Livingspring Pty Ltd v Ng
[2007] VSC 9
•5 February 2007
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
No. 2001 of 2004
| LIVINGSPRING PTY LTD & ORS | Plaintiffs |
| v | |
| CHRIS HAKTOH NG & ORS | Defendants |
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JUDGE: | Cavanough J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 13-16 June 2006 and 24-25 July 2006 (Further written submissions received 1 and 2 August 2006) | |
DATE OF JUDGMENT: | 5 February 2007 | |
CASE MAY BE CITED AS: | Livingspring Pty Ltd & Ors v Ng & Ors | |
MEDIUM NEUTRAL CITATION: | [2007] VSC 9 | |
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Contempt of court – Alleged breaches of undertakings and orders restraining defendants from “dissipating” assets – Whether undertakings and orders clear and unambiguous – Whether any breach wilful and contumacious – Alleged breaches of order for disclosure of assets and liabilities - Whether misstatements in affidavits amounted to contempt - Supreme Court (General Civil Procedure) Rules 2005, r 75.06.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr S K Wilson QC with Mr S Rubenstein | Hambros & Cahill Lawyers |
| For the 1st, 10th, 14th and 16th Defendants | Mr P Almond QC with Mr A Hanak | Arnold Bloch Leibler |
| For the 2nd and 22nd Defendants | Mr R Heath | Schetzer Brott & Appel Solicitors |
HIS HONOUR:
Overview
This is a ruling on an application brought by the plaintiffs under r 75.06 of the Supreme Court (General Civil Procedure) Rules 2005 for orders that certain of the defendants be dealt with for contempt of court for alleged breaches of temporary undertakings given to the Court and of interlocutory orders made by the Court. Speaking generally, the undertakings were expressed to restrict certain specified dealings in the defendants’ assets. The orders, which were made later, continued and modified those restrictions and also required the defendants to make certain disclosures about their assets and liabilities by affidavit.
As to the alleged breaches constituted by dealings with the defendants’ assets, it is common ground for the most part that the impugned transactions occurred, although in some cases it was not conceded that the particular defendant charged was involved in or responsible for the transactions. The transactions were transfers of funds, transfers of shares, withdrawals from bank accounts and, in one group of cases, dealings relating to a mortgage and sale of a particular piece of land. However, except in relation to one charge, there is a large issue as to whether the impugned transactions were covered by the terms of the undertakings and orders. The defendants say that the restraints are relevantly ambiguous and cannot support the contempt charges. Various other points of defence were taken as well.
As to the disclosure requirements, it is admitted that affidavits were filed that contained certain misstatements. However it is not admitted that these were deliberate and in any event it is submitted that what occurred could not in law amount to contempt of court.
In every case there is an issue as to the degree of gravity of the contempt if, any.
The plaintiffs are companies associated with Dr Tiow Hoe Goh and his wife Kooi Lean Goh, together with Dr Goh and Mrs Goh personally. In the proceeding as a whole, there are numerous defendants, comprising companies associated (or allegedly associated) with Mr Chris Haktoh Ng and/or his wife Winnie Ng, together with Mr Ng and Mrs Ng personally. Six of those defendants are charged with contempt, including Mr Ng and Mrs Ng. Various new plaintiffs and defendants have been added to the proceeding generally since the happening of the events in question, but each of the charged defendants was already a party at the relevant time.
The proceeding as a whole relates mainly to disputes between the Goh interests and the Ng interests arising out of the breakdown of joint venture arrangements relating to the building and management of three apartment blocks in Melbourne designed principally for the accommodation of overseas students. In summary, the plaintiffs claim that the Ng interests wrongfully appropriated to themselves large sums of money properly belonging either to the joint venture or to the plaintiffs, and otherwise wrongfully caused the plaintiffs to incur financial losses, such as through false accounting. There are numerous “tracing” claims. Senior counsel for the plaintiffs told me that the overall claim was for approximately $30 million. The claim is being vigorously defended. Some of the Ng interests have counterclaimed against some of the Goh interests in respect of related matters.
As proposed by the parties and agreed, my present task is to determine which, if any, of the alleged breaches of the undertakings and orders have been made out; which, if any, were “wilful”; and which, if any, were of a “contumacious” nature.[1] If necessary, there will be a separate hearing on “penalty”, ie on the question whether the contempt jurisdiction should be exercised at all in relation to any of the identified breaches and, if so, how.
[1]Compare Pelechowski v Registrar, Court of Appeal (NSW) (1999) 198 CLR 435 at 484 [147] per Kirby J (dissenting).
The charges are set out in 44 paragraphs, numbered from 1 to 40C, in Part A of the plaintiffs’ amended summons dated 15 March 2006. At the hearing, the charges contained in six of those paragraphs were withdrawn (paragraphs 2, 4, 9, 11, 26 and 33). However, many of the remaining paragraphs include multiple and/or alternative allegations. Nevertheless, for convenience, from here on I will refer to each separate paragraph as a “charge”, unless the context otherwise indicates.
I have decided that all of the charges except one should be dismissed. The exception relates to an “asset dealing” charge (numbered 1(a)) against Mr Chris Ng based on a breach of undertaking which Mr Ng admits. The final disposition of that charge will be determined after the proposed further hearing, although more will be said in these reasons about the circumstances of the breach. The main reason for the dismissal of the other “asset dealing” charges is that, in my opinion, the terms of the relevant provisions of the undertakings and orders are not clear and unambiguous in their application to the matters complained of. The (three) remaining charges, which are based on the making of inaccurate affidavits, will be dismissed because I am not satisfied that the allegations as put were, in law, allegations of contempt of court. In any event, I am not satisfied that the misstatements in the affidavits were deliberate.
Grouping of charges
Charges 1-21 are in respect of the first defendant, Chris Ng. Charges 22-24A are in respect of the second defendant, Ecomace Pty Ltd (“Ecomace”). Charges 25-27 are in respect of the tenth defendant, Crystal Properties Australia Pty Ltd (“CPA”). Charges 28-30 are in respect of the fourteenth defendant, CNG Australia Pty Ltd (“CNG Australia”). Charge 31 is in respect of the sixteenth defendant, Franklin One One Eight Pty Ltd (“Franklin One One Eight”). Charges 32-40C are in respect of Winnie Ng.
Some of the charges are in respect of the same conduct but are directed to different defendants.
Charges 24A, 40A, 40B and 40C are inter-related. They are concerned with transactions involving a company called Irving Hopkins Pty Ltd in relation to land in Footscray. They will be dealt with as a whole in due course. However it should be noted that one of them, charge 40B, is based on an alleged breach of para 2(b) of the undertakings, whereas the other three are based on alleged breaches of the (later) orders.
Legal representation
The plaintiffs were represented by Mr S K Wilson QC and Mr Rubenstein. The representation of the defendants was split. Whereas at the time of the giving of the relevant undertakings in December 2004 all of the then defendants were jointly represented, in January or February 2005 (ie before the making of the orders) a fresh legal team was engaged to represent Chris Ng and certain of the defendant companies and another fresh legal team was engaged to represent Winnie Ng and certain other defendant companies. There is no suggestion of a falling out between Mr and Mrs Ng. However, the split of legal representation has continued, and before me Mr Almond QC and Mr Hanak represented Chris Ng, CPA, CNG Australia and Franklin One One Eight (instructed by Arnold Bloch Leibler) and Mr Heath represented Winnie Ng and Ecomace (instructed by Schetzer, Brott and Appel).
Amendment of charges
Certain minor amendments to charges 8, 9, 27 and 40A and to paragraph (h) of the particulars subjoined to charge 5 were allowed at the hearing.
Applications made on the fourth day of the hearing for leave to make certain substantial amendments to charges 24A and 40C and to file related fresh affidavit material were disallowed.[2]
[2]See transcript pp 331-375, esp at 366, 375; and see Inghams Enterprises Pty Ltd v Timania Pty Ltd (2005) 201 ALR 823 at 835-836 [32]-[34].
The evidence and the submissions
The evidence before me consisted of four substantial affidavits (and their respective exhibits) filed on behalf of the plaintiffs together with three further documentary exhibits obtained by way of subpoena or notice to produce and tendered by the plaintiffs. The defendants did not seek to cross-examine any of the deponents, nor did they call any evidence themselves. There were certain objections to parts of the affidavit material, and these were dealt with at the hearing. The affidavit material was voluminous. It took the best part of four hearing days for Mr Wilson QC to present the evidence, and even then large parts of it were not specifically adverted to.
The hearing was then adjourned for a period of about six weeks during which lengthy written submissions were filed and served by the three sides. The parties then spoke to their submissions for two days, with extended sitting hours on both days. Large folders of authorities were handed up by each side. After the matter was reserved for decision, the plaintiffs’ representatives sought leave to make further submissions. This was initially opposed, but ultimately, by consent and by leave, the plaintiffs filed and served a relatively short further written submission and the defendants filed and served a joint written reply.
I have considered all of the evidence and the written submissions and read and re-read the transcript of the hearing. Fortunately, it is not necessary for me to deal with every one of the many points that were agitated at the hearing.
The undertakings
The undertakings were given on 13 December 2004 in response to a summons filed by the plaintiffs on 6 December 2004. They were given by all of the then existing defendants, being twenty-four in number. They were included in the “Other Matters” section of a consent order made by Justice Dodds-Streeton whereby, among other things, the hearing of the plaintiffs’ summons was adjourned to 28 February 2005. The undertaking was in the following terms:
“2.The Defendants undertake by their Counsel to the Court that, pending the hearing and determination of the Plaintiffs’ summons filed 6 December 2004 or further order that:
(a)they will not transfer or cause to be transferred any funds overseas;
(b)they will not dissipate any assets within the jurisdiction and in particular:
(i)they will not transfer funds or assets to any person or entity of which Chris Ng or Winnie Ng or members of their families have a direct or indirect interest;
(ii)they will not pay or settle inter-company loan accounts in respect of any other Defendant;
(iii)they will not pay out amounts allegedly owing to any beneficiary or unit holder of any trust of which any of them is a trustee; and
(iv)they will not pay debts other than to trade creditors necessarily incurred in the ordinary course of business of CNG Australia Pty Ltd and Archmatrix Pty Ltd including employees, professional advisors, and banks (but only where they are obliged under any existing covenant or mortgage to make a payment to a bank in circumstances where the failure to make that payment would constitute a breach of existing contractual obligations);
(c)they will not transfer or otherwise deal with or cause to be dealt with any funds which represent the proceeds of Bank of Melbourne (BSB 033 534) term deposit accounts 181-704; 182-555; 182-563; 184-569, the proceeds of cheque number 146 drawn on account number 033 534 107153 (the trading account) or the balance of the trading account as at 7 April 2004.”
The extent of the plaintiffs’ reliance on para 2 of the undertakings
None of the charges is based on para 2(a) of the undertakings (overseas transfers).
However, para 2(b) is very important. Thirty-two of the remaining 39[3] live charges are based on para 2(b). Three of these (namely, charges 3, 5 and 40B) rely simply on the opening words of para 2(b) (“they will not dissipate any assets within the jurisdiction”). The other 29 are more specific. They nominate one or more of sub-paragraphs (i), (ii), (iii) and (iv) of para 2(b) as having been breached. As will be seen, for all 32 of these charges, the effect of the word “dissipate” is critical.
[3]For this purpose I am treating paragraphs 1(a) and (b) of the summons as containing two separate charges.
Charge 1(a) was originally based on both para 2(b) and para 2(c). However, in view of Chris Ng’s acknowledgment of a breach of para 2(c), the plaintiffs do not press the allegation that the transaction in question also amounted to a breach of para 2(b). Charge 1(a) is the only charge in respect of which para 2(c) of the undertakings is relied on.
The remaining six charges are based on alleged breaches of the orders which were made later, namely on 2 March 2005. I will come to them in due course, but would point out here that conclusions reached about the meaning and effect of para 2(b) of the undertakings will be highly relevant to three of those charges, which in turn are based on alleged breaches of provisions restraining the defendants and others from “dissipating” assets.
The need for clarity
It seems to be common ground that a charge of contempt of court based on an alleged breach of an undertaking or order cannot succeed unless the relevant terms of the undertaking or order are clear and unambiguous.[4] In Australian Consolidated Press Ltd v Morgan[5], Owen J (with whom Windeyer J agreed on this point[6]) cited with approval and applied the following statement of general principle made by Jenkins J in Redwing Ltd v Redwing Forest Products Ltd[7]:
“ … in my judgment, a defendant cannot be committed for contempt on the ground that upon one of two possible constructions of an undertaking being given he has broken his undertaking. For the purpose of relief of this character I think the undertaking must be clear and the breach must be clear beyond all question.”
[4]The plaintiffs themselves submitted that, generally, an applicant has to prove, among other things, that the terms of the undertaking or order are “clear, unambiguous and capable of compliance”, citing National Australia Bank v Juric [2001] VSC 375 at [37] and Law Institute of Victoria v Nagle [2005] VSC 35 at [15]: see paras 33 and 34 of the plaintiffs’ written submissions dated 17 July 2006.
[5](1965) 112 CLR 483 at 515-516.
[6]At 506. Compare at 492 per Barwick CJ.
[7](1947) 177 LT 387.
See also McNair Anderson Associates Pty Ltd v Hinch[8]. Further, since Australian Consolidated Press and McNair Anderson were decided, it has been authoritatively established that a charge of contempt of court must be proved on the criminal standard, ie beyond reasonable doubt.[9] In Australian Competition and Consumer Commission v Collings Construction Co Pty Ltd[10], Bainton J held that if there be any ambiguity, uncertainty or want of clarity in an order it should be construed contra proferentem, the proferens being the party seeking it (and seeking to enforce it). Contrary to Mr Wilson’s submission, I think that the same applies to an undertaking accepted by, and later sought to be enforced by, a particular party.
[8][1985] VR 309 at 311-312.
[9]Witham v Holloway (1995) 183 CLR 525. For a comprehensive recent review of the authorities relating to the need for clarity, see Tovehead Pty Ltd v Owston Nominees No 2 Pty Ltd (2002) 171 FLR 278; appeal dismissed (by majority) sub.nom Tovehead Pty Ltd v Freeman (2003) 175 FLR 311. And see also Arlidge, Eady and Smith on Contempt, 3rd edition, 2005 at [12.48]-[12.57].
[10]Unreported, SCNSW 2 July 1997, BC 9702850 at 15.
The issues as to the construction of para 2(b)
There are two issues between the parties relating to the construction of para 2(b) of the undertakings. The first concerns the effect of the word “dissipate” in the opening line. The second is whether any meaning or operation at all can be given to sub-para (i) of para 2(b).
The first construction issue
It is common ground that the opening words of para 2(b) govern each of sub-paragraphs (i), (ii), (iii) and (iv), and accordingly that the kinds of transactions referred to in those sub-paragraphs are to be regarded as mere (non-exhaustive) examples of the conduct prohibited by the opening words. This means, however, that conduct of the defendants will not be caught by para 2(b) unless it falls within the words “they will not dissipate any assets within the jurisdiction”. Even if a transaction answers a description set out in (i), (ii), (iii) or (iv), it will not be caught unless it also constitutes or forms part of the “dissipation” of assets. This reading is confirmed by noting that the related reference (in the opening line) to assets “within the jurisdiction” must apply throughout para 2(b) (and compare para 2(a), which relates to transfers overseas). It is further confirmed by the use of the phrase “and in particular”.
Nevertheless the plaintiffs submit that the word “dissipate” should not be treated as imposing any presently relevant limitation on the scope of para 2(b). They submit that in para 2(b) “dissipate” simply means “divest” or “dispose of”. They say that this is the “plain and ordinary meaning” of the word and they also rely on the context which, they say, “is directed to preserving assets and maintaining the status quo pending the outcome of legal proceedings”.[11]
[11]Written submissions dated 17 July 2006, para 18.
The defendants dispute the plaintiffs’ interpretation of “dissipate”. Their principal submission in this regard is that, in the context, the word means to scatter wastefully or extravagantly, to consume wilfully or to squander or fritter away. They point out that, because this is a contempt proceeding, it is enough for their purposes if the construction which they advance, or any other construction significantly different from the plaintiffs’ construction, is open as a reasonable possibility.[12]
[12]They refer to Witham v Holloway (1995) 183 CLR 525 at 534, where it was said that all proceedings for contempt “must realistically be seen as criminal in nature”; and to Varnavides v Victorian Civil and Administrative Tribunal [2005] 12 VR 1 at 6[18] where the Court of Appeal said that “contempt of Court is a serious offence and should be approached, as far as possible, in a way which is consistent with that adopted when dealing with criminal conduct generally”.
This is a vital issue because, as it seems to me, all 32 of the charges alleging a breach of para 2(b) of the undertakings are drawn on the basis that the plaintiffs are correct in their construction of “dissipate”. In other words, they all proceed on the basis that any transfer or payment of money or any disposal of a thing, regardless of the reason and regardless of any consideration received, is a breach. Given the strict rules governing the formulation of contempt charges, including the requirement that the charge itself (or the particulars) sufficiently specify the contempt[13], the plaintiffs cannot be heard to say, and have not attempted to say, that any of these 32 charges could be upheld on some alternative reading of para 2(b).
[13]See CFMEU v BHP Steel (AIS) Pty Ltd [2001] FCA 1758 at [30]-[31]; Inghams Enterprises Pty Ltd v Timania Pty Ltd (2005) 201 ALR 823 at 835-836 [32]-[34].
The second construction issue
The second construction issue is thrown up by the mangled English of sub-para (i) of para 2(b), and in particular, by the expression “any person or entity of which Chris Ng or Winnie Ng or members of their families have a direct or indirect interest”. The defendants say that the use of the phrase “of which” is plainly inappropriate as a matter of language; that even if that phrase should be read as “in whom or in which” or as “in respect of whom or in respect of which” the overall expression is still meaningless, because one cannot have a relevant “interest” in or in respect of a person, as distinct from an entity. The plaintiffs reply that the sub-para (i) should be understood as though it read:
“(i) they will not transfer funds or assets to:
(a)any person; or
(b)any entity [in] which Chris Ng or Winnie Ng or members of their families have a direct or indirect interest; … .”
If the defendants are right about this second issue, charges 6, 7, 8, 9, 10, 25, 26, 27, 28, 29, 31 and 40 would have to be dismissed in part, ie to the extent that they depend on para 2(b)(i); and charges 22, 23, 24, 33, 34, 35, 37, 38 and 39 would have to be dismissed completely, because they depend completely on para 2(b)(i). Of course, this issue would only need to be considered at all if the defendants failed on the first issue.
What can be taken into account in construing the undertakings and orders?
On the first day of the hearing, Mr Almond QC submitted[14] that where it is alleged that an order or undertaking has been breached it is not permissible to go beyond the order or undertaking itself to aid in construction. As authority for that proposition he cited the judgment of Southwell J in McNair Andersonand Associates Pty Ltd v Hinch.[15] Southwell J said:
“Mr Winneke Q.C., who appeared with Mr . Hayne for the plaintiff, submitted that it was not open to the Court to go behind the order, either by reference to the transcript or to the reasons for judgment. He referred to Australian Consolidated Press Ltd. v. Morgan (1965) 112 C.L.R. 483, at p. 503 where Windeyer J. said: ‘Those who give undertakings to a court are bound by the language they use. If its true meaning, although not immediately plain, can be ascertained according to ordinary rules of construction, then the person giving the undertaking is bound by it in that sense’.
In my opinion, no different principle can be applied where injunctions, rather than undertakings, are under consideration.
For my part I would have thought it would seldom be permissible in proceedings for contempt to go behind the order and to examine the reasons for judgment as an aid to construction of the order. Borrie and Lowe in Law of Contempt, 2nd ed., p. 395 says: ‘It is clearly established that a person will not be held guilty of contempt for breaking an injunction unless the terms of the injunction are themselves clear and unambiguous’. Accordingly, one must first look at the order and decide whether it is clear and unambiguous in its terms. If it is, then it is unnecessary to look beyond it in order to aid construction: if it is not clear and unambiguous in its terms, a breach of it could not be proved.”
[14]Transcript pp 62-64.
[15][1985] VR 309 at 311-312.
Mr Wilson QC did not in terms deny the correctness of these observations of Southwell J, nor did he submit in terms that they were inapplicable to the present case. Indeed he acknowledged expressly, twice, that I was required to construe the undertakings and orders “on their face”[16].
[16]Transcript p. 64, lines 24-25 and 484, line 5. Similarly, in para 15 of their written submissions, while the plaintiffs referred to the transcript of the argument before Dodds-Streeton J on 10 December 2004 as going to the question of ‘wilful disobedience’ or ‘contumacious breach’, they acknowledged expressly that the transcript was not relevant for the purpose of interpretation of the undertakings.
However, somewhat inconsistently, the plaintiffs did submit, both orally and in writing, that I should take into account that on 28 February 2005 Mr Almond QC (on behalf of “the Chris Ng defendants”) and Mr Wheelahan QC (who on that day appeared for “the Winnie Ng defendants”) made submissions to Dodds-Streeton J which the plaintiffs now characterise as admissions by the relevant defendants of various breaches of the undertakings, including breaches of para 2(b).
Further, within moments of his second acknowledgement that the Court was confined to a consideration of the terms of the orders and undertakings on their face, Mr Wilson QC said that there was a question “of how far Your Honour is allowed to look at the background material as context for the making of the order”[17]. In particular, Mr Wilson QC said that in considering whether an apparently “draconian” interpretation was appropriate, I could “perhaps” take into account what Mr Wilson QC described as unchallenged evidence that existed at the time at which the undertakings were proffered to Dodds-Streeton J, to the effect that Mr Chris Ng had taken millions of dollars out of the first plaintiff, Livingspring Pty Ltd, that a substantial part of that money had gone into the bank account referred to in the undertakings, that millions of dollars had been dispersed overseas and that no-one could find out what had happened to it[18].
[17]Transcript p. 484, lines 27-28.
[18]Transcript p. 484-485.
In view of the above-quoted observations of Southwell J in McNair Anderson, which have never been questioned in Victoria as far as I know, I seriously doubt that I am entitled to have regard to either of the two “extrinsic” matters referred to by Mr Wilson QC. On the other hand, I note that there is authority in other jurisdictions (albeit not referred to for present purposes by any of the parties before me) to the effect that, for the purpose of construing an order or undertaking in contempt proceedings, a court may, at least in some cases, take into account “the factual matrix which was known to both parties”[19]. In one of those authorities it was held that the Court could take into account the history of the litigation and the pre-existing contractual relationship between the parties[20].
[19]S + M Motor Repairs v Caltex Oil (1988) 12 NSWLR 358; Evenco Pty Ltd v Australian Building Construction Employees and Builders Labourers Federation (Qld Branch) (2001) 2 Qd R 118 at 135; Tovehead Pty Ltd v Freeman [2003] NTCA 10 at [14]-[25] per Martin CJ (dissenting); cf at [37]-[41] per Mildren J and at [51] per Riley J. Outside the context of contempt, at least, it appears that courts are relatively free to take into account extrinsic material (such as reasons for judgment) to resolve ambiguities in court orders: see Owston Nominees No 2 Pty Ltd v Branir Pty Ltd (2003) 129 FCR 558.
[20]S + M Motor Repairs, supra.
However that may be, I do not think that the plaintiffs gain any assistance from the transcript of the proceedings before Dodds-Streeton J on 28 February 2005. The “admissions” were made in a context in which the defendants were seeking to have the undertakings relaxed. There was no motion for contempt on foot, or even threatened, at that time. For the most part, Mr Almond’s so-called admissions were qualified and tentative. The transactions he referred to had all been voluntarily disclosed by the defendants. Relatively few of the transactions now the subject of these contempt proceedings were expressly referred to by Mr Almond QC. Further, Mr Almond QC did not in terms concede that the undertakings were clear. The comments he made to the effect that there had been, or may have been, breaches, and his two brief references to “contempt” (at page 25 of the transcript) do not bind his clients for present purposes. Mr Almond QC did not say anything about how his clients had actually understood the undertakings at the time of the transaction in question. In any event, what matters is not Mr Almond’s nor even Mr Ng’s understanding of the undertakings, but rather the Court’s reading of them in light of the presently relevant principles.
Much the same comments apply to the observations made by Mr Wheelahan SC, who was then acting for the Winnie Ng defendants. I acknowledge that he expressed himself in more definite and more apologetic language than Mr Almond QC. He repeatedly described various transactions that had occurred as contempts. However, as it happens, none of the transactions to which Mr Wheelahan SC referred has been included in the charges against the Winnie Ng defendants. True, charges have been laid in respect of other, comparable instances, but, once again, what matters for immediate purposes is not Mr Wheelahan’s or even his clients’ understanding of the undertakings as at any particular time or at all, but rather my reading of them in the context of this contempt proceeding.
As to the second “extrinsic” matter (being the allegation as to the serious nature and unanswered status of the evidence against the defendants as put before Dodds-Streeton J on 10 December 2004), even if I could take it into account, I do not think it would help the plaintiffs in relation to the construction of para 2(b) of the undertakings.
To begin with, I do not have before me, in admissible form, the same evidence that was before Dodds-Streeton J on 10 December 2004. I have no more than a potted version or summary of that evidence, as set out in paragraphs 16 and 17 of the affidavit of Paul Charles Munster sworn 14 March 2006. The defendants justifiably objected to any reliance by the plaintiffs on affidavits that were not actually included in the evidentiary material put on in support of the contempt summons.
In any event, I am not persuaded that the existence of evidence of the nature and status alleged would logically explain why the defendants might proffer undertakings as restrictive as the plaintiffs say the undertakings in question were. The caps, thresholds and limits usually seen in Mareva orders[21] are entirely absent for the human defendants and for all of the other defendants except two. The very discussion during which Mr Wilson QC made the present suggestion was prompted by a question from the Bench as to whether it was Mr Wilson’s submission that the undertakings precluded Mr and Mrs Ng from spending any money at all on food for so long as the undertaking was in operation. He said yes. He frankly conceded that, on the plaintiffs’ construction of the undertakings, both Mr and Mrs Ng could potentially (or at least “technically”) be dealt with for contempt for spending a few dollars to buy their lunch.[22] Indeed he acknowledged that, on the plaintiffs’ construction, both of the human defendants were precluded from spending any money at all on anything.[23]
[21]See P. Biscoe, Mareva and Anton Piller Orders, 2005, [6.15]-[6.27].
[22]Transcript pp 480-484, esp at 480 lines 10-13 and 482 lines 2-4.
[23]Transcript p 482 lines 13-18 and following.
Resolution of the first issue of construction of para 2(b) of the undertakings
It seems to me that the draconian consequences, just mentioned, of the plaintiffs’ construction of para 2(b), alone, throw the gravest doubt on the correctness of the plaintiffs’ submissions on this issue. But there is more. As indicated above, the plaintiffs submit that, in para 2(b), the word “dissipate” means “divest” or “dispose of”. However, no dictionary gives such a meaning for “dissipate”. The plaintiffs rely on the following definitions of “dissipate” given in the Concise Oxford Dictionary (Third Australian Edition):
“1 a tr. Cause (a cloud, vapour, fear, darkness, etc) to disappear or disperse. 2 intr. & tr. break up; bring or come to nothing.”
By reference to these definitions, the plaintiffs say that the defendants were precluded by the undertakings from causing any of their assets to “disappear” or “disperse”. They say that to divest or dispose of any individual asset, including any sum of money, is to cause the asset to “disappear” or “disperse”. It is true that to pay or transfer money or to sell a thing is to cause the money or the thing itself to depart from your ownership and possession and, in a figurative sense, to cause it to “disappear” from your view and, perhaps, from the view of your creditors or potential creditors. But that is not the true sense of the word “dissipate” as conveyed by the particular dictionary definitions relied on by the plaintiffs. Those definitions are relevant where the word “dissipate” is applied to subject matter of a kind which by its nature tends to be subject to disintegration, such as the very things mentioned – a cloud, vapour, fear, darkness etc. On the other hand, where the word “dissipate” is applied to subject matter such as money, wealth or resources, it generally conveys the notion that the diminution was not natural or to be expected but rather was due to some blameworthy or unreasonable conduct on the part of the holder. Hence the defendants rely on dictionary definitions of “dissipate” such as the following one in the Second Edition of the Oxford English Dictionary, 1989:
“To scatter or consume wastefully (money, resources, faculties); to waste, squander.”
On the other hand, when one reads para 2(b) as a whole, there are difficulties about the construction of “dissipate” which the defendants principally advance. It is not easy to imagine how some types of transactions specified in sub-paragraphs (i) to (iv) of para 2(b) could amount to the squandering or wasting of money or other assets. For example, it is difficult to see immediately how the payment of debts could be regarded as squandering or wasting money. However, when this point was raised at the hearing, Mr Almond QC pointed out, with some plausibility, that even in the case of debts a payment might involve waste or squandering where the debt was not genuine or where it was paid in advance of the time when it fell due.
I accept that the word “dissipate” and its cognate forms are very commonly used in legal texts and in court decisions in relation to freezing or “Mareva” undertakings and orders. For example, Biscoe says that the object of such an order or undertaking is to prevent the frustration of an actual or prospective monetary judgment by restraining the respondent from removing assets from the jurisdiction “or dissipating them”.[24] In the recent decision of the House of Lords in Her Majesty’s Commissioners of Customs and Excise v Barclays Bank plc[25], Lord Bingham of Cornhill said that “risk of dissipation has to be shown to obtain a freezing injunction”. However my reading of the texts and cases satisfies me that, most commonly, the word is used in a pejorative sense. It was so used by Wilson and Dawson JJ in the leading Australian case on the “Mareva” jurisdiction, Jackson v Sterling Industries Pty Ltd[26]. In that case, the power to grant “Mareva” relief was strictly tied to the need for a court to prevent “abuse or frustration of its process”.[27] In any event the word is not used synonymously with the mere engaging in financial transactions; a fortiori, the mere engaging in routine financial transactions which cannot be shown to have either the purpose or the effect of reducing the net asset position of the defendant.[28] Thus in Cardile v LED Builders Pty Ltd[29] Kirby J, in his concurring judgment, quoted with approval a Canadian case in which it was said:
“The Mareva and Anton Piller orders were conceived not so much to protect plaintiffs as to protect the court’s jurisdiction against defendants bent on dissipating or secreting their assets or evidence in order to render inconsequential the judicial process against them.” (my emphasis).
It is true that in the same case Gaudron, McHugh, Gummow and Callinan JJ noted[30] that in National Australia Bank Ltd v Bond Brewing Holdings Ltd[31] Mason CJ, Brennan and Deane JJ had described as mistaken any proposition that Mareva relief could only be obtained against the defendant to an action if there were a positive intention to frustrate any judgment. However nothing was said in Bond or in Cardile to indicate a departure from the fundamental principles established in Jackson v Sterling. Indeed the general tenor of the joint judgment in Cardile was against the expansion of Mareva relief. Their Honours said that Mareva orders must be “capable of properly being seen as appropriate to the case in hand”.[32]
[24]P. Biscoe, op. cit, at [1.1].
[25][2006] UKHL 28 at [15].
[26](1987) 162 CLR 612 at 617.
[27](1987) 162 CLR 612 at 617, 619, 621 and especially at 623.
[28]See also Biscoe, op. cit at [6.25] and the quotation therein from Goumas v McIntosh [2002] NSWSC 713 at [22]-[23].
[29](1999) 198 CLR 380 at 425-426.
[30](1999) 198 CLR 380 at 394.
[31](1990) 169 CLR 271 at 277.
[32](1999) 198 CLR 380 at 405. See also at 404.
Apart from the present matter, the parties could not refer me to any case, and my own researches did not unearth any, in which the operative provision in a Mareva order or undertaking was actually expressed in terms of a restriction on the “dissipation” of assets.[33] The reason, I think, is because the word is simply inappropriate for the purpose. “Dissipation” of assets may result from dealing with them, but to deal with assets is not necessarily to “dissipate” them.[34] Accordingly it may be appropriate to use “dissipate” or “dissipation” in describing the operation or object of a Mareva order or undertaking, especially in relation to a respondent’s assets and liabilities regarded collectively, but not as part of the operative language of the order or undertaking itself. The use of it in that way in the present case has, not surprisingly, led to lengthy debate and deep uncertainty as to the proper interpretation of the restriction.
[33]Or any cognate form of the word.
[34]Compare the use of the word “dissipated” by Hodgson J at first instance in Witham v Holloway as quoted by McHugh J: (1995) 183 CLR 525 at 537.
The plaintiffs’ construction is made all the more unlikely when one sees that the drafter has actually used the expression “will not transfer or cause to be transferred” in para 2(a) and the expression “will not transfer or otherwise deal with or cause to be dealt with” in para 2(c). The contrast is obvious. To take into account contrasting language in the same instrument is well within the “ordinary rules of construction”.[35] It is unnecessary to determine whether it is appropriate to take into account also the contrast with the usual form of “Mareva” undertaking or order.[36]
[35]McNair Anderson and Associates Pty Ltd v Hinch [1985] VR 309 at 312.
[36]See Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 at 410. Commonly, in “Mareva” undertakings or orders, the restraint itself is expressed in broad, absolute terms, but is made subject to caps, thresholds, exceptions and/or limitations to suit the circumstances.
It seems to me that there is at least a reasonable possibility that the effect of the use of the word “dissipate” in para 2(b) of the undertakings is such as to render the provision applicable only to transactions of a wasteful kind; or alternatively only to transactions of a kind that tend to diminish the net asset position of a particular defendant (or to do so unreasonably or improperly), such as purchases at an overvalue or sales at an undervalue or unusual “gifts”. Indeed, Mr Wilson QC conceded that in ordinary parlance the word “dissipate” is more commonly used in such a way than in the way for which the plaintiffs contend.[37] Mr Wilson QC tried valiantly to argue that at least Chris Ng’s personal withdrawals from his bank accounts (the subject of charges 3 and 5) were “dissipations” of his assets because they involved the “breaking up” of a relatively large asset (the chose in action against the bank) by conversion into cash. But if a payment to a third party by a cheque drawn on Mr Ng’s account is not necessarily, without more, dissipation within the meaning of para 2(b), then, a fortiori, neither is a personal withdrawal of cash by him. Mr Wilson QC said everything that could be said for the plaintiffs’ position on the first construction issue[38], but his submissions have not persuaded me, beyond reasonable doubt, that any of abovementioned alternative possibilities, much less all of them, must be put aside in favour of the plaintiffs’ construction of para 2(b) of the undertakings. Indeed I consider that the presence of the word “dissipate” has rendered para 2(b) so unclear as to be effectively unenforceable in contempt proceedings.
[37]Transcript p 465-466.
[38]See especially, but not exclusively, at pp 460-487 of the transcript.
It follows that none of the charges based on para 2(b) can be sustained.
Resolution of the second issue of construction of para 2(b) of the undertakings
In view of my conclusion on the first construction issue, it is not necessary for me to resolve the second. Nevertheless I would indicate that I accept the defendants’ submission as to sub-para (i) of para 2(b) and reject the plaintiffs’ submission. The language of para 2(b)(i) is muddled beyond salvation, at least for the purposes of contempt proceedings. The plaintiffs’ “re-writing” of it is not possible as a matter of English or as a matter of law.
The remaining charges
This leaves six remaining disputed charges (apart from charge 1(a)). Each is based on an alleged breach of the orders made by Dodds-Streeton J on 2 March 2005. They fall into two categories: three “asset dealing” charges and three “false affidavit” charges. I will deal first with the “asset dealing” charges, all of which relate to the Irving Hopkins matter referred to in paragraph 12 above.
The “Irving Hopkins” charges
As mentioned above, the amended summons actually contains four charges relating to the Irving Hopkins matter, namely, charges 24A (against Ecomace) and charges 40A, 40B and 40C (against Winnie Ng). However, in effect I have already dealt with charge 40B. That charge pertained to events which occurred prior to the making of the 2 March 2005 order, and so it was based on an alleged breach of the prohibition on “dissipation” contained in para 2(b) of the undertakings, which I have found to be relevantly unclear and therefore incapable of supporting the contempt charge.
The language of the orders of 2 March 2005 is not significantly different from that of the undertaking. The corresponding, critical provision restrains the defendants (and certain additional named parties) from “dissipating any assets within the jurisdiction”. Further, one can see in other parts of the orders contrasting language very similar to the contrasting language in the undertakings, such as “transferring or causing to be transferred” in para 1(a) of the orders and “transferring or otherwise dealing or causing to be dealt with” in para 1(c).
It is true that, unlike the undertakings, the orders make express provision for exceptions from the general restraint, including an exception for Mr and Mrs Ng’s “ordinary living expenses”. However this is insufficient to persuade me, beyond reasonable doubt, that the word “dissipating” in para 1(b) of the orders should be read as “disposing of or divesting”, as the plaintiffs urge. I consider that the various alternative possible constructions of para 2(b) of the undertakings are likewise available in relation to the corresponding provisions of the orders. Once again, I think that the use of the word “dissipating” has rendered the relevant part of the orders so unclear as to be effectively unenforceable in contempt proceedings. For that reason alone, I consider that the three remaining “Irving Hopkins” charges must be dismissed.
Mr Heath also submitted on behalf of Ecomace and Winnie Ng that the Irving Hopkins charges themselves were unsoundly based and fatally unclear. He relied on the abovementioned strict principles as to the formulation of contempt charges.[39] I agree.
[39]See especially Inghams Enterprises Pty ltd v Timania Pty Ltd (2005) 221 ALR 823 at 835-836 [32]-[34].
To explain this aspect it is desirable to set out all four of the Irving Hopkins charges in the order and form in which they appear in the amended summons, taking into account the minor amendment to charge 40A that was permitted at the hearing. The order is not chronological.
“24A.Between on or about 1 April 2005 and 15 November 2005, the Second Defendant, Ecomace Pty Ltd, in contravention of paragraph 1(b) of the 2nd March Orders, dissipated a recoverable amount of $771,100, being a unitholder’s entitlement owing to Ecomace by Irving Hopkins by permitting the amount thereof to be reduced to $270,989.
…
40A.Between on or about 1 April 2005 and 15 November 2005, in contravention of paragraph 1(b)(ii) and (iii) of the 2nd March Orders, Winnie Ng, as a director of Irving Hopkins Pty Ltd, a company related to her, caused or permitted the reduction by $500,111 of an intercompany loan owing to Ecomace Pty Ltd (the Second Defendant), a company of which she was also a director and controlling shareholder, and also thereby related.
40B.On or about 21 February 2005, in breach of paragraph 2(b) of the Undertakings, Winnie Ng, as a director of Ecomace, caused or permitted a dissipation of Ecomace’s asset as a unitholder in the Irving Hopkins Unit Trust by permitting Irving Hopkins, a related company of which she was a director, to mortgage the asset of the trust, being land at Hopkins Street, Footscray to the Commonwealth Bank of Australia (“CBA”) to stand as security for debts owing to the CBA by other parties.
40C.On or about 23 May 2005, in breach of paragraph 1(b) of the 2nd March Orders, Winnie Ng, as a director of Irving Hopkins and Ecomace, dissipated the assets of Ecomace by permitting or causing the sale of the Irving Hopkins land and out of the sale price of $1,920,000 caused or permitted the sum of $1,853,793.68 to be paid to the CBA, which did not constitute the repayment of any monies paid by the CBA to it.”
The wording of these charges is bewildering, whether they be read separately or together. Charges 24A, 40B and 40C themselves use the word “dissipated” or “dissipation”, thereby incorporating the same kinds of ambiguities as those which afflict the undertakings and the orders.
Since all of the other “asset dealing” charges in the amended summons plainly assume that “dissipate” (in the undertakings and orders[40]) means “dispose of” or “divest”, the reader is entitled to assume that the author of the amended summons has used the word in the same sense in the Irving Hopkins charges. Therefore, charge 24A would be read as alleging that Ecomace disposed of or divested the relevant “recoverable amount” (whatever that might mean) of $771,100 by, oddly, permitting it to be reduced to $270,989.
[40]Actually “dissipating” in the orders.
Mr Heath of counsel told me that until Mr Wilson QC was well into his case he, Mr Heath, had understood the plaintiffs’ case on this charge to be that Ecomace had “dissipated” (ie disposed of) $500,111 previously received by it from Irving Hopkins Pty Ltd.[41] This is a possible reading. Even more likely, I would have thought, is that the allegation was simply that Ecomace had obtained payment of $500,111 owing by Irving Hopkins, thereby “permitting” an asset (in the form of the debt as it previously stood) to be reduced to that extent.
[41]Transcript pp 148-150.
However, the plaintiffs’ case on the evidence was quite different. They alleged, ultimately, that the amount of $500,111 had been written off, not paid. The write-off was said to be the outcome of a series of transactions and book entries, none of which is referred to in the charge. In my view, charge 24A does not fairly identify the case ultimately sought to be put by the plaintiff.
The same applies to charge 40A.[42] It accuses Winnie Ng, as a director of Irving Hopkins, of “causing or permitting” the same “reduction” (dissipation?) as is referred to in charge 24A, albeit with some confusing changes of terminology (eg, “unitholder’s entitlement” becomes “intercompany loan”). The real case to be run was obscured all the more.
[42]At the hearing, Mr Wilson QC dropped reliance on sub-para (iii) of para 1(b) of the orders in relation to this charge.
Charge 40B is also confusing. Winnie Ng is charged in her capacity as a director of Ecomace with permitting another company, which was not bound by the undertakings, to mortgage an asset of the Irving Hopkins Unit Trust. She is said thereby to have “caused or permitted a dissipation” of Ecomace’s asset as a unitholder in the Trust. But if “dissipation” means “disposal” or “divestment”, the charge makes no sense. The true intention seems to be to accuse Winnie Ng of inaction leading indirectly to a reduction, or the risk of a reduction, in the commercial value of Ecomace’s entitlements as a unitholder of the Trust. But such a charge finds no proper foundation in para 2(b) of the undertakings. Para 2(b) does not prohibit inaction of any sort. The expression “will not dissipate”, in para 2(b) cannot be stretched to require positive steps to be taken to prevent others from doing things which impact on the commercial value of one’s assets. It is no answer, in my opinion, to say that the real allegation is that Winnie Ng herself was active in causing Irving Hopkins to mortgage the land. If she was active in that way, it was in a different capacity.
Further, the mortgaging by Irving Hopkins of the land owned by it could not itself be a dissipation, by Ecomace, of any asset belonging to Ecomace within the meaning of para 2(b). In my view, the expression “they will not dissipate any assets within the jurisdiction” must be read distributively, not collectively. It restrains each named defendant, severally, from “dissipating” any assets belonging to that named defendant. It does not prohibit one defendant from “dissipating” the assets of another defendant. Of course, a defendant, who knowingly assisted another defendant to breach the latter’s undertaking might be liable for contempt as an “aider and abettor” on that account.[43] However, charge 40B is bad in form and in substance and should be dismissed on that (additional) basis.
[43]Z Ltd v A Limited [1982] 1 All ER 556 at 566. And see paragraph 65 below.
Charge 40C suffers from substantially the same defects as charge 40B and should also be dismissed accordingly.
As mentioned in paragraph 15 above, the plaintiffs sought leave on the fourth day of the hearing to amend the Irving Hopkins charges with a view to salvaging them, but the application was refused for the reasons then given.
Mr Heath further submitted that, in any event, the evidence did not establish Winnie Ng’s alleged role in the Irving Hopkins matter to the requisite standard. Both sides filed helpful summaries of the evidence in this regard. In view of my conclusions on other points, it is unnecessary and would be tedious to go through the detail of that evidence. Suffice it to say that I agree with Mr Heath that the evidence did not sufficiently establish Winnie Ng’s alleged role in the Irving Hopkins matter.
For completeness, I would add that, in my opinion, where “aiding and abetting” is relied on in a proceeding for contempt, the prosecutor should distinctly allege in the charge and must prove to the requisite standard that the accused person acted deliberately and intentionally, ie that he or she appreciated that he or she was disobeying a currently operative order of the court.[44] In the present case, the plaintiffs did not include any such allegation in the relevant Irving Hopkins charges (or, for that matter, in any of the other “aiding and abetting” charges), nor did they endeavour to make out a case in those terms.
[44]See LED Builders Pty Ltd v Eagle Homes Pty Ltd [1999] FCA 1213 at [56]. I disagree with the plaintiffs’ submissions to the contrary in para 51 of their written submissions.
The “false affidavit” charges
In my view I am bound to dismiss the “false affidavit” charges (charges 21, 24 and 40) on the authority of the decision of the Full Court in McGoldrick v Citicorp Finance Pty Ltd[45].
[45][1990] VR 504.
In McGoldrick, the respondent obtained an ex parte order that the appellant inform the person serving the order of the whereabouts of a motor car that was in dispute and the identity of the person in whose control it was. The appellant told the person serving the order, “I don’t know. If I knew I’d tell you”. Beach J found the appellant guilty of contempt of court on the basis that his answer to the question was false. The Full Court allowed his appeal. The Full Court equated the appellant’s position to that of a witness in the witness box. A distinction had to be drawn between a refusal to answer, which will support a conviction for contempt, and a merely false answer, which will not. Except where there is no bona fide effort to answer the question at all, a witness who answers questions cannot be convicted of contempt on account of the falsity of the answers. The Court treated as applicable the holdings in Coward v Stapleton[46] and Keeley v The Honourable Mr Justice Brooking[47]. Gray J (with whom Crockett and O’Bryan JJ agreed) went on to say:
“It is also true that the appellant’s answer, if false, amounted to a non-compliance with Beach J’s order. But the mere non-compliance with an order does not represent a contempt of court. The essential ingredients of a contempt must be shown to be present. In the present context, what in my opinion had to be proved was a wilful refusal to provide the information sought accompanied by the requisite intent to interfere with or obstruct the course of justice.”
[46](1953) 90 CLR 573.
[47](1979) 143 CLR 162.
The plaintiffs have not sought to establish a case along those lines. They did not mention the McGoldrick line of cases in their written submissions. Rather, they submitted that any misstatement in an affidavit made in response to an order could potentially give rise to a finding of contempt. They based this on Witham v Holloway[48] and Advan Investments Pty Ltd v Dean Gleeson Motor Sales Pty Ltd[49]. It is true that in Witham v Holloway the appellant had been found liable in the Supreme Court of New South Wales for contempt for breach of an order to disclose by affidavit his assets and liabilities. The affidavit had indicated that he was in a better financial position than, in fact, he was. He had been charged that he “knowingly or recklessly presented a false or misleading statement of his assets and liabilities”. Hodgson J found recklessness and imposed a penalty.[50] Mr Witham appealed to the Court of Appeal. He argued, among other things, that, in accordance with Coward v Stapleton[51], a summary committal for false swearing was only justified by a specific finding of an evinced intention to leave a question unanswered or by a finding of contempt in some other respect. In a very brief judgment, Handley JA (with whom Cripps JJA and Samuels AJA agreed) distinguished Coward v Stapleton on the basis that it did not involve any disobedience of a court order. McGoldrick was not cited. Mr Witham appealed to the High Court, but only on other grounds. He did not challenge the Court of Appeal’s ruling on this point. The High Court noted what had happened below without expressing any disapproval of it, but there was no occasion for the Court to do so. Needless to say, there was no reference to McGoldrick. I do not regard McGoldrick as having been overruled by Witham v Holloway. As a (carefully considered) decision of the Victorian Court of Appeal I am obliged to follow it in preference to the decision of the New South Wales Court of Appeal.
[48](1995) 183 CLR 525.
[49][2003] VSC 201 (Gillard J).
[50]Holloway v Witham, unreported, BC 9101357, 11 December 1991.
[51](1953) 90 CLR 573.
In the other case relied on by the plaintiffs, Advan, the McGoldrick line of cases was not cited either. Although Mr Heath cited McGoldrick to me in his written submissions, Mr Wilson QC did not mention it in any of his submissions. I think that as a single judge I must apply McGoldrick and not follow Advan in this respect. Accordingly, charges 21, 24 and 40 will be dismissed.
For completeness, I add that, in any event, I am not satisfied that the misstatements relied on by the plaintiffs were deliberate. I note that the share transfers were disclosed in a timely way in public records maintained by ASIC; that the shares themselves were of a nominal value[52]; and that the transfers were in the main to other persons or entities who were subject to the undertakings. My provisional inclination would have been not to exercise the contempt jurisdiction in relation to these charges had I considered them to be “technically” made out.
[52]Albeit that the assets of the trusts administered by the companies concerned were substantial.
The admitted breach: charge 1(a)
Charge 1(a) is against Chris Ng and, as currently pressed, it is in the following terms:
“1(a) On or about 21 December 2004, and contrary to paragraph 2(c) of the undertakings given by the First Defendant to the Honourable Justice Dodds-Streeton on 13 December 2004 (‘the Undertakings’), the First Defendant caused the sum of $425,188.99 to be transferred from himself to Amber Three Pty Ltd.”
On the first day of the hearing Mr Almond QC, on instructions from Mr Ng, expressly conceded that the conduct described in charge 1(a) occurred, ie that Mr Ng caused the sum of $425,188.99 to be transferred from himself to Amber Three Pty Ltd and that that constituted a breach of paragraph 2(c) of the undertakings.
The money was transferred from an account in the name of Chris Ng at the Hong Kong and Shanghai Bank in Singapore. Chris Ng has indicated that the amount was for use for the working capital of Amber Three Pty Ltd, which was one of the companies that operated the Sydney’s Furniture and Bedding Business. That business, it now appears, had been under acquisition by interests associated with Chris Ng since mid-2003.
As indicated above, it falls to me now to consider on the evidence whether this single breach of the undertakings should be regarded as “wilful” within the meaning of the authorities and, if so, whether it should further be regarded as “contumacious”.
There can be no doubt that the transfer of the money was “wilful” in the sense that it was a conscious, deliberate act which, in fact, was in breach of the undertaking.[53] The real question is whether it should be regarded as “contumacious”.
[53]See Australian Competition and Consumer Commission v INFO4PC.COM Pty Ltd [2002] FCA 949 at [10].
In Witham v Holloway[54] the High Court equated contumaciousness with “deliberate defiance” for the purpose of determining whether a breach of an undertaking amounts to criminal contempt.
[54](1995) 183 CLR 525 at 530. See also National Australia Bank v Juric [2001] VSC 375 (Gillard J) at [160]-[163]; Law Institute of Victoria v Nagle [2005] VSC 35 (Gillard J) at [15].
I agree with Mr Almond QC that the requirement for proof beyond reasonable doubt extends not only to each element of a charge of contempt but also to the aggravating features relevant to penalty[55], including the question whether the conduct constituted a “contumacious” breach of the order or undertaking.
[55]Primelife Corp Ltd v Newpark Pty Ltd [2003] VSC 106 (Nettle J) at [39]; Pico Holdings Inc v Voss [2002] VSC 319 (Gillard J) at [54].
However, I am satisfied beyond reasonable doubt that Chris Ng, when he caused the sum of $425,188.99 to be transferred from himself to Amber Three Pty Ltd, knew that what he was doing amounted to a breach of the undertakings given by him on 13 December 2004. I am so satisfied for the following reasons. His counsel’s acknowledgement that Chris Ng was in breach of the undertakings involves an acknowledgement that paragraph 2(c) of the undertakings was clear and unambiguous and that Chris Ng in fact breached it. The only room for a finding of non-satisfaction that the breach was deliberate would lie in some suggestion that, though this paragraph of the undertakings was clear and unambiguous, nonetheless Chris Ng himself had not appreciated that what he was doing was in breach of the undertaking. His counsel have not pointed to any matters that would raise a doubt in this regard. On the other hand, counsel for the plaintiffs say, and I accept, that there were matters which heightened the likelihood that Chris Ng himself was fully conscious that what he was doing was in breach of the undertaking. They refer to the close proximity in time to the giving of the undertakings (21 December 2004 as compared with 13 December 2004). In addition they point out that the undertaking related to the proceeds of a $2.026 million transfer from a particular account and that the plaintiffs had expressed their concerns about that money clearly and strongly in court at the very hearing that led to the giving of the undertakings. The transfer was the subject of discovery orders made on 13 December 2004 which the defendants were required to comply with by 10 January 2005. They also point out that the transfer of the $425,188.99 to Amber Three Pty Ltd took the payment outside the then defendants. It deprived the plaintiffs of the security of having that amount available in the name of Chris Ng in the event of a successful outcome in the principal proceeding. It undermined the efficacy of the undertakings given by Chris Ng himself. I accept that this would have been manifestly apparent to Chris Ng at the time of the transfer. There has been no excuse or apology given for the transaction and no evidence that Chris Ng has taken any steps to correct the breach. In my view those matters in combination are sufficient to show, beyond reasonable doubt, that Chris Ng was aware that he was breaching the undertaking when he made the payment.
The plaintiffs also say that no evidence has been adduced by or on behalf of Chris Ng to suggest that the breach was unintentional. That is true. However, I am not convinced that it would have been appropriate for me to take that fact into account in assessing whether the plaintiffs have proved, beyond reasonable doubt, knowledge on the part of Chris Ng of the wrongfulness of the transaction.[56]In any event, without having regard at all to the fact that Chris Ng himself has remained silent, I am satisfied beyond reasonable doubt of his awareness that the transaction constituted a breach. In that sense, at least, the breach was “contumacious”.
[56]See Markisic v Keelty [2005] NSWSC 1124 at [51] referring to Azzopardi v The Queen (2001) 205 CLR 50 and Dyers v The Queen (2002) 210 CLR 285; compare Australian Prudential Regulation Authority v Siminton [2006] FCA 326 at [24]-[30] referring to Weissensteiner v The Queen (2000) 199 CLR 620 at 632-633 [27] and RPS v The Queen (2000) 199 CLR 620 at 632-633 [27].
On the other hand, I accept that there can be different kinds and different degrees of “contumacy”, and in the present case I accept that mitigating factors exist. As Mr Almond QC submitted, the money was brought back from overseas for the purpose of the acquisition of the Sydney’s Furniture Business, which is a business within the jurisdiction. Mr Almond QC also submitted that it is a business against which the plaintiffs could obtain relief if they obtained judgment in the main proceeding. I am not sure that Mr Wilson QC would agree that this potential avenue of recovery is as satisfactory as money sitting in a bank account in the name of Mr Ng. The parties may wish to say more about that matter at the penalty hearing. On the other hand, I agree with Mr Almond QC that there has been no suggestion that the business is not legitimate or that the purchase of the business was anything other than an arms length transaction. Whether (at the relevant time) it was an “open” transaction, as Mr Almond QC also submitted, may be questionable, viewing the matter from the plaintiffs’ perspective.
I would acknowledge that Chris Ng was not simply taking steps to put the funds beyond the plaintiffs’ reach. However it seems to me that he was so determined to complete the acquisition of the business that nothing was going to stand in his way. I am satisfied, beyond reasonable doubt, he deliberately breached his obligations to the plaintiffs and to the Court pursuant to the undertakings for that purpose.
I accept that by a letter dated 28 February 2005 Mr Ng’s solicitors made general disclosures about payments of funds for the purpose of the acquisition of the Sydney’s Furniture Business, and that they offered further progressive discovery. However, by then the relevant deed had been done.
Mr Almond QC says that the payment has not been shown to have prejudiced the plaintiffs. He bases this on the fact that disclosure has been made and that Amber Three Pty Ltd (amongst others) was made a party to the proceeding without objection and is subject to the March orders. These circumstances may be cold comfort to the plaintiffs. In my view it remains to be seen whether and to what extent the plaintiffs have been prejudiced by the payment.
It was not expressly settled at the hearing whether I should proceed now to a decision as to whether any breach found should be determined or declared to amount to a criminal contempt, ie a criminal offence, as distinct from a civil contempt. The distinction may no longer be as important as it once was[57], but it is a fraught distinction and may well be of considerable practical significance to Mr Ng: compare Seymour v Migration Agents Registration[58]. I think I should not treat the classification issue as falling to be finally decided until after I have heard the parties at the proposed “penalty” hearing. There is substantial overlap between the matters which bear on the classification issue and matters which bear on penalty. In any event, all issues as to the imposition of any actual “penalty”, including even the possibility of not exercising the contempt jurisdiction at all, were agreed to be left open for further consideration at that hearing.
[57]Director of Public Prosecutions v Zarah Garde-Wilson [2006] VSCA 295 at [17].
[58][2006] FCA 965 (Rares J).
Disposition
Subject to what counsel may say, although I intend in due course to dismiss all of the charges apart from charge 1(a), I do not propose at this stage actually to pronounce orders to that effect. It seems to me, provisionally, that orders of that kind would most appropriately be made as part of final orders disposing of the amended summons as a whole, so as not to complicate matters such as the running of time in relation to any appeals. I propose to adjourn the further hearing of the matter to a date to be fixed. I will hear counsel as to any necessary or desirable directions for that purpose.
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