Mason & Mason
[2023] FedCFamC1F 18
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Mason & Mason [2023] FedCFamC1F 18
File number: SYC 6981 of 2021 Judgment of: BRASCH J Date of judgment: 25 January 2023 Catchwords: FAMILY LAW – CONTEMPT – Where three charges prosecuted by wife– Whether contraventions of court orders – Whether flagrant challenges to the Court’s authority - Whether wife established a prima facie case for each charge – Where standard of proof is beyond a reason doubt – Where prima facie case not established on two of the three charges – Where one charge to proceed to further hearing
FAMILY LAW – PRACTICE & PROCEDURE – Where parties and recipients of subpoenas agree competing Applications in a Proceeding and Objections to subpoena be deferred until the contempt proceedings are determined
Legislation: Family Law Act 1975 (Cth) ss 112AB, 112AP, 112AP(1)(b), 112AP(3)
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 rr 2.28, 2.35, 11.71, 11.71(2), 11.71(6)
Cases cited: Bokin & Wild [2022] FedCFamC1A 209
DAI & DAA (2005) FLC 93-215; [2005] FamCA 88
Dobbs & Dobbs [2021] FamCAFC 78
Donau v ASC AWD Shipbuilder Pty Ltd [2019] NSWCA 185
Ganem & Ganem (No.2) [2013] FamCA 257
Kendling&Kendling (2008) FLC 93-384; [2008] FamCAFC 154
LGM v CAM (2006) FLC 93-267; [2006] FamCA 435
LGM v CAM (2007) 235 ALR 197; [2007] HCA 25
LGM v CAM (Contempt) (No 2) (2008) FLC 93-355; [2008] FamCAFC 1
Medlow & Medlow (2017) 57 Fam LR 179; [2017] FamCAFC 159
Oakley & Millar [2019] FamCAFC 12
Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537; [1982] ANZ ConvR 444
Rosington & Rosington [2018] FamCA 172
Smith & Pickworth (1981) FLC 91-071
Zamir & Zamir [2022] FedCFamC1A 193
Division: Division 1 First Instance Number of paragraphs: 75 Date of hearing: 20 January 2023 Place: Sydney Counsel for the Applicant: Mr Dura Solicitor for the Applicant: Barkus Doolan Winning Counsel for the Respondent: Mr North SC Solicitor for the Respondent: Lander & Rodgers ORDERS
SYC 6981 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS MASON
Applicant
AND: MR MASON
Respondent
order made by:
BRASCH J
DATE OF ORDER:
25 JANUARY 2023
THE COURT ORDERS THAT:
1.The Amended Application in a Proceeding filed 9 December 2022 be adjourned for hearing on a date to be fixed.
2.The Notices of Objection to the subpoenas issued to:
(a)Lander & Rogers filed by the subpoenaed party Lander & Rogers on 23 December 2022;
(b)Lander & Rogers filed by the respondent husband on 23 December 2022;
(c)Ms B filed by the respondent husband on 23 December 2022; and
(d)Ms B filed by the subpoenaed party Ms B on 4 January 2023
be adjourned for hearing on a date to be fixed.
3.Charge One, as contained within the Amended Application - Contempt filed 25 November 2022, be dismissed.
4.Charge Two, as contained within the Amended Application - Contempt filed 25 November 2022, be listed for hearing on a date and time to be fixed.
5.Charge Three, as contained in the Amended Application - Contempt filed 25 November 2022, be dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Mason & Mason has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
BRASCH J:
On 25 November 2022, the wife filed an Amended Application – Contempt, which contained three charges. It was the wife’s case that the husband had contravened orders under the Act and it involved a flagrant challenge to the authority of the court; see s 112AP(1)(b) of the Family Law Act1975 (“the Act”).
The “order under the Act” was an interim order made by consent on 14 October 2021. The Consent Order reveals both parties were represented by expert family law firms along with Senior Counsel for the wife, and Queens Counsel for the husband (as it was at that time). The Order also reveals the parties were with their respective Counsel. The firms that represented the parties on the making of the 14 October 2021 Order remain on the record.
The hearing of the contempt application was set down for hearing on Friday 20 January 2023. Also before me on that date was an Amended Application in a Proceeding filed by the husband on 9 December 2022 and four objections to two subpoena – one subpoena was directed to the husband’s law firm and the other to his partner. As indicated at the hearing, I purposefully did not read the Application in a Proceeding and accompanying affidavit prior to raising the following concern with the parties. I pause to make clear that it was the husband who brought the Application in a Proceeding but defending the wife’s contempt application, where he had a right to silence (Dobbs & Dobbs [2021] FamCAFC 78 at [24] (“Dobbs”)).
Thus, I raised with the parties and the legal representatives for the two subjects of subpoena (both non-parties) the analogous situation set out in Dobbs at [25] that:
The parties’ countervailing contravention applications should not have been heard together because neither party could be expected to simultaneously prosecute one case and defend another. An applicant who prosecutes a contravention application carries the burden of adducing evidence to prove the alleged contravention. Since the parties’ respective contravention applications related to the same underlying parenting and property orders, neither party could concurrently carry the burden of proof and reserve their right to silence.
It was accordingly agreed that the Amended Application in a Proceeding filed 9 December 2022 and the four objections to the two subpoena be adjourned for hearing after the Application - Contempt is determined. I will make such orders.
Background
There was little, if any, background information about the parties’ relationship in the material before me. However, from cross-examination of the wife it seems that the parties commenced cohabitation in 1992, married in the same year and separated on 20 June 2021. In cross-examination, reference was made to the parties’ children X and Y.
When together, the husband and wife operated a farming partnership and another business. The wife agreed in cross-examination that the husband managed the day to day operation of the farm during the marriage and post separation. The wife also agreed that she was primarily responsible for the books of accounts for the enterprises. The wife is a finance professional.
The wife also agreed the husband established the business with a third party and that she was not involved with its day to day running. She was however the director of C Pty Ltd, which ran (through a trust) an Airbnb property at Suburb D.
The wife agreed that the parties’ pool of assets was at least $17 million.
Legal Principles
Section 112AP of the Act provides:
(1) Subject to subsection (1A), this section applies to a contempt of a court that:
(a) does not constitute a contravention of an order under this Act; or
(b)constitutes a contravention of an order under this Act and involves a flagrant challenge to the authority of the court.
(1A) ...
(2) In spite of any other law, a court having jurisdiction under this Act may punish a person for contempt of that court.
(3) The applicable Rules of Court may provide for practice and procedure as to charging with contempt and the hearing of the charge.
(4) Where a natural person is in contempt, the court may punish the contempt by committal to prison or fine or both.
...
(9) In this section:
order under this Act means an order under this Act affecting children or an order under this Act within the meaning of Part XIIIA.
(emphasis added)
Section 112AA adds a further definition to “order under this Act” being:
order under this Act, in relation to a court, means:
(a)an order (however described) made by the court under this Act (other than a parenting order); or
(b)an injunction granted by the court under section 90SS or 114 except in so far as the injunction is for the protection of a child; or
(c) an undertaking given to, and accepted by, the court in proceedings under this Act other than proceedings that relate wholly or partly to, or to the making of, a parenting order; or
(d) a subpoena issued under the applicable Rules of Court in proceedings under this Act other than a subpoena issued in, and so issued to a party to, proceedings that relate wholly or partly to, or to the making of, a parenting order; or
(e) a court enforceable agreement; or
(f) a bond:
(i) entered into under an order of a court under this Act other than an order under Division 13A of Part VII; or
(ii) entered into for the purposes of subsection 112AE(5);
and includes an order, injunction, agreement or bond that:
(g) is an order under this Act made by another court because of paragraph (a), (b), (e) or (f); and
(h) has been registered in the first-mentioned court.
The parties were in agreement that the Order of 14 October 2021 was an order to which
s 112AP applied.
The meaning of “contravene an order” is defined in s 112AB.
Section 112AP has been called a complete and self-contained code; see DAI & DAA (2005) FLC 93-215; [2005] FamCA 88 at 79,582:
47. In Rutherford v Marshal of the Family Court of Australia [1999] FamCA 1299; (1999) FLC 92-866 at 86,241, the Full Court described s 122AP, then Part of Division 3 of Part XIIIA after the 1988 amendments, “a complete code for dealing with contempts of the Court”. The Full Court affirmed the decision in Schwarzkopff (supra), noting that contempt under the Act does not constitute “an offence against any laws of the Commonwealth”. The Court accepted a submission that s 112AP, as it then was, constituted a self contained code, and general sentencing legislation, whether State or Federal, had no application
It was common ground that the following principles apply, which were usefully summarised by Aldridge J in Ganem & Ganem (No.2) [2013] FamCA 257 (approved by the Full Court in Oakley & Millar [2019] FamCAFC 12):
10.Contempt pursuant to section 112AP is a criminal proceeding and accordingly each element of each charge must be proven beyond reasonable doubt. (In the Marriage of Tate [2002] FamCA 356; (2002) 29 Fam LR 195; (2002) FLC 93-107)
11.Contempt under section 112AP has four elements each of which must be proven beyond a reasonable doubt. The first three involve the acts and intentions of the respondent. The fourth is a finding to be made by the trial judge. These four elements are:
•The respondent knew the terms of the orders. (LGM and CAM [2006] FamCA 435; (2006) FLC 93-267 at 80, 536)
• The respondent deliberately did an act. The act must be wilful and deliberate as opposed to accidental or inadvertent. (In the Marriage of English (1986) FLC 91- 729 at 75, 294)
• The act must be intentional. This is not to say that the respondent must intend that the act was in breach of the order, which would make the respondent’s actions contumacious, but the respondent must have intend to do the act which is alleged to be the contempt. In the Marriage of English, above.
• The act must involve a flagrant challenge to the authority of the court. In Bande and Cade [2011] FamCAFC 93; 45 FamLR 376 at 39 the Full Court said:
The concept of a “flagrant challenge” involves conduct of an exceptional, striking or repeated nature. In Ibbotson and Wincen [1994] FamCA 103; (1965) 18 Fam LR 164; (1994) FLC 92 – 496 the Full Court held (at Fam LR 175; FLR 81, 162): “the use of the term “flagrant challenge” ... is intended to underline the exceptional or striking nature of the contravention in question and thus to differentiate it from what might be described as a general run of breaches which are intended to be dealt with under section 112AD ... it is a question of fact and degree whether the stringent terms of the section are satisfied ...
The decision of LGM and CAM (2006) FLC 93-267 referred to in the first element above was the subject of successful challenge in the High Court of Australia. The matter was remitted to a differently constituted Full Court and is reported as LGM v CAM (Contempt) (No 2) (2008) FLC 93-355. A ground of appeal concerned the primary judge’s finding that the wife (as it was there) knew of the terms of the order. Whilst that matter turned on its own facts, it remains though that knowledge of the terms of the order is an element in a charge of contempt that must be established.
Finally, it cannot be overlooked that there must be a contravention of an order under the Act. The second and third elements above direct attention to whether the respondent did an act that contravened an order, with that act being deliberate and intentional.
Procedure
As contemplated by s 112AP(3), r 11.71 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”) provides:
11.71 Contempt applications
(1)If it is alleged that a person has committed a contempt of the court (whether or not the contempt occurred in the face or hearing of the court), an application may be made to the court for the person to be dealt with for the contempt.
(2) An application must:
(a) be in accordance with the approved form; and
(b) state the contempt alleged; and
(c) be supported by an affidavit setting out the facts relied on.
Example: For the purposes of paragraph (2)(c), if a person alleges, in an Application—Contempt, that a party is in contempt because of a contravention of an order that involved a flagrant challenge to the court’s authority (see subsection 112AP(1) of the Family Law Act), the affidavit must set out the alleged facts necessary to prove this.
Note:An application under this rule and its supporting affidavit must be served personally on the respondent (see Table 2.2).
(3) An application may be made:
(a) if the contempt is in connection with a proceeding—by a party to the proceeding; or
(b) by the Marshal or another officer of the court; or
(c) by an officer or staff member of the Australian Federal Police; or
(d) by a member of the police force of a State or Territory.
(4) The court may direct the Marshal or another officer of the court to make an application.
(5) If the court considers that the person is likely to leave the jurisdiction of the court, the court may issue a warrant for the arrest and detention of the person in custody until the person:
(a) attends before the court to answer the charge; or
(b) gives security, as directed by the court, for the person’s attendance before the court to answer the charge.
(6) When the person attends before the court, the court must:
(a) tell the person of the allegation; and
(b) ask the person to state whether the person admits or denies the allegation; and
(c) hear any evidence in support of the allegation.
(7) After hearing evidence in support of the allegation, the court may:
(a) if the court decides there is no prima facie case—dismiss the application; or
(b) if the court decides there is a prima facie case:
(i) invite the person to state the person’s defence to the allegation; and
(ii) after hearing any defence, determine the charge.
Note:If a maintenance order is complied with before an Application—Contempt is heard by the court, the failure to comply with the order that led to the Application—Contempt being filed does not constitute a contempt of court (see subsection 112AP(1A) of the Family Law Act).
(8) If the court finds the charge proved, the court may make an order for the punishment of the person.
Note:Part XIIIB of the Family Law Act sets out the punishment the court may impose on a person found to be in contempt of court.
After it was agreed that the contempt application must be heard and determined prior to entertaining the husband’s Application in a Proceeding and subpoena objections, the following occurred:
(a)Both parties confirmed they were ready to proceed;
(b)Both parties confirmed s 112AP(1)(b) was the relevant statutory provision;
(c)Both parties agreed the onus was on the applicant wife to prove beyond reasonable doubt each contempt as alleged. As recently said by the Full Court in Zamir & Zamir [2022] FedCFamC1A 193 at [35], “The husband (as it also was there) had to prove nothing. The wife has to prove his contempt beyond reasonable doubt ...”;
(d)Both parties agreed that upon the wife giving evidence and being cross-examined, they would make submissions about whether a prima facie case had been made out by the wife;
(e)No issue was raised with respect to the formalities required in r 11.71(2) of the Rules;
(f)No issue was taken with the requirements for service in rr 2.28 and 2.35 of the Rules;
(g)The wife read her material being:
·The Amended Application – Contempt filed 25 November 2022;
·Her affidavit filed 3 November 2022; and
·An Outline of Case Document filed 19 January 2023. However, because that document also referred to the Application in a Proceeding and the subpoena objections, a revised version relating only to the Contempt was subsequently sent to chambers;
(h)Pursuant to r 11.71(6), the husband was asked to stand and was informed by me that:
You will be asked to indicate to the Court whether the charge which is put to you is admitted or denied. If you wish you can refer to your legal adviser in respect of each response.
(i)Each charge was read to the husband one at a time, and the husband, through his Senior Counsel, entered a denial for each individual charge;
(j)Objections to the wife’s affidavit were heard and determined;
(k)I then heard evidence in support of the allegations, being the wife’s affidavit, and the wife was cross-examined;
(l)During the course of the wife’s cross-examination, documents were tendered which became Exhibits 1-4;
(m)There was no re-examination of the wife;
(n)The wife then tendered a document which became Exhibit 5;
(o)The wife closed her case; and
(p)Both parties made submissions as to whether a prima facie case had been made, or not. Unsurprisingly, the applicant wife contended she had made out a prima facie case beyond reasonable doubt, and equally unsurprisingly, the husband contended she had not.
Whilst the husband suggested I determine that matter on the spot, I reserved my decision. As said at the time, I was not prepared to rush to a determination at 4.30 pm after a long day of hearing. Rather, I resolved to re-read the material before me and give careful consideration to the thorough and thoughtful submissions that had just been made by both parties on the prima facie case issue.
These are my Reasons as to whether a prima facie case has been made out by the wife for each of the three charges.
Charge One
Charge One is as follows:
[In mid] 2022 the respondent [Mr Mason] caused the sum of $429,358 to be paid to his personal account with [E Bank] being account number […16]; BSB […] in deliberate breach of the injunction contained in Order 2.5 of the Orders made on 14 October 2021.
Order 2.5 provides:
2.5. That the husband shall cause to be paid to the farm account:
2.5.1. All income earned from the farming enterprise;
It is common ground that in mid-2022 the husband received $429,358.03 in sale proceeds into his personal account ending in …16. It is also common ground that in mid-2022 he transferred $100,000 to the farm account ending with …92 (see Order 2.4.1 which defined the …92 account as the farm account), and the balance of $329,358.03 was transferred to the farm account the following day, in 2022. The wife’s annexures at pages 27, 81 and 83 are pages from bank accounts showing the transactions. The direction to change bank accounts is at page 78, which I accept to be the husband’s doing on a prime facie basis.
The charge itself omits the three cents, but no issue was taken with this. Nor will I, because the missing three cents in the charge is not so fundamental as to make the charge incompetent or lacking in the kind of precision to which a respondent is entitled, so they know the case that is to be met (Smith & Pickworth (1981) FLC 91-071).
The respondent knew the terms of the orders
Counsel for the wife submitted that as a consent order, and with the order revealing his Queens Counsel was appearing “for and with the respondent husband” that this element was established on a prima facie basis beyond reasonable doubt. Counsel for the wife also submitted that Exhibit 5, being extracts from the husband’s 9 December 2022 affidavit, proved he had knowledge of the orders. I do not accept that final submission; Exhibit 5 speaks to the husband’s state of knowledge about the orders as at 9 December 2022. It does not indicate what he knew the terms of the orders on 14 October 2021 when they were made, or, at the time of the mid-2022 transaction about which the wife complains - or indeed, the dates relevant to the other two charges below.
Senior Counsel for the husband referred to knowing of the terms of the orders as also requiring proof that he understood it. It was submitted that whilst the husband may be taken to have knowledge of the consent order, that was not the same as understanding it. I do not accept that submission. The authorities I was taken to speak of knowing the terms of the order, and implicit within that concept is understanding. I was not taken to any authorities, which made knowledge and understanding two separate limbs or elements as the husband seemed to contend.
I conclude, on a prima facie basis that the wife has established there is evidence beyond reasonable doubt that the husband knew of the terms of the order, and do so for all or any of the following reasons. First, it is inconceivable that the husband’s legal representatives would have presented or otherwise been supporting the making of the proposed consent orders by the court without their client’s informed instructions as to its terms (see for example the consideration by the High Court of Australia of LGM v CAM (2007) 235 ALR 197 at [13]). Second, the husband is recorded as being present with his Queens Counsel on the making of the orders. Further, his solicitors at the time the order were made, remain his solicitors. Third, Order 2.5 is not hard to understand and is part of a wider circumstance of a suite of orders being made to preserve assets and income (Medlow & Medlow (2017) 57 Fam LR 179 (“Medlow”) at [20]). Fourth, the husband did what was required of him by the order; that is, he paid the sale proceeds into the farm account, albeit by a process and timing about which the wife complains, and of which I say more later.
The respondent deliberately did an act
It is, as said, common ground at least on this prima facie basis that the husband had the grain proceeds paid into his personal account in mid-2022 and then transferred the funds to the farm account on two dates in mid-2022. That is, on a prima facie basis I am satisfied the receipt of funds into his personal account then transfers to the farm account were deliberation and not accidental or inadvertent. But, is that act in contravention of the relevant order?
The wife, who holds the onus of establishing all elements of contempt including the contravention of the order beyond reasonable doubt, would have me imply a timeframe into Order 2.5. But Order 2.5 does not contain a time frame for payment such as “immediately” or “forthwith”. Nor does it contain a mode of payment, for example, that all income be paid “directly” to the farm account.
If this were contract law, I could imply a time frame for performance, such as a reasonable time, where none is provided (Donau v ASC AWD Shipbuilder Pty Ltd [2019] NSWCA 185). But this is not contract law. These are criminal proceedings (see Ganem and Oakley above) where the wife must discharge the onus of proof for each element of each charge beyond reasonable doubt, including that the husband contravened the order.
It is certainly the case that a time frame would have been preferable (Bokin & Wild [2022] FedCFamC1A 209 at [74] citing Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537), but the reality is that Order 2.5 does not impose a time frame for compliance nor a mode by which the payments were to be made.
That said, it is accepted that a need to construe an order does not foreclose contempt (Medlow at [6]-[15]), but this is not a matter of construction, syntactic ambiguity or typographical error.
Rather, the husband literally did what was required of him under the order – he paid the sorghum sale proceeds to the farm account, but on a timeframe and by a mode with which the wife disagreed. The wife’s requirements as to timing of payment and mode of transfer are not imposed by the terms of the order.
The wife has thus failed to establish a prima facie case, beyond reasonable doubt, with respect to Charge One, and in particular, whether the husband contravened Order 2.5. For completeness and in the event I am wrong on that conclusion, I will consider the balance of the elements.
The act must be intentional
The bank direction and banks transfers are attached as annexures to the wife’s affidavit at the pages listed above. They show, on a prima facie basis, intentional acts by the husband, but not, as I have found, a prima facie breach of the terms of the order as actually made.
The act must involve a flagrant challenge to the authority of the court
The question here is whether the following evidence is sufficient to establish, at least on a prima facie basis, the exceptional, striking or repeated nature of the contravention in question:
(a)Order 2.5 was made on 14 October 2021;
(b)In mid-2022 the husband caused $429,358.03 to be paid to his personal account;
(c)A short time later, in 2022, the husband transferred $100,000 to the farm account; and
(d)The following day, the husband transferred the balance of $329,358.03 to the farm account.
The wife submitted that the timeframe referred to above was relevant to the consideration of flagrancy. I agree. However, I do not accept that the timeframe evinced a striking or exceptional challenge to the court’s authority. If the wife were able to establish the breach, then at best, the timeframe would fall within the less draconian relief provided by the general run of contravention proceedings (LGM v CAM (2006) FLC 93-267 at [98]).
It was also said it was flagrant that the husband held on to the funds in his account until the husband and wife agreed on a proposal for the Division 7A payments that were required to be made on or prior to 30 June 2022. I do not accept that submission because there are a myriad of reasons why the husband may have kept the funds aside; for example, if agreement could not be reached, he had access to funds to meet the parties’ obligation to the Australian Tax Office. That is not to put any onus on the husband, but to explain that the wife has not satisfied me beyond reasonable doubt that the husband’s actions in keeping the money pending agreement were flagrant.
The husband maintained that there was no contravention of the order. Notwithstanding, if the Court was against him on that, he then submitted that the breach (not that that was conceded) was remedied prior to the wife even knowing the funds had sat in his account for about two weeks, and as such, his actions were not flagrant. I accept that to be so; if the wife could establish the contravention of the order then, again, this would fall into the general run of proceedings dealt with by contravention proceedings.
Further, in circumstances where no time frame for depositing the sale proceeds was imposed on the husband, I am not satisfied that the receipt of the funds in to his personal account and then into the farm account some days later is exceptional or striking. It is also not repeated.
The requirements of s 112AP are stringent. Even if I was satisfied the order had been contravened, I am not satisfied that the husband’s conduct was a flagrant challenge to the authority of the Court.
This charge will be dismissed.
Charge Two
Charge Two is as follows:
[In mid] 2022 the respondent [Mr Mason] obtained a loan in the sum of $500,000 being NAB Business Markets Loan account number […54], and provided the property known as '[F Property]' at [G Street, H Region], as security for the loan, in deliberate breach of the injunction contained in Order 3.1 of the Orders made on 14 October 2021.
Page 138 of the wife’s annexures, shows the NAB Facility limit of $500,000; page 140 shows the property known as F Property was used as security for the facility; and, page 143 shows the date of mid-being when the husband signed his acceptance of the bank’s offer of finance. Separately, I observe that the address in the Charge of G Street, H Region seems to be a different address used by the bank, being 2 G Street, J Town. No submissions were made about this, so I cannot advance that any further.
Order 3.1 provides:
3. Until further order and save as otherwise provided herein, each party be and hereby is restrained by themselves, their servants and agents from causing, permitting or abiding:
3.1.Any encumbrance or further encumbrance, or any increase in any liability secured by any existing encumbrance, upon any real property registered in the names of the parties or either of them or any proprietary limited company of which they or either of them are directors or shareholders, including but not limited to the real property located at [L Street, Suburb D] (“[Suburb D] property”), [F Property] and [K Region] properties and [M Street] ("[Suburb N] property") including by increasing the balance presently owed on any facility secured thereby unless otherwise provided for in these orders; and
(emphasis added)
The respondent knew the terms of the orders
There is some evidence before me that the husband misread the order and was initially planning to borrow monies without security; see wife’s annexures page 107. However, when he was unable to obtain unsecured credit, the husband then borrowed money using the property known as F Property as security. That is a property listed in Order 3.1. The husband's deliberative process just outlined indicates to me, on a prima facie basis that, as the wife submitted, he had turned his mind to the order – first looking at unsecured credit but then offering F Property when security was required. That factor, in combination with the factors of knowledge listed under Charge One lead me to conclude on this prima facie basis that the wife has established the husband knew the terms of the order.
The respondent deliberately did an act
I am again satisfied on the wife's case and on this prima facie basis that the husband's action in borrowing against a property, contrary to Order 3.1, was a deliberate act as distinct from accidentally or inadvertently. The wife put on evidence of the business loan agreement, which lists the property subject of the injunction and bears the husband's name as the borrower and his signature. I am thus satisfied that the wife made a prima facie case, beyond reasonable doubt, that the husband contravened the order and did so deliberately, as distinct from accidentally or inadvertently.
I accept the wife's submissions that on the evidence currently before me, there is a prima facie case that the husband used F Property as security in contravention of Order 3.1.
The act must be intentional
For the same reasons set out under the previous sub-heading I also conclude, on this prima facie basis that the act of borrowing against the property was intentional.
The act must involve a flagrant challenge to the authority of the court
The wife’s Counsel placed emphasis on the decision of Rosington & Rosington [2018] FamCA 172 (“Rossington”). However, in that case, the wife (the alleged contemnor there) conceded that her “conduct in these proceedings could be found to represent a flagrant challenge to the Court’s authority” at [34]. No such concession was made for the husband in this matter.
Here, the husband planned to indemnify the wife with respect to the loan and not include it in the balance sheet; wife’s annexures page 108 and again at page 167. However, again on this prima facie basis I accept the wife's submissions that the lack of adverse consequence for the wife was not the test by which flagrancy was viewed. The wife's Counsel again relied on Rosington in that regard, which itself referred to Kendling&Kendling (2008) FLC 93-384, where it was said commencing at [194]:
So far as the submissions on behalf of the husband in relation to the absence of significant or enduring adverse consequences for the wife of the husband’s breaches of the Court’s orders are concerned, we record that in our view those submissions are misconceived in at least two material respects.
It is to be remembered that s 112AP concerns challenges to the authority of the Court. The fact that such challenges may have significant or enduring adverse consequences for the other party to the matrimonial cause may well be part of the circumstances enlivening the provisions of s 112AP, but in our view their absence does not preclude the section being successfully enlivened in a case where the findings of fact were as they were in this case.
There are at least two reasons why that is so. First, if this proposition were accepted, the consequences of the most flagrant challenges to the authority of the Court could be avoided by the rectification of the breaches of the orders at any time prior to the imposition of sentence. There would be a clear incentive in those circumstances for parties to flagrantly challenge the authority of the Court in the hope that the other party would not incur the expense of bringing the application pursuant to s 112AP, safe in the knowledge that if and when that was successfully undertaken, remedying the breaches of the orders would obviate the imposition of sanctions pursuant to the section.
Secondly, although not so expressed, implicit in the husband’s submission, at least in cases where rectification of breaches of court orders can be achieved by financial transactions or payments, is that it has the potential to elevate the wealthy to a level of impunity not enjoyed by those less affluent. Senior Counsel for the wife voiced this contention in oral submissions:
So for a very wealthy man this is just pulling the cheque book out at the last minute, and what [Counsel B]’s submission, and the effect of it would encourage is for, in any case in this Court where there is a huge disparity in wealth, a wealthy husband would feel quite confident to say, "Well, the Court can make whatever orders it likes. I will do what I want. If and when I am caught, and if and when someone goes through the massive hurdles of embarking upon a successful prosecution of me, then I will get the cheque book out and repay it and I will feel strongly confident that that Court is unlikely to do anything to me that would involve depriving me of liberty and if [Counsel B]’s argument would have it, and so far as any judge who made a contrary decision ought be seen as erring in the exercise of their discretion.
In this case, as learned Counsel for the husband candidly expressed it in the submission which we have earlier recorded, the husband’s case is that the “pie” being so large, nothing done by him in breach of the Court orders could ultimately enure to the financial detriment of the wife and thus could not be considered flagrant.
We not only disagree with that proposition, but regard the submission itself as indicative of flagrancy, the husband, through his learned Counsel, candidly suggesting to the Court that because his means are as large as he admits them to be, he can do with impunity what others perhaps could not because he asserts it would not affect the wife’s ultimate entitlements.
This extract speaks to the effect rectification and lack of adverse consequences upon the wife as not being the tests; but, it also serves to focus the consideration of flagrancy as one which is a flagrant challenge to the authority of the Court
The question here is whether the wife has satisfied me on a prima facie basis that it is beyond a reasonable doubt that the husband's borrowing against the property subject of an injunction was flagrant being exceptional, striking, or repeated. The wife submitted that it was, because the husband did what the order restrained him from doing, and, further, had not applied to the court to vary the October 2021 order until months after the act of accepting the finance offer and only after the wife’s contempt application was filed.
The husband submitted that if there was a breach (which was denied), then it was not flagrant. I was invited to consider the fact and degree of the breach (if found) including that there was would be no detriment to the wife. More so, if there was breach then it was “garden variety and rather ordinary”.
On this prima facie basis the wife has satisfied me that Charge Two ought proceed to further hearing - she has demonstrated at least at this point of the hearing that the husband did precisely what he promised to the court he would not, being that he provided a property for security in contravention on the order. That, at least on this prima facie basis, is a striking challenge to the Court’s authority.
Charge Three
Charge Three is as follows:
[In] around [mid] 2022 the respondent [Mr Mason] caused an unencumbered [Motor Vehicle 1] owned by the [Mason Partnership] to be disposed of by trading it in to purchase [Motor Vehicle 2] having registration […], which new vehicle is encumbered by finance arrangements with [O Limited], in deliberate breach of the injunction contained in Orders 1 (subparagraph 1.1) and 2.3 of the Orders made on 14 October 2021.
(emphasis added)
It is important to observe that a critical part of the charge is that the unencumbered Motor Vehicle 1 (a different model from Motor Vehicle 2) was said to be owned by the Mason Partnership. That is particularly important for the orders said to be contravened, being Order 1.1 and 2.3, which restrained the parties from dealing with assets and income of, inter alia, the “partnership” (for Order 1.1) and the “Mason Partnership” (for Order 2.3).
Orders 1.1 and 2.3 provide:
1.Until further order, each party be and hereby is restrained by themselves, their servants and agents, from doing or causing or permitting to be done, any of the following:
1.1.Howsoever dealing with any of the assets and income of any of the companies, trusts and partnerships in which they have an office holding or interest, other than in the ordinary course of business;
…
2.Until further order, the husband and the wife each be restrained by injunction from doing the following without the other party’s prior written consent or a prior order of the Court including but not limited to the following:
…
2.3.doing any act or thing to cause the assets or income of any companies in which he / she is a shareholder or any trusts in which he / she is a trustee or appointor or a director or shareholder of a corporate trustee, or the [Mason Partnership], to be disbursed, sold, transferred, assigned, encumbered, alienated, leased or disposed of in any manner except in the ordinary course of business and as properly documented in the books of financial statements and accounts of the relevant company or trust or partnership; or
(emphasis added)
The respondent knew the terms of the orders
I rely on my reasons given above about knowledge.
The respondent deliberately did an act
I am satisfied on a prima facie basis beyond reasonable doubt that the husband traded in Motor Vehicle 1 and applied the proceeds to the acquisition of a new vehicle. The documents attached to the wife’s case indicate this is so on a prima facie basis. On the face of the wife’s material, the respondent’s actions in selling and buying were deliberate acts as distinct from accidental or inadvertent.
But, were these acts contraventions of an order? As stressed above, a critical part of the charge was that Motor Vehicle 1 was partnership asset and thus an asset the husband was restrained from dealing with under both Orders 1.1 and 2.3.
There is no evidence before me that establishes Motor Vehicle 1 was a partnership asset, and certainly nothing which would establish that beyond reasonable doubt. The annexures to the wife’s affidavit, for example at pages 193-199, 201- 207, 209 and 210 make no mention of Motor Vehicle 1 being a partnership asset, nor Motor Vehicle 2 being acquired by the partnership – not that that was pleaded with respect to the later acquisition, but submissions were made to that effect.
Further, the Mason Partnership is defined in the Order at A.1 as having an ABN. Conversely, the ABN given at page 210 of the wife’s annexures, being the application with O Limited to acquire Motor Vehicle 2, is different.
For the lack of evidence with respect to Motor Vehicle 1 being a partnership asset but not in the charge, the wife has failed to establish a prima facie case with respect to Charge Three. It was said in submissions that the new vehicle was acquired by the partnership too, but that is not pleased in the charge nor is there any evidence to support that on a prima facie basis beyond reasonable doubt.
Separately, Senior Counsel for the husband also drew the court’s attention to the clauses in the orders that the parties were restrained from dealing with (inter alia) partnership assets “other than in the ordinary course of business” (Order 1.1) and “except in the ordinary course of business” (Order 2.3). The submission was made that a farmer selling an old Motor Vehicle 1 and buying a new one was nothing but the ordinary course of business.
Counsel for the wife said there was no evidence that selling a car and buying another was in the ordinary course of business. However, that submission cast an onus on the husband to prove it was. Rather, it was for the wife to prove beyond reasonable doubt that dealing with the 2013 vehicle and buying a new one was not in the ordinary course of business.
The wife put on no evidence to satisfy me of that, let alone beyond reasonable doubt.
For the lack of evidence with respect to the transactions not being in the ordinary course of business, the wife has failed to establish a prima facie case with respect to Charge Three.
The act must be intentional
It was common ground the husband traded in one car and acquired another.
The act must involve a flagrant challenge to the authority of the court
Again, it is not necessary for me to decide the element of flagrancy given I have concluded that the wife has not established that the husband contravened the relevant orders. Nevertheless, I will consider the parties’ submissions in the event I am wrong on those conclusions.
The wife said during the course of the hearing that, in essence, I should not be blinkered by the modest sums involved and compare that to the asset pool of at least $17 million. Rather, the wife contended this was a striking act of contravention.
The husband submitted that even if the order was breached (which was denied) then trading in one car for another is simply not flagrant.
Even if the wife had been able to make out a prima facie case that the husband had contravened Orders 1.1 and 2.3, I do not consider selling one car and buying another to be a flagrant challenge to the authority of the court. Rather, the failure (if able to be established) would be one which would be described as a general run of breach intended to be dealt with as a contravention (Ibbotson and Wincen (1965) 18 Fam LR 164).
It follows that Charge Three will be dismissed.
I certify that the preceding seventy-five (75) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Brasch. Associate:
Dated: 25 January 2023
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