Circuit Finance Australia (recs and mgrs apptd) (in liq) v Sobbi

[2010] NSWSC 912

CITATION:	Circuit Finance Australia v Sobbi & Anor [2010] NSWSC 912 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	13 August 2010
JUDGMENT DATE :	18 August 2010
JUDGMENT OF:	Ball J
DECISION:	1. A declaration that the first defendant be found guilty of contempt of court for his breach of an undertaking given by him through his solicitor to the court on 14 April 2010, as charged in the statement of charge filed with the notice of motion dated 19 May 2010.; 2. An order that the first defendant pay a fine of $1,500; 3. The first defendant pay the plaintiff’s costs on an indemnity basis.
CATCHWORDS:	CONTEMPT - penalty - motive of contemnor - contrition - limited financial means - indemnity costs awarded - fine imposed
LEGISLATION CITED:	Crimes (Sentencing Procedure) Act 1999 (NSW) Fines Act 1996 (NSW) Supreme Court Rules 1970 (NSW)
CATEGORY:	Consequential orders
CASES CITED:	Attorney-General v Whiley (1993) 31 NSWLR 314 at 320 Australian Securities & Investments Commission v Michalik [2004] NSWSC 1259; [2004] 52 ACSR 115 McGuirk v University of New South Wales [2010] NSWSC 448 Principal Registrar of the Supreme Court of NSW v Jando (2001) 53 NSWLR 527 Registrar of the Court of Appeal v Maniam (No 2) 26 NSWLR 309
PARTIES:	Circuit Finance Australia Limited (Receivers & Managers Appointed) (In Liquidation) (Plaintiff) David Sobbi (First Defendant) Arezoo Chahili (Second Defendant)
FILE NUMBER(S):	SC 2010/66184
COUNSEL:	Mr T Morahan (Plaintiff) Mr L Robison (Plaintiff) Mr C Nowlan (First Defendant)
SOLICITORS:	Jade Lawyers (Plaintiff) In Person (First Defendant)

- 1 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BALL J

18 AUGUST 2010

2010/66184 CIRCUIT FINANCE AUSTRALIA LTD v DAVID SOBBI & ANOR

JUDGMENT

1 On 21 July 2010 I delivered a judgment in which I found that the first defendant (Mr Sobbi) was guilty of civil contempt in that he failed to comply with an undertaking given by him to the court that he would deliver to a nominated address by 5.00 pm on Friday, 14 May 2010, a motor vehicle that had been the subject of possession proceedings brought against him by the plaintiff. This judgment concerns the penalty that should be imposed on Mr Sobbi in respect of that contempt.

2 Mr Sobbi filed an affidavit in relation to the penalty hearing. In that affidavit, Mr Sobbi accepts that he is guilty of civil contempt and apologises to the court and the plaintiff for his actions.

3 The motor vehicle in question was a 2007 Chrysler 300C 13 seater limousine which Mr Sobbi used in connection with his wedding hire car business.

4 Mr Sobbi explained his conduct by saying that he just could not bring himself to let go of the vehicle, that it was unique in Australia and that it was a means by which he earned his income and on which he had spent at least $30,000 upgrading it. He said that a number of customers had booked the vehicle and he did not want to let them down and that, on returning the vehicle, he was required to refund approximately $1500 each to eighteen customers. He says that, in keeping the vehicle, he was trying to earn an income for his family.

5 Mr Sobbi was born in 1973. He is an Australian citizen and arrived in Australia in 1989, having been sponsored by his sister. He completed his HSC in 1992 and then worked at a service station and did security work. He did a TAFE course on fitting and machining and started engineering at university, but did not complete his degree. He was married in September 2000, but is now separated from his wife. He pays maintenance of $50 per week and helps his wife in her business. Mr Sobbi opened a jewellery shop in Rouse Hill in 2008, but that shop ceased to trade in August 2009. He was then sued by the shop owner and shopfitter. He continues to run his hire car business and has six motor vehicles. However, it appears that the business is not doing well. He says that he now earns approximately $250 per week and he believes that the owner of the jewellery shop has issued a bankruptcy notice against him.

6 Part 55 r 13 of the Supreme Court Rules provides that the court may punish a contempt by committal to a correctional centre or fine or both. Rule 13(3) provides that the court may make an order on terms. Part 55 r 13 confirms the court’s sentencing powers and does not exhaust them: Registrar of the Court of Appeal v Maniam (No 2) 26 NSWLR 309 at 314. Where the court is considering a custodial sentence, the Crimes (Sentencing Procedure)Act1999 applies: Principal Registrar of the Supreme Court of NSW v Jando (2001) 53 NSWLR 527. That Act provides for various alternatives to imprisonment. In addition, section 6 of the Fines Act1996 provides:

“In the exercise by a court of a discretion to fix the amount of any fine, the court is required to consider:

(a) such information regarding the means of the accused as is reasonably and practicably available to the court for consideration, and

(b) such other matters as, in the opinion of the court, are relevant to the fixing of that amount.”

A “fine” includes any monetary penalty imposed by a court for an offence. “Offence” includes a contempt of court: Principal Registrar of the Supreme Court of NSW v Jando (2001) 53 NSWLR 527; Attorney-General v Whiley (1993) 31 NSWLR 314 at 320.

7 In Australian Securities & Investments Commission v Michalik [2004] NSWSC 1259; [2004] 52 ACSR 115 at [59] Palmer J listed the following matters as relevant in sentencing for contempt of court:

“i) the seriousness of the contempt proved;
ii) whether the contemnor was aware of the consequences to himself of what he proposed to do;
iii) the actual or potential consequences of the contempt on the proceedings in which the contempt was committed;
iv) whether the contempt was committed in the context of a proceeding alleging crime or conduct seriously prejudicial to the public interest;
v) the reason or motive for the contempt;
vi) whether the contemnor has received, or sought to receive, a benefit or gain from the contempt;
vii) whether there has been any expression of genuine contrition by the contemnor;
viii) the character and antecedents of the contemnor;
ix) what punishment is required to deter the contemnor and others of like mind from similar disobedience to the orders of the Court;
x) what punishment is required to express the Court’s denunciation of the contempt.”

8 Obviously, to this list must be added the means of the contemnor if the court is considering imposing a fine. In addition, the court should bear in mind the fact that, in the normal course of events, the contemnor will be ordered to pay costs on an indemnity basis. In some cases, an order for costs may be a sufficient penalty: McGuirk v University of New South Wales [2010] NSWSC 448.

9 In my opinion, this is clearly not a case where imprisonment is appropriate. Nor is there any reason why Mr Sobbi should not be ordered to pay the plaintiff’s costs on an indemnity basis. The real question is whether he should also be ordered to pay a fine and, if so, the amount of that fine. In answering that question, there are several observations to be made about the contempt in this case.

10 First, I think the contempt must be regarded as a serious one in the sense that Mr Sobbi deliberately chose not to comply with an undertaking of the court in circumstances where it must have been clear to him that the court required him to comply with that undertaking. Mr Sobbi sought relief from White J from having to comply with the undertaking that he gave. That relief was refused and Mr Sobbi only complied with his undertaking when it was obvious to him that he faced contempt proceedings. On the other hand, the contempt cannot be regarded as a serious one from the point of view of its consequences. This is not a case where the administration of justice has been compromised by Mr Sobbi’s conduct. The nature of the right that is sought to be vindicated is a proprietary right of the plaintiff. The contempt was ultimately purged by the return of the vehicle.

11 Secondly, although in one sense it is true to say that the reason or motive for Mr Sobbi’s contempt was a financial one, I do not think that that characterisation gives the complete picture. Mr Sobbi is clearly facing financial difficulties. He hoped, perhaps irrationally, that with a bit more time he would be able to refinance the vehicle and, as a consequence, pay the amount that he owed the plaintiff and earn additional income to deal with his pressing financial needs. Mr Sobbi was not seeking to defraud anyone or gain an undeserved benefit. Rather, he was seeking to meet his financial commitments, albeit in a misguided way.

12 Thirdly, Mr Sobbi’s expressions of contrition have been mixed. At the original hearing, he filed an affidavit in which he expressed contrition. However, the paragraph in his affidavit by which he did so was really included as a matter of form. The reality is that Mr Sobbi contested the allegation of contempt against him and he did so on the same basis as he had sought to be relieved by White J from the undertaking he had given. In doing so, Mr Sobbi was not showing contrition. Rather, I think that he was demonstrating an unwillingness to accept the decision of White J. Having said that, Mr Sobbi is not a sophisticated person. It appears that he only obtained legal advice in relation the charge of contempt against him following my judgment in which I found him to be guilty of contempt. He expressed contrition in the affidavit sworn in relation to the hearing concerning penalty and I think the likelihood is that he has a better appreciation now of the seriousness of what he has done. How much of his regret springs from the circumstances in which he now finds himself and how much of it springs from a genuine concern that he failed to comply with an undertaking he gave to the court is less clear.

13 Fourthly, I am satisfied that Mr Sobbi’s financial position is very serious. Mr Sobbi did not give any evidence of his assets and liabilities. However, his income is low and what evidence there is suggests that he faces the possibility of bankruptcy. In addition, as I have said, it is necessary to bear in mind that Mr Sobbi will be liable for a substantial order for costs against him.

14 Fifthly, there is no evidence to suggest that Mr Sobbi has committed any other offence in the past. A number of references were tendered on Mr Sobbi’s behalf. Each of his referees describes Mr Sobbi as a person of good character.

15 Taking these matters into account, I think that, in addition to costs, Mr Sobbi should pay a fine of $1,500. I do not think that this is a case where an order for costs is sufficient. In my opinion, Mr Sobbi’s conduct was a deliberate breach of the undertaking that he gave to the court and the contrition he has shown has come too late and is too little to justify an order for costs alone. I also think that Mr Sobbi’s contempt was exacerbated by the fact that he applied to be relieved of his undertaking and that application was refused. In those circumstances, the need for deterrence requires something more than an order for costs in this case. On the other hand, I think that a fine of $1,500 is a significant penalty having regard to Mr Sobbi’s financial position and therefore appropriately reflects the seriousness of his offence.

16 The orders I make therefore are:

a A declaration in terms of paragraph 1 of the plaintiff’s notice of motion filed on 21 May 2010 so far as it concerns the first defendant;
b That Mr Sobbi pay a fine of $1,500;
c That Mr Sobbi pay the plaintiff’s costs on an indemnity basis.

**********

18/08/2010	-	Make correction to coversheet - Paragraph(s) Not applicable
02/09/2010	-	Make correction to coversheet - Paragraph(s) Not applicable