Liu v Gan
[2024] VSC 566
•4 October 2024
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST
S ECI 2021 02993
IN THE MATTER of L&G CO PTY LTD (ACN 603 431 394)
BETWEEN:
| YA LIU | Plaintiff |
| and | |
| PING GAN | Defendant |
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JUDGE: | M Osborne J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 5 August 2024 |
DATE OF JUDGMENT: | 4 October 2024 |
CASE MAY BE CITED AS: | Liu v Gan |
MEDIUM NEUTRAL CITATION: | [2024] VSC 566 |
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PRACTICE AND PROCEDURE – Contempt of Court – Civil and criminal contempt – Whether defendant failed to comply with court orders by not correcting register of members of company and failing to provide financial records – Whether proven beyond reasonable doubt that defendant’s conduct was defiant or contumacious – Consideration of relevant principles – Breach of orders – Contempt established – Declarations and orders for indemnity costs sufficient recognition of the Court’s disapproval of the contemnor’s conduct – Quantum of costs to be fixed – Corporations Act 2001 (Cth) ss 175, 233 and 247A.
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APPEARANCES: | Solicitors | |
| For the Plaintiff | C Tan / Solicitor | Wiin Lawyers |
| For the Defendant | Self-represented Litigant | Not Applicable |
HIS HONOUR:
Introduction
This is an application by the plaintiff, Ya Liu (‘Ms Liu’), by amended summons, for orders pursuant to r 75.05 of the Supreme Court (General Civil Procedure) Rules 2015 (‘the Rules’) that the defendant, Ping Gan (‘Ms Gan’) be punished for contempt of court.
The contempt which is the subject of the amended summons is that Ms Gan breached orders made 18 February 2022, 10 March 2022 and 9 February 2024. The alleged breaches fall into two categories; first, a failure to correct the register of members of L & G Co Pty Ltd (‘the Company’) to record that Ms Liu is the holder of 49 shares in the Company (‘the Company Register Breach’) and secondly, that Ms Gan failed to provide Ms Liu’s solicitors by email with certain books of account and financial records of the Company or if she was unable to do so, provide an affidavit explaining why she was unable to do so (‘the Financial Records Breach’).
Ms Liu submits that the Company Register Breach is a criminal contempt whilst the Financial Records Breach is a civil contempt. She seeks declarations that Ms Gan is liable for the contempt alleged, an order that Ms Gan pay her costs of the application on an indemnity basis and submits that Ms Gan should be fined an amount determined by the Court.
At the hearing of the application, Ms Liu relied upon the following affidavits:
(a)Claire Tan affirmed 1 August 2024;
(b)Kathleen Ben Yair sworn 13 June 2024;
(c)Nuo Chen affirmed 24 June 2022;
(d)Yunfei Wu affirmed 14 December 2023;
(e)Claire Tan affirmed 2 May 2024;
(f)Ms Liu affirmed 2 May 2024;
as well as a bundle of documents set out in the tender bundle (‘the Tender Bundle’).[1]
[1]The Tender Bundle refers to the bundle of documents sent to M Osborne J’s chambers on 18 February 2022, comprising pages 1–54.
Despite strong and consistent encouragement from the Court and indeed from Ms Liu’s solicitors, Ms Gan has chosen to represent herself throughout the proceeding. This is highly regrettable; there is little doubt that this hearing would have been avoided had she obtained legal representation.
At the hearing of the contempt application, Ms Gan did not file any affidavit material or otherwise choose to give evidence, although she had previously filed a document described as an affidavit and made by her on 16 April 2024. Although purporting to be an affidavit and containing an attestation that its contents were true and correct, the document was not relevantly sworn or affirmed before any person authorised to have affidavits made before them. I have nevertheless had regard to the matters set out in that document, but only to the extent to which they assist Ms Gan. Ms Gan denies that she is guilty of contempt. In the account of relevant events set out below, I have had regard to the matters set out in the affidavits relied upon by Ms Liu and the Tender Bundle.
Relevant Events
The Company operates as an authorised newsagency in Springvale. The newsagency business includes a Tattslotto Agency.
By a Share Purchase Agreement made between Ms Gan as the seller and Ms Liu as the purchaser dated 11 June 2019, Ms Liu acquired 49 ordinary shares in the Company from Ms Gan for $150,000.[2] The remaining 51 shares were owned by Ms Gan. Some two years later, Ms Gan notified Ms Liu that she had decided to buy back Ms Liu’s shares for $130,000. Ms Gan then lodged a Form 484 with the Australian Securities and Investments Commission (‘ASIC’) recording the transfer of Ms Liu’s 49 shares to Ms Gan such that Ms Gan was shown as the holder of all 100 issued shares. Ms Liu was unaware that this had occurred and had not agreed to Ms Gan’s buy back of the shares from her.
[2]Share Purchase Agreement cl 2.
By originating process filed 19 August 2021, Ms Liu made an application under ss 175, 233 and 247A of the Corporations Act 2001 (‘the Act’) for:
(a)the correction of the register with respect to members’ shareholdings in [the Company];
(b)inspection of the books of the Company; and
(c)relief in respect of oppressive conduct of affairs of the Company.
By orders made 3 November 2021, Connock J referred the proceeding to a Judicial Registrar for ‘hearing and determination of the Originating Process filed on 19 August 2021 wherein orders [were] sought pursuant to s 175 of [the Act].’
A hearing occurred before Judicial Registrar Caporale on 3 December 2021[3] and 28 January 2022. Ms Liu was represented by Counsel; Ms Gan appeared for herself on 3 December 2021 but did not appear on 28 January 2022.
[3]The order refers to an attendance on 3 December 2020 which is obviously a typographical error.
Orders were then made by the Judicial Registrar on 18 February 2022 (‘the 18 February 2022 Orders’) as follows:
1.[Ms Gan] create a register of members for [the Company] in accordance with s 169 of [the Act].
2.Pursuant to s 175 of [the Act], the register of members of [the Company] be corrected to record that:
a.49 of the shares presently registered in the name of [Ms Gan] be registered in the name of [Ms Liu]; and
b. the remaining 51 shares be registered in the name of [Ms Gan];
such order to take effect nunc pro tunc.
In the ‘Other Matters’ section, the Judicial Registrar, inter alia, set out the evidence adduced before him which he described as ‘uncontroverted’ and which is set out below:
(a)on or around 11 June 2019, [Ms Liu] became the registered holder of 49 of the 100 issued shares in [the Company] pursuant to a Share Purchase Agreement;
(b)on 23 June 2021, there were a series of exchanges between [Ms Liu] and [Ms Gan], during which [Ms Gan] notified [Ms Liu] that she [Ms Gan] had “decided to acquire your shares today for $130,000” and she was doing so even though [Ms Liu] did not consent;
(c)on or around 24 June 2021 [Ms Gan] filed a Form 484 with ASIC purporting to transfer [Ms Liu’s] 49 shares to [Ms Gan], such that [Ms Gan]t then held all 100 of the issued shares in [the Company];
(d)at no time did [Ms Liu] agree, or otherwise consent, to the change in her shareholding or to sell her 49 shares in [the Company] back to [Ms Gan], nor has [Ms Liu] received any funds from [Ms Gan] in respect of any alleged sale or change in [the Company’s] shareholding;
(e)Wiselink Accountants were [the Company’s] accountants but no longer act for [the Company] and do not hold any copies of share certificates or other financial books and records of [the Company]; and
(f)to date, no original or copy of [the Company’s] register of members has been located or produced;
(g)[Ms Gan] has stated that “the shop was stolen [sic]” and “all documents folder [sic] were lost”.
On 18 February 2022, the chambers of the Judicial Registrar sent an authenticated copy of the 18 February 2022 Orders to the parties by email. Ms Gan responded by email on the same day:
Dear Registrar,
I would like to declare I have agreed with redo 49% for the plaintiff if the court would force me to do it during the first hearing. However, we will received the breach notice for the LOT company. That means our business costs nothing. Therefore the first order requires the plaintiff to take action to applicable the Tatts. The key problem is the plaintiff did not fulfil her duty for her 49% registration.
On 10 March 2022, the Judicial Registrar made orders (‘the 10 March 2022 Orders’) that:
1. By no later than 4:00 pm on 4 April 2022, [Ms Gan] is to make available to [Ms Liu’s] solicitors by email all books of account and financial records of [the Company], including but not limited to:
a)[the Company’s] current accounts;
b)[the Company’s] monthly bank statements from incorporation;
c)access to [the Company] accounting software and/or a list of all general ledger transactions for the 2020 and 2021 financial year, including year-end adjustments;
d)Tattslotto annual statement for the 2021 financial year;
e)2021 tax return and financial statements (even if in draft), including all relevant notes;
f)notes to the 2020 financial statements;
or file and serve an affidavit explaining why [Ms Gan] was unable to produce any of the books of account and financial records of [the Company].
On 11 March 2022, the chambers of the Judicial Registrar sent an authenticated copy of the 10 March 2022 Orders to the parties by email, along with a follow-up email to Ms Gan, providing her with details of the Court’s Self-represented Litigant Co-ordinator.
Ms Gan responded by email sent 21 March 2022 to the following effect:
I would like to request you issue the fines to [Ms Liu]. [Ms Liu] has obviously showed how to focus on playing money game to take up others’ benefit and always tries offer bribe to the young people.
On 6 April 2022, the then solicitors for Ms Liu sent proposed minutes of consent orders to Ms Gan, which provided for the proceeding to be dismissed with a right of reinstatement and no order as to costs. The covering letter which accompanied the minutes of consent orders stated that the solicitors had prepared draft consent orders providing for the dismissal of the proceeding against Ms Gan, but would include a right of reinstatement which would entitle Ms Liu to come back before the Court should Ms Gan breach Settlement Terms agreed between the parties.
The Settlement Terms apparently related to an alleged agreement that Ms Liu would acquire the 51 of the shares owned by Ms Gan in the Company for $154,000 and otherwise provided for the parties to jointly appoint an independent forensic accountant to assess the profit position of the Company.[4]
[4]See pg 31 of Yunfei Wu’s Affidavit affirmed 14 December 2023.
On the same day (6 April 2022), Ms Gan returned signed consent orders to Ms Liu’s solicitors who then sent them to the Court. The Judicial Registrar made orders accordingly on 7 April 2022.
By summons filed 24 June 2022, Ms Liu applied for orders that the proceeding be reinstated and for orders for specific performance of the Settlement Agreement by which Ms Liu was to acquire the 51 shares held by Ms Gan.
Ms Gan did not appear when the matter came before me on 22 July 2022. I made orders, inter alia, reinstating the proceeding, adjourning the further hearing of the summons to 5 August 2022, and providing that in the event that Ms Gan did not appear on 5 August 2022, the proceeding would proceed on that day as if it was an undefended matter and Ms Liu would be at liberty if so advised to seek orders for specific performance against Ms Gan.
When the matter returned before me on 5 August 2022, Ms Liu was represented by counsel and Ms Gan appeared in person. I made orders setting the proceeding down for trial on 3 October 2022.
Regrettably, Ms Liu did not pay the setting down fee, as a consequence of which, on 9 September 2022, I made orders vacating the trial which had been fixed for 3 October 2022. Orders were made listing the proceeding for directions on a date to be fixed.
The proceeding lay in abeyance for 18 months until Ms Liu filed a summons on 14 December 2023, seeking relief in the nature of contempt with respect to the breaches by Ms Gan of the 18 February 2022 Orders and the 10 March 2022 Orders.
Ms Gan did not appear when the summons came on for directions before me on 9 February 2024. On that day I made further orders (‘the 9 February 2024 Orders’) that:
1. By 4:00pm on 22 March 2024, [Ms Gan] shall create a correction of register of members for [the Company] in which 49 shares are to be registered in the name of [Ms Liu].
2. By 4:00pm on 22 March 2024, [Ms Gan] shall provide all books of account and financial records of [the Company] to [Ms Liu] by email, including but not limited to:
(a)[the Company’s] current accounts;
(b)[the Company’s] monthly bank statements from incorporation;
(c)access to [the Company] accounting software and/or a list of all general ledger transactions including year-end adjustments for the financial years ending:
(i)30 June 2020;
(ii)30 June 2021;
(iii)30 June 2022;
(iv)30 June 2023;
(d)Tattslotto annual statement for the financial years ending:
(i)30 June 2021;
(ii)30 June 2022;
(iii)30 June 2023;
(e)tax returns and financial statements (even if in draft) including all relevant notes for the following years:
(i)2021;
(ii)2022;
(iii)2023;
(f)notes to the financial statements of the following years:
(i)2020;
(ii)2021;
(iii)2022; and
(iv)2023;
or file and serve an affidavit explaining why [Ms Gan] was unable to produce any of the books of account and financial records of [the Company].
In the ‘Other Matters’ section, the following was set out:
A.[Ms Gan] has failed to comply with order 2 made on 18 February 2022 by Caporale JR.
B.[Ms Gan] has failed to comply with order 1 made on 10 March 2022 by Caporale JR.
C.[Ms Liu] foreshadows an application for relief in respect of any contempt of court should [Ms Gan] continue to stand in default of the Court’s orders.
I otherwise adjourned the summons for further directions to 19 April 2024.
On 14 March 2024, Ms Liu’s then solicitors wrote to Ms Gan, inter alia, noting ‘that you have been provided with a copy of the [9 February 2024 Orders]’. The letter required compliance with the orders including by complying with order 2 by sending the documents by email to a nominated email address of the solicitor with conduct of the matter. The solicitors informed Ms Gan that in the event that she did not comply with the orders, Ms Liu may bring an application for contempt of court.
On 12 April 2024, Ms Liu’s solicitors wrote to Ms Gan referring to the letter of 14 March 2024, and otherwise relevantly stating the following:
3.To date, you have not complied with the orders despites repeated requests from our client.
4.Only the company officer could correct the register by either submitting a Form 484 on ASIC Forms Manager portal or instructing [the Company’s] accountant to do so. Ms Liu has always been ready and able to provide information or execute any necessary documents prepared by you or the accountant. Your allegations that Ms Liu failed to do her part or appoint her lawyer to correct the register are without basis.
5.Further, Order 2 is not conditional upon Ms Liu being a registered shareholder of the Company, nor upon payment of the account’s costs, which is contrary to your assumption that Ms Liu must register her shareholding before having access to the documents or must pay the accountant.
6.Nevertheless, Orders 1 and 2 should have been complied with by 4.00 pm on 22 March 2024. Your failure to do so constitutes contempt of court.
Contempt of court
7.We refer to the Summons filed on 14 December 2023 and served by way of personal service on 9 January 2024. You were already in breach of the following court orders:
a.Orders made by Judicial Registrar Caporale on 18 February 2022; and
b.Orders made by Judicial Registrar Caporale on 10 March 2022
Both court orders are enclosed.
8.We would also seek an order that you are in contempt of court for failing to comply with the orders made on 9 February 2024.
9.We strongly recommend that you seek legal advice in relation to all aspects of this proceeding, particularly the consequences of a finding of contempt by the court.
10.We refer to Reg 75.11 which sets out the punishment for contempt -
(1)Where the respondent is a natural person, the Court may punish for contempt by committal to prison or fine or both.
11.We are confident that we would be able to establish the elements of the offence of contempt. We would also seek an order that the punishment be continued until the contempt is purged, in other word, until you complied with the orders.
The letter enclosed copies of the 9 February 2024 Orders, the 10 March 2022 Orders and the 18 February 2022 Orders.
Ms Gan responded by email sent 13 April 2024. Her response stated among other things ‘You must let [Ms Liu] know it is her fault for her ASIC removal…All financial documents you request, please collect from the Accountant [email protected])…You must help [Ms Liu] to register the 49% lottery shares under Franchises agreements. Any questions, please respect our labor to contact the shop supervisor [email protected]. Any document need my signature, please send it. Stop to play money game, $150,000 is running out for our labor of holding the 49% for [Ms Liu]. $150,000 labour payment is not my target. I offered 143,000 to [Ms Liu] before the case. Please respect our labor. Stop to help [Ms Liu] play money game’.
On 15 April 2024, Ms Liu’s solicitors emailed the Company’s accountant regarding the documents set out in the 9 February 2024 Orders. On the same day, Ms Gan emailed the accountant (copying in [Ms Liu’s] solicitors) requesting that the accountant release the financial documents to Ms Liu, who would be (‘responsible for your labour fee’). The accountant provided a shared link to the documents via a google drive on 17 April 2024 by email.
Prior to the matter returning to Court for directions on 18 April 2024, Ms Liu’s solicitors filed and served an outline of submissions on 17 April 2024 which among other things stated the following in regards to the status of the proceeding: ‘To date, [the Company] register has not been corrected and [Ms Gan] remains the holder of the 49 shares… On 17 April 2024, we received most of the financial and accounting records except: (a) Financial statement and tax return for FY 2023 as it is not due yet; and (b) General ledger for FY 2020, 2021, 2022 and 2023’.
When the matter returned for further directions on 18 April 2024, Ms Gan appeared and I made orders fixing Ms Liu’s summons dated 14 December 2024 for hearing on a date to be fixed. The orders gave Ms Liu leave to file and serve an amended summons and affidavit in support, and for the filing and service of an outline of submissions. I otherwise made an order that Ms Gan forthwith request her tax agent to advise Ms Liu’s solicitors as to whether there is a general ledger for the Company for the financial years ending 2020, 2021, 2022 and 2023 and, if so, provide further details as to where the general ledger can be inspected. I recommended once again that Ms Gan obtain legal advice.
Ms Liu subsequently filed the amended summons which sought orders that Ms Gan be held in contempt with respect to the following breaches of:
(a)the 18 February 2022 Orders by failing as required by paragraph (2)(a) to correct the register of members of [the Company] to record that 49 of the shares registered in the name of [Ms Gan] be registered in the name of [Ms Liu];
(b)the 10 March 2022 Orders by failing, as required by paragraph (1) to make available to [Ms Liu’s] solicitors by email all books of account and financial records of [the Company], including but not limited to:
(i)[the Company’s] current accounts;
(ii)[the Company’s] monthly bank statements from incorporation;
(iii)access to [the Company] accounting software and/or a list of all general ledger transactions for the 2020 and 2021 financial year, including year-end adjustments;
(iv)Tattslotto annual statement for the 2021 financial year;
(v)2021 tax return and financial statement (even if in draft), including all relevant notes;
(vi)Notes to the 2020 financial statements;
or file and serve an affidavit explaining why [Ms Gan] was unable to produce any of the books of account and financial records of [the Company];
(c)the 9 February 2024 Orders by:
(i) failing to create a correction of register of members for the Company in which 49 shares are to be registered in the name of [Ms Liu] by 4:00 PM on 22 March 2024;
(ii)failing to provide all books of account and financial records of [the Company] to [Ms Liu] by email, including but not limited to:
(i)[the Company’s] current accounts;
(ii)[the Company’s] monthly bank statements from incorporation;
(iii)access to the Company accounting software and/or a list of all general ledger transactions for the 2020 and 2021 financial years, including year-end adjustments for the financial years ending 30 June 2020, 30 June 2021, 30 June 2022 and 30 June 2023;
(iv)Tattslotto annual statement for the financial years ending 30 June 2021, 30 June 2022 and 30 June 2023;
(v)tax returns and financial statements (even if in draft) including all relevant notes for the following years: 2021, 2022 and 2023;
(vi)notes to the financial statements of the following years: 2020, 2021, 2022 and 2023;
or file and serve an affidavit explaining why [Ms Gan] was unable to produce any of the books of account and financial records of [the Company].
Relevant Principles
The elements which need to be proved to found a civil contempt of court involving a breach of an undertaking or order of the court were enunciated by Gillard J in National Australia Bank Ltd v Juric[5] and in Advan Investments Pty Ltd v Dean Gleeson Motor Sales Pty Ltd[6] as follows:
[5][2001] VSC 375, [37].
[6][2003] VSC 201, [31].
(i) that an order was made by the court;
(ii)that the terms of the order are clear, unambiguous and capable of compliance;
(iii)that the order was served on the alleged contemnor or excused in the circumstances, or service dispensed with pursuant to the Rules of Court;
(iv) that the alleged contemnor has knowledge of the terms of the order;
(v) that the alleged contemnor has breached the terms of the order.
The onus is on the moving party to prove the charges against the contemnor beyond reasonable doubt.[7]
[7]Talacko v Talacko [2009] VSC 387, [22].
The applicant must prove, beyond reasonable doubt, that the failure to comply with the order amounted to wilful disobedience and was not merely ‘casual, accidental or unintentional’.[8]
[8]Australasian Meat Industry Employees’ Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98, 107 (‘Mudginberri’).
It is not necessary for the applicant to prove that the contemnor intended to breach an order of the court.[9]
[9]Ibid 111.
Analysis
There is no question that the Court made orders on 18 February 2022, 10 March 2022 and 9 February 2024.
I am satisfied that the terms of the orders are clear and unambiguous and capable of compliance. In the case of the 18 February 2022 Orders, Ms Gan was required to create a register of members, thereby complying with s 169 of the Act. Read sensibly, the register so created was to record that 49 of the shares were registered in the name of Ms Liu whilst the remaining 51 shares were registered in the name of Ms Gan.
The 10 March 2022 Orders are also tolerably clear on their face and provide a time by which Ms Gan was to make available to Ms Liu’s solicitors all books of accounts and financial records for the Company or if in default, file and serve an affidavit explaining why she was unable to do so.
In the case of the 9 February 2024 Orders, the orders made clear that Ms Gan was to create a register of members by 4:00 pm on 22 March 2024 and provided a further date for Ms Gan to provide copies of the financial records of the Company to Ms Liu.
None of the orders were personally served on Ms Gan. Nor has Ms Gan filed a notice of appearance which specifies an address for service. Service of the orders therefore has neither been affected personally or in accordance with the Rules of Court. Ms Liu did seek to effect personal service of the amended summons and affidavits in support on Ms Gan. The attempt was unsuccessful. At this hearing, she sought orders for substituted service. I do not consider it necessary to make such orders. The relevant documents were emailed to Ms Gan who attended the hearing and accepted that she had received the documents.
In addition, none of the orders contained an indorsement of the kind contemplated by r 66.10 of the Rules.[10] Rule 66.10 provides that a judgment (which for the purposes of Order 66 includes an order[11]) shall not be enforced by committal or sequestration unless a copy of the judgment is served personally on the person bound and it is indorsed with a notice informing the person served that he or she will be liable to imprisonment or to sequestration if he or she fails to comply with the order.
[10]Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 66.10.
[11]Ibid r 66.01.
In circumstances where the relevant orders are not indorsed in accordance with r 66.10(3) of the Rules,[12] the alleged contemnor may not be committed or dealt with by sequestration unless that requirement is dispensed with. The purpose of the indorsement is to warn the party of the consequences which might befall them, should they fail to perform the act directed. Notwithstanding the absence of any indorsement, a court may in an appropriate circumstance impose a fine even where the order has not been indorsed in accordance with the relevant rule.[13] Nor does the absence of any indorsement preclude the Court from finding that the contemnor is in contempt or from making costs orders.
[12]Ibid r 66.10(3).
[13]Primelife Corporation Ltd v Andrejic [2009] VSC 106, [35].
Notwithstanding that the relevant orders have not been personally served on Ms Gan, I nevertheless consider that it is appropriate in the circumstances that the absence of service be excused. The purpose of service is to ensure that the party, the subject of the order, has notice of its terms. A person cannot be held guilty of contempt in infringing an order of the Court of which the person knows nothing.[14] Here, in the case of the 18 February 2022 Orders, Ms Gan was present at the first day of the hearing on 3 December 2021, and a copy of the orders were sent to her on 18 February 2022 by the chambers of the Judicial Registrar. There can be no question that Ms Gan received a copy of the orders and was aware of its terms as she responded immediately to the Judicial Registrar in terms which acknowledged that she had read the order.[15]
[14]Husson v Husson (1962) 3 LR 1056.
[15]Ibid.
In the case of the 10 March 2022 Orders, once again, Ms Gan was provided with an authenticated copy of the order to which she responded by email sent 21 March 2022.
I am therefore satisfied that Ms Gan had proper notice of the terms of the 18 February and 10 March 2022 Orders.
In the case of the 9 February 2024 Orders, Ms Gan was not present but Ms Liu’s then solicitors wrote to Ms Gan by letter dated 14 March 2024. In the letter the solicitors noted that Ms Gan had been provided with copies of the 9 February 2024 Orders and set out paragraphs 1 and 2 of those orders in full. In addition, Ms Liu’s new solicitors sent a further letter on 12 April 2024, which enclosed copies of the 9 February 2024 Orders together with additional copies of the 10 March 2022 Orders and 18 February 2022 Orders. Ms Gan responded to this letter by email the next day purporting to justify her approach by asserting, among other things, that it was the fault of Ms Liu that she had been removed as a shareholder on the ASIC registry.
I am therefore satisfied that Ms Gan had proper notice of the terms of the 9 February 2024 Orders.
Ms Liu must also establish that Ms Gan knew of the terms of the orders. The communications sent by Ms Gan along with her purported affidavit of 16 April 2024 on the most favourable interpretation to her are consistent with Ms Gan conflating the requirement on the part of a director of a company to maintain a register of members on the one hand, with the records maintained by ASIC on the other. In addition, on one interpretation of them, the communications are consistent with a belief on the part of Ms Gan that the removal of Ms Liu as a shareholder resulted from a notice of breach being issued by Tatts and/or that Ms Liu’s failure to undertake the required training as would mean that Tatts would not approve the sale of the shares to Ms Liu. Ms Liu would no doubt urge an alternative interpretation of the relevant events. However, given the nature of the jurisdiction, and the overall burden on Ms Liu to establish the elements of the contempt beyond reasonable doubt, it is appropriate that I proceed on the basis that Ms Gan was somewhat confused as to the distinction between the Company’s share register and the ASIC records and otherwise that she considered that Ms Liu’s continued status as a shareholder on the ASIC register might in some way imperil the newsagency licence with Tatts.
However, this is irrelevant. The liability for breaching a court order is strict. As Lord Oliver said in AG v Times Newspapers Ltd:[16]
in the sense that all that requires to be proved is service of the order and the subsequent doing by the party bound of that which is prohibited.
[16][1992] 1 AC 191, 217.
It is not necessary, at least in relation to a civil contempt that the defendant is intentionally contumacious or that the defendant intends to interfere with the administration of justice.[17] Here, the relevant orders were positive in nature in the sense that they required Ms Gan to do certain things. In the case of a positive order, it is the duty of the defendant to inquire and discover the proper means of obeying the order.[18]
[17]Knight v Clifton [1971] Ch 700, 721.
[18]Ian Cram et al, Borrie & Lowe: The Law of Contempt (LexisNexis Australia, 4th ed, 2010) 139 [6.10].
In the present case, despite consistent strong encouragement from both the Court and indeed the solicitors for Ms Liu, Ms Gan made no attempt to ascertain the proper means of compliance with what were relatively straightforward orders.
I am satisfied to the requisite standard of proof that Ms Gan has not created a register of members of the Company, showing Ms Liu as the holder of 49 shares. So much is obvious from the later orders made 9 February 2024. In the period between 18 February 2022 and 9 February 2024, Ms Gan never suggested that she had complied with the orders, but rather argued that she was justified in not doing so, by reason of alleged deficiencies on the part of Ms Liu and the alleged breach of the Tatts licence. I am therefore satisfied to the necessary standard that the Company Register Breach is established.
In relation to Ms Liu’s submission that the Company Register Breach constitutes a criminal contempt, the cases recognise a distinction between civil and criminal contempt.[19]
[19]Mudginberri (n 8), 106.
The distinction, however, has been recognised as problematic albeit one which at a procedural level is of importance. In the judgment in Mudginberri, the plurality identified procedural questions of onus of proof, right of appeal, and mode of punishment as relevant to the distinction but noted that the differences in approach to such matters have largely disappeared.
In Mudginberri, the question was whether there was a power to impose a fine for a deliberate breach of a court order, it having been argued that a fine could only be imposed where the contempt was criminal. The plurality observed[20] that punishment for contempt serves two functions. The first is enforcement of the process and orders of the Court, disobedience to which is recognised as a civil contempt whilst the second is punishment of other acts which impede the administration of justice which have been described as a criminal contempt. Their Honours observed that the theoretical distinction between the two classes of contempt:[21]
… overlooks the underlying rationale of every exercise of the contempt power, namely that it is necessary to uphold and protect the effective administration of justice. Although the primary purpose in committing a defendant who disobeys an injunction is to enforce the injunction for the benefit of the plaintiff, another purpose is to protect the effective administration of justice by demonstrating that the court’s orders will be enforced.
[20]Ibid.
[21]Ibid 107.
Their Honours later observed[22] that there is much to be said for all contempts to be punished as if quasi-criminal in nature. In Mudginberri, after reviewing the authorities their Honours concluded that a fine could be imposed for wilful disobedience of a Court order which achieved the purpose of both disciplining the defendant and vindicating the authority of the Court.[23] In those circumstances, it was not necessary to classify the contempt as criminal.
[22]Ibid 109.
[23]Ibid 113.
In Witham v Holloway[24] the critical question was the standard of proof required to establish a contempt. The Court held that the criminal standard applied to all forms of contempt. In resolving that question, their Honours commented upon the distinction between civil and criminal contempt. The plurality stated[25] that as a general proposition civil contempt involves disobedience of a court order or breach of an undertaking in civil proceedings, whilst criminal contempt involves an obstruction or interference with the course of justice. Their Honours also noted that prima facie civil contempt ‘amounts to a criminal contempt if it involves deliberate defiance or, as it is sometimes said, if it is contumacious’.
[24](1995) 183 CLR 525.
[25]Ibid 530.
In Australian Consolidated Press Ltd v Morgan,[26] Barwick CJ commented that a contempt by breach of an undertaking may be accompanied by such contumacy or defiance so as to evidence a criminal as well as a civil contempt. His Honour emphasised that mere breach is not criminal.[27]
[26](1965) 112 CLR 483, 489.
[27]Ibid 501.
In the present case, I am not satisfied that the Company Register Breach constitutes deliberate defiance in the sense of amounting to contumacy, such as to compel the conclusion that Ms Gan has committed a criminal contempt.
As noted above, an available view of the evidence is that Ms Gan failed to appreciate the distinction between the ASIC register and the Company Register and has otherwise proceeded on a misapprehended basis as to the consequences that follow from Ms Liu being the holder of 49 shares. Further, I note that Ms Gan has, albeit somewhat belatedly, now largely (if not completely) complied with the obligation to provide Ms Liu’s solicitors with the financial records. The provision of such material (albeit late) is arguably at odds with the notion that Ms Gan deliberately defied the orders of the Court in respect of the Company Register Breach.
Accordingly, I am not prepared to conclude that the Company Register Breach amounts to a criminal contempt, but I am prepared to conclude that the Company Register Breach amounts to a civil contempt.
In relation to the Financial Records Breach, I am satisfied that Ms Gan also breached the orders by failing to provide the financial records to Ms Liu by 4 April 2022 which was required by the 10 March 2022 Orders and by failing to provide them to Ms Liu by 22 March 2024 as required by the 9 February 2024 Orders. However, I note that most and perhaps all of the financial records were provided to Ms Liu by Ms Gan’s accountant on 17 April 2024. The full extent of the provision of documents on that day and afterwards is a little unclear; the submissions filed in advance of the 18 April 2024 directions hearing and the orders made that day are consistent with everything required by the order having been provided, bar the general ledgers and the financial statement and tax return for the financial year ending 30 June 2023. There is no specific evidence as to the position post the making of the 18 April 2024 orders, although I note that in Ms Liu’s affidavit affirmed 2 May 2024 she deposed that she had finally received the documents through her lawyer on 17 April 2024. I also note that in Ms Gan’s email to her accountant on 15 April 2024, she requested that the accountant provide the general ledgers and the 30 June 2023 financial statement and tax return to Ms Liu. It follows therefore that either the orders have now been fully complied with (albeit late) or that the extent of any on-going non- compliance relates to documents which have not yet been created and hence is limited to a failure on the part of Ms Gan to make an affidavit deposing as to the non-existence of some of the documents sought. Given the nature of this application, I am not satisfied that there is any subsisting breach of the orders. Although this does not mean that the Financial Records Breach has not occurred in the limited sense in which it has been established by late compliance, I do not propose to make any declaration of civil contempt in relation to that breach. The findings set out above are sufficient in the circumstances.
It is necessary now to determine the consequences which follow from the conclusion that Ms Gan is liable for a civil contempt by reason of the Company Register Breach. The conclusion that it does not amount to a criminal contempt does not prevent the Court imposing a fine on Ms Gan. A fine may still be imposed for a civil contempt.
However, I do not propose to impose a fine. Instead, a declaration that Ms Gan is in contempt of court together with orders that she pay the costs of the application on an indemnity basis is an appropriate disposition.
First, I am not satisfied to the requisite standard of proof that Ms Gan’s failure to adhere to the orders is as a result of anything other than her failure to take proper steps to understand the obligations imposed on her by those orders and to obtain legal advice.
Secondly, she has largely (if not fully) complied with the orders requiring the provision of financial statements. Whilst the subject matter of those orders is distinct from the Company Register Breach, Ms Gan’s compliance (albeit late) with those orders is a mitigating factor and reinforces my conclusion that the circumstances of the Company Register Breach owe more to Ms Gan’s failure to take proper steps to seek to understand the orders than anything else. This is relevant to the penalty to be imposed.
Thirdly, the orders did not contain an indorsement of the kind set out in r 66.10(3) of the Rules. Whilst this does not preclude the imposition of a fine, I do nevertheless regard it as a relevant consideration in respect of penalty.
Fourthly, the consequences of the Company Register Breach are something of a distraction. The 18 February 2022 Orders stand. The orders comprise both order 1 which oblige Ms Gan to create a register of members. Whilst this has not been complied with, the Judicial Registrar also made order 2 which provided that the register of members be corrected and take effect nunc pro tunc to record that 49 shares be registered in the name of Ms Liu.
The evident purpose of the original orders made 3 November 2021 referring the question of orders pursuant to s 175 of the Act for determination by the Judicial Registrar was to deal with the status of Ms Liu as a member whose name is entered on the register of members of the Company as preliminary question so that Ms Liu had standing to bring her oppression claim. There is authority to the effect that standing to seek relief under ss 232 and 233 of Act requires the applicant to have their name entered on the register of members.[28] Order 2 made by the Judicial Registrar operates as an order of the Court which takes effect as at the date of commencement of the proceeding, that Ms Liu is such a member. Ms Gan‘s failure to comply with order 1 which requires the creation of a physical register does not affect the operation of order 2, nor could Ms Gan rely upon any perceived lack of standing on the part of Ms Liu by pointing to the absence of a physical register where the absence is brought about by Ms Gan‘s own breaches of the order. Regardless Ms Liu has to maintain some form of action whether it be for specific performance of the Settlement Agreement allegedly entered into by the parties or for some form of oppression relief under s 233(1) of the Act. Ms Liu has been excluded from the business for some time and has been denied access to the financial records of the Company until recently. It is tolerably clear that subsistence of a status quo where Ms Liu owns 49% of the shares and Ms Gan owns 51% is unsustainable. Matters have to be brought to a head in such a way as to facilitate the making of further orders by way of final relief, whether they be for specific performance, or for any other order pursuant to s 233(1) whether that be for winding up of the Company or for a buyout by Ms Liu of Ms Gan’s interest or vice versa and at what price. The late provision of the financial records should assist Ms Liu in determining an appropriate course. I had previously sought to facilitate this by setting the proceeding down for trial and am still disposed to do so.
[28]Niord Pty Ltd v Adelaide Petroleum NL & Ors (1990) 54 SASR 87, 2 ACSR 347; Titlow v Intercapital Group (Aust) Pty Ltd (1996) 20 ACSR 201 cf Re Independent Quarries Pty Ltd (1993) 12 ACSR 188
Whilst there is no principle that requires costs to be awarded against a contemnor on an indemnity basis, there are many cases in which such orders have been made particularly in circumstances where there is no other penalty imposed. In such circumstances, the authority of the Court is sufficiently vindicated by the making of orders for costs and declarations of contempt. The making of an order for costs on an indemnity basis favouring the successful moving party represents sufficient recognition of the Court’s disapproval of the contempt established.[29]
[29]McIntyre v Perkes (1988) 15 NSWLR 417, 427.
I also consider that it is appropriate to avoid the expense, delay and aggravation involved in taxing the costs by fixing the costs the subject matter of this application. The application is discrete and the final hearing date will be some time away. Such a course is consistent with the overarching purpose of facilitating the just, efficient, timely and cost-effective resolution of the real issues in dispute in the proceeding.[30] I shall direct that Ms Liu file and serve a memorandum as to the quantum of the costs sought and I will otherwise determine an appropriate sum to fix those costs.
[30]Civil Procedure Act 2010 (Vic) s 7.
The orders I shall make are as follows:
(1)The defendant, Ping Gan is in contempt of court by failing to create a register of members for L & G Co Pty Ltd (ACN 603 431 394) recording that 49 of the shares of the Company are registered in the name of Ya Liu;
(2)The defendant pay the plaintiff’s costs of and incidental to the summons filed 14 December 2023 and the amended summons filed 2 May 2024, including reserved costs on an indemnity basis;
(3)The costs shall be fixed by M Osborne J in chambers after receipt of the memoranda the subject of orders (4) and (5) hereof and shall be payable by the defendant forthwith;
(4)For the purpose of fixing the costs, the plaintiff shall file and serve a memorandum setting out the quantum of the costs sought and the manner in which the costs have been calculated within 7 days of this order;
(5)In the event that the defendant contends that the quantum of the costs sought by the plaintiff is excessive or should otherwise not be allowed, the defendant shall file and serve a memorandum in response within 7 days of receipt of the plaintiff’s memorandum served in accordance with paragraph 4 hereof;
(6) The application is otherwise dismissed;
(7) The proceeding is listed for directions on 15 November 2024;
(8) Liberty to apply.
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