Mahaffy v Mahaffy

[2018] NSWCA 42

Court of Appeal

Supreme Court

New South Wales

• Summary available
• Amendment notes

Medium Neutral Citation:

Mahaffy v Mahaffy [2018] NSWCA 42

Hearing dates:

7 April 2017; 19 May 2017; 24 July 2017; 15 August 2017

Decision date:

14 March 2018

Before:

Simpson JA at [1]; Payne JA at [245]; Emmett AJA at [283]

Decision:

(1)   Appeal against conviction allowed in part;

 

(2)   Convictions in relation to counts 1, 5, 6, 8 and 13 are set aside;

 

(3)   Appeal against sentence allowed. Set aside the sentence imposed by the primary judge and in lieu thereof:

 

(a)   Sentence the appellant to 4 months imprisonment commencing on 18 December 2015.

 

(4)   Set aside the costs order made by the primary judge for the costs of the trial and in lieu thereof order:

 

(a)   each party pay their own costs of the trial.

 (5)   Each party pay their own costs of the appeal.

Catchwords:

CONTEMPT – applicable principles – nature of contempt alleged to be specified – proof beyond reasonable doubt – disobedience of court orders – orders must be unambiguous – must be wilful, not casual, accidental or unintentional

 

CONTEMPT – scandalising the court – interference with the course of justice – relevant considerations – protection of administration of justice – right to criticise courts and their decisions – scurrilous abuse

   

CONTEMPT – whether failure of accused to give evidence available in determination of guilt – where relevant facts peculiarly in knowledge of the accused

 

CONTEMPT – failure – non-compliance with costs order against company – whether sole director may be liable in contempt for failure to cause company to pay – whether company impecunious and unable to pay

 

CONTEMPT – failure to comply with subpoena – late production of documents – whether additional documents in existence and under control of accused

 

CONTEMPT – structuring financial affairs to avoid enforcement of orders by garnishee – whether capable of constituting contempt

 

CONTEMPT – sentencing

  COSTS – civil jurisdiction – where mixed outcome – where appropriate to apportion costs – whether competing costs orders are inconsistent with the purpose of quelling litigation quickly, justly and cheaply

Legislation Cited:

Civil Procedure Act 2005 (NSW), s 98
Corporations Act 2001 (Cth), s 459C
Crimes (Sentencing Procedure) Act 1999 (NSW), s 53A
Real Property Act 1900 (NSW), s 57
Uniform Civil Procedure Rules 2005 (NSW), r 42.1

Cases Cited:

Attorney General for New South Wales v Mundey [1972] 2 NSWLR 887
Attorney-General for Tuvalu v Philatelic Distribution Corporation Ltd [1990] 1 WLR 926
Australasian Meat Industry Employees Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98; [1986] HCA 46
Australian Competition and Consumer Commission v Goldstar Corporation Pty Ltd [1999] FCA 585
Australian Consolidated Press Ltd v Morgan (1965) 112 CLR 483; [1965] HCA 21
Azzopardi v The Queen (2001) 205 CLR 50; [2001] HCA 25
Bell v Stewart (1920) 28 CLR 419; [1920] HCA 68
Cardile v LED Builders Pty Ltd (1999) 198 CLR 380; [1999] HCA 18
Circuit Finance Australia v Sobbi [2010] NSWSC 789
Commissioner for Fair Trading v Rixon (No 2) [2014] NSWSC 431
D B Mahaffy & Associates v Mahaffy [2015] NSWSC 1959
D B Mahaffy & Associates v Mahaffy [2015] NSWSC 66
Doppstadt Australia Pty Ltd v Lovick & Sons Developments Pty Ltd (No 2) [2014] NSWCA 219
Ernest Hall & Sons Pty Ltd v Donlon [2011] NSWSC 1088
Ex parte Attorney-General; re Goodwin [1969] 2 NSWR 360
Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) (1998) 30 ACSR 20
Gallagher v Durack (1983) 152 CLR 238; [1983] HCA 2
Hinch v Attorney General (Vict) (1987) 164 CLR 15; [1987] HCA 56
Hurd v Zomojo Pty Ltd [2015] FCAFC 148
James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296
John Fairfax and Sons Pty Ltd v McRae (1955) 93 CLR 351; [1955] HCA 12
Kazal v Thunder Studios Inc (California) [2017] FCAFC 111
Lewis v Ogden (1984) 153 CLR 682; [1984] HCA 26
Madeira v Roggette [1990] 2 Qd R 357
Mahaffy v Mahaffy [2010] NSWSC 1358
Mahaffy v Mahaffy [2013] NSWSC 245
Markisic v Commonwealth of Australia (2007) 69 NSWLR 737; [2007] NSWCA 92
Martin v Trustrum (No 2) [2003] TASSC 50
McIntyre v Perkes (1988) 15 NSWLR 408
Nationwide News Pty Ltd v Wills (1992) 177 CLR 1; [1992] HCA 46
Parashuram Detaram Shamdasani v King Emperor [1945] AC 264
R v Baden-Clay (2016) 258 CLR 308; [2016] HCA 35
R v Gray [1900] 2 QB 36
R v Wilson; Ex parte Kisch (1934) 52 CLR 234; [1934] HCA 63
Re Wiseman [1969] NZLR 55
Shepherd v The Queen (1990) 170 CLR 573; [1990] HCA 56
Sigalla v TZ Ltd [2011] NSWCA 334
Spindler v Balog (1959) 76 WN (NSW) 391
The King v Dunbabin; Ex parte Williams (1935) 53 CLR 434; [1935] HCA 34
The King v Fletcher; Ex parte Kisch (1935) 52 CLR 248; [1935] HCA 1
The King v Nicholls (1911) 12 CLR 280; [1911] HCA 22
Trade Practices Commission v C G Smith Pty Ltd (1978) 30 FLR 368
TZ Ltd v ZMS Investments Pty Ltd [2009] NSWSC 1465
Weissensteiner v The Queen (1993) 178 CLR 217; [1993] HCA 65
Witham v Holloway (1995) 183 CLR 525; [1995] HCA 3
Zhu v Treasurer of NSW (2004) 218 CLR 530; [2004] HCA 56

Category:

Principal judgment

Parties:

David Mahaffy (Appellant)
Jeffrey Mahaffy (Respondent)
Attorney-General of New South Wales (Intervenor)

Representation:

Counsel:
P J Macarounas (Appellant)
In person (Respondent)
D Kell SC (Intervenor)

  Solicitors:
Executive Legal (Appellant)
N/A (Respondent)
Crown Solicitor’s Office (Intervenor)

File Number(s):

2016/234880

 Decision under appeal 

Court or tribunal:

Supreme Court

Jurisdiction:

Common Law

Citation:

D B Mahaffy & Associates v Mahaffy [2015] NSWSC 66

Date of Decision:

16 February 2015

Before:

Schmidt J

File Number(s):

2010/119143

HEADNOTE

[This headnote is not to be read as part of the judgment]

On 16 February 2015, the appellant was found guilty of eight counts (from a Statement of Charge of 13 counts) of contempt of court. He was later sentenced to a total term of imprisonment of 10 months, to commence from the date of his arrest. The appellant was subsequently arrested and served part of the sentence, before being released pending the hearing of his appeal.

The offences arose out of proceedings brought by the appellant, David Mahaffy, and his company D B Mahaffy & Associates Pty Ltd (“the Company”), against the respondent, his brother Jeffery Mahaffy, in the District Court and a number of related proceedings in the Common Law Division, the Equity Division and in the Court of Appeal. The contempt proceedings are the culmination of a long and bitter family dispute between the two brothers.

Most of the contempt charges arose out of the failure of the Company (and the appellant) to pay amounts of costs that had been ordered against either or both of them. Two counts related to allegations made by the appellant of corruption and improper conduct on the part of judges dealing with proceedings relating to the costs orders.

In brief the factual particulars of the eight counts on appeal can be summarised as follows:

Count 1 – failure to pay the respondent’s costs of $134,679.46 ordered by McLoughlin DCJ on 4 September 2009. This order was made against the Company and not the appellant personally.

Count 5 – failure to pay $25,000 to the respondent within 7 days as a condition of a stay of the substantive order made by McLoughlin DCJ on 16 July 2010.

Count 6 – failure by the appellant to produce documents (identified by lists made by the respondent) under subpoena by the adjourned return date of 9 November 2010. The appellant had produced documents in two tranches, the first on 6 August 2010 and the second on 12 August 2010.

Count 7 – related to a number of instances in which the appellant had, in writing, made statements about McLoughlin DCJ. The appellant claimed, inter alia, that McLoughlin DCJ had tampered with a court transcript, and that the District Court was “very corrupt”.

Count 8 – failure to pay $22,000 to the respondent specified as a condition of the ground of an adjournment in the Court of Appeal.

Count 9 – failure to pay $1,100 to the respondent for expenses incurred in relation to an unsuccessful injunction application, ordered by Rein J on 1 October 2010. The appellant was made aware of this order no later than 2 November 2010, when it was raised before White J.

Count 11 – related to four communications in which the appellant had referred to White J, in one of which the appellant accused him of corruption.

Count 13 – frustration of costs orders made by the court by the appellant structuring his own affairs and those of the Company so that all accounts except for the Company’s trust account (which was immune to compulsory acquisition by garnishee order) were without funds to satisfy garnishee orders.

Although the appellant did not initially challenge the convictions (appealing only against the severity of the sentence), pursuant to leave granted on 7 April 2017, the appellant filed an Amended Notice of Appeal, which identified 48 separate grounds of appeal against conviction. These were broken into three categories, broadly identified by the Court as “the money order charges” (Grounds 4-37), “the court behaviour charges” (Grounds 38-45), and “the subpoena charge” (Grounds 46-51).

Counts 1, 5, 8, 9, comprised the “money order charges”; with Count 13 incorporated into this category. Count 6 comprised the “subpoena charges”, and Counts 7 and 11 comprised the “court behaviour charges”.

Held

In relation to Count 1

Payne JA, (AJA Emmett agreeing at [288]), allowing the appeal:

(1)   To establish the charge of contempt by failing to comply with an order of the court it must be shown, beyond reasonable doubt, that the conduct of the alleged contemnor was a deliberate breach of the order. In the absence of an express admission or express acknowledgement of facts which demonstrate such conduct, the conclusions reached by the primary judge had to be arrived at by a process of inference: at [250]-[253].

(2) An inference may properly be drawn from the evidence in the case, and more safely drawn in the absence of rebutting evidence. This does not mean, however, that an evidential onus falls on the contemnor; the onus of proving the charge remains on the prosecutor at all times: at [255].

Weissensteiner v The Queen (1993) 178 CLR 21; [1993] HCA 65 cited; R v Baden-Clay (2016) 258 CLR 308; [2016] HCA 35 cited; Azzopardi v The Queen (2001) 205 CLR 50; [2001] HCA 25 followed.

(3)   An inference about a fact indispensable to a finding of guilt can only be drawn if there is no reasonable explanation consistent with innocence. On the evidence such an explanation existed through the insolvency of the Company at all relevant times: at [254], [256]-[270].

Shepherd v The Queen (1990) 170 CLR 573; [1990] HCA 56 cited.

(4)   It is therefore inappropriate to decide in the current proceedings whether a non-party director can be found guilty of contempt where they have failed to cause the party company to take a positive step ordered by the court: at [251] and [290]-[292].

Simpson JA, dissenting:

(5)   In proceedings where there are additional facts which would explain or contradict the inference which the prosecution seeks to draw, and they are facts which (if they exist) would be peculiarly within the knowledge of the accused, comment on the accused’s failure to provide evidence of those facts may be made. In these proceedings, it was the appellant who had knowledge of his own, and (as the sole director) of the Company’s, capacity to pay; therefore comment could correctly be made on his failure to provide such evidence: at [103]-[104].

Azzopardi v The Queen (2001) 205 CLR 50; [2001] HCA 25 considered; Weissensteiner v The Queen (1993) 178 CLR 217; [1993] HCA 65 cited.

(6)   Directors who have notice of a court order are under a duty to take reasonable steps to ensure that it is obeyed, and if they wilfully fail to do so, and the order is breached, they may be held directly liable for contempt. As the sole shareholder and director of the Company, the appellant controlled what the Company did and did not do. Where the Company could be held in contempt for failure to comply with a court order, then it follows that the appellant could also be held in contempt: at [117]-[125].

TZ Ltd v ZMS Investments Pty Ltd [2009] NSWSC 1465 considered; Sigalla v TZ Ltd [2011] NSWCA 334 considered; Zhu v Treasurer of NSW (2004) 218 CLR 530; [2004] HCA 56 considered; Attorney-General for Tuvalu v Philatelic Distribution Corporation Ltd [1990] 1 WLR 926 considered; Australian Competition and Consumer Commission v Goldstar Corporation Pty Ltd [1999] FCA 585 considered; Hurd v Zomojo Pty Ltd [2015] FCAFC 148 considered.

In relation to Counts 5 and 8

The Court, allowing the appeal:

(7)   Contempt for non-compliance cannot be found where no relevant court order exists. Requirements for payment by the appellant were not made as orders of the court, but as conditions for a stay of the substantive order (Count 5) and for the granting of an adjournment (Count 8): at [134]-[143].

In relation to Count 9

The Court, dismissing the appeal, upholding the conviction:

(8)   The appellant was aware of the order on which this Court was based; a submission that he was in “a negative asset position” by reason of a subsequent order was rejected.

In relation to Count 13

The Court, allowing the appeal:

(9)   Query whether quarantining funds with the express purpose of avoiding garnishee orders constitutes contempt. Further, there was insufficient evidence to prove the charge beyond reasonable doubt, even if it could be supported by an authority: at [235]-[236].

In relation to the “subpoena charges”

The Court, allowing the appeal:

(10) A charge of contempt constituted by failure to make adequate compliance with a subpoena must establish, not only that documents have not been produced, but that, at the return date (or adjourned return date) there were such documents in existence, and that they were in the possession or under the control of the recipient of the subpoena. It is also necessary to show that the non-production was wilfully disobedient: at [152].

Markisic v Commonwealth of Australia (2007) 69 NSWLR 757; [2007] NSWCA 92, cited.

(11) The identification by the respondent of additional documents not produced was informed speculation; it does not show with any degree of certainty whether those documents remained in existence: at [158].

In relation to the “court behaviour charges” (Counts 7 and 11)

The Court, dismissing the appeal and upholding convictions in part, but on a limited basis:

(12)   Contempt may be committed by “scandalising a court or judge”, or by “obstruct[ing] or interfere[ing] with the due course of justice”: at [170]-[174].

R v Gray [1900] 2 QB 36 applied.

(13)   The Courts seek to strike a balance between the protection of the administration of justice (in order to preserve public confidence) and the recognition of the rights of individuals to criticise, even strongly, decisions made by courts and even the courts themselves. Publication of material that tends to undermine confidence in the administration of justice, or that is likely to impair a Court’s authority however, will not be tolerated: at [176]-[209].

Australasian Meat Industry Employees Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98; [1986] HCA 46 considered; Martin v Trustrum (No 2) [2003] TASSC 50 considered; Bell v Stewart (1920) 28 CLR 419; [1920] HCA 68 considered; The King v Fletcher; Ex parte Kisch (1935) 52 CLR 248; HCA 1 considered; R v Wilson; Ex parte Kisch (1934) 52 CLR 234; [1934] HCA 63 considered; The King v Dunbabin; Ex parte Williams (1935) 53 CLR 434; [1935] HCA 34 considered; Attorney General for New South Wales v Mundey [1972] 2 NSWLR 887 considered; Gallagher v Durack (1983) 152 CLR 238 considered; Nationwide News Pty Ltd v Wills (1992) 177 CLR 1; [1992] HCA 46 considered.

(14)   In finding this class of contempt, the relevant considerations are, at [210]:

• the extent of the publication and to whom it is made;

• the likelihood or the possibility that the publication will have the effect of obstructing or interfering with the due course of justice or the lawful processes of the courts; and,

• whether the publication excites misgivings as to the integrity, propriety, or impartiality in the exercise of judicial office.

(15)   There exists a further category or sub-category of scandalising contempt in the form “scurrilous abuse”; which emerges where accusations or statements go beyond the limits of legitimate criticism of the courts and their decisions: at [214]-[219].

R v Gray [1900] ] 2 QB 36 cited; Attorney General for New South Wales v Mundey [1972] 2 NSWLR 887 applied; Re Wiseman [1969] NZLR 55 considered; Ex parte Attorney-General; re Goodwin [1969] 2 NSWLR 360 considered; Martin v Trustrum (No 2) [2003] TASSC 50 considered.

(16) The appellant’s assertions that McLoughlin DCJ tampered with the transcript of court proceedings, that the District Court was corrupt, and that White J engaged in corruption went beyond legitimate criticism. Those specific accusations were calculated to induce a lack of confidence in the ordered and fearless administration of justice: at [223].

In relation to sentencing

(17) The appeal against the convictions on Counts 1, 5, 6, 8, and 13 having succeeded, and against the convictions on Counts 7 and 11 in part, it became necessary for the Court to resentence: at [238]-[241], [271]-[273], and [282]. The time served adequately punished the appellant for the contempt established.

In relation to costs

Payne JA, (Simpson JA and AJA Emmett agreeing at [244] and [293] respectively), setting aside costs order of the trial and in lieu thereof, ordering that each party pay their own costs of both the trial and the appeal:

(18) Contempt proceedings are conducted in civil jurisdiction and attract the rule that costs follow the event: at [274].

(19) However, s 98 of the Civil Procedure Act 2005 (NSW) confers on the Court a wide discretion with respect to costs. Where there has been a mixed outcome in the proceedings, and it is appropriate to entertain the process of apportioning costs as between different issues in the proceedings, such an exercise will be carried out on a relatively broad brush basis and largely as a matter of impression and evaluation by the Court: at [275].

Doppstadt Australia Pty Ltd v Lovick & Sons Developments Pty Ltd (No 2) [2014] NSWCA 219 followed; James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 followed; Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) (1998) 30 ACSR 20 applied.

(20) The broad brush impression in the current proceedings is that the entitlement of the appellant to costs of his successful appeal would roughly be equivalent to the respondent’s entitlement to costs of the primary trial: at [279].

(21) The making of competing costs orders would almost certainly (given the history of litigation in the current proceedings) be contested in a lengthy and costly assessment; this would be inconsistent with the overarching purpose of quelling litigious disputes as quickly, justly, and cheaply as possible: at [280].

Judgment

1. SIMPSON JA: These proceedings arise out of litigation that took place over a period of years, commencing in May 2006, in the District Court (in Tamworth), the Supreme Court of New South Wales and this court. The parties to the litigation were David Mahaffy (the present appellant), D B Mahaffy and Associates Pty Ltd, and Jeffrey Mahaffy (the present respondent). The proceedings culminated in a notice of motion filed in this court on 30 November 2010, in which Jeffrey Mahaffy sought (i) an order that David Mahaffy:

“… be held in contempt of court for his conduct and actions in Court matters, as well as his repeated failure to comply with orders and directions of the District Court of New South Wales and the Supreme Court of New South Wales”,

and (ii) that a custodial penalty be imposed.

2. Attached to the notice of motion was a “Statement of Charge” that was subsequently amended on at least two occasions. The final document, a “Further Amended Statement of Charge” (the FASoC), outlined 13 instances of conduct on the part of the appellant that the respondent alleged constituted contempt. The 13 instances were treated, in the language of the criminal law, as charges or counts. It is convenient to continue to use that terminology. To each count were appended a series of particulars, in some cases numerous. All counts arose out of aspects of the manner in which the appellant had conducted the litigation.

2. The proceedings were remitted by this court to the Common Law Division of the Supreme Court. By amended notice of motion filed on 2 August 2011 the appellant sought summary dismissal of the proceedings. He was in part successful. On 28 March 2013 Garling J summarily dismissed four of the 18 counts contained in what was then the Statement of Charge, and gave leave to the respondent to file a FASoC: Mahaffy v Mahaffy [2013] NSWSC 245. Proceedings on the resulting document (the FASoC, which contained the 13 counts) took place before Schmidt J (the primary judge) on 29 September 2014. The respondent represented himself to prosecute the charge of contempt. The appellant did not appear and was not represented.

3. On 16 February 2015 the primary judge found the appellant guilty of eight out of the 13 counts itemised in the FASoC: D B Mahaffy & Associates v Mahaffy [2015] NSWSC 66. I will refer to the findings of guilt as “convictions”. On 18 December 2015 the primary judge sentenced the appellant to a fixed term of imprisonment for 10 months: D B Mahaffy & Associates v Mahaffy [2015] NSWSC 1959. In sentencing, the primary judge used the aggregate sentencing provisions of the Crimes (Sentencing Procedure) Act 1999 (NSW), s 53A. In accordance with s 53A(2)(b), her Honour indicated the sentences that she would have imposed in respect of each individual count of contempt. Since the appellant was not present at court at the time sentence was imposed a warrant for his arrest was issued and the sentence was expressed to commence from the date of his arrest. The warrant was executed on 18 December 2015, and the appellant was taken into custody.

4. The appellant appealed against the severity of the sentence imposed. He remained in custody until 28 July 2016 when he was granted conditional bail pending the hearing of the appeal. He did not, initially, challenge the convictions. His appeal was limited to the sentence imposed. He pleaded two grounds only:

(i)  that, in imposing sentence, the sentencing judge erroneously failed to give consideration to alternatives to full-time imprisonment; and

(ii)  that the sentence is too severe.

6. Written submissions, in support of these grounds, signed by counsel, were provided. As it then appeared that the respondent, who was the instigator of the charges, would not appear, the Crown Advocate (Dr Kell) sought leave to appear as amicus curiae in order to assist the court in the resolution of the appeal. Leave was given.

7. On the day the appeal was listed for hearing in this court (7 April 2017), counsel appeared for the appellant. The respondent appeared in person. Counsel for the appellant (expressing himself “with some trepidation”) sought an adjournment in order to enable the appellant to appeal against the convictions. The court determined that the appeal against sentence should proceed, but the matter then be adjourned for the purpose of allowing the appellant to file an appeal against the convictions, for which leave was granted.

8. After a hiccup that caused further delay the matter resumed on 24 July, and continued on 15 August. The appellant was represented by counsel, the respondent appeared in person, and the Crown Advocate continued to appear as amicus.

Background

9. The appellant and the respondent are brothers. The contempt proceedings are the culmination of a long and bitter family dispute between them. For present purposes, the background circumstances can be recited with relative brevity.

10. The appellant is a qualified accountant. Prior to 2009 he operated an accountancy practice through a company, D B Mahaffy & Associates Pty Ltd (DBMA), in Narrabri and Wee Waa. The appellant was the sole director, shareholder and the controlling mind of DBMA. The respondent is also a qualified accountant. He was employed by DBMA, and ran the Wee Waa office. In May 2005 the respondent suffered a stroke and was unable to work for a protracted period of time. Thereafter, disputes arose between the brothers concerning the respondent’s entitlements. These disputes did not then result in litigation. The appellant closed the Wee Waa office. The dispute between the brothers escalated when the respondent was approached by former clients of DBMA and asked to open an accountancy practice in Wee Waa, and did so. It was then that the litigation commenced. The appellant and DBMA sued the respondent in the District Court, claiming $750,000 in damages. The precise nature of the claim does not appear from the materials before this court. According to a letter written by the appellant in August 2010, his claim was for recovery of files, records and other property of DBMA, which he alleged had been unlawfully removed by the respondent. The respondent cross-claimed, naming DBMA and the appellant as, respectively, first and second cross-defendants. Again, the precise nature of the cross-claim does not appear from the evidence.

11. The litigation took an extraordinary course, some of which it will be necessary to detail below. Numerous notices of motion were filed by the appellant. Costs orders were repeatedly made against him or DBMA, none of which was met. Over a period of several years (at least between September 2009 and September 2012), numerous garnishee orders were made in favour of the respondent, against bank accounts held in the appellant’s name or that of DBMA. Initially, some of the garnishee orders produced some funds.

12. The cross-claim resulted in judgment in favour of the respondent for about $400,000 against the appellant and DBMA on a joint and several basis.

13. On 4 March 2013 the appellant was declared bankrupt and on 18 March DBMA was deregistered. (Its registration was later reinstated, and it continued to trade, although, apparently, without a director.)

The proceedings at first instance

14. The contempt proceedings took place before the primary judge on 29 September 2014, on the basis of the FASoC referred to above (containing 13 individual allegations of contempt). The respondent, as plaintiff, represented himself; the appellant did not appear, either personally or by a legal representative. A vast amount of documentary material was presented. The respondent put his evidence in the form of six affidavits sworn by him on 17 June 2011, 30 October 2013, 9 September 2014, 11 September 2014 (identical to that of 9 September), 2 April 2015 and 24 April 2015, which traced the history of the litigation, and to which were annexed a large volume of documentation.

15. Since the appellant did not appear, the respondent’s evidence was undisputed. Much, but not all, of what he asserted was supported by primary documents, such as court records and transcripts.

16. On 16 February 2016 the primary judge gave judgment. As indicated above, she found the appellant guilty of eight of the charges. She thereafter gave the appellant the opportunity to make submissions with respect to the penalty to be imposed, but he did not avail himself of that opportunity. The penalty proceedings took place on 10 December 2015, and on 18 December 2015 the primary judge imposed the sentence mentioned above.

17. Against that background, the various instances of contempt of which the appellant was found guilty may now be outlined.

Litigation chronology

18. What follows is a much abbreviated chronology of the litigation. For the purpose of this part of these reasons, and to avoid confusion, I will refer to the appellant and the respondent by their names.

19. As mentioned above, in May 2006 DBMA and David Mahaffy filed in the District Court at Tamworth a Statement of Claim, naming Jeffrey Mahaffy as defendant. On 19 July 2006 Jeffrey Mahaffy filed a cross-claim. Also mentioned above, the nature of the claim and the cross-claim are not revealed by the evidence. What may be discerned from the materials is that DBMA was named in the cross-claim as the first cross-defendant, and David Mahaffy was named as the second cross-defendant. Various orders and procedural directions were made from time to time thereafter, including for discovery and for costs. An amended statement of claim was filed (in Sydney) on 28 March 2008. It is not possible, from the materials provided, to know with precision what happened in the litigation in the period between commencement of the proceedings and the events to which I will now make reference.

20. On 12 February 2009 the matter came before Gibb DCJ. What appears to be a court record (Continuation Sheet) contains a number of notes, and documents orders and directions made. The Continuation Sheet for 12 February 2009 records, inter alia, the following:

“4  Continuation of P’s claim is subject to compliance with costs orders or is stayed instanta until costs obligation discharged.

…

Further conduct

23  …

24  P’s claim to be stayed in the event of non-compliance with costs orders.

25  Any stay of P’s claim without prejudice to cross claim which is to be heard ASAP.

26  If P’s costs obligation not met by 12 August 2009 d entitled as [sic] D’s discretion to seek orders as to:

i  stay of P’s claim until costs are paid in full.

ii  sever cross claim and proceed to hrg on the cross claim alone.

Costs orders

27  Vacate previous costs orders against D on P’s claim.

28  P to pay all D’s costs thus far on P’s claim (i.e., not cross claim) on an indemnity basis, including all costs incurred and thrown away by reason of second further amended statement of claim up to and including today.

29  D to inform P of costs for which payment is required within 3 weeks (i.e. by 6 March 2009) with appropriate detail and substantiation.

30  All costs payable by P are to be paid by 12 August 2009.”

21. It is apparent that “P” is a reference to DBMA (as plaintiff) and “D” is a reference to Jeffrey Mahaffy (as defendant). (This court was informed that, by this time, David Mahaffy was no longer a party to the proceedings. The circumstances in which he ceased to be a party are not disclosed. In the appellant’s letter of August 2010, referred to above, he said that he had never properly been a party and was removed by consent in 2008.)

22. Jeffrey Mahaffy deposed in his affidavit of 17 June 2011 that the costs were not paid by 12 August 2009 as required by the Order numbered 30.

23. On 26 August 2009 Jeffrey Mahaffy filed in the District Court a notice of motion seeking an order for the immediate payment “from the plaintiff for a determined amount”, pursuant to orders made on 12 February 2009.

24. On 4 September 2009 the matter came before McLoughlin DCJ. A “Continuation Sheet” records that his Honour made, inter alia, the following notes and orders:

“Judge Gibb made orders on 12/2/09 that Plff’s prosecution of claim be stayed until Def’s costs are paid.

- Pursuant to s 98(4) Civil Procedure Act [2005] I order Plff [that is, DBMA] to pay costs in the sum of $134,679.46 being total of costs payable pursuant to the order made.

- I further order by way of confirmation that Plff’s prosecution of the claim be stayed until those costs are paid.

- I order Plff to pay Def’s costs of this NOM in the sum of $2000.

…”

25. According to the affidavit of Jeffrey Mahaffy, no payment has been made pursuant to the orders of Gibb DCJ or those of McLoughlin DCJ. It is again to be observed that “the Plff” against whom the orders were made was not David Mahaffy, but DBMA. The failure of DBMA to pay the costs ordered gave rise to Count 1 of the FASoC. In framing Count 1 as he did, Jeffrey Mahaffy plainly recognised that the orders were made against DBMA and not against David Mahaffy. Count 1 was, accordingly, framed in the following terms:

“1.  David Mahaffy challenged the authority of the Court, i.e. the authority of Judge McLoughlin and committed contempt of court by failing to have DB Mahaffy & Associates Pty Ltd pay $136,679.46 to Jeffrey Mahaffy pursuant to orders made on 4 September 2009 by the District Court of New South Wales.”

The primary judge found David Mahaffy guilty of this count and specified an indicative penalty of a term of imprisonment of 4 months.

26. On 12 November 2009 Jeffrey Mahaffy filed two notices of motion, one of which claimed the following orders:

“1 Pursuant to s 98(1) of the Civil Procedure Act 2005, that Orders 1 and 3 made by the Court on 4 September 2009 also apply to the Plaintiffs Director being David Bruce Mahaffy.

2 Alternatively, Pursuant to Section 42.3(2)(e) of Uniform Civil Procedure Rules 2005, that Orders 1 and 3 made by the Court on 4 September 2009 also apply to the Plaintiffs Director being David Bruce Mahaffy.

3  That in addition to the Plaintiff, the Court orders David Bruce Mahaffy to pay costs in the sum of $136,679.46 to the Defendant.”

27. It seems that on 28 September 2009 DBMA also filed a notice of motion, seeking to vacate the orders of 4 September 2009; in response, Jeffrey Mahaffy requested that “the plaintiff” (DBMA) be ordered to make some payment in respect of the costs orders. McLoughlin DCJ agreed and, on 19 November, ordered:

“I order Plff to pay into court, for the court to pay to Def [defendant – Jeffrey Mahaffy], the sum of $15,000 – as a part payment of costs ordered by Gibb J [sic].”

28. The matter returned to McLoughlin DCJ on 7 December 2009. The “Continuation Sheet” records the following:

“… Note that the plaintiff [DBMA] has not complied with the court order to pay the defendant’s costs of $15,000. Costs to be paid by 10am Thursday 10.12.09. Plaintiff Solicitor to advise defendant of the DC registry into which the outstanding costs have been paid.”

29. According to the affidavit of Jeffrey Mahaffy, that payment has not been made. This gave rise to Count 2 on the FASoC which is framed as follows:

“David Mahaffy challenged the authority of the Court, i.e. the authority of Judge McLoughlin and committed contempt of court by failing to have DB Mahaffy & Associates Pty Ltd pay $15,000 to Jeffrey Mahaffy within 3 days pursuant to orders made on 7 December 2009 by the District Court of New South Wales.”

30. Again, it can be seen that Jeffrey Mahaffy recognised the difficulty in holding David Mahaffy legally responsible for the non-payment of costs ordered against DBMA.

31. The primary judge dismissed this charge.

32. On 5 March 2010 the matter was again before McLoughlin DCJ. What appears to be a court document records the following:

“D’S N/M 12.11.09 IS DISMISSED AND I ORDER PTF PAY D’S COSTS OF THIS N/M. D’S N/M 10.12.09 IS DISMISSED AND I ORDER PTF AND 2DN X/DEF [that is, David Mahaffy] PAY DEFS COSTS OF THIS N/M. 2ND X/DEFS N/M RET INSTANTER 25.2.10 IS DISMISSED. I GRANT LEAVE TO DEF FILE AM STAT OF X/CL BE SERVED W/I 14DYS, MAKE NO ORDER AS TO COSTS OF N/M OF 25.2.10. PTF N/M. PT F N/M OF 28.9.09 IS STILL ON FOOT AND IS S/O P/H B4 ME ON 14.5.10. COSTS ORDER MADE 4.9.10 I ORDER 2ND X/DEF [David Mahaffy] BE JOINTLY LIABLE FOR COSTS ORDER OF GIBB J 12.2.09 AGAINST PTF …” (Emphasis added)

33. What emerges from this record of orders is that McLoughlin DCJ made an order that David Mahaffy (as second cross-defendant) pay Jeffrey Mahaffy’s costs of the notice of motion, and, importantly, extended the costs orders previously made against DBMA by Gibb DCJ on 12 February 2009, and quantified by himself on 4 September 2009, to include David Mahaffy. He did not, however, fix a time within which payment was to be made.

34. On 26 March 2010 Jeffrey Mahaffy filed a notice of motion seeking a number of orders, of which the sixth was:

“That the cost orders made on 5 March 2010 in favour of the Defendant for the Notice of Motions filed 12 November 2009 and 10 December 2009 be quantified and payable immediately.”

35. On 16 April 2010 a hearing took place before McLoughlin DCJ. The record indicates the following:

“I order both x/defs [that is, DBMA and David Mahaffy] pay to x/claimant [Jeffrey Mahaffy] forthwith the sum of $28,655.83.”

36. Jeffrey Mahaffy has deposed that those costs have not been paid.

37. These circumstances gave rise to Count 3 in the FASoC, which asserts:

“David Mahaffy challenged the authority of the Court, i.e. the authority of Judge McLoughlin and committed contempt of court by failing to pay $28655.83 to Jeffrey Mahaffy forthwith pursuant to orders made on 16 April 2010 by the District Court of New South Wales.”

The primary judge dismissed this count.

38. On 11 May 2010 Jeffrey Mahaffy filed a further notice of motion in which he sought, effectively, summary judgment on the cross-claim.

39. On 14 May 2010 a hearing of this notice of motion took place before McLoughlin DCJ. David Mahaffy, through his legal representative, offered security by way of mortgage over his property at Narrabri. As a result, McLoughlin DCJ ordered:

“By consent I order xdef D.B – Mahaffy to enter into a mortgage in the form approved by Law Society of NSW in the sum of the costs order made against him by me on 16/4/10 plus interest from that date in accordance with those prescribed by District Court Act and Rules. Such mortgage to be executed by xdef DB Mahaffy and forwarded to def/xclaimaint J Mahaffy by 4pm on 18/5/10 and such sum to be payable by 4pm on 27/5/10 and to include recitals and/or terms for immediate possession should that sum not be paid.”

40. Jeffrey Mahaffy deposed that a registered mortgage in his favour was not provided in accordance with the order by 18 May 2010, although such a document was provided on 28 June 2010. That the mortgage was not provided within the time specified was not the basis for a separate count. Rather, Count 4 was framed as follows:

“David Mahaffy challenged the authority of the Court, i.e. the authority of Judge McLoughlin and committed contempt of court by failing to pay $28,655.83 of his applicable interest to Jeffrey Mahaffy by 27 May 2010 pursuant to orders made on 14 May 2010 by the District Court of New South Wales.”

The primary judge dismissed Count 4.

41. On or about 23 September 2010 DBMA and David Mahaffy filed in the Equity Division of the Supreme Court a summons seeking interlocutory orders restraining the sale of the Narrabri property (pursuant to the mortgage granted to Jeffrey Mahaffy) and a stay of the District Court orders of 4 September 2009, 16 April 2010 and 14 May 2010, a final order setting aside the mortgage, and a declaration that Jeffrey Mahaffy was not entitled to exercise a mortgagee’s power of sale without first having served notice under s 57(2)(b) of the Real Property Act 1900 (NSW).

42. An affidavit in support of the application was sworn by David Mahaffy. The basis of the application appears to have been that David Mahaffy wished to challenge the costs orders in respect of which the mortgage had been granted, and that he had felt under pressure to agree to executing the mortgage documents. He gave the usual undertaking as to damages. In doing so, he deposed, in the affidavit:

“I have an unencumbered home, which will be available to make good that undertaking in the event it was ever required to be honoured.”

43. On the same day, after an ex parte hearing, an interim order was made restraining Jeffrey Mahaffy from selling the Narrabri property. On 1 October 2010, after a (presumably contested) hearing, Rein J in the Equity Division ordered that the summons be dismissed and ordered DBMA and David Mahaffy within seven days to pay Jeffrey Mahaffy $1100 for expenses associated with the application.

44. Jeffrey Mahaffy deposed that no money has been paid by either DBMA or David Mahaffy.

45. The failure to make that payment gave rise to Count 9 in the FASoC, which was in the following terms:

“David Mahaffy challenged the authority of the Court, i.e. the authority of Judge Rein and committed contempt of court by failing to pay $1100.00 to Jeffrey Mahaffy within 7 days pursuant to orders made on 1 October 2010 by the Supreme Court of New South Wales.”

David Mahaffy was convicted of this count. The indicative penalty stated was a term of imprisonment of 2 months.

46. On 5 July 2010 Jeffrey Mahaffy filed and served on DBMA and David Mahaffy subpoenas to produce documents. The schedule to each subpoena identified bank records and tax invoices as the documents required to be produced. The return date was 16 July 2010. Each subpoena named Jeffrey Mahaffy as the contact person.

46. On 8 July 2010 David Mahaffy, identifying himself as the Managing Director of DBMA, wrote to Jeffrey Mahaffy, saying:

“In respect to above [subpoenas] what issue does the production of these documents relate to? There is no issue before the District Court that these subpoenas relate to. In respect to these, I will not be complying with production of documents in your Subpoena, no valid reason exists.”

48. The following day, 9 July 2010, Jeffrey Mahaffy responded by asserting that the subpoenas had:

“… a legitimate forensic purpose for evidence in support of the Notice of Motion filed for the Defendant on 11 May 2010 … [and] for evidence in support of the relief claimed by the Defendant in the Further Amended Statement of Cross-Claim …”

He noted that, unless the subpoenas were set aside, they must be complied with in full.

49. No documents were produced by either DBMA or David Mahaffy by 16 July. On that day the return date was extended to 23 July, with leave granted to DBMA and David Mahaffy to file notices of motion seeking to have the subpoenas set aside. By 23 July no documents had been produced. The return date was further extended to 27 July. A direction was given to DBMA and David Mahaffy to file, by 26 July, affidavit evidence addressing their failure to appear and their failure to comply with the subpoenas.

50. No affidavits were filed. A further extension was granted to 6 August, with the warning that if there were a failure to comply, the defences to the cross-claim would be struck out.

51. On 6 August a box of documents was deposited at the court. Jeffrey Mahaffy inspected the documents and formed the view that they did not fully meet the requirements of the subpoena. He compiled two lists of what he considered to be the missing documents, one with respect to DBMA and one with respect to David Mahaffy. Further documents were produced on 12 August. Jeffrey Mahaffy considered that these also failed fully to answer the description of documents in the schedules to the subpoenas. He compiled two further lists. The matter was listed before McLoughlin DCJ on a number of occasions with respect to the subpoena compliance issues.

52. What Jeffrey Mahaffy asserts to be noncompliance (or inadequate or incomplete compliance) with the requirements of the subpoenas is the basis for Count 6 in the FASoC, which is in the following terms:

“David Mahaffy challenged the authority of the Court, i.e. the authority of Judge McLoughlin and committed contempt of court by failing to comply with Subpoena to Produce served on him, that was filed on 5 July 2010 and returnable on 16 July 2010 in the District Court of New South Wales.”

David Mahaffy was convicted of this count; the indicative sentence specified was a term of imprisonment of 6 months.

53. It seems that, on a date not disclosed, a summons seeking leave to appeal against the costs orders of 4 September 2009 and 16 April 2010 was filed on behalf of DBMA and David Mahaffy in this court.

54. The summons was listed for hearing on 23 September 2010. DBMA was represented by counsel, who sought an adjournment. The matter was heard by Giles JA and Sackville AJA. After some discussion Giles JA said:

“To try and get to some definity, our current thinking is that there should be an adjournment for 2 weeks, the matter will come back before us because we know something about it and the adjournment will be on terms that there be paid within 7 days to Mr Jeffrey Mahaffy $2,000, which we would summarily assess as compensation for loss of his income and expenses in coming to court today for no purpose and further sum of $20,000, which we again summarily assess on the basis that at least that amount will end up being payable as the costs. The sanction for that will be reminding the parties that if those sums are not paid, there is a doctrine that the court will not hear a party who is in contempt of orders of the court. So that in 2 weeks’ time if the sums are not paid there would be a very real question about whether the application for leave to appeal would be heard.”

55. The hearing concluded, with the court fixing 8 October as the date for resumption, and saying:

“And as a condition of the adjournment and in addition we order that the applicants [DBMA and David Mahaffy] pay to the respondent [Jeffrey Mahaffy] the sum of $2,000 in respect of his wasted attendance at court today and the further sum of $20,000 in part payment of the costs payable pursuant to the order of Judge Gibb in both cases within 7 days.”

56. The matter was finally before the court on 3 December 2010. DBMA was represented by the appellant. The respondent appeared in person. There was evidence before the court that no part of the $22,000 – specified as the “terms” on which the adjournment had been granted – had been paid. After hearing the appellant and the respondent, the court dismissed the application for leave to appeal. One of the factors taken into account in the court’s reaching that decision was the failure of the appellant to make the payment of $22,000.

57. Jeffrey Mahaffy has deposed that he has not been paid $22,000 or any amount by DBMA or David Mahaffy. This was the foundation for Count 8 of the FASoC, which was in the following terms:

“David Mahaffy challenged the authority of the Court, i.e. the authority of Judge Giles and Justice Sackville and committed contempt of court by failing to pay $22000 to Jeffrey Mahaffy within 7 days pursuant to orders made on 23 September 2010 by the Supreme Court of New South Wales.”

David Mahaffy was convicted of this count. The indicative penalty specified was imprisonment for 4 months.

58. The summons seeking leave to appeal returned to this court, again constituted by Giles JA and Sackville AJA, on 8 October 2010. David Mahaffy appeared in person. Jeffrey Mahaffy did not appear (he later deposed in an affidavit that he had been late, and had attended the wrong court).

59. The transcript records that David Mahaffy said:

“I might bring it to your attention that we were in the District Court yesterday in front of Judge McLoughlin and he adjourned the matter to 9 November where he is actually going to revisit that second costs order of $28,655 next month on the basis I supplied a substantial affidavit which is quite detrimental to my brother in respect that it proves that he didn’t even travel for most of the time and didn’t incur the expenses, so Judge McLoughlin is actually going to hear that next month, revisit that costs order. If that gives you any bearing or help.”

60. He then informed the court that he proposed to file a notice of motion in the District Court seeking to have the costs orders set aside. The matter was adjourned to 3 December 2010.

61. This gave rise to Count 10 on the FASoC, which was in the following terms:

“David Mahaffy challenged the authority of the Court, i.e. the authority of Justice Giles and Justice Sackville and committed contempt of court by knowingly misleading the Supreme Court of New South Wales on 8 October 2010 by falsely informing the court that the District Court of New South Wales had agreed to and was going to revisit old cost orders and judgments on 9 November 2010 that were the subject of the current Supreme Court Summons application.”

This count was dismissed.

62. Notwithstanding that the summons filed on 23 September 2010 (seeking injunctive relief in respect of the sale of the Narrabri property) was, on 1 October 2010, dismissed, on 28 October David Mahaffy filed a summons in the Equity Division, again seeking orders restraining the sale of the Narrabri property, this time pending hearing of the application for leave to appeal against the costs orders, and, alternatively, an order that money be paid into a Supreme Court trust account pending hearing of the application for leave to appeal.

63. The application was supported by two handwritten affidavits, in which David Mahaffy asserted that he had not been served with “a 57(2)(b) notice”, and made other assertions about the validity of the proposed option. These latter assertions appear to have been rejected by the judge hearing the application.

64. He appears also to have relied upon the affidavit which he had filed in support of the earlier application, although this affidavit was given a new date and new number.

65. In any event, on 28 October 2010 David Mahaffy was successful in obtaining a second temporary injunction restraining sale of the property. However, on 2 November 2010 White J dismissed the second summons with an order that David Mahaffy pay Jeffrey Mahaffy’s costs of those proceedings: Mahaffy v Mahaffy [2010] NSWSC 1358.

66. Thereafter, and notwithstanding the dismissal of the two summonses, David Mahaffy, on five separate occasions, filed in the Land and Property Management Authority caveats claiming an interest in the Narrabri property, which had the effect of preventing its sale.

67. This course of conduct gave rise to Count 12 in the FASoC, which was in the following terms:

“David Mahaffy challenged the authority of the Court, i.e. the authority of the District Court of New South Wales and committed contempt of court by filing of two unsuccessful Summons applications in the Supreme Court of New South Wales, seeking injunction to stop the sale and settlement of sale of property as well as the filing of two Caveats with the Land & Property Management Authority to renig [sic] on a Mortgage offered and consented by him for satisfaction of a cost order in favour of Jeffrey Mahaffy”

This count was dismissed.

68. On 25 January 2011 judgment was given in favour of Jeffrey Mahaffy against DBMA. (This judgment does not appear in the materials provided to this court; it may be that it was entered as a default or summary judgment.) On 24 February 2011, judgment was entered in the amount of $390,333.43. (Curiously enough, the liability was expressed to be on a “joint and several basis”, although only DBMA was identified as a party. This may be because, although David Mahaffy was removed as plaintiff in the original proceedings, he remained a cross-defendant.)

69. On 16 July 2010, dealing with Jeffrey Mahaffy’s notice of motion of 26 March 2010, McLoughlin DCJ ordered:

“… I make an order quantifying costs against D B Mahaffy in the same sum as quantified against the company.

- I stay that order on conditions and I order that costs ordered by me on 5/3/10 in favour of Def against David Mahaffy be quantified in the sum of $134,679.46 and I stay execution of that conditional upon:

1)  D Mahaffy to pay J Mahaffy sum of $25,000 within 7 days

…

- I order D Mahaffy pay costs of J Mahaffy of this NoM …”

70. At the same time, he dealt with a notice of motion filed by DBMA on 28 September 2010. As no copy of this notice of motion appears in the materials before this court, it is not clear what orders were sought. In any event, what his Honour said in relation to that notice of motion was:

“I do not make the orders sought but stay until further order conditional upon $25,000 being paid within 7 days (as above) by D B Mahaffy.

- I grant leave to D Mahaffy to seek similar relief as to stays and/or a variation of my original order when and if Ms Daley’s evidence is to hand.

…”

71. Jeffrey Mahaffy deposed:

“The Plaintiff failed to utilise the opportunity given by the Court and failed to comply with stay conditions by not paying any amount to the Defendant within the seven days, or in fact at all since.”

72. This gave rise to Count 5 in the FASoC, in the following terms:

“David Mahaffy challenged the authority of the Court, i.e. the authority of Judge McLoughlin and committed contempt of court by failing to pay $25,000 to Jeffrey Mahaffy within seven days pursuant to orders made on 16 July 2010 by the District Court of New South Wales.”

The appellant was convicted on this count. The primary judge specified an indicative sentence of imprisonment for 3 months.

73. Counts 7 and 11 both concern a variety of statements made by David Mahaffy that were derogatory or disrespectful of the courts, or of individual judges. Count 7 was framed in the following terms:

“David Mahaffy challenged the authority of the Court, i.e. the authority of Judge McLoughlin and committed contempt of court by making various verbal allegations before the court and statements in affidavits and letters tendered to the court that Judge McLoughlin has made ‘incorrect orders’ and ‘illegal orders’ and that Judge McLoughlin is biased towards him.”

74. Subscribed to the charge were more than six pages of particulars. Eleven separate publications were relied on. These included letters to judges or employees in either the District Court, the Supreme Court or the Court of Appeal, and affidavits and notices of motion filed in various proceedings.

75. There is no question that the content of the documents was abusive and, to put it mildly, intemperate.

76. It would not be a useful exercise to attempt to set out the entirety of the matters of which complaint is made. A sample will suffice.

77. In a letter directed to the associate to the Acting Chief Judge of the District Court dated 27 August 2010, headed “Formal complaint against Judge McLoughlin of District Court”, David Mahaffy complained that costs orders made were “incorrect” or “totally incorrect”, and went on to say that “this is biased to the Plaintiff”. He went on to assert that McLoughlin DCJ “continually makes biased remarks pointed at the Plaintiff [DBMA] and myself”, described him on at least three occasions as “totally biased” and said that he would make a formal complaint with the Judicial Commission of New South Wales. In a letter dated 5 October 2010 addressed to the associate to McLoughlin DCJ, he made assertions of bias on the part of McLoughlin DCJ. In various notices of motion and affidavits filed in the Supreme Court and the District Court over a period between October 2010 and April 2011, and letters addressed to the District Court and this court, he repeated his allegations of bias, of “incorrect orders” and stated that McLoughlin DCJ was “under investigation”.

78. On 3 December 2010 David and Jeffrey Mahaffy appeared before this court, constituted by Giles JA and Sackville AJA, in a proceeding to which reference has already been made. That was the proceeding in which David Mahaffy was finally refused leave to appeal against the orders of McLoughlin DCJ. During the course of that hearing, he said (as recorded in the transcript):

“No. No I’m telling you what I think of you. This is absolutely bullshit. Now I have appealed because first of all the costs orders are incorrect. Okay? We have a biased judge down in the District Court who hates my guts. Okay? And I hate his guts back too and when I finish with him he won’t have a job. Now you are supposed to be unbiased.”

Giles JA responded by telling David Mahaffy to be quiet or he would be removed. He said that David Mahaffy would no longer be heard. The transcript records that David Mahaffy responded:

“Well I’d like to feel that you won’t be having it heard by you. Thank you very much for today.”

79. David Mahaffy continued in other correspondence and communications to assert bias on the part of McLoughlin DCJ. In a letter addressed to this court dated 14 March 2011, he wrote:

“Judge McLoughlin is under investigation by the judicial system (Ernie Smack [sic – Schmatt]). There is substantial evidence to show bias and unwarranted and incorrect cost orders. There is evidence to show tampering of court tapes before transcript section. Judge McLoughlin has made unwarranted and biased remarks about me in open court and will be sacked and compensation given to me. The District Court is very corrupt at the moment and a full judicial and government inquiry will show this … Also this matter cannot be heard until the full investigation by judicial system is finished which will show gross corruption and bias by Judge McLoughlin with gross incorrect cost orders.”

80. In an affidavit filed in the Supreme Court he again asserted bias on the part of McLoughlin DCJ and again said that the judge had:

“… even tampered with the tapes so as not to incriminate himself further.”

81. As indicated, this course of communication gave rise to Count 7, of which David Mahaffy was convicted and in respect of which an indicative sentence of imprisonment for 8 months was specified.

82. Count 11 concerned similar conduct in relation to White J, then of the Equity Division of the Supreme Court of New South Wales. The count is framed in the following terms:

“David Mahaffy challenged the authority of the Court, i.e. the authority of Justice White and committed contempt of court by making statements in affidavits tendered to the court that Justice White has made ‘incorrect orders’ and ‘illegal orders’ and is also biased towards him.”

83. Three items of correspondence and one notice of motion were particularised as the foundation for this count.

84. In a notice of motion filed in the Supreme Court on 10 November 2010, David Mahaffy wrote:

“No hearing of Notices of Motion in Supreme Court by Judge White, as twice verbal altercation with Judge White.”

85. In a letter dated 10 March 2011 addressed to the Supreme Court, David Mahaffy advised that, in relation to proceedings to which he referred, he would object to certain judges (whom he did not name) hearing the matter, on the ground of bias.

86. In a second letter dated 29 June 2011 addressed to the Supreme Court, he wrote:

“I have had two run ins with Judge White gave two incorrect decisions. Judge White is biased towards me and my company and as such I wish to have this morning’s hearing reheard before another Judge, and a stay on his order. I will not allow Judge White to appear before me ever again and a full investigation will be conducted into this matter. Please organise this matter to be reheard please note a full investigation into this matter will be organised into biased judges.”

87. Finally, in a further letter to the Supreme Court dated 29 July 2011, David Mahaffy wrote:

“On 29/6/2010 a biased Judge White heard the matter …

… I have had Judge White before me on two other cases with gross bias being shown … Judge White dismissed my case illegally … in those cases extreme bias and corruption being evidence. Judge White dismissed current subpoenas without any logical reason … Thirdly I will not allow Judge White to appear before me again, as after investigation it will show gross bias and corruption.”

88. David Mahaffy was convicted of this count and an indicative sentence of 6 months was specified.

89. Between September 2009 and September 2014 Jeffrey Mahaffy issued numerous garnishee orders directed to financial institutions in which he believed either David Mahaffy or DBMA held accounts.

90. David Mahaffy thereafter took steps to have his income from his accountancy practice paid into the practice’s trust account, which was immune from garnishee orders. This gave rise to Count 13 in the FASoC which was in the following terms:

“David Mahaffy challenged the authority of the Court, i.e. the authority of the District Court of New South Wales and committed contempt of court by conducting his financial affairs and operating his bank accounts so as to deliberately avoid enforcement of Garnishee Court Orders for judgments and costs orders owing by him and D B Mahaffy and Associates Pty Ltd to Jeffrey Mahaffy.”

David Mahaffy was convicted of this count. An indicative penalty of imprisonment for 4 months was specified.

91. It will be seen that the convictions fall generally into four categories: (i) contempt constituted by disobedience of court orders (generally orders for payment of costs); (ii) contempt constituted by conduct in and around the various proceedings that, it was alleged, brought the legal system into disrepute (these were, generally, abusive, contemptuous and vexatious letters or documents filed in proceedings); (iii) contempt constituted by failure to comply with a subpoena; and (iv) contempt constituted by conduct designed to frustrate the orders of the courts.

The primary judgment

92. Drawing on the judgment of Garling J in Commissioner for Fair Trading v Rixon (No 2) [2014] NSWSC 431, the primary judge set out the relevant applicable legal principles. I paraphrase for brevity:

• a charge of contempt should specify the nature of the contempt by providing proper particulars: Lewis v Ogden (1984) 153 CLR 682 at 693; [1984] HCA 26;

• a charge of contempt must be proved beyond reasonable doubt: Witham v Holloway (1995) 183 CLR 525; [1995] HCA 3;

• contempt may be constituted by a breach of a court order: for example Trade Practices Commission v CG Smith Pty Ltd (1978) 30 FLR 368 at 375; Spindler v Balog (1959) 76 WN (NSW) 391; Circuit Finance Australia v Sobbi [2010] NSWSC 789 at [10];

• there can be no conviction for contempt by breach of an order which is ambiguous: Australian Consolidated Press Ltd v Morgan (1965) 112 CLR 483; [1965] HCA 21;

• disobedience of court orders may constitute contempt: Australasian Meat Industry Employees’ Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98 at 106, 107; [1986] HCA 46;

• where contempt is said to consist of failure to comply with an order of the court, it must be demonstrated that the contempt was wilful, and not merely casual, accidental or unintentional: Mudginberri Station.

93. Having regard to the grounds of appeal, an important paragraph in the judgment is [30], which I set out in full:

“[30]   The Court’s contempt power extends to third parties who, whilst not themselves bound by an order, conduct themselves so as to obstruct the course of justice (see Cardile v LED Builders Pty Ltd [1999] HCA 18; (1999) 198 CLR 380 at [30]). Persons who are not personally bound by a court order, but who have knowledge of its terms and procure those who are bound by it to contravene or otherwise thwart the order, are directly liable for their independent contempt, committed in obstructing the course of justice (see ZHU v Treasurer of NSW [2004] HCA 56; (2004) 218 CLR 530 at [122]). A director such as Mr David Mahaffy can thus be guilty of contempt even in proceedings to which the director is not a party and where the order the subject of the contempt charge was made against the company and not him (see Sigalla v TZ Limited [2011] NSWCA 334).”

Those observations are specifically applicable to Count 1, in which the appellant was convicted of a count of disobedience to a court order constituted by his failure to ensure that DBMA, against whom the order was made, complied.

94. With respect to those counts concerning derogatory or disrespectful comments about judicial officers, the primary judge stated the relevant principles as follows (again paraphrasing for brevity):

• conduct constituting a baseless attack on the integrity or impartiality of courts or judges may constitute a contempt: R v Fletcher; Ex parte Kisch (1935) 52 CLR 248; [1935] HCA 1; Gallagher v Durack (1983) 152 CLR 238 at 243; [1983] HCA 2;

• adverse imputations upon courts of justice, which, if continued, are likely to impair their authority, are capable of constituting contempt: R v Dunbabin; Ex parte Williams (1935) 53 CLR 434; [1935] HCA 34 at 447;

• words used, or conduct engaged in, in the face of the court, or in the course of proceedings, which are such as would interfere, or tend to interfere with the course of justice, may constitute contempt: Parashuram Detaram Shamdasani v King Emperor [1945] AC 264; Lewis at 688;

• “the wilful insult of a Judge in the course of proceedings necessarily interferes, or tends to interfere with the course of justice, however, mere discourtesy falls short of wilfully insulting conduct which is the hallmark of contempt: Lewis at 688-689”: cited by Garling J in Mahaffy v Mahaffy [2013] NSWSC 245 at [27].

These principles are uncontroversial.

95. At a number of points in the judgment, in the consideration of the individual counts, the primary judge referred to the failure of the appellant to participate in the hearing or to raise issues that might have provided an answer to one or more of the charges. She recognised that a possible defence to a charge of contempt by non-payment of a money order is impecuniosity. In that context, by way of example, she said:

“[55]  By his failure to take the opportunity he has had to defend the charges, Mr David Mahaffy must be taken finally not to challenge the case advanced against him in this regard.”

Later, she said (in her consideration of Count 5):

“[98]  The evidence establishes beyond reasonable doubt that Mr David Mahaffy’s failure to comply with the order was deliberate and wilful. As I have already explained, the evidence does not establish that he was not then able to comply with the order. Mr David Mahaffy has not appeared to discharge the evidentiary onus which fell upon him in that regard.”

96. On a number of occasions she referred to the evidence adduced by the respondent as “unchallenged”. She specifically referred to the failure of the appellant to give or call evidence in relation to the capacity, either of himself or of DBMA, to meet the costs orders made.

97. The primary judge then dealt in detail with each of the counts in the FASoC. She found that, of the 13 counts, five were not proved beyond reasonable doubt, and that eight were so proved. The most convenient course is to explain her reasons in relation to each of those counts when dealing with the grounds of appeal.

The appeal

98. Pursuant to leave granted on 7 April 2017, an amended notice of appeal was filed, which identified 48 separate grounds of appeal against conviction. These were broken into three categories, substantially representing the categories of conviction outlined above, and identified as “the money order charges” (Grounds 4-37), “the court behaviour charges” (Grounds 38-45) and “the subpoena charges” (Grounds 46-51). Count 13, concerning the allegation that the appellant deliberately frustrated the intention of the court and the purpose of the orders in making the various costs orders, was incorporated in the category dealing with “the money order” counts.

99. A repeated ground of appeal, pleaded in respect of a number of counts, that the primary judge erred in allowing into evidence material that was inadmissible, was withdrawn.

100. A ground that was pleaded in relation to a number of counts was (for example, Ground 11):

“That her Honour erred in that her Honour improperly used the failure of the appellant to give evidence as a matter supporting the proof of the charges alleged beyond a reasonable doubt.”

It is as well to deal with that ground before embarking on the individual counts.

101. I have referred above to some of the passages in the judgment which are said to give rise to this ground. Effectively, her Honour held that the appellant’s failure to give evidence justified a conclusion that he did not challenge the case advanced against him. The primary judge took this into account specifically in respect of those counts in which a defence might have been raised of impecuniosity, in relation to Count 6 (the subpoena count) and Count 11 (allegedly contemptuous allegations made about White J).

102. Counsel for the appellant relied on a passage from Azzopardi v The Queen (2001) 205 CLR 50; [2001] HCA 25, as follows (Gaudron, gummow, Kirby and Hayne JJ):

“[34]  … It is, therefore, clear beyond doubt that the fact that an accused does not give evidence at trial is not of itself evidence against the accused. It is not an admission of guilt by conduct; it cannot fill in any gaps in the prosecution case; it cannot be used as a make-weight in considering whether the prosecution has proved the accusation beyond reasonable doubt. Further, because the process is accusatorial and it is the prosecution that always bears the burden of proving the accusation made, as a general rule an accused cannot be expected to give evidence at trial. In this respect, a criminal trial differs radically from a civil proceeding.” (Footnote omitted)

103. However, as counsel recognised, the High Court then went on to consider in detail the earlier decision in Weissensteiner v The Queen (1993) 178 CLR 217; [1993] HCA 65 and said:

“[64]  There may be cases involving circumstances such that the reasoning in Weissensteiner will justify some comment. However, that will be so only if there is a basis for concluding that, if there are additional facts which would explain or contradict the inference which the prosecution seeks to have the jury draw, and they are facts which (if they exist) would be peculiarly within the knowledge of the accused, that a comment on the accused’s failure to provide evidence of those facts may be made. The facts which it is suggested could have been, but were not, revealed by evidence from the accused must be additional to those already given in evidence by the witnesses who were called. The fact that the accused could have contradicted evidence already given will not suffice. Mere contradiction would not be evidence of any additional facts. In an accusatorial trial, an accused is not required to explain or contradict matters which are already the subject of evidence at trial. These matters must be assessed by the jury against the requisite standard of proof, without regard to the fact that the accused did not give evidence.”

104. This passage, in my opinion, resolves the issue. One circumstance in which the primary judge took into account the failure of the appellant to give evidence was in her consideration of a potential defence of incapacity to pay. It was the appellant who had knowledge of his own, and (as sole director) DBMA’s capacity to pay. It was not an error for the primary judge to approach that question in the manner in which she did.

105. There is no error in the way the primary judge addressed this issue. There was no way, other than through evidence advanced from or by the appellant, or some other person on DBMA’s behalf, that her Honour could have been apprised of DBMA’s financial position. Moreover, she noted that the satisfaction of some garnishee orders showed that DBMA had had resources from which it could have met the orders. There is no substance in this ground.

106. A related ground, repeated in respect of various of the convictions, was of error in finding the charges proved beyond reasonable doubt, where “an inference [of] innocence” had not been excluded.

107. It is sufficient to say that there was no occasion, in relation to any of the counts on which the appellant was convicted, where an inference of innocence reasonably appeared on the evidence. These grounds should be rejected.

108. I now turn to deal with the individual counts of which the appellant was convicted.

The costs orders

Count 1

109. The orders the subject of Count 1 were made by McLoughlin DCJ on 4 September 2009. They were relevantly in the following terms:

“… I order [DBMA] to pay costs in the sum of $134,679.46 …

I order [DBMA] to pay [Jeffrey Mahaffy’s] costs of this NoM in the sum of $2,000.”

110. As a preliminary, two things may be noted about the terms of these orders. First, they were made against DBMA and not against the appellant (a circumstance that did not escape the notice of the respondent in drafting the FASoC). Second, they did not specify any time for compliance.

111. The FASoC particularised numerous occasions on which the appellant had (himself or through DBMA) sought, in various ways, vacation of the costs orders, or a stay thereof. Three such applications were filed by notice of motion in the District Court, on, respectively, 23 September 2009, 28 September 2009 and 4 March 2010; two in this court, associated with applications for leave to appeal (17 June 2010 and 10 September 2009); one in the Equity Division of the Supreme Court (23 September 2010, associated with an application for injunctive relief concerning the sale of the Narrabri property); and one in the Common Law Division of the Supreme Court, associated with a variety of other orders sought (10 November 2010).

112. All attempts were unsuccessful and the orders of 4 September remained extant.

The primary judge’s reasons for convicting the appellant on this count

113. The primary judge concluded that the appellant sought to thwart the respondent’s recovery of costs from DBMA: at [63]. In this respect she took into account the repeated attempts made by the appellant to have the orders vacated or stayed. She took into account that the appellant had not sought, by evidence, to establish an inability, as distinct from refusal, to pay: at [68]. (I have already held that this was a permissible approach.) She considered that the evidence established that DBMA did have the capacity to pay should it have chosen to do so, but, instead, expended its resources “in the pursuit of the futile course which [the appellant] caused [DBMA] to take”: at [70]. She held:

“[71]  … It was he [the appellant] who was directly responsible for the course which the company pursued, instead of complying with the order which bound it. The evidence establishes beyond reasonable doubt that thereby he was independently in contempt of the District Court, his intentional actions having resulted in the course of justice being obstructed, as it undoubtedly was, by the company’s failure to pay the costs it was bound to pay Mr Jeffrey Mahaffy.”

114. She also considered it “pertinent” that subsequent orders expressly extended the operation of the orders to the appellant, so as to bind him as well as DBMA. (In my opinion that is not a relevant circumstance, given that the charge is framed in terms of failure on the part of the appellant to cause DBMA to satisfy the order. There is no count based on an allegation that the appellant failed to comply with the order directed to him. However, this is not identified as an error of which complaint is made and I leave it to one side.)

115. The complaints made with respect to the conviction on Count 1 are, essentially:

(i)  failure adequately to consider the principles by which a third party may be made liable in contempt for breach of an order by the entity against whom or which it is made (Ground 4);

(ii)  failure to take into account the purposes for which the order was made (Grounds 5, 6 and 7);

(iii)  failure to take into account possible inferences (or explanations) consistent with innocence (Ground 8);

(iv)  error in finding the appellant guilty in circumstances where it was not possible to be satisfied beyond reasonable doubt that the appellant or DBMA had the means to comply with the order (Ground 9);

(v)  finding the act of contempt sufficiently serious to warrant punishment (where some other method of doing justice was available and was in fact employed – that is, the ultimate imposition of a stay of DBMA’s proceedings against the respondent) (Ground 10); and

(vi)  improperly using the failure of the appellant to give evidence in support of proof of the contempt (this has been dealt with).

Determination

Third-party liability

116. Counsel for the appellant relied upon a line of authority culminating in Sigalla v TZ Ltd [2011] NSWCA 334.

117. Sigalla was a case in which an injunction had been granted restraining a company, ZMS Investments Pty Ltd, from selling a certain property. Notwithstanding the injunction, ZMS entered into a contract for sale of the property. Proceedings in contempt were brought against both ZMS and one of its two directors, Mr Sigalla. Both were found guilty: TZ Ltd v ZMS Investments Pty Ltd [2009] NSWSC 1465 (Austin J). Austin J held:

“[48]  … The court’s power is sufficiently broad to extend to an individual’s involvement in conduct constituting a contempt by the company that he or she controls. Therefore in my view, it is appropriate to conclude that Mr Sigalla is in contempt of court by virtue of his involvement in the breach of the orders by ZMS …”

118. A different approach was taken on appeal. Young JA, with whom Macfarlan JA and Handley AJA agreed, said:

“[12]  … It is clear that Mr Sigalla was not a party to the proceedings in which the order was made. It would appear that he and his wife were the sole proprietors and controllers of ZMS Investments, but they, of course, were distinct legal persons from the company.”

His Honour went on to say, in a passage upon which reliance was placed:

“[14]  It is trite law that where there is an injunction against X, only X will commit a contempt by disobeying the injunction as opposed to a different contempt for obstructing the process of the court … The non-party to the original proceedings who knows of the order and assists in the breach of the order and thereby obstructs the process of the court is liable to be punished for that offence against the court, not for a breach of the original order …”

119. He then referred to a passage in the decision of the High Court in Zhu v Treasurer of the State of New South Wales (2004) 218 CLR 530; [2004] HCA 56, in which the High Court said (at 571-572 [121]):

“[121]   …Intervention against persons who, though not personally bound by a court order, procure those who are bound by it to contravene it, or otherwise thwart it, rests on a different basis: those persons are not liable as accessories who aided and abetted the persons bound by the order, but are directly liable for independent contempts committed by themselves in obstructing the course of justice.”

120. Young JA concluded that it had not been open to convict Mr Sigalla of the contempt committed by ZMS Investments.

121. There is, however, another line of authority, to which it seems that the court in Sigalla was not referred. That line of authority is specifically referable to the obligation of a director of a company, aware of an order of a court, to take reasonable steps to ensure compliance with the order.

122. In Attorney-General for Tuvalu v Philatelic Distribution Corporation Ltd [1990] 1 WLR 926 at 936 Woolf LJ said:

“In our view where a company is ordered not to do certain acts or gives an undertaking to like effect and a director of that company is aware of the order or undertaking he is under a duty to take reasonable steps to ensure that the order or undertaking is obeyed, and if he wilfully fails to take those steps and the order or undertaking is breached he can be punished for contempt. We use the word ‘wilful’ to distinguish the situation where the director can reasonably believe some other director or officer is taking those steps.”

123. That proposition was adopted by Kiefel J (as the Chief Justice then was) in Australian Competition and Consumer Commission v Goldstar Corporation Pty Ltd [1999] FCA 585. Her Honour said:

“[41]  Directors who have notice of a Court order (as to which see Madeira v Roggette [[1990] 2 Qd R 357], 364) are under a duty to take reasonable steps to ensure that it is obeyed, and if they wilfully fail to do so and the Order is breached they may also be held liable for contempt …”

Her Honour cited the Philatelic Distribution Corporation case.

124. In Hurd v Zomojo Pty Ltd [2015] FCAFC 148, Besanko and Gilmour JJ said:

“[93]  A person, other than a person to whom the order is directed, may be found guilty of contempt in connection with a contravention of the order … In addition, a third party may be guilty of contempt if they know of the order and aid and abet the respondent in contravening it or otherwise do an act that obstructs or frustrates the object of the order … In certain cases, the liability of the third party is direct and not as an accessory …”

The passage from Zhu earlier mentioned was cited as authority for the proposition contained in the final sentence.

125. That line of authority is directly referable to this case. The appellant was the sole shareholder and director of DBMA. He controlled what it did and what it did not do. If DBMA could be held in contempt for failure to comply with the order of McLoughlin DCJ, then it follows, on the authority of the decisions extracted above, that the appellant could also be held in contempt.

126. One difficulty in that approach is that no time was fixed by which payment was required to be made. That raises a question: at what point could it be said that either DBMA or the appellant was in contempt of the order? The primary judge (reasonably in my opinion) took into account the course of conduct of the appellant in repeatedly making unsuccessful applications to vacate or stay execution of the orders, as evidence of his determination not to comply with the orders.

229. No written submissions were directed to the last-mentioned ground, and it may be disposed of quickly. Count 13 was not based on alleged disobedience of any order; it was based upon asserted frustration of costs orders made by the court by allegedly evasive conduct on the part of the appellant. The same may be said in response to the first ground, concerning the liability of a third party. The appellant was not, in this instance, charged as a third party; he was charged for the conduct in which he allegedly engaged, and was found to have engaged.

230. The written submissions did not directly address the grounds of appeal. Two points only were made. One was that the evidence did not establish that the appellant had knowledge of the various garnishee orders (of which there were many) and that knowledge of the (garnishee) order is necessary before contempt by reason of disobedience of orders can be found. This, again, misunderstands the crux of the charge which, I repeat, was of conduct by the appellant designed to frustrate the costs orders, enforcement of which was sought to be achieved by the use of garnishee orders. That argument is based on a false premise, that it was necessary to prove, in the case of a garnishee order, that the appellant was aware that it had been made. That is incorrect. What had to be established was that the appellant was aware of the costs orders, and this was not (and could not be) contested. I accept that the manner in which the charge is framed is less than pellucidly clear, but its intent is plain enough.

231. The second argument was that the central allegation in the count as pleaded was that the appellant structured his financial affairs, and operated his bank accounts so as to avoid enforcement of the costs orders.

232. This argument has more merit. Since the allegation is in the nature of a criminal charge, it must be stated with precision. Rather than focus on the manner in which the appellant conducted his own financial affairs, the respondent adduced evidence showing that the appellant conducted the affairs of DBMA so as to avoid the effect of any garnishee order that might be obtained. It is true that some of the particulars asserted conduct by the appellant in relation to his own affairs, but it is difficult to extract this from the evidence adduced.

233. In any event, no authority was cited to support the proposition that quarantining funds with the express purpose of avoiding garnishee orders constitutes contempt.

234. In my opinion the evidence was insufficient to establish this charge beyond reasonable doubt. I would uphold the appeal in this respect.

235. The result is that, in my view, four (Counts 5, 6, 8 and 13) of the eight convictions ought to be set aside, and the appeal allowed to that extent; the appeal should be dismissed in relation to the remaining four convictions (Counts 1, 7, 9 and 11).

236. That calls for reconsideration of the sentence imposed. The primary judge imposed an aggregate sentence of 10 months, commencing on the date the appellant was taken into custody (18 December 2015). She specified the sentences of imprisonment that she would have imposed if sentencing for the offences individually. The indicative sentences now relevant were:

Count 1:  4 months;

Count 7:  8 months;

Count 9:  2 months; and

Count 11:  6 months.

239. I would not depart from the primary judge’s assessment of the appropriate sentences in relation to Counts 1 and 9. Since I would uphold the convictions in relation to Counts 7 and 11 on a more limited basis than was found by the primary judge, it is necessary to reconsider those sentences.

240. The contempt in Count 7, the allegation concerning McLoughlin DCJ and the District Court although serious, was confined in its circulation and would not have been given credence by any recipient. If sentencing in relation to that conviction separately, I would impose a sentence of imprisonment for 3 months. The contempt embodied in Count 11, concerning White J, was of equal seriousness and warrants a similar sentence, of 3 months.

241. I would impose an aggregate sentence of imprisonment for 6 months, commencing on 18 December 2015, the day the appellant was taken into custody. Since he has served at least that time, there is no call for any action to be taken in relation to his being again taken into custody.

242. Since the parties have had equal success, I would make no order for costs.

243. The orders I propose are:

(1)  Appeal against conviction allowed in part: specifically, the convictions in relation to Counts 5, 6, 8 and 13 are set aside;

(2)  Appeal against sentence allowed. In lieu of the sentence imposed in the Supreme Court, the appellant is sentenced to imprisonment for 6 months, commencing on 18 December 2015.

244. Since preparing these reasons I have had the advantage of reading in draft the judgments of Payne JA and Emmett AJA. I agree that Order 4 concerning the costs of the trial, ought be made.

245. PAYNE JA: I am grateful for the judgment of Simpson JA which I have read in draft. Subject to what appears below, I agree with her Honour, for essentially the reasons she gives, that Counts 5, 6, 8 and 13 should have been dismissed by the primary judge and that the appeal in relation to those counts should be allowed.

246. I agree with Simpson JA, again for essentially the reasons her Honour gives, that the convictions in relation to Counts 7 and 11 should stand and the appeal in relation to those counts should be dismissed. In particular, I agree with the limitations upon those counts identified by her Honour, namely that Count 7 be limited to the assertions that McLoughlin DCJ tampered with transcripts and the District Court was corrupt and that Count 11 be limited to the assertion that White J was guilty of corruption.

247. I also agree with her Honour that the appeal in relation to Count 9 should be dismissed. The order made by Rein J the subject of this count was addressed to the appellant rather than DB Mahaffy & Associates Pty Ltd and there was evidence that the appellant had sufficient funds to pay the order and that his failure to do so was deliberate.

248. The conclusion reached by her Honour in respect of Count 1, however, is one with which I do not agree. My reasons can be briefly explained.

249. It will be recalled that Count 1 was in the following form:

“David Mahaffy challenged the authority of the Court i.e. the authority of Judge McLoughlin and committed contempt of court by failing to have DB Mahaffy & Associates Pty Ltd pay $136,679.46 to Jeffrey Mahaffy pursuant to orders made on 4 September 2009 by the District Court of New South Wales.”

250. To establish the charge of contempt by failing to comply with the order of the District Court to pay costs of $136,679.46 it must be shown that the conduct of the alleged contemnor was a deliberate breach of that order: Australasian Meat Industry Employees Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98: [1986] HCA 46. The standard of proof is beyond reasonable doubt and the prosecutor bears the onus of establishing that the alleged contemnor did something or failed to do something that he could have otherwise done.

251. As Simpson JA explains, the weight of authority is in favour of the proposition that, depending on the nature of the order, a non-party director of a company may be in contempt for breaching an order directed at the company of which he or she is a director. Whether the authorities go so far as to provide that an omission by a non-party company director to take steps to cause a company to pay a costs order is not something I need to decide here. I will assume that on the facts of this case, the appellant, although not a party to the relevant proceedings and not the subject of the order, as the sole shareholder and director of DB Mahaffy & Associates Pty Ltd and a person on notice of the order, was bound to take steps, if those steps were able to be taken, to have DB Mahaffy & Associates Pty Ltd comply with the order.

252. The relevant issue here is whether, in his capacity as sole director of DB Mahaffy & Associates Pty Ltd, by act or omission, the appellant deliberately caused the company to fail to pay $136,679.46 to Jeffrey Mahaffy pursuant to orders made on 4 September 2009. For present purposes, although no time was fixed for payment by the order of the District Court, I am content to adopt the time for compliance identified by Simpson JA of 30 January 2011.

253. In the absence of an express admission or express acknowledgment of facts which demonstrate such deliberate conduct, the conclusions reached by the primary judge had to be arrived at by a process of inference. A feature of drawing inferences as a basis for ultimate fact-finding is that those inferences may be rebutted, or there may be other evidence which qualifies or inhibits the inference-drawing process: see Kazal v Thunder Studios Inc (California) (2017) 350 ALR 216: [2017] FCAFC 111 at [67]. That is especially so when conclusions indispensable to guilt are required to be reached in proceedings with penal consequences, such as in this case.

254. An inference about a fact indispensable to a finding of guilt can only be drawn if there is no reasonable explanation consistent with innocence: Shepherd v The Queen (1990) 170 CLR 573 at 580-581; [1990] HCA 56. Whether or not DB Mahaffy & Associates Pty Ltd was at any relevant time able to pay $136,679.46 to Jeffrey Mahaffy was a fact indispensable to a finding of guilt. In those circumstances, once raised on the material, the reasonable possibility that DB Mahaffy & Associates Pty Ltd was unable to pay $136,679.46 to Jeffrey Mahaffy at any relevant time had to be excluded beyond reasonable doubt.

255. Of course, an inference may properly be drawn from the evidence in the case, and more safely drawn in the absence of rebutting evidence: see Weissensteiner v The Queen (1993) 178 CLR 217 at 227; [1993] HCA 65; R v Baden-Clay (2016) 258 CLR 308; [2016] HCA 35 at [50]. It does not, however, follow that impecuniosity is a “defence” to a claim that a director of a company deliberately caused the company to fail to pay a costs order. The onus of proving that a director of a company deliberately caused the company to fail to pay a costs order remains on the prosecutor at all times. Weissensteiner and Baden-Clay do not establish that an evidential onus falls upon a director of a company to show the inability of the company to pay a fine or an award of costs. To conclude that in a contempt case such as the present impecuniosity is a defence which must be established by a defendant, even at the level of an evidential onus, is in my view inconsistent with the decision in Azzopardi v The Queen (2001) 205 CLR 50; [2001] HCA 25 at [34].

256. In this case, important aspects of the available evidence positively suggested that it was a reasonable possibility that DB Mahaffy & Associates Pty Ltd was at all times unable to pay $136,679.46 to Jeffrey Mahaffy pursuant to orders made on 4 September 2009. If the company was insolvent and unable to pay, it follows that the appellant, by act or omission, was incapable of deliberately causing the company to fail to pay $136,679.46 to Jeffrey Mahaffy pursuant to orders made on 4 September 2009.

257. The primary judge inferred that the appellant deliberately caused the company to fail to pay $136,679.46 to Jeffrey Mahaffy pursuant to orders made on 4 September 2009 based principally on five matters:

1. the statutory declaration from the appellant dated 9 April 2008 apparently filed in relation to a security for costs application that he was familiar with the financial status of DB Mahaffy & Associates Pty Ltd and that the company “is able to meet a costs order in the event that it is unsuccessful in this litigation”;

2. a successful garnishee order which recovered $2,300;

3. the successful sale of a property in Narrabri owned by the appellant;

4. the finding that in 2014, DB Mahaffy & Associates Pty Ltd “continues to trade”; and

5. the 13 proceedings, identified as particulars to the count, which were commenced by DB Mahaffy & Associates Pty Ltd to set aside the order for costs which had been made.

258. All but the first of those matters are incapable of properly giving rise to an inference in this case that DB Mahaffy & Associates Pty Ltd was able to pay $136,679.46 to Jeffrey Mahaffy at any relevant time.

259. The evidence of the successful garnishee order, including that under which $2,300 was recovered, is at best neutral and may tend to establish the insolvency of the company. The fact that after exhaustive attempts involving all major financial institutions yielded only $2,300 tends to suggest that by 30 January 2011 DB Mahaffy & Associates Pty Ltd was unable to pay $136,679.46 to Jeffrey Mahaffy pursuant to the orders made on 4 September 2009. It certainly does not support an inference to the contrary.

260. The sale of a property in Narrabri was not relevant to a finding about the ability of DB Mahaffy & Associates Pty Ltd to pay $136,679.46. The evidence was that the property was owned by the appellant, not the company. The fact that a director has assets of his or her own which he or she chooses not to use to pay a company debt is not probative of whether the director deliberately caused the company to fail to pay a costs order.

261. The finding that as at the date of making orders DB Mahaffy & Associates Pty Ltd continued to trade was inconsistent with the evidence of an Australian Securities & Investments Commission (ASIC) search, tendered by the respondent, that DB Mahaffy & Associates Pty Ltd had been deregistered in March 2013. Deregistration may perhaps have been the consequence of the sequestration order made in relation to the appellant, its sole director and shareholder, earlier in March 2013. Whilst it is true that there were also other ASIC records in evidence suggesting that the company was registered at the time of the trial, how a company could “continue to trade” without any directors or employees in circumstances where the shares in the company have vested in a trustee in bankruptcy was not explained in the evidence. The “trading” evidence was equivocal at best and did not support the drawing of any inference about solvency.

262. The 13 occasions that proceedings were commenced to set aside the orders for costs which had been made is not capable of amounting to evidence that the appellant was in contempt of court in this case. I do not think it is open to conclude that failure to pay a costs order can amount to contempt of court if the only identifiable funds which are said to have been available to pay those costs are used to seek, by appeal and other available process, to set aside the original orders of the court. If, as the respondent submitted, those 13 proceedings were all an abuse of process, each relevant court had ample powers to take action to prevent an abuse of process. There was no finding to which the respondent was able to point made by any of the judges who heard the particularised applications that those applications were an abuse of the processes of the court. Absent extraordinary circumstances, which do not arise in this case, it is not a contempt of court to challenge by appeal or stay application the making of an order by a court. If it were otherwise, all litigants would inevitably face contempt proceedings if they chose unsuccessfully to challenge a court order for the payment of money (and spent money in that challenge) and were subsequently unable to meet that order for the payment of money.

263. The only evidence which points in favour of drawing the necessary inference is the statutory declaration from the appellant dated 9 April 2008 that he was familiar with the financial status of DB Mahaffy & Associates Pty Ltd and the company “is able to meet a costs order in the event that it is unsuccessful in this litigation”. If that were the only evidence available there would be much to commend the inference drawn by the primary judge that DB Mahaffy & Associates Pty Ltd was therefore able to pay $136,679.46 to Jeffrey Mahaffy.

264. There was, however, a further body of evidence about the solvency of DB Mahaffy & Associates Pty Ltd at the relevant time. This evidence strongly suggested that DB Mahaffy & Associates Pty Ltd was insolvent. At least that evidence raised the reasonable possibility that DB Mahaffy & Associates Pty Ltd was insolvent. In particular, there was evidence comprising almost an entire volume of correspondence containing multiple garnishee notices directed to all of Australia’s major financial institutions together with the responses to those notices all of which, with the exception of one in the amount of $2,300, disclosed no attachable funds. There was also evidence of multiple attempts by the sheriff to levy the property of DB Mahaffy & Associates Pty Ltd. Despite extensive searches by the sheriff’s office, there was no property of DB Mahaffy & Associates Pty Ltd which was able to be levied to meet the costs order.

265. There was also evidence that on 9 December 2010 the respondent served a statutory demand on DB Mahaffy and Associates Pty Ltd identifying as the relevant debts judgments of the District Court in September 2009 and April 2010. On 29 June 2011, White J dismissed the originating process filed by DB Mahaffy & Associates Pty Ltd seeking to set aside that statutory demand. Time for compliance with that statutory demand expired on 6 July 2011: DB Mahaffy & Associates Pty Ltd v Mahaffy [2011] NSWSC 901 at [6]. No order was made by the Court of Appeal extending the time for compliance and, as his Honour found, “accordingly the presumption of insolvency has arisen”: s 459C of the Corporations Act 2001 (Cth).

266. Further important evidence of the financial position of DB Mahaffy & Associates Pty Ltd was contained in business records tendered by the respondent in his affidavit sworn on 23 August 2009 which provided as follows:

1. as at 23 August 2009, the most recent financial statements and income tax returns of DB Mahaffy & Associates Pty Ltd concerned the 2006 financial year;

2. financial statements for the year ending 30 June 2006 demonstrated that DB Mahaffy & Associates Pty Ltd made a loss of $17,593 for the year ending 30 June 2006;

3. as at 30 June 2006, DB Mahaffy & Associates Pty Ltd had a negative net asset value of $65,911 and shareholders’ funds for the company showed an accumulated loss amount of $65,911;

4. DB Mahaffy & Associates Pty Ltd Company Income Tax Return for the year ending 30 June 2006 confirmed the results as reported on the financial statements; and

5. in a letter dated 19 May 2009, Martin Legal, former solicitors appearing for DB Mahaffy & Associates Pty Limited stated “[DB Mahaffy & Associates Pty Ltd] has not paid his legal fees to us for past work and, as a result, we have served a Notice of Intention to File Notice of Ceasing to Act upon the Plaintiff”. Mr Martin further stated, “Because of the quantum of the fees involved and the period, over which payment has been promised, we are unwilling to perform further work, whilst past work remains unpaid”.

267. As the respondent, himself an accountant who had at one time been employed by DB Mahaffy & Associates Pty Ltd, stated in his affidavit sworn on 23 August 2009:

“It would appear from correspondence, documentation and records that DB Mahaffy and Associates Pty Limited is insolvent and unable to pay the Defendants costs incurred on DB Mahaffy and Associates Pty Limited’s claim.”

268. This evidence of insolvency both before and after the relevant date, at the very least, gives rise to an available inference consistent with innocence. Having regard to all of the evidence, and paying due regard to the failure of the appellant to give evidence, I would not infer that DB Mahaffy & Associates Pty Ltd was able to pay $136,679.46, or any part of that amount, to Jeffrey Mahaffy at any relevant time.

269. The inference I would draw is that the company was at all relevant times insolvent. In any event, there is on the evidence an available inference consistent with innocence. The ability of DB Mahaffy & Associates Pty Ltd to pay $136,679.46, or any part of that amount, on or after 30 January 2011 was a conclusion indispensable to the appellant’s guilt. That conclusion can only be drawn if there is no reasonable inference available consistent with innocence. I am satisfied that there was an inference available consistent with innocence. It follows that I am not satisfied that the appellant could properly have been found guilty of count 1.

268. The appeal so far as it relates to count 1 should be allowed.

Sentence

271. Given the conclusion I have reached it is necessary to resentence the appellant. Simpson JA has set out the indicative sentences identified by the primary judge.

272. I agree with Simpson JA, for the reasons that her Honour gives, that the appropriate indicative sentences are 2 months for Count 9 and 3 months for each of Counts 7 and 11. A modest degree of accumulation between those indicative sentences is appropriate. I would impose an aggregate sentence of imprisonment of 4 months, commencing on 18 December 2015.

273. As the appellant has already served a period of imprisonment in excess of 4 months, there is no need for any action to be taken in relation to his again being taken into custody.

Costs of the trial and the appeal

274. As the primary judge correctly observed, in Hinch v Attorney General for the State of Victoria (1987) 164 CLR 15 at 88-89; [1987] HCA 56, the High Court concluded that contempt proceedings are conducted in civil jurisdiction and attract the rule that costs follow the event. There is no rule of law or established practice requiring the making of a costs order on an indemnity basis in contempt proceedings: McIntyre v Perkes (1988) 15 NSWLR 417 at 428 (Samuels JA (with whom Mahoney JA agreed)).

275. Section 98 of the Civil Procedure Act 2005 (NSW) confers on the court a wide discretion with respect to costs. Under r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) the “general rule” is that the court is to order that costs follow the event. The “event” may be characterised in more than one way. Generally the "event" refers to the event of the claim or counterclaim, as the case may be, and may be understood as referring to the practical result of a particular claim: Doppstadt Australia Pty Ltd v Lovick & Sons Developments Pty Ltd (No 2) [2014] NSWCA 219 at [15] (Ward, Emmett and Gleeson JJA). Where there has been a mixed outcome in the proceedings, and it is appropriate to entertain the process of apportioning costs as between different issues in the proceedings, in general such an exercise will be carried out on a relatively broad brush basis, and largely as a matter of impression and evaluation by the court: Doppstadt at [19]; James v Surf Road Nominees Pty Ltd [No 2] [2005] NSWCA 296 at [36]; Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) (1998) 30 ACSR 20 at 22.

276. This is a difficult case to address the question of costs. The appellant was represented by counsel on the appeal, where he was successful in having five of the eight counts against him dismissed. The measure of success he enjoyed on the appeal would in the ordinary course entitle him to an award of a percentage of his costs.

277. The primary judge made an award of costs of the trial in the respondent’s favour. The respondent was self-represented at the trial (and in this court). Given the large number of counts where I have concluded he should have failed, that order should be set aside and the discretion exercised afresh. The respondent ultimately succeeded on only a small number of the numerous charges he preferred. In the ordinary course, however, he would nevertheless be entitled to a percentage of his costs of the trial.

278. A particular feature of this litigation is that the litigation between the Mahaffy brothers has consumed each of them for over a decade and has led, amongst other things, to the bankruptcy and imprisonment of the appellant. The proceedings have also taken an obvious financial, psychological and emotional toll on the respondent. A further peculiar feature of this litigation is that the subject matter of these proceedings encompassed the respondent’s almost wholly unsuccessful attempts to have the appellant found guilty of contempt for the non-payment of various costs orders in earlier litigation. It is important, if possible, to bring this internecine litigation to an end.

279. In these very particular circumstances, rather than make orders for costs in favour of the appellant in relation to the appeal and in favour of the respondent in relation to the trial, I have concluded that the appropriate orders are that there be no order as to costs of the trial or the appeal. That conclusion gives effect to my broadbrush impression and evaluation that the entitlement of the appellant to costs of his successful appeal would roughly be cancelled out by the respondent’s entitlement to costs of the trial.

280. The order I propose involves taking a high-level view of the relative successes of each party in the trial and on the appeal. To make competing costs orders, which will almost certainly be contested in a lengthy and costly assessment, would not be consistent with the overarching purpose of quelling litigious disputes as quickly, justly and cheaply as possible.

281. Before leaving this case I should also record that I am grateful to Dr Kell SC and those who assisted him in appearing as an amicus curiae in this matter. Without their assistance what was already a very difficult matter would have become unmanageable.

Orders

282. I propose the following orders:

1. Appeal against conviction allowed in part;

2. Convictions in relation to counts 1,5,6,8 and 13 are set aside;

3. Appeal against sentence allowed. Set aside the sentence imposed by the primary judge and in lieu thereof:

1. Sentence the appellant to 4 months imprisonment commencing on 18 December 2015.

4. Set aside the costs order made by the primary judge for the costs of the trial and in lieu thereof order:

1. each party pay their own costs of the trial.

5. Each party pay their own costs of the appeal.

283. EMMETT AJA: This appeal is concerned with charges of contempt brought against the appellant, Mr David Mahaffy (David), by his brother, Mr Jeffrey Mahaffy (Jeffrey). The charges arose out of proceedings brought against Jeffrey in the District Court at Tamworth by David and D B Mahaffy & Associates Pty Ltd (the Company). David is the principal and sole director and shareholder of the Company. The claims were finally pressed only by the Company and the proceedings were dismissed. However, Jeffrey brought a cross-claim against the Company and David, and an order was made in his favour in the cross-claim.

284. In addition, various costs orders were made in favour of Jeffrey against David and the Company both in the proceedings in the District Court and in related proceedings brought in the Common Law Division and in the Court of Appeal. Specifically, on 4 September 2009 McLoughlin DCJ ordered the Company to pay the sum of $136,679.46 to Jeffrey. No stay was ever granted in relation to that order and there was therefore no impediment for Jeffrey to take steps to enforce the orders made by McLoughlin DCJ. Most of the contempt charges arise out of the failure of the Company to pay that amount and other amounts that it was ordered to pay. In addition, there were two charges relating to allegations by David of corruption and improper conduct on the part of judicial officers dealing with proceedings relating to the costs orders.

285. Ultimately, some 13 separate charges by Jeffrey against David were heard by a judge of the Common Law Division (the primary judge). On 16 February 2015, the primary judge published reasons for her Honour’s conclusions that the contempt alleged in eight of the charges had been proved beyond reasonable doubt. Her Honour dismissed the other five charges. On 18 December 2015, her Honour formally found David guilty of the contempt alleged in eight charges and sentenced him to a total term of imprisonment of 10 months, to commence from the date of his arrest. David was arrested and served part of the sentence.

286. However, David appealed to this court from the convictions and against the sentences imposed by the primary judge. On 28 July 2016, another judge sitting in the Common Law Division ordered his release, pending the hearing of his appeal.

287. The question in the appeal is whether the convictions should stand in relation to eight charges. I have had the advantage of reading in draft form the proposed reasons of Simpson JA for upholding the appeal in relation to four of the charges and for dismissing the appeal in relation to three of the charges. I have also had the advantage of reading in draft form the proposed reasons of Payne JA for upholding the appeal in relation to one of the charges (Charge 1), in respect of which Simpson JA would dismiss the appeal.

288. I agree with Simpson JA’s reasons and conclusions in relation to the four charges where her Honour would uphold the appeal and three of the charges where her Honour would dismiss the appeal. However, I do not agree with the conclusion of Simpson JA that the appeal should be dismissed in relation to Charge 1. I agree with Payne JA, for the reasons proposed by his Honour, that the appeal should be upheld in relation to Charge 1. I wish to make some further observations in relation to Charge 1.

289. Charge 1 was that David committed contempt by failing to have the Company pay to Jeffrey the sum of $136,679.46 ordered by McLoughlin DCJ on 4 September 2009. All of the particulars of conduct said to constitute that contempt consisted the filing of applications either to the District Court or the Equity Division or the Court of Appeal seeking relief in relation to that order. It may well be that most, if not all, of those applications were vexatious and had little prospect of success. However, it is noteworthy that each of the steps was taken in accordance with the relevant rules. There was no flouting of the law, whether or not the subject of the applications was to frustrate the enforcement of the order made by McLoughlin DCJ.

290. Having regard to the conclusion that I have reached in agreeing with the reasons of Payne JA for upholding the appeal in relation to Charge 1, it is not necessary to decide other grounds relied upon by David in relation to Charge 1. However, it should not be thought that, by not addressing those grounds, I accept the correctness of the position adopted by the primary judge and Simpson JA.

291. Clearly enough, persons who, although not personally bound by a court order, procure those who are bound by it to contravene it or otherwise thwart it, may be directly liable for contempt in obstructing the course of justice. [1] Further, where a company is ordered not to do certain acts and a director of a company who is aware of the order wilfully causes the company to do the acts, the director himself may be guilty of contempt. [2] However, where an order is made against a company requiring the company to take some positive step, such as the payment of a sum of money, the position may be different.

     1. See Zhu v Treasurer of the State of New South Wales (2004) 218 CLR 530 at 571 [121]; [2004] HCA 56.

     2. See Attorney-General for Tuvalu v Philatelic Distribution Corporation Ltd [1990] 1 WLR 926 at 936.

292. There is a distinction between the case where the director of a company that could comply with an order to make a payment takes steps to ensure that the company does not or cannot comply, and the case where the director simply fails to take steps to ensure or procure that the company complies with the order. In the present case, as Payne JA has concluded, it is by no means clear that the Company could have complied with the order made by McLoughlin DCJ. That is the basis upon which Charge 1 has not been made out. It is inappropriate, therefore, to decide whether, had the Company been able to comply with the order, David would have been guilty of contempt in circumstances where he simply failed to cause the Company to make the payment. That question is for another case.

293. I agree with Payne JA, for the reasons proposed by his Honour, that there should be no order as to the costs before the primary judge or in this Court. I agree with the orders proposed by Payne JA for disposition of the appeal and the aggregate sentence that his Honour imposes.

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Endnotes

Amendments

13 December 2018 - [257](2) change monetary figure from $2,330 to $2,300;

[259] change monetary figure from $2,330 to $2,300;

[264] change monetary figure from $3,300 to $2,300.

10 May 2019 - Amendments and revisions.

Decision last updated: 10 May 2019