Hogan and Lennard (No.2) - [2008] FMCAfam 587

FEDERAL MAGISTRATES COURT OF AUSTRALIA

Hogan & Lennard (No.2)

[2008] FMCAfam 587

FAMILY LAW – Contempt – notice of orders not established – application dismissed – oral application – orders to preserve assets – application granted.

Black & Kellner (1992) FLC 92-287
Grant-Taylor v Jamieson (2002) NSWSC 634
Mezzacappa (1987) FLC 91-853
Oriolo (1985) FLC 91-653
Pereira v Director of Public Prosecutions (1988) HCA 57
Sahari v Sahari (1976) FLC 90-086
Weir (1993) FLC 92-338

Applicant:

MS HOGAN

Respondent:

MR LENNARD

File number:

SYC 4472 of 2007

Judgment of:

Altobelli FM

Hearing date:

30 April 2008

Date of last submission:

30 April 2008

Delivered at:

Sydney

Delivered on:

30 April 2008

REPRESENTATION

Counsel for the Applicant:

Mr Gersbach

Solicitors for the Applicant:

Elias Gates & Associates

Counsel for the Respondent:

Mr Schroder

Solicitors for the Respondent:

Pertsoulis Lawyers

ORDERS

THE COURT ORDERS THAT:

The Contempt Application filed 19 March 2008 is dismissed.

THE COURT ORDERS PENDING FURTHER ORDER THAT:

The Applicant be given leave to file an Application in a Case in Court, made returnable immediately.
The husband be restrained from accessing, cashing, commuting, drawing upon, receiving or transferring any of his right title and interest in his superannuation with [X] Superannuation.
The husband be restrained from doing any action or this and/or executing any deed or document in relation to enabling, authorising, directing or causing any employee, agent or servant of the Trust company [Y] Limited ABN [Y] as trustee of the husband’s [X] Superannuation Fund Investor number [X] from dealing in any manner with any Superannuation Fund, monies, and/or investments held in any account by the company for or on behalf of the husband.
The husband forthwith cause all cash moneys held by him or by any person on his behalf to be transferred to the wife’s solicitor.
The wife’s solicitor pay any moneys received from the husband or any person on behalf of the husband into his trust account to be held and applied in accordance with Order 2 made 27 February 2008.

THE COURT NOTES

The husband is present in Court and is aware of these Orders.
All future applications relating to procedural issues in this matter are to be listed before Federal Magistrate Altobelli.

IT IS NOTED that publication of this judgment under the pseudonym Hogan & Lennard is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYC 4472 of 2007

MS HOGAN

Applicant

And

MR LENNARD

Respondent

REASONS FOR JUDGMENT

Ex Tempore

Prima Facie Case

In the course of this matter, at the conclusion of the applicant's case a submission was made on behalf of the respondent that the applicant had not established a prima facie case, and specifically, that the knowledge of the respondent of the orders in question had not been established beyond a reasonable doubt.
I agree that on the evidence that is contained within the applicant's case she has not established knowledge beyond a reasonable doubt, but in this present context where the argument is simply whether the case has been established on a prima facie basis, I am satisfied that it is not necessary for the applicant to prove all of the elements of the offence at its highest. There must still be some basis on which knowledge could be established. The question I have asked myself is this: on the basis of the evidence that is available to me at this moment, is the applicant's case entirely hopeless? I think the answer is no.
Mr Schroder has correctly pointed out that what is regarded as the leading Full Court authority on contempt, the Full Court's decision in Sahari v Sahari (1976) FLC 90-086 at 75406, makes it abundantly clear that the first matter that must be established is notice.
When the various reported authorities from the common law countries together with the Phillimore Report are examined the following principles emerge in relation to civil contempt:
(a) a person can be found guilty of contempt of court only if he knows the order he is required to obey and is in breach of that order.
(b) the precise breach of the order must be proved beyond reasonable doubt.
(c) the court may then punish (inter alia) by imprisonment:
(i) until the order is complied with; or
(ii) to uphold the authority of its orders.
(d) as to (c)(i) imprisonment should only be imposed if there is no alternative method available to achieve the remedy the breached order seeks to effect.
(e) as to (c)(i) the sentence may be indefinite as the defendant has ''the keys of his release in his own pocket'' but imprisonment should not continue when compliance is no longer possible.
(f) where the defendant breaches an order and his breach is apparently a criminal offence, the court has to exercise a discretion whether to hear the contempt charge or adjourn it and await the outcome of the criminal proceedings (if any).
(g) in the exercise of that discretion the court will need to consider inter alia the gravity of the offence and the urgent need (if any) to protect the applicant or prevent repetition of the offence.
(h) in the hearing of contempt proceedings the defendant should have the same rights and privileges as a person charged summarily with a criminal offence.
(i) contempt procedures should be used sparingly and imprisonment invoked only as a last resort.
A person can be found guilty of contempt of court only if he knows the order he is required to obey and is in breach of that order.
Now, the evidence at its highest indicates to my satisfaction that the respondent’s solicitor was aware of the order and indeed acted on it. So it is possible, in a theoretical sense at least, that the applicant could prove knowledge though not on a constructive basis, because I am satisfied that the authorities provide that is not sufficient in terms of notice. In that regard I rely on a decision of the Supreme Court of New South Wales in Grant-Taylor v Jamieson (2002) NSWSC 634. Whilst constructive notice is not an option in this case, it is possible, having regard to the High Court's decision in Pereira v Director of Public Prosecutions (1988) HCA 57, that the doctrine of wilful blindness might apply, but that depends upon the evidence. So whilst there is sufficient evidence to establish there is a prima facie case, nonetheless, I observe that there is still an issue about notice. I am not quite sure how that can be dealt with from the applicant's perspective from this point onwards, but that is a matter for the applicant. The applicant's case at least survives a challenge on the basis of a prima facie case.

Substantive Application

The application for contempt filed by the applicant wife on 19 March 2008 is dismissed. By way of brief reasons, my reasons should incorporate the observations I have made during submissions and the transcript no doubt will record those. My reasons should incorporate the brief reasons that I gave in relation to the application that the applicant had not established a prima facie case.
When the application was unsuccessful it became in effect the respondent's turn to present such evidence as he might or might not, as the case may be. No evidence was called on behalf of the respondent. That was his right and I think it would be quite inappropriate for me to draw any adverse inference in criminal or quasi-criminal proceedings from the respondent's decision not to call evidence.
An essential element in the applicant's case is proving beyond a reasonable doubt that the respondent had knowledge of the order, specifically order 2 made on 27 February 2008 in this court. The evidence that has been advanced by and on behalf of the applicant fails to do so to the requisite standard. At its highest the evidence might indicate that the respondent was on constructive notice of the order, but that of course is not sufficient in the context of proceedings such as these.
I adverted to the principle of wilful blindness that is referred to in the High Court's decision in Pereira v Director of Public Prosecution (1988) 82 ALR 217. I am not aware that the concept of wilful blindness has ever been applied in the context of contempt proceedings where the issue for the Court to determine is whether there has been knowledge. The concept of wilful blindness is discussed at paragraphs 10 and 11 of the High Court's decision.
10. Although the application must fail it is nevertheless appropriate that some observations be made on the direction relating to "wilful blindness". In Bahri Kural v. The Queen [1987] HCA 16; (1987) 162 CLR 502 it was emphasized (at pp 505 and 511-512) that in this area it is important not to transform matters of fact into propositions of law. That case was concerned not with what constituted "knowledge" as a distinct element of an offence but with the unspecified requirement that the accused had acted with mens rea or a guilty mind. It was pointed out in the joint judgment of Mason C.J., Deane and Dawson JJ. (at p 504) that, depending upon the nature of the particular offence, "the requirement of a guilty mind may involve intention, foresight, knowledge or awareness with respect to some act, circumstance or consequence." Their Honours concluded (at pp 504-505) that actual knowledge or awareness of the presence of the particular substance was not an essential element in the guilty mind required for the commission of the offence involved in that case, namely, the offence of importing a prohibited import.
11. Even where, as with the present charges, actual knowledge is either a specified element of the offence charged or a necessary element of the guilty mind required for the offence, it may be established as a matter of inference from the circumstances surrounding the commission of the alleged offence. However, three matters should be noted. First, in such cases the question remains one of actual knowledge: Giorgianni v. The Queen [1985] HCA 29; (1985) 156 CLR 473, at pp 504-507; He Kaw Teh, at p 570. It is never the case that something less than knowledge may be treated as satisfying a requirement of actual knowledge. Secondly, the question is that of the knowledge of the accused and not that which might be postulated of a hypothetical person in the position of the accused, although, of course, that may not be an irrelevant consideration. Finally, where knowledge is inferred from the circumstances surrounding the commission of the alleged offence, knowledge must be the only rational inference available. All that having been said, the fact remains that a combination of suspicious circumstances and failure to make inquiry may sustain an inference of knowledge of the actual or likely existence of the relevant matter. In a case where a jury is invited to draw such an inference, a failure to make inquiry may sometimes, as a matter of lawyer's shorthand, be referred to as wilful blindness. Where that expression is used, care should be taken to ensure that a jury is not distracted by it from a consideration of the matter in issue as a matter of fact to be proved beyond reasonable doubt.
What is apparent to me is that the evidence filed on behalf of the applicant would not in any event have met the requirements for the doctrine of wilful blindness as set out by the High Court in Pereira.
The applicant submits that the Court should be on notice of the respondent's presence at the time that the order was made. There is no evidence advanced on behalf of the applicant to that effect and the only way in which I could use whatever recollection I had would be via the doctrine of judicial notice, which I think would be entirely inappropriate in the context of criminal or quasi-criminal proceedings because it would recast my role from being an independent judicial officer to that, in effect, of being a witness as part of the applicant's case against the respondent. I think that would be a great travesty and would bring these proceedings into disrepute. Of course there are some present in the courtroom who might be thinking that these proceedings have brought the legal system and this court into disrepute because of failing to take into account what in the colloquial might be described as the ‘bleeding obvious’.
But these are criminal or at least quasi-criminal proceedings, and one of the possible consequences for the respondent is that he would be deprived of his liberty. In those circumstances, it is necessary for the Court to proceed with the utmost caution. At all times the responsibility was on the applicant to prove her case beyond a reasonable doubt. Mr Schroder's observation in his closing submissions that it would have been a relatively simple matter for the applicant to have led such evidence I think speaks for itself.
The decision may well flee in the face of commonsense, as is submitted on behalf of the applicant. But I think there are far more important principles at stake here, having regard to the nature of the proceedings.
There was a submission on behalf of the applicant that the nature of the breach of the order was a continuing breach. My view is that the contempt application refers to a single breach. Indeed, as Mr Schroder, counsel for the respondent, pointed out, the order in question required the respondent to do something forthwith, that is, at the time presumably of making the order. So I think there is no substance, and in fact it does not assist the applicant even to try to construe the order as one that should be characterised as resulting in a continuing breach and thereby to use that as a means in effect of establishing the breach. Again I agree with the submissions by Mr Schroder for the respondent that even if that were the case the applicant has not established knowledge beyond a reasonable doubt.
This application is somewhat of a tragedy. Both the applicant and the respondent have expended I am sure considerable funds in running the proceedings. As a result of circumstances beyond my control, my inability to deal with the matter last week in Parramatta has probably contributed to that and that is regrettable. What is tragic of course is that the matrimonial pool of assets is being used to fund these proceedings. What is tragic is that there is more than a strong element of allegations of non-disclosure in these proceedings and that ultimately if those allegations are established at a final hearing, the inferences that I could not draw against the husband in criminal proceedings might in fact be drawn against him at a final hearing.
At the end of the day, one possible outcome in this case is that all of the costs and all of the consequences of any alleged non-disclosure could be sheeted home to one of the parties in this litigation. Of course I am not hearing this case at a final hearing. So the parties can be reassured that a person will be hearing this case who will have no history or background in terms of the contempt proceedings and what has transpired here.
The purpose of my comments is to simply encourage both the husband and the wife in this case to just have a think about the benefit or the possible futility of continued proceedings in this case.

Oral Application

I have before me an oral application to move on an application in a case that is before me, but which I note will still need to be filed in the usual way, seeking certain restraining orders. There is also an oral application to seek orders in accordance with the document that is called "Wife's Minute of Orders", a handwritten document.
The application is supported by an affidavit of Mr G that was sworn on 29 April and there is the undertaking in the usual form as to damages that is provided on behalf of the applicant wife.
For the record, I grant leave to the applicant to proceed with this matter and to deal with it straightaway.
The submission is that this is necessitated because the history of the matter indicates a previous non-compliance by the husband of orders of this court and a conduct which could be reasonably inferred as being non-disclosure for want of a better word. It is submitted on behalf of the wife that had she proceeded by giving notice to the husband he may well have acted to dissipate the very funds that are sought to be preserved.
I think the fundamental problem with this case is exemplified by two events which have occurred in the presence of myself, in the presence of both clients and their respective solicitors and I think counsel as well. The first event occurred on 2 April and in effect came to my knowledge that a sum of $60,000 that at some stage was in the possession and control of the husband was now being held by a friend of his ostensibly on his behalf. The husband declined on that occasion to provide further information about the moneys, and in particular, who was holding those funds.
The second event that typifies the problem of this case occurred this afternoon when the husband through his counsel again declined to provide the Court with information about who holds these funds or any particulars in that regard.
Mr Gersbach submits, and I believe quite correctly, that the husband has a duty of disclosure to the Court. It is an ongoing duty of disclosure. That duty of disclosure is discussed at length in various Full Court decisions including Black & Kellner (1992) FLC 92-287, Oriolo (1985) FLC 91-653, Weir (1993) FLC 92-338 and Mezzacappa (1987) FLC 91-853. The duty of litigants in this court in financial matters is to, in effect - again if I can use the vernacular - to come to the table, and put all of their cards down face-up. Without that it is impossible for this court to carry out its statutory duty to make adjustments of property that are just and equitable.
I indicated before that the matter has been before me several times. In each case the context seems to have been in one way, shape or form the husband's non-compliance with orders made by this court. It is true that the husband was successful in having dismissed the wife's application for contempt. Of course those proceedings operate on a completely different standard of proof.
I am satisfied on the balance of probabilities that if the orders sought are not made, that there is a real risk that the husband will dissipate the very assets that are sought to be preserved. The orders are made pending further order of the court and I note that the final hearing of this matter is in the not too distant future.
Having regard to all of those matters, I make the following orders.

I certify that the preceding twenty-seven (27) paragraphs are a true copy of the reasons for judgment of Altobelli FM

Associate: Monique Robb

Date: 11 June 2008