Jorgensen v Fair Work Ombudsman
[2019] FCAFC 113
•8 July 2019
FEDERAL COURT OF AUSTRALIA
Jorgensen v Fair Work Ombudsman [2019] FCAFC 113
Appeal from: Fair Work Ombudsman v Jorgensen (No. 2) [2018] FCCA 1202 File number: QUD 314 of 2018 Judges: GREENWOOD, REEVES AND WIGNEY JJ Date of judgment: 8 July 2019 Catchwords: CONTEMPT OF COURT – appeal from orders made by primary judge on conviction and sentences of imprisonment – where appellant had been found guilty of contempt of freezing orders – where appellant third party to freezing orders – where appeal allowed in part – declarations set aside – matter remitted to the Federal Circuit Court of Australia for retrial Legislation: Evidence Act 1995 (Cth) ss 69, 136
Fair Work Act 2009 (Cth) s 716(5)
Federal Circuit Court of Australia Act 1999 (Cth) s 17
Federal Court of Australia Act 1976 (Cth) s 28(1)(f)
Federal Circuit Court Rules 2001 (Cth) r 19.02(1)
Cases cited: Admark Property Group Pty Ltd (in liq) v GJ Building and Contracting Pty Ltd [2016] NSWSC 1309
Australian Competition and Consumer Commission v World Netsafe Pty Limited (No 3) [2003] FCA 159; 127 FCR 542
Australian Securities and Investments Commission v Sigalla (No 3) [2010] NSWSC 1076
Cardile v LED Builders Pty Ltd [1999] HCA 18; 198 CLR 380
CCOM Pty Ltd v Jiejing Pty Limited [1992] FCA 325; 36 FCR 524
Clampett v Attorney-General (Cth) [2009] FCAFC 151; 181 FCR 473
Commissioner for Australian Capital Territory Revenue v Alphaone Pty Ltd (1994) 49 FCR 576
Concrete Pty Ltd v Parramatta Design and Developments Pty Ltd [2006] HCA 55; 229 CLR 577
Denknis v Commonwealth Bank of Australia [2018] FCA 1908
Fortune Holding Group Pty Ltd v Zhang (No 2) [2017] VSC 738
Galea v Galea (1990) 19 NSWLR 263
Goodwin v Commissioner of Police [2012] NSWCA 379
Huda & Huda & Latham [2018] FamCAFC 85
ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248
Jamal v Director of Public Prosecutions (NSW) [2019] NSWCA 121
Johnson v Johnson [2000] HCA 48; 201 CLR 488
Jones v National Coal Board [1957] 2 QB 55
Kazal v Thunder Studios Inc (California) [2017] FCAFC 111; 256 FCR 90
Kuru v New South Wales [2008] HCA 26; 236 CLR 1
Lockwood v Police (2010) 107 SASR 237
Metcash Trading Ltd v Bunn (No 5) [2009] FCA 16
Michael Wilson and Partners Limited v John Forster Emmott [2015] EWCA Civ 1028; [2015] All ER (D) 160
Michel v R [2009] UKPC 41; [2010] 1 WLR 879
OKS v Western Australia [2019] HCA 10; 93 ALJR 438
R v T, WA [2014] SASCFC 3; 118 SASR 382
Royal Guardian Mortgage Management Pty Ltd v Nguyen [2016] NSWCA 88; 332 ALR 128
RPS v The Queen [2000] HCA 3; 199 CLR 620
Seaward v Paterson [1897] 1 Ch 545
Sigalla v TZ Limited [2011] NSWCA 334
Sullivan v Trilogy Funds Management Ltd [2017] FCAFC 153; 255 FCR 503
SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs [2006] HCA 63; 228 CLR 152
Toth v Director of Public Prosecutions (NSW) [2017] NSWCA 344
Vakauta v Kelly [1989] HCA 44; 167 CLR 568
Weiss v The Queen [2005] HCA 81; 224 CLR 300
Wilde v R (1988) 164 CLR 365
Windoval Pty Limited v Donnelly [2014] FCAFC 127; 226 FCR 89
Yuill v Yuill [1945] 1 All ER 183
Zhu v Treasurer of the State of New South Wales [2004] HCA 56; 218 CLR 530
Date of hearing: 16 July 2018 Registry: Queensland Division: General Division National Practice Area: Federal Crime and related proceedings Category: Catchwords Number of paragraphs: 243 Counsel for the Appellant: Mr S C Holt QC with Ms K W Gover Solicitor for the Appellant: Lillas & Loel Lawyers Counsel for the Respondent: Ms E S Wilson QC with Mr M McKechnie Solicitor for the Respondent: Ashurst Australia ORDERS
QUD 314 of 2018 BETWEEN: LEIGH ALAN JORGENSEN
Appellant
AND: FAIR WORK OMBUDSMAN
Respondent
JUDGES:
GREENWOOD, REEVES AND WIGNEY JJ
DATE OF ORDER:
8 JULY 2019
COURT ORDERS THAT:
1.The appeal be allowed in part.
2.The Declarations made by Judge Vasta on 3 May 2018 be set aside.
3.Order 1 of the orders made on 10 May 2019 by Judge Vasta be set aside.
4.The matter be remitted to the Federal Circuit Court of Australia for retrial pursuant to s 28(1)(f) of the Federal Court of Australia Act 1976 (Cth), such retrial to be heard by a judge other than Judge Vasta.
5.The cross-appeal filed by the respondent on 30 May 2018 be dismissed.
6.The respondent pay the appellant’s costs of the appeal and first instance proceedings as agreed or taxed.
7.The appellant be released from the undertakings he gave to the Court on 11 May 2018.
8.The appellant’s passport be returned to him upon request.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
THE COURT:
This is an appeal from orders made in the Federal Circuit Court of Australia which had the effect of convicting the appellant, Mr Leigh Jorgensen, of contempt of court and sentencing him to a period of imprisonment.
At the time of the events in question, Mr Jorgensen operated a business which sold tours and adventure activities in Far North Queensland. He appears to have operated that business through a number of different entities and in a fairly disorganised and haphazard way, at least in an administrative and financial sense. He also appears at times to have underpaid his employees. The latter feature of the business brought Mr Jorgensen and at least one of the entities through which he conducted the business, A.C.N. 156 455 828 Pty Limited, trading as Trek North Tours, to the attention of the respondent to this appeal, the Fair Work Ombudsman. The company A.C.N. 156 455 828 Pty Limited is referred to throughout this judgment as 828 Pty Limited to avoid confusion which would otherwise arise because Mr Jorgensen and other companies associated with him also used the trading name Trek North Tours.
In late 2014, the Ombudsman commenced proceedings in the Circuit Court against 828 Pty Limited and Mr Jorgensen alleging that 828 Pty Limited had contravened s 716(5) of the Fair Work Act 2009 (Cth) because it had failed to comply with compliance notices issued under that subsection. The compliance notices required 828 Pty Limited to pay a total of $29,956.75 representing the outstanding wages and entitlements of three of its employees. The Ombudsman also alleged that Mr Jorgensen was involved in the contraventions by 828 Pty Limited. Judgment was entered against both 828 Pty Limited and Mr Jorgensen in June 2015. 828 Pty Limited was ordered to pay a pecuniary penalty of $55,000 and to comply with the compliance notices. Mr Jorgensen was ordered to pay a pecuniary penalty of $12,000.
That was by no means the end of the matter. On 24 July 2015, the Ombudsman sought and obtained ex parte freezing orders in the Circuit Court which had the effect of restraining 828 Pty Limited from disposing of or dealing with any of its assets other than in certain specified circumstances. The freezing orders were extended on 30 July 2015. The purpose of the freezing orders was no doubt to prevent 828 Pty Limited from frustrating the enforcement of the judgment that had been obtained against it. The assets of 828 Pty Limited were defined in the orders as including “where applicable” money held in certain specified bank accounts. The specified circumstances in which 828 Pty Limited was permitted to deal with or dispose of its assets included, relevantly, where the dealing or disposal was “in the ordinary and proper course of [its] business”. The orders, including a penal notice which warned of the repercussions of any disobedience of the orders, were served on Mr Jorgensen in his capacity as the “proper officer” of 828 Pty Limited.
In October 2017, the Ombudsman commenced proceedings against Mr Jorgensen in the Circuit Court alleging that he was in contempt of court. The Ombudsman alleged that Mr Jorgensen caused 828 Pty Limited to breach the freezing orders in early to mid-August 2017 by causing funds to be transferred on nine occasions from two bank accounts which were referred to in the freezing orders. It would also appear that at the hearing of the contempt charges the Ombudsman contended that, in causing Trek North Tours to make the transfers which were said to breach the freezing orders, Mr Jorgensen knowingly impeded the administration of justice.
After a four day hearing in late April and early May 2018, the primary judge in the Circuit Court convicted Mr Jorgensen of nine counts of contempt of court. On 10 May 2018, the primary judge sentenced Mr Jorgensen to imprisonment for 12 months, but ordered that he be released on 20 May 2018 if he paid a sum of money to the Ombudsman which represented the amount that 828 Pty Limited had initially been ordered to pay the Ombudsman in the underlying proceeding. His Honour declined to make any costs order.
Mr Jorgensen appealed both his conviction and the sentence imposed on him by the primary judge. The Ombudsman cross-appealed the primary judge’s refusal to make a costs order.
Mr Jorgensen’s conviction appeal raises three issues. The first is whether Mr Jorgensen was denied procedural fairness during his trial in the Circuit Court by reason of the primary judge’s excessive and inappropriate interventions during the course of his evidence. The second is whether the primary judge misdirected himself in relation to the proper interpretation of the “ordinary and proper course of business” exception in the freezing orders and the relevant mental element of the contempt charges which had been brought against Mr Jorgensen. The third issue concerns the primary judge’s use of a particular documentary exhibit in making what, at least on his Honour’s view of the contempt charges, was an important finding against Mr Jorgensen.
RELEVANT PRINCIPLES – CONTEMPT ARISING FROM BREACH OF COURT ORDERS
The Full Court in Kazal v Thunder Studios Inc (California) [2017] FCAFC 111; 256 FCR 90 at [26] cited with approval the following passage from Metcash Trading Ltd v Bunn (No 5) [2009] FCA 16 at [9], in which Finn J summarised the principles which apply where the alleged contempt concerns the breach of a court order and the alleged contemnor is a party bound by the relevant order:
… First, the order alleged to be breached must be clear and unambiguous: see Australian Consolidated Press Ltd v Morgan (1965) 112 CLR 483 at 515-516; and be capable of being complied with: see Australian Prudential Regulation Authority v Siminton (No 7) [2007] FCA 1609 at [40]. Secondly, the proper construction of an order is not a matter of fact but a question of law: Universal Music Australia Pty Ltd v Sharman Networks Ltd (2006) 150 FCR 110 at [19]. Thirdly, it is not necessary for an applicant to prove that an alleged contemnor intended to disobey the order: ibid, at [17]; nor is it necessary to prove that the alleged contemnor understood the true meaning of the terms of an order or that he or she was aware that his or her conduct constituted a breach of the order: Microsoft Corporation v Marks (No 1) (1996) 69 FCR 117 at 143. Nonetheless it may be highly relevant to the question of penalty that the alleged contemnor disobeyed an order because he or she placed a construction on it that was not its true construction: Universal Music Australia Pty Ltd at [38]. Fourthly, deliberate conduct which is in breach of a court order will constitute wilful disobedience of the order, and therefore a civil contempt, unless the conduct be casual, accidental or unintentional: Louis Vuitton Malletier SA v Design Elegance Pty Ltd (2006) 149 FCR 494 at [6]. Fifthly, the facts in issue in a contempt charge must be proved beyond reasonable doubt: Witham v Holloway (1995) 183 CLR 525 at 534.
(Emphasis in original).
Thus, where the alleged contemnor is a party specifically bound by the order, it is not necessary to prove that they intended to disobey the order. Rather, deliberate conduct in breach of the order will be taken to constitute “wilful disobedience” of the order unless the conduct is “casual, accidental or unintentional”.
The position is, however, different where the alleged contemnor is not a party bound by the court order. That will include the situation where the party bound by the order is a company and the alleged contemnor is a director of the company. In such a case, the alleged contemnor is only liable for contempt if it is proved, beyond reasonable doubt, that they knowingly aided, abetted, counselled or procured the breach of the order: Seaward v Paterson [1897] 1 Ch 545 at 555; ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248 at 255, 266; Australian Competition and Consumer Commission v World Netsafe Pty Limited (No 3) [2003] FCA 159; 127 FCR 542 at [86]; Cardile v LED Builders Pty Ltd [1999] HCA 18; 198 CLR 380 at [30]. In such circumstances, the alleged contemnor is not liable as an accessory, but rather is directly liable for an independent contempt committed by themselves in obstructing the course of justice: Zhu v Treasurer of the State of New South Wales [2004] HCA 56; 218 CLR 530 at [121].
A third party not bound by the court order will only be liable for contempt if they not only know of the order, but also engage in conduct which is intended to frustrate, thwart or subvert the purpose of the order. In CCOM Pty Ltd v Jiejing Pty Limited [1992] FCA 325; 36 FCR 524 at 530-531, Drummond J referred to the liability of a party not bound by the order in the following terms:
Mr McCullagh however is not a party to the action and is not bound by the undertaking. Such a person is not subject to the strict liability in contempt which rests upon a person bound by an undertaking that is breached. However a person who is not in terms bound by an undertaking but who knows of it and who then does something which disrupts the situation created by the undertaking may, but not necessarily must, be guilty of contempt of court.
Such a person will be guilty of contempt where his conduct, coupled with his knowledge of the undertaking, shows that he is flouting the authority of the court by doing something which he knows will prevent the undertaking given to the court achieving its intended object. Such a person will be in contempt, because he has “knowingly impeded or interfered with the administration of justice by the court in the action between A and B”: see Attorney-General v Times Newspapers Ltd (supra) (at 1003; 405), per Lord Brandon. See also Seaward v Paterson [1897] 1 Ch 545 at 555 and Z Ltd v A-Z and AA-LL [1982] QB 558 at 578.
In Attorney-General v Times Newspapers Ltd, Lord Oliver (at 1018-1019; 419), speaking of the circumstances in which a determination could be made that a stranger to a court order which had been breached was guilty of contempt, said:
“… a more dependable guide is to be found in the way in which the gravamen of the offence is expressed in the respondent’s case and which, I think, must be based upon the speeches in this House in Attorney-General v Leveller Magazine Ltd [1979] AC 440: ‘The publication … frustrates, thwarts, or subverts the purpose [and I interpolate that Lord Oliver emphasised that phrase] of the court’s order and thereby interferes with the due administration of justice in the particular action.’ ‘Purpose’, in this context, refers, of course, not to the litigant’s purpose in obtaining the order or in fighting the action but to the purpose which, in seeking to administer justice between the parties in the particular litigation of which it had become seized, the court was intending to fulfil.”
I think the statement by Lord Oliver most clearly identifies the features that must be present in the conduct of a stranger to an order of the court or an undertaking given to the court before he can be found guilty of contempt where the order or undertaking is breached.
Drummond J also held that a party not bound by the order will not be liable if they had an honest but mistaken belief as to the meaning or operation of the order which, if correct, would mean that their conduct could not amount to an interference with the operation of the order. His Honour said, in that regard (at 532):
And if a stranger, in fact, interferes with the operation of an undertaking given in an action between A and B, but does so in the honest but mistaken belief that the undertaking has a particular meaning which, if correct, would mean that his conduct could not be an interference with this operation, then there is equally a lack of the mens rea necessary to put him in contempt. This is so, in my view, no matter how unreasonable the stranger’s mistaken belief is, so long as it is a belief that is honestly held.
Those passages from the judgment of Drummond J in CCOM were referred to with approval in Sigalla v TZ Limited [2011] NSWCA 334 at [14]-[16], [28] (Macfarlan JA, Young JA and Handley AJA agreeing); see also Admark Property Group Pty Ltd (in liq) v GJ Building and Contracting Pty Ltd [2016] NSWSC 1309 at [23]-[27].
The critical point for the purposes of the present appeal is that, because Mr Jorgensen was not a party to or directly bound by the freezing order, the Ombudsman was required to prove that when Mr Jorgensen caused funds to be transferred from the frozen bank accounts, he knew that the transfers breached the freezing order. As will be seen, that in turn required the Ombudsman to prove, beyond reasonable doubt, not only that the transfers did not fall within the “ordinary and proper course of business” exception, but also that Mr Jorgensen knew that to be the case and did not honestly, but mistakenly, believe that the transfers fell within the exception.
Before addressing the grounds and contentions advanced by the parties in support of the conviction appeal, it is necessary to consider in more detail the terms of the freezing order, the terms of the contempt charge, the evidence which was before the primary judge and the primary judge’s reasons for finding that Mr Jorgensen was guilty of contempt.
THE FREEZING ORDER
It is important to emphasise that the freezing order made on 24 July 2015 (and extended on 30 July 2015) (the freezing order) was directed to or against 828 Pty Limited, not Mr Jorgensen. The freezing order did not directly restrain Mr Jorgensen from doing anything, though subpara 5(b) of the freezing order provided that “[i]f you are ordered not to do something, you must not do it yourself or through directors, officers, partners, employees, agents or others acting on your behalf or on your instructions or with your encouragement or in any other way”. Mr Jorgensen was the sole director of 828 Pty Limited.
The central operative subparagraph of the freezing order was subpara 6(a) which provided as follows:
You must not remove from Australia or in any way dispose of, deal with or diminish the value of any of your assets in Australia (‘Australian assets’) up to the unencumbered value of AUD $84,956.75 (‘the Relevant Amount’).
Subparagraph 7(1) of the freezing order defined what Trek North Tour’s assets were for the purposes of the freezing order. It was in the following terms:
(1) your assets include:
(a)all your assets, whether or not they are in your name and whether they are solely or co-owned;
(b)any asset which you have the power, directly or indirectly, to dispose of or deal with as if it were your own (you are to be regarded as having such power if a third party holds or controls the asset in accordance with your direct or indirect instructions); and
(c) the following assets in particular:
(i)the assets of your business A.C.N 156 455 828 PTY LTD TRADING AS TREK NORTH TOURS carried on from:
i. Unit 3, 87 Lake Street, Cairns,
ii. 43 The Esplanade, Cairns,
iii. 53-57 The Esplanade, Cairns, and
iv. Shop 10, 93 The Esplanade, Cairns.
or, if any or all of the assets have been sold, the net proceeds of the sale; and
(ii)any money in any bank accounts held by A.C.N 156 455 828 PTY LTD TRADING AS TREK NORTH TOURS, including, where applicable, the following accounts:
a. Account Number 451643835 held with either Suncorp Bank, Commonwealth Bank or any other banking institution,
b. Account Number 452798506 held with either Suncorp Bank, Commonwealth Bank or any other banking institution, and
c. Account Number 452058391 held with either Suncorp Bank, Commonwealth Bank or any other banking institution.
The terms of subpara 7(1)(c)(ii) of the freezing order are somewhat curious. That is because, while the chapeau refers to money held in any bank accounts held by 828 Pty Limited, the three accounts then specified do not appear to have been accounts held in the name of 828 Pty Limited.
The first account, account number 451643835, was an account held at Suncorp Bank in the name of Yubnub Pty Ltd. This account will be referred to in these reasons as the Yubnub account. Mr Jorgensen was a director of Yubnub and a signatory for the Yubnub account.
The proceedings in the court below appeared to have been conducted on the basis that 828 Pty Limited was at all relevant times beneficially entitled to all of the funds in the Yubnub account and able to deal with them on that basis. It is not entirely clear why that was so. The evidence did suggest that that at least some of the income derived from the business of Trek North Tours was deposited into the Yubnub account, even though strictly speaking 828 Pty Limited, not Yubnub, owned or conducted the business. The evidence did not, however, appear to go so far as to suggest that all of the funds in the Yubnub account were at all times assets of 828 Pty Limited. Mr Jorgensen operated a number of different bank accounts in different names and appeared to deal with the funds in those accounts without any particular regard to which entity or business was entitled to them. The precise provenance of the funds in the Yubnub account at any given time was not the subject of any evidence or close analysis at the hearing of the contempt charges.
The second account, account number 452798506, was an account held at the Suncorp Bank in the name “Mr L A Jorgensen t/a Trek North Tours”. This account will be referred to in these reasons as the Jorgensen TNT account. It again appeared to be common ground that some of the revenue derived from the Trek North Tours business was deposited into this account. It was nevertheless an account held in Mr Jorgensen’s name, not in the name of 828 Pty Limited. Not surprisingly, Mr Jorgensen was a signatory for this account.
The third account, account number 452058391, was not the subject of any evidence or consideration at the hearing of the contempt charges. It was not an account from which any funds were relevantly transferred.
The other curiosity about subpara 7(1)(c)(ii) of the freezing order is that it includes the words “where applicable”. It is not entirely clear what those words mean in the context in which they are used in the freezing order. In its submissions on this appeal, the Ombudsman asserted that the words “where applicable” were superfluous. If that is the case, it is unclear why they were included in the freezing order. The better view would appear to be that the words “where applicable” were intended to operate so as to ensure that the funds in the three specified accounts were only considered to be an asset of 828 Pty Limited for the purposes of the freezing order if the funds were beneficially owned by 828 Pty Limited, or if 828 Pty Limited had the power to dispose of the funds as if they were its own. Ultimately, however, nothing of significance turned or turns on this issue. As already noted, the proceeding below appeared to be conducted on the basis that 828 Pty Limited had the power to dispose of the funds in the relevant accounts as if they were its own. Mr Jorgensen did not contend that the freezing order were in any respect unclear, ambiguous or incapable of compliance.
The other critical paragraph to consider is para 10, which specified certain exceptions to the operation of the freezing order. It was in the following terms:
This order does not prohibit you from:
(a)Paying the remuneration and employee entitlements of the First Respondent’s employees as required by law;
(b) Paying $15,000 for legal expenses;
(c)dealing with or disposing of any of your assets in the ordinary and proper course of your business, including paying business expenses bona fide and properly incurred; and
(d)in relation to matters not falling within (a), (b) or (c), dealing with or disposing of any of your assets in discharging obligations bona fide and properly incurred under a contract entered into before this order was made, provided that before doing so you give the applicant, if possible, at least two working days written notice of the particulars of the obligation.
(Emphasis added.)
The terms of subpara 10(c) of the freezing order are particularly critical having regard to the issues that arose both before the primary judge and on appeal. The important point to note about that subparagraph is that the operative words are “in the ordinary and proper course of your business”. The dealing or disposition of assets in the “ordinary and proper course” of the business is said to include “paying business expenses bona fide and properly incurred”, but that is only one example of such a dealing or disposition. The exception is not limited to paying business expenses.
THE CONTEMPT CHARGE
Section 17 of the Federal Circuit Court of Australia Act 1999 (Cth) provides that the Circuit Court has the same power to punish contempts of its power and authority as is possessed by the High Court in respect of contempts of the High Court. Rule 19.02(1) of the Federal Circuit CourtRules 2001 (Cth) provides that if it is alleged that a person has committed a contempt of Court (other than contempt in the face or hearing of the Court), an application may be made for the person to be dealt with for the contempt. Rule 19.02(2) provides, amongst other things, that an application must “state the contempt alleged”.
The application filed by the Ombudsman in the Circuit Court in relation to the alleged contempt by Mr Jorgensen was in some respects fairly unclear or uninformative in terms of stating the “contempt alleged”. The application sought the following declaration:
1. A declaration that the Respondent is in contempt of the Court;
(a) in that:
(i)on or about 4 August 2015, the Respondent authorised and directed the electronic transfer of funds in the amount of $2,330.00 from Suncorp Bank Business Everyday Account (BSB 484-799 Number 451643835) in the name of Yubnub Pty Ltd (Yubnub Account), being an account and moneys in respect of which ACN 156 455 828 Pty Ltd trading as Trek North Tours (Trek North Tours) had a beneficial interest, into the Suncorp Bank Access Equity Account (BSB 484-799 Number 503197972) held in the name of Leigh Alan Jorgensen/Leigh Jorgensen Family Trust (Family Trust Account);
(ii)on or about 6 August 2015, the Respondent authorised and directed the electronic transfer of funds in the amount of $8,001.00 from the Yubnub Account, being an account and moneys in respect of which Trek North Tours had a beneficial interest, into the Family Trust Account;
(iii)on or about 9 August 2015, the Respondent authorised and directed the electronic transfer of funds in the amount of $9,996.95 from the Yubnub Account, being an account and moneys in respect of which Trek North Tours had a beneficial interest, into the Family Trust Account;
(iv)on or about 9 August 2015, the Respondent authorised and directed the electronic transfer of funds in the amount of $4,558.00 from the Suncorp Bank Business Everyday Account (BSB 484-799 Number 452798506) in the name of Leigh Alan Jorgensen T/A Trek North Tours (Trek North Tours Account), being an account and moneys in respect of which Trek North Tours had a beneficial interest, into the Family Trust Account;
(v)on or about 10 August 2015, the Respondent authorised and directed the electronic transfer of funds in the amount of $2,569.00 from the Yubnub Account, being an account and moneys in respect of which Trek North Tours had a beneficial interest, into the Family Trust Account;
(vi)on or about 11 August 2015, the Respondent authorised and directed the electronic transfer of funds in the amount of $4,621.00 from the Yubnub Account, being an account and moneys in respect of which Trek North Tours had a beneficial interest, into the Family Trust Account;
(vii)on or about 12 August 2015, the Respondent authorised and directed the electronic transfer of funds in the amount of $4,713.64 from the Yubnub Account, being an account and moneys in respect of which Trek North Tours had a beneficial interest, into the Family Trust Account;
(viii)on or about 13 August 2015, the Respondent authorised and directed the electronic transfer of funds in the amount of $1,255.97 from the Yubnub Account, being an account and moneys in respect of which Trek North Tours had a beneficial interest, into the Family Trust Account; and
(ix)on or about 14 August 2015, the Respondent authorised and directed the electronic transfer of funds in the amount of $2,990.00 from the Yubnub Account, being an account and moneys in respect of which Trek North Tours had a beneficial interest, into the Family Trust Account,
(b) in circumstances where:
(i)on 24 July 2015, Judge Jarrett made orders addressed to the Proper Officer of Trek North Tours in Federal Circuit Court Proceeding No BRG 1009 of 2014 (Order);
(ii)order 6 of the Order restrained Trek North Tours from removing from Australia or in any way disposing of, dealing with or diminishing the value of any assets which are in Australia up to an unencumbered value of AUD$84,956.75;
(iii)the Respondent was informed of the terms of the Order by email at about 4.21 pm on 24 July 2015 and was aware of the terms of the Order on or before 30 July 2015;
(iv)the Respondent appeared before Judge Jarrett upon the extension of the Order on 30 July 2015 (Extended Order);
(v)order 2 of the Extended Order varied the Order so that it had effect until further order;
(vi)the Respondent was informed of the terms of Extended Order during the hearing before Judge Jarrett on 30 July 2015 and the orders were subsequently emailed to him by Sarah Hedger on 27 August 2015; and
(vii)the withdrawals do not fall within the exceptions listed at paragraph 10 of the Order.
The application also sought an order that Mr Jorgensen “be punished or otherwise dealt with for the contempt”.
The grounds of the application were stated as being that Mr Jorgensen, “having knowledge of the Orders made by Judge Jarrett [the freezing orders], caused Trek North Tours [828 Pty Limited] to fail to comply with paragraph 6 of the Order”.
Insofar as it could be said that the application filed by the Ombudsman contained a statement of the “contempt alleged”, as required by r 19.02(2) of the Circuit Court Rules, the statement suggested that the alleged contempt was comprised of the following elements.
First, that the freezing order restrained 828 Pty Limited from dealing with or disposing of its assets.
Second, that Mr Jorgensen had knowledge of the freezing order.
Third, that 828 Pty Limited had a beneficial interest in the funds in the Yubnub and Jorgensen TNT accounts, or otherwise had the power to deal with or dispose of those funds as if they were its own.
Fourth, that Mr Jorgensen authorised and directed the electronic transfer of funds from the Yubnub and Jorgensen TNT accounts to an account held in the name of either Leigh Alan Jorgensen or Leigh Jorgensen Family Trust.
Fifth, that the “withdrawals” did not fall within the exceptions in paragraph 10 of the freezing order.
Sixth, that Mr Jorgensen thereby caused 828 Pty Limited to fail to comply with paragraph 6 of the freezing order.
The important point to emphasise at this juncture is that, while the Ombudsman alleged that Mr Jorgensen knew about the freezing order, it was not specifically alleged that Mr Jorgensen knew that the funds transfers that he authorised and directed breached the freezing order. Similarly, while the Ombudsman alleged that the transfers or withdrawals did not fall within the exception in paragraph 10(c) of the freezing order, it was not alleged that Mr Jorgensen knew that the transfers did not fall within that exception. Nor did the Ombudsman allege, in the application at least, that Mr Jorgensen knowingly impeded the administration of justice or knowingly aided and abetted 828 Pty Limited’s failure to comply with the freezing order.
THE OMBUDSMAN’S EVIDENCE AND SUBMISSIONS IN THE CIRCUIT COURT
Rule 19.02(2)(c) of the Circuit Court Rules provides that an application which alleges that a person has committed a contempt must be “supported by an affidavit setting out the facts relied on”. The Ombudsman’s application was supported by an affidavit sworn by a lawyer employed in the Ombudsman’s office, Mr Samuel Prain. The Ombudsman subsequently filed and relied on another affidavit sworn by Mr Prain.
The first affidavit sworn by Mr Prain on 11 October 2017 was a lengthy affidavit which annexed a very large number of documents. Neither of the parties to this appeal took the Court to this affidavit or referred to any part of it in their submissions. That may perhaps have been because, as will be seen, the primary judge also did not expressly or directly refer to any part of this affidavit. The parties also did not include all of the annexures to Mr Prain’s first affidavit in the Appeal Book. In those circumstances, it is unnecessary to refer at length to the contents of Mr Prain’s affidavit or the annexures thereto. It suffices to make the following brief points.
First, Mr Prain’s first affidavit contained a detailed chronological account of the underlying proceeding commenced by the Ombudsman in relation to the alleged contraventions of the Fair Work Act by 828 Pty Limited and the making and service of the freezing order against that company. That chronological account was not contentious. There was no dispute that Mr Jorgensen was aware of the freezing order at the time he caused or directed the relevant funds transfers.
Second, Mr Prain’s first affidavit annexed a large bundle of bank statements which had been produced on subpoena by Suncorp Bank. The bundle included statements for a number of different bank accounts, including the Yubnub account, the Jorgensen TNT account and the account held in the name Leigh Alan Jorgensen or Leigh Jorgensen Family Trust. The latter account will be referred to in these reasons as the Family Trust account. As was noted earlier, the Ombudsman’s case was that the nine breaches of the freezing order all involved transfers of funds into the Family Trust account. There was no dispute that those funds transfers occurred or that Mr Jorgensen caused them to be made.
Third, Mr Prain referred in his first affidavit to an “enforcement hearing” in the Circuit Court. That hearing took place on 24 March 2016 and was said to be a hearing in accordance with r 29.11 of the Circuit Court Rules. That rule provides that a party may apply to the Circuit Court “to issue a writ, order or any other means of enforcement of a judgment or order”. Unfortunately, the enforcement summons was not included in the Appeal Book and there is no indication of exactly what orders had been applied for or were made pursuant to r 29.11. As a result, it is not known exactly what “writ, order or any other means of enforcement” the Ombudsman had applied for. It is also not entirely clear what the so-called enforcement hearing specifically involved, though it appears from the transcript of the enforcement hearing that Mr Jorgensen had been required to attend court for examination about the financial affairs of 828 Pty Limited. Nor, indeed, is it entirely clear exactly what judgment or order the Ombudsman was seeking to enforce, though it may fairly be assumed that it was the judgment which ordered 828 Pty Limited to pay the amounts which were the subject of the compliance notices.
In any event, it would appear that Mr Jorgensen was examined by the Ombudsman’s counsel at the enforcement hearing. Mr Prain’s first affidavit annexed a transcript of the enforcement hearing held on 24 March 2016, including Mr Jorgensen’s evidence. It would also appear that Mr Jorgensen produced a number of documents to the Circuit Court during the enforcement hearing. Mr Prain’s first affidavit annexed some, but apparently not all, of those documents, or at least some of them.
Fourth, Mr Prain’s first affidavit contained what appeared to be a relatively uncontroversial narrative of the relevant entries in the bank statements which evidenced the relevant funds transfers.
Mr Prain’s second affidavit was sworn on 7 February 2018. It simply annexed various subpoenas and notices to produce which had been issued to the Commonwealth Bank of Australia, together with a very large number of bank statements which had been produced in answer to the subpoenas and notices. It also contained Mr Prain’s analysis of the balances of various bank accounts at various times. The contents of Mr Prain’s second affidavit was not referred to in the judgment of the primary judge. Nor was this Court taken to any part of it by either party in their submissions in relation to the appeal. The relevance of Mr Prain’s analysis of the balances of some of the bank accounts is not immediately apparent.
The only other evidence apparently relied on by the Ombudsman before the primary judge was documentary evidence in the form of invoices issued to “Trek North Tours” by Queensland Rail Limited, a copy of the discretionary trust deed for the Leigh Jorgensen Family Trust dated 5 February 2014 and a letter from an accountant based in India which appeared to be dated 1 March 2016 (Exhibit 4). The latter document was produced by Mr Jorgensen during the enforcement hearing. He was asked some questions about it during that hearing. As will be seen, it was tendered by the Ombudsman in the proceeding before the primary judge so as to provide a “complete record” of the enforcement hearing. It also featured prominently in the primary judge’s reasons. The primary judge’s use or reliance on Exhibit 4 in making certain findings is the subject of one of Mr Jorgensen’s appeal grounds.
The Ombudsman’s case as articulated in its submissions in the Circuit Court was that Mr Jorgensen’s conduct in authorising or directing the transfers from the Yubnub account to the Family Trust account constituted a criminal contempt. It was submitted that Mr Jorgensen was the “proper contemnor” even though 828 Pty Limited was the party bound by the freezing order because he had knowledge of the freezing order and assisted 828 Pty Limited to disobey them. The Ombudsman submitted that the elements of the contempt it was alleging against Mr Jorgensen were: first, the existence of the freezing order; second, the terms of the freezing order were clear, unambiguous and capable of compliance; third, knowledge of the freezing order; and fourth, the alleged contemnor, Mr Jorgensen, knowingly impeded the administration of justice.
It is unnecessary, for present purposes, to outline the Ombudsman’s submissions in relation to the first three elements. It would appear that they were essentially not in issue in the Circuit Court and, even if they were, they were not the subject of any relevant issue in this appeal. As for the fourth element, the Ombudsman’s submission was essentially that Mr Jorgensen knowingly impeded the administration of justice because he knew of the existence of the freezing order and yet authorised or directed the payments from two of the frozen bank accounts into the Family Trust account.
The Ombudsman’s case was that the relevant transfers contravened the freezing order because they did not fall within any of the exceptions in the freezing order, including the “ordinary and proper course of business” exception in para 10(c) of the freezing order. It was submitted in that regard that Mr Jorgensen’s evidence did not establish a reasonable possibility that the payments were made in the “ordinary and proper course” of 828 Pty Limited’s business. The Ombudsman’s primary submission in that respect was that the payments into the Family Trust account did not constitute the payment of 828 Pty Limited’s business expenses.
In the Ombudsman’s submission, Mr Jorgensen’s evidence rose no higher than an assertion that the payments related to “generic business expenses” which he was not able to particularise. It was also submitted that, as at 30 July 2015, when the freezing order was extended, the Family Trust account was “in the black” and therefore 828 Pty Limited could not have owed anything to Mr Jorgensen in respect of the payment of past business expenses. The Ombudsman pointed out that each of the payments to the Family Trust account had the effect of “clearing out” the Yubnub account and submitted that the apparent intention of the payments was simply to reduce the amount of interest payable in respect of any debit balance in the Family Trust account. The Ombudsman submitted that, even if the payments had something to do with the payment of business expenses, they were not “proper” because there was no loan agreement between 828 Pty Limited and Mr Jorgensen and no proper records maintained by the business.
While the Ombudsman submitted that the payments did not fall within the exception in para 10(c) of the freezing order, it was not submitted, at least directly, that the evidence established that Mr Jorgensen knew that the payments did not fall within that exception. The Ombudsman did attack Mr Jorgensen’s credibility as a witness and the reliability of his evidence. The submissions made in that regard, however, were directed to the question whether Mr Jorgensen had established a reasonable possibility that the exception in para 10(c) of the freezing order applied. They were not directed to Mr Jorgensen’s evidence that he believed that the payments fell within that exception. At the very conclusion of the Ombudsman’s oral submissions it was put to the primary judge that he “may think it was a wilful and deliberate attempt to disobey the orders”, though the precise basis upon which it was submitted that the primary judge might arrive at that conclusion was not articulated at all.
It is also important to emphasise in this context that the Ombudsman expressly disavowed that its case against Mr Jorgensen was that he had intentionally cleared the Yubnub account so that the funds in that account were not available for payment of the judgment debt owing by 828 Pty Limited. The following exchange occurred in the course of the final submissions for Mr Jorgensen:
MS GOVER [Counsel for Mr Jorgensen]: My learned friend – the applicant has submitted that he [Mr Jorgensen] has intentionally cleared funds specifically to avoid those funds being in the business account, so that they could be available for payment of the judgment debt or recovery of the judgment debt. I apologise if I’ve misstated that.
HIS HONOUR: Yes. I don’t know that ---
MS WILSON [Counsel for the Ombudsman]: I never made that submission, your Honour.
Counsel for the Ombudsman went on to say that, insofar as Mr Jorgensen’s intention was concerned, the Ombudsman’s case was only that Mr Jorgensen’s conduct in transferring the funds in question was intentional in the sense that “[i]t was an intentional act to take those funds away”. The primary judge confirmed that his understanding of the Ombudsman’s case concerning Mr Jorgensen’s state of mind was that “these were intentional acts, in that it wasn’t reckless, it wasn’t an administrative oversight” and that it “was a conscious decision to take monies out of the frozen accounts for at the very least a purpose of reducing the interest that would have to be paid by the family trust”.
MR JORGENSEN’S EVIDENCE AND SUBMISSIONS IN THE CIRCUIT COURT
Before the primary judge, Mr Jorgensen relied on an affidavit sworn by him on 30 April 2018. That affidavit included Mr Jorgensen’s general description of the business conducted by Trek North Tours and his account of the original proceedings commenced by the Ombudsman and the making and service of the freezing order. It is unnecessary to refer to those aspects of Mr Jorgensen’s evidence. Suffice it to say that Mr Jorgensen said that his understanding was that the freezing order were subject to some exceptions, which included that he was “permitted to deal with or dispose of funds from the Frozen Accounts in the ordinary course of [his] business, including payment of business expenses”.
Mr Jorgensen’s affidavit dated 30 April 2018 included the following evidence (at [15]-[26]) concerning the funds transfers which were the subject of the contempt charges (referred to in the affidavit as the Withdrawals):
15.I confirm that I was the only person with access to and control of the Frozen Accounts at the time the Withdrawals were made. I cannot recollect making those particular transactions but accept that I did.
16.The Trek North Tours business had significant outgoings, including monthly rental payments for the retails outlets from which it operated and monthly invoices from Skyrail and Queensland Rail.
17.At the time the Withdrawals were made, it was my practice was [sic] to pay some business expenses from the Family Trust Account. I also paid business expenses with a Commonwealth Bank Mastercard in my own name (5523 5052 7025 0991) (the Mastercard).
18.I usually repaid the Mastercard from a Commonwealth Bank Complete Access Account (BSB 064-804, Account 000436254) in my own name (the CBA Account). I also transferred large lump sums from the Family Trust Account into the CBA Account. The CBA Account was closed by the Commonwealth Bank in around November 2017. They advised this was for “commercial reasons”. I can no longer access those accounts and cannot access by [sic] old bank statements via internet banking.
19.Statements for the CBA Access Account and Mastercard are included at pages 15 to 104 of Annexure SP-27 of the affidavit of Samuel David Walter Prain dated 7 February 2018 (Mr Prain’s Second Affidavit).
20.The repayment of business expenses paid from the Family Trust Account was done on an ad hoc basis and cashflow through the business was variable. Rather than repaying specific amounts for particular business expenses, I would transfer money into the Family Trust Account when funds were available in the Trek North Tours Account or Yubnub Account. This was to reduce the line of credit whenever I could and lower the interest. I would empty whatever funds were in those accounts to reduce the overall debt.
21.I would also transfer money from the Yubnub Account to the Trek North Tours Account to cover business expenses.
22.By the time it went into liquidation, Trek North Tours owed $177,652 to Yubnub for payment of business expenses. Annexed hereto and marked ‘LAJ-1’ is a copy of the financial statements for Yubnub for the year ending 30 June 2016, confirming a debt in that amount.
23.The Trek North Tours business expenses paid from the Family Trust Account included payments made to the following accounts:
a.084472 791708952 – This is the bank account of Skyrail, referred to in paragraph 5 above. Annexed hereto and marked ‘LAJ-2’ is a copy of an invoice from Skyrail dated 16 March 2018 which contains these bank account details.
b.014734 493250736 – This is the bank account of A & K Ankars Pty Ltd, the lessor of Shop 10, Calypso Plaza, Shields Street in Cairns. The lease was held by Yubnub and Trek North Tours operated out of a retail store out [sic] those premises until it went into liquidation. This store has now closed. The premises were leased through Cairns Commercial real estate agents. There was never any formal sublease agreement between Yubnub and Trek North Tours in respect of these premises. Annexed to this affidavit and marked ‘LAJ-3’ is a true copy of an invoice from A & K Ankars Pty Ltd dated 25 July 2016 which contains these bank account details.
c.064013 010030050 – This is a bank account operated by Queensland Rail. Annexed to this affidavit and marked ‘LAJ-4’ is a true copy of an invoice from Queensland Rail dated 28 August 2016 which contains these bank account details. In the past I have paid Queensland Rail using their bank details on some occasions, and on other occasions by using the BPAY reference provided on the invoice.
24.The Trek North Tours business expenses paid from the Mastercard included frequent payments made to the following payees:
a.“Rainforestation Pty Kuranda AUS” – Rainforestation is a nature park in Kuranda, Queensland. As Kuranda is the destination of the Skyrail, Rainforestation was a component of Trek North Tours’ daytrip packages; and
b.“Queensland Rail Limi Brisbane AUS” – As to the relationship between Trek North Tours and Queensland Rail, see paragraph 4 above.
25.After the freezing orders were made, I continued to operate my business and pay outgoings as I usually would. However, I did not draw any personal income from the Frozen Accounts. The Withdrawals were made to repay the Family Trust Account for business outgoings previously paid on behalf of Trek North Tours, particularly the large, frequent payments to Skyrail and Queensland Rail. This was my usual practice at that time. The Withdrawals were not for personal use.
26.For the reasons above, at the time I made the Withdrawals I believed they fell within the exception to the Freezing Order.
It should be noted that the references to Trek North Tours in Mr Jorgensen’s affidavit were references to 828 Pty Limited and that the references to the Trek North Tours account were references to the Jorgensen TNT account.
As can be seen, in short summary Mr Jorgensen’s evidence was that it had for some time been his practice to pay business expenses payable by Trek North Tours out of the Family Trust account and to transfer funds from the Yubnub account to “cover” those business expenses. That practice continued after the freezing order were made. Critically, his evidence was that the relevant funds transfers were made to repay the Family Trust account for “business outgoings previously paid on behalf of Trek North Tours” and that he believed that they therefore fell within the “ordinary and proper course of your business” exception in subpara 10(c) of the freezing order.
Mr Jorgensen was cross-examined at considerable length by counsel for the Ombudsman. He was also questioned at length by the primary judge during the course of the cross-examination. The questioning of Mr Jorgensen by both counsel for the Ombudsman and the primary judge occurred over three days.
It is neither necessary nor desirable at this stage to discuss Mr Jorgensen’s oral evidence at length. It suffices to say that, despite extensive questioning concerning the conduct of the business of Trek North Tours and the operation of the relevant bank accounts, Mr Jorgensen maintained that the funds transfers from the Yubnub and Jorgensen TNT accounts to the Family Trust account were all repayments of business expenses of the Trek North Tours business which had earlier been paid out of the Family Trust account. The business expenses were first paid from the Family Trust account because that was the only line of credit available to Mr Jorgensen.
Mr Jorgensen conceded that he was unable to say exactly what business expenses the impugned funds transfers specifically related to and agreed that the amounts did not correspond with any particular invoices. Rather, the transfers were made whenever business funds became available in, relevantly, the Yubnub account and generally had the effect of clearing the account until further funds were paid into it. This was done in part to ensure that the debit balance of the Family Trust account was reduced to minimise the amount of interest that was payable. He maintained that this was the way he had always conducted the Trek North Tours business and operated the relevant accounts and that he therefore believed that the funds transfers fell within the exception in subpara 10(c) of the freezing order. That was because he believed that the funds transfers were in the “ordinary and proper course” of the business of Trek North Tours and 828 Pty Limited.
In his submissions to the primary judge, Mr Jorgensen pointed to documentary evidence which supported or corroborated his case that the impugned transfers were simply a continuation of the practice that he had for some time adopted of first paying business expenses out of the Family Trust account and then reimbursing the Family Trust account from business funds when received in the Yubnub account. He submitted that an analysis of the Family Trust account statements showed that, for some considerable time prior to the making of the freezing order, business expenses of the Trek North Tours business were regularly paid out of the Family Trust account. Those payments included fairly regular payments to “Skyrail” and Queensland Rail.
In relation to the specific funds transfers, Mr Jorgensen pointed out that the Family Trust account statements showed that on 3 August 2015, the day before the first of the impugned transfers to the Family Trust account was made, two “Bpay” payments were made to Queensland Rail from the Family Trust account. Those payments, for $24,628.69 and $9,937.60 were referable to invoices issued by Queensland Rail to the Trek North Tours business in respect of the Kuranda Scenic Railway. Those invoices, which were in evidence, were dated 13 June and 30 June 2015 respectively. The bank statements also revealed that on 14 August 2015, an amount of $7,500 was transferred from the Family Trust account to the Jorgensen TNT account. Mr Jorgensen contended that the evidence therefore showed that in the period from 3 August 2015 (the day before the first of the impugned payments) to 14 August 2015 (the date of the last of the impugned payments), the Family Trust account was used to pay $42,066.29 towards the business expenses of the Trek North Tours business and $41,005.56 was transferred to the Family Trust account from the Yubnub and Jorgensen TNT accounts.
In Mr Jorgensen’s submission, it did not matter that the amounts paid to reimburse the Family Trust account did not precisely coincide with the invoices paid from the Family Trust account. Nor did it matter that Mr Jorgensen’s way of doing business was unsophisticated, if not haphazard. The impugned payments were in keeping with the way the business had always been operated by Mr Jorgensen and were therefore made in the ordinary and proper course of the business.
JUDGMENTS OF THE PRIMARY JUDGE
On 30 April 2018, the primary judge delivered an ex tempore judgment rejecting Mr Jorgensen’s application that he had no case to answer. His Honour found that Mr Jorgensen had a case to answer based on the evidence adduced in the Ombudsman’s case because there was scant evidence concerning the relevant transactions and the way the bank accounts were operated. The evidence at that point did not, of course, include the evidence in Mr Jorgensen’s affidavit.
On 3 May 2018, the primary judge delivered an ex tempore judgment (the Judgment) in which he found that the Ombudsman had proved each of the nine charges of contempt beyond reasonable doubt and convicted Mr Jorgensen accordingly.
The primary judge accepted the Ombudsman’s submission that the contempt charges against Mr Jorgensen required the Ombudsman to prove four elements: that there was a court order in existence; that the terms of the order were clear, unambiguous and capable of compliance; that Mr Jorgensen had knowledge of the order; and that Mr Jorgensen knowingly impeded the administration of justice: Judgment at [46]. His Honour found that the first three elements were “easily met” and that the fourth element was the focus of the trial: Judgment at [47]-[50]. His Honour accepted that it was for the Ombudsman to prove each of the elements beyond reasonable doubt: Judgment at [52].
As for the “exception” in subpara 10(c) of the freezing order, the primary judge proceeded on the basis that it was for Mr Jorgensen to show that there was evidence upon which it could be found that the relevant payments fell within the exception and that once that was shown it was for the Ombudsman to negate the exception beyond reasonable doubt: Judgment at [52]-[53]. It should perhaps be noted, in this context, that the primary judge’s findings in this regard are consistent with the decision of Zammit J in Fortune Holding Group Pty Ltd v Zhang (No 2) [2017] VSC 738 at [31]-[49]; compare Australian Securities and Investments Commission v Sigalla (No 3) [2010] NSWSC 1076 at [46]-[48].
The primary judge then purported to address the question whether the relevant “disposition of assets” occurred in the “ordinary course of business and in the proper course of the business”: Judgment at [54]. That was no doubt a reference to the question whether the relevant withdrawals or transfers fell within the exception in subpara 10(c) of the freezing order. His Honour considered that the answer to that question turned in part on whether the relevant withdrawals were “bona fide business expenses which were properly incurred”: Judgment at [54]. While it is not entirely clear, it would appear that the primary judge accepted that Mr Jorgensen had met his evidentiary onus of adducing evidence that raised a reasonable possibility that the transfers fell within subpara 10(c) of the freezing order and that the question was whether the Ombudsman had discharged its legal burden of proving beyond reasonable doubt that they did not.
The primary judge found that the transfers were not the payment of “business expenses bona fide and properly incurred” (Judgment at [54]). His Honour’s reasons for so finding are not, however, entirely clear or easy to understand. His Honour appears to have accepted, or at least proceeded on the basis that, when he made the transfers, Mr Jorgensen was essentially reimbursing or repaying the Family Trust account because funds in the Family Trust account had been used to pay expenses of the Trek North Tours business. His Honour in effect found, however, that any reimbursement or repayment obligations that 828 Pty Limited may have had to the Family Trust arising from the use of funds in the Family Trust account to pay business expenses of Trek North Tours were not business expenses. His Honour reasoned as follows (at [59]-[61]):
I do not think that these payments can be categorised as business expenses. A business expense would occur if the Respondent (or the company) were paying a creditor but repaying a family trust who has paid a creditor, is not a business expense itself and certainly not in this case.
If one goes through the history of how these payments had been made, it is obvious to me that it does not really matter to the Respondent as to which entity pays the bill as long as, whenever there is too much credit in either of the business accounts that do not have debit or overdraft facilities, there is the minimum amount of debt in any other account for which a debit facility is enabled. That does not mean that the transferring of money becomes the payment of a business expense.
I accept the submission of the Applicant that, in such circumstances as obtained in this case, what was created was at the most, a financial obligation, maybe even a legal obligation, on behalf of the business to pay the family trust. Such obligations are not business expenses.
The primary judge also considered that it was important that the transfers or withdrawals did not correspond with the “actual” payments of the Trek North Tours expenses out of the Family Trust account and that the withdrawals, in that respect, were “sporadic”: Judgment at [70]. His Honour also considered that it was significant that the withdrawals on each occasion “cleared the account”, by which his Honour meant that the withdrawals reduced the balance of the Yubnub account to nil or almost nil, and that the transfers reduced the “interest rates” on the Family Trust account: Judgment at [71]. His Honour’s reference to reducing the “interest rates” was presumably a reference to the fact that the transfers into the Family Trust account reduced the debit balance of that account and meant that less interest was payable.
The primary judge also held that the transfers or withdrawals were not, in any event, made in the “ordinary and proper course of [828 Pty Limited’s] business”: Judgment at [72]. His Honour appears to have accepted that Mr Jorgensen had, in the past, conducted the business of Trek North Tours by using the Family Trust account to pay business expenses and then reimbursing the Family Trust account by transferring funds from the Yubnub account. His Honour held, however, that it did not follow that the conduct of the business in that way was “ordinary and proper”: Judgment at [72]. His Honour reasoned as follows (at [74]):
The mixing of business funds with personal funds could never be seen as proper. The non-documenting of loans could never be seen as proper. The non-existence of any loan agreement could not be seen as proper. The complete lack of records could not be seen as proper and it could never have been seen as a proper conduct of business to periodically clear a business account solely to ensure that a family trust account incurred the least amount of interest payable.
The primary judge accordingly found that the transfers or withdrawals did not fall within the exception in subpara 10(c) of the freezing order.
The primary judge then addressed what he considered to be an “even more fundamental problem” with Mr Jorgensen’s conduct which was relevant to whether he had “knowingly impeded the administration of justice”: Judgment at [76]. That problem, according to the primary judge’s findings, was that from 1 July 2015 the business of Trek North Tours had “effectively shut up shop” and was taken over by the business of Trek North Safaris: Judgment at [78]-[85]. That finding was primarily based on the primary judge’s analysis of Exhibit 4, the 1 March 2016 letter from the Indian accountant, though his Honour also considered that the letter did “seem to correspond with what the objective evidence is”: Judgment at [78].
The significance of the primary judge’s finding that on 1 July 2015 the business of Trek North Tours had effectively been taken over by the business of Trek North Safaris was twofold.
First, it provided the primary judge with another reason for finding that the transfers or withdrawals were not “bona fide business payments and in the ordinary course of running the business”. That was because, according to the primary judge, it meant that “any payments made after 1 July 2015 for business expenses, were made on behalf of Trek North Safaris”: Judgment at [82].
Second, though it is not entirely clear, the primary judge appears to have found that the “deliberate decision” by Mr Jorgensen to “ensure that Trek North Tours was no longer a going concern from 1 July 2015” was conduct which defeated, or had the effect of defeating, the purpose of the freezing order: Judgment at [84]-[85]. His Honour appears, therefore, to have found that it was that conduct by Mr Jorgensen, rather than the impugned transfers or withdrawals which were the subject of the Ombudsman’s pleaded case, which satisfied the element of knowingly impeding the administration of justice.
On 10 May 2018, the primary judge heard submissions in relation to sentencing Mr Jorgensen. His Honour handed down an ex tempore judgment (the Sentence Judgment) in which he imposed the following sentence:
That the Respondent, LEIGH ALAN JORGENSEN be sentenced to a period of imprisonment in the Lotus Glen Correctional Centre for a period of twelve (12) months, to be served immediately and upon the balance of $84,956.75 being paid to the Fair Work Ombudsman, with such monies to then be remitted to the relevant employees with in a further 28 days from the date of these Orders, the Respondent be released from prison on 20 May 2018 with the balance of his sentence to be wholly suspended.
His Honour made no order as to costs. His Honour also dismissed applications by Mr Jorgensen for bail and a stay of the sentence.
It should, however, be noted that on 11 May 2018, Reeves J ordered that the orders made by the primary judge on 10 May 2018 be stayed pending the hearing and determination of this appeal and that Mr Jorgensen be released on conditional bail.
For reasons that will in due course become apparent, it is unnecessary to refer at length to the primary judge’s reasons for imposing the sentence that he did. It suffices to make the following short points.
First, the primary judge reiterated his finding that the impugned transfers to the Family Trust account were not business expenses even though “there was an obligation on the business to repay the trust” which had arisen because the Family Trust account had been used to pay business expenses: Sentence Judgment at [28]. His Honour also explained that, even if that obligation was a business expense, the “method” by which Mr Jorgensen had come to make the transfers was “not a proper way in which to conduct business” because there were no loan agreements, no records kept of the expenses and the transfers had the effect of “clearing of the bank accounts”: Sentence Judgment at [29].
Second, the primary judge did not sentence Mr Jorgensen on the basis that he knew that the relevant transfers were either not the payment of business expenses or were not made in the ordinary and proper course of the business of 828 Pty Limited trading as Trek North Tours. Nor did his Honour suggest that Mr Jorgensen knew that the transfers did not fall within the exception in subpara 10(c) of the freezing order. Nor were such findings referred to in the Sentence Judgment.
Third, consistently with the primary judge’s judgment in respect of liability, his Honour had regard to what he found to be a “more alarming aspect” to Mr Jorgensen’s conduct: Sentence Judgment at [30]. The more alarming aspect was that, according to his Honour, the business expenses that were reimbursed by the relevant funds transfers were business expenses of Trek North Safaris, not Trek North Tours. That was because Trek North Tours had been “left to wither and die on the vine” and Trek North Safaris “took over” on 1 July 2015: Sentence Judgment at [31]-[33].
Fourth, it appears that the primary judge sentenced Mr Jorgensen on the basis that his conduct which warranted the “sternest possible condemnation” was his conduct in “orchestrat[ing] and structur[ing] a series of companies and businesses so as to be able to ensure that the Fair Work Ombudsman was never going to be able to have the judgment” in its favour satisfied (Sentence Judgment at [37]). As will be seen, there are a number of difficulties with that finding, not the least of which is that the contempt charges brought by the Ombudsman related only to specific breaches of the freezing order, not some broader scheme to defeat the judgment which had been obtained against 828 Pty Limited.
APPEAL GROUNDS AND SUBMISSIONS
Mr Jorgensen’s amended notice of appeal raised four grounds of appeal against his convictions for contempt. It also included a ground of appeal against the sentence imposed by the primary judge.
The first ground of appeal was, in short terms, that the primary judge erred in finding that the relevant transfers did not fall within the exception in subpara 10(c) of the freezing order because his Honour misconstrued the expressions “business expenses” and “ordinary and proper course of your business”. Mr Jorgensen contended, in essence, that the primary judge was distracted by the “messiness” of the manner in which the business of Trek North Tours was conducted and in particular by the fact that the conduct of the business generally included or involved the mixing of business and personal funds and the inadequate documentation of transactions. In Mr Jorgensen’s submission, the fact that he conducted his business in that general manner did not mean that the relevant transfers were not made in the “ordinary and proper course” of the business. The relevant question was whether the specific transfers were in “ordinary and proper course” of the business of Trek North Tours, not whether the conduct of that business generally was “proper”. Mr Jorgensen relied, in support of this ground, on the decision in Michael Wilson and Partners Limited v John Forster Emmott [2015] EWCA Civ 1028; [2015] All ER (D) 160 which, he contended, involved analogous facts and circumstances.
The second ground was that the primary judge “impermissibly” relied on Exhibit 4 and as a result erred in finding that the business of Trek North Tours was not a going concern from 1 July 2015 and that any payments for business expenses made after 1 July 2015 were made on behalf of Trek North Safaris. Mr Jorgensen contended that Exhibit 4, the 1 March 2016 letter from the Indian accountant, was only admitted on a limited hearsay basis and that he was not asked any questions about it at the hearing. He submitted that the document did not, in any event, support the relevant findings made by the primary judge.
The third ground of appeal was that the primary judge either failed to make an essential finding of fact, being that Mr Jorgensen knowingly impeded the administration of justice, or in the alternative erred in finding, beyond reasonable doubt, that he knowingly impeded the administration of justice. Mr Jorgensen contended that, while the primary judge identified that it was necessary for the Ombudsman to prove that he knowingly impeded the administration of justice, he made no express finding in that regard. Even if such a finding was somehow implicit in his Honour’s reasons, in Mr Jorgensen’s submission it was not a finding which was open on the evidence.
The fourth ground of appeal is that Mr Jorgensen was denied procedural fairness as a result of the primary judge’s “interventions” during the hearing.
The fifth ground of appeal relates to the sentence imposed on Mr Jorgensen. Mr Jorgensen contended that the “head penalty” of imprisonment was manifestly excessive because it required a period of “actual custody” to be served.
CONSIDERATION – CONVICTION APPEAL
Where, as here, an appeal involves grounds involving allegations of apprehended bias or denial of procedural fairness along with other substantive or discrete grounds, the appeal court should first deal with the issues of bias or procedural fairness. That is because those grounds, if made out, would strike at the validity of the trial and require the matter to be remitted for retrial: Concrete Pty Ltd v Parramatta Design and Developments Pty Ltd [2006] HCA 55; 229 CLR 577 at [2] (Gummow A-CJ), [117] (Kirby and Crennan JJ); Royal Guardian Mortgage Management Pty Ltd v Nguyen [2016] NSWCA 88; 332 ALR 128 at [9]-[13] (Basten JA) and [259]-[261] (Ward JA with whom Emmett AJA agreed). If the bias or procedural fairness ground is made out, it may then be inappropriate to determine the remaining grounds of appeal.
The appropriate course, then, is to first consider Mr Jorgensen’s fourth ground of appeal which alleged that he was denied procedural fairness.
Ground four - Denial of procedural fairness by reason of excessive interventions
Mr Jorgensen contended that excessive intervention by the primary judge during the course of his evidence at the trial resulted in or amounted to a denial of procedural fairness. He contended that the primary judge’s interventions undermined or disrupted the orderly elicitation of his evidence and represented such a fundamental departure from the role of a judge in an adversarial trial that it compromised the primary judge’s ability to objectively evaluate the evidence. Mr Jorgensen did not contend that the extent and nature of the primary judge’s interventions supported a finding of apprehended bias: that a fair minded lay observer might reasonably apprehend that the primary judge might not bring, or might not have brought, an impartial mind to the resolution of the question that the judge was required to decide. The issues or concepts of apprehended bias and procedural unfairness by excessive intervention may overlap, but are nonetheless distinct: RPS v The Queen [2000] HCA 3; 199 CLR 620 at [11]; Toth v Director of Public Prosecutions (NSW) [2017] NSWCA 344 at [61].
It appears that Mr Jorgensen did not pursue any claim of apprehended bias because counsel who represented him before the primary judge did not apply for the judge to recuse himself, or otherwise raise any complaint concerning the interventions. It is, however, questionable whether the failure to object in the particular circumstances of this case would have constituted a form of waiver: cf. Vakauta v Kelly [1989] HCA 44; 167 CLR 568 at 572. That is because the interventions occurred throughout the trial and it may in those circumstances have been difficult to identify a particular point in time when objection should have been taken: cf. Nguyen at [31]. The impact or risks associated with the interventions may also not have materialised until the ex tempore judgment was delivered by the primary judge: Nguyen at [32], [255].
Relevant principles
In any event, Mr Jorgensen’s ground of appeal relating to the primary judge’s interventions falls to be determined by references to the principles applicable to the situation where excessive interventions by a trial judge are said to have given rise to a denial of procedural fairness. Those principles are fairly well settled. In Galea v Galea (1990) 19 NSWLR 263, Kirby A-CJ (with whom Meagher JA agreed) summarised the relevant principles or guidelines in the following terms (at 281-282):
1.The test to be applied is whether the excessive judicial questioning or perjorative comments have created a real danger that the trial was unfair. If so, the judgment must be set aside: see E H Cochrane Ltd v Ministry of Transport [1987] 1 NZLR 146 (NZCA).
2.A distinction is drawn between the limits of questioning or comments by a judge when sitting with a jury and when sitting alone in a civil trial. Although there is no relevant distinction, in principle, between the judicial obligation to ensure a fair trial whatever the constitution of the court, great latitude in questioning and comment will be accepted where a judge is sitting alone. This is because it is conventionally inferred that a trained judicial officer, who has to find the facts himself or herself, will be more readily able to correct and allow for preliminary opinions formed before the final decision is reached: see R v Matthews (1983) 78 Cr App R 23; E H Cochrane Ltd v Ministry of Transport.
3.Where a complaint is made of excessive questioning or inappropriate comment, the appellate court must consider whether such interventions indicate that a fair trial has been denied to a litigant because the judge has closed his or her mind to further persuasion, moved into counsel’s shoes and “into the perils of self-persuasion”: see Sir Robert Megarry, “Temptations of the Bench” (1978) 16 Alta L Rev 406 at 409; see also U Gautier, “Judicial Discretion to Intervene in the Course of the Trial” (1980) 23 Crim LQ 88 at 95-96 and cases there cited.
4.The decision on whether the point of unfairness has been reached must be made in the context of the whole trial and in the light of the number, length, terms and circumstances of the interventions. It is important to draw a distinction between intervention which suggests that an opinion has been finally reached which could not be altered by further evidence or argument and one which is provisional, put forward to test the evidence and to invite further persuasion: see In the Marriage of Lonard (1976) 26 FLR 1 at 10-11; 11 ALR 618 at 626 (FFC); see discussion [1976] ACLD DT 630; cf Ex parte Prentice; Re Hornby (1969) 90 WN (Pt 1) (NSW) 427; [1970] 1 NSWR 654.
5.It is also relevant to consider the point at which the judicial interventions complained of occur. A vigorous interruption early in the trial or in the examination of a witness may be less readily excused than one at a later stage where it is designed for the legitimate object referred to in Jones, namely of permitting the judge to better comprehend the issues and to weigh the evidence of the witness concerned. By the same token, the judge does not know what is in counsel’s brief and the strength of cross-examination may be destroyed if a judge, in a desire to get to what seems crucial, at any stage prematurely intervenes by putting questions: see Yuill (at 185) and Gautier (at 117).
6.The general rules for conduct of a trial and the general expression of the respective functions of judge and advocate do not change. But there is no unchanging formulation of them. Thus, even since Jones and Tousek, at least in Australia, in this jurisdiction and in civil trials, it has become more common for judges to take an active part in the conduct of cases than was hitherto conventional. In part, this change is a response to the growth of litigation and the greater pressure of court lists. In part, it reflects an increase in specialisation of the judiciary and in the legal profession. In part, it arises from a growing appreciation that a silent judge may sometimes occasion an injustice by failing to reveal opinions which the party affected then has no opportunity to correct or modify. In part, it is simply a reflection of the heightened willingness of judges to take greater control of proceedings for the avoidance of the injustices that can sometimes occur from undue delay or unnecessary prolongation of trials deriving in part from new and different arrangements for legal aid. The conduct of criminal trials, particularly with a jury, remains subject to different and more stringent requirements: see Whitehorn v R (1983) 152 CLR 657 discussed in R v R (1989) 18 NSWLR 74 at 84F per Gleeson CJ.
In R v T, WA [2014] SASCFC 3; 118 SASR 382, Kourakis CJ identified three basic grounds on which excessive judicial intervention might give rise to a denial of procedural fairness or miscarriage of justice.
The first ground, which Kourakis CJ referred to as the “disruption ground” is made out where the interventions unfairly undermine the proper presentation of a party’s case: see also Ellis v R [2015] NSWCCA 262 at [65]. In Michel v R [2009] UKPC 41; [2010] 1 WLR 879, Lord Brown described this ground as involving interventions that prevent a party from doing himself or herself justice in the giving of his or her evidence. It may, however, also apply to interventions which occur in the course of submissions: see Jones v National Coal Board [1957] 2 QB 55 at 63-64.
The second ground is where the questioning or interruptions give an appearance of bias. As noted earlier, however, Mr Jorgensen did not pursue any claim of apprehended bias.
The third ground, which Kourakis CJ referred to as the “dust of conflict” ground (an expression coined by Lord Greene MR in Yuill v Yuill [1945] 1 All ER 183 at 189), is made out where the questioning or intervention is “such an egregious departure from the role of a judge presiding over an adversarial trial that it unduly compromises the judge’s advantage in objectively evaluating the evidence from a detached distance”: R v T at [38]. Kourakis CJ further explained this ground as follows (at [39]):
I prefer to state the dust of conflict ground in terms of compromising the capacity of the judge to adjudicate because an appeal court can never do anything more than speculate as to whether the judicial officer’s vision was in fact “clouded by the dust of conflict”. If the appeal court, on an appeal by way of rehearing, concludes that a judge’s findings were wrong in fact on the evidence, it may correct them without relying on the judge’s excessive judicial intervention. However, in those cases in which the facts, as found, were open to the trial judge, particularly given the judge’s advantage in assessing the credibility of the witnesses, it is impossible for an appeal court to say whether or not the judge’s finding in fact proceeded from a clouded, or clear headed, evaluation of the evidence. Moreover, because this ground, in effect, alleges an error of law which will generally result in a retrial irrespective of the appeal court’s view of the weight of the evidence, it is better based on an objective standard measured by an assessment of the degree to which the departure from a judge’s traditional role compromises the judicial capacity to objectively evaluate the evidence.
The primary judge’s errors in construing the scope of the “ordinary and proper course of business” exception were akin to the situation where a trial judge is found to have misdirected a jury about a material legal issue. The appropriate order in such circumstances, subject to the application of the proviso, is ordinarily that the conviction be set aside and the matter be remitted for retrial.
That would appear to be the appropriate order arising from the success of this ground of appeal. There is no scope for the application of the proviso. For the reasons given earlier it is not possible to conclude on the basis of the material before this Court that, despite the primary judge’s error in construing the scope of the “ordinary and proper course of business” exception, the evidence admitted at the trial proved that Mr Jorgensen was guilty of contempt as charged, or that the error concerning the scope of the exception could not reasonably be supposed to have affected the result of the trial.
Ground two – Reliance on Exhibit 4 and the findings based on it
Ground two of Mr Jorgensen’s grounds of appeal raises three issues: first, whether the primary judge “impermissibly” used Exhibit 4 having regard to the particular circumstances in which it was tendered and relied on in the court below; second, whether findings of fact made by the primary judge on the basis of Exhibit 4 were erroneous; and third, what was the effect or impact, if any, of the findings of fact based on Exhibit 4.
The circumstances in which Exhibit 4 came to be tendered and relied on were somewhat unsatisfactory and potentially problematic.
Exhibit 4 was tendered by counsel for the Ombudsman on the third day of the hearing, just prior to the completion of the cross-examination of Mr Jorgensen. The basis of the tender was explained in the following terms by counsel for the Ombudsman (T159 lines 1-7):
MS WILSON: Thank you, your Honour. Just as a matter of housekeeping, which I’ve discussed with my learned friend. In the enforcement hearing there was – Mr Jorgensen was cross-examined on a letter that he provided from Mr Mudit Jain & Associates, chartered accountants, from Punjab, India. It says that – though it was tendered but it seems to have not been included in the material. My learned friend has no objection to me handing that up so – to make that material complete, and that’s what I do …
The Ombudsman had already tendered the transcript of the enforcement hearing and a number of other documents that were produced or referred to in the course of that hearing. Mr Jorgensen had produced the letter from the accountant at the enforcement hearing and had been questioned about it. It was implicit in what counsel for the Ombudsman said that his Honour could have regard to Exhibit 4 as being a document about which Mr Jorgensen had given evidence at the enforcement hearing. That would appear to be what was meant when it was said that the document made “that material complete”. Counsel did not, however, at that point at least, otherwise explain to the primary judge what the relevance of the letter was. As also can be seen from what was said, counsel for Mr Jorgensen did not object to the tender of the letter, or seek any limitation or restriction on its use.
Counsel for the Ombudsman did not cross-examine Mr Jorgensen about Exhibit 4. In those circumstances, it was probably not open to counsel for Mr Jorgensen to re-examine Mr Jorgensen about it. It perhaps would have been open to counsel for Mr Jorgensen to seek leave to ask Mr Jorgensen questions about the letter, though no such leave was sought. That is perhaps understandable in circumstances where nothing had been said about the relevance of the letter or what, if any, factual findings might be made about it or its contents.
It does not appear that counsel for the Ombudsman referred to Exhibit 4 in the closing submissions that were made to the primary judge. There is no indication that the Ombudsman relied on the letter in any way in seeking to make out its case. That is perhaps consistent with the suggestion that the document had been tendered merely as a matter of “housekeeping”.
It was the primary judge who first raised the potential significance of Exhibit 4. That occurred in the course of the closing submissions by counsel for Mr Jorgensen. It is readily apparent that his Honour considered that Exhibit 4 was evidence of the fact that Trek North Tours had ceased its business operations in March 2015, or at least by 1 July 2015. Counsel for Mr Jorgensen endeavoured to deal with that proposition. She submitted, amongst other things, that Mr Jorgensen had not been cross-examined about the document in the contempt proceedings, that the proposition that Trek North Tours had ceased business operations in March 2015 was not consistent with Mr Jorgensen’s evidence, and that it was possible that the reference in the letter to March 2015 may have been a “typo” given that 828 Pty Limited, which was the company that operated the business of Trek North Tours, was not wound up until June 2016. Counsel in due course took the primary judge to the evidence that Mr Jorgensen gave about the letter during the enforcement hearing. That evidence was not consistent with the proposition that the business of Trek North Tours ceased in March 2015.
In her submissions in reply, counsel for the Ombudsman did not take up the proposition advanced by the primary judge to the effect that Exhibit 4 indicated that Trek North Tours had ceased its business operations in March 2015 or by 1 July 2015. Indeed, the submissions advanced on behalf of the Ombudsman were to the effect that no reliance could be placed on the truth of any of the statements in the letter. Counsel said (T260 lines 17-25):
MS WILSON: Yes. That’s right. And the accountant’s letter was handed up by the respondent to provide a complete – their accountant’s letter was handed up yesterday to provide a complete record of the enforcement hearing. We note that we can see by the cross-examination of the respondent at the enforcement hearing that it was a document that was relied on by the respondent. This letter does nothing more than just add more mud to muddied waters. For example, in this letter it says there’s no liabilities of the company. And now in his affidavit he says there are liabilities. It’s prima facie a hearsay document. You can’t establish the truth behind that. But it is an assertion that has been made to the court.
It is not immediately apparent why counsel for the Ombudsman suggested that the letter was “prima facie a hearsay document” given that it could most likely be considered to be a business record for the purposes of the business records exception to the hearsay rule in s 69 of the Evidence Act 1995 (Cth). In any event, the point remains that the Ombudsman did not rely on Exhibit 4 as proving the truth of any statement made in it, including that the Trek North Tours business had ceased to operate by March 2015.
Despite the circumstances in which Exhibit 4 was tendered and the approach taken to it by the parties, it is readily apparent that the primary judge relied heavily on it in making significant adverse findings against Mr Jorgensen. Those findings included that Trek North Tours had “effectively shut up shop and allowed Trek North Safaris to take over its operations” (Judgment at [78]-[79]); that “from 1 July 2015, the business of Trek North Tours was not a going concern” (Judgment at [80]); that any payments made after 1 July 2015, even if they were “bona fide business payments and in the ordinary and proper course of running the business”, were made on behalf of Trek North Safaris, not Trek North Tours (Judgment at [81]-[82]); that therefore there “could be no exceptions under order 10(c) for the business, Trek North Tours” (Judgment at [85]); and that Mr Jorgensen had “simply let Trek North Tours ‘wither on the vine’ so as to defeat the judgment” and had made a “deliberate decision … to ensure that Trek North Tours was no longer a going concern from 1 July 2015” (Judgment at [83] and [85]; also see Judgment at [24]-[26]).
If the primary judge made any finding to the effect that Mr Jorgensen knowingly impeded the administration of justice, an issue that is considered later in the context of ground four of Mr Jorgensen’s amended notice of appeal, the findings made by his Honour based on Exhibit 4 seem to have been central to that finding. That is apparent from paragraph [76] of the Judgment, where his Honour effectively introduced his consideration of Exhibit 4 by stating that there was an “even more fundamental problem” with Mr Jorgensen’s conduct which “goes to the heart of whether he has knowingly impeded the administration of justice”.
The Ombudsman contended that the primary judge did not rely on Exhibit 4 in making any of the findings just referred to. In the Ombudsman’s submission, the primary judge made those findings based on other “objective evidence” and only used Exhibit 4 as a “chronological prompt”. The difficulty with that submission is that it is not supported by a fair reading of the primary judge’s reasons. The primary judge refers extensively to Exhibit 4, but only obliquely refers to, and does not identify, the “objective evidence” with which Exhibit 4 was said to correspond. More fundamentally, the Ombudsman was unable to identify the objective evidence which the primary judge supposedly relied on. There was no evidence capable of supporting the primary judge’s findings.
Was the primary judge’s reliance on Exhibit 4 in making these findings “impermissible” as alleged by Mr Jorgensen? Mr Jorgensen’s main contention in that regard was that the document was “admitted on a limited basis that did not permit it to be used to establish the truth of its contents”. That contention is at best doubtful. Despite the rather unclear and ambiguous statements made by counsel for the Ombudsman concerning the tender of the exhibit, no order limiting the use to which the document could be put, either pursuant to s 136 of the Evidence Act or otherwise, was sought by counsel for Mr Jorgensen or made by the primary judge.
It was, however, procedurally unfair for the primary judge to make the findings he did based on Exhibit 4. Mr Jorgensen was not cross-examined about Exhibit 4 by counsel for the Ombudsman. Nor did the primary judge question Mr Jorgensen about the document. It was never put to Mr Jorgensen that he had deliberately ensured that the business of Trek North Tours was no longer a going concern from 1 July 2015 and had effectively transferred the business to Trek North Safaris from that date. It certainly was not squarely put to Mr Jorgensen that he did that to defeat the judgment and orders that had been made against 828 Pty Limited. Nor did the Ombudsman make any submission to the primary judge that he should make any such findings. The Ombudsman’s pleaded case also did not include any such allegation. It was never put to Mr Jorgensen in cross-examination that the transfers related to business expenses of Trek North Safaris, instead of Trek North Tours as he had claimed. Nor did the Ombudsman invite the primary judge to make any such finding.
It is true that the primary judge did raise Exhibit 4 with counsel for Mr Jorgensen in the course of her final submissions. His Honour did suggest that it supported a finding that the business of Trek North Tours had ceased in March 2015. Counsel was able to make submissions on that point. Those submissions included that Mr Jorgensen had not been cross-examined about Exhibit 4 or the findings that were said to flow from it. In any event, the point remains that Mr Jorgensen himself was never given the opportunity to respond to or address any of the findings of fact that the primary judge ultimately made in relation to Exhibit 4.
There is no question that the primary judge was obliged to afford Mr Jorgensen procedural fairness. Procedural fairness extends to require a decision-maker to identify to a person who may be affected by a decision any adverse conclusion which has been arrived at which would not obviously be open on the known material, though the decision-maker is not obliged to expose his or her mental processes or provisional views to comment before making the decision: Commissioner for Australian Capital Territory Revenue v Alphaone Pty Ltd (1994) 49 FCR 576 at 591-592; SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs [2006] HCA 63; 228 CLR 152 at [29]. There will be a denial of procedural fairness and a substantial miscarriage of justice where a trial judge makes findings of impropriety against a witness in circumstances where the witness was not given an opportunity to address that issue in cross-examination: see generally Sullivan v Trilogy Funds Management Ltd [2017] FCAFC 153; 255 FCR 503 at [265], [325].
While Mr Jorgensen’s notice of appeal did not expressly or directly contend that he was denied procedural fairness because he was not given an opportunity to respond to the adverse findings that the primary judge made based on Exhibit 4, that was the general tenor of his submissions. He submitted, amongst other things, that the primary judge’s use of Exhibit 4 was impermissible because he was not given the opportunity to comment on it, or to affirm or deny the truth of the hearsay assertions in it, including that Trek North Tours discontinued its business operations in March 2015. That was tantamount to an allegation of denial of procedural fairness.
In any event, and putting issues concerning procedural fairness to one side, there is considerable merit in Mr Jorgensen’s submission that the findings made by the primary judge based on Exhibit 4 were erroneous. The letter from the accountant was signed and dated 1 March 2016. It concerned 828 Pty Limited and did not specifically refer to the business of Trek North Tours. While it does state that “[t]he Company has discontinued its business operations with effect from March 2015”, when considered in context, it is fairly obvious that that date is a typographical error and should read “March 2016”, which was the date of the letter. March 2015 was some months before the default judgment was entered against 828 Pty Limited and some months before the business of Trek North Safaris was established. There was no evidence to suggest that no business at all operated between March 2015 and 1 July 2015. Aside from the letter, there was no evidence whatsoever that 828 Pty Limited discontinued its business operations as early as March 2015, and no evidence whatsoever that the business of Trek North Tours ceased months prior to the default judgment and months prior to the commencement of the business of Trek North Safaris. Mr Jorgensen resigned as a director of 828 Pty Limited on 1 March 2016, the date of the letter, and the company was wound up some months later. It is highly unlikely that it would have ceased business operations in March 2015 and yet not be wound up for another 16 months.
Putting the statement about the company ceasing business in March 2015 to one side, Exhibit 4 otherwise provided no basis for an inference or finding that the business of Trek North Tours ceased on 1 July 2015.
The primary judge suggested that the letter seemed to “correspond with what the objective evidence is”: Judgment at [78]. As has already been noted, however, his Honour did not identify what that “objective evidence” was. Nor was the Ombudsman able to take the Court to any compelling evidence which supported the findings made by the primary judge in relation to Exhibit 4.
Mr Jorgensen was questioned, both at the enforcement hearing and by the primary judge, about the establishment of the business Trek North Safaris, the relationship of that business with the business of Trek North Tours and the date that the business Trek North Tours ceased to operate. While Mr Jorgensen’s evidence about those matters was fairly unclear and unimpressive, he did not at any time suggest or concede that Trek North Tours “shut up shop” on or by 1 July 2015. Indeed, the general tenor of his evidence was that the two businesses coexisted for some period of time and were not identical. While there was no dispute that Trek North Safaris commenced business on 1 July 2015, it did not necessarily follow that the Trek North Tours’ business ceased on that day.
The Ombudsman also contended that the primary judge’s finding that the business of Trek North Tours ceased on 1 July 2015 was also supported by an analysis of the relevant bank statements. It is, however, by no means clear that the primary judge engaged in any analysis of the bank statements. In any event, the bank statements alone are not capable of supporting the finding, particularly having regard to the evidence which clearly indicated that Mr Jorgensen operated the various accounts he controlled without any particular regard to the person or entity who was the account holder.
Even if, contrary to this conclusion, there was some evidentiary basis for finding that Trek North Tours ceased to carry on business on 1 July 2015, there is an even more fundamental difficulty with the primary judge’s finding that the relevant transfers therefore related to the reimbursement of the business expenses of Trek North Safaris, as opposed to business expenses of Trek North Tours as Mr Jorgensen had claimed. That difficulty is that Mr Jorgensen’s case, as ultimately articulated in his submissions to the primary judge, was that the impugned transfers reimbursed the Family Trust account in respect of the payment of two large invoices issued by Queensland Rail for $9,937.60 and $24,628.69. Those invoices were dated 13 June and 30 June 2015 respectively. The later invoice dated 30 June 2015 for the amount of $24,628.69 was addressed to Trek North Tours. The invoice dated 13 June 2015 was addressed to Trek North, Tudoods Pty Ltd. Mr Jorgensen’s evidence was to the effect that the reference to Tudoods Pty Limited was a mistake by Queensland Rail and this invoice related to the business of Trek North Tours. There was no basis for concluding that these invoices, both of which self-evidently referred to the provision of services prior to 1 July 2015, represented business expenses of Trek North Safaris, as opposed to Trek North Tours.
One final observation should be made about the primary judge’s reasoning based on the finding that the business of Trek North Tours ceased on 1 July 2015. If that was in fact the case, it would almost certainly follow that the funds which were received into the Yubnub account during July 2015 and immediately prior to the impugned transfers from that account in August 2015 were the property of Yubnub trading as Trek North Safaris. The funds could not, in those circumstances, be considered to be the property of 828 Pty Limited. It would seem to follow that the freezing order would not have applied to those funds, given that the order only restrained 828 Pty Limited from disposing of its assets. It is unnecessary and perhaps undesirable to express any conclusion in relation to this issue given that it was not the subject of any consideration in the court below. As discussed earlier, the proceedings in the court below were conducted on the basis that the funds in the Yubnub account were the property of 828 Pty Limited. This issue does, however, rather expose fundamental difficulties with the primary judge’s reasoning.
It follows that Mr Jorgensen has made out ground two of his amended notice of appeal. The primary judge impermissibly relied on Exhibit 4 because his Honour made findings based on that exhibit without giving Mr Jorgensen the opportunity to address that exhibit or the findings that were based on it. His Honour also made findings that were not supported by Exhibit 4 or any other evidence.
The appropriate order to make in relation to these errors is to set aside the order which had the effect of convicting Mr Jorgensen of contempt and remit the matter for retrial for the same reasons as given in relation to ground one.
Ground three – Knowingly impeded the administration of justice
This ground of appeal essentially raised two questions. The first question was whether the primary judge found, beyond reasonable doubt, that in authorising or directing the impugned transfers, Mr Jorgensen knowingly impeded the administration of justice. The second question, which only arose if the primary judge did find that Mr Jorgensen knowingly impeded the administration of justice, was whether the primary judge erred in so finding. As will be seen, however, the more fundamental issue raised by these questions is whether the primary judge misdirected himself or otherwise proceeded on the basis of a misconception or misunderstanding concerning this element of the contempt charges faced by Mr Jorgensen.
There could be little doubt that the primary judge accepted that, to convict Mr Jorgensen of the contempt charges brought by the Ombudsman, it was necessary for him to be satisfied beyond reasonable doubt that Mr Jorgensen knowingly impeded the administration of justice. His Honour accepted the Ombudsman’s submission that that was an essential element of the contempts with which Mr Jorgensen was charged: Judgment at [46].
It is in those circumstances somewhat surprising that the primary judge’s reasons contain no express finding or statement that he was satisfied beyond reasonable doubt that Mr Jorgensen had knowingly impeded the administration of justice. His Honour referred (Judgment at [76]) to a “fundamental problem” with what Mr Jorgensen had done which “really goes to the heart of whether he has knowingly impeded the administration of justice”, however he never expressly concluded that he was satisfied beyond reasonable doubt that that was the case.
The Ombudsman contended that the primary judge’s finding that Mr Jorgensen knowingly impeded the administration of justice was “implicit in the reasons and consistent with the primary judge’s ultimate findings”. The difficulty with that submission, however, is that if the finding is implicit in the primary judge’s reasons and ultimate finding of guilt, the Ombudsman did not identify exactly what the basis of any such finding was. Nor is that readily apparent from his Honour’s reasons.
To the extent that it is possible to understand the primary judge’s reasons concerning the element of knowingly impeding the administration of justice, it would appear that his Honour found that the element was made out because Mr Jorgensen had deliberately ensured that Trek North Tours was no longer a going concern after 1 July 2015 so as to defeat the judgment and orders that had been made against 828 Pty Limited. That appears to be the general tenor and effect of paragraphs [76] to [85] of the primary judge’s reasons. His Honour’s findings in that regard also feature prominently in his reasons or remarks on sentence.
If that was the basis of the primary judge’s finding that Mr Jorgensen had knowingly impeded the administration of justice, it gives rise to three fairly fundamental problems.
The first problem is that, for the reasons already given, the primary judge’s finding that Trek North Tours ceased its business on 1 July 2015 was not open on the evidence. It was not a finding that was open on the basis of Exhibit 4, even if it was permissible for his Honour to use that exhibit for the purpose of making that finding, and was not supported by any other evidence.
The second problem is that, even if that finding was open on the evidence, the contempt charges that had been brought against Mr Jorgensen did not allege that he had knowingly impeded the administration of justice by causing Trek North Tours to cease business on 1 July 2015. The charges against Mr Jorgensen were that, knowing of the freezing order, he caused transfers to be made which breached that order. That was the apparent basis of the allegation that he knowingly impeded the administration of justice. It does not appear that the Ombudsman ever pleaded or put its case against Mr Jorgensen on the basis that he deliberately caused Trek North Tours to either “shut up shop” or “wither on the vine” so as to ensure that the judgment against 828 Pty Limited could never be enforced.
The third difficulty is that there was no direct evidence that Mr Jorgensen knowingly impeded the administration of justice by acting in a way that was intended to defeat the judgment and penalty orders that had been made against 828 Pty Limited. The only basis upon which such a finding could have been made was that it was an inference that was drawn from the evidence as a whole. To be satisfied beyond reasonable doubt that Mr Jorgensen was guilty of contempt, however, it was necessary for the primary judge to be satisfied that that inference was the only reasonable inference and that no other reasonable inference consistent with innocence was open or available on the evidence. There is no indication in the judgment of the primary judge that his Honour asked himself or addressed that essential question.
There is another possible explanation or basis for the primary judge’s finding that Mr Jorgensen had knowingly impeded the administration of justice, if in fact any such finding was made. That explanation is that his Honour was proceeding on the basis that this element would be made out if it was simply proved beyond reasonable doubt that Mr Jorgensen authorised or directed the relevant transfers from the frozen accounts and those transfers breached the freezing order.
The critical paragraph of the primary judge’s reasons which suggest that his Honour was proceeding on this basis is paragraph [86], in which his Honour concluded that “on the three aspects that I have spoken of, I find that the [Ombudsman] has proven beyond reasonable doubt that the exceptions do not apply”. It appeared to be on that basis that his Honour convicted Mr Jorgensen: see Judgment at [87]. The primary judge’s reference to the “exceptions” in the Judgment at [86] is presumably a reference to the exceptions in para 10 of the freezing order, though the only real exception that was in issue was the “ordinary and proper course of business” exception in subpara 10(c) of the freezing order. The primary judge’s reference to the “three aspects I have spoken of” would appear to be a reference to the three reasons he had given for why the relevant transfers did not fall within the exception in subpara 10(c) of the freezing order: first, that transfers were not the payment of business expenses; second, that the transfers were not in any event “proper”; and third, that if the transfers were in respect of business expenses, they were the expenses of Trek North Safaris, not Trek North Tours.
If that was the basis of the primary judge’s finding that Mr Jorgensen had knowingly impeded the administration of justice, his Honour was acting on the basis of a fundamental misunderstanding of this element of the contempt charges against Mr Jorgensen.
The freezing order was made against 828 Pty Limited. Mr Jorgensen was not a party to and therefore was not directly bound by the freezing order. The authorities referred to earlier in these reasons clearly establish that a third party who is not bound by a court order will only be liable for contempt arising from a breach of that order if it is found that they engaged in conduct which was intended to frustrate, thwart or subvert the purpose of the order: see in particular CCOM at [14]-[17]; Sigalla at [14]-[17], [28]; Admark at [23]-[27]. That involves proof that the alleged contemnor not only knew about the order, but also knew that their conduct involved or gave rise to a breach of the order. A party not bound by the order will not be liable for contempt if they had an honest but mistaken belief as to the meaning or operation of the order which, if correct, would mean that their conduct could not amount to an interference with the operation of the order.
It follows that, to convict Mr Jorgensen of the charges of contempt brought by the Ombudsman, it was not sufficient for the primary judge to find, beyond reasonable doubt, that “the exceptions do not apply”: Judgment at [86]. It was not enough for his Honour to be satisfied beyond reasonable doubt that Mr Jorgensen authorised and directed the transfers and that the transfers breached the freezing order. It was also necessary for the primary judge to be satisfied beyond reasonable doubt that Mr Jorgensen knew that the transfers breached the freezing order.
Moreover, it is abundantly clear that Mr Jorgensen’s case before the primary judge was that he believed that the impugned transfers fell within the “ordinary and proper course of business” exception in order 10(c). That was the effect of his affidavit evidence and his evidence during cross-examination. It was, in those circumstances, necessary for the primary judge to be satisfied beyond reasonable doubt that Mr Jorgensen did not honestly entertain any such a belief.
The primary judge made no such findings about Mr Jorgensen’s knowledge or belief. His Honour did not find beyond reasonable doubt that Mr Jorgensen knew that the transfers breached the freezing order, or that Mr Jorgensen did not honestly believe that the transfers fell within the exception in subpara 10(c) of the freezing order and therefore did not breach the order.
It follows that, whichever way one looks at it, the primary judge erred in the way he addressed the critical element of the charges of contempt that had been brought against Mr Jorgensen. To the extent that his Honour made any finding that he was satisfied beyond reasonable doubt that Mr Jorgensen had knowingly impeded the administration of justice, which itself is questionable, that finding was in any event based on an incorrect understanding of the nature and elements of charges of contempt that the Ombudsman had brought against Mr Jorgensen. If his Honour found that Mr Jorgensen knowingly impeded the administration of justice because he had deliberately closed the business of Trek North Tours by 1 July 2015 so as to defeat the judgment against 828 Pty Limited, that was not the basis of charges that had been brought by the Ombudsman and was not, in any event, a finding that was open on the evidence. If his Honour found that Mr Jorgensen knowingly impeded the administration of justice merely because he was responsible for the transfers which breached the freezing ordes, his Honour misdirected himself and proceeded on the erroneous basis that it was not necessary for him to be satisfied that Mr Jorgensen knew that the impugned transfers breached the order and that Mr Jorgensen did not entertain an honest belief that the transfers fell within the exception in subpara 10(c) of the freezing order as he claimed.
To be fair, it would appear to be clear that the primary judge was led into error by the way the Ombudsman had put its case. The statement of the contempt charges contained in the Ombudsman’s application simply alleged that Mr Jorgensen knew about the freezing order and had authorised and directed the transfers which were alleged to have breached the order. The statement of the charges did not include any allegation that Mr Jorgensen knowingly impeded the administration of justice, or any allegation that Mr Jorgensen knew that the transfers breached the freezing order or had otherwise engaged in conduct which was intended to frustrate, thwart or subvert the freezing order. And while the Ombudsman eventually put to the primary judge that it was necessary to prove that Mr Jorgensen had knowingly impeded the administration of justice, it does not appear that the Ombudsman put to the primary judge that to make any such finding, he had to be satisfied beyond reasonable doubt that Mr Jorgensen knew that the transfers breached the freezing order. Indeed, it appears that the Ombudsman was also proceeding on the erroneous basis that it was not necessary to prove that Mr Jorgensen intended to disobey the freezing order, or that he knew that the transfers were in breach of the freezing order. That is apparent from the submissions initially put by the Ombudsman in relation to the appeal.
The primary judge’s errors in addressing this essential element of the contempt charges gave rise to a substantial miscarriage of justice. It is not possible to conclude that, despite the primary judge having misdirected himself concerning this essential element of the charges, the evidence admitted at the trial nevertheless proved beyond reasonable doubt that Mr Jorgensen did knowingly impede the administration of justice. As discussed earlier, this Court was not provided with the entire trial record and this is in any event a case where the natural limitations of proceeding on the record would have prevented the Court from attaining the requisite satisfaction. Nor could it be suggested that the primary judge’s errors could not reasonably be supposed to have affected the result of the trial. There is accordingly no room for the operation of the proviso.
For the reasons given in the context of the other grounds of appeal, the appropriate order to make in respect of this successful appeal ground is to set aside the primary judge’s order which had the effect of convicting Mr Jorgensen of contempt and remit the matter to the Circuit Court for retrial.
It is not appropriate for the Court to order that the Ombudsman’s application be dismissed. That is because the Court cannot, on the basis of the material before it, be satisfied that it would not have been reasonably open to the primary judge to convict Mr Jorgensen on the evidence before him had he properly directed himself concerning the elements of the charges.
SENTENCE APPEAL
It is neither necessary nor desirable to address Mr Jorgensen’s sentence appeal in circumstances where his convictions are to be set aside and the matter is to be remitted to the Circuit Court for retrial.
It suffices to note that the errors made by the primary judge in addressing and determining Mr Jorgensen’s liability for contempt appear to have infected the exercise of his Honour’s sentencing discretion. In particular, his Honour appears to have sentenced Mr Jorgensen on the basis that the most serious aspect of his contempt was his conduct in causing the business of Trek North Tours to “shut up shop” on 1 July 2015 so as to defeat the judgment. It was this element of the contempt which his Honour found was required to be “met with the sternest possible condemnation” (Sentence Judgment at [37]). As discussed in detail earlier, the difficulties with that finding include that: the contempt charges against Mr Jorgensen related to the impugned transfers in August 2015, not the shifting of the business from Trek North Tours to Trek North Safaris on 1 July 2015; in basing this finding primarily on Exhibit 4, the primary judge effectively denied Mr Jorgensen procedural fairness; and the finding in any event was not supported by Exhibit 4.
As has been said, however, since the conviction appeal has been successful and the matter is to be remitted for retrial, the sentence appeal (ground 5 in the amended notice of appeal) should be dismissed.
THE OMBUDSMAN’S CROSS-APPEAL
The Ombudsman’s cross-appeal concerned the primary judge’s order that there be no order as to costs. It is neither necessary nor desirable to address the cross-appeal in circumstances where Mr Jorgensen’s appeal is to be allowed, his convictions are to be set aside and the matter is to be remitted for retrial.
CONCLUSION AND DISPOSITION
The trial of Mr Jorgensen in respect of the charges of contempt brought by the Ombudsman substantially miscarried for at least four reasons.
First, the primary judge’s excessive, unwarranted and inappropriate interventions in the course of the cross-examination of Mr Jorgensen constituted a denial of procedural fairness (appeal ground four).
Second, there was also a denial of procedural fairness because the primary judge made a number of material findings based on Exhibit 4 in circumstances where Mr Jorgensen was not cross-examined about either the exhibit or the findings that were made in respect of it (appeal ground two).
Third, the primary judge erred or misdirected himself in relation to the meaning and scope of the “ordinary and proper course of … business” exception in the freezing order (appeal ground one).
Fourth, the primary judge misdirected himself in relation to the critical element of the charges of contempt that had been brought: that Mr Jorgensen knowingly impeded the administration of justice (appeal ground three). To the extent that his Honour made any finding that Mr Jorgensen had knowingly impeded the administration of justice, that finding either did not relate to the charges that had been brought against Mr Jorgensen, or was based on an erroneous belief that it was not necessary for the Ombudsman to prove that Mr Jorgensen knew that the transfers breached the freezing order.
The proviso does not apply to any of the errors made by the primary judge. The appropriate orders to make are to set aside the declarations and order that had the effect of convicting Mr Jorgensen of contempt and remitting the matter to the Circuit Court for retrial. Given that one of the errors involved the denial of procedural fairness arising from excessive intervention, it would be appropriate for the matter be tried by a Circuit Court judge other than the primary judge.
The sentence appeal and the Ombudsman’s cross-appeal should be dismissed.
The Ombudsman should be ordered to pay Mr Jorgensen’s costs, including the costs of the proceedings before the primary judge.
The undertakings given by Mr Jorgensen and the stay and bail orders made by Reeves J on 11 May 2018 were expressed as being operational until the determination of this appeal. For more abundant caution, however, orders should be made releasing Mr Jorgensen from his undertakings and directing that his passport be returned to him upon request.
I certify that the preceding two hundred and forty-three (243) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Greenwood, Reeves and Wigney.
Associate:
Dated: 8 July 2019
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