Morgan v State of Victoria
[2008] VSCA 267
•17 December 2008
SUPREME COURT OF VICTORIA
COURT OF APPEAL
No 3745 of 2007
| MARK MATTHEW MORGAN | |
| Appellant | |
| v | |
| THE STATE OF VICTORIA | Respondent |
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JUDGES: | NETTLE and ASHLEY JJA and PAGONE AJA | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 2 September 2008 | |
DATE OF JUDGMENT: | 17 December 2008 | |
MEDIUM NEUTRAL CITATION: | [2008] VSCA 267 | [1st Revision 25 February 2009 see End Note] |
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Contempt of court - Solicitor - Undertakings to court - Contingent undertakings to repay moneys - No time for repayment fixed by undertakings - Happening of contingency - Undertakings not converted into orders to pay by a fixed time - Orders for repayment of money both enlarging and quantifying subject-matter of undertakings - Repayment obliged in event of happening of different contingency - No time fixed by orders for repayment - Happening of contingency - Whether undertakings continued in force despite order being made - Whether breach of undertakings a contempt of court - Whether failure to repay pursuant to orders a contempt of court - Significance of time for repayment not being fixed by undertakings or orders - Enforcement of judgments and orders - Applicability of O 66 of Chapter I of Rules to order for payment of money - Supervisory jurisdiction of court in respect of solicitors - Practice requiring conversion of undertakings to pay into orders for payment by fixed date applicable - Appeal against convictions for contempt for breach of undertakings and orders allowed - Proceeding dismissed.
Supreme Court (General Civil Procedure ) Rules 2005, Rules 59.03(4), 66.05, 66.10 and Order 75.
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| APPEARANCES: | Counsel | Solicitors |
| For the Appellant | Mr G H Golvan QC with Mr J K Arthur | KCI Lawyers |
| For the Respondent | Mr H J Langmead SC with Mr P C Golombek | Victorian Government Solicitor |
NETTLE JA
ASHLEY JA:
On 15 August 2007 a judge of the County Court found the appellant, Mark Morgan, guilty of two charges of contempt in a proceeding brought by the State of Victoria (‘Victoria’). On 4 September 2007 the judge in one instance sentenced the appellant to a period of imprisonment wholly suspended, and in the other instance imposed a fine. She also ordered the appellant to pay Victoria’s cost of the proceeding on an indemnity basis, in default of prompt payment of which he was to be imprisoned.
In our opinion, for the reasons which follow, the judge erred in finding the appellant guilty of the alleged contempts. The convictions should therefore be set aside, with the implications which that has for the penalties imposed and for costs.
Circumstances
The contempt proceeding, commenced by originating motion filed 20 June 2005, was the end product of lengthy and complicated litigation.
In the late evening of 9 March 1996 a number of policemen raided premises at Hastings. They had no warrant. There were four occupants of the premises. As a result of events which occurred at the premises and in the aftermath, all of the occupants (‘the plaintiffs’) commenced proceedings in the County Court[1] against the four police officers (‘the police defendants’), claiming damages including aggravated and exemplary damages. Later in 1998, Victoria was added as a defendant to each proceeding. Against the police defendants, the claims were laid in one instance in negligence, and in assault against all of them. Two of the plaintiffs also raised claims in trespass, false imprisonment and (against two of the police defendants) in malicious prosecution. All the plaintiffs sought damages against Victoria on the basis, inter alia, that the respective liabilities of the police defendants had been transferred to Victoria pursuant to s 123 of the Police Regulation Act 1958 (Vic).
[1]Two of them on 6 June 1997 and the others on 5 August 1998.
The police defendants denied all claims made against them. Victoria denied, particularly, that s 123 was applicable to the circumstances of the case.
The appellant, who was then conducting practice as a sole practitioner in Castlemaine, was the solicitor for the plaintiffs.
The proceedings went to trial in 2000. They were bitterly contested. The trial extended over some 38 days.[2] In late February 2001, the learned trial judge delivered reasons in favour of each of the plaintiffs against the police defendants and against Victoria. He assessed damages, in all, at some $335,000.
[2]According to the reasons for judgment of the judge below. There is some variation in the described period of the trial. According to the reasons of this Court in State of Victoria v Horvath & Ors (2002) 6 VR 326, 333, [13], the trial occupied ‘some 40 sitting days’. But the precise length of the trial does not matter.
Judgments were entered in favour of the plaintiffs in the period 26-29 March 2001. Orders were later authenticated.
Victoria appealed. The police defendants, as well as the plaintiffs, were made respondents to its appeal. Several of the police defendants also appealed, in form as cross-appellants. A principal focus of Victoria’s appeal was the meaning of s 123 of the Police Regulation Act, and thus its operation in the circumstances of the case.
The appeal and cross-appeals were heard between 19 and 22 August 2002. The court delivered reasons on 7 November that year. Relevantly for present purposes, Victoria’s appeal succeeded, the court holding that there was no transfer of liability in the circumstances of the case.
Although reasons for judgment were delivered on 7 November 2002, orders were not pronounced until 4 April 2003, and those orders were not authenticated until 7 May 2003.
In the end result, each plaintiff held an award of damages against the police defendants, together with an order for costs; whilst judgment was entered for Victoria against each plaintiff. Although the plaintiffs were ordered to pay Victoria’s costs of the appeal, no order was made against them in respect of Victoria’s costs of the proceeding generally. Indeed, the Court of Appeal ordered that the police defendant pay Victoria’s costs of the proceeding.
On 20 May 2003 applications for special leave to appeal against the orders made by the Court of Appeal were filed in the High Court on behalf of the plaintiffs.
On 18 June 2004 the applications were refused.
From the plaintiffs’ standpoint, it is common ground, the saga remains unresolved. None of the plaintiffs have recovered damages from the police defendants, who claim to be impecunious. Three of the four police defendants, it appears, remain in police service.
Commencing at the time when the County Court judge decided the plaintiffs’ claims in their favour, circumstances developed, in parallel with the various appeals, which gave rise to the contempt proceeding out of which this appeal arises.
On 9 April 2001 Victoria filed its notices of appeal.
On 23 April 2001 the learned trial judge ordered that there be a stay on execution, in respect of Victoria, both as to damages and costs.
On 18 February 2002 each of the plaintiffs filed a summons in the County Court proceedings seeking to have the stay orders discharged insofar as they related to costs. It appears, although it is not a central consideration, that at that time the appeals had been struck out because Victoria had failed to take some necessary step in their prosecution.
The appellant did not represent the plaintiffs on Victoria’s appeals. But he swore an affidavit in support of the applications to discharge the stay orders so far as they related to costs.
The appellant later deposed, and his evidence in this connection was unchallenged, that the impetus for making the applications came from counsel – particularly senior counsel – who had been briefed at the trial. Although counsel had been retained on an unwritten ‘no win, no fee’ basis, they were apparently concerned to be paid the very substantial amounts of their fees.
The plaintiffs’ applications were heard by the original trial judge on 26 February 2002. Senior and junior counsel who had appeared at the trial appeared for the plaintiffs.
In the course of the hearing, senior counsel for the plaintiffs submitted that the judge might more readily accede to the applications because the appellant would undertake to the court to repay to Victoria any monies paid by it to the plaintiffs by reason of the court lifting the stay in the event that Victoria was successful in its appeals. The appellant later deposed, and in this connection again his evidence was unchallenged, that senior counsel indicated to the judge that such an undertaking would be given despite no such instructions having been sought or given in that connection. The appellant also deposed that, confronted by this sudden development, he stayed silent; and so, in substance, acquiesced in what had been said.
The learned judge granted the applications. He made an order on each of the four summonses. It was as follows:
Order varying the original stay order made on 23 April, 2001 by removing from its operation the liability of the 5th named defendant to pay the costs of the various plaintiff’s [sic] as ordered by the various orders dated 12 April, 2001. 5th named defendant to make such payment to Mr Mark Morgan, the plaintiff’s [sic] former solicitor, suite 23/27 Lyttleton Street, Castlemaine in the State of Victoria within fourteen (14) days of this date upon the said Mr Mark Morgan undertaking to the court in writing that in the event that the appeals by the 5th named defendant are successful to such an extent that the said costs orders are reversed or varied that he will personally be liable to repay such costs to the 5th named defendant on behalf of the plaintiff’s [sic] and the barrister’s [sic] who appeared for the plaintiff’s [sic].
We pause in the narrative to make these observations.
· First, the order was concerned only with the consequences of Victoria’s appeals to the Court of Appeal. The liability to repay personally which the appellant was required to undertake was a contingent liability. The contingency was Victoria’s success in its appeals.
· Second, the appellant assumed a personal liability to repay costs although the costs orders were in favour of his clients. Further than that, the orders described the appellant as the plaintiffs’ ‘former solicitor’. That was because, as we have already noted, the plaintiffs had by then transferred their instructions to another firm of solicitors. So it was not even a case of a then-current solicitor for the plaintiffs undertaking to repay monies which were to be paid to his clients.
· Third, as will appear, the effect of the orders was that counsel received, directly from Victoria, a very large part of the costs.
· Fourth, the appellant was surely foolish, in the circumstances which we have described, to give the required undertaking. He was the more foolish because the main part of the costs comprised barristers’ fees; and he was not going to be the substantive recipient of those fees. There was no real prospect of the appellant, with his small practice, being able to honour the required undertaking in full if the contingency occurred. He admitted as much on the hearing of the present proceeding.
Returning to the narrative, there followed correspondence between the appellant and Victorian Government Solicitor (‘VGS’), solicitor for Victoria, as to the terms of the undertaking. Ultimately, the appellant provided an undertaking in terms settled by Victoria’s solicitor. He agreed to do so in about mid-March 2002.[3] The intended undertaking[4] was as follows:
In the terms of the order I undertake to the court that in the event that the 5th named defendants’ [sic] appeals in these proceedings are successful then to the extent that the costs orders are reversed or varied, I am personally to repay such costs as received from the [5th named] to the 5th named defendant on behalf of the plaintiffs and on behalf of the barristers who appeared on behalf of the plaintiffs.
[3]The signed undertaking was apparently filed in the County Court on about 20 March.
[4]There was an obvious typographical error in the text provided by the appellant to VGS; and there was reference to the ‘1st named’ rather than the ‘5th named’ defendant at one point.
Pausing again, it can be seen that the undertaking focused, as it must have done, upon the then-current appeals by Victoria to the Court of Appeal. It simply did not contemplate the speculative possibility that determination of the appeals by the Court of Appeal might lead on to applications for leave to appeal to the High Court.
In a perfect world, the appellant would have come to appreciate the magnitude of the undertaking recorded in the order made by the County Court judge on 26 February 2002, and would have sought to be relieved of that undertaking. But it is clear from correspondence which passed between the appellant and VGS in the period between 26 February and mid-March 2002 that counsel[5] were pressuring him for payment of their fees. It is readily understandable that the appellant was distracted from reflecting upon the undertaking which the court order required him to give. It appears also to be the case that he was given assurances by counsel that Victoria’s appeal, so far as it relied upon s 123 of the Police Regulations Act, was not well founded.
[5]Particularly, senior counsel.
What appears to have become, unfortunately, a matter of acrimony between the appellant and VGS was exacerbated by what next happened. Solicitors engaged by counsel for the plaintiffs commenced a proceeding for contempt against Victoria and Mr Hugh McArdle, the solicitor at VGS who was handling the matter, seeking that each of them be dealt with for contempt of court. The contempt was said to be the failure of Victoria to pay their fees. Junior counsel deposed that both he and his leader had had numerous telephone conversations with the appellant about that matter, and that the appellant had provided explanations - in substance relaying what had allegedly been said by Mr McArdle - as to why payment had been delayed.
The hearing of the contempt proceeding was adjourned from 21 March to 3 April 2002. In the interim, Victoria made payments, direct to counsel’s clerks, in amounts of $197,698 for senior counsel and $100,759.96 for junior counsel.
In the contempt proceeding the subject of the present appeal, Mr McArdle deposed that the appellant filed an affidavit in the earlier contempt proceedings to which we have been referring. So he did. But insofar as it might be inferred from what Mr McArdle deposed that the appellant had supported the contempt application brought by counsel, the contrary was in fact the case. The appellant’s affidavit sworn 26 March 2002, having set out some of the chronology to which we have been referring, made it crystal clear that he had had nothing to do with the initiation of the contempt proceedings; and, indeed, that he had refused to issue a summons, or to swear an affidavit which senior counsel had prepared for him. He deposed that the summons filed by the other solicitors had been filed without his authority ‘as the solicitor for the plaintiffs’. He also described in some detail the pressure under which he had been placed by counsel to ensure that they were promptly paid.
In the event, counsel having been paid, orders were made by consent on 3 April 2002 that the contempt application be struck out with a right of reinstatement.
On 12 April 2002, the appellant filed a summons for taxation of costs. On the hearing of the summons he applied for an interim order that Victoria pay $75,000 costs. On 13 June 2002, a registrar ordered that a payment in that amount be made to one of the plaintiffs towards her legal costs. On 4 July 2002 Victoria paid to the appellant, for that plaintiff, that sum.
On 4 July 2002, the appellant made a further application for an interim costs payment. That day, a registrar ordered Victoria to pay the same plaintiff the sum of $25,000 towards her costs. On 20 July Victoria paid to the appellant, for that plaintiffs, such amount.
In all, then, in the period between 22 March and 4 July 2002 Victoria paid $398,457.96 in costs, of which all but $100,000 was paid directly to the plaintiffs’ barristers at trial.
The Court of Appeal having handed down reasons for judgment in Victoria’s appeals on 7 November 2002, four days later Mr McArdle wrote to the appellant, advising him that he had been instructed by Victoria to seek recovery ‘of all monies paid to you for your clients’ costs and disbursements pursuant to the orders of [the trial judge]’. The demand, to which the appellant did not reply, was premature. Orders were not pronounced on the appeals until 4 April 2003.[6] They were not authenticated until 7 May that year.
[6]See rule 59.02 (1) and (2).
On 20 May 2003, as we earlier noted, special leave applications were filed on behalf of the plaintiffs. Notwithstanding this development, by letters dated 3 June, VGS made demands upon each of the plaintiffs and the appellant. Except in the case of the plaintiff to whom Victoria had been ordered to pay two sums totalling $100,000 in part satisfaction of the appellant’s costs, the letter sent to each of the plaintiffs was in common form. It demanded of the plaintiff payment of $298,457.96 plus interest at 7 per cent per annum from 23 March 2002. The plaintiff was warned that, if the money was not paid within 14 days, Victoria had instructed VGS to institute legal proceedings for recovery of that amount together with interest and any costs incurred. The plaintiff was told that if the appellant complied with his undertaking, then Victoria would not be seeking repayment of amounts from the plaintiff.
In the case of the plaintiff in respect of whom the $100,000 had been paid towards the appellant’s costs, VGS demanded repayment of the further amount of $100,000.
In the case of the appellant, the letter of demand culminated in the following statements:
Pursuant to your written undertaking of 14 March 2002, the State of Victoria hereby demands payment from you personally of the amount of $298,457.96 and the amount of $100,000 plus interest.
I am instructed to inform you that unless payment of the sum of $398,457.96 plus interest is received at my office at the above address within 14 days from the date hereof, my client will institute legal proceedings against you personally to enforce your said undertaking, and will also seek to recover any legal costs it incurs in instituting such proceedings.
A copy of this letter has been this day forwarded to the solicitor acting for Ms Horvath, Mr Love, Ms C Kneise and Mr D Kneise in the four Appeals, namely, Messrs Noweicki Carbone & Co. I point out that if the plaintiffs repay to my client the said amount of $398,457.96 and interest then my client will not be seeking repayment of this amount personally from you. However, if they do not then my client will be seeking to recover the amount of $398,457.96 and interest from the plaintiffs and you personally and will seek to enforce your undertaking to the Court.
There was, evidently, a difficulty from Victoria’s standpoint with respect to the threatened proceeding against the appellant. Simply, Victoria did not have a money judgment against him. He was not a party to the plaintiffs’ proceedings.
The special leave applications were filed on behalf of the plaintiffs by new solicitors. The appellant had acted for the plaintiffs at trial, another firm of solicitors had acted for them on Victoria’s appeals, and now a third firm of solicitors was representing them on the special leave applications.
The involvement of new solicitors prompted Mr McArdle to write to them, on 26 June 2003, expressing concern that Victoria would incur substantial legal costs in respect of the applications in circumstances where the plaintiffs, because of their impecuniosity, were unlikely to satisfy any costs orders if the applications for special leave were not granted. Mr McArdle raised a question whether there were persons not parties to the applications who were funding the plaintiffs, indicating that if such was the situation they should be put on notice that if the applications were dismissed Victoria would seek orders for its costs directly against such persons. The letter was plainly designed to discourage any litigation funder from supporting the plaintiffs - whose impecuniosity was at least contributed to by their inability to recover the damages to which they were justly entitled by reason of the misconduct of the police defendants.
The plaintiffs’ new solicitors wrote to VGS by letter dated 3 July 2003. Focusing upon the 3 June letters of demand, the solicitors sought Victoria’s consent to postpone any recovery action that Victoria might have until the conclusion of the special leave applications; and in the event that leave was granted, the full hearing of the appeal.
Showing, as we perceive it, the extent to which the costs issue had got out of hand, Mr McArdle wrote to the solicitors on 7 July expressing the view that there was no reason why the plaintiffs ought to be granted the requested stay in respect of the recovery monies. There should be no difficulty in the plaintiffs repaying counsel’s fees -
as both counsel always knew that the sum would have to be repaid to my client if my client’s appeal was successful in the Court of Appeal.
Mr McArdle then posed the question:
Is it your clients who really want the proposed stay or is it your clients’ legal representatives?.
He went on to say that Victoria was prepared to consent to a stay in respect of the Court of Appeal’s order only in respect of the costs of the appeal. Otherwise -
… in relation to the recovery monies, my client is only prepared to consent to a similar stay if your clients provide full security for repayment of the recovery monies and interest.
and -
Unless within seven days from this date your clients repay the recovery monies to my client or make a satisfactory proposal to fully secure the recovery monies it is my client’s intention to continue with its recovery proceedings both against your clients and their solicitor in the County Court proceedings[7]
[7]That is, the appellant.
In fact, Victoria did not commence the threatened recovery proceedings. Rather, by summonses filed 25 July 2003 in the original County Court proceedings, Victoria sought the following relief against the appellant:
1.That Mark M Morgan pay to the fifth defendant the State of Victoria the amount of $298,457.96 together with interest on such amount at 7% per annum from 23 March 2003 until payment.
2.That Mark M Morgan pay to the fifth defendant the State of Victoria the amount of $75,000 together with interest on such amount at 7% per annum from 5 July 2002 until payment.
3.That Mark M Morgan pay to the fifth defendant the State of Victoria the amount of $25,000 together with interest on such amount at 7% per annum from 21 July 2002 until payment.
4.That Mark M Morgan pay the fifth defendant’s costs of this application.
5.Such other or further order as the Court sees fit to make.
Mr McArdle swore affidavits on 25 and 31 July 2003 in support of the relief sought. In the first of those affidavits he referred to the fact that, in the course of the appeals, a costs order had been made in favour of the plaintiffs on an interlocutory application. Their then-solicitor had pressed for payment, notwithstanding that a large amount had become repayable in respect of the costs which Victoria had paid. Victoria had sought to stay execution of the costs ordered in the interlocutory application until an equivalent sum had been repaid by the plaintiffs out of the moneys to which Victoria was now entitled. A judge of the Supreme Court had dismissed Victoria’s application and had ordered Victoria to pay the plaintiffs’ costs.
Mr McArdle then deposed:
The main reason for not granting the stay of execution was that the State of Victoria had no court order for repayment of the $398,457.96 whereas the plaintiffs did have a court order for the payment of the $22,500.00.
He went on to say this:
The State of Victoria will now be required to pay the said $22,500 plus penalty interest to the plaintiffs whilst at the same time the plaintiffs and their solicitor Mark M Morgan will have $398,457.06 and the State of Victoria’s money which according to the Court of Appeal’s decision the plaintiffs are not entitled to.
In the circumstances outlined above the State of Victoria seeks an order that Mr Mark Morgan repay to it the sum of $398,457.06 plus interest and in default that he be dealt with by the Court for Contempt.
It seems to us to be very clear, in the event, that what Victoria wanted to do was to convert the appellant’s undertaking into an order for repayment of a definite amount, plus interest; with contempt to be used to coerce payment; or perhaps to punish him in the event of default of payment in accordance with the order.
Then followed correspondence between Mr McArdle and the appellant, which correspondence was exhibited by Mr McArdle to his supplementary affidavit sworn 31 July 2003.
It is unnecessary to refer to the individual items of correspondence. But we do note that by letter dated 30 July 2003 the appellant informed Mr McArdle that he intended –
to seek from the court a release, or variation, of the undertaking on the grounds, inter alia, that the plaintiffs in each proceeding have sought special leave to appeal to the High Court and the undertaking should be extended until that appeal has been determined. It is contended that the appeal process should be allowed to conclude before your client seeks to execute the undertaking.
Putting to one side the impossibility of Victoria executing an undertaking, the import of what the appellant intimated he would seek was clear enough – that is, a stay upon any liability to repay until the High Court proceedings were at an end. That was also the gist of the final paragraph of a draft affidavit prepared by the appellant, to other aspects of which we will now refer.
The draft affidavit was sent to Mr McArdle under cover of letter dated 11 August 2003. Exhibited to the draft were copies of letters that the appellant had written to counsel seeking repayment of moneys which Victoria had paid them directly, of a letter which he had written to the plaintiffs’ new solicitors demanding that the plaintiff pay to him the sums already paid by Victoria, and of letters of demand sent to the police defendants.
On 13 August 2003 a County Court judge made orders in each of the four proceedings on Victoria’s summonses filed 25 July. On that occasion, both Victoria and the appellant were represented by counsel. Although the orders do not reflect the fact, it is common ground that the orders were made by consent. They were in this common form:
1.Mark M Morgan pay to the fifth defendant the State of Victoria the amount of $298,457.96 together with interest on such amount as 7% per annum from 23 March 2003 until payment.
2.That Mark M Morgan pay to the fifth defendant the State of Victoria the amount of $75,000 together with interest on such amount at 7% per annum from 5 July 2002 until payment.
3.That Mark M Morgan pay to the fifth defendant the State of Victoria the amount of $25,000 together with interest on such amount at 7% per annum from 21 July 2002 until payment.
4.That execution on Orders 1, 2 and 3 above be stayed until the hearing and determination of the special leave applications to the High Court of Australia in High Court Proceedings No M105 of 2003, No M106 of 2003, No M107 of 2003 and No M108 of 2003 or until Mark M Morgan fails to comply with order 5 below, whichever is the earlier.
5.That Mark M Morgan pay to the fifth defendant’s solicitor the Victorian Government Solicitors, for the fifth defendant the State of Victoria the sum of $250 per month in part reduction of the amounts referred to in orders 1, 2 and 2 above, such payments of $250 per month to commence on 20 August 2003, and to continue during the period of stay of execution referred to in order 4 above.
6.That Mark M Morgan pay the fifth defendant’s cost of this application fixed in the sum of $500.00.
These orders (‘the August orders’) were variously authenticated on 25 August and 10 September 2003. Their effect was to create a judgment debt in a definite amount against the appellant, execution being stayed until the earlier of two specified events. One of those events was the determination of the special leave applications.
The orders left open the possibility that the entirety of the judgment debt might become liable to execution before the special leave applications were determined. That could happen if the appellant failed to make a monthly repayment. The questions what would happen if the special leave applications thereafter succeeded, or if they succeeded when there had been no default, were not specifically addressed. As to the latter, the form of the orders was such that the judgment debt could be subject to execution when the special leave applications had been determined, whatever their outcome.
The appellant made payments in accordance with paragraph 5 of the August orders in late August, late September and late October 2003. Then the appellant failed to make several payments when they fell due. But he made another payment – it was in respect of a two month period – on 18 February 2004.
In late March 2004, and again in late May, the appellant wrote to Victoria’s solicitor claiming to be in straitened circumstances, and indicating that he awaited payment of costs which would put him in funds sufficient to pay what was outstanding.
In fact, he did not make such payments.
The special leave applications were, as we have said, refused on 18 June 2004. On 11 August, Victoria made a demand for payment on the appellant. The letter in part said this:
By reason of the High Court of Australia so refusing special leave to appeal, the stay of execution placed on orders 1, 2 and 3 of the orders made by Judge F B Lewis on 13 August 2003 in each of the above County Court proceedings has been lifted and the amounts owing by you personally under each of the said County Court orders (less the amounts paid by you since 13 August 2003) are now due and payable as set out in the Schedule attached. I am instructed to advise you that, unless you comply with the said order of Judge F B Lewis made on 13 August 2003 within 7 days from the date hereof by paying the balance owing under the said orders, as showing on the Schedule, the State of Victoria will apply to the County Court to have you punished for contempt of court by reason of your failure to comply with your undertaking to the court and your failure to comply with the said orders made by the court for payment by you.
I enclose copy of the orders of Judge R B Lewis made on 13 August 2003 referred to above. The original orders were served on you by my process server on 6 February 2004.
If I do not have full payment within 7 days I am instructed to commence contempt proceedings.
If payment is not forthcoming, I will also need to carefully consider referring the breach of undertaking to the Law Institute.
On 18 November 2004 the appellant wrote to VGS indicating that his practice was in disarray, that he had ‘barely worked’ for a protracted period, that he had moved to Melbourne and would be working as an employee solicitor, and that if what he called ‘this injustice’ could not be resolved, he would recommence his instalments payments.
On 20 June 2005 the contempt proceeding which is the subject of the present appeal was initiated. Later, we will identify the particular contempts alleged against the appellant.
By letter dated 28 June 2005 the appellant explained to Victoria’s solicitor his straitened circumstances. He stated that he had re-established a practice in Preston, which was only a few months old but which was showing promise. He offered to pay $1000 per month in respect of the moneys which he had received. He stated that he could not repay the barristers’ fees, and that he did not have the resources to pursue the barristers.
The appellant made further attempts, by letter, to persuade counsel to refund the moneys which they had been paid.
In late August 2005, Victoria’s solicitor intimated its client’s refusal to accept the appellant’s offer of repayment of $1000 per month.
The contempt proceeding did not come to trial promptly. It was twice fixed, but adjourned on the application of the appellant. It finally came to trial in August 2007.
By the time that the judge came to sentence the appellant, senior counsel for the plaintiffs had in fact repaid Victoria $100,000.
We were informed, on the hearing of the appeal, that senior counsel had now paid amounts, including interest, totalling $263,183; and further, that the appellant had repaid $5000 in all. Junior counsel, we were told, had thus far declined to repay any amount.
The pleaded contempts
By its originating motion, Victoria sought the following relief:
That pursuant to Section 54 of the County Court Act 1958 and Order 75, Rule 75.06 of the County Court General Rules of Procedure in Civil Proceedings 1999 a judge of the Court punish the Defendant (Respondent) for contempt of court as stated below.
(a)That the Defendant (Respondent) to this Originating Motion is in contempt of this Honourable Court in that he has breached the several personal undertakings which he gave to the Court on or about the 14 March 2002 pursuant to each of the orders made by the County Court (constituted by Judge R G Williams) on 26 February 2002 in each of the following four County Court proceedings namely:
No 9703818 of 1997
No 9703748 of 1997
No 9802161 of 1998
No 9802182 of 1998
(Hereinafter collectively referred to as “the four proceedings”).
And in that he has also breached the four orders made by the County Court (constituted by Judge F B Lewis) on 13 August 2003 which orders were based on the said several personal undertakings given by the defendant (respondent) to this Honourable Court and which orders quantified the amounts then owing by the defendant (respondent) to the plaintiff (applicant) under each of the said several personal undertakings.
The application, then, was squarely founded on Order 75 of the Rules, both in respect of the alleged breach of undertakings and also in respect of non-payment of moneys pursuant to the August orders. In substance, each alleged contempt consisted of a failure to pay moneys – in the one instance a failure to pay an amount which was unquantified by the undertaking given, and in the other instance an amount fixed by court order. In neither case – but most obviously in respect of the second alleged contempt – did Victoria seek to call in aid the procedure for committal and sequestration which is provided for by Order 66.05 of the Rules. Neither, we add, did Victoria take any other steps available under the Rules to levy execution of the judgment debt from the appellant before it commenced the contempt proceeding. And, for sake of completeness, it seems that to this day it has never taken any such other step.
The decision below
In her reasons for judgment, the learned County Court judge recited evidence given by the appellant. She did not explain exactly what she accepted and what she rejected, in that evidence. It is, however, clear enough that the judge saw importance in the appellant’s agreement, in viva voce evidence, that his reason for seeking to vary the costs stay orders was because of pressure applied by counsel and his desire for his own costs. Further, her Honour considered it to be important that the appellant did not take any steps, by contractual arrangement, to ensure that counsel would repay him their costs received in the event of successful appeal by Victoria.[8] Again, it seems to have been important to her Honour that the appellant agreed that when he gave the oral undertaking he did not have a sufficient capital base to satisfy the undertaking if called upon to do so; and that he did not receive, and never sought, legal advice before giving either his verbal or the written undertaking. Still further, her Honour noted that, having received the $100,000 by way of part satisfaction of his own costs, the appellant ‘bought a new Monaro motor vehicle for $60,000, which he still owns’. Finally, the judge noted that the appellant had agreed that he had not apologised or expressed remorse in his affidavits, although he had stated that he not been deliberately refusing to pay and had said he was sorry for what had happened.
[8]Cf. in Re Hilliard (1845) 2 D & CL 919, 921; 69 ER 880, 882; United Mining and Finance Corporation Ltd v Becher [1910] 2KB 296, 304.
The judge rejected a submission that the undertaking given by the appellant in respect of the four proceedings had ‘already been dealt with by the Court’ in that it became ‘transformed’ in the August orders. Her Honour concluded that both the undertakings and the orders were extant, and that each of them was a vehicle for a charge of contempt.
The judge rejected the argument that proceedings could not be brought under Order 75 in relation to an order or undertaking to pay money.
The judge held, rejecting argument to the contrary, that each element of contempt – she identified the elements by reference to Chan and Ors v Chen and Ors -[9] had been proved to the criminal standard. The appellant’s alleged inability to repay the moneys was immaterial. It did not deny that he had wilfully failed to comply with the orders. Indeed, his breach of undertaking and breach of the August orders constituted –
‘a deliberate defiance amounting to contumacious behaviour warranting punishment which will reflect a vindication of the court’s authority. There could hardly be a clearer case of contempt.[10]
[9][2007] VSC 24, [22] (Kaye J).
[10]Reasons [98]. The emphasis is that of the judge.
The judge rejected a submission that the contempt application had not been brought and prosecuted promptly – with whatever implications that might have had.
Her Honour described each of the ‘alleged defences’ as ‘fundamentally misconceived and without any legal basis’. She stated that, in particular, appellant’s counsel had failed to distinguish between the enforcement of an undertaking or court Order and punishment for a breach of an undertaking or Order.
Her Honour also expressed certain other conclusions, of law and fact, which were adverse to the appellant. We need not presently say anything about them. They are not pertinent to our conclusion that the appeal should succeed.
Resolution of the appeal
The undertakings
It was Victoria’s case that the contempt constituted by the breach of undertakings continued to this day.[11] Its counsel submitted in this Court that-
The breach of the undertaking remains extant (as does the contempt thereby committed) until the undertaking is honoured, waived or rescinded. None of these have occurred.
The learned judge, counsel submitted, did not fall into error in so holding.
[11]The submission was consistent with the VGS letter of 11 August 2004 sent to the appellant.
It is at least implicit in her reasons for judgment that the judge did so hold. She rejected an argument for the appellant that the undertakings became ‘transformed’ into the August orders. She also held that the making of the August orders had ‘no bearing per se upon the purging of the contempt constituted by breach of the undertaking.’ Again, she held that ‘in no sense can [Victoria] be accused of sitting on its hands’. She could hardly have so concluded if Victoria, by a proceeding commenced in June 2005, had been alleging a contempt constituted by breach of undertakings – a breach confined to a short period which ended in August 2003.
In our opinion, however, the undertakings given by the appellant ceased to have any operative effect when the August orders were made. Victoria did not advance a case of contempt constituted by the appellant’s failure to honour the undertakings in the short period between the pronouncement of the Court of Appeal’s orders and the August orders. The case of contempt which it did mount, founded upon the undertakings, should have been dismissed.
As we have explained, the undertakings were given at a time when the only extant appeals were those brought by Victoria to the Court of Appeal. The extant orders for costs were in the plaintiffs’ favour. Once those appeals were resolved favourably to Victoria, by the pronouncement of orders,[12] the contingency was satisfied. The existing costs orders were, in the language of the undertakings, ‘reversed or varied’. The appellant had held himself liable to repay an unspecified amount in the circumstances which then came into existence.
[12]See rule 59.02 (1) and (2) and rule 60A.03.
In a number of respects the August orders reflected a new situation. First, the costs orders now ran in Victoria’s favour. Second, the special leave applications were on foot. Third, a quantifiable total amount in costs had been paid under the superseded orders. Fourth, the appellant was willing to consent to judgment against him in that amount. Fifth, the appellant was also willing to consent to a judgment which included provision for interest.
It seems to us that the life and utility of the undertakings was spent when the orders were made. Their subject-matter had been overtaken by events. The new circumstances led into the assumption of more definite and larger[13] contingent obligations, the obligation to pay being now contingent upon either one of two new contingencies.
[13]That is, by reason of the appellant’s agreement to pay interest.
One way of testing the conclusion is this: suppose that in September 2003 Victoria had attempted to enforce the undertakings; or had brought a proceeding for contempt based upon a continuing breach of the undertakings. The response would have been that the undertakings addressed a factual situation which had been overtaken by events. How could there be a continuing contempt constituted by failure to repay - the Court of Appeal contingency having eventuated - when the parties had agreed upon two new contingencies? That was so although the undertakings had specified no time for payment. The same difficulty faced Victoria when this appeal was heard.
Counsel for Victoria argued, as we understand it, that the undertakings remained on foot because of the importance which the courts attach to the undertakings of legal practitioners. In effect, the undertakings had continued life so as to enable the court to punish the appellant for contempt.
We do not underestimate for a moment the importance of legal practitioners abiding undertakings given to a court. Rarely, so far as there are reported authorities, does such a problem arise. When it has done, courts have been rightly concerned and critical.[14] But that cannot mean that undertakings are to be held to have continued life, despite compelling evidence to the contrary, in order that a practitioner may be punished for contempt of court.
[14]Crinis v The Law Institute of Victoria (Full Court, Supreme Court of Victoria, 20 October 1987, unreported). A solicitor found guilty of serious professional misconduct breached undertakings to the court not to conduct any transactions upon his trust account and not to practise as a solicitor pending determination of his appeal. He was found guilty of contempt of court, and ordered to be imprisoned. On appeal, Young CJ said this:
In my view the need to insist strictly upon adherence to undertakings given to the court by solicitors is of paramount importance in the administration of justice. If solicitors who give undertakings are to escape punishment or to receive only nominal light punishment for breach of an undertaking to the Court, it will become readily impossible for others to be required to adhere to undertakings which they give.
I would expect any solicitor to be particularly sensitive to the maintenance of any undertaking which he gives to the Court and in my view the administration of justice requires such an example from solicitors and indeed form all legal practitioners.
Long v Specifier Publications Pty Ltd and ors (1998) 44 NSWLR 545. A solicitor breached undertakings which he had given to the court in the course of obtaining an Anton Piller order for a client. He was charged and found guilty of contempt of court. The finding of contempt, and a fine of $15000 imposed at first instance, were respectively confirmed on appeal. Powell JA, dealing with penalty, referred (at 571) to the solicitor’s ‘extraordinary casualness’, which had caused the execution of the Anton Piller order to ‘completely miscarr[y]’.
We should mention, before going on, that appellant’s counsel made a submission which we have found unnecessary to determine, but which we doubt should have been accepted. The submission ran this way. The judge had required the appellant to undertake to ‘personally be liable to repay’ the costs if the contingency was satisfied. The undertaking in fact given did not accord precisely with the required undertaking; but it should be so understood. The required undertaking was to be contrasted with an undertaking to repay. The former required only that the appellant submit himself to judgment and enforcement if required. The appellant could only have been guilty of breach of the required undertaking if he had refused to submit to judgment. He had not so refused. Concerning the phrase ‘liable to pay’, counsel referred to Equuscorp Pty Ltd v Short Punch & Greatorix[15] and Deputy Commissioner of Taxation v Moorebank Pty Ltd.[16] The gist of those authorities is that, in statutory context, the phrase ‘liable to pay’ carried its ordinary meaning of ‘responsible in law’; and that this connoted the existence of a person ‘against whom payment of [costs] can be enforced’.[17]
[15][2001] 2 Qd R 580, 582 [10] (de Jersey CJ).
[16][1987] 1 Qd R 414, 416-417 (Connolly J); varied on appeal (1988) 165 CLR 55, but not on this point.
[17]Equuscorp Pty Ltd v Short Punch and Greatorix [2001] 2 Qd R 580, 582, [10] (de Jersey CJ).
The appellant not being a party to the plaintiffs’ proceedings, and so not being a beneficiary of the costs orders, it is understandable that the form of undertaking required by the learned judge was in the form of an assumption of a contingent personal liability by the appellant to repay costs paid in pursuance of the orders made in favour of the plaintiffs. It might be said that an order simply that the appellant undertake to repay the costs, if the contingency was fulfilled, would have lacked an evident juridical basis. But it is another question whether the undertakings could only be the subject of a contempt proceeding if the appellant refused to submit to an order which could be enforced. Neither of the cases relied upon by counsel dealt with such an issue.
There is another reason why the undertakings did not enable a finding of contempt. There is a recognised practice that, if committal is sought, undertakings of the kind here given should first be converted into an order which specifies a fixed time for payment. Further, a practice has been recognised that undertakings by a solicitor to pay or account for moneys should first be converted into a court order. English authorities outline and explain those practices, the first of which reflects, in a case such as the present, a legal imperative. No Australian case was cited to us which would suggest that either practice ought not be applied in Victoria.
Speaking generally, an undertaking is equivalent to an order of a court for the purposes of so-called ‘civil’ contempt. It is treated in the same way as an injunction. That is so whether the undertaking is simply noted by the Court, as in Australian Consolidated Press Ltd v Morgan,[18] or is embodied in an order of a court, as in Biba Ltd v Stratford Investments Ltd,[19] and as accepted by Burchett J in Windsurfing International Inc v Sailboards Aust Pty Ltd & Anor.[20]
[18](1965) 112 CLR 483, 489 (Barwick CJ), 496 (Windeyer J).
[19][1973] Ch 281. There, Brightman J held that an undertaking embodied in the written order of the court, whereby a party undertook not to do an act, had the same effect under RSC Order 45 r 5 as a judgment or order enjoining the Act. That rule, we add, relevantly provided:
Where … (b) a person disobeys a judgment or order requiring him to abstain from doing an act, subject to the provisions of these rules, the judgment or order may be enforced by one or more of the following means, that is to say … (ii) where that person is a body corporate, with the leave of the Court, a writ of sequestration against the property of any director or other officer of the body; (iii) subject to the provisions of the Debtors Acts, I869 and I1878, an order of committal against that person or, where that person is a body corporate, against any such officer.
[20](1986) 19 FCR 110, 113. The Federal Court Rules, however, appeared to intrude somewhat upon the powers of that Court.
But it does not follow from the fact that, generally speaking, breach of an undertaking can found a successful proceeding for contempt that an undertaking to pay money (otherwise than by payment into court) can, without more, do so. Principle, and authorities, suggest the contrary.
Williams, Civil Procedure Victoria, traces the history of judgments for the payment of money as follows:
A common law judgment for the payment of money was stated in the form of a ‘recovery’ by the plaintiff. The judgment was that the plaintiff ‘recovered against the defendant’ $100,000. The judgment did not, in terms, impose an obligation upon the defendant to do something. Therefore, unlike a decree in equity, which consisted of a command addressed to the defendant, a common law judgment could not be enforced by the processes of contempt, the writ of attachment and the writ of sequestration. Nor was there jurisdiction to later fix a time for compliance in order to render the defendant liable to be dealt with for contempt in the event of disobedience: Hulbert v Cathcart ([1894] 1 QB 244). A common law judgment for the recovery of money was enforced by the writ of fieri facias, which authorised the sheriff to levy on the property of the defendant for the judgment amount and costs. The new rules change the form of judgment for the recovery of debt or damages. The judgment is that the defendant pay the plaintiff $100,000 or that the defendant pay the plaintiff damages to be assessed.
In the ordinary case of a judgment that the defendant pay a sum of money the court will not fix a time for payment. However, r 59.03(4) provides that where a judgment or order requires a person to do an act but does not fix a time for compliance, the court may by order fix a time.[21]
[21]Commentary, 66.02.10. We have omitted several presently unimportant references.
In Chaffey v Chaffey & Anor[22] Hodges J made a supplemental order fixing time for payment of costs where none had been fixed in the original order. A distinction was thereby drawn between the availability of a supplemental order fixing time in the context of a costs order as distinct from judgment for the payment of money under the old rules of court. But that does not assist Victoria. Rather, the case emphasises the significance of a time for payment being fixed by order.
[22](1914) VLR 438.
Of itself, an undertaking to assume liability to pay money (whether a judgment sum or costs), or to pay money, could not stand differently to a judgment or order for the payment of such money conforming with the terms of the undertaking. In the present case, orders founded upon the respective undertakings would in each case have been an order that the appellant, if the contingency was fulfilled, must repay Victoria the amount of costs paid. Such an order would not have fixed a time within which payment must be made. Time may be fixed by requiring payment within a certain time of the making of the order, or by a certain date, or even ‘forthwith’. But here an order would only have provided that the liability to pay was to be triggered by the happening of the contingency.
In our opinion, then, the absence in the undertakings of a fixed time within which payment must be made meant that - just as if there had been an order to pay but without a fixed time for payment – the appellant could not have been found guilty of contempt of the undertaking founded upon the failure to pay.
Authorities support this analysis.
In Carter v Roberts[23] the parties to a partnership dispute respectively undertook to pay all sums of money received by them into a particular account pending trial. One of the parties allegedly failed to honour his undertaking, and the other party sought his committal, or else that he be at liberty to issue a writ of attachment against the alleged defaulter. Counsel for the defendant submitted, inter alia, that the motion to commit must fail because no time had been limited for the fulfilment of the undertaking. Byrne J said this:
[23][1903] 2 Ch 312.
Two technical objections were taken to the first part of the motion. One was that no time is mentioned for the fulfilment of the undertaking in the order containing the undertaking.[24]
and
With reference to the first of these points, Order XLI, r 5, is referred to: ‘Every judgment or order made in any cause or matter requiring any person to do an act thereby order shall state the time, or the time after service of the judgment or order, within which the act is to be done, and upon the copy of the judgment or order which shall be served upon the person required to obey the same there shall be endorsed a memorandum’ – which it quotes. That rule, as was pointed out by Sir George Jessel in Gilbert v Endean (9 Ch D 259), does not apply to an undertaking. The question of the enforcement of an undertaking for payment of money was considered by Kekewich J in the case of Halford v Hardy (81 L T 721, 722). There the undertaking was not for the payment of money, but the order was ‘forthwith’ to execute a certain indenture, and no time was mentioned further. The learned judge … deals with the particular case, and he says the word ‘forthwith’ was a sufficient expression of time on the authority of Thomas v Nokes ((1868) L R 6 Eq 521).[25]
and
I am not going to lay down any general rule as to undertakings, that they can never be enforced by attachment or committal because a time is not mentioned. It depends of course on the nature of the undertaking; but in a simple case, where there is an undertaking to pay into court or to a joint account, it does not appear to me that the position ought to be worse for the party undertaking to pay, than if an order had been made, and if it is desired to enforce the undertaking, no time having been mentioned, an order fixing the time ought to be obtained first, or relief may be obtained by an application for the apportionment of a receiver, if it is a proper case for such an appointment. I will not say that there cannot be a case where, on an undertaking of this kind, there may not be (even although it be for payment of money) so gross a contempt of Court, apart from the non-payment, as to justify a committal; and by way of illustration if a man, having given an undertaking to pay moneys, proceeds of certain cheques, into court, deliberately went and tore up the cheques, so as to put it out of his power ever to comply with his undertaking, I think that different element would come in – that there might be a contempt apart from the non payment of the money.[26]
[24]Ibid 319-320.
[25]Ibid 320.
[26]Ibid 321.
Carter was considered in Cotton v Heyl.[27] Before the Court was a motion for committal or the issue of a writ of attachment founded on the defendant’s alleged failure to honour an undertaking, embodied in an order of the Court, that the defendant pay the plaintiff a certain amount on the happening of a contingency.
[27][1930] 1 Ch 510.
Luxmoore J referred to the presently pertinent issue as follows:
The second technical objection is this; by the order of January 21 the undertaking is to pay the 4000l. out of the first moneys received by or on behalf of the defendant upon the sale by him of the patents. Obviously this is an order to do an act and by Order XLI, r. 5 it is provided that, ‘every judgment or order made in any cause or matter requiring any person to do an act thereby ordered shall state the time, or the time after service of the judgment or order, within which the act is to be done …,’ and then it provides of course for the service of the order with the proper memorandum endorsed on it. Mr Gover has argued that the undertaking to pay out of the first moneys received is quite indefinite and cannot be construed as an order to pay forthwith or within a fixed time after receipt and therefore unless and until a definite time for payment is fixed there can be no default. It appears to me that this argument is well founded and therefore I feel that on this ground I am unable to make the order for the issue of a writ of attachment asked for by the plaintiff.[28]
[28]Ibid 522-523.
His Lordship then added:
I think however that [the plaintiff] is entitled to a four-day order against the defendant for the payment of this 4000l and I accordingly on this motion make a four-day order against the defendant that he pay to the plaintiff the sum of 4000l, within four days after service upon him of the order which I now make.[29]
[29]Ibid 523.
The four-day order effectively converted the undertaking to pay with no time fixed for performance into an order for payment within a fixed time. Such an order, if not complied with, could have led on to certain proceedings for contempt.
We should mention also In re A Solicitor.[30] A solicitor undertook, inter alia, to account to a bank for the proceeds of sale of a client’s properties. Deposits were paid but the sales fell through. The client defaulted on loans made to him in reliance on the undertakings. The bank initially sought to commit the solicitor for breach of undertaking. That application was abandoned during the trial. The bank ultimately sought orders that the solicitor hold two leases to the order of the bank and that he account to the bank for the deposits.
[30][1966] 1 WLR 1604.
Pennycuick J dealt, inter alia, with the application in its original form. He said this:
Mr Bagnall referred to a number of cases, including in particular In re H. A. Grey ([1892] 2 QB 440, 8 TLR 694, CA) in the Court of Appeal, in which the court stressed the punitive and disciplinary nature of its jurisdiction over solicitors as officers of the court, not for the purpose of enforcing legal rights, but for enforcing honourable conduct on the part of the court’s own officers. When one comes to look at the cases it seems that in all of them what happened was that the person to whom the undertaking was given sought from the court an order upon the solicitor to do the act which he had undertaken to do, that being an act which it was within his power to do – for example, the payment of money, the entering of an appearance, or the like. In one case the application was for committal, but that part of the application was stood over, the court making an immediate order on the solicitor to perform the undertaking. It therefore appears that in the exercise of this jurisdiction, what in practice has always been done is that the court, if the circumstances warrant it, makes an order upon the solicitor to do the act which he has undertaken to do. Then if the solicitor disobeys that order, no doubt an application for committal would follow and the order would be made. No case was cited in which the court made an order for committal upon a direct application to commit for breach of the undertaking without having first made an order to perform the undertaking. I do not say that there is no jurisdiction to make such an order, but neither counsel was able to point to a case in which such an order had been made.
The undertaking in In re A Solicitor was a private undertaking, and not an undertaking to the Court. It was also an undertaking in respect of which, very belatedly, the application to commit the solicitor was abandoned. Again, it was not a case in which, it seems, any issue arose about the undertaking to account being uncertain as to time. Nonetheless, Pennycuick J described a practice, in respect of a solicitor’s undertaking to pay moneys, which was consistent with the kinds of order made in Carter and Cotton. The practice was not demonstrated to be at odds with any proceeding in this State involving a solicitor’s undertaking to pay or account for moneys. Crinis involved very different circumstances. It might be regarded, perhaps, as an instance of the exceptional case hinted at in the last sentence of the passage in the reasons for judgment of Pennycuick J cited at [104].
In the present case, no order was sought in the terms of the undertakings. Such an order, for reasons described, would not in any event have assisted Victoria. In our opinion, assuming – contrary to our earlier conclusion – that the undertakings were not at an end by August 2003, that was fatal to the contempt application founded upon the undertakings.
The August orders
Where it is sought to enforce a judgment or order for the payment of a sum of money by an order for committal under Order 75, the applicant must comply with the requirements of Order 66 unless expressly relieved of the need for compliance.
Order 66 is based on Order 45 of the English Rules of the Supreme Court 1965. That order and Orders 46 and 52 of those Rules grouped together the methods of enforcement of the judgements and orders of the court so as together to constitute a self-contained code of procedure on the subject of ‘Execution’ as it was described in the earlier English and Victorian rules.[31] In similar fashion, Order 66 together with Orders 69 to 75 inclusive of the Supreme Court (General Civil Procedure) Rules 2005 groups together the methods of enforcement of judgments and orders of this court.[32]
[31]The White Book 1973, Vol 1, [45/1/1]; Williams, Civil Procedure in Victoria, [66.01.0].
[32]Marriner v Smorgon [1989] VR 485, 502 (Murphy J), 508 (Ormiston J).
Order 75, which is modelled on Order 52 of the 1965 English Rules, abolished the long standing distinction between attachment and committal by providing in effect that committal shall be the remedy for all cases of civil contempt. Order 75 did not, however, create any new categories of contempt but rather, like the English rule on which it was modelled, provided for the means of dealing with contempts arising aliunde.
The categories of civil contempt remain largely as they were before the adoption of the Supreme Court (General Civil Procedure) Rules in 1986, and are as follows:
a) Disobedience to a judgment or order for the payment of money to a person or into court or breach of an undertaking to make such a payment.[33]
[33]Rules 66.02(1)(f) and (2)(b)(i); cf RSC O42 rr 3, 4 and 24.
b) Disobedience to a judgement or order requiring a person to do any act other than the payment of money, or to abstain from doing anything or breach of undertaking to the same effect.[34]
[34]Rules 66.05(1)(a) and (b) and (2)(a); cf RSC O42 rr 7,24.
c) Failure to comply with a judgement for the delivery of goods or payment of its assessed value.[35]
[35]Rule 66.04(1)(b)(i); cf RSC O42 r 6.
d) Failure to comply with a judgment for possession of land.[36]
[36]Rule 66.03(b)(i); cf RSC O42 r 5.
e) Failure by a solicitor to give notice to his or her client of an order for interrogatories or discovery or inspection of documents.[37]
f) Failure of a party to comply with an order for interrogatories or discovery or inspection of documents.[38]
g) Wilful disobedience by a corporation.[39]
[37]Rules 29.14(3) and 30.10(3). RSC 29.14(3); cf RSC O 12 r 10.
[38]Rules 30.10(1) and 29.14(1); cf RSC O 31 r 21.
[39]Rules 66.07-66.09; cf RSC O 42, r 31.
As to disobedience to a judgment or order, the effect of Rule 66.02(1)(f) is that the only kind of judgment or order which may be enforced by committal is one to which Rule 66.05 applies, namely, a judgment or order which requires a person to pay within a time fixed in the judgement or order, and that is subject to Rule 66.10, which is to say that the judgment may not be enforced by committal unless a copy indorsed in accordance with Rule 66.10(3) is served on the person bound a reasonable time before that time expires. Those requirements are based on O 45 r 1(e) and O 45 r 5(1) of the English Rules of the Supreme Court 1965 and are similar to O 41 r 5 of the former Victorian Rules of the Supreme Court (which provided for the enforcement by writ of attachment of a judgment for the payment of a sum of money by a date for payment specified in the judgment).
Under the former rules, attachment would not go to enforce a judgment or order which did not specify a date for payment, there being no default and thus no contempt until a date certain was set and not complied with.[40] Similarly under the current rules, committal having replaced attachment as the method of enforcement of a judgment to do or refrain from doing an act, committal is not available for enforcement of a judgment or order for payment of a sum of money or order which does not specify a date for payment, for the same reason that there is no contempt until a date certain is set and not complied with.[41]
[40]Buckley v Crawford [1893] 1 QB 105, 107, Cotton v Heyl [1930] 1 Ch 510, 522.
[41]Re Oddy [1906] 1 Ch 93, 95.
There is a difference between the two regimes, in that under the former rules a common law judgement was in form other than a command to pay and did not specify a date for payment, and it was not open to obtain a subsequent order limiting time for payment. Contrastingly, in equity, judgments were in the form of a command to pay and, although they did not always specify a date for payment, it was open to obtain a subsequent order limiting time in which to pay.[42] When the 1986 Rules came into force, the form of common law judgment was changed to one which required the defendant to pay a sum of money (albeit that, generally, the Court will not fix a time for payment in a common law judgment) and thus it became open under Rule 59.03(4) to seek a subsequent order fixing time for payment of a common law judgment.[43] Even now, however, because committal (and sequestration) are reserved for cases of wilful disobedience, the court will not normally so fix a date for payment of a judgment unless there is reasonable cause to believe that if time were set, the person would fail to comply in circumstance amounting to contempt.[44] A common law judgment creditor will thus ordinarily be confined to other methods of enforcement, such as by warrant of execution under Order 68.
[42]Hulbert & Crowe v Cathcart [1894] 1QB 244, 245.
[43]Thereby, at least in principle, opening the gate to enforcement by committal pursuant to Rule 66.05.
[44]Re Clement 46 LJ(Ch) 375; In Re Maria Annie Davies (1888) 21 QBD 236, 239; Williams, Civil Procedure in Victoria, [66.02.10].
As we have said, in the case of disobedience to a judgment or order the effect of Rule 66.02(1)(f) in combination with Rule 66.05(1)(a) is that enforcement by committal – subject always to Rule 66.10 - is only available where the judgment or order is one which requires a person to pay within a time thereby fixed.[45]
[45]Thus –
·Rule 66.02(1)(f)(i) states that a judgment for the payment of money may be enforced (subject to a presently irrelevant exception) –
where Rule 66.05 applies, and subject to Rule 66.10 [by]
(i) committal …
·Rule 66.05(1)(a) states that the rule applies where
… a judgment requires a person to do an act and the act is to be done within a time fixed in the judgment or by subsequent order, and the person refuses or neglects to do the act within that time …
·By rule 66.10(1)(b) -
A judgment shall not be enforced by committal or sequestration unless -
(a) a copy of the judgment is served personally on the person bound; and
(b)if the judgment requires the person to do an act within a fixed time a copy of the judgment is so served a reasonable time before that time expires.
·By rule 66.10(3) a copy of a judgment served under the rule must be indorsed with a notice stating that the person served is liable to imprisonment or to sequestration of property if -
(a) where the judgment requires the person bound to do an act within a fixed time, the person bound refuses or neglects to do the act within that time.
The August orders did not require the appellant to do an act within a ‘fixed time’, as that term is understood by the rules. No time was thereafter fixed, on Victoria’s application, under Rule 59.03(4). In the event, the orders were not of the kind mentioned in Rule 66.05(1)(a). Compliance with Rules 66.10(1)(b) and 66.10(3)(a) was in turn impossible.
The trial judge advanced a series of propositions concerning the operation of Rule 66.10. For reasons which we will state in a moment, we disagree with each of them. But even if they had been correct it would not affect the situation. That is because, for reasons explained, the August orders did not fall within Rule 66.05(1)(a). In consequence - subject to our later consideration of a submission repeatedly advanced for Victoria that the contempt proceeding was by intent an attempt to punish the appellant for his conduct in not paying the judgment sum, by contrast with the use of threatened committal as a tool in enforcing judgment - committal was not available by reason of the appellant’s failure to make payment of the amounts mentioned in[46] the orders; for his non-payment did not constitute a contempt.
[46]Or, in the case of interest, calculable.
The Rule 66.10 propositions
The first of her Honour’s propositions concerning Rule 66.10 on which it is necessary to say something by way of correction is her Honour’s statement[47] that:
An application to deal with a person for breach of an undertaking given to the court is not an application to enforce a judgment by committal or sequestration, and r 66.10 does not apply. This proceeding is one which has been brought under Order 75 and accordingly is analogous to the case of William Lawrence … v A.G.C …[48]
[47]Reasons, [51].
[48]William Lawrence (Globe Dye Works) Pty Ltd (in liq) (admin appt’d) v Australian Guarantee Corp Ltd [2000] VSC 234.
The statement cannot be accepted in the unqualified terms in which it is expressed. Before the Judicature Act, the proper remedy against a person who failed to do an act which was ordered to be done (including failure to pay a sum of money ordered to be paid) was attachment [49] and the proper remedy against a person for doing an act in contravention of an order that it not be done was committal. The practice in the Court of Chancery was not to treat an undertaking as distinct from an injunction with regard to a breach and so, for the purpose of enforcement, breaking an undertaking involved the same consequences as would disobedience to an order.[50] After the Judicature Act, the rules were altered to provide that most judgments could be enforced by attachment or committal regardless of whether the judgment was to do an act or to refrain from doing an act,[51] although it remained that an undertaking to do an act or refrain from doing an act could only be enforced by committal.[52] But as has been seen, and indeed her Honour noted later in her reasons for judgment,[53] an undertaking to pay was and conceived of as being equivalent to an order to pay, and thus failure to pay in accordance with the undertaking could not be enforced by committal unless the claimant complied with the rule (now embodied in R 66.10(3)) that the person bound first be served with an order specifying in terms the date for compliance and indorsed with the required warning of the consequences of failure to comply.[54] That remains the case under the current rules.
[49]Pearson v Arcadia Stores, Guyra Ltd (No. 2) (1935) 53 CLR 587, 591.
[50]London and Birmingham Rwy Co v Grand Junction Canal Co 1 Ry & Can Cas 224, 241; Attorney-General v Wheately & Co 48 S J 116; Biba Ltd v Stradford Investments Ltd [1973] 1 Ch 281, 286 (Brightman J)
[51]Harvey v Harvey (1884) 26 Ch D 644, 653-4 (Chitty, J).
[52]D v A & Co [1900] 1 Ch 484, 488 (Cozens-Hardy J); Williams Supreme Court Practice, 42.7.2.
[53]Reasons, [55].
[54]Cotton v Heyl [1930] 1 Ch 510, 522; cf. D v A & Co [1900] 1 Ch 484, 487.
Contrary, moreover, to the judge’s observation, this case is not analogous to William Lawrence (Globe Dye Works) Pty Ltd (in liq) (admin appt’d) v Australian Guarantee Corp Ltd.[55] In that case, Beach J stated that an application to deal with a person for breach of an undertaking was not an application to enforce a judgment by committal or sequestration to which Rule 66.10 applies. But his Honour’s statement must be understood in context. Beach J was dealing with an application to commit a party for contempt for wilfully contravening an undertaking not to deal with real property without first obtaining the consent of the defendant. In contravention of the undertaking, that party had sold the property without consent. The undertaking thus so broken, it could no longer be enforced. All that could be done was to punish the defendant for his contempt. It was only in that sense that it was not an application to enforce the undertaking.
[55][2000] VSC 234.
The second matter for comment concerns her Honour’s observations that:
A judgment may be enforced by committal and sequestration despite the fact that a copy of the judgment has not been served personally on the person against whom committal or sequestration is sought. The judgment may be enforced in this manner if that person had notice of the judgment. The forms which such a notice may take are either by the person the subject of the committal proceedings being present when the judgment is given, or by that person being notified of the terms of the judgment by telephone, telegram or other means: r 66.10(5) …
In the circumstances of this case, although Counsel for the SOV conceded that the service of documents upon Morgan was not accompanied by the requisite indorsement, there is no question that Morgan was aware of the making and content of the Undertaking and the Judge Lewis order. I am satisfied beyond reasonable doubt that the evidence in this case has established that all procedural requirements in terms of Order 66.05 and 66.10(5) have been satisfied.[56]
[56]Reasons [57] and [58], emphasis added.
That is not a correct statement of the law either. Subject to any order relieving an applicant of the requirements of Rule 66.10(3), a judgment or order may not be enforced by committal or sequestration pursuant to Rule 66.05 unless the person bound thereby has been personally served with a copy of the judgment or order indorsed with a notice in accordance with Rule 66.10(3) a reasonable time before the date for performance specified in the judgment or order.
The judge referred to Re Tuck, Murch v Loosemore[57] and Haydon v Haydon[58] and Foley v Herald-Sum TV Pty Ltd[59] as if they were authority that a judgment or order for the payment of a sum of money may be enforced by committal or sequestration without compliance with Rule 66.10(3). But with respect, none of those decisions supports that proposition.
[57][1906] 1 Ch 692.
[58][1911] 2 KB 191.
[59][1981] VR 315.
Re Tuck stands as clear authority to the contrary. In that case, an order was made on 5 December 1905 that the defendant should on or before 1 January 1906 pay a sum of money into court and deposit certain documents at a bank. The order was not passed and entered until 1 January 1906 and so it was not until 2 January 1906 that the order duly indorsed with notice to the defendant that he would be liable to process of execution if he did not comply within the time limited in the order was served on the defendant. The defendant did not pay the money into court and on 10 January 1906 the plaintiff gave notice of motion for liberty to issue a writ of attachment against him for contempt in not complying with the order. On 2 February 1906 Warrington J following Hyde v Hyde[60] held that, inasmuch as the defendant was present in court when the order was made, personal service was unnecessary, and the fact that it was not served until a day after the date fixed for payment was immaterial. On 24 February 1906 a writ of attachment issued and shortly afterwards the defendant was lodged in Exeter Gaol. On appeal, however, the Court of Appeal held that what had been said in Hyde v Hyde about service was obiter dicta and should not be followed. The order for attachment was not properly made and the plaintiffs should pay the costs of the appeal and below. Their Lordships stated that that nothing which they said was intended to throw any doubt upon the result of disobeying an order not to do a thing of which notice, short of personal service, could be perceived as having reached the defendant. But there was a ‘wide distinction’ between such an injunction and an order commanding the defendant to do something within a definite time. As Cozens–Hardy LJ explained:
Order XLI r 5[61] deals only with an order of the latter class, and for the protection of the liberty of the subject, requires the indorsement of a memorandum warning the defendant that the consequence of not complying with the order may be the issue of an attachment. There is no such requirement where the order is prohibitive only.[62]
In the case of an order of the former class, compliance was mandatory.
[60](1888) 13 PD 166, 171.
[61]The then English equivalent of Rule 66.10(3).
[62][1906] 1 Ch 692, 696.
Haydon v Haydon[63] is directed to another point. It concerned proceedings under s 5 of the Debtors Act 1869 (UK) for the committal to prison of a judgment debtor who made default in the payment of a debt or instalment of a debt in pursuance of an order of the court. Perforce of r 365 of the Bankruptcy Rules, the County Court Rules for the time being in force as to the committal of judgment debtors were made applicable to all courts exercising jurisdiction under s 5 of the Debtors Act. In contrast to RSC Order XLI r 5, there was no rule in the County Court Rules which in positive terms made personal service of the order requisite before committal. The Court of Appeal held that there was no reason to imply one because the summons (which did have to be served personally) told the debtor exactly what may be done and what order may be made against him.
[63][1911] 2 KB 191.
Foley v Herald-Sun TV Pty Ltd[64] is for present purposes irrelevant. In that case the point at issue was whether, in the absence of personal service, the defendant could be held to have committed contempt of an order restraining the proprietor of a television station from broadcasting a film relating to the plaintiff. Shortly before the film was to be broadcast on television, the television presenter, Michael Willesee, who was not the proprietor of the station, was told by telephone that the order had been made. Willesee held the erroneous belief that such an order was not binding unless served personally and went ahead with the broadcast. Although Willesee was not personally bound by the injunction, McGarvie J held that he would have acted in contempt if he had had proper notice, and that notice short of personal service would have been proper notice if it would have led a reasonable person in his position to refrain from showing the film. But in the view of McGarvie J, the evidence did not establish beyond reasonable doubt that such notice as Willesee had received was enough to satisfy that test. The case had nothing to do with committal for failure to comply with an order to pay a sum of money by a date specified in the order but only with non-compliance with a prohibitive injunction.
[64][1981] VR 315.
Turning then to the possibility of an order relieving a claimant from the requirements of Rule 66.10(3), the judge observed that:
Also, the court may dispense with service of notice.
And said that:
Personal service may be dispensed with if the person bound has knowledge of the judgment and is deliberately avoiding service
Her Honour cited Allen v Allen,[65] Hyde v Hyde,[66] Suarez v Saurez[67] and R v Wigand[68] in support of the proposition.
[65](1885) 10 PD 187.
[66](1888) 13 PD 166.
[67][1918] 1 Ch 176.
[68][1913] 2 KB 419.
There are several things to be said about that too. The first is that Allen v Allen and Hyde v Hyde must be taken, in relation to Rule 66.10(3) and cognate rules, to have been overruled by Re Tuck. Secondly, in R v Wingard, the court followed Allen v Allen and Hyde v Hyde, per incuriam, without reference to Re Tuck. Thirdly, since those cases were decided, there have been a number of decisions which have stressed the importance of compliance with Rule 66.10(3) and cognate rules and the reticence with which the court will be disposed to dispense with compliance.
In Gordon v Gordon,[69] in an appeal from a case in the Matrimonial Causes jurisdiction, Lord Greene, MR said this:
Attachment and committal are very technical matters, and as order for committal affect the liberty of the subject such rules exist in relation to them must be strictly obeyed. However disobedient the party against whom the order is directed may be, unless the process of committal and attachment has been carried out strictly in accordance with the rules he is entitled to freedom. I am not speaking now of contempts in the face of the court, but contempts by disobedience of an order for something to be done outside the court …
The only matter that we have heard argued is a purely technical matter which is that the order of Hodson J requiring delivery by 7 o’clock was not served until that time had elapsed, that is to say until 8 o’clock in the evening. The relevant rule in the Matrimonial Causes Rules, 1944, is r. 62, sub-r. 2 …That rule in the Divorce Division follows in substance with some verbal modifications, the corresponding Rule in the Supreme Court, Or. 41, r. 5 … it is to be remembered that the process of enforcing orders in civil litigation made for the benefit of a party against the other party by committal or attachment is nothing more than a form of execution. It is that form of execution by which the successful litigant enforces his right against his opponent. If he fails to comply with the strict rules he is the sufferer because he has not succeeded in protecting or enforcing his right by this very effective means. When one comes to deal with the case of an infant the position is fundamentally different …[70]
[69][1946] P 99, 103 (CA).
[70]Ibid 103-104.
In Clifford v Middleton[71] Kaye, J said this:
Order 52, r 4, provides that in proceedings for attachment a copy of any affidavit intended to be used in support of the application shall be served with the notice of motion. Attachment proceedings, being penal and affecting the liberty of the subject, are of a criminal character, so that the utmost strictness in procedure and proof is demanded: Hall and Co. v Trigg, [1897] 2 Ch 219, at p. 222; Re Bramblevale Ltd., [1970] Ch 128; [1969] 3 All ER 1062; Comet Products UK Ltd. v Hawker Plastics Ltd., [1971] 2 QB 67; [1971] 1 All er 1141, and Oswald on Contempt, 3rd. ed., pp. 210-11. An application to attach a party arising out of disobedience of the Court's order which, if it requires him to perform an act, must be endorsed with a memorandum in the form or to the effect prescribed by O.41, r5. The purpose of the endorsement is to warn the party of the consequences which might befall him should he fail to perform the act directed. It follows that a party will not be attached for disobedience of a mandatory order unless he has been served with a copy of the order, although personal service may be dispensed with if it is shown that he has evaded service: Re Tuck; Murch v Loosemore, [1906] 1 Ch 692; Gordon v Gordon, [1946] P 99, at p. 103; [1946] 1 All ER 247, and Taylor v Whelan,[1962] VR 306, at p. 307. In Re Tuck, supra, Cozens-Hardy, LJ, at (Ch) p. 695, delivering the judgment of the Court of Appeal, referred to a statement in the Annual Practice that by the settled practice of the Court an order need not be served if the Court is satisfied that the person to be served is aware of the order. His Lordship, after stating that the authority cited in support of that proposition did not justify it, referred to a memorandum of the settled practice provided to the Court by the Senior Registrar at its instigation. In the quoted passage relating to the practice in the Registrar's Office it was reported, inter alia: ‘It has not been the practice to make an exception on the ground that the person ordered to do the act was aware of the order.’ Acting on the memorandum the Court of Appeal rejected the stated practice contained in the Annual Practice, and held that knowledge of the order did not obviate the need for personal service of it.
…
In my opinion, the power to relieve a party from the consequences of non- compliance with the Rules of the Court where the liberty of the subject is in jeopardy should not be exercised unless the evidence shows that the requirements of and purpose for the particular rule have been fulfilled in a manner otherwise than in the form provided. I am fortified in this view by Taylor v Roe (1893) 68 LT 213, where objection was taken to attachment proceedings because affidavits were not served together with the notice of motion and because the grounds of the application were not stated on the notice. After referring to O.70, r1, and Petty v Daniel, supra, Kekewich, J, at p. 214 expressed his opinion that it would not be right to condone a direct non-compliance with the Rules when the application before the Court affects the liberty of the subject. A similar view was expressed by Lord Greene, MR, in Gordon v Gordon, supra, at (P.) p. 103 in these terms: ‘Attachment and committal are very technical matters, and as orders for committal or attachment affect the liberty of the subject such rules as exist in relation to them must be strictly obeyed. However disobedient the party against whom the order is directed may be, unless the process of committal and attachment has been carried out strictly in accordance with the rule he is entitled to his freedom.’
[71][1974] VR 737.
More recently, in this court in Miller v Eurovox Pty Ltd,[72] Vincent JA said this:
The Rules of the Court require the presence of an endorsement pointing out the serious potential consequences that may follow a breach of an order of the kind present here in order, inter alia, to emphasize the seriousness with which such conduct can be expected to be viewed, and, specifically, that a sentence of imprisonment or the sequestration of property may follow.
By reason of the penal character of r 75.11 of the Rules for contempt of court, it is necessary that there be strict proof, satisfying the criminal standard, of the conduct constituting the contempt. In so far as a finding of contempt is based upon non-compliance with an order of the Court, it will be necessary, save perhaps in the case of some technical or inconsequential defect, also to establish to the same standard that the formalities associated with the order have been strictly satisfied. A defect may be regarded as inconsequential in this sense, if it can be demonstrated, by some other means, that the person charged was well aware of their obligations under the order and the possible consequences of breaching it.
His Honour then referred to the passage from the judgment of Kaye J in Clifford v Middleton to which we have referred.
[72][2004] VSCA 211, [30]–[31].
Finally, in Siminton v APRA,[73] the Full Court of the Federal Court (North, Goldberg and Weinberg, JJ) referred with approval to what Kaye J had said in Clifford v Middleton and declined to exercise the dispensation power to relieve the applicant of the requirement for personal service of a duly indorsed copy of the subject order.
[73](2006) 152 FCR 129, 147.
In the result, although there is power to dispense with the requirements of Rule 66.10(3), any judge asked to exercise the power should hasten slowly. As Lord Greene MR stated in Gordon v Gordon, a judge faced with such an application should bear in mind that committal is a technical matter and that, as an order for committal affects the liberty of the subject, such rules as exist in relation to committal must be strictly obeyed. A judge faced with such an application would also do well to bear in mind, as his Lordship suggested, that the process of enforcing an order in civil litigation made for the benefit of a party against the other party by committal is a form of execution and, if the moving party fails to comply with the strict rules, that party should ordinarily be the sufferer. Compliance may not be waived unless the judge is satisfied beyond reasonable doubt by admissible evidence that the person charged with the order was well aware of his or her obligations under the order and the consequences of breaching it. Even then, the judge is not bound to waive compliance and, ordinarily it will require something more to persuade him or her that justice requires dispensing with strict compliance.
The next point on this aspect of the matter is that, although Rule 66.10(3) applies only to enforcement by committal and sequestration, and thus has been held not to affect the power of the court to impose a fine for contempt in an appropriate case,[74] there could be no question of any fine in this case; for the reason already explained, that there was no contempt.
[74]Windsurfing International Inc v Sailboards Australia Pty Ltd (1986) 19 FCR 110, 113; Miller v Eurovox Pty Ltd [2004] VSCA 211 [38]; Siminton v APRA (2006) 152 FCR 129, 145-6.
The last of her Honour’s Rule 66.10 propositions which needs to be mentioned is her observation concerning the operation of the Imprisonment of Fraudulent Debtors Act1958. Her Honour said that:
Orders to pay money are treated no differently to any other orders. In McKinnon v Adams, Bongiorno J observed that an order to pay money is an order directed to the performance of a specific act and ‘in this respect it is to be contrasted with a common law judgment for a monetary amount such as a judgment for a debt or damages’. Bongiorno J further noted that the Imprisonment of Fraudulent Debtors’ Act 1958 (Vic) does not deprive ‘the Court of the capacity to sentence a person to gaol for failure to comply with a judgment of the court for the payment of money’. On the contrary, ‘Rules 66.02 and 66.05 contemplate the enforcement of a judgment for the payment of money by committal in the circumstances set out in r 66.02’.
The first thing to be noted about that is that what is attributed to Bongiorno J is to some extent taken out of context and to that extent misrepresents the tenor of what his Honour stated. It was as follows:
[35] There was much argument during the case as to whether the Imprisonment of Fraudulent Debtors' Act 1958 effectively deprives the Court of the capacity to sentence a person to gaol for failure to comply with a judgment of the court for the payment of money. The argument centred around the provisions of that Act and their inter-relation with the Rules of Court, particularly rr 66.02 and 66.05.
[36] Rules 66.02 and 66.05 contemplate the enforcement of a judgment for the payment of money by committal in the circumstances set out in r 66.02. While such a step would be extreme, but for the fact that Ms Adams has now paid the $6000, this case may well have been sufficiently extreme to warrant such a sanction. Ms Adams has challenged the authority of the Court by refusing to comply with its order in the first place and by continuing in that refusal up to and indeed past the 11th hour and in the face of stern warnings from the Court delivered on 9 November upon the first return of this summons as to the consequences which could befall her should she persist in her contumacy.
It will be seen that Bongiorno J did not reach the conclusion which her Honour ascribed to him.
The second matter is that the Act applies differently to the Supreme Court than it does to the County Court. In its application to the Supreme Court, the Act provides in s 3 as follows:
3. Imprisonment upon writ of capias ad satisfaciendum abolished
No person shall be arrested or imprisoned or detained in prison upon any writ of capias ad satisfaciendum issued out of the Supreme Court after or before the passing of this Act, any law or practice of such court to the contrary notwithstanding.
As can be seen, that section is in terms directed only to arrest or detention upon a writ of capias ad satisfaciendum and thus, perhaps not unsurprisingly, the Full Court held in Re Sandilands Ex parte Browne[75] that, in contradistinction to the Debtors Act 1869 (UK),[76] it preserved the other forms of execution against the person which were in existence in 1865.[77] In McKinnon v Adams, Bongiorno J was concerned with committal, which was another form of execution against the person in existence in 1865 (the availability of capias ad satisfaciendum having been abolished on the coming into force of the 1986 Rules). Thus his Honour would not have been prevented from dealing with the defendant in that case by commitment had he determined that it was proper to do so.
[75](1878) 4 VLR (L) 318.
[76]Which provided much more broadly that, subject to certain exceptions ‘no person shall be imprisoned for making default in payment of a sum of money’: see Buckley v Crawford [1893] 1 QB 105,106-107.
[77]See also Ingram v Ingram [1927] VLR 335, 340 (Cussen J); Williams Supreme Court Practice, Vol 2, 44.1.14.
In its application to the County Court, the Act provides differently, in s 14, as follows:
14. Imprisonment for debt abolished in county court
It shall not be lawful for the registrar or a deputy registrar of the county court to issue a warrant of commitment upon a return made to any warrant of execution that the bailiff or officer could find no sufficient property of the person against whom such warrant has issued liable to satisfy such execution; and no person shall be arrested or imprisoned in execution upon or in satisfaction of any judgment or order recovered or obtained in the county court, save in the special cases where such court is empowered by law to make an order for commitment, and in no such case shall any person be committed for a longer period than four months.
Under s 53 of the County Court Act 1958 a judge of the County Court has the same power to compel obedience to a judgment or order of the court as a Supreme Court judge for compelling obedience to a judgment or order. That includes power to commit for failure to comply with a judgment or order pursuant to Rule 66.05, subject of course to compliance with Rule 66.10 unless it be waived. Perforce of s 14 of the Act, however, a judge of the County Court may not so commit a person in execution upon or in satisfaction of a judgment or order for longer than four months.
The intent of the contempt proceeding
Counsel for Victoria repeatedly submitted, as we have already noted, that the proceeding was by intent an attempt to punish the appellant for his conduct in not paying the judgment sum, by contrast with the use of threatened committal as a tool in enforcing judgment. Having regard to the conduct of Victoria[78] as we have described it in these reasons, it is by no means clear to us that the starting point for this submission should be accepted. But let so much be assumed. What consequence ensues?
[78]Acting through its solicitor.
As has already been noted, in England there is a recognised jurisdiction to punish a solicitor for failure to comply with an undertaking given in his or her capacity as a solicitor.[79] The jurisdiction arises as part of the court’s inherent supervisory jurisdiction over solicitors and is compensatory, although it is said that it retains a disciplinary slant in that it is only exercisable when the conduct of the solicitor is inexcusable and merits reproof.[80] The essential features of the jurisdiction were summarised by Balcombe LJ in Udall v Capri Lighting Ltd[81] as follows:
1) The nature of the summary jurisdiction is explained in the following passage from the speech of Lord Wright in Myers v Elman.[82]
2) Although the jurisdiction is compensatory and not punitive, it still retains a disciplinary slant. It is only available where the conduct of the solicitor is inexcusable and such as to merit reproof: R & T Thew Ltd v Reeves (No2) (Note).[83]
3) If the misconduct of the solicitor leads to a person suffering loss, then the court has power to order the solicitor to make good the loss occasioned by his breach of duty: Marsh v Joseph.[84]
4) Failure to implement a solicitor’s undertaking is prima facie to be regarded as misconduct on his part, and this is so even though he has not been guilty of dishonourable conduct: see United Mining Finance Corporation Ltd v Becher[85] and in particular the argument of the successful applicants in John Fox v Bannister, King & Rigbeys.[86] However, exceptionally, the solicitor may be able to give an explanation for his failure to honour his undertaking which may enable the court to say that there has been no misconduct in the particular case: see Fox’s case.[87]
5) Neither the fact that the undertaking was that a third party should do an act, nor the fact that the solicitor may have a defence to an action at law (e.g. Statute of Frauds) precludes the court from exercising its supervisory jurisdiction: see Ex parte Hughes;[88] Re Greaves.[89] However, these are factors which the court may take into account in deciding whether or not to exercise its discretion and, if so, in what manner.
6) The summary jurisdiction involves a discretion as the relief to be granted: per Lord Wright in Myers v Elman.[90] In the case of an undertaking, where there is no evidence that it is impossible to perform, the order will usually be to require the solicitor to do that which he had undertaken to do: see In re a Solicitor[91]
7) Where it is inappropriate for the court to make an order requiring the solicitor to perform his undertaking, e.g. on the grounds of impossibility, the court may exercise the power referred to in paragraph (3) above and order the solicitor to compensate a person who has suffered loss in consequence of his failure to implement his undertaking: see John Fox v Bannister, King & Rigbeys …
[79]Daniel’s Chancery Practice, 8th Ed, 778; In Re A Solicitor, Ex parte Hals [1907] 2 KB 539; See also Silver (Geoffrey) & Drake v Baines (Trading as Wetherfield Baines and Baines, a Firm) [1971] 1 QB 396, 402 (Lord Denning MR); Halsbury’s Laws of England 4th Ed Vol 44(1), [354].
[80]F. T. Horne, Cordery on Solicitors, 8th Ed, 110.
[81][1988] QB 907, 917.
[82][1940] AC 282, 319.
[83][1982] QB 1283, 1286.
[84][1897] 1 Ch 213, 244-245, (Lord Russell of Killowen CJ).
[85][1910] 2 KB 296.
[86][1988] QB 925.
[87]Ibid 930 D-G.
[88]5 B & Ald 482; 106 ER 1267.
[89](1827) 1 Cr & J 374.
[90][1940] AC 282, 318.
[91][1966] 1 WLR 1604.
In New Zealand, the High Court has held that it has the same jurisdiction over its solicitors[92] and in New South Wales Bryson J of the Equity Division held in Wade v Licardy[93] that, although there are differences in procedural law between England and New South Wales:
I am of the view that there is a strong basis for contending that the summary jurisdiction to enforce solicitors’ undertakings, whether in respect of litigation or otherwise in respect of their professional conduct, exists in New South Wales. In my view there is no reason why such jurisdiction would not have been conferred on this Court by s 3 and s 24 of the Act 9 George IV Ch 83 (UK) and by s 23 of the Supreme Court Act 1970.
[92]Countrywide Banking Corporation Ltd v Kingston [1990] 1 NZLR 629; see also Burbery Mortgage Finance & Savings Ltd (in receivership) v O’ Neill [1995] ANZ Conv R 387; Westpac Banking Corporation v Cochrane [2002] ANZ Conv R 231.
[93](1993) 33 NSWLR 1, 9; see also McIlraith v Ilkin [2007) NSWSC 911, [10] and [11] (Brereton J); and in Tasmania, Young v Pickands Mather & Co International [1998] Tas SC 108 (Underwood J); The Laws of Australia [10.11.94].
We respectfully adopt his Honour’s reasoning. We see no reason why the summary jurisdiction to enforce solicitors’ undertakings would not have been conferred on the Supreme Court of Victoria by s 15 of the Supreme Court Act 1958, s 4 of the Supreme Court 1986 and s 85 of the Constitution Act 1975.[94]
[94]And preserved by Legal Profession Act 2004, s 4.4.39.
The County Court has no inherent jurisdiction. But under s 54 of the County Court Act 1958 it is given the same jurisdiction and may exercise the same powers and authority in respect of any contempt of the County Court as the Supreme Court has and may exercise in respect of any contempt of the Supreme Court. It follows, we think, that in circumstances where a solicitor gives an undertaking in a proceeding before the County Court, and breaches it, the solicitor may be dealt with by the County Court in exercise of the disciplinary jurisdiction to the same extent as the Supreme Court might deal with the solicitor for breach of the undertaking given in a proceeding before the Supreme Court.
As we have earlier noted, however, the long-established practice in England is that the court will not make an order for committal for breach of an undertaking to pay a sum of money unless the court has first made an order to perform the undertaking within a limited time, and the solicitor thereafter fails to comply with that order. The solicitor may then be dealt with for contempt in failing to comply with the order. We see no reason to doubt that the same salutary practice should apply in this state. It is a general principle that process by way of contempt should not be lightly employed and not in aid of a civil remedy where some other method of achieving justice is available.[95]
[95]Re Clements (1877) 46 LJ (Ch) 375, Re Davies (1888) 21 QBD 236, 239 (Matthew J).
Furthermore, and despite the apparent breadth of the disciplinary jurisdiction, there is nothing in the English cases, or in New Zealand or New South Wales, to suggest that the jurisdiction extends or should be taken to extend to punishing a solicitor by committal for contempt for failure to comply with an order for the payment of a sum of money in respect of which the time for payment is not limited by the order. In point of principle it would be wrong to do so, for ‘unless and until a definite time for payment is fixed there can be no default.’[96]
[96]Cotton v Heyl [1930] 1 Ch 510, 522 (Luxmoore, J).
It might be thought that the decision in Swyny v Harland[97] points the other way. In that case a stay of execution pending the defendant’s appeal to the Divisional Court was made on terms that the defendant pay the plaintiff’s taxed costs to the plaintiff’s solicitors and the plaintiff’s solicitors personally undertaking ‘to repay the taxed costs herein should the appeal be successful‘. The appeal to the Divisional Court was successful but the plaintiff appealed from the Divisional Court to the Court of Appeal and the judgment of the Divisional Court was stayed pending that appeal. The defendant thereupon required the solicitors to repay the costs, and although they did not dispute that, but for the stay of execution, they would be liable to pay, they contended that the effect of the stay pending appeal to the Court of Appeal was that the result of the appeal to the Divisional court could not be said to be determined until the appeal to the Court of Appeal had itself been heard and determined.
[97][1894] 1 QB 707,708.
On a motion for an order that the solicitors repay the costs, the Court of Appeal held that the defendant had a right to have the costs paid to him at once. Lord Esher MR said this:
The event on which the solicitors were to repay the costs has happened, and therefore the obligation to repay has arisen.
And Lopes, LJ added:
The undertaking is given in the face of the Court, and for all practical purposes the case is the same as if it were give to the Court. If so, what are the consequences if the solicitor fails to carry it out? It is open to the other party to apply either to commit him or to attach him. That course has not been taken in the present case, but an application is made for an order that the money should be paid.
At first sight those observations might be thought to mean that the obligation to repay the costs became due and payable immediately upon the appeal succeeding. In our view, however, that is not the effect of what was decided. Until the appeal succeeded, the solicitors’ obligation to repay the costs was no more than an inchoate contingent obligation. The decision recognised that, upon the appeal succeeding, that inchoate contingent obligation became an accrued obligation.[98] But it was not suggested that the obligation thus accrued was one to pay within a fixed time or upon a definite day. And for reasons akin to those later expressed in Carter v Roberts[99] and Cotton v Heyl,[100] to which we earlier referred, an obligation to pay ‘should the appeal be successful’ could not properly be construed as an undertaking to pay forthwith upon the appeal succeeding. We are strengthened in that view of the matter by the observation that, although Lopes LJ considered that it was open to the defendant to seek committal or attachment, his Lordship was presumably speaking in terms of the range of remedies conceivably available, as opposed to those which could be accorded eo instanti; and further by the fact that the only order sought and thus thought to be appropriate on the particular facts of the case was one for payment at once – an order which in effect specified the time for payment and thus provided a basis for application for committal in future if that order were breached.
[98]Debitum in praesenti – see and compare Federal Commissioner of Taxation v James Flood (1953) 88 CLR 492, 505.
[99][1903] 2 Ch 312.
[100][1930] 1 Ch 510.
Finally, even if it were possible to enforce by committal an undertaking to pay for the performance of which time had not been limited (which in our view it is not), there would be every reason in the exercise of discretion to refuse to commit the solicitor, because of the availability of another remedy available for enforcement of the August orders, by means of application under Rule 59.03(4) for a further order to limit the time for performance of the undertaking, followed in the event of default, by a further application for committal pursuant to Rule 66.02(1)(f) for failure to comply with that further order.
Sentence. A postscript
Having found the appellant guilty of contempts of court, the judge below sentenced the appellant to four months’ imprisonment, wholly suspended for two years, for the breach of undertakings which she found proved, and to a fine of $12000 for breach of the August orders. She also ordered the appellant to pay Victoria’s costs on an indemnity basis, in default of payment of which he was to be committed to prison for an unspecified period.
We have concluded that the appellant was wrongly found guilty of contempt. For that reason, the sentences which were imposed and the costs order fall away. Strictly, then, we need say nothing about the sentences, or about the judge’s remarks when imposing sentence. On the other hand, by an affidavit sworn 1 September 2008 the appellant deposes that following sentence in September 2007 his practising certificate was suspended, reliance being placed by the Law Institute of Victoria upon sentencing remarks made by the judge; that in November 2007 he was notified that it was proposed to cancel his certificate for the period 1 July 2007 to 30 June 2008 on the same grounds; and that in June 2008 (as we understand it) a decision was made not to issue him with a certificate for 2008/09.
The appellant further deposes that the Victorian Civil and Administrative Tribunal made a series of orders in consequence of which none of suspension, cancellation and refusal to issue a practising certificate have taken effect. Nonetheless, it is at least theoretically possible that the Institute might, in reliance upon remarks made by the judge below, refuse to issue him with a practising certificate despite the success of his appeal. For that reason, it is desirable that we indicate our disagreement with some of those remarks.
The judge, when imposing sentence, expressed extremely strong disapproval of the appellant’s conduct. Focusing upon the circumstances of the offences which she found proved, she stated, inter alia –
You made application for the variation of cost orders in the original proceedings. The court was prepared to consider such variation only upon you giving a personal undertaking in the manner ultimately given. Your Undertaking to the court was made as a condition of the court varying cost orders to the detriment of another party. It is imperative that the court have absolute confidence in the integrity and reliability of its officers if it is every to consider similar applications to vary cost orders in future.
and
… your Counsel submitted that you were not unwilling to repay the costs owed just financially unable. I find this submission without merit and is not supported by the authorities referred to in my reasons for judgement. As pointed out by Counsel for the State of Victoria, your Undertaking was given in circumstances where you had not yet received the subject costs. Compliance with the Undertaking was readily achievable by a number of means none of which you put in place. Your inability to repay the costs was a circumstance entirely of your own making.
and
The following matters are relevant to penalty in respect of the breach of the Undertaking and the failure to comply with the Judge Lewis Order:
a)The Undertaking was given as a condition of this Court varying orders to the detriment of another party;
b)You have been admitted to practice as a Barrister and Solicitor in Victoria for some 16 years and as an officer of the Court you are presumed to understand the importance of undertakings made to the court and possible ramifications for breach;
c) This proceeding has been brought in the public interest;
d)In my view you have not demonstrated any genuine remorse or given a meaningful or timely apology;
e)I am satisfied that you have not provided any reasonable explanation for your conduct constituting the contempts;
f)There was an interval between the initial verbal undertaking and subsequent written Undertaking sufficient for timely reflection and the obtaining of legal advice by you, if required;
g)You personally received a substantial benefit by way of payment of your costs and the discharge of your debt to the barristers;
h)You failed to put in place any safeguards at all to ensure that the costs received could be repaid in the event of a successful appeal by the State of Victoria, and provided no satisfactory explanation to the Court for such failure;
i)You failed to comply with those parts of the Judge Lewis Order which required you to pay $1,000 per month to the State of Victoria pending determination of the application to the High Court for special leave to appeal;
j)To the date of your plea you had repaid only $5,000 of the original $100,000 which you had received and had failed to account for any part of the payments directed to the plaintiffs’ barristers;
k)You have consistently blamed others for your predicament: the barristers to whom you directed the State of Victoria to pay nearly $300,000 in costs; and the State of Victoria itself to whom you apparently continue to harbour deep seated resentment;
l)You were dilatory in pursuing the barristers whom you say are liable to account to you for the costs they received and only elected to institute proceedings against them after a misconceived attempt to join these barristers to the contempt proceedings; and
m)In my view you have not demonstrated good faith in your dealings with the State of Victoria in its attempts to secure repayment of the costs which you had undertaken and then were ordered to repay.
and
In addition to the above circumstances I repeat again my previous comments that your breach of the Undertaking and your continuing breach of the Judge Lewis Order constitutes a deliberate defiance amounting to contumacious behaviour warranting punishment which will reflect a vindication of the courts authority.
and
… as indicated in my reasons for judgement there could hardly be a clearer case of contempt in both the breach of Undertaking and subsequent Court Order. I am satisfied beyond reasonable doubt that:
a)the Undertaking given by you was voluntarily given for your own benefit and that of counsel; the Undertaking was clear and unequivocal in its terms and was also clearly understood by you both as to your obligations under it and to the consequences of your failure to comply. In particular I am satisfied that when you made the Undertaking you clearly understood that in the event that the appeal by the State of Victoria was successful you would immediately personally repay the total costs and interest previously received by you and plaintiffs’ counsel;
b)the Undertaking was not given in circumstances of duress, necessity or legal impossibility. There was no legal obligation or imperative upon you either to obtain the variation to the cost orders made by His Honour Judge Williams or to give the Undertaking as required to vary such orders;
c)You were capable, if you so chose, to obtain appropriate legal advice or otherwise enter into appropriate security arrangements with plaintiffs’ counsel in the event that you were required to satisfy the Undertaking;
d)You have shown a reckless disregard to the authority of the Court in giving the Undertaking in circumstances where you made no arrangements whatsoever to ensure your capacity to repay or otherwise to secure the interests of the State of Victoria; and
e)After consenting to the Judge Lewis Order, within a short time thereafter you were in breach of the conditions of that Order and otherwise have continued in breach.
and
Having now considered in detail the circumstances of your contempts in my view they clearly warrant the imposition of a term of imprisonment. Having regard to the relevant authorities to which I have been referred there is a strong case for the imposition of immediate custody. However, I have finally determined that no useful purpose would be served by your immediate imprisonment and I propose to order that your sentence be wholly suspended.
We have said, and we reiterate, that we do not underestimate the importance of legal practitioners abiding undertakings given in a court; and that courts have rightly been concerned and critical when undertakings are not abided. We have noted the Court’s inherent supervisory jurisdiction over solicitors.
Those points made, it appears to us that the judge’s assessment of the gravity of misconduct on the appellant’s part considerably failed to reflect the entire very unusual circumstances of the matter. We have described those circumstances at length in our reasons. The situation, as we see it, is far from one in which the appellant should have carried, in effect, the whole blame for what transpired. The role of trial counsel for the plaintiffs was evidently critical in the appellant giving the undertakings which he did; and, once given, it is unrealistic to suppose that he could readily have withdrawn them. We refer, in that connection, to what we have said at [28]. It was those undertakings which, as events developed, translated into the August orders, the appellant becoming more and more enmeshed in the fortunes of his former clients; and increasingly assuming a liability which he ought never have been asked to assume from the beginning.
Moreover, Victoria’s position was hardly that of the model litigant which it purports to be[101] and should have been.[102] Throughout, whatever be the explanation for it, Victoria’s position towards the appellant was very aggressive, repayment being sought prematurely and otherwise inappropriately, and contempt proceedings being threatened on several occasions and ultimately being brought when on proper analysis contempt could not be established.
[101]See and compare the Model Litigant Guidelines, Government policies as referred to in Schedule 4 of the Legal Services to Government Panel contract.
[102]Melbourne Steamship Limited v Moorhead (1912) 15 CLR 333, 342 (Griffith, CJ).
None of this is to say that the appellant is free of blame for what has eventuated. But such blame as does attach to him, it might be said, is substantially addressed by his continuing status as a judgment debtor. For after all, he has never sought to deny his liability, and even now he does not seek to do so. He simply lacks the capacity to meet it. Therefore, even leaving aside matters running generally in mitigation, if any part of his conduct had constituted contempt of court, his moral culpability would surely not have been of high degree.
Orders
In our opinion the appeal should be allowed and orders made on 15 August 2007 and 4 September 2007 set aside. In lieu thereof it should be ordered that the proceeding be dismissed with costs.
PAGONE AJA:
I have had the advantage of reading the draft reasons of Nettle and Ashley JJA and agree with the conclusions and orders proposed therein.
END NOTE: Counsel for the plaintiffs were not represented or called to give evidence before the judge below and were not represented at the hearing of the appeal.
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