R v Murfett
[2004] VSC 160
•13 May 2004
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 9244 of 2003
| THE QUEEN | Plaintiff |
| v | |
| CHRISTOPHER CHARLES MURFETT | Defendant |
On the Application of PINCOTT PTY LTD (ACN 085 137 971)
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JUDGE: | Balmford J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 31 March, 1, 2, 19 and 20 April 2004 | |
DATE OF JUDGMENT: | 13 May 2004 | |
CASE MAY BE CITED AS: | R v Murfett | |
MEDIUM NEUTRAL CITATION: | [2004] VSC 160 | |
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Contempt of Court – defendant gave an undertaking in civil proceedings as to the ownership, possession, custody and use of certain equipment – whether the defendant knowingly and wilfully breached the undertaking – whether the defendant aided and abetted a company in breaching the undertaking – whether, in the alternative, evidence in a supporting affidavit was false and the defendant knew this thereby knowingly and wilfully interfering with the administration of justice – evidence relied on by the plaintiff did not prove the charges beyond reasonable doubt – no finding of contempt.
Keeley v Mr Justice Brooking, (1979) 143 CLR 162; Advan Investments Pty Ltd v Dean Gleeson Motor Sales Pty Ltd [2003] VSC 201.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J Slonim | RB Legal Pty Ltd |
| For the Defendant | Mr J Ruskin QC with Mr W Alstergren | Michael Brereton & Co |
HER HONOUR:
Introduction
This proceeding was commenced by originating motion on 11 December 2003. By the amended originating motion filed on 19 March 2004 the applicant seeks the following orders:
1.The defendant be punished for contempt of court in that he knowingly and wilfully:
(a)breached the undertaking given by him to the Court on 30 June 2003 in Proceeding No 7324 of 2003;
(b)aided and abetted Murfett Fine Foods Pty Ltd in that company’s breach of the undertaking given by him on its behalf to the Court on 30 June 2003 in Proceeding No 7324 of 2003.
2.In the alternative, the defendant be punished for contempt of court in that he knowingly and wilfully interfered with the administration of justice by giving the undertakings to the Court personally, and on behalf of Murfett Fine Foods Pty Ltd, on 30 June 2003 in Proceeding No 7324 of 2003:
(a)knowing that the evidence that he had given to the Court in his affidavit sworn 27 June 2003 was false regarding the ownership, possession, custody and use of the plant and equipment that was the subject of the undertakings and was provided by him for the purpose of deceiving the Court as to the true ownership, possession, custody and use of said plant and equipment; and
(b)for the purpose of wrongfully procuring the dismissal of the applicant’s summons by providing undertakings which were, in the circumstances, misleading and ineffective.
The genesis of the present proceeding can be seen to lie in proceeding No 7324 of 2002 (“the principal proceeding”). In 2000 the applicant in the present proceeding (“the Pincott company”) and a company (“the Murfett company”), of which the defendant in the present proceeding (“Mr Murfett”) was the sole director and shareholder, entered into a commercial relationship which related to the packaging and sale of milk powder. The nature of that relationship is in issue in the principal proceeding. In the context of that relationship certain plant and equipment (“the relevant equipment”) was purchased by the Pincott company. It is common ground that the relevant equipment was “loaned”. Whether it was loaned to what the Pincott company claims was a partnership between the two companies, or to the Murfett company is also in issue.
A dispute arose between the parties to the relationship. On 13 August 2002 the Murfett company served a statutory demand on the Pincott company under the Corporations Act 2001. The principal proceeding was initiated by writ on 17 September 2002. In that hard fought proceeding the Pincott company seeks against the Murfett company orders that the claimed partnership be wound up, a receiver appointed, and all necessary accounts and enquiries made; for payment of amounts found to be owing to the Pincott company; and for damages.
In the context of that proceeding, a summons was issued on 24 June 2003 seeking an order that the Murfett company deliver up the relevant equipment to the Pincott company. An affidavit in support of that summons was sworn on that date by Edward Peter Pincott (“Mr Pincott”), the sole director of the Pincott company, in which he gave his reasons for being concerned as to the whereabouts, ownership and status of the relevant equipment, none of which had been returned to the Pincott company. An affidavit in reply was sworn by Mr Murfett on 27 June 2003, which is the affidavit referred to in paragraph 2(a) of the orders sought by the applicant.
On 30 June 2003 the summons came on before Justice Redlich, who ordered that the summons be dismissed. The order was expressed to be made:
Upon [Mr Murfett], by the defendant’s counsel, giving an undertaking to the Court in the form annexed hereto, the undertaking being made “without prejudice” to the defendant’s rights to deny the plaintiff possession of or any entitlement to the plant and equipment the subject of the Summons.
The undertaking read:
Christopher Charles Murfett (“Murfett”) through Counsel for the defendant, hereby undertakes both personally and on behalf of Murfett Fine Foods Pty Ltd (“MMF” [sic]) as the sole director and shareholder of MFF and as the holder of a charge over MFF, that neither himself nor MFF will remove, encumber or sell the plant and equipment described in Edward Peter Pincott’s affidavit, Exhibit EPP-2 as items 2, 4-10, until the proceeding is either heard and determined, or settled, or the plant and equipment is returned to the Plaintiff.
The items of plant and equipment referred to are described as follows in Exhibit EPP-2:
2. Kawashima KBF 100M
4. Flowveyer 7 mtr long
5. One stainless steel hopper
6. Two (2) Electrical control panel
7. Greer Stainless steel batch mixer
8. Hinged swing plastic doors
9. Two metal detectors
10. Converter control panel with stand
[11] Three stainless steel magnetic vibrating tables
The charges of contempt
As Wilson J said in Victoria v Australian Building Construction Employees’ and Builders Labourers’ Federation.[1]“The jurisdiction to deal with contempt is one which is to be exercised with great caution”. [2] The applicant bears the onus of proof, and it is clear since the decision of the High Court in Witham v Holloway[3] that “all proceedings for contempt must realistically be seen as criminal in nature” [4] and consequently that the elements of a charge of contempt must be proved beyond reasonable doubt. In Keeleyv Mr Justice Brooking Barwick CJ said [5] :
False swearing in a court proceeding may in itself be contempt of the tribunal before which the proceedings are had. . . . If it could be concluded beyond all reasonable doubt that the false swearing was with the actual or inevitable intent or consequence of frustrating or obstructing the proceedings, the party or witness could be dealt with for contempt of the tribunal. But that intent or inevitable consequence would differentiate what I might call mere perjury from contempt. The contempt would lie in the obstruction or frustration of the proceedings actually intended or necessarily consequential.
[1](1982) 152 CLR 25 at 133.
[2]His Honour was there speaking in the context of contempt arising from publication of material, but the generalisation is not limited to that context.
[3](1995) 183 CLR 525.
[4]at 534.
[5](1979) 143 CLR 162 at 169.
The second charge
As to the second charge, which chronologically comes before the first, and is conveniently dealt with first, the applicant submits that the evidence shows that Mr Murfett knew that the evidence in his affidavit of 27 June 2003 regarding the ownership, possession, custody and use of the relevant equipment was false, and that that evidence was provided by him for the purposes of deceiving the court and wrongfully procuring the dismissal of the applicant’s summons.
That evidence reads as set out below from the numbered sub-paragraphs of paragraph 4 of that affidavit. The name “Pincott” is not defined in the affidavit, and it is not always possible to determine whether it is intended to refer to Mr Pincott or to the Pincott company.
(iv)items 2, 4-10 remain in my possession.
(v)[items 2, 4-10] remain in the same place as they have been for the last 2 years being 475 Hammond Road, Dandenong.
(vii)I maintain . . . that . . . Pincott has no entitlement to those machines. Pincott maintains that [the Murfett company] has never made any claims as to title of those machines. This is incorrect. [The Murfett company] has always maintained that it is entitled to the possession of those machines pursuant to a set off as against the monies owing by Pincott to [the Murfett company].
(xviii)Some of the machines are currently being used in the production line.
(xxii)The plant and equipment, as I previously indicated are the property of [the Murfett company] . . .
Paragraph (vii) demonstrates some confusion between ownership and possession. However, paragraph (xxii) is a precise claim to ownership.
It is not in issue that, as stated in [2] above, the relevant equipment was purchased by the Pincott company, and was lent, although the nature of the entity to which it was lent is in dispute.
It is convenient here to set out a chronology of certain events or purported events which are said to be relevant to the ownership, possession, custody and use of the relevant equipment as it stood at 30 June 2003, the date of the order of Justice Redlich.
(i) 13 Feb 2002: Sale of stock, certain assets, creditors and goodwill of the Murfett company to Ozdairy Foods Pty Ltd (“Ozdairy”). Ozdairy is a company of which Mr Murfett is the sole director, which operates from the premises from which the Murfett company operated.
(ii) 14 Feb 2002: Sale of plant and equipment of the Murfett company to Mr Murfett. Mr Murfett agreed in cross-examination that the Flowveyer and the Kawashima, which appear in the Schedule of plant and equipment the subject of that sale, were two of the items of the relevant equipment. It is not apparent from the Schedule that the other items of the relevant equipment were included in the sale, although it appears to be generally assumed that they were in fact included. Mr Giles, the accountant for the Murfett interests, deposes in his affidavit of 21 January that this was the case. And see [13] below.
(iii) 18 Feb 2002: Notification to ASIC of a charge by the Murfett company to Mr Murfett over “all current assets and plant and equipment to the value above” [$357,521].That document, signed by Mr Murfett, includes the statement “I verify the annexure marked A of 4 pages is a true copy of the instrument(s) creating or evidencing the charge and I witnessed the execution by the chargor of the instrument(s).” However the attached instrument is a simple loan agreement, and does not create or evidence a charge. There is no other document before the Court creating or evidencing such a charge, although I note that Mr Murfett’s undertaking is given by him, in part, “as the holder of a charge over [the Murfett company]”. I cannot find that such a charge was given.
(iv) 14 July 2002: Notification to ASIC of a charge by Ozdairy to Samantha Murfett over “company assets”. Samantha Murfett is the sister of Mr Murfett and works for Ozdairy. That document, signed by Mr Giles includes the statement “The original of the instrument(s) creating or evidencing the charge is attached.” However the attached instrument is a simple loan agreement, and does not create or evidence a charge. There is no other document before the Court creating or evidencing such a charge. I cannot find that such a charge was given.
(v) 13 Aug 2002: Statutory demand served by the Murfett company.
(vi) 17 Sept 2002: Writ issued by the Pincott company.
(vii) 15 Feb 2003: Mr Pincott has a meeting with Samantha Murfett, at which she tells him that Ozdairy is now operating the Murfetts’ business.
(viii) 24 June 2003: Summons issued; Mr Pincott’s affidavit sworn.
(ix) 26 June 2003: Mr Murfett meets with his legal and accounting advisers. This occasion is discussed further at [13] and following below.
(x) 27 June 2003: Mr Murfett’s affidavit sworn.
(xi) 30 June 2003: Undertaking given by Mr Murfett to Redlich J; Redlich J dismisses summons.
(xii) July 2003 Journal entry made with effect from 1 July 2002.
As to the ownership of the relevant equipment, Mr Giles deposes in his affidavit of 21 January 2004 that when the items of the relevant equipment were originally provided by the Pincott company in 2000/2001 they were listed in the accounts of the Murfett company. He does not explain why this was done, given that, as stated in [2] above, it is common ground that those items were loaned by the Pincott company, rather than transferred. The affidavit continues:
In February 2002 [the Murfett company] entered into a sale agreement with [Mr Murfett] to sell its plant and equipment. Those assets [i.e. the relevant equipment] formed part of the list of plant and equipment which was to be transferred.
As to that last statement, see [12(ii)] above. It appears from other evidence that that sale agreement was carried out, in that the relevant equipment was in fact transferred pursuant to that agreement. The affidavit continues:
However, because of the dispute between [the Pincott company and the Murfett company] those items of plant and equipment were placed back into the assets of [the Murfett company] by an accounting entry and the loan account of [Mr Murfett] were [sic] adjusted accordingly. This occurred prior to the undertakings being provided by [Mr Murfett and the Murfett company] to the court.
Mr Giles deposes that the relevant equipment was loaned by Mr Murfett to Ozdairy from 14 February 2002 to 1 July 2002, and appears in the Ozdairy depreciation schedule. He produces the Ozdairy depreciation schedule. Whether it is normal accounting practice to claim depreciation on property owned by somebody else is not a matter which I need to determine.
Mr Giles deposes in a further affidavit of 29 March 2004 that at the meeting on 26 June 2003 the relevant equipment was “transferred back into the ownership of [the Murfett company]”, and that “the arrangements were recorded in” a specific file note made by one of his accountants. That file note records that certain journal entries are to be processed “as at 1/7/02”. The actual journal entry records the transfer of all of the relevant equipment from Ozdairy to the Murfett company. That journal entry was not made until after 30 June 2003.
Mr Murfett said that he did not check documents before he signed them, but relied on Mr Giles, and that he had little understanding of financial documents. Having observed him as a witness and heard his evidence relating to various financial matters, I accept those statements.
Mr Slonim submitted that the relevant equipment had in fact been transferred to Ozdairy, rather than lent, as evidenced by the fact that it was depreciated in the Ozdairy accounts, and that being so, it was subject to the charge to Samantha Murfett, which would have prevented its being transferred to the Murfett company. However, as I have said in [13(iv)] above, I cannot find that any such charge was created by Ozdairy, and I do not find the depreciation schedule of Ozdairy to be convincing of anything.
He submitted further that the transfer referred to in [15] above was not effective to transfer the relevant equipment in the absence of consideration, journal entry or legal instrument, and that none of these were present or had taken place when Mr Murfett swore his affidavit on 27 June 2003. Accordingly, in his submission, when that affidavit was sworn the relevant equipment was not the property of the Murfett company, and thus Mr Murfett’s affidavit was false, and Mr Murfett knew this.
I would have considerable doubt, given Mr Murfett’s lack of understanding of financial matters, and his frequently expressed reliance on Mr Giles, that Mr Murfett was aware of precisely what had been done or needed to be done to effect the formal transfer. It appears to me that he would have relied on the legal and accounting advice which Mr Giles said in evidence that he received at the meeting on 26 June 2003 to the effect that what was done was effective to transfer the relevant equipment from Mr Murfett to the Murfett company in order that he might give the undertaking in court. The evidence of Mr Giles is that that was the intention of those present at that meeting. The evidence of Mr Murfett is that the transfer was carried out to correct a mistake, in that it had not been intended to transfer the relevant equipment to him in the first place. Those two pieces of evidence are not necessarily inconsistent.
Whether or not the tangled and unreliable history of dealings with the relevant equipment resulted in such a transfer being completed prior to the hearing before Justice Redlich on 30 June is a matter which I need not determine. In sub-paragraph 4(xxii) of his affidavit of 27 June 2003[6] Mr Murfett deposes that the relevant equipment is the property of the Murfett company. I cannot be satisfied beyond reasonable doubt that Mr Murfett, in swearing that affidavit, believed that the relevant equipment had not been transferred to the Murfett company.
[6]see [9] above.
As to the possession, custody and use of the relevant equipment, Mr Murfett deposed in sub-paragraphs 4(iv), (v) (vii) and (xviii) of his affidavit of 27 June 2003 [7] that it remained “in my possession”, at 475 Hammond Road Dandenong, that “[the Murfett company] has always maintained that it is entitled to the possession of those machines” and that some of it was “currently being used in the production line”. These paragraphs indicate a lack of understanding of the difference between a company and its sole director. Sub-paragraph (xviii) does not state what entity is operating the production line at Hammond Road, although it seems probable that it was at the time being operated by Ozdairy, of which Mr Murfett was the sole director. However, the Murfett company was, at the time of the swearing of the affidavit and until it went into liquidation on 9 September 2003, also in occupation of the building at Hammond Road (as well as the adjoining building with an address in Mickle Street, Dandenong, as to which see [28] below).
[7]see[9] above.
Those sub-paragraphs indicate confusion as to the legal position, but also demonstrate, in my view, that in the mind of Mr Murfett what was significant was that the relevant equipment was at a place controlled by him, and being used by a company controlled by him. I cannot be satisfied beyond reasonable doubt that he was aware of the true meaning of those sub-paragraphs.
The first part of the second charge reads that Mr Murfett “knowingly and wilfully interfered with the administration of justice by giving the undertakings . . . knowing that the evidence that he had given to the Court in his affidavit sworn 27 June 2003 was false regarding the ownership, possession, custody and use of the plant and equipment”.
As I am not satisfied beyond reasonable doubt that Mr Murfett knew that that evidence was false, I cannot find that he “knowingly and wilfully interfered with the administration of justice” in terms of that charge. Accordingly the second charge must fail.
The first charge
As to the first charge, the applicant submits that the evidence shows that, having given, for himself and for the Murfett company, the undertaking set out in [5] above not to remove, encumber or sell the relevant equipment, Mr Murfett knowingly and wilfully breached that undertaking by removing the relevant equipment, and aided and abetted the Murfett company in doing the same.
It is conceded by Mr Murfett that the two metal detectors numbered 9 in the list of the relevant equipment set out in [6] above were accidentally “binned” that is, scrapped, while in the custody of Garry Shannon Engineering, where they had been sent for repair. The Court was informed of this at the outset of the hearing and Mr Murfett gave evidence that two replacement metal detectors had been purchased, photographs of which are in evidence. Mr Murfett gave an undertaking to the Court that those replacement metal detectors would be retained by him along with the rest of the relevant equipment.
Gillard J said in Advan Investments Pty Ltd v Dean Gleeson Motor Sales Pty Ltd[8] :
In my view, in the exercise of a discretion, this court may refuse to exercise its contempt jurisdiction and thereby dismiss the proceeding. If the court was of the view that the charge was trivial or minor and lacked substance, or was casual or inadvertent and unintentional, even though technically established, it could decline to exercise the jurisdiction.
I would, with respect, adopt that statement of the law. The unchallenged evidence on the subject indicates that scrapping of the metal detectors was inadvertent and unintentional. Any breach of the undertaking in that regard has been remedied. It does not justify the making of an order that Mr Murfett is guilty of contempt.
[8][2003] VSC 201 at [50].
It is not in issue that Mr Murfett’s business activities and those of the companies which he controls have been and continue to be conducted in two buildings on adjoining blocks of land. Hammond Road is used as a factory and for storage; Mickle Street is used for storage alone. The address of one is 475 Hammond Road Dandenong, and the address of the other is 3 Mickle Street Dandenong. They share a common entrance. I do not regard the moving of any piece of the relevant equipment from one of those buildings to another as a breach of Mr Murfett’s undertaking not to “remove” the relevant equipment.
Mr Peter Kirkham of Global Business Auctioneers and Valuers visited those premises in order to value certain plant and equipment for the administrator of the Murfett company. The date of his visit is not apparent from the valuation which he prepared, or from the oral evidence of himself or of Mr Terry Kirkham of that firm. However, the covering letter sending the valuation to the administrator is dated 13 August 2003, so that the visit must have taken place before that date. Several of the items of the relevant equipment were not seen by Mr Kirkham, and his evidence was that had they been there he would have seen them. He said that Mr Murfett told him that some of those items were missing or had been scrapped. However, it is not clear from his evidence whether he visited one (and if so which) or both of the two buildings, and that being so, I cannot find that the relevant equipment was not in one or other of the buildings at the time of his visit.
On the day when the trial of this matter commenced, Mr Murfett took photographs of certain items of equipment, which were tendered in evidence. His evidence that the photographs depicted all of the items of the relevant equipment (excluding the two metal detectors), and that they were in the building at Hammond Road was unchallenged. The evidence relied on by the plaintiff does not satisfy me beyond reasonable doubt that any items of the relevant equipment have been removed from the premises in Hammond Road and Mickle Street. No other evidence was put forward to justify the charge that Mr Murfett “knowingly and wilfully breached the undertaking” or that he aided and abetted the Murfett company in so doing. Accordingly the first charge must fail.
It will be apparent that there was much material before the Court, by way of both evidence and submissions, to which I have not found it necessary to refer.
For the reasons given, both charges will be dismissed. Counsel may wish to make submissions as to costs.
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