Macleod v Australian Securities Commission

[1994] HCATrans 202

~

.

• •

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Brisbane No B42 of 1993

B e t w e e n -

ROBERT JAMES MACLEOD

Applicant

and

AUSTRALIAN SECURITIES

COMMISSION

Respondent

Application for special leave

to appeal

MASON CJ TOOHEY J McHUGH J

MacLeod 1 11/2/94

TRANSCRIPT OF PROCEEDINGS

FROM BRISBANE BY VIDEO LINK TO CANBERRA

ON FRIDAY, 11 FEBRUARY 1994, AT 10.38 AM

Copyright in the High Court of Australia

MR S.E. HERBERT, QC:  May it please the Court, I appear for

the applicant, with my learned friend,

MS A.I. PHILIPPIDES. (instructed by Corrs Chambers

Westgarth).

MR P.H. MORRISON, QC:  May it please the Court. I appear

with my learned friend, MS E.M. O'REILLY, for the
respondent. (instructed by G.G. Durbridge,

Australian Securities Commission)

MASON CJ:	Mr Herbert.
MR HERBERT:	May it please the Court, the point taken here

is a narrow one and the particular proposition

which we contend here to be in error is to found at

page 9 of the record in the judgment of

Mr Justice Drummond. The particular proposition is

this, that Order 37 rule 2(5) of the Federal Court

Rules:

does not require proof that the respondent has
any notice of the penal consequences of

non-compliance with the judgment or order

sought to be enforced before it can be relied

on to justify the making of a committal order.

In the court below, there was controversy concerning proof of breach by the applicant of the substance of the orders of Mr Justice Spender and

Mr Justice Cooper. Those points are not taken here

but, rather, we confine ourselves to the question

of notification of the penal consequences.

Order 37 requires, as a mandatory provision,

that any order must contain a notice specifying the

penal consequences. The order made by

Mr Justice Heerey, the first order, contained such

a notice, and that notice and order were served

upon the applicant. As to the next orders, the

order of Mr Justice Spender, orders were made

vacating the substantive orders made by

Mr Justice Heerey, but the order made by

Mr Justice Spender was never served, on the

evidence, upon the applicant. Not only was it not

served, but it did not contain the requisite notice

as to penal consequence.

May we go now to Order 37, rule 2(1) requires personal service. Subrule (3) requires this, that:

An order or a certified or office copy thereof

served under this rule must bear a notice

(naming the persons concerned) that the person

served is liable to imprisonment or to

sequestration of property if -

MacLeod 2 11/2/94

in the event of· certain consequences.

MASON CJ: Well, subrule (3), first of all, says:

An order or a certified or office copy thereof

served under this rule -

so it is looking to the document that is served.

MR HERBERT:  That is so. The order said here to be breached

is firstly the order of Mr Justice Spender and then
the order of Mr Justice Cooper which modified the

order of Mr Justice Spender. Neither of those

latter two orders contained any such notice.	They
were not served but did not contain any notice.

The first order did. It was served but it is not that order which was breached by the applicant in the three matters which -

MASON CJ: But is not that problem overcome by subrule (5)?

MR HERBERT:  That takes me directly to the point which we

seek to raise. Subrule (5) permits excusal from

the requirement of personal service in certain

circumstances. Firstly, if the person is:

present when the judgment is pronounced or the

order is made -

there was no evidence of that here. Second:

by being notified of the terms of the judgment

or order whether by telephone, telegram or

otherwise -

There was here, it is submitted, evidence

sufficient to establish that the applicant was

aware of the substantive terms of the order but

there was no evidence, it is submitted, to

establish that the applicant was aware of the penal

consequences of that order.

MASON CJ: But subrule does not require that, does it?

MR HERBERT: In our respectful submission, Your Honour, it

does because of the requirement that he have

notification of the terms. In our respectful

submission, "terms" include the penal notice. We

say that for three reasons: firstly, the natural

meaning of the language is apt to include the

consequences or the formal notification of

consequences; secondly, it accords with the general

structure of rule 2. To hold otherwise would be to

hold that in the case of personal service, there

must be a notice in the relevant form attached.

MacLeod	11/2/94
MASON CJ: But you get no support, do you, from

paragraph (a) of subrule (5) which contemplates

that it is enough that the person is present when

judgment is pronounced or when the order is made.

(a) does not contemplate that the notice forms part

of the pronouncement of the judgment or the making

of the order.

MR HERBERT:  If that is correct, with respect, then that is

so because presence at the making of the order is

to be regarded as sufficient notification of the

penal consequences.

TOOHEY J: But why is it? Is that not your problem, that

you can only overcome paragraph (a) by treating the

penal consequences as part of the order and taking

it one step further and saying that if the person

is in court, it is incumbent on the judge not only

to enunciate whatever the obligation is, but to go

further and incorporate the penal endorsement

required by rule 2(l)(a).

MR HERBERT:  It may be that the draftsman contemplated that

there would be notification in terms of the order

at the time it is made when the person is present

in court.

TOOHEY J: But unless is an obligation on the judge to do

that, and it can only arise out of paragraph (a),

then it rather detracts from your argument in

relation to paragraph (b).

MR HERBERT:	It causes us some difficulty as a question of construction, but in response we make this
submission, that relying upon (b) means that if one
personally serves the respondent, the applicant
here, then that will be ineffective to justify a
committal for contempt unless there is a notice.
On the construction favoured against us of subrule
(5) it would mean that where there is no personal
service, then it is unnecessary to give any
notification whatsoever of the penal consequences
under subrule (b) of subrule (5).

MASON CJ: Rule 2 is expressed to be subject to the rules.

So that it is to be read as subject to subrule (5).

MR HERBERT:  Yes. Our respectful submission is that the

rule was, being read subject to subrule (5), none

the less contains an otherwise mandatory

requirement of a matter of great importance.	We
draw some comfort from some remarks of

Mr Justice McHugh in Attorney-General (NSW) v Mayas

Pty Ltd, (1988) 14 NSWLR 342 at 356. At just below

para E, this is said, after referring to some

remarks in Leveller:

MacLeod 4 11/2/94

These remarks did not receive the support

of any other member of the House ..... No doubt

it is true that in many areas of the law of

contempt people publish at their peril and, as

I have pointed out, may be guilty of criminal

contempt even though they are not aware that

their conduct will interfere with the

administration of justice. But the imposition

of criminal sanctions upon a person who does

not have knowledge of the consequences of his
conduct is contrary to modern expositions of

the fundamental principles of common law

criminal liability. New categories of strict

liability in the criminal law, even in the law

of contempt should not be introduced by the courts. If they are needed, they should be introduced by the legislature.

With respect, our point is that applying the

general climate of modern thought to these
provisions leads to the conclusion that rule 2(5)

necessarily requires notification of the penal

consequences, that being part of the terms of the

order.

McHUGH J: But Mr Herbert, having regard to the fact that

moments before 9.30 am on 23 July, it would be

your client was served with a copy of the order of

Mr Justice Heerey, and the conversations with

impossible to conclude otherwise than that your

client knew well and truly that he was liable to be

punished if he did not obey the orders.

MR HERBERT:  Our response is this, Your Honour: if that is

correct, then the point that we take here does not

arise. If it is a matter of fact that conclusion
is available, then the point we make does not

arise. Could I deal with the factual point then

immediately.

He had notice of the order of

Mr Justice Heerey which expressly contained the

relevant notice of penal consequence. There is no

evidence that he was ever advised of the penal

consequences of any breach of the order of

Mr Justice Spender.

McHUGH J:  Except that that order was made by consent on his

motion.

MR HERBERT:  That is so. We submit that that permits the

inference to be drawn that he was aware of all the
substantive terms of the order, but not, since it

was not included and since there is no express

consent expressed, to the penal consequences.

There is no notification of - - -

MacLeod	11/2/94
McHUGH J:	I mean, we have the identical order apart from

the exceptions concerning the $250 per week, the

use of the car and unit and money for legal

expenses.

MR HERBERT:  Your Honour, may we take you to the

supplementary record. It is worth simply looking

for a moment at these orders.

TOOHEY J: Could I just ask you this before you do,

Mr Herbert. I get the impression reading the

judgment of the Full Court of the Federal Court

that the primary argument was whether notice of the

order had been communicated to your client rather

than the question whether he was aware of the penal

consequences.

MR HERBERT:  Your Honour, attention was focused below, it is

true, principally upon the substantive question.

However, the matter was argued below, and the

particular proposition for which we here contend

formed item 4(c) in the notice of appeal.

TOOHEY J:  I appreciate it is in the notice of appeal. How

precisely did the Full Court deal with this
particular point, namely, the need to communicate

not only the contents of the order, but the penal

consequences attached to non-compliance?

MR HERBERT:	Our response is that it did not deal with the question precisely or at all.
MASON CJ:	It did not refer to it at all.

McHUGH J: Neither did Justice Drummond, did he?

MR HERBERT:  Your Honour, Mr Justice Drummond did in the

passage at page 9 of the record to which I have

already made reference, and he construed

subrule (5) as not requiring any notice of the
penal consequence.	The construction of
Mr Justice Drummond is at page 9, lines 5 to 9.	So
His Honour dealt with it against us as a question
of construction.

TOOHEY J:	Is it part of your application for special leave to appeal to this Court that the Full Court failed
to deal with that point? It does not emerge
clearly, at least on a quick reading of the draft
notice of appeal.
MR HERBERT:	Yes.
MASON CJ:	You refer to the point in ground 2(b)(ii), but

you do not actually state that the Full Court of the Federal Court failed to deal with the point.

MacLeod 6 11/2/94

MR HERBERT:  We do not say that with complete precision, but with respect - - -

MASON CJ: Well, at all, do you?

MR HERBERT:  - - - we would submit, that the ground as drawn

is sufficient to encompass the point we make. All

we can say about the Full Court's treatment of the

matter is at page 102 of the record and at line 14:

It was submitted also that Drummond J failed

to give due consideration to the fact that no

irreversible consequences had flowed from the

acts of contempt found against the appellant

and that His Honour failed to give weight to

the fact that there had been no notification

of the penal consequences for breach of

Spender J's order as given to the appellant.

It has not been established that Drummond J

erred in these respects.

That is the only treatment of it there is.

MASON CJ: Yes.

MR HERBERT:  We should point out that His Honour below held

as a matter of fact, at page 32 of the record:

I also held that the ASC's evidence was

sufficient to entitle the Court to be

satisfied beyond reasonable doubt that

Mr MacLeod was aware that non-compliance with

Spender J's order would make him potentially

liable to some form of punishment -

Now, we challenge that as a finding of fact. We

appreciate the difficulties, but the facts are in

very short compass and as part of that exercise, we submit, it will be of assistance to Your Honours to

got to the supplementary record and notice the

difference in these orders. the supplementary record is the order of Mr Justice The first document in	Heerey, and at page 7, of the supplementary record,
one sees the notice under Order 37 rule 2 - it is
very clear:

liable to imprisonment ..... if they refuse or

neglect to do ..... or do not abstain -

But there is the notice as required under Order 37.

One then goes to the order of Mr Justice Spender,

there are substantial provisions. Then at page 13

of the record, the order concludes that the

application be adjourned as to interlocutory

relief, costs reserved, and that is the end of the

order; there is no notice.

MacLeod 7 11/2/94

McHUGH J: Except it is ·in substitution for those orders so

the notice stands, does it?

MR HERBERT: 

The applicant was held to have been in breach

not of a constructed order of Mr Justice Heerey but
of the order of Mr Justice Spender, and it is that

specific order, with all respect.

McHUGH J: 

I appreciate that. But all this is irrelevant

because your client was never served with

Mr Justice Spender's order.

MR HERBERT:	No, he was not.
McHUGH J:	So it is irrelevant, is it not, whether or not he had the notice on it or not?
MR HERBERT:	The order then in respect of which he was said to have been in breach is one that did not contain
what it must have contained under Order 37. There
is no relief from that. There is relief from
service but there is no relief from the requirement
under rule 2(3). There is no provision relieving a
party from applying that notice.

TOOHEY J: It is a curious argument, Mr Herbert, when the

second order is made in substitution of the first
order and is made by consent to argue that the
absence of the notice which formed part of the
order for which it is substituted itself contained

the requisite notice. It is a pretty technical

sort of -

MR HERBERT:  It is technical, yes, but the consequence is

imprisonment and he is to be imprisoned upon an

order which does not comply with the statute and in

respect of which there is no evidence of

notification. Indeed, it may be that the very

serving of Mr Justice Heerey's order is, in these

circumstances, likely to mislead. It contained an

express provision concerning imprisonment. The

next two did not. To the extent that His Honour

found that the applicant became aware of the terms

of those next two orders, then he was not aware

that they provided for a consequence of

imprisonment. A lay person may be forgiven for

thinking that where one order provides specifically for imprisonment and the next does not that he does not render himself liable to imprisonment for

breach of the second.

McHUGH J:	If your client had given any evidence in it and saw that he was misled, as a matter of fact, there
might be something in that but he did not give any
evidence at all.
MacLeod	11/2/94
MR HERBERT:	No, our principle submission is that the

structure of the section means this, that if there

is no requirement under rule 2(5) for notification

of the penal consequences as part of the terms of

the order than one can, in relation to contempt,

avoid giving notice by not serving the order, but

by simply informing the person of the substance of it. That cannot be, in our respectful submission,

a proper construction. Those are our submissions.

MASON CJ:  Thank you, Mr Herbert. The Court need not

trouble you, Mr Morrison.

MR MORRISON:  Thank you, Your Honour.

MASON CJ: The Court is not persuaded that the decision of

the Full Court of the Federal Court is attended

with sufficient doubt to justify the grant of

special leave to appeal. The application is,

therefore, refused.

MR MORRISON:  Your Honours, we ask for costs.

MASON CJ:  Yes. Do you wish to say anything about costs

Mr Herbert?

MR HERBERT:	No.
MASON CJ:	The application is refused with costs.

AT 10.59 AM THE MATTER WAS ADJOURNED SINE DIE

MacLeod 9 11/2/94