In the matter of Gap Constructions Pty Ltd - Application under Corporations Act: Gap Constructions Pty Limited v Vigar Pty Limited
[2012] NSWSC 30
•06 February 2011
Supreme Court
New South Wales
Medium Neutral Citation: In the matter of Gap Constructions Pty Ltd - Application under Corporations Act: Gap Constructions Pty Limited & Anor v Vigar Pty Limited & Ors [2012] NSWSC 30 Hearing dates: 3 February 2011 Decision date: 06 February 2011 Jurisdiction: Equity Division - Duty List Before: Ball J Decision: Paragraph 1 of the motion filed on 25 January 2012 be dismissed with costs.
Catchwords: CONTEMPT - concurrent contempt, civil and criminal proceedings - whether motion for contempt should be stood over until after substantive proceedings - whether contempt hearing prejudicial to later criminal trial - determination of defendant's credit in contempt proceedings Legislation Cited: Crimes Act 1900 (NSW) Cases Cited: Australian Meat Industry Employees' Union v Mudginberri Station Pty Limited (1986) 161 CLR 98
Gypsy Fire v Truth Newspaper Pty Ltd (1987) 9 NSWLR 382
Kevern v Marshall [2000] NSWSC 1236Category: Procedural and other rulings Parties: GAP Constructions Pty Limited ACN 122 350 038 (First Plaintiff - Respondent on Motion)
Peter Bega (Second Plaintiff - Respondent on Motion)
Vigar Pty Limited (In Liquidation) ACN 070 145 452 (First Defendant)
Bega Group Pty Limited ACN 139 252 529 (Second Defendant - Applicant on Motion)
Con Bosganas (Third Defendant - Applicant on Motion)
Bugong Pty Limited (In Liquidation) ACN 089 116 405 (Fourth Defendant)Representation: A J Hourigan (Plaintiffs - Respondents on Motion)
Ms C Latham (Second and Third Defendants - Applicants on Motion)
Sarvaas Ciappara Lawyers (Plaintiffs - Respondent on Motion)
Horowitz & Bilinsky Lawyers (Second and Third Defendants - Applicants on Motion)
File Number(s): 2011/198502
Judgment
In these proceedings, the plaintiffs claim that the third defendant, who was an employee of the first plaintiff, misappropriated sums of money totalling approximately $900,000, which were ultimately transferred to the share trading account and an associated account of the fourth defendant. The first and fourth defendants are now in liquidation.
The proceedings were commenced on 17 June 2011. On 27 June 2011, White J made interlocutory orders by consent placing restrictions on the payment of money out of the two accounts. Those orders were varied by Ward J on 4 July 2011, Hammerschlag J on 18 July 2011 and, on 19 and 23 September 2011, Rein J made further orders freezing the money remaining in the two accounts. Those orders were extended by Brereton J on 27 September 2011. Subsequently, the monies remaining in the accounts have been paid into court.
It is not clear precisely when, however criminal charges were laid against the third defendant under s 178(b)(a)(i) and s 192(e)(i)(B) of the Crimes Act 1900 (NSW) arising out of the facts that are the subject of these proceedings. The parties accept that the substantive issues in these proceedings should await determination of the criminal proceedings.
On 5 December 2011 the plaintiffs filed a motion seeking to have the third defendant and Mr Alex Pappas, who was appointed a director of the fourth defendant on 28 June 2011, charged with contempt of court for breaching the interlocutory injunctions I have referred to. The details of the alleged contempts are not relevant for present purposes.
By a notice of motion filed on 25 January 2012, the respondents to the contempt motion seek, among other orders, an order that the motion for contempt be stood over until either the hearing of the substantive proceedings or to a date following disposal of the substantive proceedings. It is with that order that this judgment is concerned.
Ms Latham, who appeared for the applicants on the motion, essentially submitted that there were three reasons why the motion for contempt should be stood over to the hearing of the substantive proceedings or a date following the substantive proceedings.
First, Ms Latham submitted that there was no utility in hearing the contempt motion before the substantive proceedings. The effect of any contempt has been brought to an end since any money remaining in the two accounts has now been paid into court. Consequently, there can be no possibility of further contempts in relation to the orders in question and no utility in dealing with the motion for contempt before the substantive proceedings.
Second, Ms Latham submitted that the third defendant's credit would be an issue both in the contempt proceedings and in the substantive proceedings and in those circumstances it is appropriate that the court hear all the third defendant's evidence before determining the question of credit. In making that submission, Ms Latham relied on the decision of Hodgson CJ in Eq Kevern v Marshall [2000] NSWSC 1236. In reaching the conclusion that a contempt motion filed in those proceedings should be stood over to the hearing of the case, Hodgson CJ in Eq said at [7]:
There is now no urgency that the question of breach of Court orders be determined prior to the hearing. Determining the Notice of Motion will not assist this other person knowing what to do with the items that he has. If I were to determine the Notice of Motion, this would probably involve forming a view as to the credibility of the plaintiff and the defendant on limited material when, in my opinion, it is desirable that a judgment of the credibility of the plaintiff and the defendant be made on the basis of all available material, and that is something that can only happen at the hearing.
Ms Latham submitted that the same point applied in these proceedings.
Third, Ms Latham submitted that the criminal proceedings should be dealt with before the contempt proceedings, for otherwise there was a risk that the third defendant would be prejudiced in his defence of the criminal proceedings.
In my opinion, none of these grounds provide sufficient reason to stand the motion for contempt over until the hearing of the substantive proceedings.
As to Ms Latham's first point, the allegation of contempt and the existence of a contempt, if there is one, is a serious matter. I do not think that the determination of whether there has been a contempt and, if so, the punishment of those who have committed a contempt should be put off indefinitely. There is a public interest in dealing with allegations of contempt promptly. The position in Kevern was quite different from the current position. There, the motion to have the plaintiff dealt with for an alleged contempt was filed on 12 December 2000 and the proceedings had been set down for a final hearing on 27 February 2001. Having regard to the intervening Christmas period, the delay in dealing with the motion was short. Here, however, it is unclear when the substantive proceedings will be determined.
As to Ms Latham's second point, I accept that the third defendant's credit may be relevant to both the contempt motion and the substantive proceedings and that, as a general principle, it is desirable that issues of credit be decided at one time on the basis of all available evidence. However, there is no general principle that that should happen and it is not uncommon that the court finds itself in a position where it must make credit finding in relation to a particular application in advance of the final hearing. In this case, I do not think the desirability of making credit findings on all available evidence justifies the postponement of the hearing of the motion for contempt for an indefinite period of time.
As to Ms Latham's third point, the general principle is that civil proceedings should be stayed where the defendant in those proceedings has been charged with a criminal offence arising out of the same subject matter and, as a result, there is a real prospect that the hearing of the civil proceedings could lead to a miscarriage of justice because the defendant is required prematurely to disclose his or her case or there is a risk that the criminal proceedings could be interfered with in some other way: see Gypsy Fire v Truth Newspaper Pty Ltd (1987) 9 NSWLR 382. Here, however, the motion is one for contempt, which is quasi-criminal in nature: see Australian Meat Industry Employees' Union v Mudginberri Station Pty Limited (1986) 161 CLR 98 at 109 per Gibbs CJ, Mason, Wilson and Deane JJ. More importantly, the subject matter of the substantive proceedings and criminal proceedings are relevantly quite different from the subject matter of the contempt motion. The underlying facts relevant to the criminal proceedings concern the circumstances in which the money the subject of the substantive proceedings was transferred by the third defendant to the two accounts I have referred to. The underlying facts concerning the motion for contempt concern the circumstances in which money was paid out of the two accounts allegedly in breach of orders made by court. I cannot see how any defence that the third defendant might wish to put forward in relation to the contempt motion will involve him prematurely disclosing his case in the criminal proceedings and there is no evidence to suggest that the criminal proceedings may be interfered with in some other way by the contempt motion.
Paragraph 1 of the motion filed on 25 January 2012 should be dismissed with costs.
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Decision last updated: 05 April 2012
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