Melbourne University Student Union Inc (in liq) v Ray
[2006] VSC 205
•14 June 2006
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
PRACTICE COURT
No. 6208 of 2005
| MELBOURNE UNIVERSITY STUDENT UNION INC (IN LIQUIDATION) | Plaintiff |
| v | |
| DARREN KENNETH RAY and OTHERS | Defendants |
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JUDGE: | Hollingworth J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 24 March 2006 | |
DATE OF RULING: | 14 June 2006 | |
MEDIUM NEUTRAL CITATION: | [2006] VSC 205 | |
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Contempt of court – Publication by defendant of material highly critical of plaintiff’s liquidator – Material alleged to constitute contempt by bringing improper pressure to settle on plaintiff – Principles governing contempt by improper pressure on party – Whether serious question to be tried – Balance of convenience – Application for interlocutory injunction to restrain publication refused
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| APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr G Bigmore QC Mr J Evans | Madgwicks |
| For the Fifth Defendant | Mr Cass appeared in person | |
HER HONOUR:
Introduction
Around the end of 2003, Melbourne University Student Union Inc (“MUSU”) went into liquidation amidst allegations of impropriety by former MUSU officers and a blaze of media interest. This court appointed Dean McVeigh as provisional liquidator in December 2003 and as liquidator in February 2004. Thereafter, Mr McVeigh conducted examinations pursuant to the Corporations Act 2001 (Cth). In May 2005, he issued this proceeding on behalf of MUSU, claiming damages well in excess of $3M for breaches of fiduciary duties and conspiracy on the part of former MUSU officers and contractors. The fifth defendant, Benjamin Cass, is a former president of MUSU.
Mr Cass has long been critical of Mr McVeigh’s conduct with respect to the MUSU liquidation. Of particular concern to him has been the substantial amounts of creditors’ money which has been spent on the fees of the liquidator and his lawyers. At the heart of his concerns is his assertion that the liquidator started with about $6M in assets and $4M in liabilities, but instead of simply paying out creditors, has spent millions of dollars on professional fees pursuing this litigation against impoverished or impecunious defendants. He is also aggrieved that no meeting of creditors has been held.
On 30 January 2006, Mr Cass set up a “blog” (an abbreviation for “weblog”) on his website, which is essentially an online diary. Mr Cass has described the website as being dedicated towards a critique of the liquidator’s professional conduct. The contents of the website will be considered in detail shortly; suffice to say that they are highly critical of Mr McVeigh’s conduct as MUSU liquidator.
On 8 February 2006, the plaintiff issued a summons in this proceeding, seeking to have Mr Cass punished for contempt of court for the publication of the website and a 2 page facsimile dated 2 February 2006 headed “Emergency Bulletin: Dean McVeigh referred to Victoria Police” and sent to MUSU creditors (“the bulletin”). The summons also sought interim orders until the determination of the entire proceeding, requiring the removal of the blog from the website and preventing Mr Cass from publishing:
(a) Any of the material previously published on the website;
(b) The bulletin;
(c) Any material relating to the conduct of the liquidation of MUSU;
(d) Any material relating to Mr McVeigh.
In short, the original summons sought very draconian orders which, if granted, would have had the effect of completely silencing Mr Cass from making any comment, no matter how innocuous or accurate, about Mr McVeigh or the liquidation of MUSU.
When the summons first came on in the Practice Court on 10 February 2006, Habersberger J granted an adjournment at Mr Cass’s request until 16 February 2006. The matter came on before Hansen J on 16 and 23 February 2006. On the 23rd, Hansen J granted a further adjournment until 24 March 2006, and gave leave to MUSU to amend the summons.
The amended summons, filed on 23 February 2006, seeks more modest interlocutory relief. Instead of seeking the complete removal of the blog, or a total ban on any comment about Mr McVeigh or the liquidation, the amended summons seeks to restrain Mr Cass from publishing nine specific types of information, the details of which will be considered shortly.
As its liquidator, Mr McVeigh is the only person capable of deciding whether to prosecute, settle or abandon the plaintiff’s claim against Mr Cass and the other defendants. Mr McVeigh says that the continued publication of offending material on the website and elsewhere would bring improper pressure to bear on him to settle or discontinue the proceeding against Mr Cass and the other defendants. It is for this reason that the publications are said to constitute contempt.
In considering any application for an interlocutory injunction, the court is required to consider whether there is a serious question to be tried and whether the balance of convenience favours the grant of an injunction, as well as any relevant discretionary matters. Here, the practical result of any injunction would be that MUSU would obtain the final relief which it seeks on the summons, in the sense of silencing criticism by Mr Cass until the determination of the entire proceeding. The Court of Appeal has recently said in Bradto Pty Ltd v State of Victoria[1] that the test is the same, whether or not the interlocutory order would effectively dispose of the proceeding. However, an applicant’s prospects of success will almost always be a factor in the evaluation of the balance of convenience, in the analysis of where the least risk of injustice lies[2].
[1][2006] VSCA 89.
[2]Ibid at [39].
Here, MUSU seeks to have Mr Cass punished for criminal contempt. In order to succeed in that claim, it will need to establish that Mr Cass’s comments constitute a contempt of court in accordance with the criminal standard of proof.
I will briefly outline the law as it applies to this branch of contempt by publication, before turning to the specific examples said to constitute instances of contempt.
The law of contempt
All forms of criminal contempt share a common characteristic: they involve an interference with the due administration of justice, either in a particular case or, more generally, as a continuing process. Although many different actions can constitute contempt, the issue in the present case concerns itself with a subset of criminal contempt known as contempt by publication.
Typically, the type of commentary that constitutes such contempt is the publication of comments on, or statements as to, the evidence to be given in proceedings pending in a court. This is because such commentary has a tendency to deprive the court of the power of impartially administering justice with reference only to the facts before it. However, contempt by publication is not limited to such comments, and also includes publications having a tendency to impose improper pressure on a party to litigation.
The relevant principles to be applied were conveniently set out by Mason P in the NSW Court of Appeal in Harkianakis v Skalkos[3] and have been followed in subsequent cases[4]. For present purposes, and omitting reference to the numerous authorities cited in that case, those principles may be paraphrased in the following terms:
[3](1997) 42 NSWLR 22 at 27-30.
[4]For example: North Australian Aboriginal Legal Aid Service Inc v Bradley (2001) 188 ALR 312 per Wilcox J at [29]; Resolute Ltd v Warnes [2000] WASCA 359 per Kennedy, Ipp and Miller JJ; Timania Pty Ltd v Inghams Enterprises Pty Ltd [2004] FCA 732 per Finkelstein J.
(1) This being an allegation of criminal contempt, the charge must be established beyond reasonable doubt.
(2) The authorities have variously stated that a claimant must demonstrate, to the criminal standard, that the publication had “as a matter of practical reality, a tendency”, or a “clear tendency”, or “a real and definite tendency” to prejudice or embarrass or interfere with the course of justice in a particular case, or that there was a “substantial risk of serious interference” of that type.
(3) Intention to interfere with the due administration of justice is not necessary to constitute a contempt.
(4) However, if intent to interfere has been proved, this has usually been sufficient to sustain a prosecution, although it is not self-evident why this is so. Two possible explanations are that the court is applying the principle that a person who does an act with such intent is admitting a belief that he or she has a reasonable chance of success, with this admission being used as evidence of the fact; or that such a case involves an inchoate offence in the nature of an attempt, where intent plus preparatory acts will be sufficient to sustain the charge.
(5) The cases have recognised a category of criminal contempt in which improper pressure is placed on a party to court proceedings through the public dissemination of material. Such contempt may include public discussion involving injurious misrepresentations concerning a party or abuse and public obloquy of a party. These and other instances of “trial by newspaper” tend to undermine the rule of law, because they risk impeding access to the courts for vindication of legal rights. The gravamen of the contempt is the tendency to deter both the individual litigant and litigants similarly placed who would wish to seek curial vindication of their rights.
(6) Delay between publication and anticipated trial date is not relevant to contempt by improper pressure on a litigant, because such pressure is capable of diverting the litigant at any stage of the proceeding. The right to bring a proceeding includes the rights to negotiate a settlement or not, and to discontinue or not.
(7) Successful interference with a party’s conduct of proceedings is not necessary for proof of liability for contempt by improper pressure. This is indicated by the “tendency” formula.
(8) There is a question as to whether the tendency is to be measured against the capacity to withstand pressure of the particular litigant involved, or whether the court should have in contemplation some hypothetical litigant of “ordinary” fortitude who might be capable of influence by similar pressure applied in similar circumstances. That issue need not be resolved in this case.
(9) In punishing certain types of interference with litigants, the law is concerned to distinguish between proper and improper pressure. It is only improper pressure which may give rise to contempt. Pressure may be actual or threatened, conditional or unconditional. What is done or threatened may be lawful or unlawful conduct, although the mere fact that it is lawful does not necessarily mean that the pressure is proper.
One of the matters left open in Harkianakis (at point (8) above) was whether the relevant tendency was to be measured against the capacity to withstand pressure of the particular party or some hypothetical litigant of “ordinary fortitude”. Some cases have preferred an objective test: Resolute Ltd v Warnes[5], Attorney-General v Hislop[6] and Vajda v Nine Network Australia Ltd[7]. However, in Bhagat v Global Custodians Ltd[8], Spigelman CJ, with whom Ipp and Brownie AJJA agreed, said that those authorities involved publication to a broader audience, in which case “the element of interference with the administration of justice is mediated by the response of the community, broader than the parties to whom the publication is sent.” The members of the Court of Appeal agreed that, at least in the present context of private communications between parties to proceedings, regard could be had to the subjective characteristics of the recipient when determining whether the pressure was improper[9]. That is to say, both an objective and subjective test may be pertinent in considering questions of impropriety.
[5][2000] WASCA 359 per Kennedy, Ipp and Miller JJ.
[6][1991] 1 QB 514 at 526.
[7][2000] NSWSC 873 at [12]-[15].
[8][2002] NSWCA 160.
[9]Per Spigelman CJ at [49]-[50], Ipp AJA at [54], Brownie AJA at [56].
The competing policy considerations in this area are the subject of an interesting discussion in a recent article by Roy Baker[10]. In this area of contempt, the law is concerned both for the particular case and the machinery of justice generally, which can produce a different answer to the subjective-objective dilemna:
“In determining whether improper pressure has been brought, should consideration be given to the effect of the media coverage on the litigant who is the subject of the publication, or should it be given to the effect on some hypothetical litigant? If the sole concern were for the current litigant, then only the effect on that person would be relevant. No justice would be served in punishing publications that have not the slightest effect on a litigant of robust strength. Alternatively, special protection might seem desirable for the unusually vulnerable. The suitable test as to whether improper pressure had been exerted would be subjective. …
If, on the other hand, the law were to have regard only for the deterrent effect of media pressure on litigants (current and potential) other than the person subjected to that pressure, the argument for a subjective test becomes far less categorical. Then, evidence of the effect of the publicity on the specific litigant would serve no more than as an example of how one particular litigant has fared.”
[10]“Determining contempts by improper pressure on a litigant: an objective or subjective test?” (2003) 8 Media & Arts Law Review 19 at 20.
This being only an application for an interlocutory injunction, it is not necessary for me to resolve any tension between the subjective and objective tests. I will consider whether the plaintiff has established that there is a serious question to be tried using either test.
Finally, it is worth remembering that the law in this area of contempt is not the same as the law of defamation, although in many cases claims in both contempt and defamation are in fact brought on the same facts. Contempt will only be found where there is a tendency “to disparage or vilify a party … because he is a litigant … or because of the litigation or allegations made in it.”[11] Furthermore:
“The mere presence of an inaccurately stated fact or florid language will not suffice to establish contempt. The whole context needs to be examined before what is said and the manner it is expressed can be identified as having crossed the line between the offensive and the contemptuous. But that line is crossed when it is proved that the publication has the tendency to deter and where a party is vilified without justification because he or she is a litigant or because of the litigation or the allegations made in it.”[12]
[11]Hinch v Attorney-General (Vic) (1987) 164 CLR 15 at 54-55 per Deane J.
[12]Harkianakis at 42 per Mason P.
Specific complaints
It is against this legal backdrop that I approach the factual matters in the present case. MUSU seeks to restrain publication of the following specific matters by Mr Cass. In considering whether there is a relevant tendency, I will consider these matters individually, before considering their combined effect. I will then consider the evidence as to Mr Cass’s intent in making such publications.
The use of Mr McVeigh’s name in the website address
The amended summons seeks to restrain Mr Cass from publishing any website incorporating the name or surname of Mr McVeigh, including but not limited to the current website address, which is “
There is no possible basis for an injunction in such broad terms. Mr McVeigh has no proprietary interest in his name. It is difficult to imagine how there could ever be a contempt committed by the use of his name in a positive or neutral context. Even if his name were used in a negative context, whether or not that might have a relevant tendency so as to constitute contempt would depend on the precise name of the website. Accordingly, I will consider this part of the summons only in relation to the use of the expression “makemcveighpay” in a website address.
Mr McVeigh complains that the name of the current website involves a deliberate attempt to incite those who visit the site to think ill of him. But that seems to mis-state the problem.
The current address certainly conveys to would-be readers (for example, somebody doing a “Google” search), that the website is likely to be critical of somebody called “mcveigh”. But it does not in itself identify that person as Dean Royston McVeigh, the MUSU liquidator. Even if it were clear that it was the MUSU liquidator who was being referred to, the website name itself does not indicate what it is suggested that he should “pay” or be accountable for or why. It is really the contents of the website which may be a cause of concern; they are the subject of separate complaint which will be considered shortly.
It is not uncommon for litigants to publish, by way of press release or otherwise, material which is critical of their opponents. If such publications have the relevant tendency, they may constitute contempt. However, in my opinion, it cannot be said that the mere name of the current website could possibly have the relevant tendency. There is no serious question to be tried in relation to this particular complaint.
Allegations of specific criminal conduct
The liquidator seeks to restrain the publication of any allegation that:
(a) He has been referred to, or is being investigated by, police in respect of potential charges of obtaining financial advantage by deception;
(b) He has breached or should be investigated for breaching any provision of the Crimes Act 1958 (Vic).
When he commenced this proceeding, Mr McVeigh made public statements to the effect that he expected to recover more than $2M in the proceeding. Mr Cass claims that the liquidator knew the asset position of all 12 defendants would “not give a return of anywhere near $2 million”, prior to initiating the proceeding against those defendants. Mr Cass argues that Mr McVeigh’s insistence on initiating proceedings against those defendants is either a reckless act or one calculated to maximise his personal financial return through receipt of liquidator’s fees. Mr Cass says that Mr McVeigh has thereby acted fraudulently.
Mr Cass has referred his concerns in that regard to Victoria Police. On 6 February 2006, he received a response from the Chief Commissioner’s office in the following terms:
“Dear Mr Cass
… The information you have provided will be assessed to determine whether the involvement of Victoria Police is appropriate. You will receive further advice in due course.”
The bulletin, which was published in Mr Cass’s name and sent out to MUSU creditors, contains the following relevant allegations :
“In a stunning development Dean Royston McVeigh, liquidator of [MUSU] was today referred to the Office of the Chief Commissioner (Victoria Police) on potential charges of obtaining financial advantage by deception.
Christine Nixon’s office was today provided with information that may lead to McVeigh’s possible arrest after evidence arose that he had settled with all remaining defendants on grossly uncommercial terms having incurred millions of dollars in personal fees and legal expenses.
If charged and found guilty, the failed liquidator faces up to ten years in gaol under Section 81 of the Crimes Act and will automatically lose his CPA and Insolvency Practitioner license.
…
If you have information that may assist in McVeigh’s prosecution, please immediately call Victoria Police on …”
The bulletin is literally true, in that the liquidator’s conduct had been referred to Victoria Police in relation to a possible offence of obtaining financial advantage by deception. The bulletin did not disclose that it was Mr Cass who had made that referral to the police.
Similar allegations are made at a number of places on the website. For example: “McVeigh must be investigated for a breach of Section 81 of the Crimes Act” and “…a prima facie case exists for a breach of section 81 of the Crimes Act, obtaining financial advantage by deception”. One particular blog entry concludes:
“We hope and pray Victoria Police will be able to bring McVeigh to justice and we stand willing and able to provide any assistance required including the provision of Supreme Court documents, ASIC lodgements and private correspondence demonstrating his fraudulent conduct.”
It is very clear on the website that it was Mr Cass who provided the police with the material which alleges the commission of a breach of s.81 of the Crimes Act. The website also contains a full copy of the Chief Commissioner’s reply, namely that the matter will be assessed to see whether police involvement is appropriate.
Given those facts, it is hard to see how there could be a relevant tendency merely in publishing the factually accurate statement that the liquidator has been referred to the police in relation to possible charges of obtaining financial advantage by deception, contrary to s.81 of the Crimes Act.
The plaintiff also seeks to restrain Mr Cass from alleging that Mr McVeigh is “being investigated by the police” in relation to such matters. I accept that an allegation that somebody is “being investigated by the police” would be more serious than an allegation that they have “been reported to the police”. However, Mr Cass has made no such statement to date. The plaintiff’s counsel argues that it is implicit in Mr Cass’s call for people to supply information to assist the police that they must be investigating Mr McVeigh. In my opinion, a fair reading of the bulletin does not give rise to such an implication.
Even if such an implication could be made, it seems to fall a long way short of improper pressure, in the present circumstances. There is evidence that both sides have publicly accused the other of criminal conduct. Even before this proceeding had been commenced, Mr McVeigh used the media to accuse Mr Cass and other defendants of a wide range of criminal conduct, including corruption, election rigging, falsification of records, forgery and obtaining an advantage by deception. They have been repeated by Mr McVeigh since then. The relevant parts of the bulletin and website may be seen as simply an instance of the tit-for-tat strategy employed by both sides in this proceeding. Allegations of criminal conduct are more likely to have the relevant tendency if made by a court-appointed liquidator, than in the internet diary of a recent student union leader.
As far as the balance of convenience is concerned, if Mr McVeigh is genuinely concerned about this publication, there is nothing to stop Mr McVeigh from informing creditors (to whom the bulletin was sent) and the public at large that he rejects any suggestion of wrongdoing, has offered full co-operation to the police and that he will vigorously defend this allegation.
General allegations of fraud
The plaintiff also seeks to restrain Mr Cass from making more generalised allegations that Mr McVeigh is engaging in, or has engaged in, fraudulent conduct.
Mr Cass threatened to distribute 1000 postcards around Melbourne University campus during Orientation Week, one side containing a photograph of Mr McVeigh and the website address and the other side containing the words “lies … deception … fraud”. It is not clear whether he did in fact distribute such cards, but I will assume for present purposes that he did so or is prepared to do something similar in the future.
On his website, he has also accused Mr McVeigh of being a liar, somebody who has misled the court and regulators, and somebody who has committed fraud.
The website also quoted from Gillard J’s criticism of Mr McVeigh in the Rugs Galore liquidation, in which his Honour said that, as liquidator, Mr McVeigh had misled creditors of that company; the website also provides a hyperlink to that decision[13]. His Honour concluded that “neither Mr McVeigh nor Mr McDonald should be the liquidator in the winding up.”[14] Although on appeal, Phillips JA, with whom Tadgell and Buchanan JJA agreed, admitted to having “some sympathy” for the plea made by Mr McVeigh that the time constraints were such as to preclude him from doing fully as he might have wished all that he had to do[15], the Court of Appeal ultimately upheld the decision of Gillard J.
[13] Linen House Pty Ltd v Rugs Galore Australia Pty Ltd [1999] VSC 126 at [165].
[14]Ibid, [204].
[15]McVeigh and Anor v Linen House Pty Ltd and Anor(No 2) (2000) 1 VR 31 at [43].
The specific references to the Rugs Galore litigation are accurate and do not have the relevant tendency. However, it is at least arguable that the more general public allegations that Mr McVeigh has engaged in lies, deception and fraud, may have the relevant tendency.
Predicting the outcome of the litigation
MUSU seeks to prevent Mr Cass from publishing any allegation that the liquidator has recovered or will recover no more than $60,000 through prosecution or settlement of this proceeding.
Mr Cass has repeatedly asserted that, despite the liquidator’s initial claims that he would recover more than $2M from this proceeding, the liquidator in fact will not recover more than $60,000 through prosecution or settlement of this proceeding. Three examples of these allegations are as follows.
On 30 January 2006, Mr Cass posted on his website the following comment, below a picture of Mr McVeigh with the caption “Mr 1%”:
“This is the man who has secretly settled with all of MUSU’s 11 defendants for a paltry $60,000 in total having spent over $6 million in a 2 year fee bonanza.”
In the bulletin, Mr Cass wrote:
“After two years of bravado and false promises, leaked documents, reveal McVeigh is in the process of shutting down the liquidation after settling with all remaining defendants for a paltry $60,000 in total.”
On 13 February 2006, Mr Cass posted the following on the website:
“Dramatic news 3 weeks ago confirmed that McVeigh had settled with all but 3 defendants for a paltry sum of $60,000 in total! Yet the amount came as no surprise to observers closely monitoring McVeigh's scam, knowing full well that launching a multi million dollar law suit against penniless students was nothing short of ridiculous.”
The website then went on to name each of the defendants. In respect of the second, third, fourth, seventh and eighth defendants, Mr Cass gives his understanding of the amount of the settlement figure which he believes each of those persons has agreed with the liquidator, which total some $60,000. In respect of the ninth to twelfth defendants, he describes them as companies in liquidation and no longer a defendant. In respect of the first, fifth and sixth defendants, Mr Cass says as follows:
“First Defendant – Darren Ray (unemployed) – aged 24 – former Student Union President – believed to be currently negotiating a settlement with Madgwicks – settlement figure believed to be less than $10,000.
Fifth Defendant – Benjamin Cass – aged 27 – former Student Union President – refuses to settle – believed to have current available assets of less than $30,000.
Sixth Defendant – Andrew Landeryou (full time blogger) – age unknown – businessman – pending bankruptcy by Solomon Lew – believed to have current available assets of less than $5,000.”
The liquidator has deposed that the four corporate defendants are indeed in liquidation, that settlement arrangements are in place with five other defendants (but are subject to conditions precedent which had not been fulfilled as at 22 March 2006) and that settlement negotiations were continuing with one other defendant. Thus far, Mr Cass’s information seems accurate.
However, the liquidator has chosen not to tell the court the precise amounts that he has agreed to accept from those with whom he has entered into settlement arrangements. And notwithstanding that 10 separate affidavits have been sworn by or on behalf of the liquidator in support of the injunction application, in not one of them is there any denial of the general accuracy of Mr Cass’s assertions that the likely recovery will fall a long way short of the $2M prediction. The liquidator’s silence in this regard is deafening. Nor has any explanation been given for the silence, for example commercial confidentiality.
Mr Cass has not purported to prejudge what the outcome of a trial of the proceeding might be, or otherwise to usurp the court’s role. What he has repeatedly done is comment on the commercial viability of the proceeding, irrespective of its merits.
The plaintiff concedes that there would be no contempt if Mr Cass had simply said that there was nothing left because the companies have gone into liquidation, there have been some settlements and certain parties have been declared bankrupt. Instead, by saying the liquidator will never recover anymore than $60,000 by pursuing this action, the plaintiff claims that Mr Cass is predicting the outcome of the proceedings and therefore acting in contempt.
The plaintiff justifies having commenced this litigation by asserting that $1M had gone overseas through the tenth defendant, Marbain Pty Ltd, a company controlled by Mr Landeryou and Mr Cass, but now in liquidation. Furthermore, the plaintiff claims that if the conditions precedent are fulfilled regarding the settlement arrangements with other defendants, it may recover as much as $165,000. However, such settlement sums are a long way short of $2M.
Mr Cass’s public statements undoubtedly seek to convey the impression that Mr McVeigh has been wasting creditors’ money chasing impoverished or insolvent defendants. The liquidator says that that impression in turn imposes an intolerable pressure to settle. I disagree.
In so far as there is material before the court, it seems that Mr Cass’s comments as to the commercial viability of this proceeding have a strong degree of factual accuracy. Any claim that there is a serious question to be tried in relation to this matter would be a weak one.
Allegations of bankruptcy
Mr McVeigh seeks to restrain any publication of the allegation that three of the defendants, Darren Ray, Mr Cass and Andrew Landeryou are bankrupt, while that allegation remains untrue.
The bulletin asserts that this proceeding is a “costly and useless exercise given the defendants had few assets” and that the liquidator is in the process of settling with all remaining defendants for a total of $60,000. Attached to the bulletin is a copy of the schedule of parties in this proceeding, with handwritten annotations which show how Mr Cass arrives at his figure of $60,000. The names of Messrs Ray, Cass and Landeryou have been crossed out and the words “$0 Bankruptcy Trustee” handwritten below. The liquidator claims that this falsely represents to creditors that those three defendants are bankrupt and that this constitutes a contempt.
Mr Cass says that he and Mr Ray have been in discussions with Andrew Dunner of Dunner & Co about the possibility of declaring themselves bankrupt, and that Mr Landeryou “entered into” bankruptcy on 19 March 2006. I do not have before me a current bankruptcy search for any of those three defendants; the most recent search in evidence was conducted on 6 February 2006, at which time none of them had been declared bankrupt.
I proceed on the basis that, at the time of publication of the bulletin, it was not true that Messrs Ray, Cass and Landeryou were bankrupt. However, there seems to be a distinct possibility that some or all of them will shortly become bankrupt (if Mr Landeryou is not already).
Mr Cass had not been declared bankrupt as at the time of the hearing before me. However, within hours of the completion of the hearing before me on 24 March, the liquidator’s solicitors served on Mr Cass a bankruptcy notice in respect of the sum of $19,585.40 for costs orders made against him in this proceeding. Even though the bankruptcy notice had been issued by the liquidator’s solicitors on 16 March 2006, the liquidator’s counsel made no mention to me of its existence or the fact that the liquidator intended to serve it later that day.
Mr Cass came back to the Practice Court late in the afternoon of the 24th, at which time I gave him leave to file a copy of the bankruptcy notice and covering letter from the liquidator’s solicitors. My associate informed the liquidator’s solicitors of that fact; the liquidator declined an invitation to make any further submissions in relation to the service of the bankruptcy notice.
It would be an abuse of process for the liquidator to have issued the bankruptcy notice only to put pressure on Mr Cass to pay the debt, rather than to invoke the court’s jurisdiction in relation to insolvency; as Deane J observed in Re Sarina[16] bankruptcy proceedings are not appropriate in order to compel a recalcitrant debtor who is otherwise solvent to pay a debt which he declines to pay.
[16]Re Sarina (1980) 43 FLR 163 at 165; see also Re Stirling: Ex parte Esanda Pty Ltd (1980) 44 FLR 125; Brunninghausen v Glavanics (Unreported, Federal Court of Australia, 3 March 1998, BC9800779) per Emmet J.
Assuming for present purposes that the liquidator issued the bankruptcy notice appropriately, that must mean that the liquidator has real doubts about Mr Cass’s ability to pay a debt of not quite $20,000 and intends to commence bankruptcy proceedings if the debt is not paid. The clear context in which the statement “$0 Bankruptcy Trustee” was written was to indicate that Mr Cass thinks that the liquidator will not recover anything of substance from him in this proceeding. The issuing and service of the bankruptcy notice rather tends to suggest that the liquidator shares that view in relation to Mr Cass’s financial position.
I am not persuaded that the mere assertion that Messrs Cass, Ray and Landeryou are bankrupt could constitute an interference with the administration of justice or be likely to force an ordinary person in Mr McVeigh’s position to settle. The accuracy or otherwise of the statement can readily be ascertained by a bankruptcy search. Mr Cass’s blog gives a fuller explanation of the financial position of each of Messrs Ray, Cass and Landeryou. Mr McVeigh is free to send a circular to all creditors, or issue a media release, refuting the assertion and explaining his reasons for pursuing the litigation against Messrs Ray, Cass and Landeryou. An ordinary litigant is unlikely to feel forced to settle.
It concerns me that a court-appointed liquidator would accuse somebody of committing criminal contempt by claiming to be bankrupt, whilst all the while the liquidator had a bankruptcy notice already issued and ready to serve on Mr Cass with the intention of bankrupting him. The failure to disclose this fact to the court, in a situation where the alleged contemnor is an unrepresented litigant, is of particular concern and is relevant to my later discussion of discretionary considerations.
Alleged misleading of the court
The liquidator seeks to restrain Mr Cass from publishing any allegation that the liquidator or his solicitors or counsel have lied to or deliberately misled this court.
The liquidator complains that Mr Cass has repeatedly accused Mr McVeigh and his solicitors of lying to the court, to regulators and generally. In his blog, Mr Cass has said:
“if word gets around town that McVeigh is a lying cretin he doesn’t get appointed any more to the easy money jobs of liquidation. If McVeigh doesn’t get appointed any more Graeme Levy [a Madgwicks partner] loses the bread and butter of his law firm.”
The website also made reference to what Mr Cass dubbed “[t]he McVeigh-Levy led cabal of rorters who have together deliberately misled the Supreme Court and creditors for two years” and made further allegations of deceit in the form of blog entry titles.
However, these quotes are by way of summary of Mr Cass’ principal argument that the liquidation started off with more assets than liabilities and that this position has now reversed under Mr McVeigh’s administration. Statements such as “McVeigh lies to the Supreme Court” lack specific reference to what the alleged lies are supposed to be.
It is arguable that such comments could give rise to a relevant tendency.
Alleged disinterest in creditors
The liquidator seeks to prevent the publication of any allegation that he is not or was not interested in achieving a financial return for MUSU creditors.
In a circular to creditors dated 16 December 2005, regarding “The Man Who Stole Christmas”, Mr Cass made various assertions including the following: that the MUSU liquidation involved “schemes, the rorts and the gross mismanagement” and had gone “from bad to worse”; that the Madgwicks partner, Mr Levy, was Mr McVeigh’s “Partner-in-Crime” in spending millions of dollars on fees; that Mr McVeigh’s conduct was under investigation by “a number of MPs”; that Mr McVeigh is incompetent; and that Mr McVeigh is not interested in maximising the financial return for creditors.
Enclosed with the circular was a copy of the liquidator’s Form 524 report to ASIC dated 5 September 2005, annotated with Mr Cass’s comments. The ASIC report showed that the liquidator had received amounts totalling about $5.28M, made payments totalling about $4.65M, had about $628,000 available but not distributed out of which he would be claiming about $495,000 for his own fees and expenses, and had received proofs of debt totalling about $4.48M. Next to those items, Mr Cass made comments such as: “McVeigh spends $4M. This is how much money McVeigh has paid out during the liquidation. Most of it went to lawyers and other professional hangers on.” and “Only $600K left! This is how much money McVeigh had left – as at 5 September 2005. Remember – creditors haven’t been paid yet!” Next to an item showing contingent assets estimated to produce $2M, Mr Cass had written “Only $2M from court cases? This is how much McVeigh reckons he will get out of suing bankrupts, near bankrupts, insolvent companies and 20 year olds!” The enclosure ends with the following words: “Creditors deserve better. Sack McVeigh now: Pay creditors what little is left.”
Mr Cass has made allegations on his website to a similar effect, namely that Mr McVeigh is less concerned about creditors than he is about the financial benefit of himself and his lawyers.
Mr Cass’s statements clearly give the impression that Mr McVeigh is not discharging his duties to creditors. The liquidator’s counsel conceded that it was not improper for Mr Cass to express an opinion about whether or not the liquidation has been handled competently. However, he sought to draw a distinction between alleging that Mr McVeigh is incompetent and alleging that Mr McVeigh is not, or was not, interested in achieving a financial return for MUSU creditors. The distinction does not seem to have merit to me.
These particular comments by Mr Cass appear to be reasonable and factually based, as far as the material before me is concerned. It is difficult to see how they might have the relevant tendency. As far as the balance of convenience is concerned, if Mr McVeigh has a simple explanation for the figures in the ASIC return, no doubt he can give it to the creditors and others interested in the MUSU liquidation.
Whether Mr Cass is a creditor
Finally, the liquidator seeks to prevent publication of any allegation that Mr Cass is a creditor of MUSU.
Mr Cass claims to be a MUSU creditor because he is owed $70 by way of an assigned debt from Mr Landeryou. I assume that the reason why he acquired that debt, after the date of the liquidation, was so that he would have some sort of standing in the liquidation.
The liquidator points out that, because it occurred after the liquidation, the assignment only gives Mr Cass a right to expect a dividend and does not make him, in a technical sense, a creditor[17]. This strikes me as an extraordinarily technical and irrelevant point for the liquidator to make.
[17]A term which is not defined in the Corporations Act.
In my opinion, it cannot be said that this could possibly constitute contempt.
Conduct as a whole
In the alternative, the plaintiff says that the various allegations of contempt against Mr Cass should be added up and that their sum constitutes contempt. The whole matter published and its tendency to prejudice as a whole must be considered.[18]
[18]Packer v Peacock (1912) 13 CLR 577 at 587; John Fairfax & Sons Pty Ltd v McRae (1955) 93 CLR 351 at 372 per Dixon CJ, Fullagar, Kitto and Taylor JJ; R v Crew[1971] VR 878 at 879.
As already mentioned, some of Mr McVeigh’s complaints are absolutely trivial, others may at least raise a question to be tried as to whether or not the publication has a relevant tendency.
However, this is not a case in which the plaintiff gains more by looking at the publications as a whole, rather than individually. On the contrary, a reading of all of Mr Cass’s publications, tends to lead one to the conclusion that one is reading the angry rantings of an undergraduate author and to give it less weight accordingly.
Mr Cass’s intentions
On his blog, Mr Cass has clearly indicated his intent to ‘finish [Mr McVeigh] off once and for all and get at least some of [the creditors’] money back’. The plaintiff seeks to use this as evidence to demonstrate intention to interfere with the due administration of justice as contemplated by Wilcox J in North Australian Aboriginal Legal Aid Service Inc v Bradley:[19]
“Intention to interfere with the due administration of justice is not necessary to constitute a contempt… Where however intent to interfere has been proved, this has usually been sufficient to sustain a prosecution.”
[19]North Australian Aboriginal Legal Aid Service Inc v Bradley (2001) 188 ALR 312 at [29], (‘NAALAS’).
Counsel for the plaintiff also referred to an email from Mr Cass to the plaintiff’s solicitors on 31 January 2006 where Mr Cass wrote:
“I made it clear to you last year that a campaign exposing your client will last for the entirety of his professional career. Whatever money he makes out of MUSU, he will lose from those prospective clients who are warned off doing business with him in the future.”
The letter culminated in the threat:
“You proceed to trial and I appoint Dunner and do everything in my capacity to have your client investigated and his licence removed. Whether or not I am successful, I’m sure there will be a considerable amount of shame and embarrassment in the process.”
The plaintiff submits that the relevant intention is clearly the intention to interfere with the plaintiff’s conduct of the litigation.
Mr Cass outlined that his intention was not to dissuade Mr McVeigh from litigation but rather to publicise his ‘deliberate misleading of creditors’. Mr Cass continued that, while at times harsh, his comments were founded on merit and not motivated by applying pressure to step down from the litigation.
The examples offered by the plaintiff appear to demonstrate that Mr Cass was attempting a commercial settlement and potentially committing an error that many people, particularly unrepresented litigants, commit without realising that such conduct may constitute demanding money with menaces.
Whilst I have no doubt that Mr Cass is also motivated by anger at the public accusations made against him by Mr McVeigh and sees himself as some sort of a crusader for the truth about the MUSU liquidation, I accept that there is a serious question to be tried that his intention at least in part is to bring pressure to bear to settle this litigation.
Balance of convenience
In relation to the question of balance of convenience, the liquidator’s argument is as follows:
“Mr Cass’s prospects of successfully defending both the action and the charges of contempt will not be jeopardised if he removes and desists from re-publishing the offensive material. Correspondingly, the plaintiff’s prospects will not be improved. All that will happen is that Mr McVeigh will not be subject to continuing vilification.”
That argument fails to place into the balance the considerable weight which the courts gives to free speech. In Australia, there is no absolute right to freedom of expression; and the implied guarantee in the Commonwealth Constitution of freedom of communication in relation to public and political discussion[20] would not assist Mr Cass in this case. Nevertheless, the concept of free speech may be relevant in considering where the balance of convenience lies in an application for interlocutory injunctive relief.
[20]See Theophanous v Herald & Weekly Times Ltd (1994) 182 CLR 104; Lange v Australian Broadcasting Corporation (1997) 189 CLR 520.
In National Mutual Life Association of Australasia Ltd v GTV Corporation Pty Ltd[21], the Full Court of this court made the following observation:
“In the case of an application to restrain a libel, however, the very great importance which our society and our law have always accorded to what is called free speech, means that equity exercises great care in granting injunctive relief and does so only where it is very clear that it should be granted. It has been said in high places, and said on high authority from the Bench, that it is by no means rarely a benefit to society that a hurtful truth be published. … The judges over the centuries have also been well aware how easy it would be for a tyrant to stifle all opposition by deciding what was “genuine” free speech, to be allowed, on the one hand and what was unjust or unfair or dishonest taking advantage of free speech, to be repressed, on the other hand. When the court enjoins, it must be extremely clear that no acceptable repression is taking place. It has thus been laid down that it is only in a clear case that the court will intervene by injunction.”
[21][1989] VR 747 at 764.
Similar remarks have been made in the context of contempt of court. For example, in Civil Aviation Authority v Australian Broadcasting Corporation[22], Kirby P said:
“The balancing of free speech and due process involves a delicate task. The intrusion of contempt law into freedom of expression is justified only where a real risk to the administration of justice is apparent which can be proved beyond reasonable doubt.”
[22](1995) 39 NSWLR 540 at 549, followed by Bongiorno J in Richardson v Jones [2002] VSC 433.
The actions of a court-appointed liquidator are matters of broad public interest. Whilst Mr Cass undoubtedly has some personal interest as a defendant in this proceeding, in critiquing the liquidator’s conduct, he is also serving a broader public interest. Whilst I am not in a position to express any view as to the ultimate merits of this proceeding, or the propriety of the liquidator’s expenditure of creditors’ funds, it cannot be said that the issues raised by Mr Cass are not appropriate matters for robust public comment.
I also bear in mind that the liquidator has demonstrated a clear capacity to use the media to his own ends. He has the capacity to correct the public record in respect of any matters which are seriously troubling to him.
In this case, for the reasons already expressed, I conclude that, whilst arguable (at least in part), the liquidator’s prospects of ultimately establishing a criminal contempt are not strong. On the other side of the scale, the competing public interests carry considerable weight. On balance, I believe that the least risk of injustice lies in refusing the application for injunctive relief.
Discretionary matters
There are a number of additional matters which would tend to militate against the grant of an interlocutory injunction in this case. They particularly relate to the liquidator’s own conduct and his capacity to resist Mr Cass’s criticisms.
Mr McVeigh has spoken on numerous occasions to members of the print, television and radio media about the MUSU liquidation and this proceeding. He has on occasion been highly critical of Mr Cass and the other defendants, accusing them of corruption, election rigging, falsification of records, forgery and obtaining an advantage by deception. He has also told the media that he has referred some such matters to the police. None of those allegations has been the subject of any trial yet. Mr McVeigh apparently wants to be free to publicly accuse Mr Cass and the other defendants of serious criminal conduct, but not be subject to similar allegations against himself.
Mr McVeigh is a very experienced liquidator, assisted by a leading firm of insolvency solicitors and senior and junior counsel. As well as utilising the media, he has the capacity to bring various legal proceedings against Mr Cass and the other defendants. For example, on 7 June 2005, he obtained on an ex parte basis Magistrates’ Court intervention orders against Messrs, Ray, Cass and Landeryou. I have not been provided with any material relied upon by the liquidator in obtaining those orders, which prevented the defendants from, amongst other things, harassing, threatening or intimidating him or contacting him other than through his lawyers. When the ex parte orders expired on 14 June 2005, the defendants told the magistrate that they wished to contest the continuation of the orders. A date not being available for a contested hearing for some months, the transcript shows that the defendants agreed to a suggestion from the magistrate that, in the meantime, they give undertakings in similar terms to the ex parte orders. It appears that, in September 2005, those undertakings were extended, although I do not know the circumstances in which that occurred.
Not having seen any of the underlying material, I make no comment as to the appropriateness or otherwise of the liquidator having obtained those ex parte orders. However, what is clear is that the liquidator has subsequently sought to use those orders and undertakings to stifle criticism of his conduct. For example, in January 2006, the liquidators’ solicitors informed Mr Cass that he would be in breach of those undertakings if he published some proposed advertisements which were critical of the liquidator. It seems to me to be something of an over-reaction for a liquidator to seek to employ what is essentially anti-stalking legislation to silence a young, unrepresented critic of his public conduct.
To say that is not to endorse all that Mr Cass has done. His publications are frequently intemperate, repetitive and immature. He is doggedly persistent and seems to have plenty of time on his hands to publish his criticisms of the liquidator. He displays some of the zealousness of a crusader, which no doubt makes him difficult for the liquidators’ lawyers to deal with. I have no doubt that Mr Cass has been a considerable irritant to the liquidator and his lawyers. Ironically, his own actions will have been responsible for some of the very expenditure of which he complains. But such matters do not make his actions a contempt of court or lead one to the conclusion that the interests of justice require that he be silenced on an interlocutory basis in the manner sought by the liquidator.
The liquidator’s response to Mr Cass’s conduct seems to me to be ill-judged. Much solicitors’ correspondence and no fewer than 10 supporting affidavits have been generated by him in an attempt to silence a critic. This strikes me as akin to using a sledgehammer to crack a walnut. No doubt it will only lead to further criticism by Mr Cass of the amount of money spent inappropriately by Mr McVeigh on professional fees.
In the circumstances, the discretionary considerations tend to support my conclusion that this is not an appropriate case in which to grant the injunction sought.
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