Eurovox Pty Ltd v Miller
[2004] VSC 47
•1 March 2004
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 5219 of 2003
| EUROVOX PTY LTD & ANOR | Plaintiffs |
| v | |
| PAUL ANTHONY MILLER & ORS | Defendants |
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JUDGE: | HANSEN J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 11 & 19 February 2004 | |
DATE OF JUDGMENT: | 1 March 2004 | |
CASE MAY BE CITED AS: | Eurovox Pty Ltd v Miller | |
MEDIUM NEUTRAL CITATION: | [2004] VSC 47 | |
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Contempt – Breach of Mareva injunction – Admitted – Plea – Penalty.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr S. M. Anderson | Freehills |
| For the 1st & 2nd Defendants | Mr J. D. Catlin | C & H Lawyers |
HIS HONOUR:
This is an application by the plaintiffs by summons filed 30 January 2004 that the first and second defendants Paul Anthony Miller and Yvonne Miller, who are husband and wife, be dealt with for contempt of court constituted by breach of a Mareva injunction ordered on 3 April 2003. The breach occurred when Mr and Mrs Miller re-mortgaged their property at 15 Nicholas Avenue, Metung (“the Metung property”) and dealt with part of the proceeds derived from the re-finance of the mortgage.
In addition to seeking orders that Mr and Mrs Miller be punished for their contempt, the summons seeks an order requiring them, subject to objection to the production of any information or document on the ground that to do so may tend to incriminate him or her, that they each file and serve an affidavit (a) updating their previous affidavits and disclosing the nature, extent and approximate value of their assets and liabilities, (b) in relation to amounts withdrawn by the defendants under para 2 of the orders made on 3 April 2003 (as amended by orders made on 7 and 21 May 2003) stating to whom those amounts have been paid, and for what purpose and how they have been expended, and (c) providing details of the source, nature, extent and approximate value of their income. This part of the application was not pressed by counsel for the plaintiffs. Accordingly I do not consider it.
Mr and Mrs Miller admit that they breached the Mareva injunction. They admit that the order containing the Mareva injunction was served upon them, and that, being aware of and understanding the order, they went ahead and breached it. They say that they did so under a pressing need to pay a variety of debts and expenses which the Mareva injunction had not sufficiently allowed them to do.
The Millers’ position was made clear at the hearing on 11 February both by their affidavits and the submissions of their counsel. The matter was stood over until 19 February for the purpose of enabling Mr and Mrs Miller to file further affidavits clarifying their evidence as to the subject expenditures. They took the opportunity and filed further affidavits. However, Mr Miller went further and filed an affidavit in support of a variation of the Mareva injunction to enable him and Mrs Miller to draw down a greater amount of funds than is presently permitted by the orders of the Court. At the request of counsel for Mr and Mrs Miller I have deferred consideration of that application until the determination of the contempt application.
The proceeding was commenced by writ filed on 3 April 2003. There is now a second amended statement of claim, filed on 23 July 2003, although the essence of the claim remains that which is described in the statement of claim endorsed on the writ. Each defendant has filed a defence and counterclaim. There is a third defendant which is not a respondent to the contempt application. It is admitted that Mr Miller was an employee of the second plaintiff, Eurovox Holdings Pty Ltd, the holding company of the first plaintiff, and a director of the plaintiffs. It is admitted that by an agreement made in or about November 1997 Mr Miller agreed to serve and the second plaintiff agreed to employ Mr Miller as managing director of the plaintiffs. The plaintiffs allege that Mr Miller’s employment was terminated on 11 March 2003, although Mr Miller, by his pleading, denies that the employment was terminated in accordance with law. The plaintiffs’ case is that Mr Miller was dismissed by reason of having acted dishonestly in receiving unauthorised commissions from suppliers of products to the plaintiffs. In other words, that he made arrangements with the suppliers concerned, whereby he personally enriched himself and did not account for the benefits to the plaintiffs. In an affidavit sworn on behalf of the plaintiffs by Bruce Heymanson on 7 May 2003, the amount of these payments is said to total $1,354,548.60. In addition, Mr Miller received two plasma televisions and 300 DVDs the receipt of which the plaintiffs seek to bring to account. Finally, the plaintiffs sue on two loan agreements with the defendants, made in April 1999 and March 2002, under which, according to the amended statement of claim, $75,979.15 and $91,971.05 respectively was owing at 15 July 2003. Mr and Mrs Miller’s pleadings raise various defences and seek relief by way of counterclaim. They proceed on somewhat different bases. Mr Miller contests the entitlement to, or correctness of, the termination, disputes the claims made against him, and seeks damages. Mrs Miller, who is sued on the loan agreements, seeks to avoid liability thereunder by the setting aside of those agreements as against her. It is unnecessary, for the purpose of the present application, to elaborate upon the pleadings.
The Mareva injunction was granted by Balmford J on 3 April 2003, the day on which the writ was filed. The order was made ex parte, prior to service of the writ. Paragraph 1 of the order restrained Mr and Mrs Miller until the hearing and determination of the proceeding or further order from:
“(a)dealing with, withdrawing or disposing of or otherwise encumbering all or any part of the moneys standing to the credit of any of the Defendants and/or their nominees at any account . . . in any bank or other financial institution . . . and, without limiting the generality of the foregoing, the following accounts in particular:
(1)Stud Park Shopping Centre branch of the Commonwealth Bank of Australia Limited . . . ; and
(2) Australia and New Zealand Banking Group Limited . . .
without the consent of the plaintiffs’ solicitors or by order of the Court;
(b) …
(c)selling, transferring, dealing with or disposing of or otherwise encumbering all or any part of any property including the land … situated and known as 3 – 4 Lansell Close, Narre Warren in the State of Victoria, without the consent of the plaintiffs’ solicitors or by order of the Court;
provided that this Order shall not:
(i)apply to so much of the monies held in the accounts held by any of the Defendants as exceed $1,000,000; or
(ii)prevent any bank from exercising any rights of set-off which it may have in respect of any facilities afforded by it to any of the Defendants prior to the date of this Order.”
Paragraph 2 of the order allowed the first or second defendants to withdraw his or her ordinary and usual living expenses, including legal advice, for the purposes of the proceeding up to a maximum combined amount of $1,000 per week or the payment of such further sums as may be agreed in writing by the plaintiffs’ solicitors or permitted by further order of the Court. Paragraph 5 of the order required the defendants to file affidavits as to their assets. An Anton Piller order followed which provided for execution at the defendants’ premises at 3-4 Lansell Close, Narre Warren.
In an affidavit sworn on 14 April 2003 pursuant to the order, Mr Miller disclosed that he and Mrs Miller owned the Metung property, which he estimated to have an approximate value of $240,000, and which he and his wife had purchased on about 4 June 2002. Among the liabilities disclosed was a liability that he and his wife had to Suncorp Metway Limited (“Suncorp”) for a home loan in the amount of $148,148.04.
By her orders Balmford J adjourned the plaintiffs’ summons for Mareva injunctions to 15 April 2003. On that day, the further hearing of the application was adjourned to 29 April 2003 with a direction for the defendants to file affidavits on which they intended to rely. On 29 April Smith J, among other orders: (a) ordered the defendants to file an affidavit of weekly expenditure and income and to file supplementary affidavits of assets and disposition of assets in compliance with the order of Balmford J, (b) ordered that para 2 of the orders of Balmford J is not applicable to funds held by Suncorp, (c) ordered that the plaintiffs’ consent to payment from the defendants to their solicitors of any reasonable legal fees and disbursements incurred by them to date, and (d) adjourned the hearing of the plaintiffs’ application to 7 May 2003.
On 7 May 2003 Smith J varied para 1(c) of the orders of Balmford J by substituting $2,000 for the figure of $1,000, and further ordered that the defendants be permitted access to a further $1,000 from the accounts referred to in the order. Smith J further ordered that the defendants be permitted to pay their solicitors any reasonable legal fees and disbursements incurred up to and including 13 May 2003. These orders were made on the submission of the defendants that the orders of Balmford J made inadequate provision for their living and legal expenses. The submission was based on affidavits of Mr and Mrs Miller and their solicitor sworn on 5 May. In one of Mr Miller’s affidavits he deposed to weekly expenses for living, loans and other payments of $3,320. Finally, Smith J adjourned the hearing of the plaintiffs’ application to 13 May 2003.
The matter came before Coldrey J, who, on 21 May 2003, further varied the order by increasing the amount of $2,000 to $3,000. Coldrey J also made provision for the defendants’ legal costs including that their lawyers receive $3,800. Finally, Coldrey J adjourned the further hearing of the plaintiffs’ summons filed 3 April 2003 to a date to be fixed by the Listing Master for the purpose of giving directions in relation to the further conduct of the proceeding, and reserved liberty to apply.
It remains to mention that Mr and Mrs Miller were represented on these occasions and actively sought a variation of Balmford J’s order to increase the amount they could withdraw.
Following these hearings, on 10 June 2003 the plaintiffs filed a summons for summary judgment for the amount stated in the statement of claim. Effectively, it would seem, the application was for judgment on the loan agreements. The defendants filed affidavits in opposition, and pursuant to directions of Master Evans made on 16 July 2003, the plaintiffs filed an amended statement of claim and the defendants filed defences and counterclaims. On 6 August 2003 Master Wheeler ordered that Mr and Mrs Miller have leave to defend and on 29 August 2003 Osborn J dismissed the plaintiffs’ appeal from that order.
In August the plaintiffs filed requests to the first and second defendants for particulars and in September the defendants and the plaintiffs filed further particulars. On 1 December 2003 the plaintiffs filed an affidavit of documents.
Then, in December 2003, and unbeknown to the plaintiffs, Mr and Mrs Miller re-mortgaged the Metung property for an increased amount, and applied the net balance of the funds remaining after paying out the prior mortgagee in the payment of various expenses. These dealings were in breach of the Mareva injunction. The plaintiffs became aware of the dealings in the following way.
Suncorp was aware of the order of Balmford J made 3 April 2004, having received a copy of it from the plaintiffs’ solicitors, Freehills, upon its making. Freehills had also been in communication with Suncorp in the course of which Suncorp was made aware of orders of Smith J and Coldrey J. On 12 January 2004 Freehills received a letter from Suncorp dated 8 January 2004 which advised that Suncorp no longer held a mortgage over the Metung property. Suncorp advised that a title search showed that the current registered mortgagee is Permanent Mortgages Pty Ltd (“Permanent”). This was the first intimation that Freehills, or the plaintiffs, had of any dealing by the defendants concerning the Metung property.
Freehills moved promptly to action. On 15 January Freehills had their Land Titles Office clerk conduct a search in relation to the Metung property. This produced a number of documents, as follows:
(a)A Transfer of Land dated 20 November 2003 for the transfer of the property to Mr and Mrs Miller for a consideration of $245,000 and which transfer had been denoted with duty of $10,360.
(b)A mortgage to Suncorp dated 20 November 2003 upon which duty of $564 had been paid on a consideration of $150,000.
(c) A discharge of that mortgage dated 8 December 2003.
(d)A mortgage to Permanent dated 10 December 2003 upon which duty of $334.40 had been paid on a consideration of $231,000.
Late in the afternoon on 15 January 2004, Freehills wrote to Mr and Mrs Miller’s solicitors inquiring about the dealings with the Metung property and asking about the increase in borrowing of $81,000. On 16 January 2004, Mr and Mrs Miller’s solicitors informed the plaintiffs’ solicitors that they had contacted Mr and Mrs Miller and were seeking instructions. On the same day Freehills wrote to Mr and Mrs Miller’s solicitors and requested an explanation by Monday 19 January 2004. On 19 January, Mr and Mrs Miller’s solicitors wrote to the plaintiffs’ solicitors stating that the facts of the re-mortgage set out in the plaintiffs’ solicitor’s letters dated 15 January 2004 were correct. The letter stated that Mr and Mrs Miller had, after re-mortgaging the Metung property, received $78,162.23. The letter enclosed a copy letter from Vernons Solicitors dated 10 December 2003, which stated that that amount had been paid into a Bank of Melbourne account. The letter from Mr and Mrs Miller’s solicitors set out a range of payments totalling about $66,491 which Mr and Mrs Miller had made to third parties from those funds during December 2003 and January 2004.
On 21 January 2004 the plaintiffs’ solicitors requested details of the transactions and asked that Mrs and Mrs Miller provide affidavits detailing their involvement in the re-mortgage of the Metung property and their subsequent disposal of about $66,491. On 22 January 2004 Freehills sent a facsimile extending the deadline for provision of the affidavits until 27 January 2004. On 27 January 2004 Freehills was served with an affidavit of Mr Miller sworn on 23 January 2004. In his affidavit Mr Miller stated that on 12 December 2003 he and his wife had re-financed the mortgage on the Metung property. He stated that the mortgage to Suncorp in the sum of approximately $150,000 was discharged and a new mortgage made to Permanent in the sum of $231,000. He stated that of this sum $81,000 was drawn down by his wife and himself and that after paying out the loan with Suncorp and solicitor’s fees they received $78,162.23. To facilitate “the re-draw facility associated with the new mortgage a new bank account was required and one was opened with the Bank of Melbourne”. He produced a copy of the statement from the Bank of Melbourne indicating the details of the account and withdrawals therefrom for the payments he proceeded to set out in his affidavit. He stated that he did not seek advice from his lawyers or advise them about the re-financing of the Metung property until they were made aware of it by the plaintiffs’ solicitors.
Mr Miller went on in his affidavit to itemise a number of payments that he and his wife had made out of the funds raised on the re-mortgage. In summary, there were two payments of $3,650 to BMW Finance in relation to the car and boat loans; $2,098 was applied to the ANZ home mortgage and additional loans referred to in an earlier affidavit; $2,200 was paid to an American Express account which is used to pay the telephone and there is a line of credit for general expenses; $400 was paid to Citibank, the debt for which related to the period prior to March 2003; $4,000 was paid to National Australia Bank toward a credit card debt referred to in an earlier affidavit; $2,150 was paid to Norwich Union being an annual fee payment against his life insurance policy; $5,000 was paid towards his family’s Christmas and associated expenses including gifts and food; $200 was paid to RACV being a monthly fee for motor vehicle insurance and house insurance; $2,000 was paid towards a debt owed to his son Matthew arising from a loan in April 2003 of $4,500; $3,000 was paid to his son Scott arising from a loan made in April of $13,000; $5,000 was paid to his mother arising from loans made from April totalling $70,000, $10,000 of which was applied to the cost of Matthew’s wedding, $20,000 to American Express and $40,000 for general expenses; $25,000 was paid to his nephew Shane Salter arising from a loan made up of a number of payments from April 2003 totalling $35,000; $1,345 was paid to Tambo Marina for boat parking at Metung; $3,000 was placed in trust with his solicitors for payment of the professional fees of counsel which he understood had not been disbursed to counsel. Mr Miller stated that the balance remaining from the funds received is $13,244 and he has asked his solicitor to refrain from dealing with those funds.
In what appeared to be intended as an explanation for what had been done, Mr Miller stated that the amount which had been allowed for expenses under the order of Balmford J had been inadequate. As to the amount of $1,000, he stated that the loan repayments on his family home alone were $962 per week, which left $38 a week for him to maintain a household of six people and resist enforcement proceedings on other loans while he and his wife were unemployed. The Court granted a variation to $2,000 and then to $3,000 a week in May 2003 to more properly reflect his reasonable expenses. The $1,000 withdrawal limit resulted in most of his loans becoming overdrawn, or placed in arrears, necessitating the loans from family members referred to previously. At all times withdrawals were being made from the Commonwealth Bank account which was exhausted of funds on 2 October 2003. His solicitors had made clear statements to the plaintiffs as to the likelihood of breaches of agreement, associated penalties and foreclosure on assets arising from the withdrawal limit contended for successfully by them before Balmford J but, despite this, the plaintiffs had not offered a solution. He had not been able to pay his solicitors in full by reason of the refusal of the plaintiffs to allow reasonable legal expenses to be paid to them. He believed that a sum of approximately $50,000 was owing for legal expenses. Unless consent was forthcoming for the re-financing of the Narre Warren property he saw no means of paying the debt. His solicitors had advised that they could not continue to act in such circumstances. Mr Miller went on to state that he had commenced employment on a three month probationary basis on 6 January 2004 and referred to his salary being on a commission basis, which he conservatively estimated to be $5,000 a month, subject to contingencies.
Mr Miller swore a further affidavit on 10 February 2004. He apologised to the Court for the breach of the orders. Counsel had advised that breaches of this nature interfere with the effective administration of justice, and are regarded very seriously. He understood the terms of the orders which were clear. He had stated in his previous affidavit that the emptying of his bank account meant that compliance with the order would have forced him on the path to bankruptcy. His capacity to borrow from his family, from whom he had borrowed over $122,000, was nearing exhaustion. Counsel advised that he should have sought an order varying the previous orders to allow him to get extra money for living and legal expenses. He said that he did not seek such an order “partly because I was not fully aware that it was available to me and partly because the obstructive attitude of the Plaintiffs regarding payment of costs outside the schedule in my first affidavit such as:
(a) payment of life insurance;
(b)payment of $2,854 owing to the Australian Taxation office from my superannuation fund;
led me to believe that the plaintiffs were by design seeking to financially suffocate me and by means of preventing me gaining employment referred to in paragraph 23 of my third affidavit, ruin me. I concluded that expensive applications to the court would be unsuccessful. The repeated court appearances are a source of expense and pressure and I also baulked at the thought of initiating another”. He stated that his decision to re-finance the Metung property was taken without advice and under enormous pressure arising from the embarrassment and humiliation of having to borrow from his family, the stress of the litigation and threat of bankruptcy, the crisis of having no money as at October 2003 with large weekly expenses and letters of demand from creditors to meet, and his belief in the likely attitude of the plaintiffs to a request for additional funds. He nevertheless repeated that “I understood the orders and my breach of them was not accidental or unintentional and understand that the circumstances of my breach of the orders in no way excuses them”.
Mr Miller went on to say that he was advised by his bank and believed that their Narre Warren home is worth $590,000 and, allowing for mortgages and loans secured on the property of $372,000, there was equity of $218,000. He had instructed his solicitors to put to the plaintiffs an offer to restore them to their position prior to the breach of the court order. The offer was sent to the plaintiffs’ solicitors on 9 February 2004. The offer was: (a) to provide a charge over the Narre Warren property in the sum of $35,000 in favour of the plaintiffs to be paid to in the event of a court order against him at the conclusion of the proceeding, and (b) to have the monies comprising fees in trust for counsel of $3,000 and the residual monies from the re-financing of $13,244 placed in trust with his solicitors and not be disbursed without court order. On this basis the breach would have changed the plaintiffs’ position to the extent of the $20,000 or so paid towards expenses. He concluded by saying that he had been interviewed by police in relation to the subject matter of the proceeding and been told that he will be charged in due course. He will need to be able to draw down monies for legal representation in that matter.
It is to be noted that in the letter dated 9 February 2004 the solicitors advised that they would seek an amendment of the orders to enable a re-financing of the Narre Warren property to create a draw down facility to enable the defendants to pay their reasonable legal costs and living expenses.
Mrs Miller also swore an affidavit on 10 February 2004. She had read her husband’s affidavit and confirmed its accuracy with regard to stress, emotional pressures and the financial facts regarding the property, equity in the property and family loans. She confirmed that during October 2004 the monies ran out from the bank account they were drawing expenses from and that they had no room to move. She said that:
“When discussing the re-financing that I am now advised by Counsel was a serious breach of the orders of the Court my husband and I said words to the effect that we would probably be outside the orders of the Court. I also humbly apologise unreservedly to this Honourable Court for my breach of the orders.”
She stated that, notwithstanding what she said about her motivation for breaching the orders of the Court, she understood that her “breach of them was not accidental or unintentional and understand that the circumstances of my breach of the orders in no way excuses them”.
Counsel for Mr and Mrs Miller presented submissions, written and oral, in a succinct and sensible way having regard to the circumstances. The written submission commenced with a concession that the defendants had acted in contempt, that they accepted that any breach of the Court’s order is serious, that their affidavits set out mitigating circumstances, and that the contempt should be treated as a civil contempt or coercive exercise for the benefit of the plaintiffs and the opportunity should be taken to put the plaintiffs in the position they were in prior to the breach. Specifically, the defendants conceded that the plaintiffs had established the necessary elements to prove the contempt, they being the elements identified by Gillard J in Advan Investments Pty Ltd v Dean Gleeson Motor Sales Pty Ltd[1]. These were that an order was made by the Court; that the terms of the order were clear, unambiguous and capable of compliance; that the order was served; that the party charged with contempt had knowledge of the terms of the order, and had breached the order. Without these admissions I would have been satisfied that all elements necessary to constitute the contempt had been satisfied. Acknowledging the importance of observing orders of the Court and the maintenance of the rule of law, as distinct from self help outside the legal system, and the associated public interest, which matters Gillard J referred to in Pico Holdings Inc v Voss[2], and the discussion in the joint judgment of Brennan, Deane, Toohey and Gaudron JJ in Witham v Holloway[3] of the difference between civil and criminal contempt, counsel conceded that the defendants “cannot characterise their actions as accidental or casual or trivial and therefore the characterisation of the contempt is almost inevitable”. That is to say, the characterisation of their contempt as criminal is almost inevitable. In this respect it is to be noted that in Witham Brennan, Deane, Toohey and Gaudron JJ said[4] that:
“In general terms, the distinction between civil and criminal contempt is that a civil contempt involves disobedience to a court order or breach of an undertaking in civil proceedings, whereas a criminal contempt is committed either when there is a contempt in the face of the court or there is interference with the course of justice. However, disobedience or breach of an undertaking amounts to a criminal contempt if it involves deliberate defiance or, as it is sometimes said, if it is contumacious.”
[1][2003] VSC 201 at [31].
[2][2002] VSC 319 at [50].
[3](1995) 183 CLR 525 at 532-533.
[4]At 530.
The present is a case of a deliberate and knowing breach of the Court’s order. It may well be, as Mr and Mrs Miller’s counsel submitted, that in time the re-mortgage would have come to the notice of the plaintiffs. That is because of the likelihood that the dealings at the Land Titles Office would come to the attention of the plaintiffs. Indeed, it would seem inevitable that at some time or other the plaintiffs would have acquired knowledge of Mr and Mrs Miller’s acts, but it is a matter of speculation when that would have occurred. Nevertheless, Mr and Mrs Miller undertook those acts for the purpose of obtaining a sum of money to quickly disburse before the plaintiffs became aware of their actions. To facilitate their purpose, Mr and Mrs Miller opened a new bank account into which the net balance of funds was deposited, and from whence payments were made with promptitude. They also kept their actions secret from their solicitors in the litigation. It is a clear inference, and I find, that Mr and Mrs Miller acted in this way in order that, when the breach was discovered, the plaintiffs and the Court would be presented with a fait accompli and, if and when called to account, they would say that they had little or no ability to restore the status quo let alone make good the amount expended, and would otherwise seek to explain or justify their actions. In the circumstances their actions clearly constituted a criminal contempt, and I so find beyond reasonable doubt.
In effect the case was conducted by Mr and Mrs Miller’s counsel as a plea. While recognising the likely characterisation of Mr and Mrs Miller’s acts as constituting a criminal contempt, counsel nevertheless submitted that the distinction between civil and criminal contempt is relevant on the issue of the appropriate order and penalty. That was in the sense that civil contempt regarded the benefit of the innocent party while the latter is concerned with the protection of the administration of justice. The coercive objective of the civil contempt process could be met by Mr and Mrs Miller’s proposal to provide a charge to become payable in the event of the plaintiffs being successful in the proceeding and the holding of the amounts of $3,000 and $13,244. The proposal would place the plaintiffs in a superior position than they were under the Mareva injunction. That was because a Mareva injunction is not a security. Counsel proceeded to make other submissions by way of a plea in mitigation. I have taken the course of initialling the written submissions of counsel for both parties and placing them on the court file where they are available for reference in full.
It is convenient at this point to refer to the adjournment of the matter to permit the filing by Mr and Mrs Miller of further affidavits clarifying their evidence of the expenditures. Affidavits were sworn by Mr Miller’s mother, two adult children of Mr and Mrs Miller, and Shane Salter. These affidavits related to the inter-family loans and Mr and Mrs Miller's payments in reduction of them. The affidavits were subjected to a critical analysis by the plaintiffs. It was submitted that by reason of contradictions or inconsistencies between the various affidavits the further affidavits should not be given much, if any, weight, and that Mr and Mrs Miller's explanation of the expenditure of the sum derived from the re-financing stood unexplained by cogent evidence. That generally applied to the disposal of the $66,491 referred to in Mr Miller’s affidavit sworn 23 January 2004. Previously, counsel for the plaintiffs had addressed detailed submissions concerning all of the payments. There are some difficulties with this submission of the plaintiffs. While being invited, in effect, to not accept the evidence of several deponents, counsel for the plaintiffs neither sought to, nor did, cross-examine any of them including Mr and Mrs Miller. Further, the lack of paperwork recording a loan, or a repayment, between a parent and child is not all that surprising. Nor is the difference in recollection, as to the month or months of the making of a loan or loans or the amount thereof, unexpected when the witnesses are trying to record things that happened within a family over a period of a year. I add that counsel for the plaintiffs also relied on his submission as to the lack of a cogent explanation as indicating, in the context of an admitted contempt, a lack of genuine remorse. That is to say, the plaintiffs submitted that if the defendants had genuine remorse they would have given an accurate account of the disposal of the sum of $66,491. In the absence of cross-examination I am not able to regard the evidence in the way for which the plaintiffs contend.
I turn then to the matter of penalty and for that purpose take account of all the circumstances of the case including the principles related to sentencing applicable to a case such as the present[5].
[5]See Pico Holdings Inc v Voss [2000] VSC 319 at [65] – [67].
One commences with the fact that this was a calculated and deliberate breach of the order by Mr and Mrs Miller, each being aware of, and understanding its terms. The fact that they had previously sought a variation of the Mareva injunction to allow them a greater amount for living and legal expenses only reinforced what they conceded, namely, their awareness of the order and its effect. That serves to emphasise the gravity of the breach in that it was undertaken with knowledge that they could apply to the Court to vary the order to allow a greater amount to be drawn down from their assets to meet expenses. Moreover, their prior applications for variation had been successful, even if not to the extent they had sought. The statement of Mr Miller in his affidavit sworn 10 February 2004 that he did not seek an order from the Court increasing the amount for living and legal expenses because he was not “fully aware” that that was an available course is, I find, a false statement. It was an unworthy statement that sits ill with the apology and apparent remorse. In the same paragraph in that affidavit he went on to refer to the obstructive attitude of the plaintiffs regarding costs and said that he concluded that expensive applications to the Court would be unsuccessful. He also stated that they were a source of expense and pressure and he baulked at the thought of initiating another. The conclusion is clear beyond reasonable doubt, and it is confirmed by Mrs Miller in her affidavit, that they considered whether to apply to the Court, and having done so, they instead determined on the course of breaching the order as the most effective way of achieving the desired result.
The submission on behalf of Mr and Mrs Miller referred to the exhaustion of funds in the Commonwealth Bank account and to the costs and expenses of the household of seven people, as to which it was said that Mr Miller had been the sole breadwinner until he was dismissed. The statement as to being the sole breadwinner was not correct, as it transpired, in that there were four adult children at home, Scott aged 30 and Luke aged 25, each of whom had casual employment, and twins Toree and Alise aged 23 who were employed as child care workers. Mr Miller’s mother, Monica, is aged 75 and retired. Mr Miller is aged 50 and Mrs Miller is aged 48.
It was said by counsel that if Mr and Mrs Miller had applied for a further variation of the order, a variation would have been granted to permit a re-finance to be undertaken to raise funds for the purpose of living and legal expenses. It was said that the Court would have permitted them to pay their pre-existing and ongoing expenses. In this respect counsel referred to Deputy Commissioner of Taxation v Hickey[6]. More particularly, as to the approach to the allowance of expenses under a Mareva injunction, counsel has later referred me to PCW Ltd v Dixon[7]. Having considered the matter, I do not consider I am in a position on this contempt application to accept the submission. In the first instance, it fails to allow for the fact that the past orders of the Court which increased the allowable limit were made in contested proceedings on the Millers’ application. Furthermore, the submission anticipates the foreshadowed application to further vary the order. To succeed on that application, Mr and Mrs Miller will have to adduce evidence that establishes that the re-financing, or whatever other arrangement, was or is appropriate to be permitted. That will permit the plaintiffs an opportunity of testing the veracity of the defendants’ case in that regard. It is that process of producing and testing evidence, even by cross-examination as Mr Miller was tested in May 2003 before Coldrey J, that Mr and Mrs Miller avoided by acting as they did. They stole a march on the Court. It is seen that on the present contempt application the plaintiffs have pointed to numerous inconsistencies and unsatisfactory aspects in the defendants’ evidence as to the expenditures and particularly the family loans. While in the absence of cross-examination I am not able, or prepared, to conclude that, as submitted by counsel for the plaintiffs, the affidavits explaining these matters are of little if any weight, yet it is apparent from the submissions that there is room for explanation of the matters pointed out by the plaintiffs. It is sufficient to say of counsel’s submission that if Mr and Mrs Miller had applied to re-finance the property it is possible that some order favourable to them may have been made, but it is speculation as to the extent of any such order. Moreover I do not think it is a sufficient explanation of the breach to submit as counsel for Mr and Mrs Miller did, that one can, by an arithmetical exercise, see that the sum produced by the difference between $1,000 and $3,000 represented the debts which Mr and Mrs Miller felt burdened to discharge or reduce and hence to engage in the breach of the order. In making these observations I do not overlook that a Mareva injunction is not intended, as Lloyd J pointed out in PCW Ltd v Dixon[8], to prevent expenditure on living as hitherto.
[6][1999] FCA 259.
[7][1983] 2 All ER 158 at 162.
[8]Supra.
Then, further on the matter of contrition and an appropriate reaction to their breach, counsel for Mr and Mrs Miller submitted that their offer of a charge over the Narre Warren property for $35,000 and to hold the further $16,244 arguably placed the plaintiffs in a superior position. That is so in the sense that the charge would constitute a security to the extent of $35,000 payable in the event of the plaintiffs succeeding at trial. The reason for offering this security was that the $35,000 paid to relatives was the Millers “worst” area as counsel described it. As to the putting aside and holding of the $16,244, the following points may be made. Unless the Millers have other (undisclosed) funds it is hard to see how that money could be preserved until trial. At present the money is covered by the Mareva order. It would seem that the money could only be set aside as a "secured" sum if the Court permitted the Narre Warren property to be re-financed. That must await the variation application. Subject to these observations, I take account of Mr and Mrs Miller’s proposal to deal with the shortfall created by their expenditures. To recapitulate, the proposal is made up of three items which total $51,244. Subtracting that sum from the proceeds of the re-mortgage of $78,162.23 produces a total of $26,918.23 as having been spent by Mr and Mrs Miller in breach of the order and not restored by the offer. In a sense that is not a large sum but, in Mr and Mrs Miller’s case, it seems forever lost from the protection of the Mareva injunction. To be fair to Mr and Mrs Miller, their case is that they should always have been free to pay the expenses of $26,918.23.
It was further submitted by counsel for Mr and Mrs Miller that the plaintiffs acted prematurely in filing the contempt summons. The submission seemed to be this. On discovering the breach the plaintiffs’ solicitors wrote requesting an explanation and an affidavit. In response, Mr Miller swore his affidavit on 23 January 2004. In that affidavit Mr Miller gave an account of what had occurred and stated, in effect, that his solicitors had made statements to the plaintiff communicating the likelihood of breaches of agreement, associated penalties and foreclosure on assets arising from the withdrawal limit ordered by the Court, and that despite this, the plaintiffs had not offered any solution. This seemed to be saying that the plaintiffs were on notice that the withdrawal limit was insufficient to avoid Mr and Mrs Miller going into default with third party creditors, with consequential financial penalties and loss of assets. That had happened and the impugned payments had been made so as to deal with creditors. It is, of course, the case that plaintiffs seeking a Mareva injunction should be sensible to the need for the order to be realistic. A Mareva injunction is not granted as a plaintiff's weapon to force a defendant into submission. At the same time the parties had been before the Court and on two occasions the withdrawal limit had been increased.
Then, the submission continued, having received Mr Miller’s affidavit the plaintiffs filed the contempt summons on 30 January, still without making a proposal as to the withdrawal limit in the order. To be weighed in the balance with this is the brazen nature of the breach, the fact that the recipients of the greater amount were family and that overall there were, it might be thought, some insufficiencies of, and inconsistency in, the explanation of the payments. Then, following the filing of the summons, it was reasonable for the plaintiffs to press the matter for a determination by the Court. For one thing, it was not until 10 February 2004, the day before the hearing, that Mr and Mrs Miller swore affidavits in fuller explanation of their conduct, including providing an apology.
I have referred to Mr and Mrs Miller’s family situation. Mr and Mrs Miller have no convictions. Mrs Miller is not employed. Mr Miller commenced employment on a three month probationary basis on 6 January 2004 on a salary which, while paid on a commission basis and not able to be predicted with certainty, he conservatively estimated to be $5,000 a month. I take that new employment, including the importance of its continuity, into account together with counsel’s submission that a conviction is likely to have serious consequences for his future capacity for work given the necessity of travel to Korea, Taiwan and Japan. I also take account of counsel’s submission that Mr and Mrs Miller determined on their course of action in desperation following the exhaustion of their available funds. I further take account of the proposal of a charge and placing funds in a restricted account and the submission that this proposal means that an amount of only $26,918.23 is not restored to the protection of the order. I conclude, in relation to the proposal, that it is not appropriate to hold Mr and Mrs Miller to it in the disposition of this contempt proceeding. I take that view for several reasons. It might become an embarrassment, or even an impediment, to a judge on a subsequent application to vary the order to allow Mr and Mrs Miller to spend greater amounts. Further, a requirement of security sits ill with the basis on which Mareva injunctions are granted. It might even be relied on by Mr and Mrs Miller to support an application for a variation of the order.
Taking all of these matters into account, and all of the other matters that I have referred to, it remains that this was a calculated and contumacious breach of an order which Mr and Mrs Miller had twice had varied in their favour. Principles of punishment and deterrence apply, together with the necessity to make it clear that this type of conduct can not be tolerated, in determining the appropriate penalty. For these purposes I do not consider that Mr and Mrs Miller can be considered separately. The breach of the order was constituted by their joint acting in relation to their joint property interest and they so acted in the knowledge that what they were doing was outside the order. In my view it is a case in which there should be a conviction against Mr and Mrs Miller for a criminal contempt. The question is as to the penalty then to be applied. The finding of criminal contempt and the conviction is punishment in itself. In addition Mr and Mrs Miller will have to pay the plaintiffs' costs and will have the burden of their own costs. But these matters are not sufficient penalty in my view. There is power to fine or imprison or both. A fine would further reduce the financial position of Mr and Mrs Miller and thus aggravate the overall position. Committal to prison rather than fine or in combination with fine is an unfortunate result for them and may result in the loss of the new employment opportunity for Mr Miller. I consider that the contumacious breach warrants imprisonment. I conclude that in all the circumstances the appropriate penalty is that Mr and Mrs Miller each be committed to prison for a period of two months. I will direct that a warrant for their committal issue but that it lie in the office of the Prothonotary unexecuted for a period of 14 days. I will grant general liberty to apply. On the question of costs I am inclined, subject to anything that counsel might say, to order that the plaintiffs’ costs including reserved costs be paid by Mr and Mrs Miller on a solicitor and client basis.
The orders will be as follows, subject to any submissions of counsel:
(a)that Paul Anthony Miller committed a contempt of court in that he breached paragraph 1 of the order of the Honourable Justice Balmford dated 3 April 2003 in the respects stated in paragraphs 1, 2, 3, 4 and 5 of the summons filed on 30 January 2004;
(b)that Yvonne Miller committed a contempt of court in that she breached paragraph 1 of the order of the Honourable Justice Balmford dated 3 April 2003 in the respects stated in paragraphs 7, 8, 9, 10 and 11 of the said summons filed 30 January 2004.
(c)in each case the contempt is a criminal contempt;
(d)a warrant issue for the committal of Paul Anthony Miller to prison for a period of two months, the warrant to lie in the office of the Prothonotary unexecuted for a period of 14 days;
(e)a warrant issue for the committal of Yvonne Miller to prison for a period of two months, the warrant to lie in the office of the Prothonotary unexecuted for a period of 14 days;
(f)there be general liberty to apply;
(g)the plaintiffs’ costs of the application by the said summons including reserved costs be paid by Paul Anthony Miller and Yvonne Miller on a solicitor and client basis.
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