August 2006. The plaintiffs also allege the defendants have each breached, and are in contempt of, paragraph 11 of the order of 16 November by failing to file and serve an affidavit as to their assets as required by that order. The summons for committal was issued on behalf of the plaintiffs on 30 June 2006. It was subsequently amended on 6 July 2006. After the commencement of the proceedings before me, it was necessary for the summons to undergo a further series of amendments. In its final form the summons sets out, seriatim, each of the contempts alleged against each of the defendants. The defendants deny each of the contempts alleged in that summons.

At the hearing before me evidence was given both on affidavit and viva voce. The plaintiffs called three witnesses and tendered documents including admissions made in response to notices to admit served on the defendants. The first and second defendants each gave evidence.

The third defendant was represented by Mr Timothy Best of counsel. The first and second defendants were each unrepresented. They had both unsuccessfully made an application both to Legal Aid and to the Public Interest Law Clearing House (“PILCH”) for assistance. At my behest, the Court’s co-ordinator for unrepresented litigants made a further approach to each of those organisations, but without success. The Court did organise an interpreter for Mrs Chen who was available to her throughout the hearing.

Although David Chen and Renmin Lu were each unrepresented, the Court was nonetheless significantly assisted by Mr Best who generously acted amicus curiae in assisting Mr and Mrs Chen, as well as representing his own client, the third defendant. In doing so Mr Best acted in accordance with the highest traditions and principles of the Victorian Bar. It is appropriate for me, at the outset of these reasons, to acknowledge the substantial, conscientious and skilful assistance provided by Mr Best to Mr and Mrs Chen and, hence, to the Court.

At the time Gillard J delivered his reasons for judgment on 11 November 2005, there were a number of bank accounts in the names of the first and second defendants. They included: a Citibank account in the names of the first and second defendants; a Citibank account in the name of the second defendant; a National Australia Bank Cash Management Accelerator account, and a National Australia Bank Flexidirect account, each in the name of the second defendant. In addition, the first defendant had an account in his own name with Macquarie Equities Limited, and the first and second defendants had a joint account with the same company. Those two accounts were used for trading in futures.

On 14 November 2005 there were three withdrawals from the two Citibank accounts totalling $5,500. On the same day there was a withdrawal of $8,377.29 from the NAB Cash Management account, and a withdrawal of $132.65 from the NAB Flexidirect account. Those withdrawals reduced the balance in each account to nil, and the accounts were closed. Those withdrawals are the subject of contempts alleged against both defendants.

On 15 November a bank cheque in the sum of $190,000 was drawn on the Citibank account in the name of Renmin Lu and debited to that account, leaving it with a balance of $330.89. That withdrawal is the subject of a contempt charge against the first and second defendants. On 28 November, the day Mr and Mrs Chen returned from China, the bank cheque was deposited into a Bank of Queensland account opened on that day in the name of Renmin Lu. On 5 December that amount, with accumulated interest, was withdrawn from the Bank of Queensland account and it was closed. The first and second defendants are charged with alleged contempt in relation to that withdrawal.

On 28 November and 30 November there were three small withdrawals from the Citibank joint account. The plaintiffs alleged that the first and second defendants committed a contempt in relation to each of those three withdrawals, but in final address those allegations were abandoned. On the same dates there were three other debits from the Citibank account in the name of Renmin Lu totalling $736.99. The first and second defendants are charged in relation to those three withdrawals.

On 9 December 2005 a Bendigo bank account was opened in the name of the third defendant Lujia Chen. On the same day two cheques were deposited into that account totalling $2,593.28. On 23 December 2005, $1,000 was withdrawn from that account. Between 10 February 2006 and 22 February there were six debits to that account of $1,000 each. Between 2 June and 5 June there were three further withdrawals from that account in the sum of $1,000 each. Each of those withdrawals are the subject of contempts alleged against Lujia Chen.

On 21 December 2006 an account in the name of Renmin Lu was opened with HSBC Bank. On the same day a $2,000 cash deposit was made into that account. On 6 January and 9 January there were withdrawals of $1,000 each from that account. On 17 February and 20 February there were two cash deposits of $10,000 each into the same account. Between 17 February and 21 February there were four withdrawals of $5,000 each from the same account. Each of those withdrawals are the subject of charges against both Mr and Mrs Chen.

On 20 June a Bendigo Bank account was opened in the name of the first defendant, Mr Chen. On 21 June, $5,225.88 was deposited into that account. On 22 June, $5,200 was withdrawn from the same account, leaving it with a balance of $24.88. That withdrawal is the subject of a contempt charge against the first defendant David Chen.

On 21 June 2006, $52,976.77 was withdrawn from the Macquarie Equities account in the name of Mr and Mrs Chen, and on the same day that sum was deposited into a Bendigo Bank account which had been opened on 19 June in the name of David Chen and Renmin Lu. On 22 June the sum of $53,000 was withdrawn from the joint Bendigo Bank account, leaving a balance of $24.77. The withdrawal was by way of bank cheque in the name of Renmin Lu. The withdrawal slip dated 22 June was signed by David Chen. The withdrawal from the Macquarie Equities account on 21 June is the subject of a contempt charge against David Chen. The withdrawal of $53,000 from the Bendigo Bank account on 22 June 2006 is the subject of a contempt charge against David Chen and Renmin Lu.

On 22 June 2006 the $53,000, which had been withdrawn from the Bendigo Bank account, was deposited into the HSBC account in the name of Renmin Lu. On 22 June, $1,000 was withdrawn from that account by an ATM at Crown Casino, Southbank. Between 27 June and 10 July there were 10 transfers, of $5,000 each, from that account to another account numbered 002-298438-412. On 13 July a further $1,000 was withdrawn from the account via an automatic teller machine at Crown Casino, leaving a balance of $1,181.38. On 26 July 2000 a further $200 was withdrawn from that account. On 14 August $3,000 was deposited into that account from the account number 002-298438-412. On 24 August the account was closed by a debit of $4,032.72. Each of the forementioned withdrawals from the HSBC account are the subject of contempts alleged against both David Chen and Renmin Lu.

“Civil” Contempt - Principles

It has long been recognised that a failure by a party to comply with an order, such as an injunction, made in a civil proceeding, constitutes a contempt of court. That type of contempt has been traditionally classified as a “civil” contempt, as distinct from “criminal” contempts which are constituted by a contempt in the face of the court or an obstruction with the course of justice. However, the line between civil and criminal contempts has become increasingly blurred[4]. In Witham v Holloway[5], Brennan, Deane, Toohey and Gaudron JJ, in their joint judgment, observed that the differences upon which the distinction between civil and criminal contempt is based “ … are, in significant respects, illusory”. Their Honours endorsed the remarks of Deane J in Hinch v Attorney-General (Vic)[6] that all proceedings for contempt “must realistically be seen as criminal in nature”. Accordingly in Witham v Holloway the High Court held that, in all cases of contempt, the charge of contempt must be proven on the criminal onus, beyond reasonable doubt.
[4]Australasian Meat Industry Employees Union & Ors v Mudginberri Station Pty Ltd (1986) 161 CLR 98 at 107-8.
[5](1995) 183 CLR 525 at 534.
[6](1987) 164 CLR 15 at 49.

The elements which the plaintiff must prove in a charge of contempt of the nature reached in this case were identified by Gillard J in National Australia Bank v Juric[7] as follows:
[7][2001] VSC 375 at [37]; see also Scott v Evia Pty Ltd [2007] VSC 15 at [36] (per Dodds-Streeton J).

(a) An order was made by the Court;
(b)The terms of the order are clear, unambiguous and capable of compliance;
(c)The order was served on the defendant or excused in the circumstances or service was dispensed with pursuant to the Rules of Court;

(d) The defendant had knowledge of the terms of the order; and
(e) The defendant breached the terms of the order.

Order must be clear and unambiguous

The first substantive element which is required to be satisfied by the plaintiffs is that the terms of the orders, of which the defendants are alleged to have been in contempt, must be clear and unambiguous.

The terms of the injunction granted by Gillard J on 11 November are, in my view, clear beyond argument. On the other hand, the Mareva injunction in paragraph 9 of the order of 16 November is, from a grammatical point of view, more complex. Mr Best, in his dual capacity as counsel for the Lujia Chen, and as amicus curiae assisting in the cases of David Chen and Renmin Lu, submitted that that clause was not clear and unambiguous beyond doubt as required by the authorities. Mr Best’s submission focussed on the concluding part of paragraph 9, and in particular on the words “ … save in so far as the unencumbered value of such assets exceed the sum of $800,000.” Mr Best submitted that that part of paragraph 9 was meaningless, and thus vitiated the whole of paragraph 9 of the order.

In my view, on a fair reading, paragraph 9 could only bear one meaning, namely, that the defendants were restrained from dealing with or disposing of any of their assets up to a value of $800,000. In other words, the defendants were only permitted to dispose of or deal with their assets, so long as the unencumbered value of their remaining assets exceeded $800,000. On a proper reading of paragraph 9 I cannot discern any other alternative sensible construction which would give rise to any potential ambiguity. Mr Best did not suggest there was any possible alternative construction which might render the order ambiguous. It might be argued that paragraph 9 is potentially ambiguous in that it fails to reveal whether the limit of $800,000 applies to each of the defendants, or to the defendants collectively. However, the orders of 16 November must be construed as a whole. Paragraph 9 was inserted to prevent frustration of the orders set out in paragraphs 2 to 6, which ordered the taking of accounts of moneys owing by the “defendants” (plural) to the plaintiffs, and the payment by the defendants (plural) to the plaintiffs of such moneys found to be due. In that context, it is clear that the limit of $800,000 applies to the defendants jointly, and not individually.

I note that a similar, but differently worded, Mareva injunction had been granted in Witham v Holloway. In that case the original order (by Powell J of the Equity Division of the Supreme Court of New South Wales) restrained the defendant from “dealing with, or disposing of any of his property within Australia in such a way as to reduce the value thereof below the sum of $200,000.” The issue of the clarity and lack of ambiguity of that order does not seem to have been raised, in the contempt proceedings, either at first instance,[8] before the New South Wales Court of Appeal,[9] or in the High Court.
[8]Holloway v Witham BC9101357 (Hodgson J).
[9]Witham v Holloway (No. 2) BC9202884.

In my view the injunction contained in paragraph 9 of the orders of Gillard J of 16 November 2005 was sufficiently clear and unambiguous for the purposes of the principles relating to proceedings for contempt.

Service and Knowledge of Orders

The third and fourth of the elements to be proven by the plaintiffs are the service of the orders on the defendants, and the knowledge by the defendants of the terms of the orders.

The requirement for service of the orders, which are alleged to be breached, is to be found in Rule 66.10 of the Rules of the Supreme Court. That Rule provides as follows:

“(1)A judgment shall not be enforced by committal or sequestration unless –
(a)a copy of the judgment is served personally on the person bound; and
(b)if the judgment requires the person bound to do an act within a fixed time, the copy of the judgment is so served a reasonable time before that time expires.

…
(3)A copy of a judgment served under this Rule shall be endorsed with a notice, naming the person served, that the person served is liable to imprisonment or to sequestration of property if –
(a)where the judgment requires the person bound to do an act within a fixed time, the person bound refuses or neglects to do the act within that time; or
(b)where the judgment requires the person bound to abstain from doing an act, the person disobeys the judgment.

…
(5)A judgment requiring a person to do an act within a fixed time or a judgment requiring a person to abstain from doing an act may be enforced under Rule 66.05 notwithstanding that service has not been effected under this Rule if the person against whom the judgment is to be enforced has notice of the judgment –
(a)by being present when the judgment was given; or
(b)by being notified of the terms of the judgment whether by telephone, telegram or otherwise.

(6) The Court may dispense with service under this Rule.”

Neither of the two orders made by Gillard J in November 2005 was served on any of the defendants. Mr Andrew Cox was called on behalf of the plaintiffs to give evidence. He stated that on 11 November he sent to the first defendant, by email, a scanned copy of the orders made by Gillard J on that date. On 22 November he sent letters to each of the three defendants, at their post box address (PO 828 South Yarra), containing a copy of the order of 16 November. Mr Cox told me that that post box address was the address which he had for his clients.

When the second defendant gave evidence in the proceedings before Gillard J, she gave her then address as 10 Clive Street, East Brighton. Ms Lily Ong, who was the solicitor acting for the plaintiffs until April 2006, gave evidence before me. She stated that on 15 November she received from the first defendant a letter dated 14 November, in which the first defendant requested an adjournment, stating that “we” had to visit his mother in China because her health condition had deteriorated. Thereupon Ms Ong attended at the address given by the defendants at Unit 4, 10 Clive Street, East Brighton. There she spoke to a male person who stated that he had been living at that address for four months, that David Chen did not live at that address any more, and that he did not know of Renmin Lu or Lujia Chen. Ms Ong stated that she knew that Lujia Chen was in the country but had no knowledge of her whereabouts. She stated that she had no knowledge of the return of Mr and Mrs Chen to Australia from China. In cross‑examination she stated that apart from her visit to the East Brighton premises on 15 November she did not make any other enquiries as to how she could serve the defendants with the orders made on 11 November.

Mr Isaac Szmerling gave evidence. Mr Szmerling has acted as solicitor for the plaintiffs since April 2006. In cross‑examination Mr Szmerling conceded that, since he has been solicitor for the plaintiffs, he has made no application for substituted service of the orders of 11 November and 16 November. No efforts had been made to serve the defendants personally, or to advise the defendants of the implications if the orders of November 2005 were breached. The first occasion upon which allegations of contempt of court were brought to the notice of the defendants was on 3 July, when the attended at Court on an application made by them to vary the orders of Gillard J on 16 November 2005.

Although the first and second defendants were each in Court when the Mareva injunctions were pronounced on 11 November, no warning was given to either of them that, if they were to breach the terms of those orders, they might be liable to imprisonment. The power to enforce a judgment by committal under Order 66.10(5), notwithstanding that service has not been effected under Order 66.10(1) and (3), is discretionary. Given the criminal nature of the proceedings, and the potential consequences of those proceedings, it is clear that the power under Order 66.10(5) should be exercised sparingly and only in exceptional circumstances.[10] In this case Mr Simon did not press any argument relying on Order 66.10(5). At the commencement of his final address he accepted that, because the two orders relied on by the plaintiffs have not been personally served on the defendants, he could not and would not seek orders for committal of any of the three defendants, if I were to make a finding of contempt of court by any of them.
[10]Drummoyne Municipal Council v Lewis and ors [1974] 1 NSWLR 655 at 658 (Holland J); Clifford v Middleton [1974] VR 737 at 739, 741 (Kaye J).

In Miller and anor v Eurovox Pty Ltd and anor,[11] the Court of Appeal gave consideration to the effect of the failure of a plaintiff, seeking relief against a defendant for contempt of court, to serve the orders alleged to have been disobeyed by the defendants in accordance with Order 66.10. In that case the order had been served on the appellant defendants, but it did not contain the requisite endorsements prescribed under Order 66.10(3). The Court of Appeal held that that omission was fatal to the application by the respondent plaintiffs to commit the defendants for contempt of court under Order 66. However, the Court held that where the contempt is made out, the Court may nonetheless proceed to make a finding of contempt, and, in an appropriate case, impose a fine under Order 75.11. Accordingly, the Court of Appeal set aside the term of imprisonment imposed on the appellants, and confirmed the finding that each of the appellants had been in contempt of court. In the circumstances of the case the Court did not deem it appropriate to impose a monetary penalty. In reaching those conclusions Vincent JA, who delivered the leading judgment of the Court, stated:

“ … it is apparent, in my view, that a clear distinction is made in the Rules between the penalties of committal and sequestration on the one hand, and the imposition of a fine on the other. Order 66.10 is applicable only to the enforcement of orders by sequestration or committal. Under Order 75.11 contempt may be punished, in the case of a natural person, by committal to prison or a fine or both. It does not seem to me that the absence of the endorsement required, if the order is to be enforced by possible imprisonment, would remove the power of the court to impose a fine.”[12]

[11][2004] VSCA 211.

[12]At para [38]; see also Simington v Australian Prudential Regulation Authority [2006] FCAFC 118 at [68] to [74].

Apart from the service requirements prescribed by Order 66.10, the plaintiff is also required to prove beyond reasonable doubt that the defendants had appropriate knowledge of the terms of the order, the breaches of which are alleged to constitute the contempt. The question of what notice is sufficient for this purpose has been mainly discussed in cases relating to alleged contempts by a person who is not a party to the order which has been breached. In those cases, which I shall discuss further below, the allegation is that the defendant has “aided and abetted” a breach of the order by the person bound by the order. In such cases, it is necessary that the person, alleged to have been in contempt, knows of the terms of the order which are alleged to have been breach. In that context the question has arisen as to precisely what knowledge such a person must have of the order.

In Sun Newspapers Pty Ltd v Brisbane TV Limited and ors,[13] Pincus J stated:

“It does not appear to be necessary to show, in circumstances of this sort, that the person charged was aware of the full terms of the order; the cases speak of ‘knowledge of the order’ or being ‘aware’ of the order.”

[13](1989) 92 ALR 535 at 538.

In Foley v Herald Sun TV Pty Ltd,[14] the plaintiff obtained, ex parte, an interim injunction restraining Herald Sun TV Pty Ltd and Transmedia Pty Ltd from publishing a television film. The presenter of the programme was one Michael Willesee. Very shortly before the commencement of the programme Willesee was told that the plaintiff’s solicitor was on the telephone and that he said that he had an injunction to restrain the film from being shown. The question was whether Willesee had appropriate notice of the injunction. McGarvie J held that he did not. His Honour stated:

“I turn to consider what is the standard which the law applies in requiring that the respondents must have had proper notice of the injunction before their conduct amounts to contempt of court. Notice of an injunction may vary from the clear and unambiguous notice had by a person who is in court when the order is pronounced and who is served with a copy of it, to the doubtful and ambiguous notice which is received by a person who is told by a stranger of a rumour that an injunction has been granted. In my opinion it follows from the principles discussed and applied by the Court of Appeal in Ex parte Langley, ex parte Smith, Re Bishop[15] that the respondent Willesee would be guilty of contempt of court if at the time when he showed the film he believed that an injunction had been granted or if at that time he had received such notice as in the circumstances would have lead a reasonable person in his position to refrain from showing the film. A reasonable person would be a responsible citizen desirous of acting in accordance with any order of a court. A reasonable person would also be a person who did not share Mr Willesee’s erroneous belief that a restraining injunction was not binding until the order was served. … It is necessary to give careful consideration to whether a reasonable person without any misunderstanding of when the injunction became binding, would in Wilesee’s situation have regarded the information which had come to him as sufficiently reliable to lead him to refrain from showing the film. … The courts have been conscious of the necessity of showing the reliability of the information which is said to constitute proper notice of an injunction; Ex parte Langley, ex parte Smith, Re Bishop … “.[16]

[14][1981] VR 315.

[15](1879) 13 Ch D 110.

[16]Pp.319-20.

In Ex parte Langley (above), an injunction was obtained in the London Bankruptcy Court restraining the sheriff from proceeding with the auction of hotel premises owned by the debtor Bishop. Langley was the auctioneer instructed to carry out the sale. A telegram was sent to the sheriff’s assistant stating, “Take notice, the London Court of Bankruptcy has made an order restraining you from selling or taking any further proceedings in the action against Bishop.” The telegram was shown to Langley. He was of the opinion that it was merely a ruse on the part of the debtor to stop the sale. Accordingly, on further instructions from the sheriff, he proceeded with the sale. In proceedings to commit him for contempt Langley made an affidavit in which he deposed that when he saw the telegram he believed it was a “trick played by the debtor or his friends for the purpose of procuring a further adjournment of the sale.” In those circumstances, the Court of Appeal held that Langley did not have sufficient notice of the order to reasonably bring home to him the fact that there was an order restraining the sale. Thesiger LJ stated:

“ … the question in each case, and depending upon the particular circumstances of the case, must be, was there or was there not such a notice given to the person who is charged with contempt of Court that you can infer from the facts that he had notice in fact of the order which had been made? And, in a matter of this kind, bearing in mind that the liberty of the subject is to be affected, I think that those who assert that there was such a notice ought to prove it beyond reasonable doubt.”[17]

[17]At p.119.

Thus in the “aiding and abetting” cases, the test applied by the courts is whether the person alleged to be in contempt knew sufficiently the terms of the order so that such person would know that the act, which is alleged to constitute the contempt, was in breach of the terms of the order on its proper construction.[18] The basis upon which a non-party may be committed for contempt of a court order is different to the basis upon which a party, bound by an order, is committed for breach of that order. The former is committed for contempt of court because he is “conducting himself so as to obstruct the course of justice.”[19] Nonetheless there is no reason in logic why the test as to the requisite knowledge of the order should be different in either case.
[18]See also Madeira v Roggette Pty Ltd (No. 2) [1992] 1 Qd R 394 at 403 (Thomas JA).
[19]Seaward v Paterson [1897] 1 Ch 545 at 555 (Lindley LJ); Zhu v Treasurer of New South Wales (2004) 218 CLR 530 at [121].

Knowledge of the Order of 11 November 2005

In his evidence-in-chief David Chen suggested that, because he was stunned by the judgment handed down by Gillard J on the morning of 11 November, he was not thinking clearly when the orders were made that afternoon. Nonetheless in cross‑examination he acknowledged that he understood that the orders made by Gillard J in the afternoon required that he and his wife stop accessing and using their funds. Indeed it is evident from the transcript of proceedings before Gillard J on the afternoon of 11 November that David Chen had a clear understanding of the orders made by Gillard J. When his Honour addressed David Chen directly and explained the orders to him, Chen asked that the amount of living expenses, to be excluded from the operation of the orders, be $3,000 and not $2,000, and Gillard J acceded to that request. Furthermore, whatever David Chen’s feelings about the judgment, nonetheless he read it that day. Three days later, on 14 November, he wrote a letter to his Honour which contained a critique of the reasons for judgment. In those circumstances I am fully satisfied that David Chen knew of and understood the Mareva injunction that was pronounced on 11 November.

In her evidence, Renmin Lu stated that she was in Court on 11 November with her husband in the afternoon, but she could not understand the orders pronounced by Gillard J because there was no interpreter.

Renmin Lu was cross-examined at some length before me. She gave her evidence and was cross-examined through an interpreter. However, on a number of occasions she responded before the questions were interpreted into Chinese for her. On other occasions she answered questions, which had been interpreted to her in Chinese, by using the English language. Her spoken English is rather halting, but she does have a reasonable English vocabulary. Indeed, in proceedings before Gillard J on 3 July 2006, when the contempt proceedings were drawn to the attention of his Honour, he asked David Chen whether he would pay back the $190,000 into the Citibank account. In response, Renmin Lu, who was sitting in the back of the Court, called out, “No”.

If Renmin Lu had any reason not to understand the orders pronounced on 11 November, it defies credulity to suggest that she did not make enquiries about those orders from her husband on leaving the Court. She was in Court. She had apparently been present for all or most of the trial before Gillard J. She could advance no credible reason to me why, on leaving Court, if she had not fully understood what went on in Court, she did not make appropriate enquiry of her husband. In all those circumstances I am satisfied beyond reasonable doubt that Renmin Lu did know of and understand the orders of 11 November pronounced by Gillard J.

The contempts particularised against the third defendant Lujia Chen allege that she was in breach of the orders of 11 November or alternatively 16 November. However, each of the acts alleged against Lujia Chen, as constituting a contempt, occurred after 16 November. The Mareva order pronounced by Gillard J on 11 November expired at 5.00pm on 16 November. Thus that order is irrelevant to the contempt proceedings against Lujia Chen. If it is relevant, I am not satisfied beyond reasonable doubt that she knew of the order. She was not in Court when it was made. It is probable that one or other of her parents told her of it on leaving Court. Nonetheless I am not satisfied that such an inference is the only reasonable inference available on the facts. Accordingly I am not satisfied beyond reasonable doubt that Lujia Chen knew of the Mareva orders pronounced on 11 November.

Knowledge of Mareva injunctions of 16 November 2005

In his evidence-in-chief before me, David Chen stated that he first saw the orders pronounced by Gillard J on 16 November 2005 when he collected the files from his former solicitor, Andrew Cox, in about March 2006. He said that at that time he had lost interest and had given up. He said that the first time he really referred to the order was when he and his wife approached the Prothonotary in the middle of June 2006, when their Commonwealth bank account was closed. In her evidence‑in‑chief, Renmin Lu stated that she could not recall seeing the orders of 16 November 2005 previously. In mid-June 2006 she became aware that the Commonwealth Bank account had become frozen, and the staff of the bank told them that the lawyer had carried out some court order to freeze the bank account. It was then that she and her husband approached the Prothonotary of the Supreme Court for advice.

The evidence of David Chen and Renmin Lu as to when they saw, and knew of, the orders of 16 November, was inconsistent and highly improbable. Each of them had also filed affidavits which were confirmed in evidence before me. In his affidavit of 28 June 2006 David Chen did not deny knowing of the orders of 16 November, but referred only to his “confused understanding” of that order. In her two affidavits, which were confirmed before me, Renmin Lu did not deny knowing of the order of 16 November. In her second affidavit, dated 23 January 2007, she swore that after their personal bank accounts were frozen by the plaintiffs’ lawyers without their knowledge “due to the Mareva order of 16 November 2005”, a significant detriment was caused to their family, and as a consequence they opened new bank accounts at the Bank of Queensland, Bendigo Bank and HSBC Bank “in order to facilitate our family’s basic living money”.

David Chen stated that he did not check the post office box, to which mail was sent, for some time after his return from China on 28 November. Thus he claimed he did not see the letter written to him from Andrew Cox containing a copy of the order. However in cross‑examination, David Chen agreed that he did regularly check the post office box. Further, and more importantly, on 14 November Renmin Lu had instructed Citibank to send the bank cheque of $190,000 to the post office box used by David Chen and Renmin Lu. On 28 November, the day of their return from China, that cheque was deposited into the newly opened Bank of Queensland account.

It is highly improbable, if not incredible, that both David Chen and Renmin Lu, on their return from China, would not have been concerned to ascertain what had occurred before Gillard J on 16 November. David Chen had written a letter to the Court requesting an adjournment of the proceedings on that date. The matters that had been adjourned to 16 November were not only the return of the Mareva injunction, but also the formulation of the substantive orders consequent upon the reasons for judgment handed down by Gillard J on 11 November. David Chen and Renmin Lu had each taken a close interest in the trial before Gillard J. As I have stated, they are both intelligent people. David Chen, in his letter to the Court, demonstrated that he had read the judgment of Gillard J and was aggrieved by it. In those circumstances it is highly probable that on their return from China on 28 November both David Chen and Renmin Lu would have been concerned to ascertain what orders were pronounced by Gillard J on 16 November. It is clear that they had accessed the post office box on 28 November. In those circumstances the inference is overwhelming that, either on that date or shortly thereafter, they read the orders of Gillard J which had been posted to them individually by their former solicitor.

Both David Chen and Renmin Lu, in cross‑examination, conceded that they did know, in late November 2005, that their bank accounts had been frozen. While they were in China, Lujia Chen had telephoned them to tell them that her accounts had been frozen, and they organised for a friend to make funds available to Lujia Chen. In cross‑examination David Chen stated that he knew that he and his wife were being stopped from touching their funds. Similarly, Renmin Lu agreed that on 28 November their new bank account with the Bank of Queensland was opened, because the other bank accounts had been frozen and their access to those accounts had been blocked. She said that she had learnt that the plaintiffs’ lawyer had closed their account. She asserted that she did not understand how the plaintiffs’ lawyers had managed to close their accounts, but that they were ruthless. At one stage in cross‑examination on this point, she said that they found out that the Commonwealth Bank account was frozen after they returned to China when they tried to get some money from the automatic teller machine but it was rejected. She said she did not make any enquiry of the bank because she thought that it was the plaintiffs’ lawyers freezing the accounts. A short time later in her cross‑examination, when describing the plaintiffs’ lawyers as unreasonable and ruthless in their behaviour in relation to their bank accounts, she said, “ … the only worry that I have is the lawyers may misuse whatever order.” She said that she used the word “order” to describe “whatever legal means” the plaintiffs’ lawyers had against them.

I had the opportunity to observe the demeanour of David Chen and Renmin Lu under cross‑examination for some time. I find their denials of knowledge of the orders of Gillard J of 16 November to be quite incredible. That conclusion is based on the matters to which I have already referred, and also on an assessment of their demeanour under cross‑examination. It is confirmed by the pattern of conduct embarked on by David Chen and Renmin Lu immediately on their return from China on 28 November. The opening and closing of their accounts, and the movement of funds, in the manner which I have already described, adds force to the conclusion which I have already reached, namely, that I am satisfied beyond reasonable doubt that they knew of the orders of Gillard J of 16 November 2005 prohibiting them from withdrawing or dissipating their funds. While David Chen and Renmin Lu may not have been aware of the precise terms of the order of Gillard J, I am satisfied beyond reasonable doubt that each of them knew that Gillard J had made an order which had the effect of prohibiting them from withdrawing funds from their bank accounts or from bank accounts controlled by them, and otherwise dealing with or disposing of their assets.

I turn, then, to the question of the knowledge of Lujia Chen of the orders of 16 November. Lujia Chen did not give evidence before me. The plaintiffs tendered against her an affidavit sworn by her on 28 June 2006, which she had deposed in support of an application made on 3 July 2006 to vary the terms of the orders of Gillard J of 16 November 2005. The affidavit was tendered as containing admissions by Lujia Chen against her own interest.[20]
[20]See Wimpole v McIlwraith [1923] VLR 553.

In her affidavit Lujia Chen stated that in late November 2005, when she went to withdraw moneys from her trust account at Goldman Sachs J.B. Were to pay the rent, legal counsel of J.B. Were, Mr Bohdan, told her, “ … that I was not able to withdraw any moneys from my J.B. Were trust account.” She went on to depose that as explained to her by Mr Bohdan, “ … this was due to an order from the court strictly forbidding me to withdraw any moneys from the account.” Ms Chen stated that she trusted legal counsel for the correct information and did not request a copy of the particular order. As a result of that explanation she was under the impression that she could not withdraw “any moneys from my own trust account.” In the next paragraph of her affidavit she stated that “For the past seven months since November last year” her family was not able to withdraw any moneys from any bank accounts for basic living expenses, and that they had resorted to borrowing money from friends and relatives to sustain their basic needs for living and for her tuition needs.

Ms Chen is approximately 23 years of age. In 2006 she commenced studying towards a law degree at Deakin University. In late 2005 she was working as a landscape architect. There is no suggestion that the affidavit sworn by Ms Chen was based on any misapprehension by her of what she had been told by Mr Bohdan.

The admissions made by Lujia Chen in her affidavit satisfy me beyond reasonable doubt that she knew, in late November 2005, that there was then currently in force an order of the Court prohibiting her from withdrawing moneys from her J.B. Were trust account. Mr Simon submitted that I should infer that she understood that the order had a broader operation than that described in her affidavit. In particular he submitted that I should infer that Mr Bohdan had explained to her the full terms of the order pronounced by Gillard J on 16 November. Further, he submitted that the conduct of Lujia Chen in opening a Bendigo Bank account on 9 December, and utilising it for the deposit and withdrawal of funds, could only have been for the purpose of hiding funds on behalf of her family.

It is important to bear in mind that the criminal onus of proof applies in these proceedings. I may only draw an inference adverse to a defendant if it is the only reasonable inference available on the facts. There is nothing in Lujia Chen’s affidavit which would justify drawing an inference, on the criminal standard, that Mr Bohdan not only told Ms Chen that there was a court order freezing her J.B. Were account, but that he also explained to her the full terms of that order. It is quite possible that he did so. However, in the absence of evidence, I am unable to conclude that the only reasonable inference from the facts is that he did so.

In cross‑examination Renmin Lu stated that Lujia Chen opened and used her Bendigo Bank account as from 9 December because she was then working as a landscape architect and that she required that bank account in order to be able to access her funds. In the absence of any other evidence, I am unable to infer that the Bendigo Bank account was not opened for the purpose disclosed by Renmin Lu, but, as contended by the plaintiff, for the purpose of assisting Renmin Lu and David Chen to evade the orders of Gillard J which were pronounced on 16 November.

The circumstances relied upon by the plaintiffs, in their totality, might make it more probable than not that Lujia Chen did know the terms of the orders of Gillard J of 16 November. However, they are, in my view, insufficient for me to conclude that the only reasonable inference, on the facts, is that she did so. The orders were not served on Lujia Chen. No effort was made to serve them on her after 16 November. The plaintiffs are required to prove beyond reasonable doubt that Lujia Chen knew of the terms of the orders of Gillard J which it is alleged she breached, and in respect of which she is alleged to have been in contempt. I am not satisfied beyond reasonable doubt that the plaintiffs have established that Lujia Chen had knowledge of orders pronounced by Gillard J affecting her, other than orders prohibiting her from accessing her J.B. Were trust account, until she and her parents approached the Prothonotary of the Supreme Court on a date in the middle of June 2006 which, from the evidence, would appear to be about 15 June.

In support of his submissions against Lujia Chen, Mr Simon relied on the failure of Lujia Chen to give evidence, and submitted that I should therefore infer that any evidence given by her would not have assisted her case. In making those submissions Mr Simon relied on the principle discussed in the well-known authorities of Jones v Dunkel,[21] Earle v Castlemaine District Community Hospital,[22] and O’Donnell v Reichard.[23] In the course of argument I raised the question whether that principle, which applies in civil proceedings, is applicable to contempt proceedings, which are criminal in their nature, bearing in mind the decision of the High Court in Dyers v R.[24] I do not need to resolve that question, at least in respect of the claim against Lujia Chen. Even if I were to draw the inference relied upon by Mr Simon, that would be insufficient to persuade me, beyond reasonable doubt, that Lujia Chen, until 15 June 2006, knew that the terms of the orders pronounced by Gillard J on 16 November had any further effect on her other than prohibiting her to use her J.B. Were trust account.
[21](1959) 101 CLR 298.
[22][1974] VR 722.
[23][1975] VR 916 especially at 920-921.
[24](2002) 210 CLR 285.

Contempts alleged against Lujia Chen

Having made those findings in relation to the knowledge of Lujia Chen of the orders of Gillard J of 16 November 2005, it is convenient if I deal first with the contempts which she is alleged to have committed of those orders. Paragraphs 5(e) to (j) of the Further Further Amended Summons for committal allege contempts consisting of withdrawals by Lujia Chen from the Bendigo Bank account in February 2006. Paragraphs 5(k) to (m) allege contempts comprising withdrawals by Lujia Chen on her Bendigo Bank account between 2 June and 5 June 2006. Each of those withdrawals took place before the date on which I am satisfied that Lujia Chen knew that the orders made by Gillard J on 16 November prohibited her from participating in any such transaction. Accordingly, none of those contempts alleged against Lujia Chen are made out.

The contempts alleged against Lujia Chen in paragraphs 5(b) and (c) of the further further amended summons have been withdrawn. The contempt alleged in paragraph 5(d) is based on admissions made by Lujia Chen in her affidavit of 28 June 2006. It is alleged that Lujia Chen was in contempt of the orders of Gillard J by writing or participating in the delivery of a letter on 19 June 2006 to Goldman Sachs J.B. Were Cash Trust in an attempt to secure the release to her of all of the funds in her account, and in attending on J.B. Were on 20 June in an attempt to withdraw all the funds held in that account. An exhibit to Lujia Chen’s affidavit is a letter dated 19 June 2006 which David Chen and Lujia Chen sent to J.B. Were. In that letter they asserted that since November 2005 they had been wrongly denied access to their own accounts. They recited advice which they stated they received from the Prothonotary of the Supreme Court on 15 June. The writers asserted that the order had been misinterpreted and wrongly executed by J.B. Were, and requested an immediate release of their funds in their cash trust accounts. In her affidavit Lujia Chen stated that on the next day, 20 June, they attended a formal meeting at J.B. Were to discuss the matter with Mr Bohdan and another representative of J.B. Were. She deposed that Mr Bohdan said that because of the unclear nature of the order he was still unable to grant access to the accounts, and he provided a letter to David Chen and Lujia Chen to explain the situation.

In my view, the matters set out above do not constitute a contempt by Lujia Chen of the orders of Gillard J of 16 November. The letter of 19 June was no more than an assertion by David and Lujia Chen that J.B. Were had wrongly interpreted the order. It put forward an alternative construction of the order which, they asserted, justified the release to them of their funds. J.B. Were was represented by its own legal officer, Mr Bohdan, at that time. The meeting of 20 June took place to discuss the differences of opinion which had arisen concerning the effect of the order. In that context, in my view, neither the letter nor the discussions which took place in the meeting on 20 June constituted actions by Lujia Chen which put her in contempt of the order of Gillard J of 16 November 2005.

Finally, paragraph 5(a) of the further further amended summons alleges a contempt by Ms Chen of the order of Gillard J of 16 November by failing to make file and serve on the plaintiffs an affidavit as to her assets. Ms Chen has admitted that she did not make file and serve such an affidavit and that she has not done so as of the date of the hearing before me. I am satisfied beyond reasonable doubt that, at least by 19 June 2006, Ms Chen had sufficient knowledge of the terms of the orders of Gillard J that she knew of her obligation to make such an affidavit. In his evidence, David Chen stated that at the meeting with the Prothonotary on 15 June the terms of the order were discussed. He either had the order at that meeting, or took a copy of it away with him. As I have already stated, I am satisfied beyond reasonable doubt that David Chen had a copy of those orders in his possession shortly after his return from China in November 2005. Ms Chen attended the meeting with the Prothonotary on 15 June. The letter to J.B. Were of 19 June refers to the precise terms of the order. In those circumstances I am satisfied beyond reasonable doubt that, at least by 19 June, Ms Chen knew of her obligation to provide an affidavit as to her assets. She has failed to do this and has thus disobeyed the order of the Court which is binding upon her.

It is well established that the Court does have a discretion not to proceed to convict and punish a defendant notwithstanding a finding by it that that defendant has knowingly breached the terms of an order pronounced against him or her.[25] The jurisdiction to convict and punish for contempt in a case such as this is, as has been observed by the authorities, both coercive and disciplinary. The former purpose can be adequately served in this case if Lujia Chen were now to repair her failure to comply with the order of Gillard J by filing and serving a full, frank and honest affidavit of assets within a short period after publication by me of these reasons. If Ms Chen were to undertake to do that, then I also consider that the other purpose served by these proceedings, namely the disciplinary purposes in ensuring due compliance with Court orders, would not be compromised if I were not to proceed to convict. I therefore propose to make orders adjourning the proceedings against Lujia Chen for a short period to enable her to repair her default by making filing and serving an affidavit in compliance with paragraph 11 of the orders of Gillard J pronounced 16 November 2005. If Ms Chen makes files and serves such an affidavit in that period of time I shall not convict her for the contempt alleged in paragraph 5(a) of the further further amended summons.
[25]Advan Investments Pty Ltd v Dean Gleeson Motor Sales Pty Ltd and ors [2003] VSC 201 at [50] (Gillard J); Re Perkins; Mesto v Galpin [1998] 4 VR 505 at 514 (Brooking JA).

I shall now deal with the contempts alleged to have been committed by Renmin Lu and David Chen.

Breach of injunction – principles

It is well established that it is not necessary for the plaintiffs to prove that the defendants committed the alleged breaches with the intention of disobeying the orders pronounced by Gillard J.[26] However, in AMIEU v Mudgenberri Station Pty Ltd,[27] Gibbs CJ, Mason, Wilson and Deane JJ, in their joint judgment, held that the power to impose a fine for a “civil” contempt only arises where the contempt is proven to be “wilful”. Their Honours noted that the rationale behind punishment for a contempt which involves wilful disobedience to a court order is the purpose of disciplining the defendant and vindicating the authority of the Court. Their Honours therefore concluded:

“It follows that a deliberate commission or omission which is in breach of an injunctive order or an undertaking will constitute such wilful disobedience unless it be casual accidental or unintentional.”
[26]Stancombe v Trowbridge Urban District Council [1910] 2 Ch 180 at 190; Heatons Transport Ltd v Transport and General Workers Union [1973] AC 15; Advan Investments Pty Ltd v Dean Gleeson Motor Sales Pty Ltd [2003] VSC 2012 at [34, 35]; Scott and ors v Evia Pty Ltd [2007] VSC 15 at [41] (per Dodds-Streeton J).
[27]Above at 113.

“Aid and abet” – legal principles

Some of the contempts particularised against David Chen in the summons allege that he “assisted” Renmin Lu to breach the relevant injunction granted by Gillard J in November 2005. The contempt so particularised appears to have derived from the principles pertaining to persons who are strangers to an injunctive order, but who act in a way to obstruct the proper implementation of that order. In Seaward v Paterson,[28] the Court of Appeal recognised that such conduct itself constituted a contempt of court. In that case the plaintiff had obtained an injunction against his tenant, Paterson, restraining him from using the demised premises so as to cause a nuisance, or for the purposes of a private club. Subsequently Paterson permitted boxing matches to be conducted on the premises. The plaintiffs alleged that two other persons, Sheppard and Murray, assisted Paterson in conducting those contests. At first instance, North J found, as a fact, that Murray was present at the bouts, not merely as a spectator, but as a person who was interested in the club. He was therefore held liable and held in contempt of court for aiding and abetting the contempt of court by Paterson. The Court of Appeal upheld that finding.
[28][1897] 1 Ch D 545.

Lindley LJ, who delivered the leading judgment of the Court, stated[29] as follows:

“Now, let us consider what jurisdiction the Court has to make an order against Murray. There is no injunction against him – he is no more bound by the injunction granted against Paterson than any other member of the public. He is bound, like other members of the public, not to interfere with, and not to obstruct, the course of justice; and the case, if any, made against him must be this – not that he has technically infringed the injunction, which was not granted against him in any sense of the word, but that he has been aiding and abetting others in setting the Court at defiance, and deliberately treating the order of the Court as unworthy of notice. If he has so conducted himself, it is perfectly idle to say that there is no jurisdiction to attach him for contempt as distinguished from a breach of the injunction, which has a technical meaning … It has always been familiar doctrine … that the orders of the Court ought to be obeyed, and could not be set at nought and violated by any member of the public, either by interfering with the officers of the Court, or by assisting those who were bound by its orders.”

[29]At p.554.

In Z Limited v A-Z and AA-LL,[30] Eveleigh LJ defined that basis of liability for contempt of court in the following terms:

“I think that the following propositions may be stated as to the consequences which ensue when there are acts or omissions which are contrary to the terms of an injunction. (1) The person against whom the order is made will be liable for contempt of court if he acts in breach of the order after having notice of it. (2) A third party will so be liable if he knowingly assists in the breach, that is to say if knowing the terms of the injunction he wilfully assists the person to whom it was directed to disobey it. This will be so whether or not the person enjoined has had notice of the injunction.”

[30][1982] 1 QB 558 at 578.

That passage from the judgment of Eveleigh LJ in Z Limited has been referred to with apparent approval by the High Court.[31]
[31]Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 at 395; Zhu v Treasurer of New South Wales (above) at [121].

Alleged breaches by David Chen and Renmin Lu: failure to file affidavit as to assets

Neither David Chen nor Renmin Lu have complied with paragraph 11 of the order of Gillard J dated 16 November 2005 requiring them to file and serve an affidavit as to their assets. I am satisfied beyond reasonable doubt that David Chen and Renmin Lu each received a copy of the order of 16 November under cover of the letter of their solicitor, Andrew Cox, dated 22 November. Furthermore, David Chen collected the file from Mr Cox on 16 March. A copy of the order was on that file. On any view, a copy of the order has been in the possession of David Chen and Renmin Lu on the date on which they visited the Prothonotary on 15 June. Thus, even if I were not satisfied that they received a copy of the order from Andrew Cox in November 2005, I am satisfied beyond reasonable doubt that the first two defendants have had appropriate notice of the terms of the orders made by Gillard J on 16 November including paragraph 11. No explanation has been advanced by either defendant as to why they have not complied with that part of the order of Gillard J. I herefore find that they are in breach of that term of the order in circumstances which constitute a contempt of this Court.

Breaches alleged against David Chen and Renmin Lu: withdrawals from bank accounts

The main allegations against David Chen and Renmin Lu relate to the withdrawals from various bank accounts in their names, which I have summarised earlier in these reasons.[32] David Chen and Renmin Lu each gave evidence in relation to those transactions.
[32]See above at paras 13 to 20.

In their evidence they both stated that each of the three withdrawals from the Citibank accounts, and the two withdrawals from the National Australia Bank accounts, on 14 November were made by Renmin Lu. On 11 November Chen telephoned his mother in China to inform her of the result of the case brought against him by his brother. On the next day Chen heard that his mother suffered a relapse of her heart condition. Chen and Lu organised to travel to China, and departed in the morning of 15 November. Chen stated that when he heard the reasons for judgment on 11 November he lost his mind and was not thinking clearly. He was shocked. He claimed that thereafter he ceded control of all the family’s financial matters to Renmin Lu. Renmin Lu gave evidence to like effect. She stated that the three withdrawals from the Citibank accounts on 14 November, totalling $5,500, were for the purpose of purchasing two return air tickets to China, and a wheelchair for her mother‑in‑law. The withdrawals from the National Australia Bank were for the purpose of providing funds for expenses incurred in China. She stated that at that time they did not know how long they would need to remain overseas because the state of her mother-in-law’s health was at that time uncertain.

A significant part of the case focussed on the withdrawal from the Citibank account of the bank cheque of $190,000 on 15 November. Renmin Lu stated that in fact she had made the initial request to the bank to withdraw those funds on either 7 November or 9 November. Both she and David Chen stated that the $190,000 did not belong to them, but, rather, consisted of moneys sent to them by David Chen’s cousin from China in order to pay for the education of the cousin’s son, who was due to commence his secondary education in Australia in early 2006. They stated that the moneys had been sent to Australia by various cash instalments carried over by relatives to Australia over the preceding years. When Lu and Chen returned from China on 28 November, Lu stated that she then opened the Bank of Queensland account and deposited the bank cheque of $190,000 in it. When she became aware that their bank accounts were frozen, she determined to withdraw the $190,000 from that account, so that it would not be affected by the freezing of the accounts. In the course of her evidence she stated that in fact the $190,000 withdrawn from the Bank of Queensland on 5 December 2005 consisted, first, of a bank cheque of $140,000 which she provided to a friend, and of $50,000 which she kept for cash. She stated that the friend (later named in the course of her evidence) was to take over the role of administering the “education fund” set up on behalf of the cousin’s child. She stated that she and her husband were entitled to the $50,000 cash because of a rather complex set of circumstances. In essence she stated that while she was in China the school fees fell due. The cousin borrowed money in China, and sent the school fees from China to the school in Australia. In the meantime her parents-in-law undertook to sell their own house, and to give $50,000 from the proceeds of the sale to the cousin, to refund the payment of the school fees. She stated that, subsequently, the parents‑in‑law sold the house in early 2006 and provided that $50,000 to the cousin. According to Renmin Lu the outcome of those transactions was that she and her husband were entitled to the $50,000 of the funds withdrawn from the Bank of Queensland account.

Renmin Lu then gave evidence about the HSBC account which she opened on 21 December. She stated that she effected all of the banking transactions on that account. The withdrawals of $1,000 each on 6 January, 9 January and 8 March were for living expenses and household expenses. She stated that the ten withdrawals of $5,000 each, and the withdrawal of $1,000, from that account between 27 June and 13 July were made to repay friends and relatives who had lent them money while their accounts were frozen.

On 21 June 2006 David Chen had withdrawn $52,976.77 from the Macquarie Equities account. That amount was then deposited into the Bendigo Bank account which had been opened in the joint names of Chen and Lu on 19 June. Mr Chen stated that Macquarie Equities was not a bank account but a trading account. When he approached Macquarie, that company consulted its legal advisers, and a few days later Macquarie stated that it would release the funds into his bank account.

Renmin Lu stated that it was she who made the withdrawal of $53,000 from the Bendigo Bank account which was in the joint names of herself and David Chen on 22 June 2006. She stated that she paid it into the HSBC account because that bank had Mandarin speaking tellers who could assist her. In his evidence, David Chen stated that the $53,000 was withdrawn from the Bendigo Bank by Renmin Lu. He stated that he could not fully remember the event. The gist of his evidence was that the transaction was undertaken by his wife and not by himself.

Before turning to each of the contempts particularised in the further further amended summons, it is necessary first to form a conclusion about the credibility of both Renmin Lu and David Chen as witnesses, and in particular to form a conclusion about their claim that it was Renmin Lu, and not David Chen, who was responsible for the movement of various funds between November 2005 and June 2006.

As I have already stated both David Chen and Renmin Lu were each cross‑examined for some time before me. They both impressed me as intelligent persons. Despite their protestations to the contrary they both displayed a capacity to remember matters in some detail. They both have a strong sense of grievance in relation to the proceedings against them by the plaintiffs, and in particular in relation to the outcome of those proceedings. I detected a strong resentment in each of them to the proposition that they might owe any money to the plaintiffs.

The evidence of both David Chen and Renmin Lu was that, until November 2005, it was David Chen who controlled the finances of the family. Chen had taught himself how to trade in futures and shares and he used the Macquarie Equities accounts for that purpose. In my view, the evidence by both David Chen and Renmin Lu that David Chen fell apart after the judgment of Gillard J in November 2005, and that thereafter he ceased to have any part in the family finances, was contrived and incredible. The objective facts are to the contrary. After receiving the detailed written reasons for judgment Chen read them. He returned to Court in the afternoon of 11 November and engaged in discussion with Gillard J concerning the terms of the Mareva injunction, and in particular in relation to the term of the Mareva order permitting the defendants to utilise funds for household expenses. On 14 November he wrote a letter to Gillard J containing a critique of his Honour’s judgment. All of those actions contradict the assertion that in that space of time David Chen had mentally fallen apart and given up on the case. The viva voce evidence to that effect given to me by David Chen and Renmin Lu was quite unconvincing. After their return from China, the defendants set up a series of alternative bank accounts and transferred funds into them. It is very difficult to believe that, given the nature and extent of those transfers, they were effected by Renmin Lu without any input from her husband. In June 2006 it was David Chen who spoke to the Prothonotary, in the presence of his wife and daughter. He then, with his daughter, sent a detailed letter to J.B. Were contesting the latter’s of the Mareva order granted by Gillard J on 16 November. He prevailed on Macquarie Equities to release funds, which were then deposited into the Bendigo Bank. All those actions reinforce my conclusion that, contrary to the evidence of the defendants, David Chen did, after November 2005, remain an active participant in the handling of the family finances.

As I have already observed, on its proper construction, paragraph 9 of the Order of Gillard J of 16 November 2005 restrained the defendants from dealing with or disposing of any of their assets up to a value of $800,000. The evidence adduced in cross‑examination of David Chen and Renmin Lu satisfies me beyond reasonable doubt that, on the dates relevant to the alleged contempts, the joint assets of the three defendants were significantly less then $800,000.

Having made those findings of fact I now turn to consider each of the contempts alleged against David Chen and Renmin Lu. It is convenient that I first consider the contempts alleged against Renmin Lu.

Renmin Lu: alleged contempts
Withdrawals from National Australia Bank – 14 November 2005

Renmin Lu admitted that she made the withdrawals from the National Australia Bank on 14 November 2005 of $8,377.29 and $132.65 respectively. She stated that those funds were withdrawn for use by her husband and herself while they were in China. The order of Gillard J of 11 November 2005 permitted the withdrawal of $3,000 for ordinary living expenses. I am prepared to accept that $3,000 of the funds withdrawn from the National Australia Bank on 14 November were for that purpose. Otherwise the contempts alleged against Renmin Lu in paragraphs 1(b) and (c) of the summons are established.

Citibank withdrawals – 14 November 2005

Renmin Lu has admitted effecting the three withdrawals from the Citibank accounts on 14 November 2005, which totalled $5,500. Those withdrawals were in breach of the order of Gillard J of 11 November 2005. I am satisfied that the contempts alleged in paragraphs 1(d), (f) and (g) of the summons are established.

Citibank withdrawal – 15 November 2005 - $190,006.50

The evidence of David Chen and Renmin Lu in respect of the withdrawal of the bank cheque of $190,006.50 from Citibank raises two issues. The first issue concerns the date upon which the withdrawal was made by Renmin Lu. The second issue concerns the question of whether the funds belonged to David Chen or Renmin Lu, so as to fall within the terms of the Mareva injunction.

Renmin Lu’s evidence is that she first made an oral request to Citibank on 7 November or 9 November for the withdrawal of the funds. That assertion by her is supported by an exhibit to her affidavit which appears to be a hard copy of an internal email at Citicorp on 11 November 2005 at either 6.15am or 8.15am. I accept Renmin Lu’s evidence to that effect. However the matter does not end there. In making that request, Renmin Lu gave the bank her husband’s mobile phone number as a point of contact. On 14 November the bank contacted David Chen on that telephone number. He handed the telephone to Renmin Lu. She stated in her evidence that she told the bank that she was going overseas on the next day. The person to whom she spoke then asked whether she needed an international cheque or an Australian cheque. She responded that she wanted an Australian cheque. The statement of Renmin Lu’s account with Citibank shows that the cheque was debited to her account on the next day, 15 November. Thus at the time of the conversation deposed to by Renmin Lu, the cheque had not been debited to the account. I am satisfied, in those circumstances, that the conversation which Renmin Lu had with the bank on 14 November was a relevant act in the withdrawal of the funds from Citibank. I am therefore satisfied that Renmin Lu effected that withdrawal after she had notice of the orders made by Gillard J on 11 November.

I am also satisfied beyond reasonable doubt that the funds in Renmin Lu’s Citibank account, including those represented by the $190,000 bank cheque, were funds belonging to Renmin Lu and her husband, and not, as she alleges, to her cousin for the child’s education. I reject the evidence of David Chen and Renmin Lu that the $190,000 withdrawn from Citibank on 15 November belonged to a cousin of David Chen. All the evidence is to the contrary. The statement of the Citibank account from which the funds were withdrawn shows that, as at 1 October, there was $271,000 in that account. During that month there were two withdrawals of sums, totalling $50,000, payable to Lujia Chen. In the face of that evidence, Renmin Lu conceded that the cousin’s funds were “intermingled” with funds belonging to herself. That circumstance itself calls into question the assertion that the funds were being held in trust for the cousin’s son.

Apart from that, the claim that the funds belonged to the cousin for her son’s education was riddled with inconsistencies and improbabilities. It emerged that the cousin’s son was 18 years of age and would be commencing Year 11 in school in 2006. It is highly unlikely that $190,000 would have been required for his education. Furthermore, no credible or logical explanation was given to me as to why Renmin Lu saw the need, in early November, to remove those funds from the Citibank account. Renmin Lu stated that she decided to separate the funds of the child from the Citibank account when the child passed the English test and thus became eligible for enrolment in the school. She said that she separated the funds in November because the school had asked for the fees. She was then asked why she did not, on that request, pay a cheque, drawn on the Citibank account, to the school. Her response was, “I didn’t think about it. I only thought to take the money out to set up [the] account for the child.”

Ms Lu then stated that, notwithstanding the request from the school, she and her husband left indefinitely for China, having requested the bank to mail to their post office box the bank cheque for $190,000. She further stated that when they arrived in China the child’s mother was required to pay the school fees, so the child’s mother borrowed the sum in China, and sent it directly to the school. That being so, no credible explanation was given to me as to why the fund had been required to be set up for the child in Australia anyway. Furthermore, Renmin’s Lu’s evidence as to the source of the $190,000 was, to say the least, highly questionable. She stated that over the years various friends and relatives from China had brought out the funds in cash consignments. Yet she did not produce any banking records or other evidence to support that assertion. When the contempt proceedings were first mentioned before Gillard J on 3 July, Gillard J had stated that they were serious. He asked David Chen whether the $190,000 was to be refunded, and Renmin Lu, in English, said, “No”. Thus from an early stage in the proceedings the defendants knew of the importance of the allegation made about the withdrawal of the $190,000, but did nothing to produce evidence to support their version of the covenants of that fund. In those circumstances I am satisfied that the evidence of David Chen and Renmin Lu as to the origins and ownership of the $190,000 should be rejected. I am satisfied beyond reasonable doubt that that sum, withdrawn from Citibank on 15 November, consisted of funds owned by the first and second defendants. Accordingly the contempt alleged against Renmin Lu in paragraph 1(e) of the summons is established.

Withdrawal of $190,163.24 from Bank of Queensland on 5 December 2005

It is convenient to deal next with the contempt alleged in paragraph 2(bb), relating to the withdrawal of $190,163.24 from the Bank of Queensland account by Renmin Lu on 5 December 2005.

That sum was constituted by the amount of the withdrawal from the Citibank account on 15 November, which had been deposited into the Bank of Queensland account on 28 November. The withdrawal of the funds on 5 December from the Bank of Queensland account effectively closed that account. As I stated, I am satisfied that those funds did not belong to the cousin for the education of her child, but, rather, were funds belonging to the defendants. In cross‑examination Renmin Lu was very reluctant to reveal to whom the funds were paid. Under some insistence from me she did so. No evidence was led to support the proposition that the amount paid to that recipient ($140,000) was held by the recipient on trust for the child of the cousin of David Chen. The failure of the defendants to adduce that evidence further reinforces the conclusions which I have already reached about the provenance and ownership of the money. The withdrawal of the $190,163.24 by Renmin Lu from the Bank of Queensland account on 5 December was in breach of the orders of Gillard J of 16 November and constituted a contempt of court. I am therefore satisfied that the contempt alleged in paragraph 2(bb) of the summons is established.

Citibank withdrawals - 28 November and 30 November 2005

Paragraph 2(d), (e) and (f) of the summons alleges the withdrawal of $100, $230.89, and $406.10, from Renmin Lu’s Citibank account. The first two withdrawals were on 28 November and the third on 30 November. The last withdrawal had the effect of closing the account. Although Renmin Lu did not give any evidence specifically relating to those withdrawals, they total less than $1,000 collectively. The second withdrawal (for $230.89) was an EFTPOS purchase at Coles at Victoria Gardens. In the circumstances I am not satisfied beyond reasonable doubt that the three withdrawals were not for household expenses permitted by Gillard J. Accordingly the contempts alleged in paragraphs 2(d), (e) and (f) of the summons are not made out and will be dismissed.

Bendigo Bank account withdrawal of $53,000 on 22 June 2006

Paragraph 2(g) of the summons alleges that Renmin Lu was in contempt of court in withdrawing $53,000 from her Bendigo Bank account on 22 June 2006. The relevant account was in the name of David Chen and Renmin Lu. It was opened on 19 June. On 21 June $52,976.77 was paid into that account from David Chen’s Macquarie Equities account. The withdrawal, which is alleged to be the contempt, occurred on 22 June 2006. Renmin Lu admitted making that withdrawal for the purposes of transferring the funds to the HSBC account. The transaction constituted by the withdrawal is a transfer of assets contrary to clause 9 of the order of Gillard J of 16 November and therefore is a breach of that order constituting a contempt.

Withdrawals of funds from HSBC account

Paragraphs 2(h) and (i) of the summons allege withdrawals by Renmin Lu of $1,000 each from the HSBC account on 6 January and 9 January 2006. Renmin Lu did not give any evidence relating to those two withdrawals. However they are each for a sum of no more than $1,000. I am therefore not satisfied that both of them were prohibited by the order of Gillard J. Therefore, I am not satisfied that the contempt in paragraph 2(h) is made out. However, the withdrawal three days later of the further sum of $1,000 on 9 January was in disobedience of Gillard J’s order of 16 November and was a contempt of it.

Paragraphs 2(j) to 2(n) allege contempts constituted by withdrawals from the HSBC account between 17 February and 8 March. Those withdrawals consisted of $5,000 withdrawn on 17 February, two lots of $5,000 withdrawn on 20 February, a further $5,000 withdrawn on 21 February, and $1,000 withdrawn on 8 March. Renmin Lu stated that the $5,000 debited on 17 February was paid to the child of the cousin she asserted came to Australia to be educated. Her evidence as to why she paid that child that amount was convoluted and difficult to understand. I am satisfied that each of the four withdrawals of $5,000, constituted by transfers to other bank accounts, were contrary to the orders of Gillard J of 16 November and a contempt of court. The withdrawal of $1,000 on 8 March was for an amount permitted by the order of Gillard J. I am not satisfied that that withdrawal constituted the contempt alleged in paragraph 2(n) of the summons. Thus the contempts alleged in paragraphs 2(j) to 2(m) are established, but the contempt alleged in paragraph 2(n) is not established.

Paragraph 2(o) of the summons alleges the withdrawals of $800 and $100 from the HSBC account on 22 June 2006 at Crown Casino. I am not satisfied that those withdrawals were contrary to the order of Gillard J and the allegation in paragraph 2(o) will be dismissed.

Paragraph 2(p) and paragraphs 2(r) to 2(x) allege ten withdrawals of $5,000 from the HSBC account, constituted by transfers to other bank accounts. I am satisfied that each of those withdrawals were contrary to the orders of Gillard J. Renmin Lu stated that those withdrawals were effected to pay the cousin’s child back some moneys, and also to set aside funds for themselves. I am satisfied that each of those withdrawals was a contravention of Gillard J’s order of 16 November and therefore a contempt of court.

Paragraph 2(q) and 2(y) allege withdrawals of $1,000 each from the HSBC account on 27 June and 13 July respectively, constituted by ATM transactions at Crown Casino. Paragraph 2(z) alleges a withdrawal of $200 from the HSBC account using an automatic teller in Toorak Road. I am not satisfied that any of those withdrawals were prohibited by the order of Gillard J and therefore the allegations in those paragraphs of the summons will be dismissed.

Finally, paragraph 2(aa) alleges withdrawal of $4,032.72 from the HSBC account on 24 August 2006. That appears to have been by way of transfer to another account. It had the effect of closing the HSBC account. No explanation has been given for it. I am satisfied that it was a contravention of the order of Gillard J and therefore a contempt of court.

Liability of David Chen for withdrawals of funds

I turn now to consider the allegations that David Chen has acted in contempt of the orders of Gillard J of 11 and 16 November 2005 by participating in the withdrawal of funds from various bank accounts after those dates. The contempts alleged against David Chen are particularised in paragraphs 3 and 4 of the further further amended summons. With the exception of those set out at paragraphs 3(i) and 3(gg), all of the contempts alleged against David Chen are the same as those alleged against Renmin Lu. They involve withdrawals of funds from accounts in the name of Renmin Lu, or from joint accounts in the names of David Chen and Renmin Lu. I shall deal with those withdrawals first.

Paragraph 3(b), (d) and (e) are concerned with the three withdrawals from the Citibank accounts totalling $5,500 on 14 November 2005. One withdrawal was from the Citibank joint account of Renmin Lu and David Chen, and the other two were from the Citibank account in the name of Renmin Lu. The withdrawal alleged in paragraph 3(c) of $190,006.50 on 15 November 2005 was made from the Citibank account in the name of Renmin Lu. The withdrawal of $8377.29 on 14 November 2005 alleged in paragraph 3(f) was from the National Australia Bank in the name of Renmin Lu. Mr Simon abandoned the allegation in paragraph 3(g), as to the withdrawal of $132.56 on the same day by Renmin Lu from the National Australia Bank accelerator account. The withdrawal alleged in paragraph 3(h) of $53,000 on 22 June 2006 was from the Bendigo Bank account in the joint names of Renmin Lu and David Chen. The withdrawals alleged in paragraphs 3(j) to 3(dd) were from the HSBC account in the name of Renmin Lu alone. The withdrawal alleged in paragraph 3(jj) of $190,163.24 was made from the Bank of Queensland account in the name of Renmin Lu. The withdrawals alleged in paragraph 4(a) to 4(c) of the summons were from the Citibank account in the name of Renmin Lu.

I have already found that I am not satisfied that some of the withdrawals alleged against Renmin Lu, which are the same as those alleged against David Chen, constituted contempts of court as I am not satisfied that they were not for purpose authorised by the order of Gillard J of 16 November. For the same reasons therefore I am not satisfied of the contempts alleged in paragraph 3(j), (p), (q), (s), (aa), (bb) and paragraph 4(a), (b) and (c) of the summons. Those allegations of contempt will be dismissed. The allegations of contempt in paragraph 4(d), (e) and (f) were abandoned by the plaintiff and will also be dismissed.

In relation to the balance of those contempts alleged against David Chen, the evidence of both Renmin Lu and David Chen was that it was Renmin Lu who actually effected the transactions constituting the withdrawals of funds from accounts and transfers of funds from one account to another. The only evidence to the contrary concerns the contempt alleged in paragraph 3(h) of the summons, namely the withdrawal of $53,000 from the Bendigo Bank account on 22 June. The withdrawal request was signed by David Chen. I shall return to that transaction later. However, in respect of the other withdrawals and transfers alleged against David Chen, there is no evidence to contradict the evidence of David Chen and Renmin Lu that it was Renmin Lu who undertook the actual withdrawals of the funds from the bank accounts. I therefore proceed on the basis that it was Renmin Lu and not David Chen who carried out the steps necessary to effectuate those transfers.

The question then arises as to what role David Chen played in the transactions alleged in the paragraphs of the summons to which I have referred in paragraph 100 above. I have already rejected the evidence of David Chen and Renmin Lu that, after Gillard J delivered judgment on 11 November 2005, David Chen totally surrendered his control of the family finances to his wife. The evidence is that, before that date, it was David Chen who controlled the finances of the family. Indeed it was David Chen who made a number of investments in futures on behalf of the family. Thus the evidence was that until the date of judgment by Gillard J, David Chen controlled the family finances, including the bank accounts that were either in the joint names of himself and his wife, or in the name of his wife alone.

It is clear that David Chen remained involved in and concerned about the result of the proceedings which had been determined by Gillard J in November 2005. He wrote the letter of 14 November to Gillard J to which I have already referred. It was he who applied for the adjournment of the proceedings which were to take place on 16 November. David Chen and his daughter attended upon the solicitor to obtain the file from them in early 2006. David Chen appeared before Gillard J on a number of occasions, and also before Master Kings, and applied for adjournments on their behalf. He agreed that he has appeared and represented his wife and daughter before Master Efthim in relation to the taking of accounts. I am satisfied that David Chen’s control of the family finances was not significantly diminished after the orders of Gillard J in November 2005.

The withdrawals which are the bases of the allegations of contempt in this case concerned large sums of money. Some of the transactions involved removing funds from one account, opening another account, depositing funds into that account, and then later removing the funds from that account. Those withdrawals all bear the hallmarks of transactions undertaken to evade the effect of the Mareva injunctions which had been granted by Gillard J on 11 and 16 November and of which I am satisfied David Chen and Renmin Lu had appropriate knowledge. Indeed in cross‑examination Renmin Lu agreed that the purpose of the deposit of $190,000 into the Bank of Queensland on 28 November was because all the other bank accounts were frozen. Similarly, she agreed that the series of $5,000 withdrawals from the HSBC account in June and July 2006 were to avoid those funds being affected by any freezing of the accounts. It is in my view unthinkable that David Chen would not have known of, and participated in, the decisions which were made to transfer funds in the manner which has occurred. I am therefore satisfied beyond reasonable doubt that the withdrawals of funds alleged against David Chen in the summons were each withdrawals made pursuant to a joint decision between himself and his wife, with the full knowledge and concurrence of David Chen.

I have already found that each of the withdrawals specified in paragraphs 3(b) to (f), 3(k) to (o), 3(r), 3(t) to 3(z), 3(dd), and 3(jj) were all withdrawals made by Renmin Lu in disobedience of the orders of Gillard J, and were as such contempts of court.

The basis on which David Chen is alleged to be liable for those withdrawals is expressed in differing terms in the summons. He is alleged to have “transferred or assisted in the transfer” of some of those funds; in respect of others he is alleged to have “aided or abetted” in the transfer of sums; and in respect of others it is alleged that he “withdrew” the funds. However it is clear that the allegation consistently made against him in the proceedings before me was that he aided and abetted the withdrawal and transfer of funds effected by Renmin Lu.

Each of the withdrawals alleged in the summons involved bank accounts of which Renmin Lu was either the joint legal proprietor or the sole legal proprietor. The terms of the injunctions pronounced by Gillard J were breached because his Honour had forbidden the withdrawal or transfer of funds from those accounts. In each case it was Renmin Lu who actually conducted the transaction constituting the withdrawal or transfer of the funds. I have found as a fact that the withdrawals of those funds were the product of decisions jointly made between David Chen and Renmin Lu, and that David Chen knew of, concurred with and was a party to those withdrawals. In my view, in those circumstances, David Chen aided and abetted, or wilfully assisted in, the withdrawals which constituted the contempts of court, in the sense described in authorities such as Seaward v Paterson, to which I have referred above.

I have found that David Chen was interested in, and a party to, the relevant withdrawals made by Renmin Lu, in the sense that those withdrawals were made with his approbation and as a result of a joint decision between them. Those withdrawals were each a contempt of court. Accordingly I am satisfied that David Chen is also guilty of contempt of court in relation to each of these withdrawals specified in paragraphs 3(b) to (f); (k) to (o); (t) to (z); (dd); (jj) of the Summons.

The transaction alleged in paragraph 3(h) of the summons against David Chen alleges that he withdrew the sum of $53,000 from the Bendigo Bank on 22 June 2006. Both David Chen and Renmin Lu stated in their evidence that it was Renmin Lu who withdrew those funds. However the withdrawal slip for that transaction was signed by David Chen and part of the document was in David Chen’s handwriting. I have already found that that withdrawal constituted a contempt of court. It follows that David Chen is also liable for contempt of court in relation to that withdrawal, both on the basis that he himself participated in the withdrawal of the funds from the Bendigo Bank, and on the basis that he aided and abetted Renmin Lu in making the withdrawal.

I turn to the two contempts alleged against David Chen which were not alleged against Renmin Lu. The first, specified in paragraph 3(i), alleges a withdrawal of $5,200 by David Chen from Bendigo Bank account 0004995106/1401 on 22 June 2006. That account was in the name of David Chen alone. I am satisfied that it has been proven. The withdrawal was made in disobedience of the order of Gillard J of 16 November 2005. Accordingly, I am satisfied beyond reasonable doubt that that withdrawal constitutes a contempt of court by David Chen.

Finally, paragraph 3(gg) of the summons alleges that on 21 June 2006 David Chen withdrew the sum of $52,976.77 from Macquarie Equities account S331. The evidence establishes beyond reasonable doubt that David Chen did make that withdrawal on that date. In fact the sum withdrawn was deposited into the Bendigo Bank account in the joint names of David Chen and Renmin Lu on the same date. The making of the withdrawal from the Macquarie Equities account constitutes a transfer of assets contrary to paragraph 9 of the order of Gillard J of 16 November 2005 and thus constitutes a contempt of court by David Chen.

Conclusion

I therefore summarise the conclusions which I have so far reached in the proceedings as follows.

In respect of the summons for committal against the first defendant, David Chen:

(a)I am satisfied beyond reasonable doubt that the plaintiffs have proven the contempts alleged in paragraph 3(a) to (f) (inclusive); 3(h); 3(i); 3(k) to (o); 3(r); 3(t) to (z); 3(dd); 3(gg); and 3(jj).
(b)I not satisfied beyond reasonable doubt of the contempts alleged in the further further amended summons at paragraph 3(j), (p), (q), (s), (aa), (bb); and paragraph 4(a), (b), (c). In addition the contempts alleged in paragraph 3(g) and in paragraph 4(d), (e) and (f) were abandoned by the plaintiffs. Each of those paragraphs of the further further amended summons will be dismissed.

In respect of the second defendant, Renmin Lu Chen, I find as follows:

(a)I am satisfied beyond reasonable doubt that the contempts alleged in the further further amended summons paragraph 1(a) to (g); paragraph 2(g); 2(i) to (m); 2(p); 2(r) to (x); 2(aa); 2(bb).
(b)I am not satisfied beyond reasonable doubt of the contempts alleged in paragraph 2(d), (e), (f), (h), (n), (o), (q), (y), (z). In addition the contempts alleged in paragraph 2(a), (b), (c) were abandoned by the plaintiffs. Each of those paragraphs of the further further amended summons will be dismissed.

In respect of the third named defendant Lujia Chen, I find as follows:

(a)I am satisfied beyond reasonable doubt of the contempt alleged in paragraph 5(a) of the further further amended summons for committal. I shall adjourn the further hearing of the proceedings against Lujia Chen for a short period to enable the third defendant to repair her default by filing and serving an affidavit in compliance with paragraph 11 of the order of Gillard J of 16 November 2005. If the third defendant files and serves such an affidavit in that period of time I shall dismiss the allegation in paragraph 5(a) of the further further amended summons.
(b)I am not satisfied beyond reasonable doubt of the contempts alleged in paragraph 5(d) to (n). The contempts alleged in paragraphs 5(b) and (c) were abandoned against the third defendant. Each of those paragraphs of the further further amended summons will be dismissed against the third defendant.

Further Disposition

Having announced those findings in respect of the first and second defendants, I shall now provide to the plaintiffs and the first and second defendants the opportunity to address me on whether I should proceed to convict the defendants on contempts I have found proven, and also on the question of penalty should I proceed to conviction.

As already announced I shall adjourn the further proceedings against the third defendant, Lujia Chen, for a short period of time to enable her to repair the contempt which I have found proven and as specified in paragraph 5(a) of the further further amended summons. If that contempt has been remedied by Lujia Chen upon the return of the proceedings before me, in the exercise of my discretion, I shall not proceed to record a conviction, but shall dismiss the summons against her.

[2007] VSC 24

16 February 2007