Commonwealth Bank of Australia v Salvato (No 4) - [2013] NSWSC 321

Supreme Court

New South Wales

Medium Neutral Citation: Commonwealth Bank of Australia v Salvato (No.4) [2013] NSWSC 321
Hearing dates: 11/03/2013, 12/03/2013
Decision date: 10 April 2013
Jurisdiction: Common Law
Before: Garling J
Decision:
(1) Mr Mimmi Salvato is guilty of a contempt of Court in that he was in breach of his undertaking given on 3 December 2012 by failing to give possession of his property to the Commonwealth Bank of Australia .
(2) The Notice of Motion filed by Mr Salvato on 11 March 2013 is dismissed.
(3) Proceedings adjourned for further directions to 9.30am on Wednesday 17 April 2013.

Catchwords: CONTEMPT OF COURT - Undertaking provided to the Court to stay the execution of the Writ of Possession - Whether undertaking was uncertain, unclear and ambiguous - The proper construction, and subsequent effect, of an undertaking - The proper construction of a charge, or order, of contempt of Court - Whether Plaintiff must prove any state of mind or specific intent to disobey order of Court.
Legislation Cited: Civil Procedure Act 2005
Supreme Court Rules 2005
Cases Cited: Anderson v Hassett [2007] NSWSC 1310
Ascot Investments Pty Ltd v Harper [1981] HCA 1; (1981) 148 CLR 337
Athens v Randwick City Council [2005] NSWCA 317; (2005) 64 NSWLR 58
Australasian Meat Industry Employees' Union v Mudginberri Station Pty Ltd [1986] HCA 46; (1986) 161 CLR 98
Australian Consolidated Press Ltd v Morgan [1965] HCA 21; (1965) 112 CLR 483
Circuit Finance Australia v Sobbi [2010] NSWSC 789
Australia Prudential Regulation Authority v Siminton (No.7) [2007] FCA 1609
Fairclough v Manchester Ship Canal Co [1897] WN 7
In re Mileage Conference Group of the Tyre Manufacturers' Conference Ltd's Agreement [1966] 1 WLR 1137
Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298
Matthews v Australian Securities Investment Commission [2009] NSWCA 155
Metcash Trading Ltd v Bunn (No.5) (2009) FCA 16
Microsoft Corporation v Marks (No.1) (1996) 69 FCR 117
Pang v Bydand Holdings Pty Ltd [2011] NSWCA 69
Spindler v Balog (1959) 76 WN (NSW) 391
Stancomb v Trowbridge Urban District Council [1910] 2 Ch 190
Steiner Products Ltd v Willy Steiner Ltd [1996] 1 WLR 986
Trade Practices Commission v C G Smith Pty Ltd (1978) 30 FLR 368
Witham v Holloway [1995] HCA 3; (1995) 183 CLR 525
Category: Principal judgment
Parties: Commonwealth Bank of Australia (P1)
CBFC Ltd (P2)
Mimmo Salvato (D1)
Victoria Salvato (D2)
Representation: Counsel:
D A McLure (P1)
B Galloway (D1)
No appearance (D2)
Solicitors:
Gadens (P1)
Hancocks (D1)
No appearance (D2)

File Number(s): 2011/143979

Judgment

Contempt Proceedings

On 8 February 2013, the first plaintiff, the Commonwealth Bank of Australia, filed a Notice of Motion in which it sought that the Court find the defendant, Mimmo Salvato, guilty of contempt for disobeying an undertaking he had given to the Court on 3 December 2012.

The orders sought in the Notice of Motion were:

"1. That the defendant be found guilty of contempt of Court in that in disobedience to the undertaking he proffered to the Court on 3 December 2012, he failed to:

(a) give possession of the property located at 1/117 Hopetoun Avenue, Vaucluse NSW 2030, (also known as 117 Hopetoun Avenue, Vaucluse NSW 2030) title folio identifier 1/SP17155 (Property) by:

(i) vacating the Property; and

(ii) handing over the keys to the first plaintiff (or as it directs) by 3.30pm on 21 December 2012.

2. Pursuant to Part 55 r 13 of the Supreme Court Rules 1970, the defendant be punished by committal to a correctional centre or fine or both.

3. Costs.

4. Further or other orders the Court deems appropriate."

The proceedings came on for hearing on 7 March 2013.

On that day, at the commencement of the proceedings, the solicitor for Mr Salvato, Mr Galloway, sought and was granted leave to file in Court a Notice of Motion which sought an order of the Court that the undertaking given by his client on 3 December 2012 be set aside from the date and time it was given.

The hearing of both Notices of Motion took place together because I determined that there were common issues of fact which ought be heard at the same time.

The hearing of both Notices of Motion occurred on 11 and 12 March 2013. Shortly before lunch on the second of those days, I reserved judgment, but granted leave for additional written submissions to be provided within a short space of time.

After the hearing had finished, and later during the day on 12 March 2013, Mrs Victoria Salvato, the wife of Mr Salvato, sought leave to be joined as a second defendant to the possession proceedings in order to obtain a stay for 28 days on her eviction from the property at Vaucluse which was the subject of the principal proceedings.

For reasons which I gave on 13 March 2013, I ordered that Mrs Salvato be joined and that a short stay for a period of 28 days be granted, subject to a number of undertakings and conditions, on the order for the eviction of Mrs Salvato.

Nothing which occurred in the course of the proceedings involving Mrs Salvato has any relevance to, or impact upon, the two motions with which this judgment deals. Other than as a witness, she did not appear, or participate, in the hearing of these two motions.

Although lawyers for both the Bank and Mr Salvato were present and, so far as the Bank was concerned, participated in the application made by Mrs Salvato, neither of the lawyers suggested that the proceedings involving Mr Salvato should be re-opened to take account of what occurred during Mrs Salvato's application. Nor, did either of the lawyers on behalf of their clients make any application with respect to the proceedings before Mrs Salvato relevant to the motions upon which I had reserved judgment. Mrs Salvato's proceedings can accordingly be put to one side.

As well, the second plaintiff, CBFC Ltd, was not concerned with, and played no part in, the hearing of the motion.

Mr Salvato's Position

Mr Salvato resists the Bank's application that he be found to be in contempt of Court. He does so on a number of bases, any one of which he submits, is adequate.

Firstly, he submits that the orders sought in his notice of motion ought be made, with the consequence that the undertaking is deemed never to have been given. Accordingly, there is no room for a finding of any breach of it.

Secondly, he submits that because the terms of the undertaking are ambiguous and vague, then a failure to comply with it, cannot ground a finding of contempt.

Thirdly, he submits that he has in fact complied with the undertaking.

Finally, he submits that, if he has not complied with the undertaking, that having regard to his entirely reasonable belief that he had done so, any failure to comply was unintentional and hence, did not amount to a contempt of Court.

Onus of Proof

Regardless of whether the Court ultimately needs to, or does, categorise these proceedings as being for civil contempt or criminal contempt, it is clear that the charge of contempt must be proved beyond reasonable doubt: Witham v Holloway [1995] HCA 3; (1995) 183 CLR 525 at 529 per Brennan, Deane, Toohey and Gaudron JJ.

In determining the facts in this case, and whether the contempt has been proved, it is necessary to always bear in mind the requirement which rests on the Bank to prove the allegation beyond reasonable doubt.

Possession Proceedings

This contempt motion is brought in proceedings commenced by the Commonwealth Bank of Australia as first plaintiff, and CBFC Limited as second plaintiff, against Mr Salvato for possession of the property at Vaucluse, a money judgment, and other relief.

It is necessary to sketch the history of the possession proceedings to provide the context in which the undertaking, the subject of the contempt proceedings, was given.

In 2006, Mr Salvato, who is the only registered proprietor of the Vaucluse property, entered into a mortgage with the Bank over the property by way of security to the Bank for two loans which he obtained from it.

Mr Salvato defaulted on his obligations to make repayments in accordance with the loan agreements, and on 3 May 2011, the Bank commenced proceedings by filing a Statement of Claim in which it sought possession of the property and judgment in a sum of a little under $1.54M.

The second plaintiff claimed delivery up of a Range Rover and judgment in a monetary sum in respect of a lease agreement relating to that Range Rover. That claim, and that part of the proceedings is no longer relevant to the possession proceedings. It, and the role of the second plaintiff, can be put to one side.

On 8 July 2011, Mr Salvato filed a defence in the possession proceedings. After initial directions with respect to the filing of evidence, the matter was listed for a final hearing on 29 February 2012.

On 15 February 2012, the hearing date was vacated on the application of Mr Salvato, who was given further time within which to file evidence. As well, the parties were ordered to attend a mediation which was to be completed by 15 March 2012.

On 6 March 2012, the proceedings were listed for a final hearing on 14 June 2012. On 22 March 2012, with the agreement of both parties, the hearing date of 14 June 2012 was vacated, because some measure of agreement had been reached between the parties.

On 12 July 2012, the plaintiff was granted leave to file a consent judgment which gave the Bank judgment against Mr Salvato for $1,634,430.79 together with interest, pursuant to s 101 of the Civil Procedure Act 2005. Mr Salvato applied by motion to have enforcement of that judgment stayed. On 27 July 2012, that motion was dismissed by the Court.

On 24 August 2012, Beech-Jones J made orders entering judgment for the Bank for possession of the Vaucluse property. He granted leave to the Bank to issue a writ of possession for the property.

On 31 August 2012, the Bank applied for the issue of a writ of possession for the Vaucluse property. As a consequence of the issue of a writ, the Office of the Sheriff scheduled an eviction to take place on 16 October 2012.

On 15 October 2012, application was made to Beech-Jones J to stay the order for possession and the writ of possession which he had made on 24 August 2012.

For the reasons which he then delivered, Beech-Jones J stayed the eviction, making the following orders:

"On the defendant's undertaking to the Court:

(a) not to vary the Contract for Sale dated 12 October 2012 without the consent of the Commonwealth Bank of Australia; and

(b) not to direct the agent to release the deposit without the consent of the Commonwealth Bank of Australia:

(i) stay the order for possession and writ of possession of the [Vaucluse property] up to and including 5pm on 3 December 2012;

(ii) grant liberty to the parties to apply on one day's notice;

(iii) order that the defendant pay the plaintiff's costs of the notice of motion."

The basis upon which that order was made was the existence of a contract for the sale of the property by Mr Salvato to Mr Bartholomew Elias. This contract was due to settle on or before 3 December 2012. Mr Salvato was obliged, by the terms of the contract, to give vacant possession of the property to Mr Elias upon settlement.

On the application of the Bank, the Office of the Sheriff scheduled a further eviction to take place on 4 December 2012. On 3 December 2012, Mr Salvato made application to the Court for a stay on the order granting possession and a stay on the execution of the Writ of Possession.

It will be necessary to consider in some detail shortly, the events of 3 December 2012, but, it is sufficient to say that for the reasons given in an ex tempore judgment on that day, upon the basis of the undertaking given to the Court by Mr Salvato, a further stay on the execution of the writ of possession was ordered until 21 December 2012, at 3.30pm.

The contempt proceedings arise out of an allegation that Mr Salvato did not comply with the undertaking which he gave to the Court on 3 December 2012, upon the basis of which he secured the stay on the execution of the writ of possession.

3 December 2012

Counsel for Mr Salvato approached me as Duty Judge on the afternoon of Monday 3 December 2012, seeking urgent relief to stay the eviction which was to take place on the following day. The basis put in support of that urgent application for a stay was, in short, that it had been anticipated that the contract for sale of the property to Mr Elias would have settled, but it had not done so. A notice to complete had been served by Mr Salvato's solicitor, and it was the confident expectation of Mr Salvato, according to his counsel, that by a time before, but certainly not after, 21 December 2012, the sale transaction would have been completed, the Bank repaid, Mr Salvato and his family would have given vacant possession of the property to the purchaser and the need for the Court orders would have been at an end.

Some further details of the proceedings of 3 December 2012, however, are necessary.

Counsel for Mr Salvato appeared, sought and was granted leave to file in Court, a Notice of Motion which sought a stay upon the Writ of Possession which was due to be exercised at 10.30am on 4 December 2012. In support of that motion, counsel read an affidavit of Mr Salvato dated 3 December 2012. As well, counsel read the affidavit of Mr Salvato of 15 October 2012. There was no cross-examination of the defendant by the Bank which appeared in Court in response to the motion.

In the course of submissions, counsel for Mr Salvato was asked what the reasons were for the Court to grant a further stay of execution. He said:

"The general grounds I seek [to rely upon] are these:

[1] There is no prejudice;

[2] that the settlement is imminent;

[3] that the contract remains on foot;

[4] that in the general discretion of the Court, the bank should have comfort in the circumstances that a settlement will proceed, perhaps on 12 December, but at least by 21 December whereupon the bank can be paid out in full and there will be a balance due to my client.

To lose possession for that week, or perhaps two weeks, will incur significant disruption to my client, and his family over that period. We do not know whether or not the purchaser would seek some sort of access to the premises between now and then for the purposes of making some enquiries."

Counsel went on to express a concern that if the purchaser discovered that his client was no longer in possession of the premises, that it may

"... cause the purchaser to look at this as an opportunity to terminate, rescind or otherwise just to abandon the contract on the basis that if the bank was to take possession, exercise its powers of sale, he would be in the box seat to come back and make an offer to the bank which may be less than the contract price as we have at the present time, but which would be within the bank's right to accept, causing my client loss".

After counsel had completed his submissions, the solicitor for the Bank was called upon to put submissions in support of the Bank's opposition to the grant of a stay.

She addressed a concern, expressed by Mr Salvato's counsel, as to whether the Bank would commence to immediately market the property once it took possession, and then said:

"So, on that basis we would submit there is no reason why the eviction should not take place tomorrow, it will not prejudice the defendant in any way. He has been given ample notice to remove his possessions from the property and move his family out of the property since September and it's surprising to the bank that no steps have actually been taken to move out of the property."

In reply to the submissions of the solicitor for the Bank, counsel for Mr Salvato had the following exchange with the Court:

"Loxton: It may be that my client gets to stay in the property over this Christmas, but he'll still have to be moving out by 8 January if he is not settled by that time.

His Honour: I note that you don't proffer an undertaking from your client, as an example, that if the contract does not complete by no later than 4pm on 21 December 2012, he will deliver up possession, including the keys to the property and all implements of access to the property to the Bank's solicitors at 9am Monday 24 December."

I then indicated to the parties that I would be taking a short adjournment. Before doing so, I said to counsel for Mr Salvato this:

"But I should tell you, so far as I presently see the matter, your client has not advanced any good reason for me to grant a stay of the order. At the least, your client has not addressed any question of undertaking such obligations as he has with respect to the conveyance in an enforceable way, that is to say, he doesn't proffer any undertaking to the Court which is capable of being dealt with by way of contempt if he does not comply with it, nor does he offer any undertaking with respect to possession."

A short adjournment then ensued.

As the oral submissions of counsel for Mr Salvato, and the Bank's solicitor recorded in [39] and [42] demonstrate, both parties were treating the position of Mr Salvato, and that of his family, as being identical. There was no suggestion in the course of the submissions and argument that the giving of vacant possession by Mr Salvato did not include Mrs Salvato or their children.

Upon resumption of the hearing, counsel for Mr Salvato announced to the Court that he had instructions from his client "who gives two undertakings". Counsel then read out the written undertakings which his client had signed.

The undertaking, in written form, which his client signed was in the following terms:

"I, Mimmo Salvato, undertake to the Court that:

1. I will do all things necessary on my part to be done to complete the contract of sale dated [12] October 2012 for the sale of the property at 1/117 Hopetoun Ave, Vaucluse to Mr B Elias.

2. If the contract does not settle on 21 December 2012 at 3pm, I will then give possession of the property by vacating it and handing over the keys to the plaintiff or as it directs by 3.30pm on 21 December 2012"

Without objection from the parties, I then inserted the number 12 by way of a date into the first paragraph of the document. Having received the offer of that undertaking, the solicitor for the Bank was invited to raise any further submissions she wished.

The following exchange then occurred:

"Colantonio: Your Honour, it's our position that there is nothing to compel compliance with that undertaking and we would hope the defendant understands his obligations to --

His Honour: When you say there's nothing 'compel his compliance', what about being in contempt of court for which he could be sent to jail?

Colantonio: We hope he understands those repercussions if he doesn't comply.

Loxton: Your Honour, can I say that has been put to him.

His Honour: Mr Loxton, your client should know that the Court takes undertakings given to it by individuals extremely seriously and that breaches of those undertakings ordinarily are regarded as constituting a contempt of Court and one of the penalties available for contempt of Court is imprisonment. I don't suggest it's the only one but it is one.

Loxton: I have indicated that to him and he's in Court and has heard what you've said.

Hi Honour: In light of that, Ms Colantonio, what else do you wish to say.

Colantonio: There is nothing further, apart from the fact that the defendant has failed to comply on a number of occasions with promises made to the Bank. But we were hopeful on this occasion this will solve the issue if your Honour is min[d]ed to accept the undertaking. I have nothing further."

Immediately upon the conclusion of that exchange, an ex tempore judgment was delivered. In that judgment I said:

"6. It is fair to say that that history, which commences with an agreement, entered into on 15 March 2012, by which the Bank agreed to extend further time to Mr Salvato to refinance his debt by 26 June 2012, has been characterised by delay, broken promises, last minute applications for relief and generally an attitude of dilatoriness on the part of Mr Salvato to his lawful obligations. His counsel did not seek to justify or explain in any substantial way that unacceptable and lengthy history."

I went on to say:

"8. The Bank points to the fact that if the eviction scheduled for 10.30am tomorrow is delayed then, having regard to the time of the year and the fact that the Sheriff's office will be closed for the purpose of undertaking any evictions or issuing Notices to Vacate between 14 December 2012 and 7 January 2013, the practical effect of making any order is that the Bank would not be able to obtain possession until late January 2013 or perhaps early February 2013. Having regard to the history of the matter, this is a weighty issue."

I then recorded the fact that Mr Salvato had proffered a number of undertakings to the Court to which I referred specifically, and I then concluded in the following way:

"11. In light of those undertakings which are given to the Court, the seriousness of which cannot be overlooked, it seems to me that the balance of convenience and the interests of justice fall in favour [of] the making of the orders set out in the notice of motion."

Accordingly, the following orders were made:

"1. I order that the court's order made on 15/10/12 for the execution of the writ of possession be further stayed until 21/12/12 at 3.30pm.

2. I otherwise dismiss the motion.

3. I order that Mr Salvato pay today's costs."

Events after 3 December 2012

On a number of occasions after 3 December 2012, when the Court delivered judgment, and prior to 21 December 2012, when completion of the contract was due, the solicitors for the Bank corresponded with the then solicitor for Mr Salvato, Mr Robert Shacklady.

The correspondence made clear that the Bank expected strict compliance by Mr Salvato with his undertakings, and that the Bank was not prepared to tolerate any further delay in obtaining possession of the property.

The course of that correspondence is relevant to the present charges. On 11 December 2012, the solicitors for the Bank wrote to the solicitor for Mr Salvato reminding him about the settlement due on 21 December 2012, and his client's obligations. They said:

"There will be serious consequences for your client should he breach his undertaking provided to the Court on 3 December 2012. If your client breaches his undertaking we put you on notice that we are instructed to make an immediate application that your client be held in contempt of Court. Should your client be charged with contempt, he may face imprisonment.

In this regard we urge you to remind your client of the necessity of strict compliance with his undertaking to the Court".

Following that letter there was then in the period from about 13 December 2012 onwards, an exchange of telephone conversations and emails sometimes attaching letters, about the correct payout figure for the mortgage upon settlement.

On 18 December 2012, Mr Shacklady wrote querying a difference of a little over $27,000 between the balance shown in a current bank account statement, and the payout figure indicated by the solicitors for the Bank as the figure necessary to be paid on discharge.

By letter dated 18 December 2012, from the solicitors for the Bank to Mr Shacklady, the solicitors set out at length the transactions which went to making up the payout figure. They also pointed out that an earlier discount of $20,000 which had been allowed if settlement took place in August 2012, was not being allowed on this settlement. The need for any final adjustments in the payout figure was referred to.

After that exchange, at about 3.45pm on Wednesday 19 December 2012, Mr Shacklady informed the solicitors for the Bank of the appointment for "settlement at 2.30 at your office on Friday 21 December 2012". This appointment was confirmed in a further email at 5.34 on that day from Mr Shacklady to the solicitors for the Bank.

It might reasonably have been thought that in light of this sequence of correspondence, that Mr Shacklady and his client accepted the explanation which the Bank's solicitors had provided. Alternatively, it might reasonably have been thought that they were content to proceed to settlement paying what the Bank said was owing, but doing so under protest, and reserving their rights to contest the amount in due course.

At about 11am on the following day, 20 December 2012, the solicitors for the Bank sent to Mr Shacklady a letter setting out the Bank's requirements for settlement:

"We have been instructed to schedule a settlement for Friday 21 December 2012 at 2.30pm at our offices. ...

An indicative payout figure for Friday is $1,757,859.10.

Kindly note our client requires the following bank cheques to be drawn for settlement:

1. Commonwealth Bank of Australia in the sum of $1,750,563.25.

2. Gadens Lawyers in the sum of $7,295.85."

The figure specified in this letter of 20 December 2012, was $220 more than the figure indicated by letter of 18 December 2012. Having regard to the total sum which was required to be paid, this was an insignificant difference, and well within the ordinary range of adjustments made once a specified date and time is fixed for settlement.

At 12.30pm that day, Mr Shacklady queried the payout figure provided, asserting that according to the transaction sheets which had earlier been provided, the figure for payout of the two loans totalled $1,728,107.15. The difference between the two figures being a little under $30,000.

At 7.04pm that evening, a lengthy reply was sent by the solicitors for the Bank to Mr Shacklady. The letter pointed out that the figures used for comparison by Mr Shacklady were balances of bank accounts and not payout figures. The solicitors for the Bank pointed out that, for example, the figures used by Mr Shacklady did not include interest charged to each account which had not been recorded on the transaction sheets provided. In addition, the letter noted that there were enforcement expenses and solicitor's costs which had not been included on those transaction sheets, but which were included in the indicative payout figure.

The letter continued:

"Our client has carefully considered the costs that it is entitled to recover under the terms of its mortgage, and is not seeking to recover all of its legal costs in connection with the matter. For the time being, our client is prepared to proceed to settlement on this basis. However, our client reserves its rights to reconsider its position."

On Friday 21 December 2012, an exchange of emails occurred about the settlement which was due to take place later that day. In an email sent at about 10.20am on that day, Mr Shacklady asserted that the delay in the Bank providing the explanation for the differences in the figures:

"... has caused the settlement to be uncertain for today and was totally unnecessary, particularly knowing the seriousness of the current settlement."

He sought particulars of the enforcement and legal expenses.

By email of 12.30pm, the solicitors for the Bank responded giving a further explanation about the figures, and concluding its email in the following terms:

"We confirm that should settlement not proceed as scheduled today, our client expects your client to comply with his undertaking provided to the Court on 3 December 2012, to give possession of the property to our client at 3.30pm today."

Further details of the legal costs incurred were provided by the solicitors for the Bank to Mr Shacklady by the provision of copies of accounts which they had sent to the Bank, and which the Bank had paid. Those accounts totalled a little under $80,000, although the Bank was claiming significantly less than this amount from Mr Salvato.

At 1.17pm Mr Shacklady sent the following email to the solicitors for the Bank:

"Hi Emma

Our client has referred us to the bank statements which show payments deducted from his account as follows:

$14,109.64 - 30 January 2012

$ 533.00 - 9 February 2012

$ 3,678.21 - 9 March, 2012

These amounts have not been taken into consideration in calculating payout figures. It appears to be a case of double deductions.

This is the very reason we have been pressing for over a week to set settlement figures from your client.

Our client also disputes the right of your client to deduct legal fees from his account or add to his debt with the bank without his express written authority. Please inform us the authority which permits.

It seems that no matter [how] our clients attempt to settle this matter your clients actions have made it impossible and may have jeopardised the settlement.

Further such action has put our client in a position where he may be forced into unintentionally not being able to keep to his undertakings previously given to the Court. Kindly explain how after all our efforts you have allowed this situation to arise, and how it may be now resolved.

Settlement cannot take place today, but wil occur after Xmas.

We await your response to the above circumstances, none of which are of our clients making.

Thanks.

Robert Shacklady"

In a prompt response to that email sent shortly afterwards, the solicitors for the Bank pointed out that the sum being sought for legal costs was only about half of the real expenditure of the Bank, details of which had been earlier provided.

As well, the letter said:

"It is a term of the mortgage that our client may from time to time debit and charge any account of your client with all costs, charges, expenses, legal or otherwise (including solicitor costs) which our client shall pay, incur or sustain or be put to in connection with any of your client's accounts or the mortgage.

Our client maintains its position that it has done nothing to delay settlement and rejects your assertion that our client has made it impossible for your client to settle or has jeopardised the settlement in any way.

In these circumstances, we urge your client to reconsider his position and proceed to settlement.

If your client is unable to settle the sale, he must vacate the property by 3.30pm today. Failing which he will be in contempt of Court.

Please let us know by 3.30pm today whether your client has vacated the property."

It seems that no response was received to that letter. Settlement did not proceed.

At 4.32pm the solicitors for the Bank sent a letter to Mr Shacklady noting a breach of the undertaking and calling upon his client to comply with his undertaking.

This was responded to at about 5.15pm with the following email:

"We note the contents of your email.

Delay in settlement is caused by the Bank.

Had you provided the correct information in the timeframe we requested, settlement would have occurred.

We hold your client fully responsible for the delay and any loss caused to him.

It is clear from the simple bank statements that you have not done your accounting in a correct manner, thus causing confusion and delay.

Kindly explain how he may resolve the undertaking issue bearing in mind the situation was out of our client's control and despite our best efforts, your client has seemed intent on causing this problem.

We await your response."

At 6.04pm Mr Shacklady sent a further email to the solicitors for the Bank. It said:

"Hi Emma,

I forgot to mention the office will be closed until lunchtime on 15 January 2013 as I will be overseas.

Merry Xmas to you ...."

On 24 December 2012, solicitors for the Bank wrote to Mr Shacklady rejecting his assertions that the Bank had delayed settlement or that Mr Salvato's failure to comply with his undertaking was out of his control. The letter called for an explanation for Mr Salvato's breach of his undertaking, and enclosed a draft copy of a notice of motion which the solicitors anticipated receiving instructions to file. The draft motion enclosed was identical to that which was ultimately filed.

Thereafter, in January and February there were attempts made to schedule further settlement of the property, but none of these attempts were successful.

Uncontroversial Facts

The exchange of correspondence and the affidavit evidence before the Court, satisfies me that the following facts are either uncontroversial or else plainly established with respect to Mr Salvato's occupation of the property after his undertaking was given on 3 December 2012:

(a) Mr Salvato himself seems to have left the property on or about 4 December 2012, and well prior to 21 December 2012;

(b) Mr Salvato's wife, Victoria Jane Salvato, and their two children have remained living in the property prior to the giving of the undertaking until the present time. All furniture and household goods of the family remain in the house as do the clothing and personal effects of Mrs Salvato and the children;

(d) Mr Salvato continues and, since early December 2012 when he left the premises has continued, to access the property freely and without restriction by using a spare key, the whereabouts of which he knows;

(e) Mr Salvato spends such time on the property as he chooses, including looking after his children, watching television, sleeping there for periods of time of up to four or five hours, helping himself to food from the refrigerator and, in all respects, treating the property as his home, except for the fact that he does not sleep there on a regular overnight basis;

(f) Mr Salvato has no other fixed place of abode. It appears he sleeps one night or so per week at his workplace in Kings Cross, and apparently on other nights he either rents a hotel room or sleeps, as a guest, at houses owned by his friends.

It is also clear that at no time did Mr Salvato ever tell his wife of the proceedings which had been brought by the Bank against him seeking possession of the property by reason of a default on his borrowings, and the existence of the mortgage security.

He did not tell her, and she had no knowledge, at any time until very recently of the fact that he had entered into a contract for the sale of the property to Mr Elias, nor that he had instructed solicitors to require Mr Elias to complete the contract by no later than 21 December 2012, which required Mr Salvato and his family to give vacant possession of the property to the purchaser by that date.

He had never told his wife that the Bank had obtained judgment for possession of the house, and that he had obtained a stay on the Writ of Execution being carried out on a number of occasions. He did not tell her that eviction of all those living on the property had been scheduled by the Office of the Sheriff, on more than one occasion.

He did not tell his wife that he had given the undertaking which he gave to the Court on 3 December 2012.

It is clear that at no time after the giving of the undertaking on 3 December 2012, and prior to the hearing of these proceedings for contempt, had Mr Salvato or his wife, made any arrangements for the removal of their household furniture and belongings, nor for any alternate accommodation for Mrs Salvato and the children.

Contested Issues of Fact

There were a number of contested issues of fact which need to be determined.

These are issues where, speaking generally, the evidence given by Mr Salvato did not accord with other evidence in the proceedings or else is evidence which I am asked to reject, because it is unbelievable.

Before turning to each of these relevant matters of fact, it is appropriate that I make some comments about Mr Salvato as a witness.

He was a most unconvincing witness. He gave answers which were directly inconsistent with answers he had previously given on the same topic. He forced answers on the questioner, often before the questioner had completed the question. He made speeches in which he attempted to assert his case without listening to the question and providing an answer to the question sought. He was often rambling, combative and by his demeanour, unconvincing. When asked questions, the truthful answers to which he thought would not assist him, he adopted a strategy of challenging the questioner by asking a question, and making statements which did not answer the question asked. In those circumstances, it was plain that he was avoiding directly answering the question.

He seemed to me to be simply incapable of telling the truth where he thought a truthful answer would not suit his case. I have concluded that I do not accept his evidence unless it is independently corroborated, or else is contrary to his interests.

The first factual matter which needs to be determined arises because Mr Salvato asserted in his evidence that he and his wife had come to an agreement by which they had divided their matrimonial property, with him giving the whole of the house and its contents to his wife, and she relinquishing any interest in any of his businesses. The existence of the agreement was claimed by Mr Salvato to be an impediment upon his complying with the undertaking, and hence, the agreement was said to excuse any non-compliance.

When giving evidence about the agreement, he said:

"Q. What about furniture?

A. Does it belong to me?

Q. Yes.

A. No, to my wife.

Q. Did you pay for any of it?

A. Yes, I paid for it.

Q. But you don't claim ownership?

A. No, because we came to an agreement that I take the clubs and she takes the house. I wouldn't take my furniture away from my kids.

Q. When did you come to that arrangement?

A. A while ago, about a year ago.

Q. You say a year before now you entered into a property agreement with your wife?

A. Yes.

Q. Is that recorded in writing?

A. No."

Mrs Salvato was asked about the existence of such an agreement between her and her husband. She denied entering into any such agreement. She said that her discussions with her husband had "...not gone that far" and also that she would like to think that "...we would not have to have that conversation at this minute". She was then asked this question and gave this answer:

"Q. What I'm asking you is, had you entered into an agreement with your husband, the terms of which were that the house and all of the contents belonged to you, whereas his pub belongs to him?

A. No such agreement. We have never had such a serious conversation about dividing assets. We were hoping to work things out so we don't have to discuss assets."

It was common ground on the evidence of Mr and Mrs Salvato that no proceedings had as yet been brought in either the Federal Magistrates Court, or else the Family Court of Australia by which any agreement of the kind asserted by Mr Salvato would be recognised by the Court. There was no evidence that proceedings for principal relief under the Family Law Act 1974 (Cth) had been commenced.

At its heart, Mr Salvato asserted that many, many months before he moved out of the home, he had negotiated an agreement with his wife whereby she became entitled to the home and all of its contents, and he became solely entitled to the business or businesses which he ran. However, not only does his wife deny the existence of that agreement, but Mr Salvato's conduct is inconsistent with it.

Mr Salvato does not suggest that he had separated from his wife at the time such agreement was negotiated. On the contrary, the time at which he asserts separation occurred was when he moved out in December 2012. Nor, at any time when proceedings were before this Court in 2012, when Mr Salvato sought orders staying the effect of the execution of the Writ of Possession, did he tell the Court that he had given up all interest in the property and had agreed to transfer it and all of its contents to his wife. As well, entering into a contract for the sale of the property, a contract about which his wife was entirely unaware, is wholly inconsistent with such an agreement.

I have no reason to doubt the correctness of the evidence of Mrs Salvato on this issue. Mr Salvato's evidence about the agreement was unsatisfactory, lacked logic, was unsupported by any external conduct and was simply unbelievable.

I reject Mr Salvato's evidence that he had entered into an agreement of the kind he described with his wife.

The second factual matter of importance is whether Mr Salvato, had, as at 21 December 2012, a key or keys to the property in his possession, which he could have given to Mr Shacklady, thus complying with his undertaking.

In his affidavit of 7 March 2013, Mr Salvato said, in paragraph 33:

"In relation to the keys, I gave them to my solicitor to give it to the plaintiff. I threw the key to Mr Shacklady and said 'give them the f**** keys."

He was cross-examined upon this evidence. He said that the words recorded in his affidavit, were spoken by him at the time that he was "taking a key off my keyring ...".

On a number of occasions in the course of his cross-examination, he asserted that he had given a key to Mr Shacklady on 21 December 2012, in similar circumstances to those described in his affidavit

Mrs Salvato gave evidence about keys to the property. Her evidence was inconsistent with that of her husband.

Her evidence was to the effect that her husband had never had a key to the property, and had used what she called the "spare key" to access the property at all times since they had moved there. The spare key was the description she gave to the key which was concealed in a hiding place on the property, but outside the house, which her children and her husband used to gain access to the property. Mr Salvato also gave evidence that he knew the location of this key, and he used it from time to time.

She said that the reason that her husband had never really had a key to the property was that in the past when he had been given one, he would lose it and that is why Mrs Salvato had "a key located in a designated spot, for safety reasons". The clear sense of her evidence was that although Mr Salvato may have once had a key, or perhaps more than one key, once he had lost or misplaced the key or keys, they had not been replaced.

Mr Salvato's evidence about his own conduct about getting access to the house in between when he left on 4 December 2012, and 21 December 2012, when he says he handed the key to Mr Shacklady, is inconsistent with his having a key to give to Mr Shacklady on 21 December 2012.

His evidence makes it plain that he could and did gain access the house without having a key in his possession. He said that he could enter via the second storey. He said the bathroom door was always open. He said there were many ways in which he could get into the house. At one stage, in answer to his own lawyer, he said that he could easily access the house by climbing through the roof. All of this evidence suggests that he had no need to keep a key for any reason connected with getting access to the house, after he moved out.

As well, neither Mr nor Mrs Salvato gave any evidence of taking any steps or making any arrangements at any time to ensure that Mr Salvato had a key in his possession for his use in the months leading up to his moving out, nor in the period after he moved out.

I accept the evidence of Mrs Salvato, in preference to that of Mr Salvato, on this issue. The other facts to which I have referred, in particular, the way in which he was able to gain access to the Property, are sufficient to satisfy me that I should reject Mr Salvato's evidence that he had a key in his possession on 21 December 2012.

Finally, an independent witness who could have corroborated his evidence, namely Mr Shacklady, who could have given evidence that Mr Salvato was in possession of a key on 21 December 2012, was not called to give evidence about that fact. The absence of evidence from this witness strengthens the conclusion to which I have independently come in the previous paragraph.

Some further remarks need to be made about evidence from Mr Shacklady. Mr Shacklady at the relevant time was Mr Salvato's solicitor. At the time of the hearing of these contempt proceedings, Mr Shacklady remained in practice at Double Bay. Initially when the proceedings commenced, Mr Salvato's lawyer read an affidavit of Mr Shacklady. Mr Shacklady was required by the Bank to attend for cross-examination.

On the morning of the second day of the hearing, I was informed from the bar table that Mr Shacklady had fallen over and injured himself, felt unwell and was unable to attend Court. After an adjournment was allowed to enable the question of Mr Shacklady's fitness to give evidence to be explored by Mr Salvato's lawyer, when the Court resumed, I was informed that Mr Shacklady would not be giving evidence and, upon Mr Salvato's instructions, his affidavit was withdrawn and not relied upon. No evidence was read, tendered or relied upon to indicate why this course was being adopted and whether Mr Shacklady was unable by reason of ill health, to be available for cross-examination. An adjournment was not sought to enable Mr Shacklady to be called as a witness after his health recovered. No application was made to take his evidence by telephone, or by audio-visual link. No application was made to rely upon his evidence, giving it such weight as may be appropriate in the absence of cross-examination.

In those circumstances, I see no reason why an inference of the conventional kind adumbrated in Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 ought not be drawn. Accordingly, I draw the inference that any evidence which Mr Shacklady may have given on this issue would not have assisted Mr Salvato's case.

In all of those circumstances, as I have earlier indicated, I accept the evidence of Mrs Salvato, which sufficiently satisfies me that at no time on 21 December 2012, did Mr Salvato actually have a key to the house at Vaucluse in his possession.

The third contested matter of fact is whether Mr Salvato handed over the key to the property at Vaucluse to Mr Shacklady in his office on the afternoon of 21 December 2012 with the instruction that Mr Shacklady ought deliver the key to the Bank.

On many occasions throughout his evidence Mr Salvato asserted that he had handed over a single key to Mr Shacklady on 21 December 2012, and told him to give the key to the Bank or one of its representatives.

Since I have decided that Mr Salvato did not have a key on 21 December 2012, then it follows that he could not have handed it over to Mr Shacklady on that day with instructions to give it to a representative of the Bank.

Even if I were wrong in that factual conclusion, and Mr Salvato had in his possession a key to the property at that time, I would still not be persuaded that he had handed it over to Mr Shacklady. There are number of reasons for this.

Firstly, I do not accept, unless it is corroborated, the evidence of Mr Salvato where it is in contest.

Secondly, Mr Shacklady was not called to corroborate this evidence. For the reasons which I have just explained, his absence from the evidence in the trial enables an inference to be drawn that his evidence would not have assisted Mr Salvato's case.

Thirdly, if Mr Shacklady had such a key, and had received instructions to hand it over to the Bank, at the time when Mr Salvato says this occurred, namely, after the settlement had failed to proceed on 21 December 2012, then I would have expected Mr Shacklady to have communicated that fact to the solicitors for the Bank, and to have asked for their client's direction as to where, or to whom, the key ought be delivered. There was no such correspondence whether by letter or email, nor any such conversation between Mr Shacklady and the solicitors for the Bank. The absence of any such mention in that correspondence is particularly surprising because the Bank's solicitors were insisting upon Mr Salvato strictly complying with his undertaking.

In other words, it is Mr Salvato's case that notwithstanding that his solicitor Mr Shacklady was given express instructions to give the key to the Bank, in order to demonstrate, on Mr Salvato's account, that he had complied with the undertaking which he had given to the Court, for a reason which is wholly unexplained by the evidence, Mr Shacklady who, so it seems from the evidence before me, was otherwise entirely diligent in carrying out Mr Salvato's instructions, did not carry out this particular instruction.

No plausible reason was advanced to explain why Mr Shacklady would not have obeyed his client's instructions. Such a proposition is even more difficult to accept if, as Mr Salvato asserted whilst giving evidence, that his assessment of Mr Shacklady's relationship with the solicitors for the Bank was he was "very chummy" with them, and that Mr Shacklady had "... given no resistance in this case".

Accordingly, I conclude that Mr Salvato did not give any key to Mr Shacklady on 21 December 2012.

The remaining factual question is a more complex one which deals with the issue of what Mr Salvato understood about the undertaking, and what, if anything, he did to comply with it, including whether he knew or understood that he was complying with it or else, not complying with it.

It is necessary to approach this question having first discussed the principles of law relating to contempt of Court and ambiguity of undertakings.

Contempt of Court - Principles

It is convenient if I set out the principles relating to contempt of court, which I understand I am bound to apply:

(a) Regardless of whether these proceedings are categorised in the historical sense, as criminal or civil contempt, it is clear that the charge must be proved beyond reasonable doubt: Witham at 529;

(b) A contempt of Court can be constituted by the breach of an undertaking as well as by breach of an order of the Court: Trade Practices Commission v C G Smith Pty Ltd (1978) 30 FLR 368; at [375]; Spindler v Balog (1959) 76 WN (NSW) 391; Circuit Finance Australia v Sobbi [2010] NSWSC 789 at [10];

(c) An undertaking must be capable of being complied with: Australia Prudential Regulation Authority v No.7) [2007] FCA 1609 at [40]; Matthews v Australian Securities Investment Commission [2009] NSWCA 155 at [16] per Tobias JA;

(d) A person cannot be found guilty of a contempt of court for breach of an order or an undertaking where the terms of the undertaking are ambiguous: Australian Consolidated Press Ltd v Morgan [1965] HCA 21; (1965) 112 CLR 483 at 515-6 per Owen J. The ambiguity must be such that it cannot be said what it was that required compliance: Pang v Bydand Holdings Pty Ltd [2011] NSWCA 69 at [56]-[57] per Beazley JA;

(e) In construing the terms of an undertaking, the Court seeks to give meaning to an undertaking if its terms so permit. The terms of the undertaking should be given a sensible meaning, consistent with its actual terms. It must be possible on the meaning given for the undertaking to be capable of being obeyed. The context in which an undertaking is given is relevant in understanding it, and giving it meaning: Pang at [57], [59] per Beazley JA.

Where the contempt of court consists of a failure to comply with an order of the Court (or an undertaking), it must be demonstrated that the contempt was wilful and not merely casual, accidental or unintentional: Australasian Meat Industry Employees' Union v Mudginberri Station Pty Ltd [1986] HCA 46; (1986) 161 CLR 98. However, it is not necessary for the applicant to prove that the contemnor intended to breach an order of (or an undertaking to) the Court: see Anderson v Hassett [2007] NSWSC 1310; Mudginberri at 111; Matthews at [16] per Tobias JA.

It is not necessary to prove that the contemnor was aware that his or her conduct constituted a breach of the undertaking: Microsoft Corporation v Marks (No.1) (1996) 69 FCR 117 at 143 per Lindgren J; Metcash Trading Ltd v Bunn (No.5) (2009) FCA 16 at [9] per Finn J.

As Brereton J said in Anderson at [6]:

"The statement in Mudginberri (at 111) 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, does not require proof of a specific intent but permits an alleged contemnor to show by way of exculpation that the default was 'casual, accidental or unintentional' ..."

It would not be a casual, accidental or unintentional default where the party bound by an order (or an undertaking) misconstrued the terms of the undertaking. As Hodgson JA said in Athens v Randwick City Council [2005] NSWCA 317; (2005) 64 NSWLR 58 at 36:

"36 It is very desirable that orders be completely self-contained and self-explanatory. However, as pointed out by Campbell J in Kirkpatrick at [55], the recipient of an order is expected to try to understand and obey it. In my opinion, in considering whether an order is expressed so that the recipient knows or plainly should know what is required, it may be appropriate to have regard to the circumstances in which the order is made, including the terms of the reasons given for the order and elements of applicable law.

37 In my opinion also, if the only ambiguity on the face of the orders is between two meanings, and the recipient is shown to have breached the order whichever of the two meanings is adopted, that may in any event be sufficient to establish contempt, at least unless it appears that the breach may have been due to uncertainty as to what steps were required. "

Ambiguity of Undertaking

Mr Salvato's lawyer submitted that the undertaking was "uncertain, unclear and ambiguous as to its meaning and effect". He further submitted that there was more than one meaning attributable to it "... when one considers it from the perspective of a lay person". Accordingly, he submitted Mr Salvato could not be in contempt of court if he had failed to comply with it.

The first submission about ambiguity concerned the first part of the undertaking. It was submitted on behalf of Mr Salvato that in paragraph 1 of the undertaking, the words "I will do all things necessary on my part to be done to complete the contract of sale ..." were ambiguous and vague because there was no specification of what was in fact required to be done.

There seems to me to be two answers to this submission. The first is that such a phrase is not uncommonly used in court orders, particularly those dealing with specific performance of contractual obligations, and it requires the person subject to the order (or in this case, the undertaking) to identify those things which are necessary and, so far as it is within their power or control, to attend to those things. I would not have upheld this submission about ambiguity or vagueness had it been necessary so to do.

But there is a second and complete answer to this submission, and that is, that in prosecuting these proceedings for contempt, the Bank did not rely upon any breach of paragraph 1 of the undertaking. Accordingly, any such ambiguity, if it exists, in paragraph 1 is irrelevant to the proceedings presently before the Court. It can be put to one side.

The second ambiguity which was relied upon by Mr Salvato was said to arise from the lack of specificity in the undertaking about where the keys were to be delivered to the plaintiff. It was argued, and Mr Salvato gave evidence, that it was not clear which branch of the Bank he had to attend. Mr Salvato in his evidence, posed the question of whether it would have been an adequate compliance with the undertaking to have delivered the keys to the head office of the Bank in the central business district of Sydney, the Double Bay branch of the Bank or else perhaps, the branch of the Bank in Townsville where apparently the loan originated. He also raised a question as to whether handing the keys to the Bank's solicitors would have been an adequate compliance. All of these possible avenues for compliance meant, he submitted, that the undertaking was ambiguous.

The fact that there may have been more than one way of complying with the obligation in the undertaking does not mean that the undertaking is ambiguous. It simply means that the person giving the undertaking has a choice of how to comply with the undertaking. I do not accept that the content of the phrase dealing with the delivery of the keys meant that the undertaking is ambiguous. I note no attempt was made by Mr Salvato to deliver the keys to any branch or office of the Bank, or that such attempt at delivery was unsuccessful.

The third ambiguity which it was argued existed in the undertaking, is the use of the phrase "handing over the keys". Counsel for Mr Salvato argued that it was unclear whether this meant key in the singular, or keys in the plural, and whether it meant that the only key or keys to which it referred were those in Mr Salvato's possession or those in the possession of his wife or children, or else all of the keys to all of the doors in the house.

As his lawyer, Mr Galloway, put it in submission:

"So far as the word key or keys is concerned, it says keys. Does that mean all keys? His key or keys? And so far as that aspect is concerned, sometimes there is more than one key to a property. There might be several. More modern people seem to have one key that opens everything, or an electric buzzer. So does that mean his keys?"

I reject the submission that the undertaking is in this respect, ambiguous. It is necessary to take the undertaking as a whole and in the context in which it was given. The context was that Mr Salvato was urging on the Court a stay of the execution of the writ of possession so as to enable a contract for the sale of the property to be completed. He submitted that the Bank ought not be permitted to enter into possession of the property pending that completion lest that fact gave to the potential purchaser a reason to refrain from completion of the contract. The contract required Mr Salvato to give vacant possession to the purchaser at the time of settlement.

The effect of the undertaking given was that if the contract did not complete, then the bank would thereupon be entitled to possession of the property, which entitlement was to be supported by vacant possession of the property being given to the Bank. In those circumstances, the requirement of the undertaking that Mr Salvato hand over the keys to the property was plainly meant, and was intended to mean, all the keys which he had in his possession or control which enable entry into the property, and the surrendering of which enabled the Bank to have possession of the property.

Whether the expression was singular or plural does not give rise to any ambiguity, nor is there any ambiguity in the undertaking failing to be more precise about which keys were to be handed over. Considered in its context, there was no ambiguity in this phrase. I reject the submissions of Mr Salvato's lawyer that the meaning of the undertaking in this respect was ambiguous or unclear.

The final matter of ambiguity which was raised by the lawyer for Mr Salvato was not strictly a question of ambiguity of the undertaking, but rather a submission that the order sought was ambiguous and defective. It was submitted that the Notice of Motion needed to plead all of the relevant elements and that it failed so to do. It was said:

"The statement of charge isn't sufficiently particularised and pleaded as to its particular elements insofar as how the plaintiff might prove those elements beyond a reasonable doubt. .... The charge must be pleaded properly and strictly and it has not been done so. ..."

Mr Salvato's lawyer was asked to identify the deficiency. The transcript then records this:

"Galloway: I say the charge should read like a criminal charge, that the defendant is guilty of contempt of court by his wilful disobedience of an undertaking given to the Court on 3 December 2012 in that he (a) deliberately failed to comply with the undertaking by vacating the property on the given date; and (b) failed to hand over the keys to the property to the plaintiff by 3.30pm on the said date. Something to that effect."

It is to be recalled that the order sought in the Notice of Motion, which has been set out earlier in this judgment at [2], alleged that the defendant was guilty of contempt of court - the contempt of Court consisting of disobeying the undertaking given on 3 December 2012, and that that disobedience was constituted by a failure to give possession of the property by vacating it and handing over the keys to the Bank.

It seems that the submission concentrates on the absence of the description of disobedience as being wilful and the absence of the description of a failure to comply with the undertaking as being deliberate.

I am not satisfied that the absence of either of these words means that the charge of contempt, or the orders sought in the Notice of Motion are ambiguous or in some other way defective.

As explained earlier when considering the authorities, it is not necessary for the party accusing the alleged contemnor of contempt to prove any state of mind or specific intention in order to constitute the conduct as contempt. In order to constitute a contempt, the conduct must be wilful. It may be a matter of justification by an alleged contemnor that with respect to the conduct that it was casual, accidental or unintentional. However, the inclusion of the words "wilful" or "deliberate" which qualify the conduct, are unnecessary in the orders which are set out in the motion.

I am satisfied that the Notice of Motion adequately sets out what is alleged against Mr Salvato and that he is capable of understanding the charge and meeting it.

Has a Contempt been Proved?

In considering this question, it is necessary to keep in mind that proof of the allegation of contempt of Court is required beyond reasonable doubt.

Mr Salvato submits that he is not guilty of any contempt because he has complied with the undertaking. He says that by:

(a) vacating the property as his principal place of residence; and

(b) handing his only key to his solicitor with instructions to give it to the Bank,

he has complied with the undertaking to give possession of the property to the Bank.

Vacation of Property

Mr Salvato's evidence, as I have summarised it above, is that he has personally moved out of the property and no longer sleeps there. I accept this evidence which is independently corroborated by Mrs Salvato. I accept that Mr Salvato does not sleep in the main bedroom of the house, and that he sleeps elsewhere, away from the house, although he may fall asleep for periods of hours at a time when he visits. I also accept that Mr Salvato has moved some of his clothes out of the house and that other of his clothes remain in the house.

I am satisfied that Mr Salvato visits the property regularly in order to care for his children. He said that he had visited the property on numerous occasions to babysit his children and stays on occasions for four or five hours. From time to time, since 21 December 2012, Mr Salvato said he had gone to the property straight from work and watched television, including falling asleep in front of it.

Whilst visiting the house, it is apparent from the evidence of both Mr and Mrs Salvato that he enters and leaves without her permission. Mrs Salvato says, and I accept, that when she sees him in the house, he may have been there for some hours - the period of which she does not know because he arrives when she is not present and lets himself into the house. When he is at the house, it appears that he eats food from the refrigerator - Mrs Salvato says that he has a "snack out of the fridge", this occurring it seems, without specific permission or arrangement

As well, as is apparent, the house remains full of all of the furniture and fittings which were in the house prior to Mr Salvato leaving it. Mrs Salvato and their two children remain fully in residence at the house and have not been asked to leave. They have no alternative home or accommodation, and continue to regard the Vaucluse property as their home.

At no time has Mr Salvato ever informed his wife of the terms of the undertaking which he gave the Court, and at no time has he asked his wife or his children to leave the house. As is apparent from his evidence, he regards his wife and children as being rightfully in occupation and physical possession of the property to the exclusion of all of other people, including the Bank, except for himself as he feels free to come and go as he pleases. Mrs Salvato does not regard herself as being in a position to restrict Mr Salvato's access to the house because, as is apparent from the evidence, she leaves a key in a location of which he is aware, to enable him and perhaps her children, to enter and leave the house even if it is locked.

Mr Salvato gave evidence that he regarded compliance with the undertaking as being sufficient, by his moving out of the property and not sleeping there, but rather sleeping elsewhere, either at his place of business, hotels or houses of friends, leading what he described as a "nomadic" life.

Upon its ordinary interpretation, the undertaking plainly required Mr Salvato to give possession of the property to the Bank. Giving possession of the property is a well-known and commonplace activity. Mr Salvato knew what was involved because he had by his own agreement on the contract for sale dated 12 October 2012, obliged himself to give the purchaser, Mr Elias, vacant possession of the property upon settlement. Mr Salvato said that he understood that, to give Mr Elias vacant possession, not only he, but his wife and children, would have to have moved out of the property. There is no reason to think that his undertaking to the Bank was, and was understood to be, any different.

In short, the present position seems to me to be this. The only difference between the circumstances prior to the undertaking being given on 3 December 2012, and now, is that Mr Salvato does not sleep at night with his wife in the main bedroom in the house, but rather lives a more nomadic life, sleeping at work, in hotels or at friends' houses. All of the furniture, household goods and effects and some of his clothing, remain in the house, as was the case before 3 December 2012. Some of his clothing has been removed. He comes and goes as he pleases without feeling the need to obtain approval so to do from his wife, and without his wife giving him approval. His mail still, I infer, goes to the property. His driver's licence shows the property as his current address. His wife and children continue to live at that address, and call the property home. The Bank does not have in any sense possession of the property.

I do not accept that Mr Salvato has given possession of the property to the Bank by vacating it. On the contrary, I am satisfied that in all respects he remains in possession of the property. His wife and children live there because he permits them so to do. As the registered proprietor, and in the absence of any assertion of any equitable or other right, whether by lease, contract or otherwise, by Mrs Salvato for herself and the children to stay in the property, then they do so simply by his permission. He has not sought to withdraw that permission or make any request at all that his wife and children leave.

He has not vacated it. I do not accept that his sleeping elsewhere amounts to a vacation of the property. Vacating the property means much more than that. As Mr Salvato himself accepted with respect to his contractual obligation to Mr Elias, the purchaser under the contract for sale, he had to move out of the property together with his wife and children and, I infer as he well knew, remove his furniture, household effects and personal belongings.

I am satisfied beyond reasonable doubt that Mr Salvato has not given possession of the property to the Bank, by vacating it. It was plain that the undertaking he gave was intended to put the Bank in the same position as the purchaser, namely that it would have possession of the property. This has simply not occurred.

I entirely reject the argument advanced by Mr Salvato that he could, by moving out of the property himself, although leaving his family, all of their furniture, household effects and some of his personal effects there, have satisfied the undertaking to vacate the property and give possession to the Bank. Vacating a property means something which is a permanent state of affairs. There is nothing permanent about what Mr Salvato has done.

Handing over the Keys

The second obligation, which Mr Salvato had arising from the undertaking, was to hand the keys to the property to the Bank or as it might direct. I have already found that he has not done so. He has not done so because he did not have a key himself, and he has not required his wife or his children to provide their keys to him so that he could given them to the Bank, nor has he done anything about removing the spare key to the property and providing it to the Bank.

Even if I were to accept the entirety of his evidence, and for the reasons which I have explained, I do not, he has failed to provide the keys to the Bank or as it directed because, at best and only after the time for compliance had expired, he gave one key to the property to his solicitor with instructions to give the key to the Bank. There was not any compliance with his undertaking, which was to give the keys to the property to the Bank.

Accordingly, I am satisfied beyond reasonable doubt that Mr Salvato has failed to comply with his obligation to give the keys of his property to the Bank or as it directed.

Casual, Accidental or Unintentional

Before I can be satisfied that I should make a finding that contempt has been proved, I need also to be satisfied that the breach was not casual, accidental or unintentional.

It is not contended that any disobedience to the undertaking was casual or accidental to the obligations in the undertaking.

It is contended however that Mr Salvato had a genuine belief that by his moving out of the property, and giving the key to Mr Shacklady, he had fully complied with his undertaking. On a number of occasions in his evidence, Mr Salvato said that he understood that that was all he was obliged to do and that consequently he was not in breach of his undertaking to the Court. It is therefore put, as I understand the submissions of Mr Salvato's lawyer, that if this was not adequate to comply with the undertaking, then the failure to comply fully and completely with the undertaking was unintentional.

In short, it is put that Mr Salvato had himself reached an understanding of his obligations which was, in the circumstances, a reasonable one and that he had acted to comply with his understanding. It is thus submitted that any failure to comply was an unintended one, and hence, could not be wilful or deliberate, and therefore no contempt has been proved.

The word "unintentional" forms a part of the phrase "casual, accidental or unintentional" which is used in a significant number of authorities dealing with contempt of court. The phrase is the counterpoint to the proof of disobedience to an order or undertaking being regarded as wilful, or deliberate. See: Stancomb v Trowbridge Urban District Council [1910] 2 Ch 190.

The phrase seems to be originally found in the decision of the UK Court of Appeal in Fairclough v Manchester Ship Canal Co [1897] WN 7 where it was said that the principles relevant to a court dealing with disobedience to its orders are the same for corporations, as for individuals. The Court of Appeal went on:

"In these cases, casual or accidental and unintentional disobedience to an order of the Court is not enough to justify either sequestration or committal; the Court must be satisfied that a contempt of court has been committed - in other words, that its order has been contumaciously disregarded.'

It has been held, and I agree, that the use of the word "contumaciously" in the above passage does not mean anything different from "wilfully": Steiner Products Ltd v Willy Steiner Ltd [1996] 1 WLR 986 at 981 per Stamp J.

The conduct here, relevantly, consists of positive acts, namely Mr Salvato ceasing to sleep at the property and taking some of his clothes away from the property, and in the factual context, omission to take any further step or steps, such as arranging for his wife and children, and all of the furniture and household belongings to be removed from the property, so that once vacated, possession of the property could be given to the Bank.

The evidence satisfies me, and there is really no dispute about it, that Mr Salvato's positive acts, and his omissions to act, were all deliberate and intentional. By way of an example, he made a deliberate decision not to tell his wife that the terms of his undertaking required him to give the Bank possession of the property by vacating it. It was not something which he overlooked, or forgot about.

His argument then seems to be that the word "unintentional" refers to an intention to commit a contempt. That is not how the word is used in the common phrase, nor is it used in that way in the authorities. To so regard it, would be specifically contrary to the authorities to which I have referred above, that it is not necessary for an applicant for an order for contempt to prove an intention to breach the order or undertaking.

This approach, and those authorities, reflect an earlier decision of the Restrictive Practices Court in England, in In re Mileage Conference Group of the Tyre Manufacturers' Conference Ltd's Agreement [1966] 1 WLR 1137, where the Court held that participants in an arrangement, upon which they took legal advice and acted upon that advice, were nevertheless committing a contempt by being in breach of the undertakings proffered to the Court. Megaw J in giving judgment for the Court, said at 1162:

"We conclude therefore, that the breaches of undertaking here were contempts of court, even though it were to be shown that they were things done, reasonably and despite all due care and attention, in the belief, based on legal advice, that they were not breaches.

...

Questions as to the bona fides of the persons who are in contempt, and their reasons, motives and understandings in doing the acts which constitute the contempt of court, may be highly relevant in mitigation of contempt. Bona fide reliance on legal advice, even though the advice turns out to be wrong, may be relevant, and sometimes very important, as mitigation.

In considering Mr Salvato's submissions, it is first necessary to determine whether the conduct was intentional or not. I have already held that I am satisfied that it was intentional.

The second matter to be determined is whether the understanding which Mr Salvato asserted he had, was in fact held by him, and whether it was reasonable. I have said sufficient in my reasons to indicate that the belief of Mr Salvato that by doing what he did he had complied with his understanding of the undertaking, was quite wrong, and if he held that belief, it certainly was not reasonable.

Finally, I agree with the authorities to which I have made reference, that in any event, the holding of a reasonable but erroneous belief that conduct does not constitute a breach of an undertaking, is not relevant to the question of whether a contempt had been committed.

I therefore conclude that I am satisfied that Mr Salvato's conduct was not properly described as "casual, accidental or unintentional".

Finding

I am satisfied beyond reasonable doubt that Mr Salvato has deliberately breached, and remains in breach, of the undertaking, given on 3 December 2012, because he has failed to give possession of the Vaucluse property to the Bank, by vacating it and by handing the keys of it to the Bank, or as it directed, by 3.30pm on 21 December 2012, or at any time since.

I am satisfied that Mr Salvato, because he is in deliberate breach of his undertaking, is guilty of a contempt of Court. An order to give effect to this finding will need to be made, after considering Mr Salvato's motion, and in the event that orders are not made to set aside the undertaking.

Mr Salvato's motion

Before proceeding to give effect to the finding sought by the Bank, it is necessary to consider whether the order sought by Mr Salvato in his motion ought to be made.

No separate submissions were made by Mr Salvato's lawyer as to why the Court would set aside the undertaking. However, having regard to the submissions which were made, it seems that the basis for the order to set aside the undertaking embraces the following propositions:

(a) the terms of the undertaking are ambiguous and accordingly, it should be set aside;

(b) having regard to the fact that only Mr Salvato was obliged to comply with the undertaking, and it did not require any compliance by Mrs Salvato, or their children, it was ineffective to secure possession for the Banks and therefore should be set aside;

(c) Mrs Salvato was not a party to the proceedings, and had no sufficient notice of them. She did not know of, and had no part in the giving of the undertaking. In circumstances where the Bank did not join her as a party, or notify her adequately of the proceedings, and she was not present and participating, even though the Bank knew she lived on the property, the undertaking should be set aside, as compliance with it affected her rights and interests.

At one stage in the evidence, it appeared that Mr Salvato was suggesting that he had only entered into the undertaking as a consequence of duress. However, the final extent of Mr Salvato's evidence did not establish any duress of a kind which would warrant any relief by way of setting aside the undertaking. No submission was ultimately made by Mr Salvato's lawyer that the undertaking was entered into as a result of duress.

Some general matters need to be noticed, before considering these submissions. The undertaking was given by Mr Salvato in order to address the disadvantage which the Bank would suffer if the Court made the orders sought by him to effect a delay in the Bank taking possession of the property. As the transcript of the proceedings on 3 December 2012 shows, as do the ex tempore reasons of the Court, prior to the proffering of any undertaking, the Court was not minded to grant relief. It is also clear that once the undertaking was proffered, relief was granted in the exercise of the Court's discretion, because the giving of, and the terms of the undertaking, were of relevance to the exercise of that discretion.

In other words, the Court granted relief over the Bank's opposition, because of Mr Salvato's undertaking, or promise, to do certain things. In seeking to set aside the undertaking, Mr Salvato does not proffer any order, nor make any suggestion as to how the Bank's position which has already been adversely affected, should be addressed.

It is also relevant to note that the wording of the undertaking was prepared by Mr Salvato's own counsel on 3 December 2012. It was Mr Salvato who proffered the undertaking in those particular terms, and as the transcript makes clear, the undertaking and the effect of it had been the subject of explanation and advice to him before he gave it to the Court.

Against those features, it is appropriate to return to the apparent bases upon which these orders are sought.

Firstly, it is argued that the terms of the undertaking were ambiguous. For the reasons I have previously expressed, there is no ambiguity in the wording of the undertaking.

Secondly, it is argued that the undertaking was ineffective to secure possession of the property for the Bank, because it did not oblige Mrs Salvato to vacate the property. It is correct that the undertaking did not by its terms directly oblige Mrs Salvato to leave the property. However, this does not mean that the undertaking was ineffective as Mr Salvato argues. The undertaking, if complied with, ought to have been effective to secure possession of the property to the Bank. After all, Mr Salvato was the sole registered proprietor of the property, he had not transferred to, or given to his wife any enforceable legal right to reside in the property. If she had an enforceable equitable interest, then it was clearly subordinate to the Bank's legal interest under its registered mortgage. I am not persuaded in those circumstances that the undertaking was ineffective to give the Bank possession of the property, nor that upon that basis, it should be set aside.

The third basis upon which it is argued that the undertaking should be set aside is, to put it shortly, the absence of Mrs Salvato as a party to the proceedings, and in the absence of her having any knowledge of the proceedings, including the proffering of the undertaking, on 3 December 2012.

The evidence before me establishes that, in accordance with the provisions of r 6.8 of the Uniform Civil Procedure Rules 2005, service was duly effected on the occupants of the property, which would include Mrs Salvato. She was entitled to, but had not by 3 December 2012, made application to be joined as a party.

Her absence as a party up to and including 3 December 2012, was known to Mr Salvato. It did not stop him from proffering the undertaking. As well, her absence did not make the undertaking unable to be complied with.

As is clear from the remarks of Gibbs J in the High Court of Australia in Ascot Investments Pty Ltd v Harper [1981] HCA 1; (1981) 148 CLR 337, the provisions of the Family Law Act 1974, which can be used to modify the interests of parties to a marriage in property, cannot be used to remove a third party's legitimate interest. At 354, he said:

"... it does not follow that the Parliament intended that the legitimate interests of third parties should be subordinated to the interests of a party to a marriage, or that the Family Court should be able to make orders that would operate to the detriment of third parties."

His Honour went to give two examples. At 355 , he said:

... the Family Court could not compel a husband to assign to his wife a lease without obtaining the necessary consent of the lessor, and could not order the transfer to a wife of land owned by a husband free of mortgage, when in fact the land was mortgaged to a third party."

Stephen, Mason, Aicken and Wilson JJ agreed with the judgment of Gibbs J.

The relevance of this authority is that it demonstrates that whatever be the position as between Mr Salvato and Mrs Salvato, and their matrimonial entitlements to property, those entitlements are subordinate to the Bank's legal interest as mortgagee. Mrs Salvato has no greater right or interest as against the Bank than does her husband.

In those circumstances, her absence from the proceedings, either as a party, or by an appearance, does not have any effect upon the undertaking given by Mr Salvato. It is not a basis for setting aside the undertaking.

I am not satisfied that I should set aside the undertaking given by Mr Salvato. His motion seeking orders to that effect should be dismissed.

Further Proceedings

As I indicated to the parties that I would hear first the question of whether the Bank had proved that Mr Salvato was in contempt of court, and deliver judgment on that question before proceeding to determine what penalty or order, if any, ought be imposed on Mr Salvato if the contempt was proved, it is appropriate that I fix a further hearing date to take any further evidence on those issues.

Ordinarily, costs would follow the event, and an order ought be made that Mr Salvato should pay the Bank's costs. However, this question may be a matter upon which the parties wish to make submissions, and they will be free to do so at the next hearing.

Orders

I make the following orders:

(1) Mr Mimmi Salvato is guilty of a contempt of Court in that he was in breach of his undertaking given on 3 December 2012 by failing to give possession of his property to the Commonwealth Bank of Australia .

(2) The Notice of Motion filed by Mr Salvato on 11 March 2013 is dismissed.

(3) Proceedings adjourned for further directions to 9.30am on Wednesday 17 April 2013.

**********

Decision last updated: 10 April 2013

Medium Neutral Citation:	Commonwealth Bank of Australia v Salvato (No.4) [2013] NSWSC 321
Hearing dates:	11/03/2013, 12/03/2013
Decision date:	10 April 2013
Jurisdiction:	Common Law
Before:	Garling J
Decision:	(1) Mr Mimmi Salvato is guilty of a contempt of Court in that he was in breach of his undertaking given on 3 December 2012 by failing to give possession of his property to the Commonwealth Bank of Australia . (2) The Notice of Motion filed by Mr Salvato on 11 March 2013 is dismissed. (3) Proceedings adjourned for further directions to 9.30am on Wednesday 17 April 2013.
Catchwords:	CONTEMPT OF COURT - Undertaking provided to the Court to stay the execution of the Writ of Possession - Whether undertaking was uncertain, unclear and ambiguous - The proper construction, and subsequent effect, of an undertaking - The proper construction of a charge, or order, of contempt of Court - Whether Plaintiff must prove any state of mind or specific intent to disobey order of Court.
Legislation Cited:	Civil Procedure Act 2005 Supreme Court Rules 2005
Cases Cited:	Anderson v Hassett [2007] NSWSC 1310 Ascot Investments Pty Ltd v Harper [1981] HCA 1; (1981) 148 CLR 337 Athens v Randwick City Council [2005] NSWCA 317; (2005) 64 NSWLR 58 Australasian Meat Industry Employees' Union v Mudginberri Station Pty Ltd [1986] HCA 46; (1986) 161 CLR 98 Australian Consolidated Press Ltd v Morgan [1965] HCA 21; (1965) 112 CLR 483 Circuit Finance Australia v Sobbi [2010] NSWSC 789 Australia Prudential Regulation Authority v Siminton (No.7) [2007] FCA 1609 Fairclough v Manchester Ship Canal Co [1897] WN 7 In re Mileage Conference Group of the Tyre Manufacturers' Conference Ltd's Agreement [1966] 1 WLR 1137 Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 Matthews v Australian Securities Investment Commission [2009] NSWCA 155 Metcash Trading Ltd v Bunn (No.5) (2009) FCA 16 Microsoft Corporation v Marks (No.1) (1996) 69 FCR 117 Pang v Bydand Holdings Pty Ltd [2011] NSWCA 69 Spindler v Balog (1959) 76 WN (NSW) 391 Stancomb v Trowbridge Urban District Council [1910] 2 Ch 190 Steiner Products Ltd v Willy Steiner Ltd [1996] 1 WLR 986 Trade Practices Commission v C G Smith Pty Ltd (1978) 30 FLR 368 Witham v Holloway [1995] HCA 3; (1995) 183 CLR 525
Category:	Principal judgment
Parties:	Commonwealth Bank of Australia (P1) CBFC Ltd (P2) Mimmo Salvato (D1) Victoria Salvato (D2)
Representation:	Counsel: D A McLure (P1) B Galloway (D1) No appearance (D2) Solicitors: Gadens (P1) Hancocks (D1) No appearance (D2)
File Number(s):	2011/143979