Chan v Chen (No 3)

[2007] VSC 52

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:	2 March 2007
DATE OF JUDGMENT:	8 March 2007
CASE MAY BE CITED AS:	Chan and ors v Chen and ors (No. 3)
MEDIUM NEUTRAL CITATION:	[2007] VSC 52

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CONTEMPT OF COURT – Breaches of Mareva injunctions – Penalties for contempt – Fines imposed – Whether court has power, under Rule 75.11(3), to order committal of a respondent until payment of fines, notwithstanding non-compliance with Rule 66.10.

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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

HIS HONOUR:

1. The plaintiffs, by summons, have sought orders for the committal of the three defendants for contempt of court.  On 16 February 2007 I gave judgment[1], in which I found that a number of the contempts, alleged against the first and second defendants, had been proven beyond reasonable doubt.  I adjourned the further hearing of the summons to provide the plaintiffs and the first and second defendants with the opportunity to address me on whether I should proceed to convict the defendants on the contempts which I had found proven, and also on the question of penalty should I proceed to conviction.  I also found that the plaintiffs had proven beyond reasonable doubt one count of contempt alleged against the third defendant, Lujia Chen.  That allegation of contempt arose out of the failure of the third defendant to make, file and serve an affidavit as to her assets in compliance with paragraph 11 of the order of Gillard J of 16 November 2005.  I adjourned the further hearing of the proceeding against the third defendant to enable her to remedy the contempt.  The third defendant has now filed an affidavit as to her assets.  The plaintiffs accept that accordingly the appropriate order is that I should dismiss the summons against the third defendant.  The only issue which remains between the plaintiffs and the third defendant concerns the question of costs. 

   [1]Chan & Ors v Chen & Ors (No 2) [2007] VSC 24.

The power to impose a fine

1. Before the defendants committed the contempts, the plaintiffs had not served a properly endorsed copy of the orders of Gillard J of 11 November 2005 and 16 November 2005 on the defendants as required by Rule 66.10 of the Rules of the Supreme Court.  As I noted in my previous reasons for judgment[2], Mr Simon, who appeared on behalf of the plaintiffs, has conceded that, because the two orders which are relied on by the plaintiffs had not been personally served on the defendants, he could not and would not seek orders for their committal.  He submitted that I should impose fines on the first and second defendants, relying on the decision of the Court of Appeal in Miller & Anor v Eurovox Pty Ltd & Anor[3], in which the Court held that the non-compliance by an applicant with the requirements of Rule 66.10 does not preclude the power of the Court to impose a fine on a respondent under Rule 75.11. 

   [2]At paragraph [33].

   [3][2004] VSCA 211.

1. The power of the Court to impose a fine for a contempt constituted by the non-compliance by a party with a previous order of the Court was considered by the High Court in Australasian Meat Industry Employees Union & Ors v Mudginberri Station Pty Ltd[4], to which I made reference in my previous judgment.[5]  In that case, the High Court held that an act of disobedience of an order which is “wilful or contumacious” amounts to criminal contempt, which involves a public injury and thus calls into play the penal or disciplinary jurisdiction of the Court.[6]  Thus the power to punish such a contempt only arises where the Court is satisfied that the relevant act or omission was wilful.  The Court held 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”.[7]

   [4](1986) 161 CLR 98.

   [5]At paragraph [65].

   [6]At 108.

   [7]At 113.

Whether the contempts were wilful

1. The first question therefore is whether I am satisfied beyond reasonable doubt that the contempts, which I have found proven against the first and second defendants, involved acts or omissions by the defendants which were “wilful” in the sense defined above, that is, that they were more than “casual accidental or unintentional”.

1. In my previous reasons[8] I found that I was satisfied beyond reasonable doubt that both the first defendant and the second defendant each knew and understood the substance of the orders of Gillard J of 11 November 2005 and 16 November 2005.  I was satisfied beyond reasonable doubt that, notwithstanding their knowledge of those orders, they nonetheless withdrew substantial funds from their bank accounts.  Those transactions, as found by me, were contrary to the injunctions pronounced by Gillard J in those orders.  I am also satisfied beyond reasonable doubt that the first and second defendants each knew of their obligation to make an affidavit of assets as required by the order of Gillard J of 16 November 2005, and that they have each intentionally refrained from doing so.  Accordingly I am satisfied beyond reasonable doubt that each of the contempts, which I have found proven against the first and second defendants, were wilful.

   [8]Paragraphs 40, 43, 50.

1. Further I am satisfied beyond reasonable doubt that the first and second defendants conducted the transactions, which are the subject of the contempts found proven by me, with the deliberate intention of evading the orders of Gillard J of 11 November 2005 and 16 November 2005.  The transactions in question commenced shortly after Gillard J had pronounced those orders.  The effect of the transactions was to empty, or significantly deplete, each of the current bank accounts of the defendants.  Thus in November 2005 the two Citibank accounts, and the two National Australia Bank accounts, were closed.  The sum of $190,000 withdrawn from the Citibank account on 15 November was deposited into the Bank of Queensland account on 28 November.  That amount was withdrawn from that account, and the account closed, one week later.  A similar pattern of behaviour occurred six months later.  On 21 June 2006 the sum of $52,976.77 was withdrawn from the Macquarie Equities account in the names of Mr and Mrs Chen, and deposited into the Bendigo Bank account which had just been opened in their name.  On the next day $53,000 was withdrawn from that account, leaving a balance of $24.77.

1. In her evidence the second defendant, Renmin Lu, stated that the sum of $190,000 was deposited into the Bank of Queensland account, because she knew that the other bank accounts had been frozen.  She stated in cross-examination that she withdrew the sum of $190,000 from the Bank of Queensland, and entrusted $140,000 of that sum to a “friend”, because she did not have access to her bank accounts as they were frozen.  Similarly, in cross-examination, she stated that, after transferring $53,000 from the Bendigo Bank to the HSBC Bank on 22 June, a series of transfers were effected from the HSBC Bank account to the account of a friend.  She said that she effected those transfers partly in order to pay some money back, and partly because she did not know how long the Court case would drag on and, therefore put the money into the friend’s account to support her family and herself.  The concessions made by Renmin Lu in her evidence reinforce the conclusion to which I have otherwise come, namely, that I am satisfied beyond reasonable doubt that the transactions which I have found to be in contempt of court were deliberately entered into by the first and second defendants in order to evade the effect of the Mareva injunctions granted by Gillard J on 11 November 2005 and 16 November 2005. 

1. The application to punish the defendants for contempt has been brought by the plaintiffs.  No doubt the primary, if only, concern of the plaintiffs is to secure compliance by the defendants with the orders of Gillard J of 11 and 16 November 2005.  However, it is well recognised that proceedings of this type also involve the vindication of the public interest in ensuring compliance by litigants with orders made against them.[9]  Thus in Witham v Holloway[10] Brennan, Deane, Toohey and Gaudron JJ stated:

“Even when proceedings are taken by the individual to secure the benefit of an order or undertaking that has not been complied with, there is also a public interest aspect in the sense that the proceedings also vindicate the Court’s authority.  Moreover, the public interest in the administration of justice requires compliance with all orders and undertakings, whether or not compliance also serves individual or a private interests.”

[9]Australasian Meat Industry Employees Union & Ors v Mudginberri Station Pty Ltd (above) at 108-109; Primelife Corporation Limited by NewPark Pty Ltd & Anor [2003] VSC 106 at [32] (Nettle J).

[10](1995) 183 CLR 525 at 532-3.

1. The contempts which I have found proven are serious.  They involve significant sums of money.  They consist of repeated withdrawals from bank accounts over a period of almost eight months.  I have found that the actions of the defendants were designed to circumvent the orders of Gillard J of 11 November and 16 November 2005, and thus to frustrate the capacity of the plaintiffs to obtain payment of any monies found due to them upon the taking of accounts pursuant to the order of Gillard J made in the principal proceedings between the parties.  The actions of the two defendants were therefore a deliberate and flagrant disobedience of the orders of Gillard J, undertaken by them with the fundamental purpose of subverting the purpose and effect of those orders.  They were, on any view, a series of serious and blatant contempts of court. 

1. The first and second defendants have filed a joint submission on the question of penalty.  I was addressed on those matters by both Mr Chen and Renmin Lu (with the aid of an interpreter).  In addition Mr Timothy Best, who appeared for the third defendant, again acted amicus curiae, and made submissions on behalf of the first and second defendants.  Again it is appropriate for me to acknowledge and express gratitude to Mr Best for his invaluable assistance. 

1. A number of mitigating factors were put forward on behalf of the first and second defendants.  They have now resided in Australia for almost 18 years, and have no previous convictions.  The character references which were tendered on behalf of the first and second defendants demonstrate that, apart from the matters which are the subject of these proceedings before me, they are otherwise of good character.  They have earned the friendship, trust and respect of a broad circle of contemporaries and acquaintances who speak highly of them.  I therefore accept that they have lived blameless lives in Australia and have established for themselves a good reputation.  In addition the second defendant, Renmin Lu, does suffer from problems affecting her health.  She has a history of diabetes and hypertension.  She has also, apparently, suffered from a stroke.

1. It was also put on behalf of the first and second defendants that they are in straitened financial circumstances.  Thus it was submitted that their capacity to bear any financial penalties is particularly limited.  The first and second defendants were each cross-examined as to their financial means as of November 2005.  That cross-examination was, correctly, limited to ascertaining whether, independently of the withdrawals from the bank accounts, the defendants had assets in excess of $800,000.  I am not in a position to make any finding as to the current means of the two defendants.  The explanations given by the defendants for the withdrawals by them from various bank accounts have been unsatisfactory.  While $140,000 of the $190,000, withdrawn from the Bank of Queensland account, might have been placed in the hands of a friend, I am satisfied beyond reasonable doubt that those funds belonged to the first and second defendants, and I made that finding in my previous reasons.  Similarly, the amounts totalling $51,000, successively withdrawn from the HSBC account, have also been paid to a “friend”.  On the admission of Renmin Lu, at least part of those funds are funds held by that “friend” for the defendants.  Indeed I am satisfied beyond reasonable doubt that all of those funds are and were so held.  Those two transactions to which I have just referred evidence a pattern of behaviour of the defendants which consists of placing funds, owned by them, in the hands of others, in order to put them beyond the reach of the orders of Gillard J and thus beyond the reach of the plaintiffs.  I am thus satisfied that the defendants do have funds available to them, at least constituted by the two amounts to which I have just referred.  Apart from that I am unable to make any other positive findings, but I am certainly not satisfied that they are so impoverished that they will be unable to pay the financial penalties which I shall impose upon them. 

1. It was also put on behalf of the first defendant that he is an interpreter by occupation, and that any conviction would adversely affect his ability to perform his occupation.  No evidence was put before me to that effect.  However and in any event the contempts which I have found proven against the first defendant are of such gravity that that circumstance is insufficient to dissuade me from entering convictions against the first defendant for the contempts found proven.  The first defendant has also produced a notice for jury service, and he is concerned that he will not be permitted to serve on a jury should I convict him for contempt.  The first defendant’s desire to serve on a jury is laudable.  However again that consideration is insufficient to outweigh the gravity of the matters which I found against him, and to persuade me not to enter a conviction against him. 

1. As I have stated the contempts which I have found proven against each of the first two defendants are serious.  The amounts involved in the contempts found proven against the first defendant total approximately $575,000.  However there is an element of duplication in that figure.  The amount of $190,000, originally withdrawn from the Citibank account, is the subject of two charges, the second arising from the subsequent withdrawal of that sum from the Bank of Queensland account.  The matter of $52,976 originally withdrawn from the Macquarie Equities account is the subject of three charges.  One concerns the withdrawal from Macquarie Equities.  The second concerns the withdrawal of that sum from the Bank of Bendigo account, and the third concerns the withdrawal of a number of amounts totalling $51,000 from the HSBC account.  Taking those duplications into account, the total amount of the withdrawals, found to be contempts against the first defendant, total approximately $285,000.  Similarly the total of the amounts involved in each of the contempts found against the second defendant amounts to $522,000.  However, allowing for duplication in respect of the second defendant, the sum involved is approximately $280,000.  The contempts were not simply a “one off” event.  Rather, in respect of each of the two defendants, they involved a series of transactions over a period of time.  They were premeditated and, as I have found, a deliberate endeavour by the defendants to evade the orders of this Court.  In the true sense of the word, the contempts found proven against the two defendants were contumacious. 

1. The various contempts, particularised in the further further amended summons which I have found proven against each of the defendants, are each separate acts of contempt of court by the two defendants.  In determining the amount of penalty which I am to impose in respect of those contempts, I am required to deal with each of them separately, and not on a global basis.[11]

   [11]Rich v Attorney-General (Victoria) [1999] VSCA 14 at [45] (Winneke P); 103 A Crim R 261 at 281; Law Institute of Victoria Limited v Nagle [2005] VSC 47 at [30] (Gillard J).

1. Nonetheless in determining the amount of any penalty to be imposed in respect of each contempt, it is necessary for me to tailor the penalty to ensure that the sum of the penalties imposed do not, in their totality, exceed what is appropriate and proportionate to the contempts committed by each of the two defendants, and also to ensure that they are not crushing.  It is also appropriate to modify the penalties to take into account that the contempts were part of a pattern of conduct, rather than a series of discrete and entirely independent acts of wrongdoing.  In addition, as was properly acknowledged by Mr Simon, while I have found the contempts proven against each of the two defendants, with only a few exceptions, the same contempts are proven against each of them.  Notwithstanding the evidence of the defendants in the earlier proceedings before me, I am satisfied that, for all intents and purposes, they treated their accounts as joint accounts, regardless of the name in which the accounts were held.  Thus, as a matter of mitigation, I bear in mind that the penalties, whether imposed on the first defendant or the second defendant, are to be paid from the one joint source.  I shall therefore modify the penalties which I would otherwise have imposed, to take into account that, while each of the defendants were responsible for a particular contempt, nonetheless it is the same contempt involved, and the same fund will be used to pay for the penalties imposed.  Finally, in determining the amount of penalty to be imposed, I also take into account that the order for costs which I propose to make against the first and second defendants will result in a payment of approximately $50,000.[12]

   [12]Compare Pico Holdings Inc v Voss [2002] VSC 319 at [83].

1. Apart from the contempts of court involved in the withdrawal of funds from bank accounts, I have also found that the first and second defendants each failed to comply with paragraph 9 of the order of Gillard J of 16 November 2005, which required them to file and serve an affidavit as to their assets.  Mr Best submitted that the contempt was not a particularly serious one, and was not the focus of much attention during the previous proceeding before me.  However, while it is true that that aspect of the case was not the central focus of the proceeding before me, nonetheless the breach of the order by the two defendants was not inconsequential.  The order, requiring the defendants to file and serve affidavits as to their assets, was an important part of the Mareva injunctions granted against the defendants.  Its purpose was to enable the plaintiffs to know whether the defendants were duly complying with the terms of the Mareva injunctions.  In the present case the defendants were able to move funds from one bank account to another and thus evade the injunctions granted by Gillard J.  Their failure to file and serve an affidavit as to their assets assisted them to achieve that objective.  In those circumstances the contempt, comprising the breach of paragraph 11 of the order of Gillard J of 16 November 2005, is a contempt of some consequence. 

Penalties

1. Bearing in mind the foregoing considerations, I therefore impose the following penalties in respect of the contempts which I found proven.  I shall do so by reference to the paragraphs of the Further Further Amended Summons dated 8 February 2006 (“the summons”). 

Penalties imposed on first defendant

Summons paragraph 3(a) (failing to file affidavit of assets)

I impose a fine of $1,000.

Summons paragraphs 3(b), (d) and (e) (withdrawals from Citibank accounts on 14 November 2005 of $2,500, $1,500, and $2,000)

For each of these contempts I impose a fine of $250.

(Making a total, for the three contempts, of $750).

Summons paragraph 3(c) (withdrawal of $190,006.50 from Citibank account on 15 November 2005)

The amount involved in this contempt was large.  I take into account that the initial steps to effect the withdrawal were taken before Gillard J pronounced his order on 11 November 2005.  However, for reasons I have already set out in my previous judgments, the defendants took further steps on 14 November to effect the withdrawal.  Those steps were a clear breach of the orders of Gillard J of 11 November 2005 which were pronounced while the first and second defendants were in court.  In those circumstances I impose a fine of $7,500. 

Summons paragraph 3(f) (withdrawal of $8,377.29 from National Australia Bank account on 14 November 2005)

I impose a fine of $1500

Summons paragraph 3(h) (withdrawal of $53,000 from Bendigo Bank account on 22 June 2006)

I regard this contempt as a clear and flagrant contempt of court.  An amount of $52,976.77 was withdrawn by the first defendant from his account at the Macquarie Bank on 21 June and deposited into the Bendigo Bank on that day.  The withdrawal of $53,000 from the Bendigo Bank on 22 June 2006 was a blatant attempt to evade the orders of Gillard J.  I therefore impose a fine of $5,000. 

Summons paragraph 3(i) (withdrawal of $5,200 from Bendigo Bank account on 22 June 2006)

I impose a fine of $500.

Summons paragraph 3(k) (withdrawal of $1,000 from HSBC account on 9 January 2006)

I impose a fine of $100.

Summons paragraphs 3(l), (m), (n), (o), (r), (t), (u), (v), (w), (x), (y) (withdrawals of $5,000 each from HSBC account between 17 February and 21 February 2006 and between 27 June and 7 July 2006)

I impose a fine of $500 for each of these contempts.  (There are 11 contempts, thus making a total fine of $5,500).

Summons paragraph 3(z) (withdrawal of $15,000 from HSBC account on 10 July 2006)

I impose a fine of $2,500 for this contempt.

Summons paragraph 3(dd) (withdrawal of $4,032.72 from HSBC account on 24 August 2006)

I impose a fine of $1,000 for this contempt.

Summons paragraph 3(gg) (withdrawal of $52,976.77 from Macquarie Equities account on 21 June 2006)

Although this contempt is a serious contempt, it was part and parcel of the transaction involved in the subsequent deposit of the same funds into the Bendigo Bank, and the withdrawal of those monies from that bank, which is the contempt found proven in paragraph 3(h) of the summons.  In order to avoid duplication of penalty I shall impose a fine of $1,000 only for this contempt. 

Summons paragraph 3(jj) (withdrawal of $190,163.24 from the Bank of Queensland account on 5 December 2005)

This contempt is a serious contempt.  However, it is closely connected with the earlier withdrawal of $190,006.50 from the Citibank account on 15 November 2005, which is the contempt in paragraph 3(c) of the summons.  To avoid duplication I impose a fine of $1,000 in respect of this contempt.

1. Thus the total of the fines, which I have imposed on the first defendant, David Chen, for each of the contempts considered above, amounts to the sum of $27,350. 

Penalties imposed on second defendant Renmin Lu

Summons paragraph 1(a) (failing to file an affidavit as to assets)

I impose a fine of $1,000.

Summons paragraph 1(b) (withdrawal of $8,377.29 from National Australia Bank on 14 November 2005)

I impose a fine of $1,500 for this contempt.

Summons paragraph 1(c) (withdrawal of $132.56 from National Australia Bank on 14 November 2005).  I convict the second defendant for this contempt.  However in view of the amount involved I shall not impose any penalty. 

Summons paragraph 1(d), (f) and (g) (withdrawals from Citibank account on 14 November 2005 of $2,000, $1,500 and $2,000).

I impose a fine of $250 for each of these three contempts (making a total of $750). 

Summons paragraph 1(e) (withdrawal of $190,006.50 from Citibank account on 15 November 2005). 

For the reasons given in relation to paragraph 3(c) of the summons (in respect of David Chen) I impose a fine of $7,500 for this contempt.

Summons paragraph 2(g) (withdrawal of $53,000 from Bendigo Bank on 22 June 2006).

For the reasons which I have given in relation to paragraph 3(h) of the summons (in respect of the first defendant David Chen) I impose a fine of $5,000. 

Summons paragraph 2(i) (withdrawal of $1,000 from HSBC account on 9 January 2006). 

I impose a fine of $100 for this contempt.

Summons paragraph 2(j), (k), (l), (m), (p), (r), (s), (t), (u), (v) and (w) (withdrawals of $5000 each from HSBC account between 17 and 21 February 2006 and between 27 June and 7 July 2006).

For each of these contempts I impose a fine of $500.  (Making a total fine of $5,500 for the 11 contempts). 

Summons paragraph 2(x) (withdrawal of $15,000 from HSBC account on 10 July 2006).

I impose a fine of $2,500 for this contempt.

Summons paragraph 2(aa) (withdrawal of $4,032.72 from HSBC account on 24 August 2006).

I impose a fine of $1,000 for this contempt.

Summons paragraph 2(bb) (withdrawal of $190,163.24 from Bank of Queensland on 5 December 2005).

For the reasons which I have already given, I regard this contempt as a particularly serious contempt.  On the other hand, however, it involves the same funds as are the subject of the contempt which I have found proven as alleged in paragraph 1(e) of the summons (involving the withdrawal of $190,006.50 from the Citibank account on 15 November 2005. 

In order to avoid a duplication of penalty I therefore impose a fine of $1,000 for this contempt.

1. Accordingly, the total fines imposed for each of the above contempts in respect of the second defendant, Renmin Lu, amount to the sum of $25,850. 

Rule 75.11(3)

1. Mr Simon submitted that, in addition to imposing financial penalties on the first and second defendants, I should also exercise the power under Rule 75.11(3) of the Rules of the Supreme Court to commit the defendants to prison until the fines imposed by me are paid.  That rule provides:

“(3)When the Court imposes a fine, it may commit, or further commit, the respondent to prison until the fine is paid.”

1. I raised with Mr Simon the question whether Rule 66.10 precludes the Court from exercising the power given to it under Rule 75.11(3), where the orders which are sought to be enforced have not been served with the endorsements specified in Rule 66.10(3).  As I have already stated, the plaintiffs have correctly acknowledged that, in this case, Rule 66.10 operates to preclude me from punishing the defendants by committing them to prison for the contempts found proven against them.  Mr Simon sought to avoid that conclusion by submitting to me that the power under Rule 75.11(3) is directed, not to punishing a respondent for a contempt of court, but, rather, to securing the payment of a fine which is imposed on a respondent for contempt of court.  Thus, Mr Simon submitted that the power provided under Rule 75.11(3) is not a power of imprisonment for contempt, but rather, a separate and distinct power to commit a respondent to prison for non‑payment of a fine imposed for a contempt or court.

1. I do not consider that that submission should be accepted.  Rule 75.11(3), on its terms, empowers the Court to commit a respondent to prison for contempt until a fine is paid.  Where an order is made pursuant to that rule, the order provides for the issue of a warrant for the committal of a respondent to imprisonment until the respondent pays the fine imposed by the Court.  Thus, the Court, under Rule 75.11(3), makes an order for the committal of a respondent to prison.  Rule 66.10(1) provides that a judgment shall not be enforced “by committal” unless (inter alia) a copy of the judgment is served containing the requisite endorsements.  It is common ground that no such order was served in this case, and that Rule 66.10 precludes me from making an order committing the first and seconds defendants to prison.  It follows, then, that the failure of the plaintiffs to comply with Rule 66.10 in this case precludes me from making an order under Rule 75.11(3) committing the defendants to prison until the fines imposed by me are paid. 

1. It may well be correct to characterise the power given to a court under Rule 75.11(3) as a power which is ancillary to the imposition of fines by a court for contempt of court, and as a power which is designed to ensure due payment of those fines.  Indeed, ordinarily, where the power to commit a respondent to prison under Rule 75.11(3) is invoked, an order is made that the warrant for committal of the respondent lie in the office of the Prothonotary unexecuted for a specific period in order to give the respondent the opportunity to pay the fine within that period.  Nonetheless, the point remains that the power under Rule 75.11(3) is a power to commit a respondent to prison.  Contrary to the submission by the plaintiffs, it is not a power “separate and distinct” to the power of the Court, under Rule 75.11(1) to commit a respondent to prison.  Rather, Rule 75.11(3) provides for a variant of the exercise of that power, namely, a power to commit a respondent to prison for contempt unless and until a fine imposed, for a contempt of court, is paid.  That power is clearly a power to punish a respondent for contempt of court, notwithstanding that its primary purpose may well be to ensure the payment of fines imposed for contempt of court.  If a respondent fails to pay fines imposed for contempt of court, any imprisonment imposed under Rule 75.11(3) would be a punishment for the contempt of court, not a punishment for the failure to pay the fines. 

1. The power under Rule 75.11(3) is a power which affects the liberty of the subject.  Such a power, and indeed the proceedings for contempt of court, are of a criminal nature.  It is well recognised that provisions relating to matters of procedure and proof in contempt proceedings are construed with “the utmost strictness”.[13]  The power under Rule 75.11(3) is a power to interfere with the liberty of the subject.  On its face Rule 66.10 applies, not only to Rule 75.11(1), but also to Rule 75.11(3).  The traditional approach of the courts to the construction of such powers lends further weight to the conclusion which I have reached, namely, that the failure of the plaintiffs to serve a duly enforced copy of the orders of Gillard J precludes me from making any order to commit the respondents to prison until the fines imposed by me are paid under Rule 75.11(3). 

   [13]Clifford v Middleton [1974] VR 737 at 739 (Kaye J); Miller and anor v Eurovox Pty Ltd and anor [2004] VSCA 211 at [32] (Vincent JA); Witham v Holloway (1995) 183 CLR 525 at 529-30 (footnote 23).

1. The result of that conclusion may well be quite unsatisfactory.  Nonetheless it is a consequence of the failure of the plaintiffs to serve duly endorsed orders under Rule 66.10. 

Costs

1. The plaintiffs have also sought an order for the payment to them of the costs of and incidental to these proceedings on a solicitor-client basis.  They seek those orders against all three defendants. 

1. The plaintiffs have succeeded in substantial measure against the first and second defendants.  Thus it is appropriate that I make an order in favour of the plaintiffs for their costs.  I shall deal, shortly, with the question whether those costs should be on a party-party basis or a solicitor-client basis, and the quantum of those costs.

1. As I have stated, the plaintiffs also seek an order for costs against the third defendant.  On behalf of the third defendant Mr Best resisted that application, and indeed submitted that an order for costs be made in favour of the third defendant.  He did so on two bases.  First, he relied on a “Calderbank” offer which was made on behalf of the third defendant to the plaintiffs in the course of the proceeding.  The substance of that offer was that the parties would consent to the proceeding against the third defendant being dismissed, without any orders as to costs.  However, although I shall make an order dismissing the proceeding against the third defendant, I have already found that the plaintiffs have proven the contempt alleged against the third defendant in paragraph 5(a) of the summons.  In the exercise of my discretion I adjourned the proceeding against the third defendant, in order to give the third defendant an opportunity to purge her contempt by filing and serving an affidavit as to her assets pursuant to the order of Gillard J of 16 November 2005.  The plaintiffs accept that the third defendant has now complied with that order.  The consequence is that the plaintiffs have now secured from the third defendant an affidavit of assets which the third defendant had failed to provide in compliance with paragraph 11 of the order of Gillard J of 16 November 2005.  Thus the plaintiffs have achieved a “better” result than that proposed by the third defendant in her “Calderbank” offer.  In the course of argument Mr Best acknowledged that this was so and did not press his argument for costs on that basis. 

1. Mr Best further submitted that the third defendant had succeeded against the plaintiffs in large measure.  In particular, I have found that the contempts alleged in paragraphs 5(d) to (m) of the summons have not been established and will be dismissed.  Mr Best submitted that the failure to provide the affidavit of means was not a central point of the previous proceedings before me.  In those circumstances the third defendant has substantially won the case against her and should be entitled to costs.

1. Notwithstanding the submissions made by Mr Best, as I have already noted, the plaintiffs have secured from the third defendant the affidavit of assets which she had wrongly failed to provide to them, in contravention of the order of Gillard J.  I do not agree that such a breach by the third defendant was inconsequential.  As I have already stated, the requirement to provide an affidavit as to assets is a common concomitant of a Mareva injunction, and is an important aspect to secure in compliance with it. 

1. In my view the proper conclusion is that the proceedings against the third defendant should be dismissed, and there be no order as to costs.  The third defendant has succeeded on a number of the charges made against her, but has not succeeded totally.  It is now accepted by the plaintiffs that she has made good her default, albeit only after I found that she was in contempt of court as alleged in paragraph 5(a) of the summons.  In those circumstances the appropriate order is that there be no order as to costs of the proceedings of the plaintiff against the third defendant. 

1. The question then arises whether I should make an order for costs against the first and second defendants on a party-party basis, or on a solicitor-client basis.  As a matter of practice in this State it is common, in a contempt proceeding, that a successful plaintiff is entitled to an order for costs on a solicitor-client basis.  The reason for such an order is that the proceedings are not only brought in order to secure compliance with the order which has been breached, but also to vindicate the public interest in upholding the rule of law.[14] 

   [14]McIntyre v Perkes (1988) 15 NSWLR 417 at 434-5 (Rogers AJA); Pico Holdings Inc v Voss (above) at [87] to [90].

1. There are three factors which persuade me that I should not make an order for costs on a solicitor-client basis, but that the appropriate order is that the first and second defendants pay the plaintiffs’ costs on a party-party basis.  First, the plaintiffs have not wholly succeeded in the proceeding.  Nine of the counts of contempt alleged against David Chen failed.  In addition the plaintiffs abandoned four other counts of contempt.  Thus 13 of the contempts alleged against David Chen have been dismissed.  Similarly the plaintiffs failed to satisfy me beyond reasonable doubt of nine contempts alleged against the second defendant Renmin Lu, and in addition the plaintiffs abandoned three further allegations of contempt.  Those 12 allegations of contempt have been dismissed.  Secondly, throughout the proceedings, and indeed until the last day of the hearing, it was necessary for the plaintiffs to make a number of amendments to their summons.  Some of those amendments comprised corrections of dates, amounts and other details.  Others comprised the addition of a substantial number of other contempts which had not hitherto been alleged in the amended summons.  Indeed some of the amendments involved deleting some allegations of contempt.  Some time in the proceeding was spent considering the various amended summonses for committal which were put forward on behalf of the plaintiffs during the trial.  As I have already noted, the jurisdiction to commit a respondent for contempt is one in which the courts require the utmost rigour on matters of procedure and evidence.  The third circumstance lies in the failure of the plaintiffs to serve, or to make sufficient efforts to serve, the three defendants with a duly endorsed copy of the orders of Gillard J.  That failure enlivened, at least in part, the issue as to the knowledge of the defendants of the orders pronounced by Gillard J.  It is true that the plaintiffs were unable to serve a copy of the orders of 11 November on the first and second defendants because of their absence from the jurisdiction.  Further, the plaintiffs may have had some difficulty in locating the defendants.  Nonetheless the fact remains that the plaintiffs failed to take any steps to ascertain the whereabouts of the plaintiffs, and failed to make any attempt to obtain an order for substituted service of the orders of Gillard J. 

1. In view of those considerations, I consider that I should not order costs against the first and second defendants on a solicitor-client basis, but that, rather, I should make an order on a party-party basis.  The plaintiffs’ solicitor has filed and served an affidavit setting out the quantum of those costs.  The parties have accepted that it is desirable that I should quantify the costs ordered against the defendants, rather than requiring the parties to have those costs taxed before the Taxing Master.  Ordinarily, judges are not well-equipped to assess the quantum of costs.  However, I am prepared to accede to the suggestion made by the parties, in order to avoid condemning them to yet another appearance in court. 

1. The affidavit filed by the plaintiffs’ solicitor does not make any allowance for an appearance by counsel and instructing solicitor before me on matters pertaining to penalty.  Nor does it make any allowance for an appearance before me to hear these reasons for judgment.  In calculating the party-party costs payable by the first and second defendants I shall take those costs into account, using the rates which may be derived from the affidavit of the plaintiffs’ solicitor.  Based on those calculations, I will make an order that the first and second defendants pay the plaintiffs the costs of an incidental to these proceedings, on a party-party basis, which I fix at $52,000. 

Other Matters

1. Finally, there are two other matters which I should note.  First, in the course of submissions before me, the first defendant submitted that I should not impose any penalty until the taking of accounts before the Master is complete.  He submitted that he considers that he is not indebted to the plaintiffs at all, and that the Master who is taking the accounts will make a finding to that effect.  The short answer to that proposition is that it is irrelevant whether or not the Master finds that the defendants owe the plaintiffs anything on the taking of accounts.  The fact is that the defendants have blatantly defied orders by Gillard J in the manner which I have already described.  Regardless of whether or not there are any sums found to be due and owing by them to the plaintiffs, they nonetheless are in contempt of court.  Even if the Master found that they owed nothing to the plaintiffs I would not be prepared to exercise a discretion not to proceed to convict them.  I consider that it is only appropriate that, in the circumstances, the defendants be fined in the terms that I have set out above.

1. Secondly, the second defendant made a further written submission to me, in which she drew my attention to a letter written by the plaintiffs’ solicitors to the particular person who, in cross‑examination, she identified as the recipient of $140,000 of the $190,000 withdrawn by her from the Bank of Queensland account on 5 December 2005.  The second defendant has alleged that the plaintiffs are in contempt of court.  In the course of argument, I explained to the second defendant, first, that the matters raised by her are irrelevant to the question of what penalty I should impose on her and the first defendant for their contempts of court.  Secondly, I stated to the second defendant in argument, that it is a matter for either them, or the recipient of the letter, whether they wish to take the particular matter further.  On its face the letter enclosed by “personal service” a copy of the orders of Gillard J and has advised the recipient that any transfer of the funds other than to the plaintiffs could amount to a contempt of court.  While I do not consider that there is anything about the letter which is improper or a contempt of court, that is not a matter which is relevant for me.

Orders

1. Subject to any submissions by counsel, I propose to make the following orders:

(1)The first named defendant, David Weiping Chen, is adjudged in contempt of court in respect of each of the charges in sub-paragraphs (a) to (f) (inclusive);  (h); (i); (k) to (o) (inclusive);  (r) to (z) (inclusive);  (dd);  (gg);  and (jj) of paragraph 3 of the Further Further Amended Summons filed 8 February 2007 (“the summons”).

(2)The first named defendant is fined a total of $27,350 in respect of the said contempts referred to in paragraph 1, such total comprising the following fines in respect of each of the said contempts: 

(a)summons paragraph 3(a) $1,000

(b)summons paragraph 3(b) $250

(c)summons paragraph 3(c) $7,500

(d)summons paragraph 3(d) $250

(e)summons paragraph 3(e) $250

(f)summons paragraph 3(f) $1,500

(g)summons paragraph 3(h) $5,000

(h)summons paragraph 3(i) $500

(i)summons paragraph 3(k) $100

(j)summons paragraph 3(l) $500

(k)summons paragraph 3(m) $500

(l)summons paragraph 3(n) $500

(m)summons paragraph 3(o) $500

(n)summons paragraph 3(r) $500

(o)summons paragraph 3(t) $500

(p)summons paragraph 3(u) $500

(q)summons paragraph 3(v) $500

(r)summons paragraph 3(w) $500

(s)summons paragraph 3(x) $500

(t)summons paragraph 3(y) $500

(u)summons paragraph 3(z) $2,500

(v)summons paragraph 3(dd) $1,000

(w)summons paragraph 3(gg) $1,000

(x)summons paragraph 3(jj) $1,000

(3)The charges of contempt alleged against the first named defendant in sub‑paragraphs (g), (j), (p), (q), (s), (aa) and (bb) of paragraph 3 and in sub‑paragraphs (a), (b), (c), (d), (e) and (f) of paragraph 4 of the summons are dismissed. 

(4)The second named defendant, Renmin Lu Chen, is adjudged in contempt of court in respect of each of the charges in sub-paragraphs (a) to (g) of paragraph 1, and sub-paragraphs (g); (i) to (m) (inclusive); (p); (r) to (x) (inclusive); (aa), and (bb), of paragraph 2, of the summons.

(5)The second named defendant is fined a total of $25,850 in respect of each of the contempts referred to in paragraph 3 hereof, such total comprising the following fines in respect of each of the said contempts:

(a)summons paragraph 1(a) $1,000

(b)summons paragraph 1(b) $1,500

(c)summons paragraph 1(d) $250

(d)summons paragraph 1(e) $7,500

(e)summons paragraph 1(f) $250

(f)summons paragraph 1(g) $250

(g)summons paragraph 2(g) $5,000

(h)summons paragraph 2(i) $100

(i)summons paragraph 2(j) $500

(j)summons paragraph 2(k) $500

(k)summons paragraph 2(l) $500

(l)summons paragraph 2(m) $500

(m)summons paragraph 2(p) $500

(n)summons paragraph 2(r) $500

(o)summons paragraphs 2(s) $500

(p)summons paragraph 2(t) $500

(q)summons paragraph 2(u) $500

(r)summons paragraph 2(v) $500

(s)summons paragraph 2(w) $500

(t)summons paragraph 2(x) $2,500

(u)summons paragraph 2(aa) $1,000

(v)summons paragraph 2(bb) $1,000

6.Further, the second named defendant is adjudged in contempt of court, without penalty, in respect of the charge in paragraph 1(c) of the summons.

7.The charges of contempt alleged against the second named defendant in sub-paragraphs (a), (b) (c), (d), (e), (f), (h), (n), (o), (q), (y) and (z) of paragraph 2 of the summons are dismissed.

8.The first and second defendants are ordered to pay the plaintiffs’ party party costs of the contempt proceeding, including any reserved costs, which I fix at the sum of $52,000. 

9.Each of the charges of contempt alleged against the third named defendant in paragraph 5 of the summons are dismissed.

10.There be no order as to costs between the plaintiffs and the third defendant. 

11.There be liberty to apply generally.

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